City Council and Authorities Concurrent
April 18, 2023

AMENDMENT NO. 1

TO THE AGREEMENT FOR THE PERFORMANCE OF SERVICES

BY AND BETWEEN

STADIUM MANAGER
AND

ICS INTEGRATED COMMUNICATION SYSTEMS

1. Parties and Date.

This Amendment No. 1 to the Agreement for the Performance of Services by and between the Forty Niners Stadium Management Company LLC (“Stadium Manager”) and ICS Integrated Communication Systems, a California corporation with its principal place of business at 6680 Via Del Oro, San Jose, CA 95119 (“Contractor”), shall be effective on March 31, 2023 (“Effective Date”). Stadium Manager and Contractor are sometimes individually referred to as “Party” and collectively as “Parties.”

2. Recitals.

2.1 Contractor. The Stadium Manager and Contractor entered into an agreement titled “Agreement for the Performance of Services By and Between Stadium Manager and ICS Integrated Communication Systems,” on November 1, 2019 (the “Agreement”) for the purpose of Stadium Manager securing services as described in Exhibit A (the “Services”) of the Agreement from Contractor during the period of November 1, 2019 through March 31, 2023 (“Term”) in relation to Stadium Manager’s obligation to maintain and operate Levi’s® Stadium pursuant to that certain Stadium Management Agreement as defined in the Agreement.

2.2 Amendment Purpose. The Stadium Manager and Contractor desire to amend the following sections of the Agreement: Section 5, Term of the Agreement, to extend the Term; Section 28, Notices, to revise the addressee for Stadium Manager for receipt of notice; Exhibit A, Scope of Services, to make conforming changes; and Exhibit B, Contractor Compensation and Fees, to increase the not-to-exceed amount under the Agreement.

2.3 Amendment Authority. This Amendment No. 1 is authorized pursuant to Section 24 of the Agreement. Capitalized terms not otherwise defined or amended herein shall have the meaning assigned in the Agreement.

3. Terms.

3.1 Amendment: Section 5 of the Agreement is deleted in its entirety and replaced in its entirety to read as follows:

3. TERM OF AGREEMENT
The term of this Agreement (the “Term”) shall begin on the Effective Date and terminate on May 31, 2023 provided however, if this Agreement extends beyond a single fiscal year, the Term for subsequent fiscal years shall be conditioned upon approval of the Authority budget for the applicable fiscal year that includes the amounts due under this Agreement. All Services contained herein shall be completed prior to the end of the Term of this Agreement. The Stadium Manager Amendment No. 1

shall have the option, in its sole discretion, to extend the Term for additional one (1) year periods by notifying Contractor in writing of Stadium Manager's desire to exercise said option prior to the expiration of the then-current Term.

3.2 Amendment: Section 28 of the Agreement is hereby amended, in part, to update the addressee for Stadium Manager for receipt of notices as follows:

Attention: Executive Director
Address: Forty Niners Stadium Management Company LLC
4900 Marie P. DeBartolo Way
Santa Clara, CA 95054
With copy to: Legal Affairs
Forty Niners Stadium Management Company LLC
4949 Marie P. DeBartolo Way
Santa Clara, CA 95054

3.3 Amendment: Exhibit A of the Agreement is hereby amended to delete Section A, Overview, subsection a. in its entirety and replace it with the following:
a. Contractor will provide Stadium Manager fire alarm testing, inspections, and maintenance services as specified in this Exhibit A and at the rates contained in Exhibit B, both of which are attached and incorporated into the Agreement, at Levi’s Stadium for a multiyear period beginning November 1, 2019 through May 31, 2023, as requested by Stadium Manager; provided however, if the services extend beyond a single fiscal year, the term for subsequent fiscal years shall be conditioned upon approval of the Santa Clara Stadium Authority budget for the applicable fiscal year that includes the amounts due under this Agreement.

3.4 Amendment: Exhibit B of the Agreement is hereby amended to delete the second paragraph in its entirety and replace it with the following:

The pricing list above will govern all of services provided by Contractor to Stadium Manager during the Term. In no event shall the total fees paid under this Agreement during (1) the period of the Term commencing November 1, 2019 and ending March 31, 2023 exceed Two Hundred Thousand Dollars ($200,000.00) during any fiscal year (ending each March 31) and (2) the period of the Term commencing April 1, 2023 and ending May 31, 2023 exceed Ten Thousand Dollars ($10,000.00).

Contractor shall have no obligation to provide Services which would cause the fees to exceed the amounts specified above unless mutually agreed upon by the Parties in writing. Notwithstanding the foregoing, the Parties acknowledge and agree that the pricing listed above may be required to change in accordance with applicable law.

3.5 Continuing Effect of Other Provisions. Except as amended by this Amendment No. 1, all other provisions of the Agreement remain in full force and effect and shall govern the actions of the Parties under this Amendment No. 1. From and after the Effective Date of this Amendment No. 1, whenever the term “Event Service Agreement” or “Agreement” appears in the Agreement, Amendment No. 1

it shall mean the Agreement as amended by this Amendment No. 1.

3.6 Adequate Consideration. The Parties hereto irrevocably stipulate and agree that they have each received adequate and independent consideration for the performance of the obligations they have undertaken pursuant to this Amendment No. 1.

3.7 Severability. If any portion of this Amendment No. 1 is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.
[SIGNATURES CONTINUED ON NEXT PAGE]
Amendment No. 1

IN WITNESS WHEREOF, the Parties have caused this Amendment No. 1 to be executed by their respective authorized representatives.

FORTY NINERS STADIUM

MANAGEMENT COMPANY LLC
Peter Wilhelm
Chief Financial Officer
Date

ICS INTEGRATED COMMUNICATION

SYSTEMS
Aaron Colton
Chief Executive Officer
Date
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
23-535 Agenda Date: 4/18/2023

REPORT TO STADIUM AUTHORITY BOARD

SUBJECT
Report from the Stadium Authority for Action Regarding Stadium Manager’s Request to Execute Amendment No. 1 to the Agreement with Integrated Communication Systems (ICS) for Fire Alarm Testing, Inspection, Maintenance, and Related Services at Levi’s Stadium

BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium

BACKGROUND
As the Stadium Manager, Forty Niners Stadium Management Company, LLC, is responsible for maintaining “the Stadium in the Required Condition and operate the Stadium as a quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility” as required by the Stadium Management Agreement between the Stadium Authority, Stadium Manager, and Forty Niners SC Stadium Company, LLC (StadCo).

On November 1, 2019, the Stadium Manager entered into a three-year agreement with ICS for fire alarm testing, inspection, maintenance, and related services. The Stadium Manager is requesting approval to execute Amendment No. 1 to the agreement with ICS Integrated Communication Systems (ICS) to extend the agreement moving the end date from March 31, 2023 to May 31, 2023 and include a compensation amount not to exceed $10,000 for the extended time period. The extension and compensation is to repair the deficiencies identified in the recent annual fire alarm testing and inspection as required in the agreement to finish the full scope of work prior to a change in the service provider.

DISCUSSION
Stadium Authority staff reviewed the Stadium Manager’s Recommendation Memo (attached to corresponding report #23-534) and supporting documentation.

Following a formal procurement process, on March 21, 2023, the Stadium Authority Board (Board) approved the Stadium Manger’s request to execute an agreement with a new vendor, Convergint Technologies, for fire alarm testing, inspection, maintenance, and related services to commence on April 1, 2023.

The ICS agreement covered both annual and semi-annual fire alarm testing and inspection including addressing any deficiencies during the testing and inspection phase. As per the schedule, Stadium Manager and contractor conducted the annual testing which occurred in March 2023. Upon completion of the fire alarm testing and inspection, there were a number of deficiencies that need to be addressed by ICS prior to the next testing and inspection period which would be conducted by Convergint.

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There are several large-scale events scheduled at Levi’s Stadium during the coming months and to ensure continuous coverage of the fire alarm system and critical safety systems, extending the agreement will allow Stadium Manager to address the deficiencies and ensure seamless service for fire and life safety concerns.

Based on the documentation provided, staff recommends approval of the Stadium Manager’s request to execute an Amendment No. 1 to the Agreement with ICS order to complete the necessary repairs before upcoming large-scale events at Levi’s Stadium.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.

FISCAL IMPACT
The Stadium Authority Fiscal Year (FY) 2023/24 Budget contains Shared Stadium Expenses (Shared Expenses) such as Security, Stadium Operations, Engineering, Guest Services, and Groundskeeping. Shared Expenses are split between the Stadium Authority and Forty Niners SC Stadium Company LLC (StadCo) per the Stadium Lease between Stadium Authority and StadCo.

There are sufficient funds in the FY 2023/24 Shared Expenses Engineering line item to cover the agreement cost for the extended term (up to $10,000, of which the Stadium Authority is responsible for up to $5,000).

COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Treasurer’s Offices.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Approve the Stadium Manager’s request to execute Amendment No. 1 to the agreement with Integrated Communication Systems (ICS) to move the term date from March 31, 2023 to May 31, 2023 and include a total not to exceed compensation amount of $10,000 for the extended term only in order for ICS to complete the necessary repairs as part of the agreement for fire alarm testing, inspection, maintenance, and related services at Levi’s Stadium.

Reviewed by: Office of the Executive Director
Approved by: Office of the Executive Director
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City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
23-275 Agenda Date: 4/18/2023

REPORT TO COUNCIL

SUBJECT
Action on a Resolution Establishing the Average Per-Acre Land Values and Park Development Costs to be Used in Setting the Parkland In-Lieu Fees for New Residential Development for FY 2023/24

COUNCIL PILLAR
Enhance Community Sports, Recreational and Arts Assets
Enhance Community Engagement and Transparency
Deliver and Enhance High Quality Efficient Services and Infrastructure

BACKGROUND
Since 2014, City Code Chapter 17.35 “Park and Recreational Land” requires new residential developments to provide developed park and recreational land and/or pay a fee in-lieu of developed parkland dedication (“In-Lieu Fees”) pursuant to the Quimby Act (“Quimby”) and/or the Mitigation Fee Act (“MFA”). This enables the City to maintain its existing level of service at the same rate of 2.6 acres to 3.0 acres of parkland and recreational amenities per 1,000 residents. The In-Lieu Fees are calculated annually and included in the Municipal Fee Schedule by a Council adopted resolution.

The calculation of the In-Lieu Fees is based on the three primary cost components for the acquisition and development of new parkland, namely (a) the average cost to purchase land for parks in Santa Clara, (b) the average cost per capita to develop the land into a useable park facility, i.e. to construct the amenities, buildings, landscaping and the equipment to service it, and (c) the cost to administer the program, including the review of residential development plans for compliance with the ordinance.

The methodology for the calculation of the In-Lieu Fees is explained in the Parks & Recreation Facilities Development Impact Fee Study (Nexus Study) updated August 27, 2019 (Attachment 1).

When the In-Lieu Fee Policy is set at 100% cost recovery, the In-Lieu Fee program will recover 100% of the costs necessary to provide new residents with developed public parkland and recreational amenities at the same level of service as provided to existing residents. If fees are set at less than 100% cost recovery, additional funds from the General Fund or other funding sources will be needed to fill the funding gap, or the level of service will decline. Without sufficient parkland and facilities, there will be an impact in the form of increased demand on existing, older facilities which causes additional wear, earlier/more frequent repair/renewal, and higher maintenance and capital replacement costs. Therefore, it is important to use current land values and park improvement costs to calculate the In-Lieu Fees.

Land Value
The cost to purchase land for parks is based on an annual land valuation study. The appraisal report is completed by an appraiser and in accordance with City Code Section 17.35.040 and the Supplemental Instructions approved by Council June 7, 2016 (Attachment 2). The appraisal report City of Santa Clara Page 1 of 8 Printed on 4/13/2023
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has a valuation date of December 31 to account for the full calendar year (January 1 to December 31) of data for property transactions and provides an objective assessment of the average value of an acre of land in each of the three residential ZIP Code areas of the City (95050, 95051, and 95054). The land valuation report is posted on the City website for a two-week public comment period and persons interested in this subject are notified by email.

Park Development/Amenities Cost
The cost to construct the park improvements (landscape, furnishings, buildings, etc.), is based on an average cost per capita for the City’s existing park system improvements. This creates a fair and equitable distribution of costs to be recovered for development of park assets and features to serve the new residents at the same standard as existing residents. The systemwide average cost per capita is reviewed periodically and as part of the nexus study. In general, the cost analysis includes a review of recent/actual park improvement project costs and increases/decreases in the State of California, Department of General Services Construction Cost Index reported by the Real Estate Services Division for the Bay Area. In 2017/18, at the time of the last nexus study, by Council direction, the increase in the value of park improvement cost was phased in over a four-year period with no index for cost escalation.

The purpose of this memorandum is to (a) share the findings of the land valuation report, (b) provide park construction cost information, (c) summarize public comment and input from the Parks & Recreation Commission Meeting of March 21, 2023, and (d) to discuss and set Council policy direction for the Parkland In-Lieu Fee Schedule for FY 2023/24.

DISCUSSION
Land Valuation - Average Cost per Acre
On March 1, 2023, the City of Santa Clara completed its annual land valuation study by Frank Schmidt & Associates with a valuation date of December 31, 2022 (Attachment 3). The land values for each of the City’s three residential zip code areas are $5.50 million per-acre in 95050, $5.84 million per-acre in 95051 and $5.24 million per-acre in 95054. Table 1 below presents the 2022 valuation and the percentage change from 2021 along with previous values for comparison.

Table 1 Average Land Value Per Acre
Area 2022 2021 % Diff 2020 2019 2017
95050 $5,500,000 $5,715,000 -3.76% $4,720,000 $4,385,000 $3,738,000 95051 $5,840,000 $6,000,000 -2.67% $5,120,000 $4,630,000 $3,993,000 95054 $5,240,000 $5,495,000 -4.64% $4,830,000 $4,495,000 $4,035,000 Park Improvement Value - Average Cost Per Capita
The average park improvement value per capita of $3,471 was developed in 2017 based on the Parks & Recreation Facility Condition Assessment “as is” replacement costs for park site and building assets and is included in the 2019 Nexus Study. At that time, an increased cost per capita amount was phased in over a four-year period per Council policy direction. Based on actual residential projects from 2018 to 2021, the policy impact was approximately $4,583,000 less in Park In-Lieu Fees collected over the four-year period.

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In addition, the 2017 park improvement value is not indexed to construction cost increases. Table 2 below indicates that, from 2018 to 2022, construction costs have increased 30.4% based on the State of California, Department of General Services Construction Cost Index (CCI) reported by the Real Estate Services Division. If the park improvement value of $3,471 per capita were indexed to account for cost escalation, the park improvement value would be $4,641 per capita for FY 2023/24.

Table 2 Park Improvements/Construction Cost Escalation 2017-22 2017 2018 2019 2020 2021 2022
+1.3% +3.6% +2.8% +13.4% +9.3%
$3,471 $3,516 $3,643 $3,745 $4,246 $4,641
In order to recover 100% of improvement costs and provide recreational amenities in new parks at the same standard as existing parks, policy direction is needed to adjust the base cost per capita to reflect the accumulated changes in the current value since 2017. As shown in Table 2, this would result in the adjustment of the existing 2017 base cost of $3,471 per capita to the current value of $4,641 in 2022 dollars - an increase of 30.4%. Recognizing that such an increase would be too aggressive to achieve in one year, for purposes of discussion and community feedback, staff has proposed an initial adjustment of 10%, from $3,741 to $3,818 per capita. Since the park development cost is a much smaller component of the In-Lieu Fee calculations, the effect of a 10% increase in the base value from $3,741 to $3,818 per capita, if adopted, would be fully mitigated by the decrease of

2.6% to 4.6% in the current year land valuation component.

In no case can the improvement value used to calculate In-Lieu Fees exceed the reasonable/justifiable costs to provide parkland and amenities at the current standard (100% cost recovery).

Policy Options - Park Improvement Value Changes
Fees due in lieu of parkland dedication are not the only development fees charged by the City for new residential development. In the past, Council has provided a balanced approach in achieving mutual goals of cost recovery and provision of much needed housing. a) Limit future increases by a maximum percentage. Given the recent volatility in construction costs due to labor and supply chain issues as well as inflation, Council may be interested in limiting future park improvement cost increases/decreases to an ongoing “not to exceed” amount of 10% per year. The annual value change may be much lower than 10% as shown in Table 2. This policy consideration, if adopted, would provide a necessary level of certainty and reasonably predictable cost escalation for new residential developers by limiting the sometimes volatile increases during an inflationary period. The actual costs would also be reviewed and validated on a periodic basis, approximately every five years, as part of the required Parks and Recreation Facilities Development Impact Study (Nexus Study). This option is proposed and included in the Fee Resolution.
b) Index future increases/decreases by use of the Construction Cost Index. In order to keep close to 100% cost recovery and address the annual fluctuations, the established park improvement base value could be linked to an objectively determined index. Use of the State of California, Department of General Services Construction Cost Index (CCI) to adjust the value annually, would help ensure use of a more current improvement cost valuation in the calculation of the In-Lieu Fees. The CCI percent changes (increase/decrease) are published City of Santa Clara Page 3 of 8 Printed on 4/13/2023
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monthly and totals provided every calendar year. This policy consideration is included in the Fee Resolution and provides a level of certainty and reasonably predictable cost escalation going forward. Since the park development cost is a much smaller component of the In-Lieu Fee calculations, it is anticipated that the effect on fees will be small and negligible in years when land values decrease.
c) Phase in changes over a specified time by percentage or fixed amount. Council may be interested in phasing in any changes in the park improvement value over a specified period of time until 100% improvement cost recovery is achieved. This policy direction could be similar to the considerations and direction after the last Parks & Recreation Facilities Development Impact Fee Study (Nexus Study) which phased in the increased value by 25% per year over 4 years. This option is not included in the Fee Resolution. The values used in this option tend to lag changes in actual costs of park development and may result in lower cost recovery over time. Should Council be interested in this option, specific language would need to be added to the Fee Resolution to specify the value to be used and the timeframe over which values would be increased.

Public Comment & Commission Recommendation
The Annual Land Valuation appraisal report was posted on the City website for the two-week review period of March 7, 2023 to March 21, 2023. Members of the public and development community were invited to review the report and to provide questions and comments to the Director of Parks & Recreation. There were no comments or questions received.

On March 21, 2023, the Land Valuation Report and the park improvement cost information was presented for Parks & Recreation Commission for consideration and public comment (File ID No. 23- 343). The Commission was shown how the In-Lieu Fees are calculated with the decreased land valuation and a potential 10% increase in the improvement value.

The Commission comments and questions primarily focused on the park improvement values/costs and are summarized below.

1. QUESTION: Did the City receive $4.6 million less in park fees from 2018 to 2021, based on use of less than 100% cost recovery for the park improvement value? RESPONSE: Yes, the estimate was based on actual residential project applications for 2018- 2021 and use of the 2017 value of $3,471. However, the City had two policy goals, that of moving the park improvement value toward 100% cost recovery and that of supporting the delivery of needed new residential housing.

2. QUESTION: Is a 10% increase in the park construction value a reasonable ask given that moving to 100% cost recovery may discourage more residential development? RESPONSE: An increase in improvement value of 10% is reasonable this year, given that it represents less than 1/3 of the total increase in the construction cost index over the past five years. In addition, Land values have decreased this year, meaning that even with a 10% increase in the park improvement component, the overall In-Lieu Fees would still decrease year over year from FY 2022/23 to FY 2023/24. Lower fees should not discourage new residential development.

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3. QUESTION: If the City wants full, 100% cost recovery, why shouldn’t the improvement value be linked to the construction cost index and make the cost more predictable from year to year? RESPONSE: It is a reasonable/justifiable approach to update average cost per capita for park improvements based on changes in the construction cost index (increases/decreases).

Currently, there is no policy direction to update annually by the annual change in the construction cost index. The periodic revaluation of the public park system’s assets on a fiveyear basis and annual increase/decrease based on the construction cost index would assure the cost projections are accurate and stay closer to 100% cost recovery.

4. QUESTION: Does the City immediately use park fees that have been collected? RESPONSE: No, the In-Lieu Fees received are placed separately into unallocated accounts for Quimby Act and for Mitigation Fee Act. The City develops a list of projects in the Capital Improvement Program (CIP) Budget including the acquisition/expansion and development of new parkland and amenities, and the rehabilitation of existing parkland and facilities that would reasonably serve the new residents and meet the nexus requirements of the Quimby Act and/or Mitigation Fee Act. Projects usually take a period of time from when they are proposed, community outreach and design completed, and construction publicly bid, awarded and completed.

5. QUESTION: The City wants to be competitive and encourage developers to construct residential housing; has the City encountered historical resistance to the In-Lieu Fees or to the percentage increase in Fees charged by the City?
RESPONSE: The development community is sensitive to both the amount of fees charged and to the percentage of any increase because they present an additional cost to residential development. Over the past 8 years, the Building Industry Association (BIA), the California Apartment Association (CAA), and residential developers have advocated for reasonable increases and suspension of increases. Developers and City recognize that public parkland and recreational amenities add to the quality of life for residents and the measurable benefits contribute to City goals of improved health and wellness for individuals and the community

6. QUESTION: If the City sets fees, can City Council still negotiate with developers to reduce fees?
RESPONSE: In-Lieu Fees are not negotiated, and In Lieu Fees are not set on a per project basis. The Council sets its In-Lieu Fee policy in accordance with state law and the provisions of the Mitigation Fee Act and the Quimby Act. The Council may set In-Lieu Fees up to 100% of the reasonable cost for the parkland and amenities and apportions that cost equitably on a per capita (new resident) basis, minus the value of the parkland that is dedicated. If a developer dedicates 100% of the City parkland requirement of 2.6 acres (MFA) or 3 acres (Quimby) of parkland per 1,000 new residents, then no In-Lieu Fees are due. Council may also set fees lower than 100% cost recovery, and/or Council can set fees for a certain area of the City within a zip code that are different from the rest of the zip code area where the fees would apply to all projects in that specific area of the City as was done in the Patrick Henry Drive Specific Plan area in FY2022/23 Developers may also receive credit for 50% of the eligible private recreational space/amenities against In-Lieu Fees due.

7. COMMENTS: (a) Most new parks in residential developments do not have a restroom; (b) When parks are developed in phases, it seems like Phase Two park development rarely City of Santa Clara Page 5 of 8 Printed on 4/13/2023
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happens, so it is important for the City to require payment of fees and development of the park facilities in the first phase of development.

RESPONSES: (a) The City provides a standard level of service and park amenities similar to existing parks based on the number of residents served (per capita) and the size of the park to be dedicated. The City’s General Plan defines parks under one acre in size as mini parks; they have few recreational amenities and typically do not have a restroom. Neighborhood parks are defined as between 1 and 15 acres in size and have multiple amenities and spaces that support a diversity of recreational activities that typically engage patrons for over one-hour duration, which may necessitate use of a restroom facility. The restroom may be in the park proper or in an adjacent building open to the public during park hours so as to not reduce the amount of usable park space.
(b) The parkland requirement and In Lieu fees are in proportion at 2.6 to 3.0 acres per 1,000 new residents and are recorded in agreements that conform to any applicable Specific Plans, Parks & Recreation Amenity and Design Standards, and Council approved park master plans which include the required parkland, fees, amenities and phasing schedule, if applicable.

Following discussion, the Parks & Recreation Commission recommended that Council approve for the FY 2023/24 In-Lieu Fees calculation:
(a) use of the Land Valuation Appraisal Report dated December 31, 2022 setting the average per acre values at $5.500 million in 95050, $5.840 million in 95051, $5.240 million in 95054, and (b) use of an increased park improvement value of $3,818 per capita (2018 value of $3,471 plus 10% for cost escalation recovery), and
(c) index future park improvement value changes (increase/decrease) to the State of California, Department of General Services Construction Cost Index (CCCI).

Proposed Fee Calculations
This report proposes calculating the In-Lieu Fees for FY 2023/24 as recommended by the Parks & Recreation Commission and are found in the Fee Resolution (Attachment 4). The proposed Fee Resolution includes policy direction to use of the Land Valuation Appraisal Report dated December 31, 2022, use of an increased park improvement value of $3,818 per capita, and to link future changes in the park improvement values to the Construction Cost Index, but no greater than 10%. If adopted as proposed, the In-Lieu Fees would decrease between 0.37% and 2.1% depending upon the area of Santa Clara, the housing type (single family/multifamily), and whether the residential project is subject to Quimby and/or MFA. Table 3 provides a comparison of the current and proposed fees.

Table 3 Proposed In-Lieu Fees
Housing Quimby MFA
Area Type Current Proposed % Diff. Current Proposed % Diff. 95050 SF $62,664 61,759 (1.45%) $55,716 55,072 (1.16%)
MULTI $50,468 49,738 $44,872 44,353
95051 SF $65,263 64,859 (0.62%) $57,968 57,758 (0.36%)
MULTI $52,561 52,235 $46,686 46,517
95054 SF $60,658 59,388 (2.09%) $53,977 53,017 (1.78%)
MULTI $48,852 47,829 $43,472 42,698
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MULTI $50,468 49,738 $44,872 44,353
95051 SF $65,263 64,859 (0.62%) $57,968 57,758 (0.36%)
MULTI $52,561 52,235 $46,686 46,517
95054 SF $60,658 59,388 (2.09%) $53,977 53,017 (1.78%)
MULTI $48,852 47,829 $43,472 42,698
Per Council direction in 2022, the reduced In-Lieu Fees approved for FY2022/23 for Patrick Henry Drive Area Plan will reset to be the same as the rest of 95054 on July 1, 2023.

Fee Implementation
In conformance with State law, the proposed City of Santa Clara FY 2023/24 Municipal Fee Schedule and the Parkland In-Lieu Fee Resolution are presented for consideration during a Public Hearing.

Approval of the Resolution provides the required findings and implementation dates of fees for projects subject to Quimby (immediately after adoption of the resolution), and projects subject to MFA (no sooner that 60 days after adoption of the resolution). However, based on a public hearing date of April 18, 2023 and Council policy direction to implement fees no sooner than the new Fiscal Year on July 1, 2023, the Quimby In-Lieu Fees would apply to new residential housing projects with applications deemed complete on or after July 1, 2023; and, the MFA In-Lieu Fees would apply to new residential projects with applications deemed complete on or after July 1, 2023. For applications deemed complete prior to July 1, 2023, the existing In-Lieu Fees adopted in Resolution No. 22-9080 (Attachment 5) and Resolution 21-8970 (Attachment 6) will apply.

ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve commitment to a specific project which may result in potential significant impact on the environment.

FISCAL IMPACT
Fees are calculated and updated on an annual basis. If adopted as proposed, the In-Lieu Fees charged would decrease between 0.37% and 2.1% and the percentage of cost recovery will be closer to actual costs for FY2023/24. The actual amount of Parkland In-Lieu Fee revenue collected in the future will vary based on the project application type (Quimby/MFA), the area of the City (Zip codes 95050, 95051, 95054), the density of housing units (multifamily versus single family), the amount of public parkland dedicated, and the amount of financial credit developers receive for eligible on-site private recreation amenities (which can reduce remaining fees due by 50%), and/or 15% credit for one hundred percent affordable or senior housing developments.

For historical perspective, Table 4 provides a summary of fees collected for FY 2015/16 to FY2022/23 year to date (YTD).

Table 4 Summary of Parkland In-Lieu Fees collected FY 2015/16 to FY 2022/23 Fiscal Year Quimby MFA Total
2015/16 130,320 0 130,320
2016/17 1,108,300 14,780,447 15,888,747
2017/18 3,557,835 0 3,557,835
2018/19 4,265,053 268,091 4,533,144
2019/20 1,655,255 7,159,545 8,814,800
2020/21 1,252,917 1,522,149 2,775,066
2021/22 3,778,469 14,634,898 18,413,367
2022/23 YTD 0 23,237,740 23,237,740
15,748,149 61,602,870 77,351,019
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23-275 Agenda Date: 4/18/2023
2017/18 3,557,835 0 3,557,835
2018/19 4,265,053 268,091 4,533,144
2019/20 1,655,255 7,159,545 8,814,800
2020/21 1,252,917 1,522,149 2,775,066
2021/22 3,778,469 14,634,898 18,413,367
2022/23 YTD 0 23,237,740 23,237,740
15,748,149 61,602,870 77,351,019
In-Lieu Fees collected from past projects are provided by Fiscal Year and Zip Code in Attachment 7.

COORDINATION
This agreement has been coordinated with the Community Development Department, the Finance Department and the City Attorney’s Office.

PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email [email protected] <mailto:[email protected]> or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION
Adopt a Resolution to set the Parkland In-Lieu Fee Schedule For New Residential Development in accordance with Title 17 (“Development”) Chapter 35 (“Park and Recreational Land”) of the City Code establishing the average per acre land values as contained in the Annual Land Valuation Appraisal Report and the Park Development cost per capita value as contained in the Parks & Recreation Facilities Development Impact Fee Study (Nexus Study Update) and adjusted by the Construction Cost Index.

Prepared by: James Teixeira, Director of Parks & Recreation Approved by: Office of the City Manager

ATTACHMENTS

1. Nexus Study Update 2019

2. Supplemental Instructions for Appraisal - Approved by Council June 6, 2016

3. Land Valuation Appraisal Report 12-31-2022

4. Fee Resolution

5. Resolution No. 22-9080

6. Resolution No. 21-8970

7. In-Lieu Fees Collected by Fiscal Year
City of Santa Clara Page 8 of 8 Printed on 4/13/2023
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CITY OF SANTA CLARA

PARK AND RECREATION FACILITIES

DEVELOPMENT IMPACT FEE UPDATE
STUDY
FINAL (approved August 27, 2019)
April 9, 2019
Oakland Office Corporate Office Other Regional Offices
1939 Harrison Street 27368 Via Industria Lancaster, CA
Suite 430 Suite 110 Memphis, TN
Oakland, CA 94612 Temecula, CA 92590 Orlando, FL
Tel: (510) 832-0899 Tel: (800) 755-MUNI (6864) Phoenix, AZ Fax: (510) 832-0898 Fax: (909) 587-3510 Sacramento, CA
Seattle, WA
www.willdan.com

i

TABLE OF CONTENTS

1. INTRODUCTION ................................................................................. 2 Background and Study Objectives 2
Public Facilities Financing in California 2
Organization of the Report 3
Facility Standards and Cost Allocation Approach 3

2. LAND USE ASSUMPTIONS.................................................................. 4 Use of Growth Projections for Impact Fees 4
Land Use Types 4
Growth Projections for City of Santa Clara 4
Occupant Densities 5

3. PARKS & RECREATION FACILITIES ...................................................... 6 Existing Park and Recreation Facilities Inventory 6
Developed Park Improvement Cost Estimate 9
Parkland Unit Costs 12
Quimby Justification Parkland Inventory (as of 2010) 13 Improved Parkland Equivalent 16
Park Facility Standards 17
City of Santa Clara Park Facilities Standards 19
Facilities Needed to Accommodate New Development 20
Parks Cost per Capita 21
Fee Schedule 22

4. IMPLEMENTATION............................................................................ 26 Impact Fee Program Adoption Process 26
Inflation Adjustment 26
Reporting Requirements 26
Fee Accounting 26
Programming Revenues and Projects with the CIP 26

5. MITIGATION FEE ACT FINDINGS ....................................................... 27 Purpose of Fee 27
Use of Fee Revenues 27
Benefit Relationship 27
Burden Relationship 28
Proportionality 28
APPENDIX........................................................................................... 29 2 1. Introduction
This report summarizes an analysis of the need for public facilities and capital improvements to support future development within the City of Santa Clara through 2035. It is the City’s intent that the costs representing future development’s share of these facilities and improvements be imposed on that development in the form of a development impact fee, also known as a public facilities fee. The public facilities and improvements included in this analysis of the City’s public facilities fee program all fall into the parks and recreation facilities category.

Background and Study Objectives
The primary policy objective of a public facilities fee program is to ensure that new development pays the capital costs associated with growth. To fulfill this objective, public agencies should review and update their fee programs periodically to incorporate the best available information.

The primary purpose of this report is to create fees that incorporate current capital facility plans to serve a 2035 service population for the City of Santa Clara.

In 2013, the Santa Clara City Council adopted a strategic objective to develop a draft new housing development impact fee ordinance for parks acquisition and recreation facility development to meet its continued goal of ensuring fiscal responsibility. In 2014, the City adopted an updated park and recreation facilities fee program under the Mitigation Fee Act and the Quimby Act. This report is an update to the 2014 study to incorporate the latest facility cost and land acquisition cost data provided City, who commissioned the data specifically for use in this analysis.

The City imposes public facilities fees under authority granted by the Mitigation Fee Act, contained in California Government Code Sections 66000 et seq. This report provides the necessary findings required by the Act for adoption of the fees presented in the fee schedules contained herein.

Depending on the characteristics of the development project, the City may use the Quimby Act to calculate impact fees. The Quimby Act allows a city to require developers to dedicate at least three acres and up to five acres per 1,000 residents, if the city’s existing park standard as of the last Census justifies the higher level.

Public Facilities Financing in California
The changing fiscal landscape in California during the past 40 years has steadily undercut the financial capacity of local governments to fund infrastructure. Three dominant trends stand out:
▪ The passage of a string of tax limitation measures, starting with Proposition 13 in 1978 and continuing through the passage of Proposition 218 in 1996; ▪ Declining popular support for bond measures to finance infrastructure for the next generation of residents and businesses; and
▪ Steep reductions in federal and state assistance.

Faced with these trends, many cities and counties have had to adopt a policy of “growth pays its own way.” This policy shifts the burden of funding infrastructure expansion from existing taxpayers onto new development. This funding shift has been accomplished primarily through the imposition of assessments, special taxes, and development impact fees also known as public facilities fees. Assessments and special taxes require approval of property owners and are appropriate when the funded facilities are directly related to the developing property.

Development fees, on the other hand, are an appropriate funding source for facilities that benefit all development jurisdiction-wide. Development fees need only a majority vote of the legislative body for adoption.

City of Santa Clara Parks and Recreation Facilities Fee Study 3 Organization of the Report
The determination of a public facilities fee begins with the selection of a planning horizon and development of projections for population and employment. These projections are used throughout the analysis of different facility categories and are summarized in Chapter 2.

Chapter 3 is devoted to documenting the maximum justified public facilities fee for parks and recreation facilities.

Chapter 4 describes the fee implementation process. The five statutory findings required for adoption of the proposed public facilities fees in accordance with the Mitigation Fee Act (codified in California Government Code Sections 66000 through 66025) are summarized in Chapter 5.

Facility Standards and Cost Allocation Approach
A facility standard is a policy that indicates the amount of facilities required to accommodate service demand. Examples of facility standards include building square feet per capita and park acres per capita. Standards also may be expressed in monetary terms such as the value of facilities per capita, or the value of improvements per acre or per capita. The adopted facility standard is a critical component in determining development’s need for new facilities and the amount of the fee. Standards determine new development’s fair share of planned facilities and ensure that new development does not fund deficiencies associated with the existing city infrastructure.

The parks and recreation facilities fees calculated in this report use an existing inventory demand standard translated into facility costs per capita to determine new development’s fair share of planned facility costs. A cost standard provides a reasonable method for converting disparate types of facilities, in this case parkland and special use recreational facilities, into a single measure of demand (capital cost per capita). The cost standard is based on the existing inventory of parks and recreation facilities. New development would fund the expansion of facilities at the same rate that existing development has provided facilities to date, thus by definition, there is no existing deficiency.
4 2. Land Use Assumptions
This chapter describes the projections of growth used in this study. The existing service population in 2018 is used as the base year of the study and the planning horizon is the year 2035. This chapter also describes the sources of the unit costs for land and buildings used in this study.

Use of Growth Projections for Impact Fees
Estimates of the existing service population and projections of growth are critical assumptions used throughout this report. These estimates are used as follows:
▪ Estimates of total development in 2035 are used to determine the total amount of public facilities required to accommodate the future service population. ▪ Estimates of existing and new development are used to allocate the fair share of total planned facility costs between existing and new development.

Land Use Types
To ensure a reasonable relationship between each fee and the type of development paying the fee, growth projections distinguish between different land use types. The land use types used in this analysis are defined below.
▪ Single-family: Detached and attached one-family dwelling units. ▪ Multi-family: All attached multi-family dwellings such as duplexes, condominiums, plus mobile homes, apartments, and dormitories.
▪ Accessory Dwelling Unit: dwelling unit not exceeding 640 square feet in floor area, and which includes a kitchen, one-bedroom sleeping quarters, and a bathroom on a lot with an existing single-family dwelling.

The City should have the discretion to impose the parks and recreation facilities fee based on the specific aspects of a proposed development regardless of zoning. The guideline to use is the probable occupant density of the development. The fee imposed should be based on the land use type that most closely matches the probable occupant density of the development.

Growth Projections for City of Santa Clara
Park and recreation facilities in Santa Clara primarily serve residents in the City of Santa Clara.

Therefore, residents comprise the park and recreation facilities service population.

The base year for this study is the year 2018. The planning horizon is 2035. Resident growth between 2018 and 2035 comprises the growth increment in this analysis. The City’s population in 2010 is used to calculate the parkland standard under the Quimby Act. The Santa Clara General Plan identified total projected residents in 2035.

Table 1 shows estimates of the growth in terms of residents between 2018 and 2035. The table also shows the City’s population in 2010.

City of Santa Clara Parks and Recreation Facilities Fee Study 5 Table 1: Parks Service Population
Residents
Census (2010) 116,468
Existing (2018) 126,408
Growth (2018 - 2035) 28,392
Total (2035) 154,800
Sources: US Census, 2010; CA Deparment of Finance,
Table E-5, 2018; Santa Clara General Plan.

Occupant Densities
Occupant densities ensure a reasonable relationship between the increase in service population and amount of the fee. Developers pay the fee based on the number of additional housing units for residential development. The fee schedule must convert service population estimates into these measures of housing units. This conversion is done with average occupant density factors by land use type, shown in Table 2. The residential occupant density factors for both the various types of dwelling units were derived from the most recently available data from US Census’ American Community Survey.

Table 2: Occupant Density
Residential
Single Family 2.98 Residents Per Dwelling Unit
Multi-family and Accessory
Dwelling Units 2.40 Residents Per Dwelling Unit
Sources: U.S. Census Bureau, 2017 American Community Survey, Tables B25024 and B25033.
6 3. Parks & Recreation Facilities
The following chapter documents the nexus analysis, demonstrating the need for new park and recreation facilities demanded by new development. This analysis documents two separate fees based on the Quimby Act and the Mitigation Fee Act. The City would collect the fee based a standard of 3.0 acres per 1,000 residents if the development was subject to the Quimby Act land dedication requirement. For all other development, the City would collect based on the existing standard through the Mitigation Fee Act. The City would only collect one of the two fees depending on which was appropriate.

Existing Park and Recreation Facilities Inventory
The City of Santa Clara maintains several park and recreation facilities throughout the city. Table 3 summarizes the City’s existing parkland inventory. All facilities are located within the City limits.

The City has revised this inventory from the prior impact fee analysis in 2014, based on the latest information available. The inventory distinguishes between developed and undeveloped parkland.

Developed parkland includes parks that are open for public use with typical park amenities. This includes facilities that are owned by other agencies that the City has joint use agreements for, or public park easements in perpetuity for public use of the facilities. Undeveloped parkland represents land that the City owns, or will be dedicated to the City, but does not yet include any improvements or amenities.

City of Santa Clara Parks and Recreation Facilities Fee Study 7 Table 3: Existing Parkland Inventory
Park Name Address
2018
Inventory
Developed
2018 Inventory
Undeveloped
Community Parks
Central Park 909 Kiely Boulevard 45.04 -
Central Park North-City Place (SCG&TC) 5155 Stars & Stripes Drive - 34.93 Subtotal Community Parks 45.04 34.93
Mini/Pocket Parks
Geof Goodfellow Sesquicentennial Park 1591 El Camino Real 0.18 - Memorial Cross Park 2501 De La Cruz Boulevard 0.34 -
Thomas Barrett Park (formerly BAREC) 1885 Worthington Circle 1.00 - Rotary Park 1490 Don Avenue 0.20 -
War Memorial Playground 295 Monroe Street 0.87 -
LSAP-Parks A-H - 3.19
Subtotal Mini/Pocket Parks 2.59 3.19
Neighborhood Parks
Agnew Park 2250 Agnew Road 1.97 -
Bowers Park 2582 Cabrillo Avenue 8.70 -
Bracher Park 2560 Alhambra Drive 3.45 -
Central Park Annex Miles Drive 2.72 -
City Plaza Park Lexington & Main Street 1.60 -
Earl R. Carmichael Park 3445 Benton Street 8.32 -
Everett Alvarez Jr. Park 2280 Rosita Drive 1.61 -
Fairway Glen Park 2051 Calle de Primavera 4.00 -
Fremont Park 1303 Fremont Street 2.66 -
Fuller Street Park 4641 Fuller Street 2.39 -
Henry Schmidt Park 555 Los Padres Boulevard 7.50 -
Homeridge Park 2985 Stevenson Street 4.28 -
Jenny Strand Park 250 Howard Drive 4.47 5.22
Larry J. Marsalli Park 1425 Lafayette Street 7.26 -
Lick Mill Park 4750 Lick Mill Boulevard 9.90 -
Live Oak Park 4025 Rivermark Parkway 9.98 -
Machado Park 3360 Cabrillo Avenue 2.65 -
Mary Gomez Park 651 Bucher Avenue 5.64 -
Maywood Park 3330 Pruneridge Avenue 6.98 -
Montague Park 3595 MacGregor Lane 7.51 -
Parkway Park 3675 Forest Avenue 4.50 -
Santa Clara Square Parks - 4.17
San Tomas & Monroe (Eddie Souza Park) 2380 Monroe Street 2.49 - Steve Carli Park 1045 Los Padres 1.60 -
Thamien Park 4321 Lick Mill Boulevard 3.40 -
Warburton Park & Pool 2250 Royal Drive 3.95 -
Westwood Oaks Park 460 La Herran Drive 1.75 -
Subtotal Neighborhood Parks 121.26 9.39
Source: City of Santa Clara.

City of Santa Clara Parks and Recreation Facilities Fee Study 8 Table 3: Existing Parkland Inventory Continued
Park Name Address
2018
Inventory
Developed
2018 Inventory
Undeveloped
Public Open Space
Agnews Historic Park, Mansion & Auditorium4030 Lafayette Street 14.50 - Civic Center Park 1525 El Camino Real 1.63 -
Ulistac Natural Area 4901 Lick Mill Boulevard - 40.08
Subtotal Public Open Space 16.13 40.08
Recreation Facilities
Raymond G. Gamma Dog Park 888 Reed Street 1.72 -
Reed & Grant Street Sports Park 870 Reed Street - 9.04
Santa Clara Senior Center 1303 Fremont Street 2.14 -
Santa Clara P.A.L. BMX Track 5451 Lafayette St. - -
Santa Clara Youth Soccer Park 5049 Centennial Blvd. 11.00 - Subtotal Recreation Facilities 14.86 9.04
Recreational Trails (San Tomas Aquino/Saratoga Creek Trail) Reach 1 Bay Trail to Agnew Road 1.70 -
Reach 2 Agnew Road to Scott Blvd. 0.81 -
Reach 3 Scott Bldv. to Monroe St. 1.21 -
Reach 4 Monroe St. to Pruneridge Ave. 3.87 0.20
Subtotal Recreational Trails 7.59 0.20
Joint Use Facilities
Buchser Tennis Courts Buchser Campus - 1.07
Mission College Sports Complex 3000 Mission College Blvd 19.40 - Elmer Johnson Field Buchser Campus 5.10 -
Mission City Center for the Performing Arts Wilcox High School - - Montague Swim Center Montague Park 2.50 -
Townsend Field Buchser Campus 5.00 -
Washington Park Baseball Field Buchser Campus 8.20 -
Steve Carli Sports Field 1045 Los Padres 3.92 -
Skate Park 2440 Cabrillo Avenue 0.90 -
Teen Center 2446 Cabrillo Avenue School 1.00 -
Walter E. Schmidt Youth Activity Center 2450 Cabrillo Avenue 1.50 - Subtotal Joint Use Facilities 47.52 1.07
Total 254.99 97.89
Source: City of Santa Clara.

City of Santa Clara Parks and Recreation Facilities Fee Study 9 Developed Park Improvement Cost Estimate
This analysis uses an estimate of the replacement cost of the City’s existing parkland inventory to estimate the reasonable cost of constructing new improvements, including site improvements and building assets on new parkland. Table 4 displays the replacement cost improvement values for all the park site and building assets in Table 3.

In 2017, the City retained Kitchell, CEM to complete an inventory of all park and recreation assets for use in the City’s Enterprise Asset Management System/Geographic Information System and a Facility Condition Assessment Report (“Kitchell Report”). The Kitchell Report, dated February 21, 2018 provides an estimate of the current replacement cost “as is” of the existing City park site improvements and building improvements in the City’s park inventory. The costs in Table 4 exclude the value of land, which was determined by a land appraisal and is shown in Appendix Table A.1 of this report. The values in Table 4 are used below in Table 5 to estimate the average cost per acre of the improvements on an acre of developed parkland. Adjustments have been made (subtracted) for non-standard park facilities and buildings, such as the Agnews Historic Park buildings which are uniquely not owned and maintained by the City but are on dedicated park property by an historic easement and agreement.

As shown in Table 4, the total replacement cost of the existing park site and building improvements is approximately $340.5 million. This figure is divided by 254.99 acres of developed parkland resulting in the average park improvement cost per acre in Santa Clara of $1.3 million.

The City also reviewed recent Santa Clara park improvement construction costs to evaluate if the $1.3 million per acre assumption for park improvements was reasonable to use in this analysis.

The recently completed Central Park Annex cost $1 million per acre, San Tomas & Monroe cost $2.3 million per acre, the Lawrence Station Area Parks 2016 estimate was $1.8 million per acre, and Reed & Grant was $2.5 million per acre, which when averaged indicate a higher $1.8 million per acre cost for park improvements. Further, an independent review of the Kitchell Report by an expert construction cost estimator was conducted to validate the Report’s methods and analysis that costs exceed $1.3 million per acre.

Therefore, based on this data and analysis, the estimated cost of $1.3 million to improve an acre of parkland in Santa Clara is both reasonable and conservative and is appropriate to use in this analysis.

City of Santa Clara Parks and Recreation Facilities Fee Study 10 Table 4: Park Site Assets and Buildings
Park Name
Replacement
Value Park
Assets
Replacement
Value Building(s)
Asset
Total
Replacement
Cost
Community Parks
Central Park $ 17,959,388 $ 73,370,929 $ 91,330,317
Central Park North-City Place (SCG&TC) - - -
Subtotal Community Parks $ 17,959,388 $ 73,370,929 $ 91,330,317 Mini/Pocket Parks
Geof Goodfellow Sesquicentennial Park $ 160,482 $ - $ 160,482 Memorial Cross Park 98,675 - 98,675
Thomas Barrett Park (formerly BAREC) 540,082 589,374 1,129,456 Rotary Park 220,887 - 220,887
War Memorial Playground 650,033 553,269 1,203,302
LSAP-Parks A-H - - -
Subtotal Mini/Pocket Parks $ 1,670,159 $ 1,142,643 $ 2,812,802 Neighborhood Parks
Agnew Park $ 786,168 $ 1,813,786 $ 2,599,954
Bowers Park 1,699,330 6,286,660 7,985,990
Bracher Park 992,336 552,207 1,544,543
Central Park Annex 732,170 732,395 1,464,565
City Plaza Park 338,104 276,276 614,380
Earl R. Carmichael Park 3,221,465 4,984,727 8,206,192
Everett Alvarez Jr. Park 770,680 888,840 1,659,520
Fairway Glen Park 1,613,055 - 1,613,055
Fremont Park 518,591 - 518,591
Fuller Street Park 799,562 530,968 1,330,530
Henry Schmidt Park 3,151,804 2,784,396 5,936,200
Homeridge Park 948,347 509,729 1,458,076
Jenny Strand Park 1,622,998 214,511 1,837,509
Larry J. Marsalli Park 1,994,604 849,549 2,844,153
Lick Mill Park 2,960,932 5,766,312 8,727,244
Live Oak Park 1,484,676 430,084 1,914,760
Machado Park 959,152 1,784,052 2,743,204
Mary Gomez Park 2,032,090 6,687,925 8,720,015
Maywood Park 2,570,053 1,784,052 4,354,105
Montague Park 2,684,563 6,743,293 9,427,856
Parkway Park 672,415 928,132 1,600,547
Santa Clara Square Parks - - -
San Tomas & Monroe (Eddie Souza Park) 3,704,850 - 3,704,850 Steve Carli Park 1,095,243 1,588,000 2,683,243
Thamien Park 1,774,012 530,968 2,304,980
Warburton Park & Pool 1,730,636 4,765,381 6,496,017
Westwood Oaks Park 875,039 1,827,566 2,702,605
Subtotal Neighborhood Parks $ 41,732,875 $ 53,259,809 $ 94,992,684 Source: City of Santa Clara; Facilities Condition Assessment Prepared by Kitchell For City of Santa Clara, California, 2018.

City of Santa Clara Parks and Recreation Facilities Fee Study 11 Table 4: Park Site Assets and Buildings Continued
Park Name
Replacement
Value Park
Assets
Replacement
Value Building(s)
Asset
Total
Replacement
Cost
Public Open Space
Agnews Historic Park, Mansion & Auditorium $ 3,278,089 $ - $ 3,278,089 Civic Center Park 937,765 - 937,765
Ulistac Natural Area 306,362 - 306,362
Subtotal Public Open Space $ 4,522,216 $ - $ 4,522,216
Recreation Facilities
Raymond G. Gamma Dog Park $ 377,960 $ - $ 377,960
Reed & Grant Street Sports Park - - -
Santa Clara Senior Center 508,130 32,546,908 33,055,038 Santa Clara P.A.L. BMX Track - - -
Santa Clara Youth Soccer Park 5,907,808 7,043,303 12,951,111 Subtotal Recreation Facilities $ 6,793,898 $ 39,590,211 $ 46,384,109 Recreational Trails $ 4,301,154 $ - $ 4,301,154
Joint Use Facilities
Buchser Tennis Courts $ 591,400 $ - $ 591,400
Mission College Sports Complex 6,968,950 3,419,649 10,388,599 Elmer Johnson Field 459,639 56,982 516,621
Mission City Center for the Performing Arts - 40,462,347 40,462,347 Montague Swim Center 398,429 5,253,915 5,652,344
Townsend Field 643,926 2,400,000 3,043,926
Washington Park Baseball Field 1,286,701 2,296,838 3,583,539 Steve Carli Sports Field - - -
Skate Park 928,485 458,756 1,387,241
Teen Center 269,536 9,291,939 9,561,475
Walter E. Schmidt Youth Activity Center - 20,968,986 20,968,986 Subtotal Joint Use Facilities $ 11,547,066 $ 84,609,412 $ 96,156,478 Total Replacement Cost $ 88,526,756 $ 251,973,004 $ 340,499,760 Source: City of Santa Clara; Facilities Condition Assessment Prepared by Kitchell For City of Santa Clara, California, 2018.

City of Santa Clara Parks and Recreation Facilities Fee Study 12 Parkland Unit Costs
Table 5 shows the estimated cost per acre for developing parkland, including land acquisition.

The land value of $3.9 million per acre is the average acquisition cost per acre in the City, based on an appraisal of a hypothetical acre of undeveloped land the three zip codes in the City. See Appendix Table A.1 for the results of the appraisal. The value of park assets and building assets is from Table 4 is summarized here.

The value of all assets, is allocated across all existing improved parkland acres and added to the cost of land acquisition per acre to determine the total cost to develop an acre of parkland in the City.

Table 5: Parkland Unit Costs
Item Total Value
Park Assets $ 88,526,756
Building Assets 251,973,004
Total - Park Improvements Replacement Cost $ 340,499,760 Improved Park Acres 254.99
Improvements Cost per Acre $ 1,335,000
Land Acquisition1$ 3,922,000
Total Parkland Acquisition and Improvement Cost per Acre $ 5,257,000 Note: Figures have been rounded to the nearest thousand. 1 Average value of land acquisition per acre in the follow ing zip codes: 95050, 95051 and 95054.

Sources: Tables 3, 4 and Appendix Table A.1.

City of Santa Clara Parks and Recreation Facilities Fee Study 13 Quimby Justification Parkland Inventory (as of 2010) Table 6 displays the City’s inventory of developed and undeveloped parkland as of 2010. This is included to justify the Quimby standard, since the Quimby Act requires that population estimates from the most recent federal Census be used to calculate a jurisdiction’s parkland standards.

Consequently, the parkland inventory used to calculate the standard must correspond with the year of the population estimates to accurately calculate the standard. Per the Quimby Act, the City can require dedication at a minimum standard of 3.0 acres per 1,000 residents if it’s existing parkland standard as of the last federal census was less than 3.0 acres per 1,000 residents. This inventory has been modified slightly since the 2014 study to correct anomalies that have come to light when the 2018 inventory was being reviewed.

City of Santa Clara Parks and Recreation Facilities Fee Study 14 Table 6: Quimby Justification Inventory - Parks in 2010 Park Name Address
2010
Developed
2010
Undeveloped
Community Parks
Central Park 909 Kiely Boulevard 45.04 -
Subtotal Community Parks 45.04 -
Mini/Pocket Parks
Geof Goodfellow Sesquicentennial Park 1591 El Camino Real 0.18 - Memorial Cross Park 2501 De La Cruz Boulevard 0.34 -
Thomas Barrett Park (formerly BAREC) 1885 Worthington Circle - 1.00 Rotary Park 1490 Don Avenue 0.20 -
War Memorial Playground 295 Monroe Street 0.87 -
Subtotal Mini/Pocket Parks 1.59 1.00
Neighborhood Parks
Agnew Park 2250 Agnew Road 1.97 -
Bowers Park 2582 Cabrillo Avenue 8.70 -
Bracher Park 2560 Alhambra Drive 3.45 -
City Plaza Park Lexington & Main Street 1.60 -
Earl R. Carmichael Park 3445 Benton Street 8.32 -
Everett Alvarez Jr. Park 2280 Rosita Drive 1.61 -
Fairway Glen Park 2051 Calle de Primavera 4.00 -
Central Park Annex Miles Drive - 2.30
Fremont Park 1303 Fremont Street 2.66 -
Fuller Street Park 4641 Fuller Street 2.39 -
Henry Schmidt Park 555 Los Padres Boulevard 7.50 -
Homeridge Park 2985 Stevenson Street 4.28 -
Jenny Strand Park 250 Howard Drive 4.47 5.22
Larry J. Marsalli Park 1425 Lafayette Street 7.26 -
Lick Mill Park 4750 Lick Mill Boulevard 9.90 -
Live Oak Park 4025 Rivermark Parkway 9.98 -
Machado Park 3360 Cabrillo Avenue 2.65 -
Mary Gomez Park 651 Bucher Avenue 5.64 -
Maywood Park 3330 Pruneridge Avenue 6.98 -
Montague Park 3595 MacGregor Lane 7.51 -
Parkway Park 3675 Forest Avenue 4.50 -
Steve Carli Park 1045 Los Padres 1.60 -
Thamien Park 4321 Lick Mill Boulevard 3.40 -
Warburton Park & Pool 2250 Royal Drive 3.95 -
Westwood Oaks Park 460 La Herran Drive 1.75 -
Subtotal Neighborhood Parks 116.05 7.52
Source: City of Santa Clara.

City of Santa Clara Parks and Recreation Facilities Fee Study 15 Table 6: Quimby Justification Inventory - Parks in 2010 Continued Park Name Address
2010
Developed
2010
Undeveloped
Public Open Space
Agnews Historic Park, Mansion & Auditorium4030 Lafayette Street 14.50 - Civic Center Park 1525 El Camino Real 1.63 -
Ulistac Natural Area 4901 Lick Mill Boulevard - 40.08
Subtotal Public Open Space 16.13 40.08
Recreation Facilities
Raymond G. Gamma Dog Park 888 Reed Street 1.72 -
Santa Clara Senior Center 1303 Fremont Street 2.14 -
Santa Clara P.A.L. BMX Track 5451 Lafayette St. - -
Santa Clara Youth Soccer Park 5049 Centennial Boulevard 11.00 - Subtotal Recreation Facilities 14.86 -
San Tomas Aquino/Saratoga Creek Trail
Reach 1 Bay Trail to Agnew Road 1.70 -
Reach 2 Agnew Road to Scott Blvd. 0.81 -
Reach 3 Scott Bldv. to Monroe St. 1.21 -
Reach 4 Monroe St. to Pruneridge Ave. 3.87 0.20
Subtotal Recreational Trails 7.59 0.20
Joint Use Facilities
Mission College Sports Complex 3000 Mission College Blvd 19.40 - Elmer Johnson Field Buchser Campus 5.10 -
Mission City Center for the Performing Arts Wilcox High School - - Montague Swim Center Montague Park 2.50 -
Townsend Field Buchser Campus 5.00 -
Washington Park Baseball Field Buchser Campus 8.20 -
Steve Carli Sports Field 1045 Los Padres 3.92 -
Skate Park 2440 Cabrillo Avenue 0.90 -
Teen Center 2446 Cabrillo Avenue School 1.00 -
Walter E. Schmidt Youth Activity Center 2450 Cabrillo Avenue 1.50 - Subtotal Joint Use Facilities 47.52 -
Total 248.78 48.80
Source: City of Santa Clara.

City of Santa Clara Parks and Recreation Facilities Fee Study 16 Improved Parkland Equivalent
Before calculating the existing standards, unimproved parkland owned by the City must be converted to an equivalent amount of improved parkland. Table 7 details this conversion. The conversion is based on the ratio of the cost of an unimproved acre of land relative to an acre of improved parkland. The assumptions for the value of undeveloped and developed parkland are shown above in Table 5. The improved parkland equivalent is calculated for both the existing inventory of parkland, and for the inventory of parkland in 2010.

Table 7: Improved Parkland Equivalent
Type Cost per Acre Acres
Unimproved Parkland $ 3,922,000
Improved Parkland 5,257,000
Unimproved Parkland Land Costs as a 75%
Relative Percentage of Parkland Costs
Mitigation Fee Act
Existing Unimproved Parkland 97.89
Improvement Factor x 75%
Equivalent Improved Acres 73.42
Quimby Act
Unimproved Parkland in 2010 48.80
Improvement Factor x 75%
Equivalent Improved Acres 36.60
Note: Figures have been rounded.

Sources: Tables 3, 5 and 6.

City of Santa Clara Parks and Recreation Facilities Fee Study 17 Park Facility Standards
Park facility standards establish a reasonable relationship between new development and the need for expanded park facilities. Information regarding the City’s existing inventory of existing parks facilities was obtained from City staff.

The most common measure in calculating new development’s demand for parks is the ratio of park acres per resident. In general, facility standards may be based on the Mitigation Fee Act (using a city’s existing inventory of park facilities), or an adopted policy standard contained in a master facility plan or general plan. Facility standards may also be based on a land dedication standard established by the Quimby Act.
1 The land dedication standard refers to the number of
acres per 1,000 residents that the required land dedication or a fee in-lieu of land dedication is based on. A typical Quimby Act standard for land dedication is 3.0 acres per 1,000 residents, though the standard can vary by jurisdiction. Another example of a land dedication standard can be found in a city that charges at 5.0 acres per 1,000 residents to meet its general plan goals.

The standards used in this analysis are discussed in depth below.

Mitigation Fee Act
The Mitigation Fee Act does not dictate use of a particular type or level of facility standard for public facilities fees. To comply with the findings required under the law, facility standards must not burden new development with any cost associated with facility deficiencies attributable to existing development.2 A simple and clearly defensible approach to calculating a facility standard is to use the city’s existing ratio of park acreage per 1,000 residents. Under this approach, new development is required to fund new park facilities at the same level as existing residents have provided those same types of facilities to date.

Quimby Act
The Quimby Act does specify facility standards to use for parkland dedication. The Act only includes dedication of parkland and does not require construction of park improvements. The Act specifies that the dedication requirement must be a minimum of 3.0 acres and a maximum of 5.0 acres per 1,000 residents. Funds collected through the Quimby ordinance can only be used for purchasing land to create neighborhood and community parks, not open space. The city can require residential developers to dedicate above the three-acre minimum if the city’s existing park standard as of the last Census justifies the higher level (up to five acres per 1,000 residents). The standard used must also conform to the City’s adopted general or specific plan standards.

The Quimby Act only applies to land subdivisions. A city cannot apply the Quimby Act to development on land subdivided prior to adoption of a Quimby ordinance, such as development on infill lots. The Quimby Act also would not apply to residential development on future approved projects on single parcels, such as many types of multi-family development.

The Quimby Act allows payment of a fee in lieu of land dedication. The fee is calculated to fund acquisition of the same amount of land that would have been dedicated. The fee does not include the cost of park improvements because the land dedication requirement does not include improvements. Developments paying the Quimby Act fee in-lieu of dedication are also subject to a Mitigation Fee Act fee for park improvements, calculated at the existing standard.

The Quimby Act allows use of in-lieu fee revenue for developing new or rehabilitating existing neighborhood or community park or recreational facilities to serve the subdivision paying the fee, including land acquisition, unless certain conditions are met. The City can use Quimby fee

1 California Government Code §66477.
2 See the benefit and burden findings in Chapter 5, Mitigation Fee Act Findings.

City of Santa Clara Parks and Recreation Facilities Fee Study 18 revenue for purpose of developing new or rehabilitating existing park or recreational facilities in a neighborhood other than the neighborhood paying the fees if the following conditions are met:3

1.The neighborhood in which the fees are to be spent has a standard of less than 3.0 park area per 1,000 members of the neighborhood population.

2. The neighborhood paying the fees has park standard that meets or exceeds 3.0 acres per 1,000 persons.

3.The City Council holds a public hearing before using the fees.

4.The City Council makes a finding that it is reasonably foreseeable that future inhabitants of the subdivision paying the fees will use the proposed park and recreational facilities in the neighborhood where the fees are used.

5.The fees are used within a specified radius that complies with the city's Quimby ordinance and are consistent with the adopted general plan or specific plan of the city. “Specified radius” includes a planning area, zone of influence, or other geographic region designated by the city.

3 Conditions are paraphrased. Refer to California Government Code §66477(a)(3)(B) for full text.

City of Santa Clara Parks and Recreation Facilities Fee Study 19 City of Santa Clara Park Facilities Standards
To calculate new development’s need for new parks, municipalities commonly use a ratio expressed in terms of developed park acres per 1,000 residents. Table 8 shows the existing standard for improved park acreage per 1,000 residents and documents the City’s standard as of the last Census for the Quimby Act standard.

Table 8: Level of Service Standards
Mitigation Fee
Act Standard
(2018)
Quimby Act
Standard (2010)1
Improved Park Acreage 254.99 248.78
Unimproved Park Acreage Equivalent 73.42 36.60
Total - Park Acres 328.41 285.38
Service Population (Residents) 126,408 116,468
Level of Service Standard (Acres per 1,000 Residents) 2.60 2.45 Sources: Tables 1, 3, 6 and 7.
1 The City can charge Quimby fees in-lieu of parkland dedication, or require parkland dedication at the 3.0 acre per 1,000 resident standard because its existing standard as of the last Federal Census in 2010 w as less than 3.0 acres per 1,000 residents.

City of Santa Clara Parks and Recreation Facilities Fee Study 20 Facilities Needed to Accommodate New Development
Table 9 shows the park facilities needed to accommodate new development at the existing standard. To achieve the standard by the planning horizon, depending on the amount of development subject to the Quimby Act, new development must fund the purchase and improvement of between 73.82 and 85.18 parkland acres, at a total cost ranging between $388.1 and $432.6 million.

The facility standards and resulting fees under the Quimby Act are higher because development will be charged to provide 3.0 acres of parkland per 1,000 residents, and 2.60 acres of improvements, whereas development not subject to the Quimby Act will be charged to provide only 2.60 acres of parkland per 1,000 residents, and 2.60 acres of improvements. Since the exact amount of development that will be subject to the Quimby fees is unknown at this time, Table 9 presents the range of total facility costs that may be incurred depending on the amount of development subject to the Quimby Act.

Table 9: Park Facilities to Accommodate New Development Calculation Parkland Improvements Total Range1
Parkland (Quimby Act), Improvements (Mitigation Fee Act) 2 Facility Standard (acres/1,000 residents) A 3.00 2.60
Resident Growth (2018-2035) B 28,392 28,392
Facility Needs (acres) C = (B / 1,000) x A 85.18 73.82
Average Unit Cost (per acre) D $ 3,922,000 1,335,000
Total Cost of Parkland To Serve New Development E = C x D $ 334,075,960 $ 98,549,700 $ 432,625,660 Parkland and Improvements - Mitigation Fee Act 3
Facility Standard (acres/1,000 residents) F 2.60 2.60
Resident Growth (2018-2035) G 28,392 28,392
Facility Needs (acres) H = (G / 1,000) / F 73.82 73.82
Average Unit Cost (per acre) D $ 3,922,000 1,335,000
Total Cost of Parkland To Serve New Development I = H x D $ 289,522,040 $ 98,549,700 $ 388,071,740 Note: Totals rounded to the thousands.

Sources: Tables 1, 5, and 8.
2 Cost of parkland to serve new development show n if all development is subject to the Quimby Act (subdivisions). Parkland charged at 3.0 acres per 1,000 residents; improvements charged at the existing standard. 3 Cost of parkland to serve new development show n if all development is subject to the Mitigation Fee Act. Parkland and improvements are charged at the existing standard.
1 Values in this column show the range of the cost of parkland acquisition and development should all development be either subject to the Quimby Act, or to the Mitigation Fee Act, respectively.

City of Santa Clara Parks and Recreation Facilities Fee Study 21 Parks Cost per Capita
Table 10 shows the cost per capita of providing new park facilities at the Quimby standard, and the existing facility standard, by zip code. The cost per capita is shown separately for land and improvements. The costs per capita in this table will serve as the basis of three fees:
• A Quimby Act Fee in-lieu of land dedication. This fee is payable by residential development occurring in subdivisions.
• A Mitigation Fee Act Fee for land acquisition. This fee is payable by residential development not occurring in subdivisions.
• A Mitigation Fee Act Fee for parkland improvements. This fee is payable by all residential development.

A development project pays either the Quimby Act Fee in-lieu of land dedication, or the Mitigation Fee Act Fee for land acquisition, not both. All development projects pay the Mitigation Fee Act Fee for park improvements.

Table 10: Cost per Capita
Calculation Quimby Act OR
Mitigation
Fee Act AND Improvements
Zip Code 95050
Parkland Investment (per acre) A $ 3,738,000 $ 3,738,000 $ 1,335,000 Level of Service (acres per 1,000 residents) B 3.00 2.60 2.60 Total Cost Per 1,000 capita C = A x B $11,214,000 $ 9,718,800 $ 3,471,000 Cost Per Resident D = C / 1,000 $ 11,214 $ 9,719 $ 3,471 Zip Code 95051
Parkland Investment (per acre) A $ 3,993,000 $ 3,993,000 $ 1,335,000 Level of Service (acres per 1,000 residents) B 3.00 2.60 2.60 Total Cost Per 1,000 capita C = A x B $11,979,000 $10,381,800 $ 3,471,000 Cost Per Resident D = C / 1,000 $ 11,979 $ 10,382 $ 3,471 Zip Code 95054
Parkland Investment (per acre) A $ 4,035,000 $ 4,035,000 $ 1,335,000 Level of Service (acres per 1,000 residents) B 3.00 2.60 2.60 Total Cost Per 1,000 capita C = A x B $12,105,000 $10,491,000 $ 3,471,000 Cost Per Resident D = C / 1,000 $ 12,105 $ 10,491 $ 3,471 Sources: Tables 5, 9 and Appendix Table A.1.

Land 1
1 A development project pays either the Quimby Act Fee In-Lieu of land dedication, or the Mitigation Fee Act Fee for land acquisition, not both.

All development projects pay the Mitigation Fee Act Fee for park improvements.

City of Santa Clara Parks and Recreation Facilities Fee Study 22 Use of Fee Revenue
The City plans to use park facilities fee revenue to purchase parkland or construct improvements to add to the system of park and recreation facilities that serves new development. The City may only use impact fee revenue to provide facilities and intensify usage of existing facilities needed to serve new development. Depending on the amount of development subject to the Quimby Act, new development must fund the purchase and improvement of between 73.82 and 85.18 parkland acres through the planning horizon of 2035.

Fee Schedule
To calculate fees by land use type, the investment in park facilities is determined on a per resident basis for both land acquisition and improvement. These investment factors (shown in Table 10) are investment per capita based on the unit cost estimates and facility standards.

The City anticipates that the park fees would be the primary revenue source to fund new development’s investment in park facilities. Tables 11.a, 11.b and 11.c show the park facilities fee based on the minimum Quimby standard and the existing standard for each zip code in the City, respectively. The City would collect the fee based on only one of the two approaches as appropriate. Each fee includes a component for park improvements based on the City’s existing standard. The investment per capita is converted to a fee per dwelling unit.

The total fee includes an administrative charge to fund costs that include: (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses.

City of Santa Clara Parks and Recreation Facilities Fee Study 23 Table 11.a: Park and Recreation Facilities Fee Schedule - Zip Code 95050 A B C = A x B D = C x 0.02 E = C + D
Cost Per Base Admin
Land Use Capita Density Fee1 Charge1, 2 Total Fee1
Quimby Act
Single Family
Parkland $ 11,214 2.98 $ 33,418 $ 668 $ 34,086
Improvements 3,471 2.98 10,344 207 10,551
Total $ 14,685 $ 43,762 $ 44,637
Multifamily
Parkland $ 11,214 2.40 $ 26,914 $ 538 $ 27,452
Improvements 3,471 2.40 8,330 167 8,497
Total $ 14,685 $ 35,244 $ 35,949
Mitigation Fee Act
Single Family
Parkland $ 9,719 2.98 $ 28,963 $ 579 $ 29,542
Improvements 3,471 2.98 10,344 207 10,551
Total $ 13,190 $ 39,307 $ 40,093
Multifamily
Parkland $ 9,719 2.40 $ 23,326 $ 467 $ 23,793
Improvements 3,471 2.40 8,330 167 8,497
Total $ 13,190 $ 31,656 $ 32,290
Sources: Tables 2 and 10.
1 Fee per dw elling unit.
2 Administrative charge of 2.0 percent for (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses.

City of Santa Clara Parks and Recreation Facilities Fee Study 24 Table 11.b: Park and Recreation Facilities Fee Schedule - Zip Code 95051 A B C = A x B D = C x 0.02 E = C + D
Cost Per Base Admin
Land Use Capita Density Fee1 Charge1, 2 Total Fee1
Quimby Act
Single Family
Parkland $ 11,979 2.98 $ 35,697 $ 714 $ 36,411
Improvements 3,471 2.98 10,344 207 10,551
Total $ 15,450 $ 46,041 $ 46,962
Multifamily
Parkland $ 11,979 2.40 $ 28,750 $ 575 $ 29,325
Improvements 3,471 2.40 8,330 167 8,497
Total $ 15,450 $ 37,080 $ 37,822
Mitigation Fee Act
Single Family
Parkland $ 10,382 2.98 $ 30,938 $ 619 $ 31,557
Improvements 3,471 2.98 10,344 207 10,551
Total $ 13,853 $ 41,282 $ 42,108
Multifamily
Parkland $ 10,382 2.40 $ 24,917 $ 498 $ 25,415
Improvements 3,471 2.40 8,330 167 8,497
Total $ 13,853 $ 33,247 $ 33,912
Sources: Tables 2 and 10.
2 Administrative charge of 2.0 percent for (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses.
1 Fee per dw elling unit.

City of Santa Clara Parks and Recreation Facilities Fee Study 25 Table 11.c: Park and Recreation Facilities Fee Schedule - Zip Code 95054 A B C = A x B D = C x 0.02 E = C + D
Cost Per Base Admin
Land Use Capita Density Fee1 Charge1, 2 Total Fee1
Quimby Act
Single Family
Parkland $ 12,105 2.98 $ 36,073 $ 721 $ 36,794
Improvements 3,471 2.98 10,344 207 10,551
Total $ 15,576 $ 46,417 $ 47,345
Multifamily
Parkland $ 12,105 2.40 $ 29,052 $ 581 $ 29,633
Improvements 3,471 2.40 8,330 167 8,497
Total $ 15,576 $ 37,382 $ 38,130
Mitigation Fee Act
Single Family
Parkland $ 10,491 2.98 $ 31,263 $ 625 $ 31,888
Improvements 3,471 2.98 10,344 207 10,551
Total $ 13,962 $ 41,607 $ 42,439
Multifamily
Parkland $ 10,491 2.40 $ 25,178 $ 504 $ 25,682
Improvements 3,471 2.40 8,330 167 8,497
Total $ 13,962 $ 33,508 $ 34,179
Sources: Tables 2 and 10.
1 Fee per dw elling unit.
2 Administrative charge of 2.0 percent for (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses.
26 4. Implementation
Impact Fee Program Adoption Process
Impact fee program adoption procedures are found in the California Government Code Section 66016. Adoption of an impact fee program requires the City Council to follow certain procedures including holding a public meeting. A fourteen-day mailed public notice is required for those registering for such notification. Data, such as an impact fee report, must be made available at least 10 days prior to the public meeting. Your legal counsel should inform you of any other procedural requirements as well as advice regarding adoption of an enabling ordinance and/or a resolution. After adoption there is a mandatory 60-day waiting period before the fees go into effect. This procedure must also be followed for fee increases.

Inflation Adjustment
The City’s Park and Recreation Land Fee ordinance requires the City Council review the fair market values that the fees are based on not less than annually and set the values in a Council resolution.
4 This allows the fees to conform to current land values in the City. A separate index for construction costs should be used to annually adjust the improvements fee under the Mitigation Fee Act. The construction cost index can be based on the City’s recent capital project experience or can be taken from any reputable source, such as the Engineering News-Record.

Reporting Requirements
The City should comply with the annual and five-year reporting requirements of the Act. For facilities to be funded by a combination of public fees and other revenues, identification of the source and amount of these non-fee revenues is essential. Identification of the timing of receipt of other revenues to fund the facilities is also important.

Fee Accounting
The City should deposit fee revenues into separate restricted fee accounts for each of the fee categories identified in this report. Fees collected for a given facility category should only be expended on new facilities of that same category.

Programming Revenues and Projects with the CIP
The City should commit all projected fee revenues and fund balances to specific projects in its Capital Improvements Program. These should represent the types of facilities needed to serve growth and described in this report. The use of the CIP in this manner documents a reasonable relationship between new development and the use of those revenues. The CIP also provides the documentation necessary for the City to hold funds in a project account for longer than five years if necessary to collect sufficient monies to complete a project.

The City may decide to alter the scope of the planned projects or to substitute new projects as long as those new projects continue to represent an expansion of the City’s facilities. If the total cost of facilities varies from the total cost used as a basis for the fees, the City should consider revising the fees accordingly.

4 City of Santa Clara City Code 17.35.040(b)(1)
27 5. Mitigation Fee Act Findings
Fees are assessed and typically paid when a building permit is issued and imposed on new development projects by local agencies responsible for regulating land use (cities and counties).

To guide the imposition of facilities fees, the California State Legislature adopted the Mitigation Fee Act with Assembly Bill 1600 in 1987 and subsequent amendments. The Act, contained in California Government Code §§66000 – 66025, establishes requirements on local agencies for the imposition and administration of fees. The Act requires local agencies to document five statutory findings when adopting fees.

The five findings in the Act required for adoption of the maximum justified fees documented in this report are: 1) Purpose of fee, 2) Use of fee Revenues, 3) Benefit Relationship, 4) Burden Relationship, and 5) Proportionality. They are each discussed below and are supported throughout this report.

Purpose of Fee
▪ Identify the purpose of the fee (§66001(a)(1) of the Act).

We understand that it is the policy of the City that new development will not burden the existing service population with the cost of facilities required to accommodate growth. Council Goal 2013- 14 states that as a strategic objective, the City would “Develop a new Housing Development Impact fee for parks acquisition and facility development.” The purpose of the fees proposed by this report is to implement this policy by providing a funding source from new development for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide parks and recreational facilities to new development.

Use of Fee Revenues
▪ Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).

Fees proposed in this report, if enacted by the City, would be available to fund expanded facilities to serve new development. Facilities funded by these fees are designated to be located within the City. Fees addressed in this report have been identified by the City to be restricted to funding parks and recreation facilities.

An estimate of the amount of parkland needed to serve new development is identified in Chapter 3 of this report. More thorough descriptions of certain planned facilities, including their specific location, if known at this time, are included in master plans, capital improvement plans, or other City planning documents or are available from City staff. The City may change the list of planned facilities to meet changing needs and circumstances of new development, as it deems necessary.

The fees should be updated if these amendments result in a significant change in the fair share cost allocated to new development.

Benefit Relationship
▪ Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).

City of Santa Clara Parks and Recreation Facilities Fee Study 28 We expect that the City will restrict fee revenue to the acquisition of land, construction of facilities and buildings, and purchase of related equipment, furnishings, vehicles, and services used to serve new development as described above under the “Use of Fee Revenues” finding. The City should keep fees in segregated accounts. Facilities funded by the fees are expected to provide a citywide network of facilities accessible to the additional residents and workers associated with new development. Under the Act, fees are not intended to fund planned facilities needed to correct existing deficiencies. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.

Burden Relationship
▪ Determine the reasonable relationship between the need for the public facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).

Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. Facilities demand is determined as follows:

The service population is established based upon the number of residents living in Santa Clara.

Service population correlates to the demand for parks and recreation facilities.

For parks and recreational facilities, demand is measured by a single facility standard (park acres per 1,000 service population) that can be applied across land use types to ensure a reasonable relationship to the type of development.

The standards used to identify growth needs are also used to determine if planned facilities will partially serve the existing service population by correcting existing deficiencies. This approach ensures that new development will only be responsible for its fair share of planned facilities, and that the fees will not unfairly burden new development with the cost of facilities associated with serving the existing service population.

Chapter 2, Land Use Assumptions provides a description of how service population and growth projections are calculated. Facility standards are described in the Facility Inventories, Plans & Standards sections of in Chapter 3.

Proportionality
▪ Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).

The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated service population growth the project will accommodate. Fees for a specific project are based on the project’s size or increases in the number of dwelling units. Larger new development projects can result in a higher service population, resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees can ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project.

See Chapter 2, Land Use Assumptions for a description of how service population or dwelling unit occupancy factors are determined for different types of land uses. See the Fee Schedule section of Chapter 3 for a presentation of the proposed facilities fees. 29 Appendix
Appendix Table A.1: Land Valuation
Zip Code
Average Value per
Acre
95050 $ 3,738,000
95051 3,993,000
95054 4,035,000
Source: Appraisal Report Valuation of the Average per Acre Land Value of High-Density Residential, Medium-Density Residential, Low and Very Low -Density Residential, Commercial/Retail, and Industrial Properties Located in the Three Existing Zip Codes (95050, 95051, and 95054) City of Santa Clara, California, Prepared By: the SchmidtPrescott Group, Inc, 2018.

Attachment A
Supplemental Instructions
for the Appraisal of the Fair Market Value of Land
The following information and instructions will be used by the City when setting the land value used in the formula for determining the impact fees due in lieu of park and recreational land dedication pursuant to Santa Clara City Code 17.35. (Approved by Santa Clara City Council—June 7, 2016) Background.

On July 15, 2014, Council added Chapter 17.35 “Park and Recreational Land” to the Santa Clara City Code to ensure that new residential development provides adequate community and neighborhood park land for active recreational uses and/or pays a fee in-lieu of parkland dedication to mitigate the impacts of the new growth pursuant to the California Quimby Act and/or Mitigation Fee Act.

17.35.040 Formula for calculation of fee in lieu of land dedication. (a) When a fee is required to be paid in lieu of parkland dedication, the maximum amount of such fee shall be determined by the fair market value of the amount of land that would otherwise be required to be dedicated pursuant to SCCC 17.35.030, as set forth below. The date of valuation of the property for in-lieu fee purposes shall be the date that the City determines that the developer’s application for a parcel map or tentative subdivision map, or application for projects not involving a subdivision, is complete.
(b) Fair Market Value.
(1) The City shall determine the fair market value of the property by using the average per acre land value for property in the City of Santa Clara, based upon a survey of land values and sale records in the City. The City Council shall set a minimum of three such average values, one for each of the three existing Zip Codes in the City (95050, 95051, 95054). The City Council may, at its discretion, set average values for additional subregions of the City. The City Council shall review the fair market values not less than annually and set the values in a Council resolution. (2) If the developer objects to this determination of fair market value, the developer may elect to have the value established by appraisal. If the developer chooses this option, the developer shall deposit with the City an amount sufficient to cover the cost of an appraisal, which the City shall conduct. The appraisal shall be completed prior to approval of the tentative or parcel map or, for developments not involving a subdivision, prior to the issuance of a building permit. (c) Based on the determination of fair market value set forth in subsection (b)(1) of this section, for each of the dwelling unit categories, the City Council shall set the amount of fees to be paid in lieu of parkland dedication in a Council resolution, which the Council shall review annually. (Ord. 1928 § 3, 7-15-14).

Attachment A—Supplemental Instructions for Appraisal Page 1 of 3 Guidelines for Appraiser:
a. Appraiser is to provide a “Fair Market Value” for an average acre of land (hypothetical, rectangular, useable site) for property in each of the three existing City of Santa Clara Zip Codes 95050, 95051, 95054. The opinion will conform to Uniform Standards of Professional Appraisal Practice.
b. Valuation Date: December 31 of each year.
c. Location & Property Sales Data Set Boundaries: Data set will begin with sales data from within Santa Clara City limits.
d. Data Set Date Range: Use data from January 1st to December 31st of each year.

Example: January 1, 2015 to December 31, 2015 for “December 31, 2015 Valuation Date.” See contingencies below.
e. Property Types: Use all of the following property types: Single Family (low and very low density), High Density Residential, Medium Density Residential, Commercial, Industrial, Lots and Land.
f. Contingencies for Limited Data Set of each Property Type: If there are insufficient, credible data points or sales of a particular property type, then appraiser will explore and use comparable sales from the local competitive market area, adjacent to City of Santa Clara. A fixed distance from City of Santa Clara city limit is not given, however a compelling, rational basis for the selection of the competitive market area must be given by the appraiser in the report. Preference is for closer, more recent, and comparable; discretion is given to the appraiser.
g. Sales Transactions Data not to be used: Do not use transactions if they are not an arms-length transaction, have encumbered/clouded title, are environmentally impaired site, or are more than three (3) years old.
h. Inflation factors for Comparable between 1 and 3 years: An inflation factor will be computed and applied to comparable sales over one year based on reasonable and rational considerations such as sales and rental trends or other appropriate methods. i. Sales Transactions Data that may be included: May use real estate sales transactions by the City of Santa Clara for additional neighborhood or community parkland.
j. Data Values excluded: No values or set of values at the high or low end of the data set are to be excluded from consideration in the average values on the sole basis of being relatively high or low; however, a check for consistency among comparable values will be done, and a rational basis should be provided for credible comparable transactions if not used.

Attachment A—Supplemental Instructions for Appraisal Page 2 of 3 k. Research Factors to be considered for Comparable sales: The factors to be used to compare property values include, but are not limited to physical factors, economic factors, market conditions verification to parcel maps, public records, CoStar data bank. Additional factors may be used provided there is a rational basis for doing so. l. Reconciliation of value differences: The approach will be comparative, iterative, qualitative and quantitative, and will be made at the appraiser’s discretion. m. Weight to be applied to Property Types: The weighted average of each property type will be based on the percentage of land area in the sales transactions, for example, if 25% of total acreage is high density residential, then the relative weight of that property type will be 25%. (The weight will not be done by the quantity of sales of each type or the percent of value of sales of each type). n. Reporting: A draft valuation report will be generated by March 15. City will provide for a two week circulation and comment period. The valuations included the final valuation report will be used in the calculation formula for fees prepared by staff to be reviewed by Council as part of the annual City budget process and Municipal Fee Schedule adoption by June 30. Fees will be implemented on or after July 1 depending upon Quimby Act or Mitigation Fee Act provisions of the Council resolution.

Attachment A-Supplemental Instructions for Parkland Dedication In Lieu Fee Process and Schedule 2016 Attachment A—Supplemental Instructions for Appraisal Page 3 of 3

ANNUAL LAND VALUATION APPRAISAL REPORT

VALUATION OF
The Average per Acre Land Value of High-Density Residential, Medium-Density Residential, Low-Density Residential, Very Low-Density Residential, Commercial, &Industrial Properties Located in Three Zip Codes (95050, 95051, and 95054)
City of Santa Clara, California
Santa Clara County

PREPARED FOR
Mr. James Teixeira, Director of Parks and Recreation
City of Santa Clara
1500 Warburton Avenue
Santa Clara, CA 95050

PREPARED BY
Frank E. Schmidt, MAI, SRA
Frank Schmidt & Associates

EFFECTIVE DATE OF VALUE OPINION
December 31, 2022
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] March 1, 2023
Mr. James Teixeira, Director of Parks and Recreation
City of Santa Clara
1500 Warburton Avenue
Santa Clara, CA 95050
Re: Annual Land Valuation Appraisal Report
Average Value of Three Hypothetical 1-Acre Lots,
One for Each Zip Code Comprising 95050, 95051, and 95054 Santa Clara, California, U.S.A.

Dear Mr. Teixeira:

Pursuant to your request, I have completed the annual land valuation appraisal to aid the City of Santa Clara in establishing park impact fees. Following this letter of transmittal is my appraisal and analysis opining the value of a hypothetical 1-acre lot in each of the City’s three zip codes.

In June 2016 the City of Santa Clara City Council approved Supplemental Instructions for the Appraisal of the Fair Market Value of land used in the Parkland Dedication In-Lieu Fee. These supplemental instructions and guidelines for the Appraisal are displayed in the Addenda. One of the supplemental instructions was that the valuation date occurs each year on December 31.

Since the date of my opinion of value, December 31, 2022 precedes the date I wrote and transmitted this appraisal by about 2 months, this is considered a retrospective appraisal as defined by the Uniform Standards of Professional Appraisal Practice. Since this is a retrospective value, it is important to note that I only considered data that was available and/or public as of the date of value. The exception to this was the 2022 land area data provided by Old Republic Title Company which was not available until February 2023, and some brokerage reports published in January and February 2023, but containing 2022 data.

I have appraised the subject of this appraisal numerous times since 2014, and most recently with a date of opinion of December 31, 2022. Based on land area, in 2020 about 43% of all the transactions sold were categorized as industrial and commercial, and the other 57% were categorized as residential. In 2021, approximately 42% of all transactions sold were industrial and commercial, while 58% were categorized as residential. In 2022, commercial/industrial sales accounted for about 27.06% of the total while residential sales accounted for about 72.94% of the total. However, the median residential selling price in 2022 was generally increasing Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 2 throughout the first half of 2022 and generally trending downwards in the last half of 2022. This resulted in lower residential unit values for 2022. Industrial and commercial land values were unchanged in 2022. The combination of recent Federal Reserve interest rate increases, expected slower economic growth and an increased possibility of a near-term recession has impacted the market. All these factors resulted in lower 2022 values for the hypothetical one-acre lots for each zip code compared to 2021.

To complete this appraisal, I conducted an investigation, gathered data, and made the analyses necessary to enable me to fulfill the purpose of this assignment, which was to estimate the fair market value of a hypothetical 1-acre lot comprising components of high-density residential, medium-density residential, low-density residential, very low-density residential, commercial, and industrial, to form and report the average value per acre of land in the three existing Zip Codes in the City of Santa Clara consisting of 95050, 95051, and 95054. The average value was established using the weighted average of these different property types, based on the percentage of total land area associated with the different property types that sold in the City of Santa Clara in the 12 months prior to the date of value and based on land area data provided by Old Republic Title Company.

I understand that this Appraisal Report is intended for use by the Client, the City of Santa Clara, for assistance in determining park impact fees.

Hypothetical Conditions, Extraordinary Assumptions, and Contingencies Hypothetical Condition is defined as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.”1 I supposed the following
hypothetical conditions:
¾ The fair market value was estimated based on different land value components applied to a hypothetical lot. It was a hypothetical condition of this appraisal that the subject lot was a finished lot and rated average in all other physical, locational, and legal aspects. ¾ Since the hypothetical lot will be comprised of different land value components and it is unlikely the City’s land use ordinances would allow the different property types on the same lot, it was necessary to apply a hypothetical condition that each of the following uses would be permitted on the subject lot: high-density residential, medium-density residential, low and very low-density residential, commercial, and industrial.

1 2020-2021Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 3 Extraordinary Assumption is defined as “an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.”2
¾ In this appraisal, land areas provided by Old Republic Title Company were used to estimate the weighted average of all the sale transactions that occurred in the City of Santa Clara in 2022. It was an extraordinary assumption of this appraisal that the land areas provided by Old Republic were accurate.

The use of these hypothetical conditions and extraordinary assumption might have affected the assignment results.

There are general assumptions and limiting conditions set forth in this report.

Based on the investigation and analyses undertaken, I formed the opinion that the average value per acre on December 31, 2022, the effective date of opinion, for each zip code was:

Sincerely,
Frank E. Schmidt, MAI, SRA

2 2020-2021Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 4

TABLE OF CONTENTS
EXECUTIVE SUMMARY 5
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS 6
CERTIFICATION 8
SCOPE OF THE ASSIGNMENT 9
DEFINITIONS 11
REAL PROPERTY, REAL ESTATE, AND PERSONAL PROPERTY APPRAISED 12 PREVIOUS APPRAISALS 13
REGION & CITY DESCRIPTION 13
MARKET CONDITIONS 17
LAND USE ORDINANCES 38
HIGHEST AND BEST USE 39
APPRAISAL PROCESS 40
AVERAGE VALUE ESTIMATE IN 95050 ZIP CODE 41
AVERAGE VALUE ESTIMATE IN 95051 ZIP CODE 61
AVERAGE VALUE ESTIMATE IN 95054 ZIP CODE 64
RECONCILIATION AND OPINION OF AVERAGE VALUES 68
ADDENDA 69

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 5

EXECUTIVE SUMMARY
CLIENT : City of Santa Clara
LOCATION : City of Santa Clara, California
PROPERTY TYPES : Very Low-Density Residential, Low-Density Residential, Medium-Density Residential, HighDensity Residential, Commercial, and Industrial Land
SITE AREA : Each Hypothetical Lot is One Acre
FLOOD HAZARD STATUS : Zone X; the hypothetical lots are outside any flood zones
EARTHQUAKE FAULT ZONE : The hypothetical lots are not located in an Earthquake Fault Zone as designated under the
Alquist-Priolo Earthquake Fault Zoning Act.

GENERAL PLAN, &
HIGHEST AND BEST USE :

EFFECTIVE DATE OF VALUE : December 31, 2022
PROPERTY RIGHTS APPRAISED : Fee Simple Estate
AVERAGE VALUE CONCLUSIONS :

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 6

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal and report were made applying these general assumptions:

1. No responsibility was assumed for the legal description or for matters including legal or title considerations. Title to the hypothetical properties was assumed to be good and marketable and free and clear of all liens, encumbrances, easements, and restrictions except those specifically addressed in this report;

3. Responsible ownership and competent property management were assumed;

4. The information furnished by the Client and others was believed to be reliable. However, no warranty is given for its accuracy;

5. All engineering was assumed correct. Plot plans or any other illustrative material in this report were included only to assist the reader in visualizing the property;

6. It was assumed that there are no hidden or unapparent conditions in the hypothetical properties that render them more or less marketable or valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them;

7. Unless otherwise stated in this report, the existence of hazardous material, toxic waste, and/or other environmental impairments which may or may not be present on or in the hypothetical properties, was not investigated by this consultant.

As real estate consultants, we are not qualified to properly investigate this property for any discharge, spillage, uncontrolled loss, seepage, filtration, or storage of hazardous substances which may adversely affect the value of this property. Neither are we qualified to detect the presence of substances such as asbestos, urea-formaldehyde foam insulation, nor other materials that could create an environmental impairment to the subject property or to other property caused by conditions present at the subject property. Our opinion(s) were predicated on the assumption that there is no such material on or in the property that would affect market value. No responsibility was assumed for any such conditions or for any expertise or engineering knowledge required to discover and/or correct them;

8. It was assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless non-compliance is stated, defined, and considered in the report;
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 7

9. It was assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal and reported in the report; and

10. It was assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate or other opinion contained in this report are based; This report has been made with the following limiting conditions:

1. Possession of the report, or a copy thereof, does not carry with it the right of publication or use. It may not be used for any purpose by any person other than the Client(s), for the Intended Use specified in the engagement agreement and/or report;

2. The consultant is not required to give further consultation, testimony, or attend court for matters involving the subject property unless arrangements have been previously made; and

3. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the Consultant, or the firm with which the Consultant is connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the Consultant.

Reader Note:

There may be other appropriate and more specific limitations on our opinions or conclusions identified in the cover letter or report as Hypothetical Conditions, Extraordinary Assumptions, or Contingencies.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 8

CERTIFICATION
I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

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

4. I previously appraised the subject of this report for the same Client on several occasions, most recently in an appraisal report transmitted April 1, 2022 and having a date of value of December 31, 2021.

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

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

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

8. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

9. I have not inspected the property that is the subject of this report since the subject lots are hypothetical.

10. Under my direction, Mr. Dennis Moredock verified the comparable data, performed analysis, and wrote the first draft of the appraisal report.

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

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

13. As of the date of this report, I have completed the continuing education program for Designated Members of the Appraisal Institute.

March 1, 2023
Frank E. Schmidt, MAI, SRA Date
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 9

SCOPE OF THE ASSIGNMENT
Information Provided to the Appraisers
The Client provided excerpts from the Parks and Recreation Facilities Fee Study completed by Willdan Financial Services. Old Republic Title Company provided Santa Clara sales statistics of land areas to assist us in estimating the weighted land average of all the sale transactions that occurred in the City of Santa Clara in the 12 months preceding the date of value. We were also provided the “Supplemental Instructions for Appraisal” approved by Santa Clara City Council on June 7, 2016, which are displayed in the Addenda. Lastly, in previous appraisals, City Parks provided us the Park Impact Fee Ordinance (No. 1928).

Extent of Research into Physical Factors
We drove several streets throughout Santa Clara over the past several years including various times in 2016, 2017, 2020, 2021, and 2022. We note changes that are occurring or have occurred, particularly regarding new development. We gathered data about land use ordinances for each hypothetical lot and the comparables from the websites of the appropriate municipalities.

Extent of Research Into Economic Factors
We gathered, analyzed, and applied macro-economic information gleaned from many sources, including:
x The Wall Street Journal
x 12th District Beige Book
x GlobeSt.com
x CoStar News
x The Kiplinger Letter
x DQ News/CoreLogic
We gathered, analyzed, and applied data about market conditions and other micro-economic information from:
x Websites of Commercial Brokerages
x Commercial and/or residential multiple listing services x Silicon Valley Business Journal
x San Jose Mercury News
x Discussions with agents active in the subject market
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 10 We talked to the buyers, sellers, and agents whose names we discovered on signage in the neighborhood and during comparable verification. We learned about additional market data from these people.

Extent of Comparable Data Research
We used a variety of sources and subscription services to gather comparable data, including:
x Verified Data Files from Other Appraisals
x CoStar Group
x DataTree
x MLSlistings.com
x LoopNet
x Commercial Real Estate Brokerage Websites
Verification
The most appropriate data that we discovered was verified with a party to the transaction. When that was not possible, we discuss and/or state the verification source(s), using public record data, subscription services, MLS, etc. in the Analysis section.

Among the comparables selected we studied copies of the assessor’s parcel maps, public record summary, aerial maps, records of survey, and other data such as structural, geological, or environmental reports, subdivision maps, title reports, etc. We also reviewed planning proposals/approvals and permit histories where appropriate.

Type and Extent of Analysis Applied
The data is summarized on spreadsheets displayed in the Analysis sections following. The analysis was comparative, iterative, qualitative, and quantitative.

Compliance
It was the intent of this appraisal to comply with the requirements of:
x The Uniform Standards of Professional Appraisal Practice (USPAP) including the Ethics and Competency Provisions as promulgated by the Appraisal Standards Board of the Appraisal Foundation.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 11 x The Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute.
x The City of Santa Clara’s “Supplemental Instructions for Appraisal”

DEFINITIONS
According to the California Code of Civil Procedure, Section 1263.320 defines Fair Market Value as:
“(a) the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.
(b) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable.”
Revised federal definitions in the Uniform Act identify the definitions of “market value” and “fair market value” as one and the same. These terms are used interchangeably in this report.

Weighted Average means an average resulting from the multiplication of each component by a factor reflecting its importance or contribution.

Average Value means a value that is calculated by adding values together and then dividing the total by the number of values.

Fee Simple Estate means absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”3

3 Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed., (Chicago: Appraisal Institute, 2015) Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 12

REAL PROPERTY, REAL ESTATE, AND PERSONAL PROPERTY APPRAISED Real Property is defined as all of the interests, benefits, and rights in the ownership of the physical real estate, that is, the bundle of rights with which the ownership of the real estate is endowed. Real estate is defined as physical land and appurtenances attached to the land.

Real Property Rights Appraised
The subject properties are hypothetical unimproved lots and the fee simple estate is appraised.

Real Estate Appraised
It is an assumption of this appraisal that the subject’s hypothetical finished lot is graded and level, all utilities and services are stubbed to the site, is ready for building improvement, and defined as follows:

Area : One acre
Shape & Frontage : Shape is rectangular with typical frontage along one street.

Topography : Level, at street grade
Drainage : Adequate
Utilities & Services : The municipality provides water, electrical, and sewer service. A private contractor provides garbage service.

Local utility companies provide telephone and cable. All utilities are piped and wired onto the hypothetical lot.

Easements : Typical public utility easements along frontage presumed.

Soil Conditions : It is a general assumption of this appraisal that the hypothetical site is suitable for any legally permissible and physically possible use.

Environmental
Impairment Issues : It is a general assumption of this appraisal that there are no environmental issues that affect the market value of the hypothetical lots.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 13 Off-Site Improvements : Street is fully improved and maintained by the City; it is asphalt paved with streetlights, curbs, gutters, and
sidewalks.

Street Access : Rates average in comparison to competing properties.

Exposure/Visibility : Rates average in comparison to competing properties for each hypothetical use.

Flood Hazard Status : Hypothetical lot is presumed to be within Zone X, which denotes areas of minimal flood hazard, usually depicted on FIRMs as above the 500-year flood level.

Earthquake Fault Zone : The hypothetical lot is not located in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake
Fault Zoning Act.

Improvements : None
Personal Property Appraised
We did not appraise any personal property.

PREVIOUS APPRAISALS
The author previously appraised the subject(s) of this report for the City of Santa Clara on several occasions, most recently in an Appraisal Report transmitted April 1, 2021 with an effective date of opinion of December 31, 2021. The next most recent appraisal of the subject was transmitted March 21, 2021 with an effective date of opinion of December 31, 2020. The intended use of all appraisals was the same: to assist the City in determining park impact fees.

REGION & CITY DESCRIPTION
The County of Santa Clara is located at the southern end of San Francisco Bay. It encompasses about 1,304 square miles of land with 15 incorporated cities and towns. According to California Department of Finance (CDF), on July 1, 2022, the county had a population of 1,882,601, a decrease of 4.82 percent from the July 2021 estimate. Over the past several years, Santa Clara County had been experiencing strong employment conditions. Prior to the COVID-19 pandemic, Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 14 unemployment was at historical lows and essentially reflected full employment conditions.

According to statistics published by the State of California Employment Development Department (EDD), the Santa Clara County unemployment rate was 2.0% in December 2022, based on a labor force of 1,060,500. This is a decrease from the March 2020 unemployment rate of 3.4%, prior to COVID-19. It is also lower compared with the one-year prior unemployment rate (December 2021) of 4.0%, based on a labor force of 1,042,900 jobs.

Santa Clara County, which makes up the bulk of Silicon Valley, is highly dependent on technology employment, including Adobe, Apple, Applied Materials, Cisco, eBay, Flextronics, Google (Alphabet), HP, Intel, Intuitive Surgical, Lockheed Martin Space Systems, Microsoft, Netapp, Oracle, PayPal, and Tesla.

The City of Santa Clara covers about 18.4 square miles and is surrounded by San Jose on the north, east, and south, and is adjacent to Sunnyvale and Cupertino on the west. The City of Santa Clara’s population estimate was 130,127 as of January 1, 2022, according to the CDF, about .8% higher than 12 months earlier. Employment conditions in Santa Clara followed a similar trend as seen in Santa Clara County. Unemployment, according to the EDD, was reported at a rate of

2.1% in the city of Santa Clara as of November 2022, based on a labor force of 74,000. The unemployment rate has generally followed a downward trend since peaking in April 2020 at

9.5%. Still, the current rate is below the rate of 2.6% reported in February 2022.

An aerial of the City of Santa Clara (outlined in red) and surrounding areas is shown below:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 15 The two largest employers in the City of Santa Clara are Intel and Applied Materials. Other hightech companies, such as AMD, Nvidia, Palo Alto Networks, Sun Microsystems, ServiceNow, and Agilent Technologies have headquarters in the City. Other large employers include California’s Great America, Avaya Inc., Santa Clara City Hall, EMC Corporation, Macy’s, and Santa Clara University. The City of Santa Clara is the supplier for the City’s water and electric power, which it claims can save small industries almost 50% on their utility costs.

Levi’s Stadium, the home of the San Francisco 49ers, opened over the summer of 2014 in the northern portion of the city, adjacent to Great America Theme Park and the existing 49ers practice facility. The Santa Clara Convention Center is also nearby and offers about 302,000 square feet of meeting space.

The opening of Levi’s Stadium spurred an increase in demand for nearby properties. There are several projects under construction throughout the city and several proposals in progress that are anticipated to add thousands of square feet of new retail, office and residential. The largest proposal is from Related California and is named Related Santa Clara (5155 Stars & Stripes Drive). The project is a 240-acre mixed use development located across from the street from Levi’s Stadium. It would include 9.16 million gross SF of office, residential units, retail and entertainment facilities, hotel rooms, and surface and structured parking facilities. The first development phase is approved and was slated to open to the public in 2023 but was delayed by the pandemic. The Lake Park office development project is a 4.05 acre project site that has received approvals for a 150,000 SF office development located at 3001 Tasman Drive. The Kylli mixed use development project Mission Point is currently pending review and is located at 3005 Democracy Way. This project is a 46 acre site that proposes 3,000,000+- SF of commercial office/lab space, 100,000+- SF of neighborhood retail, 1,800+- new multi-family residential, a child care facility, and indoor and outdoor community spaces.

The Santa Clara Square development project (The Irvine Company) encompasses approximately 93 acres and includes 1,862,000 SF of office, 178,000 SF of retail, and up to 1,840 units of residential apartment units. This project is at 2600 Augustine Drive and is currently under construction. The NVIDIA project is under construction and is located at 2600, 2788 and 2800 San Tomas Expressway. The 35.6 acre site will have 1,950,000 SF of office/research and development (R&D) space within three buildings. 575 Benton Street is a mixed use project by Prometheus that is currently under construction. This 5.7 acre site will have apartment units and retail space. A 190-room hotel on a 1.96 acre site is currently under construction at 2900 Lakeside Drive. Gateway Village by Essex Property Trust at 3700 El Camino Real will have 476 residential units and 108,600 sq.ft. of retail space on a 12.6 acre site. This project is currently under construction. The Lawrence Station Project – Kifer Road (Summerhill) is at 3505 Kifer Road and is currently under construction. This 29.4 acre project is part of the Lawrence Station Area Plan. The project is a 988 residential unit, four-story, multi-family development with 39,225 SF of retail/amenity space. Additional development in the City includes several new Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 16 structures on the Santa Clara University campus and continued residential build-out of the Lawrence Station area.

The City’s median household income was estimated by the U.S. Census Bureau at $150,244 in 2021 and the per capita income was about $69,021. The United States Census Quick Facts for 2017-2021 indicated the following demographics in Santa Clara:

Total Households 45,830
Owner Occupied Housing Unit Rate 42.4%
Average Household Size 2.68
Bachelor’s Degree or Higher 63.2%
In Civilian Labor Force 71.1%
The City is home to Santa Clara University, Mission College, a public community college, and Golden State Baptist College. The City is primarily served by Santa Clara Unified School District, which includes 19 schools spanning transitional kindergarten through high school. The southwest corner of the City is served by Cupertino schools.

The City of Santa Clara and Santa Clara County benefit from a number of freeways, arterials, and expressways that provide access to most areas of the region, including three interstate highways, I-280, I-880, and I-680 in addition to several federal and state highways, US-101, CA85, CA-87, CA-17, and CA-237. Caltrain, Amtrak, and ACE rail transportation, light rail, and VTA bus services provide mass transit for the city, connecting Santa Clara to the greater Bay Area. Located adjacent the City’s eastern border is the Norman Y Mineta San Jose International Airport, with service to about 30 destinations.

There are three primary zip codes within the city, which are shown on the following map as the color-coded areas within the black-outlined city limit boundaries. Note that the 95053 zip code applies to Santa Clara University, which is located within the Santa Clara city limits, but was not included as part of this appraisal.

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Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 18 The Winter 2022 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey “was taken as the Delta/Omicron phase of the pandemic was raging and was slowing the return of consumers to the purchase of services, to the office, and to vacation travel.” Multifamily housing has rapidly bounced back from a “falling-rent” hiatus and is also in for a run of new project development. Though the last two Surveys suggested a turn in office and retail market, it has happened sooner than expected.”
The Winter 2023 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey reports “The level of uncertainty in the economy has elevated dramatically in the months since the Summer 2022 according to Allen Matkins/ UCLA Anderson Forecast California Commercial Real Estate Survey. The combination of recent Federal Reserve interest rate increases and an increased possibility of a near-term recession has resulted in more challenging commercial real estate financing including a demand by financiers for higher equity participation and higher rate of return hurdle rates. Nationwide, a contraction in new commercial development is now underway. The latest Survey, taken in December 2022, coupled with analysis by the UCLA Anderson Forecast, paints a relatively better picture for commercial real estate in California. This is particularly true for the period after 2023. Nevertheless, commercial real estate development in California is also impacted by higher interest rates and the expected slower economic growth.”
In the following narrative we present some statistics and comments regarding the market conditions for each land use we are appraising. Land market conditions for each of these uses are not typically tracked by any firms that we are aware of; it has been my experience and historically as reported by market participants that the land market for these uses typically trend with the improved markets, oftentimes leading. We report on the sale, rental, and construction trends of the respective markets, in estimating the appropriate market conditions adjustments used in our following analysis.

Regional Economic Conditions
According to San Jose think-tank Joint Venture Silicon Valley (JVSV), “The region recovered from pandemic job losses by April 2022. Unemployment hit an historic low. Tech is becoming more highly concentrated. Silicon Valley added 88,000 jobs between mid-2021 and mid-2022, a growth rate of 5.4 percent. An estimated 22,000 jobs were added in the second half of the year.

At the end of 2022 Silicon Valley was home to a quarter of the US workforce for our largest tech companies. Layoffs commencing in the second half of 2022 resulted in a one percentage point loss in the region’s share of this 1.1 million-person workforce. The tech sector (including San Francisco) continues to become more concentrated. The 30 largest firms account for 42 percent of employment (19 percent are at Google, Apple and Meta alone). Silicon Valley’s unemployment rate hit an historic low (1.8 percent) in May of 2022.” Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 19 “Demand for commercial space is tempered by remote work but specialized R&D space is hot.

Though remote work is shifting the dynamic, leasing activity remained strong throughout 2022, reaching 24.8 million square feet (up 2 percent). While there was a 45 percent increase in the number of lease agreements, the average amount of space per lease has sharply declined (to 12,700 square feet). Bay Area companies requiring other commercial types have not downsized, reflecting how R&D, laboratory and industrial spaces are less inherently able to be replicated off-site. The amount of office development in the pipeline remains robust, indicating a continued desire of owners to expand their footprint, and optimism from developers. Rental rates rose in 2022 for all space types, although Office rates did not outpace inflation. Rates for lab space have climbed the most rapidly. With the majority of Silicon Valley’s premier tech companies announcing layoffs, sublease space has started to appear. A total of five million square feet of new Silicon Valley commercial space was completed in 2022 (61 percent Office, 10 percent Lab, 12 percent R&D and 8 percent Industrial), an amount nearly half of what was completed in 2021.

Google, Apple, Meta, Amazon, LinkedIn and Netflix, combined, occupy 20 percent (54.2 million square feet) of office and R&D space. Of these six companies, Google occupies the most (approximately 20.5 million square feet). Remote work is increasing, creating extra capacity on roadways and decimating public transit. The share of Silicon Valley workers working from home grew to 35 percent in 2022, up from 28 percent in 2021. The share was 6 percent in 2019.” “Silicon Valley’s population declined by 38,900 residents between mid-2020 and mid-2021, the highest figure ever recorded. The decline was due to a 74 percent rise in domestic outmigration, a reversal of the net flow of foreign immigrants (-103 percent), declining birth rates, and rising death rates.”
Commercial Market Conditions
Commercial properties typically include office and retail uses. We discovered that office properties are generally being built in the central business districts and in light industrial locations. Research and development (R&D) properties have historically been a subcategory of industrial. However, R&D can rival office space in terms of finishes and quality and we elected to include a discussion of the R&D submarket as part of the commercial market. Many of the traditional retail corridors in this region, El Camino Real in particular, have land use ordinances that allow for residential mixed-uses.

In this market, real estate brokerages track office and retail statistics by city or submarket; they are not broken out by zip code. Following we present the relevant statistics pertaining to the Santa Clara market and provide comments from market participants regarding the perceived differences in each of the Santa Clara zip codes that the three hypothetical lots being appraised are located.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 20 Office Market
The Silicon Valley office market from early 2017 through 4Q-2022 was generally characterized by increasing vacancy rates, negative net absorption, and overall flat to slightly increasing average asking rental rates. The next table displays data from the Cushman & Wakefield’s 4Q2022 Silicon Valley Marketbeat Office Snapshot and predecessor reports and includes statistics from the Silicon Valley market, the subject’s submarket (Santa Clara), and the adjacent Sunnyvale submarket.

OFFICE STATISTICS
Source: Cushman & Wakefield Marketbeat Office Snapshot
The data indicates that the office vacancy rate in Santa Clara generally increased slightly from Q1-2022 through Q4-2022. The Silicon Valley market has been overall more stable with vacancy reported at 11.0% for Q4-2022, slightly up from the 10.5% rate in the third quarter 2022. The region’s availability represents 17.2 million square feet of vacancy in 4Q-2022. “Despite strong fundamentals, remote work policies popularized during the COVID-19 pandemic as well as fears of an upcoming economic downturn have left a significant amount of office space in the Valley vacant.”
Cushman & Wakefield reports key 2022 lease transactions in the City of Santa Clara’s include 160,611sf expansion at 3075 Olcott Street and DataStax sublease of 31,250sf at 2755 Augustine Drive in Q1-2022, aided by a 330,317 square foot sublease by Pure Storage at 2555 & 2565 Augustine Drive in Q2-2022, and a expansion by AMD of 62,500 square feet at 2755 Augustine Drive in Q3-2022.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 21 The average office asking rent in 4Q-2022 for the City of Santa Clara was $4.45/SF/Month on a Full Service expense basis, whereby taxes, insurance, maintenance, utilities, and janitorial expenses are bundled into the base rent. This is slightly more than the $4.43/SF/Month asking rate from one year ago.

Marcus & Millichap’s 4Q-2022 Market Report shows that in the San Jose Metro area, which includes Santa Clara, office vacancy increased 30 basis points Asking rents in the San Jose Metro increased 2.4% year-over-year.

Marcus & Millichap reported the following trends in the San Jose Metro:

There are several office developments under construction in Silicon Valley and Santa Clara.

Notable developments previously discussed in the City of Santa Clara include: Related California, Lake Park, Kylli, Santa Clara Square, and NVIDIA.

Research and Development (R&D) Market
The next table displays data from Colliers International’s 4Q-2022 Silicon Valley R&D Market Snapshot and its predecessor reports:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 22 Source: Colliers International
The next tables display data from Cushman & Wakefield’s Marketbeat 4Q-2022 Silicon Valley R&D Market:

Source: Cushman & Wakefield
As shown above, Silicon Valley’s R&D market experienced an overall decreasing vacancy rate in 4Q-2022. Meanwhile, asking rents in Santa Clara have remained stable from $2.70/SF/month in 1Q-2022 to $2.69/SF/month in 4Q-2022 on a NNN expense basis, despite the pandemic. A NNN expense basis in this market means the landlord is only paying for management of the account and reserves for replacement, while the tenant typically pays all other operating expenses.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 23 Cushman & Wakefield reported in their Marketbeat 4Q-2022 Silicon Valley R&D Market that though more resilient than other markets nationally, the Bay Area has begun to show signs of an economic downturn. Mass layoffs from tech companies throughout the Bay Area have caused tenants and landlords to pause and reassess. Despite growing fears about the global economy, R&D product seems to be backed by strong demand and has consistently posted growth during the post-pandemic era.

Retail Market
According to Marcus & Millichap’s Third Quarter 2022 San Jose Metro Area Retail Report, Sector outlook is brightening. With an unemployment rate of 2.4 percent in August, San Jose’s labor market is outperforming the national average by 130 basis points. The strength of the metro’s economy, coupled with pent-up consumer demand stemming from pandemic lockdowns, led to a rise in consumer spending over the past 12 months ending in June. These circumstances are improving the outlook for the retail sector in the Silicon Valley. Although availability has remained relatively steady over the past year ending in June, the vacancy rate in San Jose is at least 80 basis points lower than any other major Bay Area market. The metro’s second quarter performance provides additional reason for optimism. During the three-month span, nearly all San Jose submarkets recorded positive net absorption. Specifically, vacancy fell 120 basis points in Santa Clara to 2.4 percent, the lowest rate in the metro, while availability in SunnyvaleCupertino dropped by 110 basis points. Transaction velocity for single-tenant assets increased by nearly 25 percent during the past four quarters ending in June, relative to the previous yearlong span. Pricing for properties in this segment was largely unchanged, recording at an average of $739 per square foot, while the mean cap rate remained in the high-4 percent range.

Within Santa Clara, Westfield Valley Fair Mall completed a $1.1 billion expansion in 2020 (Three-story, 98,000 square foot addition). Most of the new retail being proposed in this market is part of larger mixed-use projects.

Spending Patterns
General market conditions for the retail real estate segment can be indicated by taxable retail sales. Typically, a market where taxable retail sales are increasing would be supportive of additional retail development as existing retailers are willing to expand and new retailers are interested in entering the market. The converse is true when taxable retail sales are declining.

Over the course of 2019 (the most recent statistics available), taxable retail sales in Santa Clara County totaled approximately $47,001,964,265, or more than $47 billion dollars. This represents an increase of approximately 3.9 percent over the total taxable retail sales reported over the Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 24 course of 2018. The city of Santa Clara’s economic & growth data show total taxable sales in the city were reported to be $2,909,866,700 in 2010 and $2,135,359,000 in 1990.

Average Asking Retail Rental Rates and Vacancy Rates
Cushman & Wakefield is a brokerage firm that publishes quarterly reports for the retail market in the San Jose metro area. They reported in their Q4-2022 Marketbeat Silicon Valley Retail that although the job growth has been slower in the fourth quarter, the unemployment rate in Silicon Valley was still low at 2.2% at the end of 2022, down 160 basis points (bps) from last year’s figure of 3.8%. Professional and business services as well as hospitality contributed to the most job growth in Silicon Valley in 2022. The median household income was recorded as the highest in the country at $149,600, an increase of 8.2% from $138,200 a year ago. Meanwhile, the population grew by 0.5% annually. The overall vacancy rate of the shopping centers in Silicon Valley was fairly stable in the fourth quarter of 2022 at about 5%. The total retail inventory in Silicon Valley remained at 37.3 million square feet (msf) at the end of 2022, leaving 2.0 msf of vacant retail space, which consisted of 1.9 msf (96.2%) of direct retail space and 74,100 square feet (3.8%) of sublease space.

The chart below displays the average asking rental rate and vacancy for the Santa Clara submarket, Sunnyvale/Cupertino submarket, and Santa Clara County taken from Cushman Wakefield and its predecessor retail reports from 3Q-2017 onwards:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 25 As indicated in the table above, the Santa Clara County retail market had an average asking rent of $2.99/SF/Mo NNN in 4Q-2022 which is a slight increase compared to $2.96/SF/Mo NNN in 4Q-2021. Neighborhood and community centers account for most of the vacancies in the market.

In 4Q-2022 asking rents averaged $2.51/SF/Mo NNN in the subject’s Santa Clara submarket which is a decrease compared to $2.71/SF/Mo NNN in 4Q-2021. In 4Q-2022 the retail vacancy rate in Santa Clara was reported at 3.7% with no new retail under construction. Vacancy rates in the subject’s submarket declined from 3.9% from one-year ago. Asking rental rates in Santa Clara had generally been stable since Q1-2018 before a sharp increase in Q4-2020 and a decline starting in the final two quarters of 2021.

According to Marcus & Millichap’s Hospitality Report for Midyear 2022 - San Francisco Metro Area (which includes Santa Clara), “High-profile events return as pandemic restrictions fade.

One of the hardest-hit metros during the health crisis, San Francisco dropped nearly all COVID19 restrictions earlier this year. As capacity regulations are lifted, large-scale events should stimulate hospitality recovery. An expected influx of foreign travelers will play a significant role in boosting hotel demand, as before the pandemic, one third of the metro’s tourism stemmed from international sources. Full recovery dependent on business and foreign travel. Hospitality services catering to business clients still face headwinds, due to a high proportion of firms operating on hybrid or remote schedules.”
Industrial Market Conditions
We referenced industrial (manufacturing) and warehouse market data from brokerages Cushman & Wakefield and Colliers International; we also interviewed local market participants for this report. Cushman & Wakefield reported in its Marketbeat Silicon Valley Industrial Q4-2022, that vacancy for industrial product in Silicon Valley decreased in 4Q-2022 to 3.0% from 3.3% in 4Q2021. Colliers International reported that warehousing vacancy in Silicon Valley decreased to

1.5% from 2.2% in the prior year. Cushman & Wakefield reported the Central Silicon Valley industrial submarket, which includes Santa Clara, San Jose, Campbell, and Sunnyvale, had an overall vacancy rate of 2.8% and an average asking rate of $1.40/SF/Month NNN at the end of 4Q-2022. The average asking rental rate in the subject’s Santa Clara submarket was reported at $1.56/SF/Month NNN and a vacancy rate of 1.7% was reported. The subject’s Santa Clara submarket represents a moderate sized industrial submarket in the region with a total industrial inventory reported at approximately 15,487,547 square feet, or roughly 23 percent of the total Silicon Valley industrial inventory.

In their Q4 2022 San Jose Silicon Valley Research & Forecast Report for industrial/warehouse properties, Collier’s International reported The industrial market in the Silicon Valley remains stable leading into 2023 but has softened in comparison to the tremendous growth seen since Covid in the past two years. While considered the base of the economy, industrial users are Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 26 beholden to their own sales demand, so while industrial remains strong in the fourth quarter, the slowdown experienced in the other sectors will likely affect the demand for industrial space in the Valley. Regardless, with limited new supply, decreasing vacancy rates, and high asking rents, the Silicon Valley industrial market remains competitive heading into the new year. Regarding notable user activity, in San Jose Home Depot preleased 126,700 square feet at 1953 Concourse Drive and Inspur subleased Amazon’s 78,000-square-foot warehouse at 615 King Road. Despite high interest rates, investors were very active in the Santa Clara submarket; Ellis Partners acquired a 30,000-squarefoot building at 3060 Raymond Street for $13.5 million and Dollinger purchased a 12,000-square-foot building from Victor Leasing Company at 2290 De La Cruz for $625 per square foot.

The next chart shows industrial rental rate and vacancy trends since 1Q-2018 based on data from Colliers International. The chart shows generally stable to decreasing vacancy rates and stable to decreasing rental rates, Sunnyvale being the exception.

Vacancy rates for manufacturing were generally stable in Silicon Valley between the start of 2015 and 1Q-2020, before decreasing to the 2.5% range in 4Q-2022. A similar trend has played out in the Santa Clara submarket with a generally decreasing vacancy rate to the 1.1% range in 4Q-2022. However, manufacturing rental rates in Santa Clara continue to increase; the asking rental rate rose from $1.47/SF/month NNN in 3Q-2018 to $1.81/SF/month in 4Q-2022. Within Silicon Valley, the average asking rate for warehouse was $1.46/SF/month in 4Q-2022compared to last year’s rate of $1.43/SF/month.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 27 Warehouse data collected from Colliers International’s Silicon Valley Research & Forecast Report Q4 2022 and its predecessor reports are displayed in the next chart:

Warehouse vacancy rates in Silicon Valley had been declining for several years before increasing in 2018 and 2019, and then decreasing in 2022. Warehouse rental rates in Santa Clara increased; the asking rental rate increased from $1.29/SF/month in 4Q-2021 to $1.54/SF/month in 4Q-2022. Within Silicon Valley, the average asking rate for warehouse generally remained stable at $1.23/SF/month in 4Q-2022 compared to last year’s rate of $1.24/SF/month.

Data centers are one of the largest industrial occupancy groups in Santa Clara, due mostly to Silicon Valley Power, which has lower rates than elsewhere in the Bay Area. The rise of remote working reinforced the need and demand for data centers. We discovered several expansion plans and construction occurring on existing sites, notably from Prime Data Centers. There have been several land sales in recent years in Santa Clara that are proposed for new data centers.

Market participants report that data center operators will pay a premium for a larger site in Santa Clara and that the ideal site will be about six acres; however Prime is planning to build on a site as small as 1.68 acres. Two (data center) sites in Santa Clara were sold in 2021 (see Industrial Land Comparables I-1 and I-2, these are the most recent industrial sales that we uncovered and confirmed). One additional transaction at 2315 Mission College Boulevard in Santa Clara (not included in the sales grid) is also a data center land sale that was reported to have been purchased by Amazon Data Services Inc. The 7.04 acre site reportedly sold for $51,817,500 or $168.97sq.ft. of land area. This sale could not be fully confirmed but was reported to have closed escrow on January 4, 2022.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 28 CBRE’s U.S. Data Center Trends report for the 1H 2022 indicated the following market changes in Silicon Valley’s data center market:

The CBRE report notes that Silicon Valley collocation data center supply remains extremely tight, with strong demand lowering the overall vacancy rate to just 1.3% - the lowest in the nation. Cloud service providers continue to dominate, although the area has seen a resurgence of enterprise demand. Limited land and ability to deliver power has caused some providers to explore options beyond Santa Clara in neighboring markets like San Jose and the East Bay Area.

The city of Santa Clara is power constrained. Developers are land-banking available sites while waiting for power delivery. Notable activity includes NTT/RaginWire SV1 was 100% preleased.

GIPartners, EdgeCore and CyrusOne all announced new developments to begin the year or next.

Projects that began construction in Santa Clara are a 435,050sq.ft. 48-MW data center by Digital Realty, a 121,000sq.ft. 9-MW facility by Prime Data Centers, and a 560,000sq.ft. 60-MW building by Skybox Data Centers.

Residential Market Conditions
The National Association of Home Builders, reported housing data for the end of 2022 illustrate a market continuing to weaken because of low housing affordability, largely as a result of elevated mortgage interest rates. At the start of 2023, the average 30-year fixed mortgage rate is near 6.5%, down from a near 20-year high of 7.1% in early November.

However, forecasters expect the Federal Reserve will end its path of rate increases at the end of the first quarter. This should lead to sustainable declines for mortgage rates in the second half of 2023 and into 2024, enough to spur a rebound for single-family construction. However, rising mortgage rates combined with 35% to 45% growth in home prices since 2020 have priced many prospective buyers out of the market. Indeed, according to new NAHB estimates, 18 million households were priced out of the market as rates increased from 3% to 7% throughout 2022.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 29 The decline in affordability is clearly reflected in current housing sales statistics: The volume of existing home sales in November 2022 was 35% lower than a year prior, while inventory was at just a 3.3-month supply. New home sales, per Census data, were down 15% in November on a year-to-date basis when compared against the same time period of 2021. Inventory is elevated at an 8.6-month supply, as builders report growing cancellation rates (30% on average) and declining buyer traffic.

As a result of these market developments, single-family builder sentiment — as measured by the NAHB/Wells Fargo Housing Market Index (HMI) — declined every single month of 2022, falling from 83in December 2021 to 31 in December 2022. This is the lowest reading since 2012, with the exception of the spring of 2020. In fact, nearly two-thirds (62%) of builders are using some form of sales incentive to sell homes, with 35% reporting they cut prices.

The California Association of Realtors (C.A.R.) published their December Home Sales and Price Report in mid-January 2022. The report notes that “Closed escrow sales of existing, singlefamily detached homes in California totaled a seasonally adjusted annualized rate of 240,330 in December, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2022 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. December’s sales pace was up 1.1 percent on a monthly basis from 237,740 in November and down 44.1 percent from a year ago, when 429,860 homes were sold on an annualized basis.” “It’s encouraging to see an uptick in December’s home sales as buyers took advantage of a slightly more favorable lending environment that provided them with a window of opportunity to enter the California housing market,” said C.A.R. President Jennifer Branchini, a Bay Area REALTOR®. “As buyers and sellers gradually adapt to the new normal, we are seeing a shift toward a more balanced market. With both sides slowly adjusting their expectations, it’s hopeful that we’ll see sales ratcheting higher as market conditions improve further throughout 2023.” California’s median home price in 2022 remained on a downward trend for the fourth straight month and has been down on a monthly basis for six of the last seven months. December’s median price of$774,580 was down 0.4 percent from the $777,500 recorded in November.

December’s price also was lower on a year-over-year basis for the second consecutive month, declining 2.8 percent from the $796,570 recorded last December. For 2022 as a whole, California’s median home price increased 4.5 percent from 2021’s $786,750 figure but is expected to decline by 8.8 percent in 2023.
“Home prices are holding up relatively well, despite rising interest rates and falling housing demand in recent months. Tight housing inventory was a primary factor preventing prices from Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 30 free falling as new active listings continued to dip to reach the lowest level in at least the past five years,” said C.A.R. Vice President and Chief Economist Jordan Levine. “While depressed inventory will preclude major price declines beyond the 8.8 percent we forecast for this year, it will also slow sales growth and prevent the housing market from having a rapid recovery.” “At the regional level, median home prices dropped from a year ago in all major regions, with the San Francisco Bay Area experiencing the biggest annual price decline at 9.6 percent. All nine Bay Area counties experienced a year-over-year median price decline, with four of the nine counties sliding more than 10 percent.”
Regional Housing Market
The Standard & Poor/Case-Shiller Home Price Index measures the average change in value of residential real estate given a constant level of quality and reflects single-family housing. It is sometimes referred to as a repeat sale index. The next chart indicates that the index for the subject’s San Francisco Metropolitan Area increased about 29% from 263.868 in December 2018 to 340.806 in November 2022, or about 0.62%/month. However, over the eleven months between December 2021 and November 2022 the decrease was about .24%/month, echoing the builder sentiment evident in the Housing Market Index.

Source: S&P Dow Jones Indices LLC
The State of California Department of Finance (DOF) compiles statistics on total housing units in both the cities and counties of California. Based on DOF statistics, Santa Clara County had a total housing supply of 696,489 units as of January 1, 2022. This represents an increase of 4,076 units over the 692,413 units as of January 1, 2021. Extending further back in time, the DOF estimates the total supply of housing units in Santa Clara County at 631,920, as of January 2010.

This indicates that over the ten-year period between 2010 and 2020, the housing supply in Santa Clara County increased by a total of 42,638 units, equivalent to a compounded annual increase of

0.655 percent or an average of 4,264 units per year.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 31 According to the Association of Bay Area Governments (ABAG)4 Projections 2040 report (most
recent report), in 2015, Santa Clara County had a total of 648,900 households. ABAG projects that in 2030, the number of Santa Clara County households will have increased by a compounded annual increase of 1.04 percent, to 757,690 or an average of 7,253 households per year. As such, the demand for housing (i.e. households) is projected to increase at a considerably higher pace than that of housing supply.

In the City of Santa Clara, the DOF reported a total of 52,000 housing units as of January 2022.

This represents an increase of 748 units from the 51,252 housing units as of January 2021.

According to ABAG’s Projections 2040 report, in 2015, the City of Santa Clara had a total of 49,685 housing units. This statistic is projected to increase to 52,675 housing units by 2030, a compounded annual rate of 0.39%, or an average increase of 199 housing units per year. Based on the most recent two year and 10-year periods, the City has exceeded ABAG’s projections.

Local Multifamily Market
According to Integra Realty Resources Viewpoint 2023 San Jose Multifamily Mid-Year Report, The San Jose apartment market continued to recover during 2022. The pandemic had negatively impacted demand as widespread remote working environments allowed many renters to relocate to more affordable markets. The most expensive submarkets in the Silicon Valley were the hardest hit with greater occupancy loss and greater rent decline. However, as the economy recovered and businesses reopened, renter demand returned with employees once again needing to be near employment centers. Though a widespread return to the office has not materialized, most employers have adopted some form of a hybrid schedule, requiring employees to be in the office at least a few days of the week. Improvement in apartment market conditions began in 2021, and reached pre-pandemic levels by mid-2022, with positive net absorption, increasing rental rates and a decrease in overall vacancy. The submarkets most heavily impacted were also the ones with the greatest recovery.

Integra Realty Resources Viewpoint 2023 San Jose Multifamily Mid-Year Report summary is displayed in the following charts:

4 Association of Bay Area Governments is the official comprehensive planning agency for the San Francisco Bay Area region.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 32 Source: Integra Realty Resources Viewpoint 2023 San Jose Multifamily Mid-Year Report Values for multifamily properties are projected to be stable over the next 12 months, according to Integra’s report. Asking rents over the next 12 months are projected to increase.

According to a CoStar report on the local multifamily market, “Demand remained elevated through the first half of 2022, but drew back during 22Q3 as the economy slowed. The vacancy rate sits at 3.9% compared to 9.7% earlier in the pandemic, when remote and hybrid work enabled many renters to relocate to more affordable areas.” “Vacancy in Santa Clara has fluctuated over the past 10 years as large-scale construction projects were completed and units were absorbed. In total, the submarket added over 4,300 units in the Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 33 past decade. The current pipeline is likely to apply upward pressure to vacancy in the coming years, even as the submarket has previously been able to absorb new units at a healthy rate.” “Asking rents in Santa Clara fell during the pandemic as renters took advantage of remote working trends to seek alternative housing options outside of the Bay Area. As a result, demand for apartments slowed considerably, necessitating decreases in asking rents. Rent growth picked back up in 2021 and over the trailing 12-month period, rents have advanced 5.9%, a robust recovery as the economy has reopened and renters began to renew their interest in the submarket.”
The Marcus & Millichap’s 3Q-2022 Multifamily San Jose Metro Area Market Report stated that San Jose apartments return to pre-pandemic path as potential tech office return lies on the horizon. Renters are moving back to central areas, ahead of office plans. Apple’s aim to have most employees in the office at least three days per week starting in September may be a catalyst for a broader workplace return among South Bay technology companies, but for the metro’s apartments, demand has already come back. The addition of over 26,000 jobs through the first six months of the year places metro employers on track to expand staff counts by 3.7 percent this year. The total employment base is set to recover to the pre-pandemic level by the end of 2022.

Local Single-Family Market
According to the City of Santa Clara General Plan, an estimated 28,500 new jobs will be created and the population will grow by 32,135 people in the City between 2010 and 2035. The General Plan forecasts that 13,222 new housing units will be needed during that same period, based on an estimated household size of 2.5 people. The General Plan also states that household growth in the City has been much slower than the rest of Santa Clara County due to the lack of vacant residential land. Therefore, in order to meet future housing needs, construction of new housing will primarily occur through the redevelopment of existing sites.

Among the 52,000 housing units (January 2022) in Santa Clara, as reported by the DOF, the single-family (attached and detached) market represents about 24,460 or about 47% of the total housing units in Santa Clara.

CoreLogic is a national real estate, mortgage, consumer, and specialized business data provider.

DQ News has in the past tracked the annual median home price for all homes (single-family, condo, and townhouse), including new construction, in the City’s three ZIP code areas through 2021. As the DQ News reports are no longer available, all of 2022 year end summary data was obtained from MLS Listings and does not include all new construction.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 34 The data above indicates that zip code 95051 consistently has the highest median price among Santa Clara’s zip codes. Zip code 95050 had the second highest median in most years. The $/SF indicator shows that 95051 has higher prices than 95050, which both have higher prices than 95054. The data indicates that median prices were increasing in 2018, stabilizing in 2019 and 2020, and increasing in both 2021 and 2022. Overall median prices were higher in 2022. By the end of 2022, compared to the previous year, median prices had increased about 14.2% per year in 95050, increased about 9.4% per year in 95051 and about 1.8% per year in 95054.

The $/SF indicators showed an overall increasing trend from 2020 to 2022. The total number of sales indicator showed an overall decreasing rate from 2021 to 2022 in all three zip codes.

The following tables depict the median price trend by zip code over the 61 months ending December 2022 for single family homes and common interest developments (townhouse/condos) in the three zip codes of the City of Santa Clara using closed sale data obtained by MLSlistings.com:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 35 As shown above, market data derived from the local MLS shows that prices were trending downward in 2018, and oscillated up and down in 2019, 2020 and 2021. Similarly, townhouses and condominiums oscillated up and down in 2022. However, prices for single family homes were generally trending downwards in the last half of 2022. In addition, the median days to sell increased in the last half of 2022.

We note that DQ News/CoreLogic data includes resales and new construction, while MLS typically does not include all new construction. This is because builders often do not use MLS to Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 36 market their homes, using their in-house marketing efforts instead. The following tables show the annual and 2-year change for all housing types over the last three Decembers, according to the MLS:

The data in the above table supports the opinion that 95050 and 95054 generally rate inferior to 95051. The data also indicates that median selling prices are higher over the past two years, but higher in 95051, higher in 95054, and slightly lower in 95050 over the last 12 months.

The next table using MLS statistics shows the monthly median change in selling prices in Santa Clara, adjacent Sunnyvale, and the larger Santa Clara County market since the start of 2018:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 37 As the table above indicates, median selling prices were rising in the spring of 2018, receded until early 2019, were more stable through the end of 2019, but then increased sharply in the early part of 2020 through the spring of 2020. Prices were generally stable over remainder of 2020 in Santa Clara and Santa Clara County but declined in Sunnyvale. The median selling prices for each of these three areas generally increased throughout 2021 and the first half of 2022. Prices were generally trending downwards in the last half of 2022.

Conclusions
The Winter 2023 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey reports “The level of uncertainty in the economy has elevated dramatically in the months since the Summer 2022 Allen Matkins/ UCLA Anderson Forecast California Commercial Real Estate Survey. The combination of recent Federal Reserve interest rate increases and an increased possibility of a near-term recession has resulted in more challenging commercial real estate financing including a demand by financiers for higher equity participation and higher rate of return hurdle rates. Nationwide, a contraction in new commercial development is now underway. The latest Survey, taken in December 2022, coupled with analysis by the UCLA Anderson Forecast, paints a relatively better picture for commercial real estate in California. This is particularly true for the period after 2023. Nevertheless, commercial real estate development in California is also impacted by higher interest rates and the expected slower economic growth.” Commercial (retail and office) properties exhibited mixed indications due to the pandemic in 2021. Some retail is doing fine, but the hospitality/leisure/entertainment industries remain depressed. Office demand appears in limbo as many employees may or may not fully return to offices, particularly among tech companies. Layoffs commencing in the second half of 2022 resulted in a one percentage point loss in the region’s share of this 1.1 million-person workforce.

Demand for commercial space is tempered by remote work but specialized R&D space is in demand. Though remote work is shifting the dynamic, leasing activity remained strong throughout 2022. Based on discussions with market participants, general market conditions and the sales data we analyzed, we applied a market conditions rate of change to the commercial land sale comparables used of negative 0.75% per month from the start of 1Q-2020 through 4Q-2021.

For the year 2022 prices were more stable for commercial and did not warrant adjustment.

Over the past couple of years, industrial (and warehouse) market statistics indicated that rental rates have been trending upwards, while vacancy rates generally stabilized near 5%. Market participants opined that selling prices are also increasing, especially for large sites suitable for data centers. The increase in industrial value is supported by an improved paired sale at 3600 Peterson Way in Santa Clara that sold in October 2016 for $30 million and again in June 2019 for $37 million, which indicates a straight-line increase of about 0.72% per month for this 75,800 square foot building on an approximate 5.42-acre site. 1623 S 10th Street in San Jose sold for Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 38 $3,000,000 in August 2018 and again for $3,801,000 in October 2020, indicating a straight-line increase of about 1.0% per month. Based on changing rents and prices, we concluded that competing industrial land prices were increasing at the rate of about 0.75% per month from the date of sale of the comparables through Q4-2020, with no additional adjustment in 2021 or 2022.

Santa Clara (and the Bay Area in general) is an undersupplied housing market. Demand for housing is expected to continue in the long-term, with increased demand for higher density housing options, a result of the scarcity of developable land and the more affordable nature for prospective buyers/renters.

Market data and market participants report that residential prices declined in the latter part of 2018 and were stable overall during 2019. In 2020, the residential market showed different trends depending on property type. The market generally saw greater demand for detached residential over the course of 2020 and 2021 as buyers looked to have more indoor/outdoor space since they began spending a greater proportion of time at home. Meanwhile, condominiums and apartments experienced a slower market during 2021. Comparing just the December 2022 city of Santa Clara overall median residential sales price to the December 2021 overall median residential sales price, MLS Listings shows a decline of 4.83% year or a decreasing rate of change of about .40% per month. Based on the market reports cited above, sales data analyzed, and market participant interviews, for the very low-density residential land sales used in the following analysis we applied an increasing rate of change of 0.25% per month from the start of 2020 through the fourth quarter 2020, an increasing rate of change of 1.00% per month from the start of 2021 through the fourth quarter 2021, and an decreasing rate of change of 0.40% per month from the start of 2022 through the fourth quarter 2022.

For the high-density land sales, median sale prices oscillated somewhat and multifamily rents stagnated or declined during 2021. Rent growth picked back up in the first half of 2022. CoStar’s Santa Clara Multi-Family report showed stagnating rent growth in the second half of 2022. Over the longer term, rent growth in Santa Clara has averaged 3.6% annually over the past decade. We conclude no market change is warranted during 2019, 2020 and 2021. A 3.6% annual market change is applied during 2022 for this property type.

LAND USE ORDINANCES
Since we are analyzing hypothetical lots, we supposed that each use would be based on its appropriate General Plan designation. The appropriate zoning category for each hypothetical use was not a critical factor as the General Plan is the long-term planning tool used by the City.

Furthermore, comparable land sale transactions typically sell based on their intended use, which is supported by the General Plan in almost all cases. The City’s Phase II Land Use map is in effect and is intended to guide land uses for the years 2015-2025. Compared to Phase I, it Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 39 expands the areas within the city where mixed-uses and higher-density residential is allowed. We supposed the following General Plan designations for each hypothetical use:

HIGHEST AND BEST USE
We studied the legally permissible, physically possible, financially feasible, and maximally productive uses of each hypothetical lot. We considered prevailing market conditions and recent development trends. As indicated in the market conditions section, except for retail/hospitality/office, each product type is generally experiencing increasing or stable prices and stabilizing vacancy rates. These are indications that the highest and best use is to construct the legally permissible product for each respective property type. However, for the commercial use, since many retail and office projects are on hold, construction would not likely be undertaken until the market improves, unless preleased or a build-to-suit is procured. Therefore, the highest and best use for the hypothetical commercial use would be to hold for future development of a commercial building until the market improves, unless preleased or a build-tosuit. We concluded to the following components of property uses for the highest and best use of the hypothetical lot based on the overall market and the instruction of the Client:

We applied a hypothetical condition that each of these uses was allowed on the hypothetical subject lot.

Use of Hypothetical Lot General Plan
Very Low Density Residential Very Low Density Residential Low Density Residential Low Density Residential
High Density Residential High Density Residential
Medium Density Residential Medium Density Residential
Commercial Regional Commercial
Industrial Light Industrial
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 40 For this analysis and based on the market and the City’s General Plan, we concluded the most reasonable density to support the residential uses was about the midpoint or nearer the high end of the allowed density ranges (based on ever-increasing density proposals/approvals):
x 10 dwelling units per gross acre (DU/AC) for Very Low-Density Residential; x 13 dwelling units per gross acre (DU/AC) for Low-Density Residential; x 30 DU/AC for Medium-Density Residential; and
x 45 DU/AC for High-Density Residential.

For Very Low-Density Residential, which allows up to 10 DU/AC, we concluded that the most likely subdivision for a hypothetical one acre of land would support a subdivision at the high of this range, or 10 DU/AC. This is because the scarcity of land requires ever increasing densities to make projects financially feasible.

The likely commercial use would be an office building, but only if preleased or a build-to-suit.

The likely industrial use would be a data center, flex, light industrial building or some type of interim contractor storage yard with minimal building improvements.

APPRAISAL PROCESS
The appraisal profession has generally relied upon three traditional approaches in estimating the market value of real property. These are the Income Capitalization Approach, the Sales Comparison Approach, and the Cost Approach. While all three approaches are always considered in a valuation assignment, all three are not always applied. The quantity and quality of available data and the applicability of each approach relative to the value being sought are important factors in reconciling to an opinion of value.

Market value was estimated using the sales comparison approach. The income capitalization approach is seldom used when valuing land. The cost approach did not offer substantial insight into this estimate of market value since there are no building improvements. Sellers, buyers, and our peers in this market rarely rely on the cost and income capitalization approaches when offering, purchasing, or valuing properties similar to the hypothetical subject lots. Therefore, we did not undertake a cost or income capitalization approach.

Following we estimated the value of a hypothetical one-acre lot under each use scenario described above, as if located within the 95050 zip code, since the most data was discovered in this zip code. Next, we applied the weighted average of the highest and best land use component, Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 41 based on the percentage of total land area associated with the different property types (as described above) that sold in the City of Santa Clara in the 12 months prior to the date of value (as reported by Old Republic Title Company). Lastly, we applied any necessary locational differences from the 95050 zip code conclusion to arrive at the appropriate average lot value in the 95051 and 95054 zip codes.

AVERAGE VALUE ESTIMATE IN 95050 ZIP CODE
Very Low-Density Land Value
The writers examined data that was discovered by: talking to brokers, agents, property owners, and market participants from within the subject market; reviewing DataTree.com, MLSlistings.com, and CoStar.com databases for recent sales; and searching Loopnet.com and broker databases for current listings. We also reviewed development reports provided by the planning departments of Santa Clara and other nearby cities.

As stated above, for the very low-density value component, we assumed a density of 10 dwelling units per acre, at the high end of the allowed range under the Very Low-Density General Plan designation, which allows up to 10 dwelling units per acre. We searched for competing sales and listings of properties throughout Santa Clara and adjacent cities which were intended for development with residential densities less than 25 dwelling units per acre and that closed escrow over the last three years. We first analyze the subject hypothetical one-acre site located in zip code 95050 since more appropriate sales from this zip code were discovered. The sales we found most comparable are displayed on the following adjustment grid. The adjustment grid serves two purposes. First, it presents data, analysis, and conclusions about the subject and comparables in a way that facilitates comparison. Second, it presents the data in a format whereby the reader can follow the writers’ adjustment process.

A parcel map for each comparable sale is displayed in the Addenda. Selling prices were verified using our summary transcript of the public record and conversations with selling and listing brokers/agents, sellers, and/or buyers when possible. A map showing the location of these comparables is displayed in the Addenda.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 42 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 43 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 44 Adjustment Process
Transactional adjustments were made sequentially for property rights conveyed, financing terms, conditions of sale/motivation of participants, expenditures incurred by the buyer after the sale, i.e. demolition costs, and market conditions since the sale date. Market conditions adjustments are applied from the start of the first quarter 2020 through December 2022, based on trending sales data and our observations.

Comparable Sale VLD-1 is the sale of single-family lot improved with an older home. The buyer of Comparable 1 is an investor and intends to demolish the existing home and improvements.

The lot was reported to have been approved for six single family units in the past, however that transaction never consummated. Although the lot was most recently marketed with the potential of being subdivided to provide four multiple guaranteed units without city approval, we depicted 6 units on the sales grid due to its reported pre-approval. The property was reported to have been owner occupied at the time of sale. This sale has a R1-6L zoning and a low density residential general plan that allows 8 to 19 dwelling units per gross acre compared to subject’s very low density residential general plan that allows up to ten units per gross acre.

Comparable Sale VLD-2 is the sale of residential lot improved with an older home. The buyer of Comparable VLD-2 intends to demolish the home and construct a new two-story dwelling and add a 748 square foot detached additional dwelling unit (ADU). This comparable will not pay park impact fees since it already had a home improved on it and ADU’s are exempt under the Santa Clara City Code (17.35.090).

Comparable Sale VLD-3 was the sale of an improved lot that could support two lots or a SFD and an ADU. The listing broker opined that the existing improvements needed a lot of work, but the buyer intended to move into the home, which dated from the 1940s. Based on the expected utilization of the improvements, we concluded that a downward adjustment was warranted for their contributory value. The amount of adjustment was estimated based on our observations, input from the listing broker, and a good fit for the data. A downward adjustment of $150,000 for this element of comparison was applied to the comparable on the Conditions of Sale line.

Comparable Sale VLD-4 and Comparable Sale VLD-5 are the sales of two single-family lots improved with older homes. These comparables were offered together by separate ownerships.

The comparables were offered as a development site and a four lot conceptual site plan was included with the listings. Instead of a four-lot subdivision, the buyer intends to demolish both of the homes and subdivide the two existing lots into six lots and one common access lot. These comparables were selected to help bracket the subject’s lot size. These sales were relisted on April 20, 2022 for $11,500,000. The MLS shows that the properties were sold on August 23, Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 45 2022 for $12,000,000. The reported close of escrow was December 9, 2022. However, the transaction has not closed escrow and was reported by the listing broker to be in contract subject to all of the entitlements. The new subdivision if approved will have six lots with five single family homes and four condominium units (two of these will be affordable housing units). As of the date of value the property did not have approvals for this new proposed development.

Comparable Sale VLD-6 was the sale of two vacant lots that could support a reported 8 or 9 unit development. The seller had previously applied for a tentative map to allow for an 8-unit townhouse development. The proposed development was not approved and the lots currently do not have any pending approvals. The lots were not listed on the MLS but were reported to have been actively marketed for six months. The property was listed at $2,700,000 and was reported to have had four offers. This was an all cash sale.

Comparable Sale VLD-7 was the sale of a vacant lot that could support a reported 4 unit development. No pending approvals at the time of sale. Buyer was not sure if they will develop the lot for single family or multi-family use. The comparable had only one offer and it was an all cash sale.

Comparable Sale VLD-1 was reported to have been owner occupied at the time of sale and could be rented. The cost of demolition was offset by the rents that could potentially be received. The seller of Comparable Sale VLD-2 was given some time to lease back following close of escrow; again, we concluded that the cost of demolition would be offset by rental income. The sellers of Comparable Sales VLD-4 and VLD-5 were each given a short time to lease back following close of escrow; again, we concluded that the cost of demolition would be offset by rental income.

Comparable Listing 1 is the current listing of two single-family lots with each improved with an older home. The older homes will be demolished (the cost of demolition would be offset by rental income during the entitlement process). The properties are each listed at $2,300,000 ($4,600,000 total asking price) and must be purchased together. The listing agent is part owner and reported that the development has been approved by the City of Santa Clara and it is ready to pull permits within 3-6 months. The project consists of two adjacent properties that have been approved for two single family detached dwellings and six townhouses. The agent reported that they have interest in the property but have had no offers.

Comparable Listing Offer 2a and Comparable Listing Offer 2b are November 2022 offers for the current listing of a vacant corner parcel. This property was originally listed for $1,498,900 in July 2022. The listing price was reduced in September 2022 to $1,398,900. The price was again reduced in October 2022 to $1,298,900. Offer 2a was reported to have been $1,100,000 and Offer 2b was reported to have been $1,115,000. Both offers were considered low and rejected by the owner. The lot is currently marketed as having the potential for a duplex or fourplex.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 46 Locational adjustments were broken into elements that reflect the property’s identity to potential tenants or buyers (exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby properties, proximity to enhancing or detrimental factors, or an identifiable valuation element relating to address (locational appeal, zip code). As will be discussed in the following material, residential land values in the 95050 zip code rated superior to the 95054 zip code but inferior to the 95051 zip code; thus, the 95054-located comparable is adjusted upward and the 95051- located comparable is adjusted downward.

Locational adjustments were warranted for the elements of comparison as summarized on the grid. Although Comparable VLD-2 backs to a public park, beyond the park is San Tomas Expressway, which is within about 200 feet of this comparable and is not separated by a sound wall, rating inferior to the subject; an overall upward adjustment is concluded for this element of comparison. Comparable VLD-4 and VLD-5 are considered to be in a superior location with a higher median home sales price and are therefore rated as overall superior to subject.

Physical and Use/Zoning adjustments were broken into elements that reflect property size, utility/topography, allowed land uses and density, intended use/development density, affordable housing component, park fees, and entitlement status.

Comparable VLD-3 is located at the elbow of two streets and thus has an irregular pie-slice shape; an upward adjustment is concluded for inferior utility. For this analysis, upward adjustments were warranted for the lower densities of Comparables VLD-2 and VLD-3, rating inferior for this element of comparison. Excepting Comparable VLD-1, each comparable warrants downward adjustment for having either no park fees or for having lower park fees than the hypothetical subject lot.

As discussed in the preceding material, market conditions adjustments are applied from the start of the first quarter 2020 through the end of the fourth quarter 2022.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 47 Conclusion
Following adjustment for the elements summarized on the grid, we concluded to the overall ratings displayed at the bottom of the sales grid. Bracketed by the comparable ratings, giving most weight to the sale comparables located in Santa Clara, we concluded to the following unit value of unentitled very low-density residential land in the 95050 zip code:

Unit $/SF x Land Area (SF) = Indicated Value
$115 x 43,560 = $5,009,400
Estimated Market Value of a 1-Acre
Very Low-Density Residential Lot in 95050 Zip Code: $5,009,400 Low Density Land Value
For the low-density value component, the City’s land use classification cites a low-density range of 8-18 dwelling units/acre (DU/Acre), which is greater than the maximum 10 DU/Acre allowed in the very low-density classification. We assumed a density of 13 DU/Acre, about the mid-point of the density range. In the market, the primary value difference between very low and lowdensity land relates to density. The density adjustment was estimated based on the relationship between price per SF and density, as evidenced by the comparables. In the chart below, we plotted the preceding very-low density comparables and the high-density comparables used in the following high-density value scenario.

As shown in the chart above, the price per square foot of land increases with increasing density.

This is congruent with our observations in the market that as density increases, price per SF of land typically increases. The difference in pricing for changing densities is clear when comparing Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 48 the lowest to the higher densities. And the price/SF difference is less when comparing the median to higher densities. We concluded there is a difference in value/SF between the preceding very low density and low-density residential which has a higher density. The trendline in the chart above indicates that the appropriate unit value based on a density of 13 dwelling units per acre would be about $120 per square foot. Historically, there has been a 5% to 10% price difference between the preceding very low density and low-density residential. Based on the comparable data, with a density of 13 dwelling units per acre for the low-density residential land use, we concluded to $120/SF.

Conclusion
We concluded to the following Low-Density residential value in the 95050 zip code for 1-acre of land:

Unit $/SF x Land Area (SF) = Indicated Value
$120 x 43,560 = $5,227,200
Estimated Market Value of a 1-Acre
Low-Density Residential Lot in 95050 Zip Code: $5,227,200 High Density Land Value
Similar to the preceding very low-density land search, we searched data sources for high and medium-high density residential land transactions and examined data that was discovered by talking to brokers, agents, property owners, and market participants from within the subject market. We also reviewed development reports provided by the planning departments of Santa Clara and other nearby cities.

As stated above, for the high-density value component, we assumed a density of 45 dwelling units per acre, about the midpoint of the allowed range under the High Density General Plan designation, which allows 37-50 dwelling units per acre. The sales we found most comparable are displayed on the next grid. A map showing the location of these comparables is displayed in the Addenda. A parcel map for each comparable sale is also displayed in the Addenda. Selling prices were verified using our summary transcript of the public record and conversations with selling and listing brokers/agents, sellers, and buyers. We were unable to confirm the details of Comparable HD-2 with a party to the transaction. We relied on published data, city records, subscription service data, news articles, and information available from a summary transcript of the public record for transaction details regarding these comparables.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 49 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 50 Adjustment Process
Transactional adjustments were made sequentially for property rights conveyed, financing terms, conditions of sale/motivation of participants, expenditures incurred by the buyer after the sale, i.e. demolition costs, and market conditions since the sale date.

Comparable HD-1 was purchased as part of an assemblage—the buyer had recently purchased two adjacent properties. Similarly, Comparables HD-4, and HD-5 were also purchased as part of an assemblage. Based on the data, a downward adjustment is warranted for motivation on the part of the buyer due to the assemblage.

HD-6 is a current listing that has been on the market for approximately 24 months and a downward adjustment is warranted for conditions of sale. The adjustment we used was a good fit for the data.

Comparables HD-1, HD-3, HD-4, and HD-5 required the demolition of existing improvements before their new, intended use could be realized. We concluded this expense was offset by the interim income from the improvements. So, no additional adjustment was warranted for this element of comparison. Similarly Listing HD-6 will require the demolition of three industrial buildings which can be offset by the current rental income. Currently the buildings are reported to be leased at $2.00 sq.ft./month on a NNN basis. The leases give the owner a right for early termination. In 2001, solvent contamination in soil and ground water near a sump was reported within the former metal shavings storage enclosure located on one of the parcels (2301 Calle De Luna). In September 2016, the property owner submitted a Voluntary Cleanup Program application and entered into a Voluntary Cleanup Agreement with the DEH for oversight of future property assessment activities and mitigation activities, if required, to facilitate redevelopment of the property. The listing broker stated that the current cost to clean up the site is unknown. A downward adjustment is warranted for this risk of uncertainty. The adjustment we applied was a good fit for the data.

Comparable HD-2 is a closed transaction of an infill site improved with a vacant 30,000 square foot office building. This building will require demolition prior to redevelopment, estimated at $200,000, based on our observation and cost data. This element of comparison is shown as an upward adjustment on the Expenditures After Sale line.

Locational adjustments were broken into elements that reflect the property’s identity to potential tenants or buyers (exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby properties, proximity to enhancing or detrimental factors, or an identifiable valuation element Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 51 relating to address (locational appeal, zip code). Locational adjustments were warranted for the elements of comparison summarized on the grid.

Physical and Use/Zoning adjustments were broken into elements that reflect property size, utility/topography, allowed land uses and density, intended use/development density, affordable housing component, park fees, and entitlement status. Physical and use/zoning adjustments were warranted as summarized on the grid.

Comparable HD-1 and HD-3 both had two street frontages, allowing for greater design flexibility, rating superior utility, and warranting downward adjustment. Comparables HD-4, HD-5, and HD-6 are zoned Transit Neighborhood and have a minimum density of 100 dwelling units per acre. Comparable HD-3 will have 100% affordable housing and was given a 15% credit on the park fees. Comparable HD-4 has been given a credit of $1,290,000 for park fees in exchange for 14,000 square feet of dedicated park space and private amenities. The comparables proposed building densities/acre bracket the subject; the highest densities warrant downward adjustment and the lower densities warrant an upward adjustment. Comparables HD-1 and HD-2 will require a zoning change or general plan amendment to allow for residential and an upward adjustment is warranted for this element of comparison. The comparables with approved entitlements rated superior to the subject’s unentitled status and are adjusted downward. Park impact fees varied somewhat based upon the use and timing of the fee.

Conclusion
Following adjustment for the elements summarized on the grid, we concluded to the overall ratings displayed at the bottom of the grid. The comparables were analyzed based on a price per square foot and a price per unit units of comparison. The range of adjusted values is more consistent on a price/SF basis rather than a price/density unit basis; therefore, the price/SF is utilized as the primary comparison of value. Bracketed by the comparable ratings, the following value of unentitled high-density 45 DU/Acre residential land in the 95050 zip code is concluded:

Unit $/SF x Land Area (SF) = Indicated Value
$190 x 43,560 = $8,276,400
Estimated Market Value of a 1-Acre
High-Density Residential Lot in 95050 Zip Code: $8,276,400 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 52 Medium Density Land Value
For the medium-density value component, a density of 30 dwelling units per acre is assumed, slightly above the midpoint of the allowed range under the Medium Density General Plan designation, which allows 19-36 dwelling units per acre. In the market, the primary difference between the medium-density land value and high-density land value relates to density. The density adjustment was estimated based on the relationship between price per SF and density, as evidenced by the comparables. In the chart below, we plotted the preceding high-density comparables and the very-low density comparables used in the preceding low-density value scenario. We graphed the change in land value per square foot versus the change in density.

As stated in the preceding material, the data shows the price per square foot of land increases with increasing density, which is congruent with our observations in the market. The difference in pricing for changing densities is clear when comparing the lowest to the higher densities. The chart above indicates that at a density of about 30 dwelling units per acre, the indicated price per square foot is about $180, but is somewhat skewed by the cluster of low density sales.

Historically, there has been a 5% to 10% difference between the medium density residential and the preceding high density. Based on the comparable data, with a density of 30 DU/acre for the medium-density land use, a unit value of $180/SF is concluded.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 53 Conclusion
We concluded to the following medium-density value in the 95050-zip code for 1-acre of land:

Unit $/SF X Land Area (SF) = Indicated Value
$180 x 43,560 = $7,840,800
Estimated Market Value of a 1-Acre
Medium -Density Residential Lot in 95050 Zip Code: $7,840,800 Commercial Land Value
Like the search for residential land sales data, we searched similar data sources and examined data that was discovered by talking to brokers, agents, property owners, and market participants from within the subject market. We searched for recent sales of competing retail and office properties throughout Santa Clara and nearby cities. Those we found most comparable are displayed on the grid on a following page. A map showing the location of these comparables is displayed in the Addenda.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 54 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 55 Adjustment Process
The adjustment methodology was similar as above for the residential land sales.

Transactional adjustments were warranted. As described above, due to a lack of commercial land sales, some improved sales were utilized for which the improvements contributed little to the overall selling price. Comparables C-1, C-2, C-4, C-5, and C-6 were improved at the time of sale. A listing at 160 Saratoga Avenue in Santa Clara (not included in the sales grid) was previously improved with a 15,814 sq.ft. office building that was completely destroyed by fire prior to the listing. The 1.21 acre site is currently reported to be vacant. This property was reportedly listed at $8,900,000 ($168.86/sq.ft. of land area unadjusted) and went into escrow in February of 2023 at an undisclosed price.

Comparable C-1 was marketed as a development site; the eventual buyer planned to continue the retail uses. Based on a discussion with the listing broker, our observations, and the age and condition of these improvements, which comprised about 25,150 SF, the contributory value was estimated at about $60 per square foot of building area, or about 15% of the selling price as shown on the adjustment grid. This is shown as a downward adjustment.

Similarly, the sale of Comparable C-2 included about 7,800 square feet of improvements dating from the late 1950s; which contributed to the overall selling prices. Based on our observations and discussions with the broker, the contributory value for the building was estimated at about $75 per square foot of building area, or about 11% and 16%, respectively of the selling prices as shown on the adjustment grid. These are shown as downward adjustments.

Comparable C-4 included a 6,295 square foot restaurant building originally constructed in 1972.

This site was being sold for land value and the restaurant was leased month-to-month. We concluded that the cost of demolition would be offset by rental income.

Comparable C-5 included a 5,515 square foot restaurant building. The building was vacant at the time of sale, but could have been leased on a month-to-month basis. We concluded that the cost of demolition would be offset by rental income.

Comparable C-6 included two restaurant buildings and one R&D buildings. The buildings were vacant at the time of the close of escrow, but could have been leased on a month-to-month basis.

Based on our observation, we concluded that the cost of demolition would be offset by rental income. The new proposed development (currently pending review) will be a six-story hotel with 396 guest rooms, dining, and event space (totaling 204,444 square feet).

Market conditions adjustments were applied from the contract date through the date of opinion using the degree of adjustment(s) discussed in the Market Conditions section.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 56 Locational adjustments were broken into elements that reflect the hypothetical property’s identity to potential tenants, buyers, or occupants (exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby properties, proximity to enhancing or detrimental factors, or an identifiable valuation element relating to address (locational appeal). Locational adjustments were warranted as summarized on the grid. Note that Comparable C-3 does not face Coleman Avenue, a major arterial, despite its Coleman Avenue address.

Physical and Use/Zoning adjustments were considered for size, utility, off-site improvements, zoning/General Plan, and planning/entitlement status. Within the range of the comparables, larger Comparables C-1 and C-3 warranted upward adjustment. Among the differences in land use ordinances, those of Comparables C-1 and C-2 were more favorable, rating superior and warranted a downward adjustment. Comparable C-3 sold entitled for a hotel development and warranted a downward adjustment for this element of comparison.

Conclusion
Bracketed by the comparables, we concluded to the following for commercial land in zip code 95050:

Unit $/SF x Land Area (SF) = Indicated Value
$95 43,560 $4,138,000
Estimated Market Value of a 1-Acre
Commercial Lot in Zip Code 95050: $4,138,000
Industrial Land Value
We searched the same databases listed above and reviewed other data discovered by talking to brokers, agents, property owners, and market participants from within the industrial market. We searched for recent sales of competing industrial properties throughout Santa Clara and nearby cities with similar industrial markets. We also searched for recent improved sales with improvements that were nearing the end of their economic lives or that contributed little to the overall sale price. Those we found most comparable are displayed on the following grid. A map showing the location of these comparables is displayed in the Addenda.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 57 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 58 Adjustment Process
Adjustments were considered for and applied in a similar manner as above for the commercial sales. Because there are few industrial land sales in this market, we used two sales that were improved with buildings that contributed value to the selling price: Comparables I-4 and I-5. To estimate the residual land value of these transactions, we estimated and deducted the contributory value of the building improvements based on our observations, feedback from the verifying broker(s), and the adjustment that was a good fit for the data. Additionally, most of the recent industrial land transactions we uncovered were intended for data center (see Industrial Land Comparables I-1 and I-2). A transaction at 2315 Mission College Boulevard in Santa Clara (not included in the sales grid) is also a data center land sale that was reported to have been purchased by Amazon Data Services Inc. The 7.04 acre site reportedly sold for $51,817,500 or $168.97sq.ft. of land area (unadjusted), which is high and out of the pattern. This sale could not be fully confirmed but was reported to have closed escrow on January 4, 2022.

Comparable I-5 was purchased by the tenant and based on the data, a downward adjustment was warranted for buyer motivation. After making all other adjustments first, a downward adjustment was warranted for motivation on the part of the buyer.

Market conditions adjustments were applied at the rate concluded to in the Market Conditions section. As stated in the preceding material, industrial property in the City of Santa Clara (and Silicon Valley in general) continues to be in demand, supported by rising asking rental rates, generally stable vacancy rates, and the opinions of market participants.

Like the commercial sales grid, locational adjustments were considered for exposure, visibility, access (to freeways and amenities), and overall desirability of the location, including zip code.

Sale I-3 was adjusted downward for its inferior San Jose location. Locational adjustments are warranted as summarized on the grid.

Physical and use/zoning adjustments were considered for size, utility, intended use, zoning, general plan land use designation, and off-site improvements. Both I-1 and I-2 were purchased by Prime Data Centers. For I-1 the buyer plans to develop a 207,000 square foot data center with a 32MW capacity. For I-2 the buyer plans to develop a three story 80,000 square foot data center with a reported 9MW capacity. The selling agent reported that the property sold entitled and has a “will serve letter’ from Silicon Valley Power. These sales were adjusted downward for the entitlements. Within the range of the comparables, only Comparable I-5 rated superior for its smaller site size, warranting a downward adjustment. Any other warranted adjustments are summarized on the grid.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 59 Conclusion
Following the adjustments discussed above and considering the overall rating comparison for each comparable, the unit values of the most recent comparables suggested a land value in the $130 per square foot range.

We concluded to the following for industrial land in the 95050 zip code:

Unit $/SF x Land Area (SF) = Indicated Value
$130 43,560 $5,662,800
Estimated Market Value of a 1-Acre
Industrial Lot in Zip Code 95050: $5,662,800
Average Value Estimate in 95050 Zip Code
The average value was estimated by applying a weighted average based on the land area of the total sales in Santa Clara in 2022 by property type. The information was obtained from Old Republic Title Company (ORTC). It was an extraordinary assumption of this appraisal that the land areas provided by Old Republic Title Company were accurate.

ORTC reported a total of 1,064 sale transactions in Santa Clara in calendar year 2022. These included 27 commercial sales, 22 industrial sales, 516 residential single-family sales, 30 2-4 residential unit sales, 9 vacant sales, and 460 medium to high-density residential sales which comprised residential unit sales greater than 5 units, condominiums, and townhomes. This compares to 1,442 total transactions reported in 2021 by ORTC.

Residential transactions included single family, townhomes, and condominiums, 2 to 4 unit, and residential units greater than 5 units. Of the total residential sales, and similar to the 2016, 2017, 2020, and 2021 data, 2022 single family transactions comprised the most land area, as shown in the next table. In 2019, commercial and industrial sales comprised about half of the total land area in the city by area. In 2020, 2021 and 2022, a greater percentage of land area sold in the city was residential. Due to declining median residential selling price in 2022, residential unit values were lower compared to 2021. Industrial and commercial land values were unchanged in 2022.

The combination of recent Federal Reserve interest rate increases, expected slower economic growth and an increased possibility of a near-term recession has impacted the market. All these factors resulted in lower 2022 values for the hypothetical one-acre lots. This is congruent with overall market trends over the last year.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 60 The total number of land square feet (SF) sales (broken out by property type) is reflected in the next table:

Old Republic Title Company provided the data depicted in the preceding 2022 City of Santa Clara Sales table, segregated by property type. The single-family sales were grouped into very low density, 2-4 residential sales were grouped into low-density, the townhome and condominium data were grouped into the medium to high-density residential, retail and office was grouped into commercial, and industrial, R&D, and manufacturing was designated industrial. As shown in the table, within the city limits of Santa Clara, commercial/industrial sales accounted for about 27.06% of the total while residential sales accounted for about 72.94% of the total.

Conclusion
The Total Percent in the previous table was applied to the appropriate categories for each property type. Since the data provided by the title company did not segregate medium and highdensity residential, we split the total percentage evenly between the two densities (16.67% /2 =

8.335% to each). As shown in the next table, the appropriate weighted values are summed to produce the average value of a hypothetical 1-acre lot in the 95050 zip code:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 61 Average Value of a Hypothetical 1-Acre
Lot in the 95050 Zip Code: $5,500,000 (Rounded)
AVERAGE VALUE ESTIMATE IN 95051 ZIP CODE
We estimated the value of 1 acre of land for zip code 95050 above. Following we apply any differences in value between the 95051and 95050 zip codes to estimate the average value of one acre of land in 95051.

Estimating Differences Between Zip Codes
Differences between the 95050 and 95051 zip code for each use was based upon market feedback and anecdotal information. We also considered differences in values/rents for the commercial and industrial uses, and compared median selling prices and rents for the residential uses.

Residential Difference
Market participants and selling prices provided support that residential prices in the 95051 zip code are generally higher compared to the 95050 zip code. Some brokers believed that the 95050 area was slightly better due to Santa Clara University and a larger upper-middle class. Others pointed to the fact that the 95051 includes an area of the city close to Apple’s headquarters and also within the Cupertino Union School District, a higher rated school district, which commands residential price premiums. Several brokers reported that some of the nicest neighborhoods in the City are in and around San Tomas Expressway, which bisects 95050 and 95051. One market participant opined that the neighborhoods in 95051 were generally safer and that insurance premiums were lower rendering 95051 to be more desirable. Recent residential yearly-summary median prices/SF and Year End 2022 median prices/SF between the 95050 and 95051 zip codes, as reported by DQ News /CoreLogic and MLS Listings, indicated the following:

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 62 The chart above indicates that the median selling price/SF has historically been higher in zip code 95051, corroborating the general consensus among market participants. This data supports the opinions of market participants that 95050 rates inferior to 95051.

In the next table, based on data reported by the MLS the median price in 95051 has historically been higher than zip code 95050. In the most recent year the 2022 median price for 95051 was about 10% higher than 95050. However, unlike DQ News/CoreLogic which reports all recorded sales transaction, MLS only reports listings marketed on MLS, which often does not include all new construction. This is because builders, in the current market environment, often market their product in-house without using MLS, which is probably more cost effective and garners more marketing control to the builder.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 63 Based on market feedback, historical norms, and giving more weight to the MLS data, supported by historic DQ News/CoreLogic data, we concluded 2022 residential prices in zip code 95051 were 10.0% higher than zip code 95050.

Commercial Difference
We discovered that commercial land values are generally similar among commercial uses located along El Camino Real and Stevens Creek Blvd. within the 95050 and 95051 zip codes, which are the primary commercial corridors in Santa Clara. CoStar reported that the 4Q 2022 average rents for retail between these zip codes were $2.42/SF/Month in 95050 vs. $3.17/SF/Month in 95051.

A historic comparison of the 3-year average asking rental rate (2018-2020) among office properties as reported by CoStar was $3.70/SF/Month in 95050 vs. $3.83/SF/Month in 95051, or about 3.5% higher in 95051. Additionally, CoStar reported a lower vacancy rate in 95051 over the same period (2.14% vs. 6.00% among all office and retail). The 4Q 2022 average rents for office only between these zip codes were $4.75/SF/Month in 95050 vs. $4.08/SF/Month in 95051. The average selling price per square foot among these two zip codes was within 6% of each other over the three year period (2018-2020), $451 in 95050 vs. $478 in 95051 for both office and retail properties. Note that 95050 only had one retail sale in 4Q 2022 which was not sufficient to do a meaningful comparison. Based on market data, rental rates differences, historic selling price differences, and vacancy rate differences we concluded that commercial land values in 95051 rated 15% inferior to 95050.

Industrial Difference
Among industrial properties, much of the product in the 95051 zip code is built as, or allows for R&D and higher intensity office uses, and greater floor area ratios, rating superior to 95050.

Furthermore, about 65 acres of industrial lands in the 95051 zip code, around Kifer Rd and Lawrence Expressway, are converting to residential uses, reducing the supply of industrial properties, and pushing increasing demand and value for industrial at the same time. A comparison of the average rental rate per SF, as compiled by CoStar, showed that the average rental rates were equal in 95051 during 2022 ($2.33/SF in 95050 vs. $2.33/SF in 95051). 2022 average selling prices were relatively similar ($490 in 95050 vs. $438 in 95051), these numbers represent a difference of approximately 10%. After consideration for differences in asking rents, Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 64 sale prices, and the opinions of the market, we concluded that industrial land prices rated about equal the 95054 zip code compared to 95050. A discussion with a local industrial broker felt that all areas of the city were generally comparable. After consideration for differences in asking rents, sale prices, and the opinions of the market, we concluded that industrial land prices rated about equal in 95051 compared to 95050.

Conclusion of Value in 95051 Zip Code
Based on the above, we concluded residential uses in zip code 95051 rated 10.0% superior, while commercial values rated 15% inferior, and industrial values rated similar. In the next table, the adjusted price per acre for each land use in the 95051 zip code was adjusted and the appropriate weighted values are summed to produce the average value of a hypothetical 1-acre lot in the 95051 zip code:

Average Value of Hypothetical 1-Acre
Lot in the 95051 Zip Code: $5,840,000 (Rounded)
AVERAGE VALUE ESTIMATE IN 95054 ZIP CODE
We utilize the same weighted land values from zip code 95050 and apply any differences in value between the 95054 and 95050 zip codes.

Estimating Differences Between Zip Codes
For 95054 value conclusions, we applied the same methodology used above to estimate the value differences between the 95050 and 95051 zip codes.

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 65 Residential Difference
Median and average selling prices provided support that the residential prices in the 95054 zip code were generally similar or a little inferior when compared to the 95050 zip code. Brokers active in the market reported a range of opinions, that generally these two zip codes are not much different, but that 95054 tends to rate a little inferior. The 95054 zip code is affected by airport noise and has a higher concentration of higher-density housing units; there is less single-family selection and therefore fewer traditional residential neighborhoods with detached units. Recent yearly-summary median prices/SF for the 95050 and 95054 zip codes, as reported by DQ News /CoreLogic and MLS Listings, indicated the following:

The median selling prices/SF has been historically higher in the 95050 zip code. The historic DQ News/CoreLogic data indicated that the aggregate median price in 95054 was 5.0% lower in 2019 and about 2.1% lower in 2020. In 2021 the difference was about 2.7% lower. In 2022 the difference was about 15% lower. This data supports the opinions of market participants that 95054 generally rates inferior to 95050. As previously discussed, market data derived from the local MLS shows that residential prices were trending upward in 2020, 2021 and the first half of Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 66 2022. However, prices for single family homes were generally trending downwards in the last half of 2022. In addition, the median days to sell increased in the last half of 2022. This resulted in an aggregate median price in 95054 of about 15% lower in 2022.

The next table is the same MLS data displayed above.

Based on market data, historical norms, the opinions of market participants, and giving more weight to the historical norms, supported by historic DQ News/CoreLogic data (which includes new and resale residential construction), we concluded that residential land prices in zip code 95054 were historically lower than zip code 95050, on the order of 5%.

Commercial Difference
Most of the new commercial planned or proposed for the 95054 zip code comprises office and hotel uses, however, there are several mixed-use projects in process, notably Related Santa Clara. This area of Silicon Valley includes the Golden Triangle and has historically supported higher intensity uses and properties offering freeway visibility (U.S. 101 and CA-237). The addition of Levi’s Stadium and the draw of Great America theme park and the Santa Clara Convention Center create additional synergies for this zip code. The greatest concentration of Class A office is located within this zip code and more is planned. As noted above, there are several mixed-use projects in process, which if built-out, will add both retail and new residential customers.

A comparison of the historic 3-year average rental rate (2018-2020) compiled by CoStar, revealed that the average rents between these zip codes was slightly lower in 95054, $4.33/SF vs. $4.53/SF in 95050, a difference of about 4.4% based on office and retail uses. The 4Q 2022 average rents for office only between these zip codes were lower in 95054, $4.25/SF vs. $4.75/SF in 95050. The 95050 rental rate is influenced by newer retail construction which typically commands higher rental rates. A comparison of office rents indicates that the historic 3- year average (2018-2020) of $4.35/SF/Month in 95054 is about 14.9% higher than the $3.70/SF/Month in 95050. And the average selling price per square foot in the 95054 zip code was 15.5% higher over the last three years (2018-2020) compared to 95050 ($451 in 95050 vs. $521 in 95054) for office and retail sales. Note that both 95050 and 95054 only had one retail Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 67 sale in 4Q 2022 and 95054 had zero office sales which was not sufficient to do a meaningful comparison. Based on the data, including broker estimates and rental rate differences in each zip code, and considering that there is a greater proportion of office uses compared to retail uses, we concluded that an adjustment of 10% was warranted for 95054 for higher commercial land value.

Industrial Difference
Among industrial properties, much of the product in the 95054 zip code is built as, or allows for R&D and higher intensity office uses, rating superior to 95050. This also allows for greater floor area ratios in 95054. Most market participants reported higher prices in 95054 due primarily to superior freeway access and fewer heavy-industrial uses. A comparison of the average rental rate per SF, as compiled by CoStar, showed that the average rental rates were equal in 95054 during 2022 ($2.33/SF in 95050 vs. $2.33/SF in 95054). 2022 average selling prices were similar ($490 in 95050 vs. $479 in 95054), these numbers represent a difference of approximately 2%. After consideration for differences in asking rents, sale prices, and the opinions of the market, we concluded that industrial land prices rated about equal to the 95054 zip code compared to 95050.

Conclusion of Value in 95054 Zip Code
Based on the above data and analysis, the adjusted price per acre for each land use in the 95054 zip code was adjusted and the appropriate weighted values are summed to produce the average value of a hypothetical 1-acre lot in the 95054 zip code:

Average Value of a Hypothetical 1-Acre
Lot in the 95054 Zip Code: $5,240,000 (Rounded)
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 68

RECONCILIATION AND OPINION OF AVERAGE VALUES
The sales comparison approach was the appropriate value approach for each land use. Total sales statistics revealed that about 27.06% of the total sales in the city by land area were commercial and industrial transactions and the other 72.94% were residential. This represents a greater percentage of residential sales than in 2021. Because residential unit values are generally greater than commercial and industrial, this would have resulted in higher concluded values for each zip code in 2022 compared to 2021. However, as stated previously, residential selling prices declined in 2022. This resulted in lower residential unit values for 2022. Industrial and commercial land values were unchanged in 2022 compared to the preceding year. The combination of recent Federal Reserve interest rate increases, expected slower economic growth and an increased possibility of a near-term recession has impacted the market. All these factors resulted in lower 2022 values for the hypothetical one-acre lots for each zip code compared to 2021.

We concluded to the following average value for each zip code on December 31, 2022, the effective date of value opinion:

Opinion of Average Value of a 1-Acre
Lot in the 95050 Zip Code: $5,500,000 (Rounded)
(Five Million Five Hundred Thousand Dollars)
Opinion of Average Value of a 1-Acre
Lot in the 95051 Zip Code: $5,840,000 (Rounded)
(Five Million Eight Hundred Forty Thousand Dollars)
Opinion of Average Value of a 1-Acre
Lot in the 95054 Zip Code: $5,240,000 (Rounded)
(Five Million Two Hundred Forty Thousand Dollars)
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 69

ADDENDA
x Old Republic Title Company 2022 Sales data in City of Santa Clara (on file) x City of Santa Clara Supplemental Instructions for the Appraisal of the Fair Market Value of Land
x Maps of the Sale Comparables
x Land Sale Comparable Parcel Maps
x Brokerage Reports (on file)
x Qualifications of Appraiser

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 70 Attachment A
Supplemental Instructions
for the Appraisal of the Fair Market Value of Land
The following information and instructions will be used by the City when setting the land value used in the formula for determining the impact fees due in lieu of park and recreational land dedication pursuant to Santa Clara City Code 17.35. (Approved by Santa Clara City Council—June 7, 2016) Background.

On July 15, 2014, Council added Chapter 17.35 “Park and Recreational Land” to the Santa Clara City Code to ensure that new residential development provides adequate community and neighborhood park land for active recreational uses and/or pays a fee in-lieu of parkland dedication to mitigate the impacts of the new growth pursuant to the California Quimby Act and/or Mitigation Fee Act.

17.35.040 Formula for calculation of fee in lieu of land dedication. (a) When a fee is required to be paid in lieu of parkland dedication, the maximum amount of such fee shall be determined by the fair market value of the amount of land that would otherwise be required to be dedicated pursuant to SCCC 17.35.030, as set forth below. The date of valuation of the property for in-lieu fee purposes shall be the date that the City determines that the developer’s application for a parcel map or tentative subdivision map, or application for projects not involving a subdivision, is complete. (b) Fair Market Value.
(1) The City shall determine the fair market value of the property by using the average per acre land value for property in the City of Santa Clara, based upon a survey of land values and sale records in the City. The City Council shall set a minimum of three such average values, one for each of the three existing Zip Codes in the City (95050, 95051, 95054). The City Council may, at its discretion, set average values for additional subregions of the City. The City Council shall review the fair market values not less than annually and set the values in a Council resolution. (2) If the developer objects to this determination of fair market value, the developer may elect to have the value established by appraisal. If the developer chooses this option, the developer shall deposit with the City an amount sufficient to cover the cost of an appraisal, which the City shall conduct. The appraisal shall be completed prior to approval of the tentative or parcel map or, for developments not involving a subdivision, prior to the issuance of a building permit. (c) Based on the determination of fair market value set forth in subsection (b)(1) of this section, for each of the dwelling unit categories, the City Council shall set the amount of fees to be paid in lieu of parkland dedication in a Council resolution, which the Council shall review annually. (Ord. 1928 § 3, 7-15-14).

Attachment A—Supplemental Instructions for Appraisal Page 1 of 3

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 71 Guidelines for Appraiser:
a. Appraiser is to provide a “Fair Market Value” for an average acre of land (hypothetical, rectangular, useable site) for property in each of the three existing City of Santa Clara Zip Codes 95050, 95051, 95054. The opinion will conform to Uniform Standards of Professional Appraisal Practice. b. Valuation Date: December 31 of each year.
c. Location & Property Sales Data Set Boundaries: Data set will begin with sales data from within Santa Clara City limits.
d. Data Set Date Range: Use data from January 1st to December 31st of each year. Example: January 1, 2015 to December 31, 2015 for “December 31, 2015 Valuation Date.” See contingencies below. e. Property Types: Use all of the following property types: Single Family (low and very low density), High Density Residential, Medium Density Residential, Commercial, Industrial, Lots and Land. f. Contingencies for Limited Data Set of each Property Type: If there are insufficient, credible data points or sales of a particular property type, then appraiser will explore and use comparable sales from the local competitive market area, adjacent to City of Santa Clara. A fixed distance from City of Santa Clara city limit is not given, however a compelling, rational basis for the selection of the competitive market area must be given by the appraiser in the report. Preference is for closer, more recent, and comparable; discretion is given to the appraiser.
g. Sales Transactions Data not to be used: Do not use transactions if they are not an arms-length transaction, have encumbered/clouded title, are environmentally impaired site, or are more than three (3) years old. h. Inflation factors for Comparable between 1 and 3 years: An inflation factor will be computed and applied to comparable sales over one year based on reasonable and rational considerations such as sales and rental trends or other appropriate methods.
i. Sales Transactions Data that may be included: May use real estate sales transactions by the City of Santa Clara for additional neighborhood or community parkland. j. Data Values excluded: No values or set of values at the high or low end of the data set are to be excluded from consideration in the average values on the sole basis of being relatively high or low; however, a check for consistency among comparable values will be done, and a rational basis should be provided for credible comparable transactions if not used.

Attachment A—Supplemental Instructions for Appraisal Page 2 of 3

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 72 k. Research Factors to be considered for Comparable sales: The factors to be used to compare property values include, but are not limited to physical factors, economic factors, market conditions verification to parcel maps, public records, CoStar data bank. Additional factors may be used provided there is a rational basis for doing so. l. Reconciliation of value differences: The approach will be comparative, iterative, qualitative and quantitative, and will be made at the appraiser’s discretion. m. Weight to be applied to Property Types: The weighted average of each property type will be based on the percentage of land area in the sales transactions, for example, if 25% of total acreage is high density residential, then the relative weight of that property type will be 25%. (The weight will not be done by the quantity of sales of each type or the percent of value of sales of each type). n. Reporting: A draft valuation report will be generated by March 15. City will provide for a two week circulation and comment period. The valuations included the final valuation report will be used in the calculation formula for fees prepared by staff to be reviewed by Council as part of the annual City budget process and Municipal Fee Schedule adoption by June 30. Fees will be implemented on or after July 1 depending upon Quimby Act or Mitigation Fee Act provisions of the Council resolution.

Attachment A-Supplemental Instructions for Parkland Dedication In Lieu Fee Process and Schedule 2016 Attachment A—Supplemental Instructions for Appraisal Page 3 of 3

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 73

VERY LOW-DENSITY RESIDENTIAL SALE COMPARABLE LOCATION MAP Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 74

HIGH-DENSITY RESIDENTIAL SALE COMPARABLE LOCATION MAP
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 75

COMMERCIAL SALE COMPARABLE LOCATION MAP
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 76

INDUSTRIAL SALE COMPARABLE LOCATION MAP
Real Estate Appraised: Thr
Frank Schmidt & Associ
C
ree Hypothetical One-Acre Lots, One for Each Zip C
iates Phone: 510-468-9219 fschmidt@valuat

COMPARABLE LAND SALE PARCEL MA
Very Low Density Land Comparable Sale VLD 1
Very Low Density Land Comparable Sale VLD 2
Code, Santa Clara, CA
tionconsultant.net 77
APS
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 78

COMPARABLE LAND SALE PARCEL MAPS
Very Low Density Land Comparable Sale VLD 3
Very Low Density Land Comparable Sale VLD 4

Real Estate Appraised: Thr
Frank Schmidt & Associ
C
ree Hypothetical One-Acre Lots, One for Each Zip C
iates Phone: 510-468-9219 fschmidt@valuat

COMPARABLE LAND SALE PARCEL MA
Very Low Density Land Comparable Sale VLD 5
Very Low Density Land Comparable Sale VLD 6
Code, Santa Clara, CA
tionconsultant.net 79
APS
Real Estate Appraised: Thr
Frank Schmidt & Associ
ree Hypothetical One-Acre Lots, One for Each Zip C
iates Phone: 510-468-9219 fschmidt@valuat
Very Low Density Land Comparable Sale VLD 7
Very Low Density Land Comparable Listing 1
Code, Santa Clara, CA
tionconsultant.net 80
Real Estate Appraised: Thr
Frank Schmidt & Associ
ree Hypothetical One-Acre Lots, One for Each Zip C
iates Phone: 510-468-9219 fschmidt@valuat
Very Low Density Land Comparable Listing 2
Code, Santa Clara, CA
tionconsultant.net 81
Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 82

COMPARABLE LAND SALE PARCEL MAPS
High Density Land Comparable Sale HD 1
High Density Land Comparable Sale HD 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 83

COMPARABLE LAND SALE PARCEL MAPS
High Density Land Comparable Sale HD 3
High Density Land Comparable Sale HD 4

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 84

COMPARABLE LAND SALE PARCEL MAPS
High Density Land Comparable Sale HD 5
High Density Land Comparable Sale HD 6

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 85

COMPARABLE LAND SALE PARCEL MAPS
Commercial Land Comparable Sale C 1
Commercial Land Comparable Sale C 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 86

COMPARABLE LAND SALE PARCEL MAPS
Commercial Land Comparable Sale C 3
Commercial Land Comparable Sale C 4

Real Estate Appraised: Thr
Frank Schmidt & Associ
C
ree Hypothetical One-Acre Lots, One for Each Zip C
iates Phone: 510-468-9219 fschmidt@valuat

COMPARABLE LAND SALE PARCEL MA
Commercial Land Comparable Sale C 5
Commercial Land Comparable Sale C 6
Code, Santa Clara, CA
tionconsultant.net 87
APS

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 88

COMPARABLE LAND SALE PARCEL MAPS
Industrial Land Comparable Sale I 1
Industrial Land Comparable Sale I 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 89

COMPARABLE LAND SALE PARCEL MAPS
Industrial Land Comparable Sale I 3
Industrial Land Comparable Sale I 4

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 90

COMPARABLE LAND SALE PARCEL MAPS
Industrial Land Comparable Sale I 5

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 91 FRANK E. SCHMIDT, MAI, SRA
CURRICULUM VITAE, January 2022
Valuation Consulting, Forensic and General Appraisal, Expert Testimony MAI and SRA MEMBER of the APPRAISAL INSTITUTE, No. 11933 [email protected] (510) 468-9219
San Francisco Bay Area
For more than four decades, Mr. Schmidt has been a real estate appraiser and consultant with a practice primarily in Northern California and the San Francisco Bay Area. He began his career as a residential appraiser, earning the coveted SRA designation from the Appraisal Institute in 1989, and the prestigious MAI designation in 2002. In 1995, he partnered with Wayne Prescott to form the Schmidt-Prescott Group, a commercial appraisal firm of which he was president until its dissolution in 2017.

During his career, Mr. Schmidt has appraised a wide variety of real estate including residential, commercial, industrial, raw land, and special purpose properties for various property rights. His experience includes litigation support and testifying as an expert witness for both plaintiffs and defendants. Mr. Schmidt’s client list includes attorneys, municipalities, private entities, lenders, and publicly traded companies. He was engaged as a diminution in value consultant on PG&E cases involving the destruction of thirty-eight homes in the 2010 San Bruno gas-line rupture fires.

Mr. Schmidt was recently retained by the City of Santa Clara as an expert to assist the city’s task force in the process of setting Parkland Dedication fees.

Mr. Schmidt has served on several professional committees throughout his career, including the International Right-ofWay Association and the Appraisal Institute. He currently serves on the Santa Clara County Assessment Appeals Board, of which he was elected Chairperson in 2017.

Expert Witness Testimony
U.S. District Court, Santa Clara County Superior Court, San Joaquin County Superior Court, San Francisco County Superior Court, Public Utility Commission of the State of CA, American Arbitration Association, Standard of Care, Eminent Domain Professional Affiliations
Membership in: Appraisal Institute [MAI (2002) and SRA Member (1989)] Work Experience
1/2019 to Present: Frank Schmidt & Associates, President San Francisco Bay Area
2018 Carneghi-Nakasako, Appraiser Consultant
San Jose, CA
2/95 to 12/2017: The Schmidt-Prescott Group, President
San Jose, California
4/78 to 2/95: Schmidt & Associates, Inc., President
San Jose and Fremont, CA
6/76 to 4/78: Senior Supervising Appraiser, Mercury Savings & Loan Cupertino, CA
1/76 to 6/76: Staff Appraiser, American Savings & Loan
San Jose, CA
2/75 to 12/75: Real Estate Appraiser and Consultant,
B.A. Ericson Appraisal Co., San Jose, CA
Formal Education
B.S. Business Management, 1997 University of Phoenix
Graduated with Honors San Jose, CA
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development Page 1 of 9 FY2023/24 Rev: 4/19/2022
RESOLUTION NO. _____

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA

TO SET THE PARKLAND IN LIEU FEE SCHEDULE FOR

NEW RESIDENTIAL DEVELOPMENT IN ACCORDANCE WITH
CHAPTER 17.35 (“PARK AND RECREATIONAL LAND”) OF
TITLE 17 (“DEVELOPMENT”) OF THE CODE OF THE CITY
OF SANTA CLARA ESTABLISHING THE AVERAGE PERACRE LAND VALUES AS CONTAINED IN THE ANNUAL LAND

VALUATION APPRSAISAL REPORT AND THE PARK

DEVELOPMENT COST PER CAPITA VALUE AS

CONTAINED IN THE PARKS & RECREATION FACILITIES

DEVELOPMENT IMPACT FEE STUDY AND ADUSTED BY

THE CONSTRUCTION COST INDEX
BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

WHEREAS, the City of Santa Clara is the Government entity responsible for providing public parks, recreation and open space facilities within the City of Santa Clara; and, WHEREAS, the 2010-2035 General Plan includes a goal that new parks, open space and recreation be provided with new development so that existing facilities are not over-burdened; and,
WHEREAS, the report entitled “Public Facilities Impact Fee Study” dated June 25, 2014 (“Nexus Study”), was prepared by Willdan Financial Services, Inc. and approved by Council in June 2014; and,
WHEREAS, on July 15, 2014, the City Council adopted Ordinance No. 1928, which added Chapter 17.35 to the City Code, and requires new residential development to provide adequate community and neighborhood park land for active recreational uses, and/or under certain conditions to pay a fee in lieu of parkland dedication; and, WHEREAS, on February 24, 2015, the City Council adopted Ordinance No. 1937, adding duplex dwellings to the types of developments subject to the parkland dedication requirement, and removing the one (1) acre minimum parkland dedication prior to a developer being able to receive financial credit for private recreational amenities and open space; and, Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Page 2 of 9 Rev: 4/19/2022
WHEREAS, on August 27, 2019, Council approved Resolution No. 19-8749 which included the statutory findings required pursuant to the California Quimby Act (Quimby) and Mitigation Fee Act (MFA), including the report entitled “Santa Clara Park and Recreation Facilities Impact Fee Update Study” dated April 9, 2019 (“Nexus Study Update”) prepared by Willdan Financial Services, Inc., and the professional land valuation appraisal report with a valuation date of December 31, 2017, and the park improvements costs with values as of 2017; and, WHEREAS, on October 29, 2019 Council approved Resolution No. 19-8769 to establish the Parkland In Lieu Fee Schedule for New Residential Development in Accordance with Chapter

17.35 of the Code of the City of Santa Clara, and directed staff to phase in the updated 2017/18 Park Improvement Costs over four years and to use the annual Land Valuation Appraisal Report at 100% of cost recovery in the calculation of annual fees; and, WHEREAS, in 2020, due to the global COVID19 pandemic, and through the regular adoption of the Municipal Fee Schedule process, only the Park Improvement Cost portion of the Parkland In Lieu Fees were raised using 50% of the Park Improvement Costs and the City continued to use the Land Valuation Appraisal Report with a valuation date of December 31, 2018 in the calculation of annual fees; and,
WHEREAS, on June 10, 2021, Council approved Resolution No. 21-8970 to establish the Parkland In Lieu Fee Schedule for New Residential Development in Accordance with Chapter

17.35 of the Code of the City of Santa Clara, which used 75% of the 2018 Park Improvement Costs and used 100% of the land values established in the annual Land Valuation Appraisal Report with a valuation date of December 31, 2020 in the calculation of annual fees; and, WHEREAS, on April 19, 2022, Council approved Resolution No. 22-9080 to establish the Parkland In Lieu Fee Schedule for New Residential Development in Accordance with Chapter 17.35 of the Code of the City of Santa Clara, which used 100% the 2018 Park Improvement Costs and used the 100% of the land values established in the annual Land Valuation Appraisal Report with a valuation date of December 31, 2021, except for the for land within the Patrick Henry Drive Specific Plan Area, in which the average per acre land value was set at $4,830,000 million per acre ($110.88/sf) as found in the Council Resolution No. 21-8970 adopted June 10, 2021 for use in setting the fees for one fiscal year through June 30, 2023; and, WHEREAS, the methodology for the calculation of the In-Lieu Fees is explained in the Nexus Study Update from August 27, 2019, and the calculation of the In-Lieu Fees is based on the three primary cost components for the acquisition and development of new parkland, namely (a) the average cost to purchase land for parks in Santa Clara, (b) the average cost per capita to develop the land into a usable park facility, i.e. to construct the amenities, buildings, landscaping and the equipment to service it, and (c) the cost to administer the program, including the review of residential development plans for compliance with the ordinance; and the parkland and features to serve the new residents are only provided at the same standard as existing residents; and now the Council now wishes to set and use the applicable values for calculating the fees due in lieu of parkland dedication based on findings; and, WHEREAS, pursuant to SCCC Chapter 17.35, the City has surveyed land values and sales records, and has conducted a professional appraisal with a valuation date of December 31, 2022 to determine the fair market value of property in the City, and the City posted the Appraisal Report on the City website from March 7, 2023 to March 21, 2023 for public review and comment; and,
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Rev: 4/19/2022

WHEREAS, the City has reviewed the costs to construct the park improvements (landscape, furnishings, buildings, etc.), based on the average cost per capita for the City’s existing park system improvements to assure a fair and equitable distribution of costs to be recovered for development of park assets and features to serve the new residents at the same standard as existing residents, and the system wide average cost per capita is reviewed and updated periodically given actual costs of recent park improvement projects and on the basis of increases/decreases in the State of California, Department of General Services Construction Cost Index reported by the Real Estate Services Division for the Bay Area; and, WHEREAS, on March 21, 2023, the Land Valuation Report and the Park Improvement Cost information was presented to the Parks & Recreation Commission for consideration and public comment (File ID No. 23-343), and the Commission recommended that Council approve the land valuation values as found in the Land valuation Appraisal Report dated December 31, 2022, and a reasonable 10% increase in the park improvement value; and now the Council now wishes to set and use the applicable land values and park improvement values for calculating the fees due in lieu of parkland dedication and to adopt the updated fee schedule for parkland in lieu fees.

NOW THEREFORE, BE IT FURTHER RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. Findings and Purpose. That the City Council hereby finds and declares that the land valuation component will be subject to the updated annual land value appraisal report and supplemental instructions as adopted by Council June 7, 2016 with valuation dates of December 31 of each calendar year, and that the park improvement valuation component will be subject to the average cost per capita for found in the Parks & Recreation Facilities Development Impact Fee Study (Nexus Study) and periodically updated based on reasonable application of changes in the State of California, Department of General Services Construction Cost Index (CCCI) reported by the Real Estate Services Division for use in calculating the following (next) fiscal year’s fee update.

Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Rev: 4/19/2022

Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2022/23 Page 5 of 9 Rev: 4/19/2022

2. Land Valuation Appraisal. An independent real estate appraisal firm, Frank Schmidt & Associates, was retained to provide a “Fair Market Value” opinion (valuation date of December 31, 2021) conforming to Uniform Standards of Professional Appraisal Practice and using the City’s Supplemental Instructions for an average acre of land (hypothetical, rectangular, useable site) for property in each of the three existing City of Santa Clara Zip Codes 95050, 95051, 95054. The data set included all property types: Single Family (low and very low density), High Density Residential, Medium Density Residential, Commercial/Retail, Industrial, Lots and Land. Excluded were transactions considered not “arms-length”, having encumbered or clouded title, environmentally impaired sites, or more than three (3) years old. An inflation factor was computed and applied to comparable sales over one year old based on reasonable and rational considerations such as sales and rental trends or other appropriate methods. The weighted average of each property type was based on the percentage of land area in the sales transactions.

3. Land Valuation Appraisal Findings. Based on the findings of the Appraisal Report, the City Council hereby sets the average per acre land value for each ZIP Code area as of December 31, 2022, as: $5.500 million per acre ($126.26/sf) in 95050; $5.840 million per acre ($137.07/sf) in 95051; and, $5.240 million per acre ($120.29/sf) in 95054. If a developer objects to this determination of fair market value, the developer may elect to have the value established by appraisal, in conformance with City Code Section 17.35.040(b)(2).

4. Park Improvement Valuation Cost Analysis. The cost to construct the park improvements (landscape, furnishings, buildings, etc.), is based on an average cost per capita for the City’s existing park system improvements and recovers no more than 100% of the actual cost to develop new park assets and features to serve new residents at the same standard as existing residents. A cost analysis was conducted, including a review of recent/actual City park improvement project costs and a review of increases/decreases in the State of California, Department of General Services Construction Cost Index reported by the Real Estate Services Division for the Bay Area.

5. Park Improvement Valuation Cost Analysis Findings. The 2018 Santa Clara average park improvement value per capita is $3,471. From 2018 to 2022, construction costs have increased 30.4% according to the State of California, Department of General Services Construction Cost Index reported by the Real Estate Services Division for the Bay Area, such that the park improvement value of $3,471 per capita would be $4,641 per capita as of January 1, 2023. Actual park improvement costs based on recent projects competitively bid and awarded by the City of Santa Clara have experienced similar percentages of cost escalation.

The Council hereby finds that an increase of 10% in the park improvement base value is reasonable. The City Council hereby sets for use in the In Lieu Fee fee calculation a park improvement value of $3,818 per capita (2018 base value of $3,471 plus 10% for cost escalation recovery) for use in the FY2023/24 fees.

6. Use of the Construction Cost Index in Future Park Improvement Valuation. Based on the findings of the park Improvement valuation cost analysis and the periodic nexus study, Council hereby finds that annual changes in the park improvement value used in the calculation of In Lieu Fees shall be indexed to changes (increases/decreases) in the State of California, Department of General Services Construction Cost Index for the previous calendar year as reported by the Real Estate Services Division for the Bay Area. However, such annual increases and decreases shall be limited to no more than a change of 10% of the base value, and in no case shall the increased or decreased base value be more than 100% cost recovery.

Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY20223/24 Rev: 4/19/2022

Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Page 7 of 9 Rev: 4/19/2022

4. Effective date. This resolution shall become effective immediately.

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE ___ DAY OF _________, 2023, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS:

ABSENT: COUNCILORS:

ABSTAINED: COUNCILORS:

ATTEST: ______________________________

NORA PIMENTEL, MMC

ASSISTANT CITY CLERK

CITY OF SANTA CLARA
Attachments incorporated by reference:

1. Santa Clara Land Valuation Appraisal Report 12-31-2022

2. Fee Calculation Tables A, B, C
S:\Attorney\RESOLUTIONS\Form Resolution-City.doc
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Page 8 of 9 Rev: 4/19/2022
Attachment 1
Santa Clara Land Valuation Appraisal Report 12-31-22
Attachment 2
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Rev: 4/19/2022

Table A
Parkland Dedic.ation In Lieu Fee Schedule - FY2023-24
95050
Applicable Fee Type Calculation MFA
$/Acre (valuation date 12-31-2022) A S5,500,000
Parle Acres/1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C=A x B $14,300,000
Cost per capita D = C/1000 $14,300
Density Single Family (Census) D x 2.98 S42,614
Improvement value (2018: $3,471 + 10%) S3,818 x 2.98 Si 1,378 S1,080 .............................................. Admin Charge .................... 0.·.0.2. .................... ========== Total Single Family (SF) Dwelling Fee S55,072
Quilllby
$5,500,000
3 $16,500,000
$16,500
$49,170
Sll,378
Sl,211
S61,759
Density Multi Family (Census) D x 2.4 $34,320 $39,600
Improvement value (2018: $3,471 + 10%) S3,818 x 2.4 S9,163 $9,163 ............................................... Admin.Charge ..................... 0.:~? ................... ____ S8_7_0 _____ S9_7-t5 Total Multi Family (MF) Dwelling Fee $44,353 $49,738
Table B
Parkland Dedic.atioo In Lieu Fee Schedule - FY2023--24
95051
Applicable Fee Type Calculation l\IFA Quimby
$/Acre (valuation date 12-31-2022) A $5,840,000 SS,840,000 Park Acres/1000 Pop. LOS Standard B 2.6 3
Total Cost per 1,000 C=A x B $15,184,000 SI 7,520,000
Cost per capita D = C/1000 S15,184 Si 7,520
Density Single Family (Census) D x 2.98 S45,248 $52,210 lmprovemeotvalue(2018: S3,471 + 10%) $3,8/8 x 2.98 $11,378 $11,378 .............................................. Admin.Charge ..................... 0.:0.? ..................... ===S=l=,1=33====$=1=,2=7=t2 Total Single Family (SF) Dwelling Fee S57,758 S64,859
Density Multi Family (Census) D x 2.4 S36,442 $42,048
Improvement value (2018: S3,471 + 10%) S3,8 18 x 2.4 S9,163 $9,163 .............................................. Admin Charge ..................... o:.0.2. .................... ====S=91=2====$=1=,0=2==l 4 Total Multi Family (MF) Dwelling Fee S46,517 S52,235
TableC
Parkland Dedication In Lieu Fee Schedule - FY2023-24
95054
Applicable Fee Type Calculation MFA
$/ Acre ( valuation date 12-3 I -2022) A $5,240,000
Park Acres/1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C = A x B $13,624,000
Cost per capita D = C/1000 $13,624
Density Single Family (Census) D x 2.98 $40,600
lmprovement value (2018: $3,47 1 + 10%) $3,818 x 2.98 $11,378 $1,040 ................................................. Admin Charge ................... 0.:0.? ···················========== Total Single Family (SF) Dwelling Fee S53,017 Qu:imby
$5,240,000
3 $15,720,000
$15,720
$46,846
$11,378
$1,164
S59,388
Density Multi Family (Census) D x 2.4 $32,698 $37,728
Improvement value (2018: $3,471 + 10%) $3,818 x 2.4 $9,163 $9,163 ..................... ····························· J\·chlli,i·<:::h.ar~~ .................... 0.·.0.? ..................... ====S=8=37=====S=9=38~ I Total M ulti Family (MF) Dwelling Fee S42,698 S47,829 RESOLUTION NO. 22-9080

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA

TO ESTABLISH THE AVERAGE PER-ACRE LAND VALUES

IN ORDER TO SET THE PARKLAND IN LIEU FEE SCHEDULE

FOR NEW RESIDENTIAL DEVELOPMENT IN ACCORDANCE
WITH CHAPTER 17.35 ("PARK AND RECREATIONAL
LAND") OF TITLE 17 ("DEVELOPMENT") OF THE CODE OF

THE CITY OF SANTA CLARA
BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

WHEREAS, the City of Santa Clara is the Government entity responsible for providing public parks, recreation and open space facilities within the City of Santa Clara; WHEREAS, the 2010-2035 General Plan includes a goal that new parks, open space and recreation be provided with new development so that existing facilities are not overburdened; WHEREAS, the report entitled "Public Facilities Impact Fee Study" dated June 25, 2014 ("Nexus Study"), was prepared by Willdan Financial Services, Inc. and approved by Council inJune 2014;
WHEREAS, on July 15, 2014, the City Council adopted Ordinance No. 1928, which added Chapter 17 .35 to the City Code, and requires new residential developments to provide adequate community and neighborhood park land for active recreational uses, and/or under certain conditions to pay a fee in lieu of parkland dedication; WHEREAS, on February 24, 2015, the City Council adopted Ordinance No. 1937, adding duplex dwellings to the types of developments subject to the parkland dedication requirement, and removing the one (1) acre minimum parkland dedication prior to a developer being able to receive financial credit for private recreational amenities and open space; II
II
II
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY 2022/23 Page 1 of 5 Rev: 11 /22/17
WHEREAS, on August 27, 2019, Council approved Resolution No. 19-8749 which included the statutory findings required pursuant to the California Quimby Act (Quimby) and Mitigation Fee Act (MFA), including the report entitled "Santa Clara Park and Recreation Facilities Impact Fee Update Study" dated April 9, 2019 ("Nexus Study Update") prepared by Willdan Financial Services, Inc., and the professional land valuation appraisal report with a valuation date of December 31, 2017, and the park improvements replacement costs with values as of 2017; WHEREAS, on October 29, 2019 Council approved Resolution No. 19-8769 to establish the Parkland In Lieu Fee Schedule for New Residential Development in Accordance with Chapter

17.35 of the Code of the City of Santa Clara, and directed staff to phase in the 2018 Park Improvement Costs over four years and to use the annual Land Valuation Appraisal Report at 100% of cost recovery in the calculation of annual fees; WHEREAS, in 2020, due to the global COVID19 pandemic, and through the regular adoption of the Municipal Fee Schedule process, only the Park Improvement Cost portion of the Parkland In Lieu Fees were raised using 50% of the Park Improvement Costs and the City continued to use the Land Valuation Appraisal Report with a valuation date of December 31, 2018 in the calculation of annual fees;
WHEREAS, on June 10, 2021, Council approved Resolution No. 21-8970 to establish the Parkland In Lieu Fee Schedule for New Residential Development in Accordance with Chapter

17.35 of the Code of the City of Santa Clara, which used 75% of the Park Improvement Costsand used the annual Land Valuation Appraisal Report with a valuation date of December 31, 2020 at 100% of cost recovery in the calculation of annual fees; II
II
II
II
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY 2022/23 Page 2 of 5 Rev: 11/22/17
WHEREAS, pursuant to SCCC Chapter 17.35, the City has surveyed land values and sales records, and has conducted a professional appraisal with a valuation date of December 31, 2021 to determine the fair market value of property in the City, and the City posted the AppraisalReport on the City website from April 4, 2022 to April 18, 2021 for public review and comment, the Council now wishes to use the applicable values for calculating the fees due in lieu of parkland dedication and to adopt the updated fee schedule for parkland in lieu fees; WHEREAS, on April 4, 2022, a copy of the Annual Land Valuation Report was placed on the City website;
WHEREAS, the City received written and verbal comments regarding the delays in the adoption of the Patrick Henry Drive Specific Plan and the effects that the increase of land values will have on the parkland in lieu fee for residential development projects that are currently being planned; and,
WHEREAS, the City Council adopted staff recommendation for the average per acre land values in the Zip Code Areas of 95050, 95051, 95054, and directed staff to leave the Patrick Henry Drive Specific Plan Area land values at the current value ($4,830,000 as of appraisal date December 31, 2020) for one fiscal year (July 1, 2022 through June 30, 2023) due to the aforementioned delays to allow for the Patrick Henry Drive Specific Area Plan projects to submit applications under the existing fee schedule. Upon expiration of the one year, the land values for Patrick Henry Drive Specific Plan will be increased to the then appraised values by ZIP Code.

II
II
II
II
II
II
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY 2022/23 Page 3 of 5 Rev: 11 /22/17

NOW THEREFORE, BE IT FURTHER RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. Findings and Purpose. That the City Council hereby finds and declares that the land valuation component will be subject to the updated annual land value appraisal report and supplemental instructions as adopted by Council June 7, 2016 with valuation dates of December31 of each calendar year for use in calculating the following (next) fiscal year's fee update.

2. Land Valuation Appraisal. An independent real estate appraisal firm, Frank Schmidt & Associates, was retained to provide a "Fair Market Value" opinion (valuation date of December 31, 2021) conforming to Uniform Standards of Professional Appraisal Practice and using the City's Supplemental Instructions for an average acre of land (hypothetical, rectangular, useable site) for property in each of the three existing City of Santa Clara Zip Codes 95050, 95051, 95054. The data set included all property types: Single Family (low and very low density), High Density Residential, Medium Density Residential, Commercial/Retail, Industrial, Lots and Land. Excluded were transactions considered not "arms-length", having encumbered or clouded title, environmentally impaired sites, or more than three (3) years old. An inflation factor was computed and applied to comparable sales over one year old based on reasonable and rational considerations such as sales and rental trends or other appropriate methods. The weighted average of each property type was based on the percentage of land area in the sales transactions.

3. Land Valuation Appraisal Findings. Based on the findings of the Appraisal Report, the City Council hereby sets the average per acre land value for each ZIP Code area as of December 31, 2021, as: $5.715 million per acre ($131.20/sf) in 95050; $6.000 million per acre ($137.74/sf) in 95051; and, $5.495 million per acre ($126.15/sf) in 95054. If a developer objects to this determination of fair market value, the developer may elect to have the value established by appraisal, in conformance with City Code Section 17.35.040(b)(2).

II
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY 2022/23 Page 4 of 5 Rev: 11/22/17

4. Patrick Henry Drive Specific Plan Area. For the fiscal year commencing on July 1, 2022 through June 30, 2023, the City Council hereby sets the average per acre land value as $4,830,000 million per acre ($110.88/sf) for the land within the Patrick Henry Drive Specific Plan, adopted June 10, 2021 (Resolution No. 21-8970). On July 1, 2023, the Patrick Henry Drive Specific Plan Area land's per acre land value shall be set as the same value as the applicable ZIP Code area of 95054.

5. Effective date. This resolution shall become effective immediately.

I HEREBY CERTIFY THE FOREGOING TO BE A TRUE COPY OF A RESOLUTION PASSED

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A REGULAR MEETING THEREOF HELD ON THE 19TH DAY OF APRIL, 2022, BY THE FOLLOWING VOTE:

AYES: COUNCILORS:

NOES: COUNCILORS:

ABSENT: COUNCILORS:

ABSTAINED: COUNCILORS:

Attachments incorporated by reference:

Becker, Chahal, Hardy, Jain, and Park,
and Mayor Gillmor
None
Watanabe
None .I}
ATTEST

NORA PIMENTEL, MMC

ASSISTANT CITY CLERK

CITY OF SANTA CLARA

1. Santa Clara Land Valuation Appraisal Report 12-31-2021 Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY 2022/23 Page 5 of 5 Rev : 11/22/17

ANNUAL LAND VALUATION APPRAISAL REPORT

VALUATION OF
The Average per Acre Land Value of High-Density Residential, Medium-Density Residential, Low-Density Residential, Very Low-Density Residential, Commercial, &Industrial Properties Located in Three Zip Codes (95050, 95051, and 95054)
City of Santa Clara, California
Santa Clara County

PREPARED FOR
Mr. James Teixeira, Director of Parks and Recreation
City of Santa Clara
1500 Warburton Avenue
Santa Clara, CA 95050

PREPARED BY
Frank E. Schmidt, MAI, SRA
Frank Schmidt & Associates

EFFECTIVE DATE OF VALUE OPINION
December 31, 2021
April 1, 2022
Mr. James Teixeira, Director of Parks and Recreation
City of Santa Clara
1500 Warbmton Avenue
Santa Clara, CA 95050
Re: Annual Land Valuation Appraisal Report
Average Value of Three Hypothetical I-Acre Lots,
One for Each Zip Code Comprising 95050, 95051, and 95054 Santa Clara, California, U.S.A.

Dear Mr. Teixeira:

Pursuant to your request, I have completed the annual land valuation appraisal to aid the City of Santa Clara in establishing park impact fees. Following this letter of transmittal is my appraisal and analysis opining the value of a hypothetical I-acre lot in each of the City's three zip codes.

In June 2016 the City of Santa Clara City Council approved Supplemental Instructions for the Appraisal of the Fair Market Value of land used in the Parkland Dedication In-Lieu Fee. These supplemental instructions and guidelines for the Appraisal are displayed in the Addenda. One of the supplemental instructions was that the valuation date occurs each year on December 31.

Since the date of my opinion of value, December 31, 2021 precedes the date I wrote and transmitted this appraisal by about 3 months, this is considered a retrospective appraisal as defined by the Uniform Standards of Professional Appraisal Practice. Since this is a retrospective value, it is important to note that I only considered data that was available and/or public as of the date of value. The exception to this was the 2021 land area data provided by Old Republic Title Company which was not available until March 2022, and some brokerage reports published in January 2022, but containing 2021 data.

I have appraised the subject of this appraisal numerous times since 2014, and most recently with a date of opinion of December 31, 2021. Based on land area, in 2020 about 43% of all the transactions sold in the preceding 12 months were categorized as industrial and commercial, and the other 57% were categorized as residential. In 2021, approximately 42% of all transactions sold in the preceding 12 months were industrial and commercial, while 58% were categorized as residential. Because residential unit values are greater than commercial and industrial, this resulted in higher concluded values for each zip code in 2021 compared to 2020.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA To complete this appraisal, I conducted an investigation, gathered data, and made the analyses necessary to enable me to fulfill the purpose of this assignment, which was to estimate the fair market value of a hypothetical I-acre lot comprising components of high-density residential, medium-density residential, low-density residential, very low-density residential, commercial, and industrial, to form and report the average value per acre of land in the three existing Zip Codes in the City of Santa Clara consisting of 95050, 95051, and 95054. The average value was established using the weighted average of these different property types, based on the percentage of total land area associated with the different prope1ty types that sold in the City of Santa Clara in the 12 months prior to the date of value and based on land area data provided by Old Republic Title Company.

I understand that this Appraisal Repott is intended for use by the Client, the City of Santa Clara, for assistance in determining park impact fees.

The COVID-19 pandemic had various affects on local real estate markets in 2021. The December 9, 2021 UCLA Anderson Forecast states that "Since March 2020, the state of the COVID-19 pandemic has determined the course of the economy nationally and across California. With each successive wave, the economy has grown more resilient to the effects of the virus, but by the end of 2020, it became clear that consumer behavior, not government restrictions, had the greatest effect on economic outcomes." Further discussion of the COVID-19 effects are presented throughout this report.

Hypothetical Conditions, Extraordinary Assumptions, and Contingencies Hypothetical Condition is defined as "a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis." 11 supposed the following hypothetical conditions:
► The fair market value was estimated based on different land value components applied to a hypothetical lot. It was a hypothetical condition of this appraisal that the subject lot was a finished lot and rated average in all other physical, locational, and legal aspects. ► Since the hypothetical lot will be comprised of different land value components and it is unlikely the City's land use ordinances would allow the different property types on the same lot, it was necessary to apply a hypothetical condition that each of the following uses would be permitted on the subject lot: high-density residential, medium-density residential, low and very low-density residential, commercial, and industrial. 1 2020-2021 Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 2 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Extraordinary Assumption is defined as "an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser's opinions or conclusions."2
► In this appraisal, land areas provided by Old Republic Title Company were used to estimate the weighted average of all the sale transactions that occurred in the City of Santa Clara in 2021. It was an extraordinary assumption of this appraisal that the land areas provided by Old Republic were accurate.

The use of these hypothetical conditions and extraordinary assumption might have affected the assignment results.

There are general assumptions and limiting conditions set forth in this report.

Based on the investigation and analyses unde1taken, I formed the opinion that the average value per acre on December 31, 2021, the effective date of opinion, for each zip code was:

Zip Code 2021 Average Value per Acre
95050 $5,715,000
95051 $6,000,000
95054 $5,495,000
Sincerely,
Frank E. Schmidt, MAI, SRA
2 2020-2021 Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 3 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

TABLE OF CONTENTS
EXECUTIVE SUMMARY 5
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS 6
CERTIFICATION 8
SCOPE OF THE ASSIGNMENT 9
DEFINITIONS 11
REAL PROPERTY, REAL ESTATE, AND PERSONAL PROPERTY APPRAISED 12 PREVIOUS APPRAISALS 13
REGION & CITY DESCRIPTION 13
MARKET CONDITIONS 17
LAND USE ORDINANCES 40
HIGHEST AND BEST USE 41
APPRAISAL PROCESS 42
AVERAGE VALUE ESTIMATE IN 95050 ZIP CODE 43
AVERAGE VALUE ESTIMATE IN 95051 ZIP CODE 65
AVERAGE VALUE ESTIMATE IN 95054 ZIP CODE 68
RECONCILIATION AND OPINION OF A VERA GE VALUES 72
ADDENDA 73
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 4 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

EXECUTIVE SUMMARY
CLIENT

LOCATION

PROPERTY TYPES

SITE AREA

FLOOD HAZARD STATUS
City of Santa Clara
City of Santa Clara, California
Very Low-Density Residential, Low-Density
Residential, Medium-Density Residential, HighDensity Residential, Commercial, and Industrial Land
Each Hypothetical Lot is One Acre
Zone X; the hypothetical lots are outside any
flood zones
EARTHQUAKE FAULT ZONE The hypothetical lots are not located in an Eaithquake Fault Zone as designated under the
Alquist-Priolo Eaithquake Fault Zoning Act.

GENERAL PLAN, &

HIGHEST AND BEST USE
Use of Hypothetical Lot General Plan
Very Low Density Residential Very Low Density Residential Low Density Residential Low Density Residential
Medium Density Residential Medium Density Residential
High Density Residential High Density Residential
Commercial Regional Commercial
Industrial Light Industrial
Highest & Best Use
Very Low Density Residential
Low Density Residential
Medium Density Residential
High Density Residential
Hold for Development of a Commercial Building
Light Industrial Building
EFFECTIVE DATE OF VALUE December 3 I, 2021
PROPERTY RIGHTS APPRAISED Fee Simple Estate

AVERAGE VALUE CONCLUSIONS
Zip Code 2021 Average Value per Acre
95050 $5,715,000
95051 $6,000,000
95054 $5,495,000
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 5 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal and repmi were made applying these general assumptions:

1. No responsibility was assumed for the legal description or for matters including legal or title considerations. Title to the hypothetical properties was assumed to be good and marketable and free and clear of all liens, encumbrances, easements, and restrictions except those specifically addressed in this report;

3. Responsible ownership and competent prope1iy management were assumed;

4. The information furnished by the Client and others was believed to be reliable. However, no warranty is given for its accuracy;

5. All engineering was assumed correct. Plot plans or any other illustrative material in this report were included only to assist the reader in visualizing the property;

6. It was assumed that there are no hidden or unapparent conditions in the hypothetical properties that render them more or less marketable or valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them;

7. Unless otherwise stated in this repmi, the existence of hazardous material, toxic waste, and/or other environmental impairments which may or may not be present on or in the hypothetical prope1iies, was not investigated by this consultant.

As real estate consultants, we are not qualified to properly investigate this property for any discharge, spillage, uncontrolled loss, seepage, filtration, or storage of hazardous substances which may adversely affect the value of this property. Neither are we qualified to detect the presence of substances such as asbestos, urea-formaldehyde foam insulation, nor other materials that could create an environmental impairment to the subject property or to other property caused by conditions present at the subject prope1iy. Our opinion(s) were predicated on the assumption that there is no such material on or in the property that would affect market value. No responsibility was assumed for any such conditions or for any expe1iise or engineering knowledge required to discover and/or correct them;

8. It was assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless non-compliance is stated, defined, and considered in the report;

9. It was assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal and reported in the report; and
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 6 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

10. It was assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimate or other opinion contained in this report are based;
This report has been made with the following limiting conditions:

1. Possession of the report, or a copy thereof, does not carry with it the right of publication or use. It may not be used for any purpose by any person other than the Client(s), for the Intended Use specified in the engagement agreement and/or repo1t;

2. The consultant is not required to give further consultation, testimony, or attend court for matters involving the subject property unless arrangements have been previously made; and

3. Neither all nor any part of the contents of this repmt (especially any conclusions as to value, the identity of the Consultant, or the firm with which the Consultant is connected) shall be disseminated to the public through advertising, public relations, news sales, or other media without prior written consent and approval of the Consultant.

Reader Note:

There may be other appropriate and more specific limitations on our opinions or conclusions identified in the cover letter or repmt as Hypothetical Conditions, Extraordinmy Assumptions, or Contingencies.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 7 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

CERTIFICATION
I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The repmted analyses, opinions, and conclusions are limited only by the repmted assumptions and limiting conditions and are my personal, impattial, and unbiased professional analyses, opinions, and conclusions.

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

4. I previously appraised the subject of this repo1t for the same Client on several occasions, most recently in an appraisal report transmitted March 26, 2021 and having a date of value ofDecember 31, 2020.

5. I have no bias with respect to the prope1ty that is the subject of this repmt or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon developing or repo1ting predetermined results.

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

8. My analyses, opinions, and conclusions were developed, and this repo1t has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USP AP).

9. I have not inspected the prope1ty that is the subject of this repo1t since the subject lots are hypothetical.

10. Under my direction, Mr. Dennis Moredock verified the comparable data, performed analysis, and wrote the first draft of the appraisal report.

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

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

13. As of the date of this report, I am completing the continuing education program for Designated Members of the L ""retz ct April 1, 2022
Frank E. Schmidt, MAI, SRA Date
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 8 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

SCOPE OF THE ASSIGNMENT
Information Provided to the Appraisers
The Client provided excerpts from the Parks and Recreation Facilities Fee Study completed by Willdan Financial Services. Old Republic Title Company provided Santa Clara sales statistics of land areas to assist us in estimating the weighted average of all the sale transactions that occurred in the City of Santa Clara in the 12 months preceding the date of value. We were also provided the "Supplemental Instructions for Appraisal" approved by Santa Clara City Council on June 7, 2016, which are displayed in the Addenda. Lastly, in previous appraisals, City Parks provided us the Park Impact Fee Ordinance (No. 1928).

Extent of Research into Physical Factors
We drove several streets throughout Santa Clara over the past several years including various times in 2016, 2017, 2020, and 2021. We note changes that are occurring or have occurred, particularly regarding new development. We gathered data about land use ordinances for each hypothetical lot and the comparables from the websites of the appropriate municipalities.

Extent of Research Into Economic Factors
We gathered, analyzed, and applied macro-economic information gleaned from many sources, including:
• The Wall Street Journal
• l i 11 District Beige Book
• GlobeSt.com
• CoStar News
• The Kiplinger Letter
• CoreLogic
We gathered, analyzed, and applied data about market conditions and other micro-economic information from:
• Websites of Commercial Brokerages
• Commercial and/or residential multiple listing services • Silicon Valley Business Journal
• San Jose Mercury News
• Discussions with agents active in the subject market
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 9 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA We talked to the buyers, sellers, and agents whose names we discovered on signage in the neighborhood and during comparable verification. We learned about additional market data from these people.

Extent of Comparable Data Research
We used a variety of sources and subscription services to gather comparable data, including:
• Verified Data Files from Other Appraisals
• CoStar Group
• DataTree
• MLSlistings.com
• LoopNet
• Commercial Real Estate Brokerage Websites
Verification
The most appropriate data that we discovered was verified with a party to the transaction. When that was not possible, we discuss and/or state the verification source(s), using public record data, subscription services, MLS, etc. in the Analysis section.

Among the comparables selected we studied copies of the assessor's parcel maps, public record summary, aerial maps, records of survey, and other data such as structural, geological, or environmental reports, subdivision maps, title reports, etc. We also reviewed planning proposals/approvals and permit histories where appropriate.

Type and Extent of Analysis Applied
The data is summarized on spreadsheets displayed in the Analysis sections following. The analysis was comparative, iterative, qualitative, and quantitative.

Compliance
It was the intent of this appraisal to comply with the requirements of:
• The Uniform Standards of Professional Appraisal Practice (USP AP) including the Ethics and Competency Provisions as promulgated by the Appraisal Standards Board of the Appraisal Foundation.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] I 0 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA • The Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute.
• The City of Santa Clara's "Supplemental Instructions for Appraisal"

DEFINITIONS
According to the California Code of Civil Procedure, Section 1263.320 defines Fair Market Value as:
"(a) the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no paiticular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.
(b) The fair market value of property taken for which there is no relevant, comparable market is its value on the date of valuation as determined by any method of valuation that is just and equitable."
Revised federal definitions in the Uniform Act identify the definitions of "market value" and "fair market value" as one and the same. These terms are used interchangeably in this report.

Weighted Average means an average resulting from the multiplication of each component by a factor reflecting its importance or contribution.

Average Value means a value that is calculated by adding values together and then dividing the total by the number of values.

Fee Simple Estate means absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." 3
3 Appraisal Institute, The DictionmJ1 of Real Estate Appraisal, 6th ed., (Chicago: Appraisal Institute, 2015) Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 11 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

REAL PROPERTY, REAL ESTATE, AND PERSONAL PROPERTY APPRAISED Real Property is defined as all of the interests, benefits, and rights in the ownership of the physical real estate, that is, the bundle of rights with which the ownership of the real estate is endowed. Real estate is defined as physical land and appurtenances attached to the land.

Real Property Rights Appraised
The subject properties are hypothetical unimproved lots and the fee simple estate is appraised.

Real Estate Appraised
It is an assumption of this appraisal that the subject's hypothetical finished lot is graded and level, all utilities and services are stubbed to the site, is ready for building improvement, and defined as follows:

Area
Shape & Frontage
Topography
Drainage
Utilities & Services
Easements
Soil Conditions
Environmental
Impairment Issues
One acre
Shape is rectangular with typical frontage along one street.

Level, at street grade
Adequate
The municipality provides water, electrical, and sewer
service. A private contractor provides garbage service.

Local utility companies provide telephone and cable. All utilities are piped and wired onto the hypothetical lot.

Typical public utility easements along frontage presumed.

It is a general assumption of this appraisal that the
hypothetical site is suitable for any legally permissible and physically possible use.

It is a general assumption of this appraisal that there are no environmental issues that affect the market value of the hypothetical lots.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 12 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Off-Site Improvements
Street Access
ExposureNisibility
Flood Hazard Status
Earthquake Fault Zone
Improvements
Personal Property Appraised
Street is fully improved and maintained by the City; it is asphalt paved with streetlights, curbs, gutters, and
sidewalks.

Rates average in comparison to competing properties.

Rates average in comparison to competing prope1ties for each hypothetical use.

Hypothetical lot is presumed to be within Zone X, which denotes areas of minimal flood hazard, usually depicted on FIRMs as above the 500-year flood level.

The hypothetical lot is not located in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake
Fault Zoning Act.

None
We did not appraise any personal property.

PREVIOUS APPRAISALS
The author previously appraised the subject(s) of this report for the City of Santa Clara on several occasions, most recently in an Appraisal Report transmitted March 21, 2021 with an effective date of opinion of December 31, 2020. The next most recent appraisal of the subject was transmitted June 11, 2020 with an effective date of opinion of December 31, 2019. The intended use of all appraisals was the same: to assist the City in determining park impact fees.

REGION & CITY DESCRIPTION
The County of Santa Clara is located at the southern end of San Francisco Bay. It encompasses about 1,304 square miles of land with 15 incorporated cities and towns. According to California Department of Finance (CDF), on July 1, 2021, the county had a population of 1,974,827, an increase of 0.06 percent from the July 2020 estimate. Over the past several years, Santa Clara County had been experiencing strong employment conditions. Prior to the COVID-19 pandemic, Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 13 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA unemployment was at historical lows and essentially reflected full employment conditions.

According to statistics published by the State of California Employment Development Depaitment (EDD), the Santa Clara County unemployment rate was 4.0% in December 2021, based on a labor force of 1,042,900. This is an increase from the March 2020 unemployment rate of 3.4%, prior to COVID-19. It is however lower compared with the one-year prior unemployment rate of 5.9%, based on a labor force of 1,040,900 jobs. However, the County's unemployment rate peaked at 11.7% in April 2020 and has gradually declined since.

Santa Clara County, which makes up the bulk of Silicon Valley, is highly dependent on technology employment, including Adobe, Apple, Applied Materials, Cisco, eBay, Flextronics, Google (Alphabet), HP, Intel, Intuitive Surgical, Lockheed Martin Space Systems, Microsoft, Netapp, Oracle, PayPal, and Tesla.

The City of Santa Clara covers about 18.4 square miles and is surrounded by San Jose on the no1th, east, and south, and is adjacent to Sunnyvale and Cupertino on the west. The City of Santa Clara's population estimate was 130,746 as of January 1, 2021, according to the CDF, about

2.7% higher than 12 months earlier. Employment conditions in Santa Clara followed a similar trend as seen in Santa Clara County. Unemployment, according to the EDD, was reported at a rate of 2.6% in the city of Santa Clara as of February 2022, based on a labor force of 72,900. The unemployment rate has generally followed a downward trend since peaking in April 2020 at

9.5%. Still, the current rate is far above the year ago rate of 5.3 percent in December 2020.

An aerial of the City of Santa Clara (outlined in red) and surrounding areas is shown below:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 14 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The two largest employers in the City of Santa Clara are Intel and Applied Materials. Other hightech companies, such as AMD, Nvidia, Palo Alto Networks, Sun Microsystems, ServiceNow, and Agilent Technologies have headquarters in the City. Other large employers include California's Great America, Avaya Inc., Santa Clara City Hall, EMC Corporation, Macy's, and Santa Clara University. The City of Santa Clara is the supplier for the City's water and electric power, which it claims can save small industries almost 50% on their utility costs.

Levi's Stadium, the home of the San Francisco 49ers, opened over the summer of 2014 in the northern portion of the city, adjacent to Great America Theme Park and the existing 49ers practice facility. The Santa Clara Convention Center is also nearby and offers about 302,000 square feet of meeting space.

The opening of Levi's Stadium spurred an increase in demand for nearby properties. There are several projects under construction throughout the city and several proposals in progress that are anticipated to add thousands of square feet of new retail, office and residential. The largest proposal is from Related California and is named Related Santa Clara. The project is a 240-acre mixed use development located across from the street from Levi's Stadium. It would include 9 .16 million gross SF of office, residential units, retail and entertainment facilities, hotel rooms, and surface and structured parking facilities. The first development phase is approved and was slated to open to the public in 2023 but was delayed by the pandemic. The Lake Park office development project is a 4.05 acre project site that has received approvals for a 150,000 SF office development located at 3001 Tasman Drive. The Kylli mixed use development project is currently pending review and is located at 3005 Democracy Way. This project is a 46 acre site that proposes 3,000,000+- SF of commercial office/lab space, 100,000+- SF of neighborhood retail, 1,800+- new multi-family residential, a child care facility, and indoor and outdoor community spaces. The Santa Clara Square development project (The Irvine Company) encompasses approximately 93 acres and includes 1,862,000 SF of office, 178,000 SF of retail, and up to 1,840 units of residential apartment units. This project is at 2600 Augustine Drive. The NVIDIA project is under construction and is located at 2600, 2788 and 2800 San Tomas Expressway. The 35.6 acre site will have 1,950,000 SF of office/research and development (R&D) space within three buildings. The Lawrence Station Project - Kifer Road (Summerhill) is at 3505 Kifer Road and is currently under construction. This 29.4 acre project is part of the Lawrence Station Area Plan. The project is a 988 residential unit, four-story, multi-family development with 39,225 SF of retail/amenity space. Additional development in the City includes several new structures on the Santa Clara University campus and continued residential build-out of the Lawrence Station area.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 15 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The City's median household income was estimated by the U.S. Census Bureau at $126,006 in 2019 and the per capita income was about $53,986. The United States Census Quick Facts for 2015-2019 indicated the following demographics in Santa Clara:

Total Households 44,669
Owner Occupied Housing Unit Rate 42.9%
Average Household Size 2.74
Bachelor's Degree or Higher 59.9%
In Civilian Labor Force 69.2%
The City is home to Santa Clara University, Mission College, a junior college, and Golden State Baptist College. The City is primarily served by Santa Clara Unified School District, which includes 19 schools spanning transitional kindergarten through high school. The southwest corner of the City is served by Cupertino schools.

The City of Santa Clara and Santa Clara County benefit from a number of freeways, arterials, and expressways that provide access to most areas of the region, including three interstate highways, 1-280, 1-880, and I-680 in addition to several federal and state highways, US-101, CA85, CA-87, CA-17, and CA-237. Caltrain, Amtrak, and ACE rail transportation, light rail, and VTA bus services provide mass transit for the city, connecting Santa Clara to the greater Bay Area. Located adjacent the City's eastern border is the Norman Y Mineta San Jose International Airport, with service to about 30 destinations.

There are three primary zip codes within the city, which are shown on the following map as the color-coded areas within the black-outlined city limit boundaries. Note that the 95053 zip code applies to Santa Clara University, which is located within the Santa Clara city limits, but was not included as part of this appraisal.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 16 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Source: zipmap.nel
Conclusion
All locations within Santa Clara are proximate to nearby job centers, retail, housing, and linkages, contributing to the long-term demand for sites within the city.

MARKET CONDITIONS
The December 9, 2021 UCLA Anderson Forecast expects encouraging economic news to be forthcoming. "The December Forecast assumes the likelihood of a winter surge in COVID-19 cases and predicts that consumers will temporarily cut back their spending on in-person services.

But Anderson Forecast economists expect the impact on the economy to be relatively short term, writing that consumer spending may dip over the next quarter and then rebound quickly." Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 17 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA "California home prices continue to climb, and a lack of affordability has become increasingly impo1tant in both the policy sphere and for forecasting the Golden State's economic growth." "For the current quaiter, UCLA Anderson Forecast senior economist Leo Feler, author of the national report, forecasts growth of 6.9%, which would be the highest growth rate for 2021, as the economy rebounds from the wave of cases caused by the delta variant. Feler notes that the omicron variant emerged too late to have much effect on the qua1ter's average growth rate." "Overall, the national forecast is for continued strong economic growth and labor market recovery, with a lessening of supply constraints and inflation. A more severe COVID-19 wave caused by the omicron variant could temporarily derail the forecast, but it's still too soon to tell." The Winter 2022 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey "was taken as the Delta/Omicron phase of the pandemic was raging and was slowing the return of consumers to the purchase of services, to the office, and to vacation travel." Multifamily housing has rapidly bounced back from a "falling-rent" hiatus and is also in for a run of new project development. Though the last two Surveys suggested a turn in office and retail market, it has happened sooner than expected."
Following we present some statistics and comments regarding the market conditions for each land use we are appraising. Land market conditions for each of these uses are not typically tracked by any firms that we are aware of; it has been my experience and historically as reported by market participants that the land market for these uses typically shadow the improved markets, oftentimes leading. We report on the sale, rental, and construction trends of the respective markets, in estimating the appropriate market conditions adjustments used in our following analysis.

Regional Economic Conditions
CoStar Group, Inc. is a multinational provider of information, analytics, and marketing services to the commercial real estate industry. According to a CoStar Group report on economic conditions in the greater San Jose/Silicon Valley market area:

The coronavirus pandemic abruptly ended what had been the longest economic expansion in U.S. hist01y, and disrupted San Jose's streak of above-average job gmwth.

California and Bay Area counties including Santa Clara are taking a cautious approach to reopening economic activity, and businesses are siiffering fi·om the downturn in commerce.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 18 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA According to San Jose think-tank Joint Venture Silicon Valley (JVSV), "Employment is back to pre-pandemic levels, though more concentrated in tech. Silicon Valley gained back most of the jobs lost early on in the pandemic by mid-2021, and the rest in the second half of the year. The recovery is uneven, however, due to rapid growth in the tech sector; for the first time in decades the proportion of lower-skill and lower-wage jobs nudged downward. Most of the tech jobs are concentrated in a handful of companies, with 13 percent at Google and Apple alone." "Silicon Valley's innovation engine is red hot. Despite pandemic-related restrictions, the region's technology companies broke records, with the aggregate market cap of Silicon Valley and San Francisco's public companies reaching $14 trillion ( doubling the market low of February 2020). Venture capital reached an all-time high at $95 billion in 2021, fueled by a record 257 megadeals. These deals brought the region's count of unicorn and decacorn companies to 230, more than any point in history. There were more IPOs (32) than any year in this century, and companies took advantage of other means to go public including direct listings and special-purpose acquisition company (SPAC) mergers, with the latter driving more M&A activity than in a decade."
"Commercial development continues at a break-neck pace. The major tech companies such as Meta, Google, NetApp, and Apple have continued to build new space and execute leases for growth and expansion in the region, and Silicon Valley has seen an unprecedented amount of new commercial development gaining planning approvals (21.5 million square feet of new space across 135 sites). Much of the growth is planned for San Jose (62 percent), with large developments in the pipeline in Santa Clara and Sunnyvale as well." Commercial Market Conditions
Commercial properties typically include office and retail uses. We discovered that office properties are generally being built in the central business districts and in light industrial locations. Research and development (R&D) prope1ties have historically been a subcategory of industrial. However, R&D can rival office space in terms of finishes and quality and we elected to include a discussion of the R&D submarket as pait of the commercial market. Many of the traditional retail corridors in this region, El Camino Real in particular, have land use ordinances that allow for residential mixed-uses.

In this market, real estate brokerages track office and retail statistics by city or submarket; they are not broken out by zip code. Following we present the relevant statistics pertaining to the Santa Clara market and provide comments from market participants regarding the perceived differences in each of the Santa Clara zip codes that the three hypothetical lots being appraised are located.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 19 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Office Market
The Silicon Valley office market from early 2017 through 4Q-2021 was generally characterized by increasing vacancy rates, positive net absorption, and overall increasing average asking rental rates. The next table displays data from the Cushman & Wakefield's 4Q-2021 Silicon Valley Marketbeat Office Snapshot and predecessor reports and includes statistics from the Silicon Valley market, the subject's submarket (Santa Clara), and the adjacent Sunnyvale submarket.

OFFICE STATISTICS
Average Asking Rate & Vacancy Rate Office Market
$7.lll ------ - ----------- ----------,- 35.°"
/ $1,00 _ ______________________ __,.,__ / _ _ -+ "-°"
Source: Cushman & Wakefield Marketbeat Office Snapshot
The data indicates that the office vacancy rate in Santa Clara generally increased from Ql-2020 through Q4-2021. This elevated vacancy rate is due to several large office buildings having significant vacancy. The Silicon Valley market has been overall more stable with vacancy reported at 15.3% for Q4-2021 , up from the 15.2% rate in the third quarter. The region's availability represents 13.7 million square feet of vacancy in 4Q-2021. Cushman & Wakefield reports that the City of Santa Clara has some of the largest subleases on the market including Citrix (311 ,000sf). Key 2021 lease transactions in the City of Santa Clara's include 85,995sf at 3075 Olcott Street in Q2-2021 aided by a 116,103 square foot renewal by Ampere at 4655 Great America in Q3-2021 and a sublease of 31,250 square feet by Quotient at 2755 Augustine Drive in Q3-2021.

The average office asking rent in 4Q-202l for the City of Santa Clara was $4.43/SF/Month on a Full Service expense basis, whereby taxes, insurance, maintenance, utilities, and janitorial expenses are bundled into the base rent. This is slightly more than the $4.38/SF/Month asking rate from one year ago.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 20 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Marcus & Millichap's 4Q-2021 Market Report stated that in the San Jose Metro area, which includes Santa Clara, office vacancy increased 80 basis points in this year's spring period as local tech companies reevaluated their space requirements. At midyear, vacancy was 15.1 percent. Class A vacancy rose 340 basis points in the last 12 months to 15.4 percent while Class B/C vacancy climbed 460 basis points. Asking rents in the San Jose Metro increased 0.8% yearover-year to $4.28/SF/Month.

Marcus & Millichap reported the following trends in the San Jose Metro:

Supply and Demand Sales Trends
- Completiom NetAbsorption - VacancyRate - AveragePri~ -- AverageCapRate ~ .. 8600 8"
8 18.0" 0
~ ~
~ l 8660 6" l e 15.5" .J ~ 'i.i
t $500 411,
I ~ i 3 13.0K~ ~
r r f $450 3" i:::
.0 0 - 10.5" ji --:
$400 2" t 17 IB 18 20 11-
a -3 e.o" • Forcea,Jt 0 Through ZQ
17 18 18 21• Sounu, CoStar Group, Inc.; Rt,a/ Cap/Ir,/ Analytiu Marcus & Millichap's report states that "Development surges this year after construction was slowed during the downturn in 2020. Supply is on pace to increase by 3.8 percent in 2021, though most of the new space has preleasing commitments." Over the past 12 months, developers will have completed 4. 7 million square feet of space. "Investors returned to the market after pausing during the height of the downturn. In the third quarter of this year, the new record in office sales was established, including at least five deals valued over $200 million.

Buyers seeking discounted properties will be challenged to find those opportunities. Buyers never lost faith in the long-term health of the San Jose office market. During the 12-month period ending at midyear, the average price of an office property increased 3 percent to $575 per square foot. Since Google owns a sizable share of the office inventory, particularly in Mountain View, investors have limited options. Few markets had a decrease in the average cap rate during the year-long period ending in June, but the South Bay is an exception. During that time, the average rate dipped 10 basis points to 4.9 percent. Little pressure on first-year returns are expected until more clarity on office reoccupation is available." There are several office developments under construction in Silicon Valley and Santa Clara.

Notable developments previously discussed in the City of Santa Clara include: Related California, Lake Park, Kylli, Santa Clara Square, and NVIDIA.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 21 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The Marcus & Millichap's 4Q-2021 San Jose Metro Area report states "Delay in reopening pauses office recovery. Both Google and Apple pushed back their windows for workers to come back to offices until early next year due to the delta variant. The return of thes~ anchor tenants will likely precede smaller firms that rely on contracts with Big Tech. As a result, a wider reopening is unlikely to occur until the first few months of 2022. Nonetheless, both Google and Apple do plan to bring most of their employees back onto their campuses. Each company has a large real estate presence in the South Bay and both have reported in-person collaboration is paramount to the success of their operations. Therefore, the recovery in San Jose should outpace San Francisco, where the large tech firms have already committed to significant remote work options.'
Research and Development (R&D) Market
The next table displays data from Colliers International's 4Q-202 I Silicon Valley R&D Market Snapshot and its predecessor reports:

R&D Average Asking Rate & Vacancy Rate

14.00% $4.00

12.00%
$3.50

10.00%
$3.00 8.00%

6.00% $2.50

4.00%
$2.00

2.00%

0.00% $1.50
1Q;l018 2Q2018 3Q2018 4Q2018 102019 202019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 402020 1Q;l021 202021 3Q;l021 4Q2021 - Santa Clara Vacancy Rate ._.Sunnyvale Vacancy Rate - Silicon Valley Vacancy Rate - Santa Clara Asking Rate - Sunnyvale Asking Rate - silicon Valley Asking Rat• Source: Colliers International
The next tables display data from Cushman & Wakefield's Marketbeat 4Q-202 I Silicon Valley R&D Market:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 22 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

OVERALL VACANCY & ASKING RENT ASKING RENT COMPARISON

13.00 141\ $7.00 -~6.42
$3.00 f2V, $6.00 ,
JZ.60 fOll $5.00 ·

12.00 l f.60

11.00 10.00 2%
$2.68 '2,47 $2.35 $2.16
$1.73 $1.61 Sl .JS
I 10.00 ,i-.,_,,_,,_,__...,. ____ ......,_ .... ai. 0%
~ .00 ·
$3.00
$2.00 •
$1.00
$0.00 2017 2011 2018 2020 2021
PA MV Cl.I> Now 6C NSJ WS Ml fn, SSJ Mil/GIi
Source: Cushman & Wakefield
As shown above, Silicon Valley's R&D market experienced an overall stable vacancy rate within about 100 basis points of 10.0% from lQ-2018 to 2Q-2020 before increasing to 12.1% in 4Q2021. Meanwhile, asking rents have increased from $2.46/SF/month in 3Q-2020 to $2.77/SF/month in 4Q-2021 on a NNN expense basis, despite the pandemic. A NNN expense basis in this market means the landlord is only paying for management of the account and reserves for replacement, while the tenant pays all other operating expenses.

Since 3Q-2018 the average asking rate in the City of Santa Clara increased from $2.10/SF /month NNN to $2.87/SF/Mo ending the 3Q-2020 or 0.99%/month. Over the last twelve months the asking R&D rental rate decreased to $2.49/SF/Mo ending the 4Q-2021. Investor demand for R&D and office product remains above average, especially for well-located, modern buildings with long-term tenants in place. However, the R&D vacancy rate trend shows a different narrative as in Santa Clara the vacancy rate experienced a cycle low of 5.0% in 2Q-2019 before registering 15.7% in 4Q-2021, the highest since Q4-2017. Part of the jump was due to the renovations at Mission Tech campus (at 2421-2451 Mission College Blvd), which resulted in 426,255 SF of vacancy coming online.

Cushman & Wakefield rep01ted in their Marketbeat 4Q-2021 Silicon Valley R&D Market a net absorption of negative 1,009,477 SF ofR&D space within Silicon Valley and a year-to-date total of negative 3,444,244 SF. The report notes that there is 2,775,991 SF of new R&D product under construction throughout all of Silicon Valley.

Retail Market
According to Marcus & Millichap's Third Quarter 2021 San Jose Metro Area Retail Report, the long-term outlook remains bright, though the migration of many highly paid workers is delaying a stronger recovery in the retail arena. Furthermore, the emergence of the COVID-19 variants is giving pause to some to the local economy's anchors. Google, Apple and Facebook have all pushed reopening into early 2022 as the current wave of positive cases needs to pass.

Nonetheless, tech companies in the South Bay do plan on bring all or a majority of their workers Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 23 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA back to their expansive campuses, which will boost retail spending next year and into the future.

New retailers will follow workers into the metro in 2022, filling up space that was left dark by other tenants that were unable to survive the recession. Investors stepped back during the 12- month period ending at midyear as buyers awaited more clarity regarding the work-from-home model. Single-tenant deal flow dipped about 30 percent during that time as acquisitions fell across all product types except convenience stores. Buyers paid an average of $743 per square foot for single-tenant-propetiies in the yearlong period ending in the second quarter. Prices were 8 percent above the prior year rate as investors retrenched and targeted high-credit tenants. The average cap rate remained steady at 4.7 percent year over year. Multi-tenant properties faced increased due diligence during the health crisis as operators weighed the possibility of having to refill in-line space following the downturn. The average price climbed 4 percent to $593 per square foot during the yearlong period ending at midyear.

Some retail categories have managed well during the pandemic while others have not. Drive-thru fast food and fast-casual restaurants generally did fine, patiicularly those with drive-throughs.

Sit-down restaurants, particularly those without outdoor seating have not done as well. Essential services, such as grocery, drug, and convenience stores have been stable.

Within Santa Clara, Westfield Valley Fair Mall completed a $1.1 billion expansion in 2020.

Most of the new retail being proposed in this market is part of larger mixed-use projects.

Spending Patterns
General market conditions for the retail real estate segment can be indicated by taxable retail sales. Typically, a market where taxable retail sales are increasing would be supportive of additional retail development as existing retailers are willing to expand and new retailers are interested in entering the market. The converse is true when taxable retail sales are declining.

Over the course of 2019 (the most recent statistics available), taxable retail sales in Santa Clara County totaled approximately $47,001,964,265, or more than $47 billion dollars. This represents an increase of approximately 3.9 percent over the total taxable retail sales rep01ied over the course of 2018.

Average Asking Retail Rental Rates and Vacancy Rates
Cushman & Wakefield is a brokerage firm that publishes quarterly reports for the retail market in the San Jose metro area. They reported in their Q4-2021 Marketbeat Silicon Valley Retail that the economic fundamentals and the retail business in Silicon Valley showed continued improvement in the last quatier of 2021 despite some challenges, such as the supply chain shortage, inflation and rising of COVID-19 cases due to the Omicron variant in the last weeks of Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 24 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA December. At the end of 2021, Silicon Valley recorded an employment rate of 4.5% down from

6.2 % one year ago. Increasing population, job growth, high incomes and strong consumer spending continued to strengthen the performance of retail sector in Silicon Valley. At the end of 2021, the vacancy rate for Silicon Valley's shopping centers remained the lowest in the Bay Area at 5.2%, with approximately 1.9 million square feet of vacant retail space. Santa Clara continued to record the lowest vacancy rate in the region at 3 .9%. The quarterly net absorption continued in the positive territory. There was no new retail space completed in the fourth quaiter of 2021 and the total retail inventory remained at 3 7.4 million square feet.

The chait below displays the average asking rental rate and vacancy for the Santa Clara submarket, Sunnyvale/Cupertino submarket, and Santa Clara County taken from Cushman Wakefield and its predecessor retail repo1ts from 3Q-2017 onwards:

Retail Asking Rates and Vacancy
$42.00 7.0%
$40.00
I $38.00

6.0%
...
} $36.00
e $34.00 !
!' $32.00
:l2

5.0%

4.0% ~
eC
..
u 3.0% ..
>
,le $30.00 .. .. 2.0%
I!
.. $28.00 ..
or(
$26.00 1.0%
$24.00 0.0%
- Downtown SJ Vacancy - Silicon Valley Vacancy - Santa Clara Vacancy - Sunnyvale/Cupertino Vacancy - Downtown SJ Asking Rent - Silicon Valley Asking Rent - Santa Clara Asking Rent - Sunnyvale/Cupertino Asking Rent As indicated in the table above, the Santa Clara County retail market had an average asking rent of $2.96/SF/Mo NNN in 4Q-2021 which is a slight decrease compared to $3.01/SF/Mo NNN in 4Q-2020. Neighborhood and community centers account for most of the vacancies in the market.

In 4Q-2021 asking rents averaged $2.71/SF/Mo NNN in the subject's Santa Clara submarket which is a decrease compared to $3.02/SF/Mo NNN in 4Q-2020. In 4Q-2021 the retail vacancy rate in Santa Clara was rep01ted at 3.9% with no new retail under construction. Vacancy rates in the subject's submarket declined from 5.7% from one-year ago. Asking rental rates in Santa F rank Schmidt & Associates Phone: 510-468-9219 [email protected] 25 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Clara had generally been stable since Q 1-2018 before a sharp increase in Q4-2020 and a decline starting in the final two qua1ters of 2021.

According to Marcus & Millichap's Hospitality Report for Fourth Quarter 2021, "The U.S. lodging sector entered the autumn season having made up substantial ground during the spring and summer months. Loosened capacity restrictions, vaccine availability and pent-up travel demand led to a marked increase in trips taken and rooms occupied. By the end of July foot traffic through airport check-points had recovered to about 80 percent of 2019 volumes, driven largely by leisure travelers, while hotel occupancy had roughly doubled from where it began in 2021. Hotels in popular vacation destinations are projected to perform best next year, including those near beaches and parkland. Hotels that cater to business travelers will continue to face hurdles next year. Travel for business purposes has so far lagged leisure trips in recovery. While vaccines and test are widely available, the potential for new coronavirus variants presents ongoing safety concerns that will prompt many employers to minimize staff travel. Barring a significant reversion in the health crisis, more conventions and trade shows should take place in 2022, with greater emphasis on physical attendance, prompting greater professional travel.

Hotels in major urban centers and frequent convention markets will see improved operation in 2022 but will remain the most troubled segment. The problem is compounded in the country's largest gateway markets that typically cater to numerous international visitors, including New York and San Francisco. The return of certain health precautions in theses metros may dissuade some visitation to the area until the pandemic notably improves. Overall, a prolonged drought in demand in many densely packed locales extends the road to recovery." Industrial Market Conditions
We referenced industrial (manufacturing) and warehouse market data from brokerages Cushman & Wakefield and Colliers International; we also interviewed local market participants for this report. Cushman & Wakefield repo1ted in its Marketbeat Silicon Valley Industrial Q4-2021, that vacancy for industrial product in Silicon Valley decreased in 4Q-2021 to 3.3% from 5.3% in 4Q2020. Colliers International repotted that warehousing vacancy decreased to 2.2% from 6.1 % in the prior year. The Central Silicon Valley industrial submarket, which includes Santa Clara, San Jose, Campbell, and Sunnyvale, had an overall vacancy rate of 3.0% and an average asking rate of $1.29/SF/Month NNN at the end of 4Q-2021. The average asking rental rate in the subject's Santa Clara submarket was reported at $1.48/SF /Month NNN and a vacancy rate of 1. 7% was repotted. The subject's Santa Clara submarket represents a moderate sized industrial submarket in the region with a total industrial inventory reported at approximately 15,498,884 square feet, or roughly 23 percent of the total Silicon Valley industrial inventory.

In their Q4 2021 San Jose Silicon Valley Research & Forecast Report for industrial/warehouse prope1ties, Collier's International reported An accelerated shift to e-commerce coupled with Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 26 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA supply chain woes bolstered demand for industrial real estate. Silicon Valley saw industrial occupancy gains amount to 115,000 square feet in the fourth quarter and 2. 0 million for the full year, making the industrial sector the fastest growing commercial property sector in 2021.

Silicon Valley's industrial vacancy rate dipped below 2. 0 percent in the final quarter of 2021, limiting tenant mobility and new deal volume. Gross absorption totaled just 1. 0 million square feet, down 18.2 percent year-over-year. Nuro, an autonomous vehicle company, subleased 64,900 square feet at 3100 Molinaro Street in Santa Clara. At the end of 2021, the industrial availability rate stands at 3.8 percent, down 150 basis points year-over-year while the vacancy space rate is at 1.9, down 1 JO basis points over the same period. Not surprisingly, asking rents continued to rise and reached a new peak, averaging $1. 32 NNN, $ 0. 08 higher than a year ago.

The next cha1t shows industrial rental rate and vacancy trends since 1Q-2018 based on data from Colliers International. The chart shows generally stable to increasing vacancy rates and stable rental rates, Sunnyvale being the exception.

Industrial Average Asking Rate & Vacancy Rate
$4.00 ------ --------- ----- - - ----------,- 10.0%
$3.50 ----- -/ ~ ~,,--- ----.F/-...,___ _____ --j ! $3.00 - - --- - -.,,,t!- r =----------\,- ,----:J1 L_________:::~ --.....-~ ~

9.0%

8.0%

7.(f/4
~ $2.50 - I V 6,(f/4 l I $2.00 - ~~~:_,,,,, ::-_,.,.,_c-= .... ........._ - --_ 1 ...J _ '[__- --- - ~ --------- --- -1-5.(f/4 [
~ $1.50 - _ .,,,-- 4.(f/4 ~ f -- ~ - ,,,,,,,.- - 3,(f/4 1 $1.00

2.(f/4
■ - - I
$0.50 1 I I ,. ']
$0.00 - --..-.. ........ -.... .....
1~o1B
.....,......,.. r .................... r l 1....., _ l ....... r ,.._I -+ J :::
- Santa Clara Vacancy - San Jose Vacancy Rate - Sunnyvale Vacancy _ ,Silicon Valley Vacancy - Santa Clara Asking Rate - San Jose Asking Rate - Sunnyvale Asking Rate - SIiicon Valley Asking Rate Vacancy rates for manufacturing were generally stable in Silicon Valley between the start of 2015 and 1 Q-2020, before increasing to the high-three percent range. A similar trend has played out in the Santa Clara submarket with a generally increasing trend in manufacturing vacancy rates since 2Q-2018. However, manufacturing rental rates in Santa Clara continue to increase; the asking rental rate rose from $1.47/SF/month NNN in 3Q-2018 to $1.85/SF/month in 4Q2021 . Within Silicon Valley, the average asking rate for warehouse was $1.43/SF /month in 4Q2021 compared to last year's rate of $1.3 8/SF /month.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 27 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Warehouse data collected from Colliers International's Silicon Valley Research & Forecast Report Q4 2021 and its predecessor reports are displayed in the next chart:

Warehouse Average Asking Rate & Vacancy Rate
$1.70
z 14.0%
z
z
... $1.50 12.0%
~ $1.30
!
ar: $1.10 I!'
:ii
,:2 $0.90
~ 8.0% ~ C

6.0% :3
..
>
=, 4.0%
I!
a, $0.70 .. 2.0% <t

0.0%
- Santa Clara Vacancy - San Jose Vacancy - Silicon Valley Vacancy - Santa Clara Asking Rate - San Jose Asking Rate - Silicon Valley Asking Rate Warehouse vacancy rates in Silicon Valley had been declining for several years before increasing in 2018 and 2019, and then decreasing in 2021. Warehouse rental rates in Santa Clara decreased; the asking rental rate declined from $1.59/SF/month in 3Q-2020 to $1.29/SF/month in 4Q-2021. Within Silicon Valley, the average asking rate for warehouse generally increased to $1.24/SF/month in 4Q-202lcompared to last year's rate of $1.14/SF/month.

Data centers are one of the largest industrial occupancy groups in Santa Clara, due mostly to Silicon Valley Power, which has lower rates than elsewhere in the Bay Area. The rise of remote working reinforced the need and demand for data centers. We discovered several expansion plans and construction occurring on existing sites, notably from Prime Data Centers. There have been several land sales in recent years in Santa Clara that are proposed for new data centers.

Market pa1ticipants report that data center operators will pay a premium for a larger site in Santa Clara and that the ideal site will be about six acres; however Prime is planning to build on a site as small as 1.68 acres. Two (data center) sites in Santa Clara were sold in 2021 (see Industrial Land Comparables I-1 and I-2, these are the most recent industrial sales that we uncovered).

CBRE's U.S. Data Center Trends report for the lH 2021 indicated the following market changes in Silicon Valley's data center market:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 28 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Hilforic.al Supply Growth Historiccil Demand Growth
MW Undei Cons'lvcllon Preleased New Oelil'llies VaC1Jnty MW ~rpt!oo 1/, y VaC1Jnty 11)% 70 l2'MI
8% 60 10%
50 8'MI
6% 40
6%
4% 30
20 4%
2% 10 - - 216
11% D 0%
IK16 2Hl6 1H17 2H17 11118 2Hl8 rn19 2Hl9 1H20 2H20 1H21 2015 2016 2017 2018 2019 2020 Hl 2021 Source: CBRE Roseorch, CBRE Data Center Solu1lons, Hl 2021, Source: CBRE Research, CBRE Data Cenrer Solu1lons, Hl 2021.

The CBRE report notes that wholesale collocation data centers across primary U.S markets - Northern Virginia, Dallas, Silicon Valley, Chicago, Phoenix, New York Tri-State, and Atlanta recorded 142.7 megawatts (MW) of positive net absorption in the first half of 2021, 3.4% more than HI 2020's level. Total inventory across primary markets topped 3 gigawatts (GW), as supply grew 7%, or 214.3 MW, during HI 2021. More than 527.6 MW of capacity was under construction in primary markets at the midway point of 2021, up 42% year-over-year, of which over half was located in Northern Virginia. Investors remained focused on top-tier assets - those with strong underlying tenancy and significant remaining lease term. Fewer deals were signed in HI 2021 than the previous six months, but the average size of user requirements was larger.

Vacancy rates reached historically low levels in several markets, led by Silicon Valley with a nationwide-low 1.6% of inventory available as of the end of HI 2021 . Some users are moving away from a cloud-first approach to a hybrid IT structure, citing hidden fees and fluctuating costs by cloud service providers, latency issues and incompatibility of applications.

Silicon Valley's total market inventory surpassed 300 MW in HI 2021. Leasing activity increased and was dominated by hyperscale companies. Cloud service providers continue to prelease large blocks of capacity, triggering construction activity. Though new supply came online in 2021, the vacancy rate continued to drop to a U.S. wide low of 1.6%, representing only

4.8 MW of availability. Silicon Valley's construction pipeline grew another 35 MW during Hl 2021, with the percent of space preleased increasing to 82%. Tight market conditions will continue until the development pipeline moves forward after entitlements, permitting and municipal delays. The development process will continue to take longer and uncertainty remains high. NTT signed 5 MW worth of deals with multiple enterprise companies fully subscribing Phase I of their new Santa Clara facility. Prime Data Centers purchased a 9-MW, fully entitled development site in Santa Clara with plans to build speculatively.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 29 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Residential Market Conditions
The Housing Market Index, based on a survey by the National Association of Home Builders, reported "Despite inflation concerns and ongoing production bottlenecks, builder confidence edged higher for the fomih consecutive month on strong consumer demand and limited existing inventory. Builder sentiment in the market for newly built single-family homes moved one point higher to 84 in December, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This ties the highest reading of the year that was posted in February."
"The most pressing issue for the housing sector remains lack of inventory," said NAHB Chief Economist Robeti Dietz. "Building has increased but the industry faces constraints, namely cost/availability of materials, labor and lots. And while 2021 single-family starts are expected to end the year 24% higher than the pre-Covid 2019 level, we expect higher interest rates in 2022 will put a damper on housing affordability."
The California Association of Realtors (C.A.R.) published their December Home Sales and Price Repoti in mid-January 2022. The repoti notes that "Closed escrow sales of existing, singlefamily detached homes in California totaled a seasonally adjusted annualized rate of 429,860 in December, according to information collected by C.A.R. from more than 90 local REAL TOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2021 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales."
December's sales pace was down 5.4 percent on a monthly basis from 454,450 in November and was down 15.7 percent from a year ago, when 509,750 homes were sold on an annualized basis. Despite the sixth straight year-over-year sales decrease, for the year as a whole, annual home sales rose to a preliminary 444,520 closed escrow sales in California, up 7.9 percent from 2020's pace of 411,870.
"Despite signs of moderating in the second half of the year, California's housing market continued to outperform last year's level and remained competitive even as home prices rose at a double-digit pace - a testament to the imbalance of high demand and not enough homes on the market for sale," said 2022 C.A.R. President Otto Catrina, a Bay Area real estate broker and REALTOR®. "For the year as a whole, the market turned in its best performance in more than a decade, as buyers took advantage of historically low interest rates and continued to value the benefits of homeownership amid another year of the pandemic.

California home prices remained below the $800,000 benchmark for the third straight month as the seasonal slowdown continued. Despite a deceleration in growth at the end of the year, the statewide median price rose to $796,570 in December, up 1.8 percent from November's Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 30 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA $782,480 and up 11.0 percent from the $717,930 recorded in December 2020. The double-digit annual price gain was the l ih consecutive month with more than a 10 percent increase since the summer of 2020. The annual increase was also the smallest since July 2020 as the share of highend homes continued to moderate since July 2021. For the year as a whole, California set a new annual record median price of $786,750, improving 19.3 percent from the prior year. " "The state's housing market is expected to perform solidly this year as the economy recovers fmiher and consumers' desire to buy remains elevated," said C.A.R. Vice President and Chief Economist Jordan Levine. "However, with COVID cases surging and inventory constraints remaining an issue, the housing market will see headwinds of ongoing high inflation, which will put pressure on the Fed to raise rates sooner than previously expected. These factors will increase the cost of borrowing and put more affordability burden on potential homebuyers who want to purchase in 2022."
Regional Housing Market
The Standard & Poor/Case-Shiller Home Price Index measures the average change in value of residential real estate given a constant level of quality and reflects single-family housing. It is sometimes referred to as a repeat sale index. The next cha1i indicates that the index for the subject's San Francisco Metropolitan Area increased about 33% from 263.868 in December 2018 to 349.751 in December 2021, or about 0.92%/month. Over the twelve months between December 2020 and December 2021 the increase was about 1.61 %/month, echoing the builder confidence evident in the Housing Market Index.

FRED ,d - S&P1Ci)se- Shiller CA-San Frilnclsco Home Price Index 350
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330
320
310
300
290
260
270
260
250
022018 0 320 18 Ol 2019 Q2 201 9 03 2019 01 2020
Shaded areas Indicate U.S. recessions. source: S&P Dow Jones Indices LLC Source: S&P Dow Jones Indices LLC
02 2020 0 32020 0 12021 02 2021 03 2021
rred.SUOUISfe<l.org
The State of California Department of Finance (DOF) compiles statistics on total housing units in both the cities and counties of California. Based on DOF statistics, Santa Clara County had a total housing supply of 680,298 units as of January 1, 2021. This represents an increase of 5,740 Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 31 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA units over the 674,558 units as of January 1, 2020. Extending further back in time, the DOF estimates the total supply of housing units in Santa Clara County at 631,920, as of January 2010.

This indicates that over the ten-year period between 2010 and 2020, the housing supply in Santa Clara County increased by a total of 42,638 units, equivalent to a compounded annual increase of

0.655 percent or an average of 4,264 units per year.

According to the Association of Bay Area Governments (ABAG)4 Projections 2040 report (most recent report), in 2015, Santa Clara County had a total of 648,900 households. ABAG projects that in 2030, the number of Santa Clara County households will have increased by a compounded annual increase of 1.04 percent, to 757,690 or an average of 7,253 households per year. As such, the demand for housing (i.e. households) is projected to increase at a considerably higher pace than that of housing supply.

In the City of Santa Clara, the DOF rep01ied a total of 51,041 housing units as of January 2021.

This represents an increase of 2,066 units from the 48,975 housing units as of January 2020.

Housing is being built at a faster rate in Santa Clara than the County as a whole.

According to ABAG's Projections 2040 report, in 2015, the City of Santa Clara had a total of 49,685 housing units. This statistic is projected to increase to 52,675 housing units by 2030, a compounded annual rate of 0.39%, or an average increase of 199 housing units per year. Based on the most recent two year and 10-year periods, the City has exceeded ABAG's projections.

Local Multifamily Market
According to Integra Realty Resources Viewpoint 2021 San Jose Multifamily Mid-Year Report, Growth in the information technology industry over the past decade has strongly increased demand for housing in the Silicon Valley market. There has been limited new single-family home construction and developers responded with substantial new multifamily construction to satisfy demand. Research reports indicate roughly 2,000 to 3,800 multifamily units were completed each year in 2018 through 2020, with over 6,300 units under construction as of the end of 2020.

Prior to the coronavirus outbreak, vacancy remained low as new units were absorbed quickly and rental rates continued to increase moderately, particularly in core submarkets near c01porate campuses and high-end suburban markets,. In recent years, unemployment reached the lowest level since the late 1990 's and even at full employment, job growth was positive in the region. However, in April 2020, unemployment jumped up and a significant number of jobs were lost following stay-at-home mandates and non-essential business closures. The greatest impact has been in the Leisure/Hospitality and Trade/Transportation/Utilities sectors. Market conditions began to moderate during the second quarter 2020 as a result of these policies enacted to slow the spread of the coronavirus. Vacancy in the multifamily market increased as a 4 Association of Bay Area Governments is the official comprehensive planning agency for the San Francisco Bay Area region.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 32 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA result of the economic downturn, job losses, and changes in business operations which allows employees to move to more affordable locations and work fiwn home. Also contributing is the continued increase in supply from new development but ·with slower lease-up periods. Overall vacancy has increased each quarter in 2020 and is above the year ago estimate. Rental rate growth had been declining prior to the pandemic and asking rent trends had already begun to show the effects of the coronavirus at the end of the first quarter, with the typical seasonal pattern of rent growth being disrupted. Forecasting rent growth is highly uncertain at this time; however, it is expected that the economic decline combined with significant supply growth from deliveries over the next several years will result in further declines in average asking rental rates.

Integra Realty Resources Viewpoint 2021 San Jose Multifamily Mid-Year Report summary is displayed in the following charts:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 33 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Market Rate Indicators (Y/V)
Categories
Going In Cap Rate (%)
Asking Rent ($/Unit)
Vacancy Rate(%)
Class A
....
....
....

Class B
....
....
....

Going In Cap Rate Comparisons (%)

8.00%

6.00%

4.00%

2.00%

0.00%
Urban Class Suburban Urban Class Suburban
A Cla ss A B Class B
■ San Jose, CA West Region ■ National
Asking Rents ($/Unit)
$4 .000
SJ,000
S2,000 I I Sl,000
so
Clas s A
■ San Jose, CA
Vacancy Rates (%)

8.0¾

6.0¾

4.0¾ I !

2.0¾

0.0%
Class A
Class B
West Region ■ Nati onal
!
Class B
■ San Jose, CA West Region ■ National
Values for multifamily properties are projected to increase over the next 12 months, according to Integra's repmt. Asking rents over the next 12 months are projected to increase.

According to a CoStar report on the local multifamily market, the "Santa Clara submarket is an important job center, with some prominent companies making the city their home. The submarket is the second largest in the metro, with nearly 20,000 units in its inventory. The economic effects of the coronavirus pandemic and changing demand trends are weighing on submarket occupancy rates. Vacancies are decreasing for Class A units and increasing for Class B units. Prior to the pandemic, job growth around the metro had kept demand high, and absorption was able to keep pace with rapid supply increases over the past decade. Strong demand for housing, particularly near transit, was a driving force for rent gains in recent years.

The coronavirus pandemic has quickly changed market trends and created significant uncertainty Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 34 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA in the market. But the expectation is for transaction activity to pull back as market participants take stock of the changing economic and commercial real estate landscape." "Vacancy in Santa Clara has been volatile since 2016, with large scale construction projects driving the variability. In total, the submarket has added over 3,700 units since 2010. The submarket had previously been able to absorb the new units at a healthy rate, with the vacancy rate consistently normalizing just a few quarters after project deliveries. But the economic effects of the coronavirus are stressing near term occupancy rates. Remote working trends have allowed renters to look further afield to meet housing needs, reducing demand, and job losses are putting further pressure on apartment occupancies. As a result of the reduced apartment demand, existing units are experiencing move-outs, and new projects are facing longer lease-up times." The Marcus & Millichap's 3Q-2021 Multifamily San Jose Metro Area Market Report stated that the apartment market in the South Bay had a strong second quarter and was poised for continued momentum as Apple, Facebook and Google made plans to have their employees return to their campuses. However, the emergence of the delta variant and the rise in COVID-19 cases encouraged both Apple and Facebook to delay recalling employees until January of next year and Google to push back its full office opening until mid- October while also mandating vaccines for workers. Although the extensions will make the improvement in vacancy and rents more measured in the second half of 2021, the eventual return of employees to these economic anchors will prompt smaller firms to bring workers back to their offices.

Local Single-Family Market
According to the City of Santa Clara General Plan, an estimated 28,500 new jobs will be created and the population will grow by 32,135 people in the City between 2010 and 2035. The General Plan forecasts that 13,222 new housing units will be needed during that same period, based on an estimated household size of 2.5 people. The General Plan also states that household growth in the City has been much slower than the rest of Santa Clara County due to the lack of vacant residential land. Therefore, in order to meet future housing needs, construction of new housing will primarily occur through the redevelopment of existing sites.

Among the 51,041 housing units in Santa Clara, as reported by the DOF, the single-family ( attached and detached) market represents about 19,510 or about 3 8% of the total housing units in Santa Clara.

CoreLogic is a national real estate, mortgage, consumer, and specialized business data provider.

They tracked the annual median home price for all homes (single-family, condo, and townhouse), including new construction, in the City's three ZIP code areas through 2021:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 35 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The data above indicates that zip code 95051 consistently has the highest median price among Santa Clara's zip codes. Zip code 95050 had the second highest median in most years. The $/SF indicator shows that 95051 has higher prices than 95050, which both have higher prices than 95054. The data indicates that median prices were increasing in 2018, stabilizing in 2019 and 2020, and increasing in 2021. Overall median prices were higher in 2021. By the end of 2021, median prices had increased about 7.5% per year in 95050, increased about 6.4% per year in 95051 and about 6.8% per year in 95054.

The $/SF indicators showed an overall increasing trend from 2020 to 2021. The total number of sales indicator showed an overall increasing rate from 2020 to 2021 in 95050, 95051 and in the 95054 zip code. Total citywide sales were 1,049 in 2018, 955 in 2019, 1,075 in 2020 and 1,538 in 2021. Overall, there were more sales transacted in Santa Clara in 2021 compared to 2018, 2019, and 2020 suggesting an increase in demand during the pandemic.

The following tables depict the median price trend by zip code over the 3 7 months ending December 2021 for single family homes and common interest developments (townhouse/condos) in the three zip codes of the City of Santa Clara using closed sale data obtained by MLSlistings.com:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 36 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA !
!
l
. ..

I
$2,000,000
$1,100,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
Median Sales Price & Median Days to Sell
For Single-Family Units by Zip Code
IIIIIIIIIIIIIIIIIIII/IIII - 95050 Medlon Price - 9SOSIMed~nPrke - 9Sos.4 Median Price - - 95050 MtdflnOiys to Sel - - 950S1 MtdianO.ystoSell - - 95054Mtdl1nO1yst0Stff Median Sales Price & Median Days to Sell
Townhouse/Condominum
s"'°,ooo - -""'oH,1~~'------'llk-.,,_g.'---~ \-P-1~ l...._.lt-¼_._-+-~ !f--11'-'!or:--+.:...V--\:-\~~'---\--,flF-J 80 IO f 5,00,000 - --- - ---t-----',----A---- ---t----t+-'1-- - ---- ----''r------ --, f 40 IIIIIIIIIIIIII/IIIIIII/II - 95050Mtdl.lnSP - 9SOS1 Medlo1n SP - 95054 Medl,n SP - - 9SOSOMedlan0.ys to Selt - • 95051 Median Days toS.11 - - 95054MedMnO.ys toSell As shown above, market data derived from the local MLS shows that prices were trending downward in 2018, and oscillated up and down in 2019 and 2020. Similarly, townhouses and condominiums oscillated up and down in 2021. However, prices for single family homes were generally trending upwards in 2021.

We note that CoreLogic data includes resales and new construction, while MLS typically does not include all new construction. This is because builders often do not use MLS to market their homes. The following tables show the annual and 2-year change for all housing types over the last three Decembers, according to the MLS:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 37 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Housing Type Zip Code December-19 December-20 December- 21 % Change per Month % Change per Month Last 12 Months Last 2 Years
SFR, Condo, &
95050 $1,210,000 $1,265,000 $1,230,000 -0.23% 0.07%
Townhouse
95051 $1,425,000 $1,415,000 $1,575,000 0.94% 0.44%
95054 $1,202,500 $1,128,000 $1,450,000 2.38% 0.86%
Source: Local MLS
The data in the above table suppo1ts the opinion that 95050 and 95054 generally rate inferior to 95051. The data also indicates that median selling prices are higher over the past two years, but higher in 95051 , higher in 95054, and lower in 95050 over the last 12 months. The median throughout the entire city, encompassing the three zip codes, increased 8.3% over the 12 months ended December 2021 from $1,305,000 to $1,413,000.

The next table using MLS statistics shows the monthly median change in selling prices in Santa Clara, adjacent Sunnyvale, and the larger Santa Clara County market since the sta1t of 2018:

Median Sales Price For All Residential
$2,000,000
$1,800,000
$1,600,000
.
·I!
...
..

Ji $1,400,000
~ ,:
-~ $1,200,000 I
$1,000,000
$800,000
II/II/II/II/II/II/I/Ill/ - santaClara - sunnyvale - Santa Clara County As the table above indicates, median selling prices peaked in the spring of 2018, receded until early 2019, were more stable through the end of 2019, but then increased sharply in the early part of 2020 through the spring of 2020. Prices were generally stable over remainder of 2020 in Santa Clara and Santa Clara County but declined in Sunnyvale. The median selling prices for each of these three areas generally increased throughout 2021.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 38 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Conclusions
The overall long-term outlook for the economy remains bright, though the migration of many highly paid workers is delaying a stronger recovery in the retail arena. Furthermore, the emergence of the COVID-19 variants is giving pause to some to the local economy's anchors.

Google, Apple and Facebook have all pushed reopening into early 2022 as the current wave of positive cases needs to pass. The unemployment rate began declining and detached single-family buyers showed greater interest in the market as they fled more urban areas such as San Francisco and smaller housing types and were looking for more space in less dense environments. The work-from-home dynamic kept pressure on delivery services and data center operators to keep up with demand, which in turn kept up demand for industrial properties storing product.

Essential retailers generally fared okay during 2021, particularly grocery stores, home improvement stores, drive-thru fast food, and quick serve restaurants. However, fine dining, hospitality, entertainment, and shopping malls, to name a few, were impacted by the pandemic.

As the vaccine was distributed in the community, restrictions were lifted, businesses reopened, and employment numbers gradually improved. Demand for most real estate is forecast to continue to return to pre-pandemic levels.

Commercial (retail and office) pro petties exhibited mixed indications due to the pandemic in 2021. Some retail is doing fine, but the hospitality/leisure/entertainment industries remain depressed. Office demand appears in limbo as many employees may or may not fully return to offices, particularly among tech companies. Fmthermore, the emergence of the COVID-19 variants is giving pause to some to the local economy's anchors. Google, Apple and Facebook have all pushed reopening into early 2022 as the current wave of positive cases needs to pass.

During 2021 office buildings experienced stable to increasing vacancy despite increasing asking rental rates. The rental rate increases were due in patt to newer, better space becoming available as tenants migrated from nearby higher cost markets. The trend was generally the same for retail, whereby vacancy ticked down slightly over the second half of 2021, with Santa Clara continued to record the lowest vacancy rate in the region at 3.9%. Average asking rents were also down slightly at the end of the year. There is limited new retail construction occurring; most is pait of mixed-use developments. Office construction is occurring, but it is mostly located in downtown San Jose and the Bayside portions of the county where larger blocks of land can be found and generally comprises high-intensity, four or more story buildings. Based on discussions with market patiicipants, general market conditions and the sales data we analyzed, we applied a market conditions rate of change to the commercial land sale comparables used following of negative 0.75% per month from the start of April 2020 through 4Q-2020. From the date of sale through 4Q-2021 prices were more stable for commercial and did not warrant adjustment.

Over the past couple of years, industrial (and warehouse) market statistics indicated that rental rates have been trending upwards, while vacancy rates generally stabilized near 5%. Market Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 39 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA participants opined that selling prices are also increasing, especially for large sites suitable for data centers. The increase in industrial value is supported by an improved paired sale at 3600 Peterson Way in Santa Clara that sold in October 2016 for $30 million and again in June 2019 for $37 million, which indicates a straight-line increase of about 0.72% per month for this 75,800 square foot building on an approximate 5 .42-acre site. 1623 S 10th Street in San Jose sold for $3,000,000 in August 2018 and again for $3,801,000 in October 2020, indicating a straight-line increase of about 1.0% per month. Based on increasing rents and prices, we concluded that competing industrial land prices were increasing at the rate of about 0.75% per month from the date of sale of the comparables through December 2020, with no additional adjustment in 2021.

Santa Clara (and the Bay Area in general) is an undersupplied housing market. Demand for housing is expected to continue in the long-term, with increased demand for higher density housing options, a result of the scarcity of developable land and the more affordable nature for prospective buyers/renters.

Market data and market participants report that residential prices declined in the latter part of 2018 and were stable overall during 2019. In 2020, the residential market showed different trends depending on prope1ty type. The market generally saw greater demand for detached residential over the course of 2020 and 2021 as buyers looked to have more indoor/outdoor space since they began spending a greater proportion of time at home. Meanwhile, condominiums and apartments experienced a slower market during 2021. Based on the market reports cited above, sales data analyzed, and market participant interviews, for the very low-density residential land sales used in the following analysis we applied an increasing rate of change of 0.25% per month from the start of 2020 through the fourth quaiter 2020 and an increasing rate of change of 1.00% per month from the stait of 2021 through the fomth quarter 2021. For the high-density land sales, median sale prices oscillated somewhat and multifamily rents stagnated or declined during 2021.

So, no market change is applied during 2019, 2020 and 2021 for this property type.

LAND USE ORDINANCES
Since we are analyzing hypothetical lots, we supposed that each use would be based on its appropriate General Plan designation. The appropriate zoning category for each hypothetical use was not a critical factor as the General Plan is the long-term planning tool used by the City.

Fmthermore, comparable land sale transactions typically sell based on their intended use, which is supported by the General Plan in almost all cases. The City's Phase II Land Use map is in effect and is intended to guide land uses for the years 2015-2025. Compared to Phase I, it expands the areas within the city where mixed-uses and higher-density residential is allowed. We supposed the following General Plan designations for each hypothetical use:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 40 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Use of Hypothetical Lot General Plan
Very Low Density Residential Very Low Density Residential Low Density Residential Low Density Residential
High Density Residential High Density Residential
Medium Density Residential Medium Density Residential
Commercial Regional Commercial
Industrial Light Industrial

HIGHEST AND BEST USE
We studied the legally permissible, physically possible, financially feasible, and maximally productive uses of each hypothetical lot. We considered prevailing market conditions and recent development trends. As indicated in the market conditions section, except for retail/hospitality/office, each product type is generally experiencing increasing or stable prices and stabilizing vacancy rates. These are indications that the highest and best use is to construct the legally permissible product for each respective prope1ty type. However, for the commercial use, since many retail and office projects are on hold, construction would not likely be undertaken until the market improves, unless preleased or a build-to-suit is procured. Therefore, the highest and best use for the hypothetical commercial use would be to hold for future development of a commercial building until the market improves, unless preleased or a build-tosuit. We concluded to the following components of prope1ty uses for the highest and best use of the hypothetical lot based on the overall market and the instruction of the Client:

Use of Hypothetical Lot Highest & Best Use
Very Low Density Residential Very Low Density Residential Low Density Residential Low Density Residential
Medium Density Residential Medium Density Residential
High Density Residential High Density Residential
Commercial Hold for Development of a Commercial Building Industrial Light Industrial Building
We applied a hypothetical condition that each of these uses was allowed on the hypothetical subject lot.

For this analysis and based on the market and the City's General Plan, we concluded the most reasonable density to suppott the residential uses was about the midpoint or nearer the high end of the allowed density ranges (based on ever-increasing density proposals/approvals):

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 41 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA • 13 dwelling units per gross acre (DU/AC) for Low-Density Residential; • 26-30 DU/AC for Medium-Density Residential; and
• 45 DU/AC for High-Density Residential.

For Very Low-Density Residential, which allows up to 10 DU/AC, we concluded that the most likely subdivision for a hypothetical one acre of land would support a subdivision at the high of this range, or 10 DU/AC. This is because the scarcity of land requires ever increasing densities to make projects financially feasible.

The likely commercial use would be an office building, but only if preleased or a build-to-suit.

The likely industrial use would be a data center, flex, light industrial building or some type of interim contractor storage yard with minimal building improvements.

APPRAISAL PROCESS
The appraisal profession has generally relied upon three traditional approaches in estimating the market value of real property. These are the Income Capitalization Approach, the Sales Comparison Approach, and the Cost Approach. While all three approaches are always considered in a valuation assignment, all three are not always applied. The quantity and quality of available data and the applicability of each approach relative to the value being sought are important factors in reconciling to an opinion of value.

Market value was estimated using the sales comparison approach. The income capitalization approach is seldom used when valuing land. The cost approach did not offer substantial insight into this estimate of market value since there are no building improvements. Sellers, buyers, and our peers in this market rarely rely on the cost and income capitalization approaches when offering, purchasing, or valuing properties similar to the hypothetical subject lots. Therefore, we did not undertake a cost or income capitalization approach.

Following we estimated the value of a hypothetical one-acre lot under each use scenario described above, as if located within the 95050 zip code, since the most data was discovered in this zip code. Next, we applied the weighted average of the highest and best land use component, based on the percentage of total land area associated with the different property types ( as described above) that sold in the City of Santa Clara in the 12 months prior to the date of value (as reported by Old Republic Title Company). Lastly, we applied any necessary locational differences from the 95050 zip code conclusion to arrive at the appropriate average lot value in the 95051 and 95054 zip codes.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 42 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA AVERAGE VALUE ESTIMATE IN 95050 ZIP CODE
Very Low-Density Land Value
The writers examined data that was discovered by: talking to brokers, agents, property owners, and market participants from within the subject market; reviewing DataTree.com, MLSlistings.com, and CoStar.com databases for recent sales; and searching Loopnet.com and broker databases for current listings. We also reviewed development rep01is provided by the planning departments of Santa Clara and other nearby cities.

As stated above, for the very low-density value component, we assumed a density of 10 dwelling units per acre, at the high end of the allowed range under the Very Low-Density General Plan designation, which allows up to 10 dwelling units per acre. We searched for competing sales and listings of properties throughout Santa Clara and adjacent cities which were intended for development with residential densities less than 25 dwelling units per acre and that closed escrow over the last three years. We first analyze the subject hypothetical one-acre site located in zip code 95050 since more appropriate sales from this zip code were discovered. The sales we found most comparable are displayed on the following adjustment grid. The adjustment grid serves two purposes. First, it presents data, analysis, and conclusions about the subject and comparables in a way that facilitates comparison. Second, it presents the data in a format whereby the reader can follow the writers' adjustment process.

A parcel map for each comparable sale is displayed in the Addenda. Selling prices were verified using our summary transcript of the public record and conversations with selling and listing brokers/agents, sellers, and/or buyers when possible. A map showing the location of these comparables is displayed in the Addenda.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 43 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

VERY LOW DENSITY COMPARABLE LAND SALES
ELEMENT OF ADJUSTMENT SUBJECT COMPARABLE VLD-1 COMP ARABLE VLD-2 COMPARABLE VLD-:J COMPARABLE VLD--4 COMPARABLE VLD-5 ADDRESS Average Street 4254 Cheeney St 159 Brookside Avenue 3159 Butte Streat 1334 Miller Ave 1348 Miller Ave Santa Clara Santa Clara Santa Clara Santa Clara San Jose San Jose APN 104-12--031 303-22-028 290--04--044 375-25--053 375-25-055 SELLER Lawrence L FargherTrust Domingo 1992 Revocable Trust Wallis 1983 Family Trust staven K. Doi 2011 Trust Li Shaoliang BUYER BS & LS Schuman Trust Ranjan Trust, et al Cheng C & Tsai L Chan Zhang Tao Kalun DOCUMENT NUMBER 24770884 24597855 24420940 24965466 24965471 SALE/ UST/NG PRICE $925,000 $1,325,000 $1,600,000 $3,100,000 $3,232,000 SALE/ OFFERING PRICE PER SF $123.33 $96,72 $110.92 $139.87 $145.82 TRANSACTIONAL ADJUSTMENTS $308,333 $662,500 $800,000 $1,033,333 $1,077.333 REAL PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple (M-t-M leases) Fee Simple Fee Simple Fee Simple Fee Simple ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00%
FlNANCING TERMS AR Cash Conventional All Cash All Cash All Cash ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00%
CONDITIONS OF SALE Motivated Seller Arm's-length Arm's-length~mprnvement Value Arm's-length Arm's-length ADJUSTMENT 10.00% 0.00% -9.38% 0.00% 0.00%
EXPENDITURES AFTER SALE Demolition Offset Demolition Off set None Demolition Offset Demolition Offset ADJUSTMENT 0.00% 0.00% 0.00% 0.00% 0.00%
CLOSE OF ESCROW December 31, 2020 September 2. 2020 March 4, 2020 May 18, 2021 May 18, 2021 TIME OF SALE/ MARKET CONDITION December 31, 2021 November 2020 August 2020 F abruary 2020 March 2021 March 2021 MONTHS FROM START 10-2021 THROUGH 40-2021 12 12 12 9 9
ADJUSTMENT@% PER MONTH 1.00% 12.00% 1200% 12.00% 9.00% 9.00% MONTHS FROM START 10-2020 THROUGH 40-2020 1 4 10 0 0
ADJUSTNENT tll) % PER MONTH 025% 0.25% 100% 2.50% 0.00% 0.00% ADJ PRICE PER SF AFTER TRANSACTIONAL ADJS $152.33 $109.40 $116.40 $162.46 $158.96

LOCATIONALADJUSTNENTS
EXPOSURE /VISIBILITY Average Similar Similar Similar Similar Similar ACCESS Average Similar Similar Similar Similar Similar
APPEAUSITE INFLUENCES Average Inferior Inferior/San Tomas Expy Supenar Superior Superior ZIP CODE 95050 95054 95050 95051 95129 95129
OVERALL LOCATIONAL RATING Inferior Inferior Superior Superior Superior

PHYSICAL ADJUSTMENTS
SITE SIZE (ACRES) 1.00 0,17 0.31 0.33 0.51 0.51
SITE SIZE (SF) 43,560 7,500 13,700 14,425 22,164 22,164 UTILITY/TOPOGRAPHY Rectangular/ 1 Street Front Rectangular/ 1 Street Front Rectangular I 1 Street Front SI lnregular / 1 street Front Rectangular I 1 Street Front Rectangular I 1 Street Front

USE/ZONING ADJUSTMENTS
ZONING R3-18D R1-6L RHlL R1-6 R1-8
GENERAL PLAN Very Low Denstty Res Very Low Density Res Very Low Density Res Very Low Density Res Residential Neighborhood Residential Neighborhood NUMBER OF UNITS 10 3.0 1.5 1.5 3,0 3.0
ESTIMATED I PROPOSED DU/ACRE 10.0 17.4 4 .8 4.5 5.9 5.9 INTENDED USE Residential Triplex SFD + ADU Residential + ADU 3 Residential Untts 3 Residential Units AFFORDABLE HOUSING COMPONENT Yes/ 1 Unit (10%) No No No No No PARK FEE COMPONENT PER UNIT $40,588 Superior/None Superior.None Superior/None $27,300 $27,300 ENTITLEMENT STATUS HasZoninq&GP Had Zonino and GP Had Zonino and GP Had Zoninq and GP Has Zoninq & GP Has Zonino & GP OVERALL PHYSICAL & USE/ZONING RATING Superior Inferior Inferior Superior Superior

OVERALL RATING-SUBJECT SHOULD SELL FOR LESS MORE MORE LESS LESS Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 44 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Adjustment Process
Transactional adjustments were made sequentially for property rights conveyed, financing terms, conditions of sale/motivation of participants, expenditures incurred by the buyer after the sale, i.e. demolition costs, and market conditions since the sale date.

Comparable VLD-1 is the December 2020 closing of a parcel in an off-market transaction. Based on a conversation with the buyer, the seller was in poor health and was motivated to sell. The existing rents for this triplex were well below market and the agreed upon selling price was close to land value. The buyer is a builder who may renovate or demolish; he has not yet decided. If demolished, he estimated that another triplex would be built, but possibly a fourplex. After making all other adjustments first, an upward adjustment is concluded for motivation on the paii of the seller, as shown above. Since this comparable is expected to support three units again, the developer of this comparable will not pay park impact fees since there will be no net new units.

Comparables VLD-2 is the sale of single-family lot improved with an older home. The buyer of Comparable VLD-2 intends to demolish the home and construct a new two-story dwelling and add a 748 square foot detached additional dwelling unit (ADU). This comparable will not pay park impact fees since ADU's are exempt under the Santa Clara City Code (17.35.090).

Comparable VLD-3 was the sale of an improved lot that could suppoti two lots or a SFD and an ADU. The listing broker opined that the existing improvements needed a lot of work, but that the buyer intended to move into the home, which dated from the 1940s. Based on the expected utilization of the improvements, we concluded that a downward adjustment was warranted for their contributory value. The amount of adjustment was estimated based on our observations, input from the listing broker, and a good fit for the data. A downward adjustment of $150,000 for this element of comparison was applied to the comparable on the Conditions of Sale line.

Comparables VLD-4 and VLD-5 are the sales of two single-family lots improved with older homes. These comparables were offered together by separate ownerships. The comparables were offered as a development site and a four lot conceptual site plan was included with the listings.

Instead of a four lot subdivision, the buyer intends to demolish both of the homes and subdivide the two existing lots into six lots and one common access lot. These comparables were selected to help bracket size.

Comparable VLD-1 continued to be rented following close of escrow; we concluded that the cost of demolition was offset by the rents that could continue to be received. The seller of Comparable VLD-2 was given some time to lease back following close of escrow; again, we concluded that the cost of demolition would be offset by rental income. The sellers of Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 45 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Comparables VLD-4 and VLD-5 were each given a sh01t time to lease back following close of escrow; again, we concluded that the cost of demolition would be offset by rental income ..

As discussed in the preceding material, market conditions adjustments are applied from the stait of the first quaiter 2020 through the end of the fourth quarter 2021.

Locational adjustments were broken into elements that reflect the prope1ty's identity to potential tenants or buyers ( exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby properties, proximity to enhancing or detrimental factors, or an identifiable valuation element relating to address (locational appeal, zip code). Locational adjustments were warranted for the elements of comparison as summarized on the grid. As will be discussed in the following material, residential land values in the 95050 zip code rated superior to the 95054 zip code but inferior to the 95051 zip code; thus, the 95054-located comparable is adjusted upward and the 95051-located comparable is adjusted downward. Although Comparable VLD-2 backs to a public park, beyond the park is San Tomas Expressway, which is within about 200 feet of this comparable and is not separated by a sound wall, rating inferior to the subject; an overall upward adjustment is concluded for this element of comparison. Comparable VLD-4 and VLD-5 are considered to be in a superior location with a higher median sales price and are therefore rated as overall superior to subject.

Physical and Use/Zoning adjustments were broken into elements that reflect prope1ty size, utility/topography, allowed land uses and density, intended use/development density, affordable housing component, park fees, and entitlement status.

Comparable VLD-3 is located at the elbow of two streets and thus has an irregular pie-slice shape; an upward adjustment is concluded for inferior utility. For this analysis, upward adjustment was warranted for the lower densities of Comparables VLD-2, and VLD-3. Each comparable warrants downward adjustment for having either no park fees or for having lower park fees than the hypothetical subject lot.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 46 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Conclusion
Following adjustment for the elements summarized on the grid, we concluded to the overall ratings displayed at the bottom of the sales grid. Bracketed by the comparable ratings, giving most weight to the sale comparables located in Santa Clara, we concluded to the following unit value of unentitled very low-density residential land in the 95050 zip code:

Unit $/SF x Land Area (SF) Indicated Value
$125 X 43,560 $5,445,000
Estimated Market Value of a 1-Acre
Very Low-Density Residential Lot in 95050 Zip Code: $5,445,000 Low Density Land Value
For the low-density value component, the City's land use classification cites a low-density range of 8-19 dwelling units/acre (DU/Acre), which is greater than the maximum IO DU/Acre allowed in the very low-density classification. We assumed a density of 13 DU/Acre, about the mid-point of the density range. In the market, the primary value difference between very low and lowdensity land relates to density. The density adjustment was estimated based on the relationship between price per SF and density, as evidenced by the comparables. In the chart below, we plotted the preceding very-low density comparables and the high-density comparables used in the following high-density value scenario.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 4 7 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Comparable Price per Square Foot vs. Proposed DU/Ac
$240.00
$220.00
.f
C
..
-a $200,00 0. I 5
X
..
~
C
.. $180.00
E
~ :;;-
"' $160.00 iii
~
..
.i:
u.. "'
.,, $140.00 Cl.
5 ·c
Cl.
-a
.. $120.00 t; { ::,
,,
<(
$100.00
$80.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 Proposed Dwelling Units per Acre
As shown in the cha1i above, the price per square foot of land increases with increasing density.

This is congruent with our observations in the market that as density increases, price per SF of land typically increases. The difference in pricing for changing densities is clear when comparing the lowest to the higher densities. And the price/SF difference is less when comparing the median to higher densities. We concluded there is a difference in value/SF between the preceding very low density and low-density residential which has a higher density. The trendline in the chart above indicates that the appropriate unit value based on a density of 13 dwelling units per acre would be about $132 per square foot. However, by graphing only the very low density sales, the following occurs:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 48 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA 2021 Comparable Price per Square Foot vs. Proposed DU/Ac $155.00
$150.00
$145.00
-~ I! $140.00 .,
..,
'S. $135.00 .,
; $130.00
1:!
.,
E $125.00
t;;
::,
'6' $120.00 ..
'ii $115.00 :.
'l; $110.00 ...
~
~
~
~
~
~ ·~ Vl
~ ... $105.00 .,
u
♦
·;::
... $100.00 'i
t;; $95.00 ::,
i
$90.00
$85.00
$80.00
0,00 5.00 10.00 15.00 20.00
Proposed Dwelling Units per Acre
The chart above showing just the low density comparables indicates that the appropriate unit value based on a density of 13 dwelling units per acre would be in the range of about $135 to $140 per square foot.

Based on the comparable data, with a density of 13 dwelling units per acre for the low-density residential land use, we concluded to $136/SF.

Conclusion
We concluded to the following Low-Density residential value in the 95050 zip code for I-acre of land:

Unit $/SF x Land Area (SF)
$136 X 43,560
Estimated Market Value of a 1-Acre
Low-Density Residential Lot in 95050 Zip Code:

Indicated Value
$5,924,160
$5,924,160
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 49 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA High Density Land Value
Similar to the preceding very low-density land search, we searched data sources for high and medium-high density residential land transactions and examined data that was discovered by talking to brokers, agents, prope1ty owners, and market participants from within the subject market. We also reviewed development repo1ts provided by the planning depaitments of Santa Clara and other nearby cities.

As stated above, for the high-density value component, we assumed a density of 45 dwelling units per acre, a little higher than the midpoint of the allowed range under the High Density General Plan designation, which allows 37-50 dwelling units per acre. The sales we found most comparable are displayed on the next grid. A map showing the location of these comparables is displayed in the Addenda. A parcel map for each comparable sale is also displayed in the Addenda. Selling prices were verified using our summary transcript of the public record and conversations with selling and listing brokers/agents, sellers, and buyers. We were unable to confirm the details of Comparable HD-2 with a party to the transaction. We relied on published data, city records, subscription service data, news aiticles, and information available from a summary transcript of the public record for transaction details regarding these comparables.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 50 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA IIIGU D£1'1SITY cmtl'ARABLE LAND SALES
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USlJZONING AOIOSTMtNTS
""'"" C:CjCommunltyCOml'Tll1ti~) 0G CT lN (Tr.tm.lt Ne-l(tlbortlood) TN(TrilimltNl"!ChDolTIOOdl GCHlRN..PlA.'t Hlf:hDHl1lry~dC!ntii,I COfflmurutyMludlJM!' COfflfflunttyCottlfflffcW COmmunityMlMKIUW Mlf:l't DMsl(V Rftkkontu.! Hlct,Dirmttyll.c!\ldirnUI AU.OW{O IXNSn'Y lct«.cllrll unit\~ xr~) n-so .,. N/A ,,. .. MINfflumlOO MINfflunt l OO NUMBU Of UNfn ., 36IPn> IUCI) ll9 " ... 371
DmMT?D / PROPOSf.ODU/ AOtl. .... ,u .... lilO.O JDD.O 1nA um"""' us, RHldtnW Mldd-UUCoftOD\ll'ld~ AtfOn11iblt HCkdlnl AtfOflbbMHOW),C ...... .., iArrOIU>ADU MOUSING CDMPON!:Nf U>'%ortn--41eu 10!K orll'HlP!,I Yet /.1.0m' Yn/ 100% k\-lleuFH -IJHIIIUfM PARIC FU CQMPONtNT l'tR UNfT Sl6,!J021 SU.&11 SU.05' Sll.5l6 = Sl0,9U CNTITUMOffSTATUS Hlllor'llr)ll,.GP H:adc..ner.alP'l.11\ NMd1.ZOnln r ,1ndGt-rwtralPl:an HldGanlff"alPbn MMZONN'I.G? HH~• &GP OVUIALL """5ICAl &. US!./?ONING ltA'TlNG Sllgtnly 5upt'f10f SllchUYS!,pf:flor- Sllghtly5ul)l'no, S\l!Jtltlylnlcnor SllgtlltySupertor OYOW.1.U1TNG-SUIJf:CfSHOUl.DSW.f011t USS ""' .... '"'"' "" Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 51 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Adjustment Process
Transactional adjustments were made sequentially for prope1iy rights conveyed, financing terms, conditions of sale/motivation of participants, expenditures incurred by the buyer after the sale, i.e. demolition costs, and market conditions since the sale date.

Comparable HD-I was purchased as paii of an assemblage-the buyer had recently purchased two adjacent properties. Similarly, Comparables HD-4, and HD-5 were also purchased as paii of an assemblage. Based on the data, a downward adjustment is warranted for motivation on the part of the buyer.

Comparables HD-1, HD-3, HD-4, and HD-5 required the demolition of existing improvements before their new, intended use could be realized. We concluded this expense was offset by the interim income from the improvements. So, no additional adjustment was warranted for this element of comparison.

Comparable HD-2 is a closed transaction of an infill site improved with a vacant 30,000 square foot office building. This building will require demolition prior to redevelopment, estimated at $200,000, based on our observation and cost data. This element of comparison is shown as an upward adjustment on the Expenditures After Sale line.

Locational adjustments were broken into elements that reflect the property's identity to potential tenants or buyers ( exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby prope1iies, proximity to enhancing or detrimental factors, or an identifiable valuation element relating to address (locational appeal, zip code). Locational adjustments were warranted for the elements of comparison summarized on the grid.

Physical and Use/Zoning adjustments were broken into elements that reflect prope1iy size, utility/topography, allowed land uses and density, intended use/development density, affordable housing component, park fees, and entitlement status. Physical and use/zoning adjustments were warranted as summarized on the grid.

Comparable HD-I and HD-3 both had two street frontages, allowing for greater design flexibility, rating superior utility, and warranting downward adjustment. Comparables HD-4, and HD-5 both are zoned Transit Neighborhood and have a minimum density of I 00 dwelling units per acre. Comparable HD-3 will have I 00% affordable housing and was given a 15% credit on the park fees. Comparable HD-4 has been given a credit of $1,290,000 for park fees in exchange for 14,000sf of dedicated park space and private amenities. The comparables proposed building densities/acre bracket the subject; the highest densities warrant downward adjustment and the Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 52 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA lower densities warrant an upward adjustment. Comparables HD-1 and HD-2 will require a zoning change or general plan amendment to allow for residential and an upward adjustment is warranted for this element of comparison. The comparables with approved entitlements rated superior to the subject's unentitled status and are adjusted downward. Park impact fees varied somewhat based upon the use and timing of the fee.

Conclusion
Following adjustment for the elements summarized on the grid, we concluded to the overall ratings displayed at the bottom of the grid. The comparables were analyzed based on a price per square foot and a price per unit units of comparison. The range of adjusted values is more consistent on a price/SF basis rather than a price/density unit basis; therefore, the price/SF is utilized as the primary comparison of value. Bracketed by the comparable ratings, the following value of unentitled high-density 45 DU/Acre residential land in the 95050 zip code is concluded:

Unit$/SF X Land Area (SF) =
$195 X 43,560
Estimated Market Value of a 1-Acre
High-Density Residential Lot in 95050 Zip Code:

Medium Density Land Value
Indicated Value
$8,494,200
$8,494,200
For the medium-density value component, a density of 30 dwelling units per acre is assumed, slightly above the midpoint of the allowed range under the Medium Density General Plan designation, which allows 19-36 dwelling units per acre, because buyers typically build to the higher end of allowed density. In the market, the primary difference between the medium-density land value and high-density land value relates to density. The density adjustment was estimated based on the relationship between price per SF and density, as evidenced by the comparables. In the chart below, we plotted the preceding high-density comparables and the very-low density comparables used in the preceding low-density value scenario. We graphed the change in land value per square foot versus the change in density.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 53 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Comparable Price per Square Foot vs. Proposed DU/Ac
$240.00
$220.00
>
·1;;
C
a,
.,, $200.00 a
3 X
..

E $180.00 Cl>
E
;
'ii'
.. $160.00 <ii
...
..
;J:::
..
u..

V, $140.00 0..
3 ·c:

0..
"5l $120.00
t: i :,
'ii'
<(
$100.00
$80.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 Proposed Dwelling Units per Acre
As stated in the preceding material, the data shows the price per square foot of land increases with increasing density, which is congruent with our observations in the market. The difference in pricing for changing densities is clear when comparing the lowest to the higher densities. The chatt above indicates that at a density of about 30 dwelling units per acre, the indicated price per square foot is about $140 to $145, but is somewhat skewed by the cluster of low density sales.

The next chart removes the low density comparables and includes only the higher density com parables:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 54 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA >
$230.00
$225.00
$220.00
~ $215.00 .. °i $210.00
i $205.00
i $200.00 E
!j $195.00
:;,
" $190.00 ii
~ $185.00
~ $180.00
.ff $175.00
t i $170.00
~ $165.00 <(
$160.00
$155.00
$150.00
2021 Comparable Price per Square Foot vs. Proposed DU/Ac ♦
•
♦
•
♦

20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 110.00 120.00 130.00 140.00 150.00 160.00 170.00 180.00 190.00 Proposed Dwelling Units per Acre
The chart above indicates that at a density of about 30 DU/acre, the indicated price per square foot is about $200 to $205 per square foot. This is slightly more than the high density value concluded above, which may be due in part to the higher cost of underground parking typically found in more dense projects. Based on the preceding comparable data, giving greater weight to the more comparable similar density range and the higher density sales cha1i above, with a density of 30 DU/acre for the medium-density land use, a unit value of $200/SF is concluded.

Conclusion
We concluded to the following medium-density value in the 95050-zip code for I-acre of land:

Unit$/SF X Land Area (SF) = Indicated Value
$200 X 43,560 $8,712,000
Estimated Market Value of a 1-Acre
Medium-Density Residential Lot in 95050 Zip Code: $8,712,000 Commercial Land Value
Like the search for residential land sales data, we searched similar data sources and examined data that was discovered by talking to brokers, agents, property owners, and market participants Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 55 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA from within the subject market. We searched for recent sales of competing retail and office properties throughout Santa Clara and nearby cities. Those we found most comparable are displayed on the grid on a following page. A map showing the location of these comparables is displayed in the Addenda.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 56 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA COlOIERCL-\L L.-1..'"D COlfi'_·\R.ABLE S.-\LES
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Frank Schmidt& Associates
.95051

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95051
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C,.,P!wtlU.C 5'm<D,yI.m:>:T1mt ?.i:x:«an Gvdm Prope::i.es.ll.C s=.ros.tBotet:m.~uc SST""""""""U.C BPR?:ope::iest:CSCllC S9,S00.000 $6,'00,000 $4,-150,000
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suo.u SJJ0.02 $105..36
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57 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Adjustment Process
The adjustment methodology was similar as above for the residential land sales.

Transactional adjustments were warranted. As described above, due to a lack of commercial land sales, some improved sales were utilized for which the improvements contributed little to the overall selling price. Comparables C-1, C-2, C-4, and C-5 were improved.

Comparable C-1 was marketed as a development site; the eventual buyer planned to continue the retail uses. Based on a discussion with the listing broker, our observations, and the age and condition of these improvements, which comprised about 25,150 SF, the contributory value was estimated at about $60 per square foot of building area, or about 15% of the selling price as shown on the adjustment grid. This is shown as a downward adjustment. Similarly, the sale of Comparable C-2 included about 7,800 square feet of improvements dating from the late 1950s; each contributed to the overall selling prices. Based on our observations and discussions with the broker, the contributory value for each of these buildings was estimated at about $75 per square foot of building area, or about 11 % and 16%, respectively of the selling prices as shown on the adjustment grid. These are shown as downward adjustments.

Comparable C-4 included a 6,295 square foot restaurant building originally constructed in 1972.

This site was being sold for land value and the restaurant was leased month-to-month. We concluded that the cost of demolition would be offset by rental income.

Comparable C-5 included a 5,515 square foot restaurant building. The building was vacant at the time of sale, but could have been leased on a month-to-month basis. We concluded that the cost of demolition would be offset by rental income.

Market conditions adjustments were applied from the contract date through the date of opinion using the degree of adjustment(s) discussed in the Market Conditions section.

Locational adjustments were broken into elements that reflect the hypothetical property's identity to potential tenants, buyers, or occupants ( exposure, visibility), access (to freeways and amenities), and overall desirability of the location based on neighborhood factors such as age and condition of nearby properties, proximity to enhancing or detrimental factors, or an identifiable valuation element relating to address (locational appeal). Locational adjustments were warranted as summarized on the grid. Note that Comparable C-3 does not face Coleman Ave despite its Coleman Ave address.

Physical and Use/Zoning adjustments were considered for size, utility, off-site improvements, zoning/General Plan, and planning/entitlement status. Within the range of the comparables, larger Comparables C-1 and C-3 warranted upward adjustment. Among the differences in land use ordinances, those of Comparables C-1 and C-2 were more favorable and warranted a Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 58 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA downward adjustment. Comparable C-3 sold entitled for a hotel development and warranted a downward adjustment for this element of comparison.

Conclusion
Bracketed by the comparables, we concluded to the following for commercial land in zip code 95050:

Unit$/SF X Land Area (SF)
$95 43,560
Estimated Market Value of a 1-Acre
Commercial Lot in Zip Code 95050:

Industrial Land Value
Indicated Value
$4,138,000
$4,138,000
We searched the same databases listed above and reviewed other data discovered by talking to brokers, agents, property owners, and market participants from within the industrial market. We searched for recent sales of competing industrial prope1ties throughout Santa Clara and nearby cities with similar industrial markets. We also searched for recent improved sales with improvements that were nearing the end of their economic lives or that contributed little to the overall sale price. Those we found most comparable are displayed on the following grid. A map showing the location of these com parables is displayed in the Addenda.

We are aware of additional sales data in this market described below but were not selected as comparables:
• The Fujitsu campus at 1200-1280E. Arques Avenue on the Santa Clara border with Sunnyvale sold in October 2020 to Lane Partners. This campus includes six buildings on about 26 acres. The purchase price was recorded at $104 million, but we discovered that there was an additional $15 million spent on lease buyouts. Based on a total purchase of about $119 million, the equivalent land value is indicated at about $104 per square foot.

The site is expected to be redeveloped and allowed uses could include R&D, office, and data center. The large size precluded use as a comparable. We were unable to confirm the details of Comparable 1-1 with a party to the transaction. We relied on published data, city records, subscription service data, and information available from a summary transcript of the public record for transaction details regarding this comparable. • There was an improved sale at 2170 Martin A venue that closed escrow in November 2020, but based on a discussion with the listing and buying broker this was effectively a Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 59 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA distressed sale as the seller's business had dried up due to the pandemic. Furthermore, the buyer and seller had a previous relationship and the broker represented both sides. For these reasons, it was not appropriate to use as a comparable.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 60 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA INDUSTRIAL LAND COMPARABLE SALES ELDlE:'l'T OF .-Ul.JUSTIIE.'rr SUBJECT COllPARABU: I-1 COlJPAR.-U!L[ I-2 COllPARABU: I-3 col.IP ARABI.[ I--1 CO:lJ'.P.·UlABU: 1-5 ADDRESS A=;,,Sttfft ~MJ:rti::.A,"ll! 2175 MminAn 1535 & 1575 I,,dn."tri,J A" 365RffdSt 9S0MminA,..,..e 5,m,Cl,n s-= S,,,,,C!= s~JO"..e == S-C'.an
APN :!24-10-119 1'.!4-10-115 237-30-020 & 025 230-47-105 224-61-010 = P!t>jecr38U.C L'V?Mm::inA·•••~ F=k J. & Lcli• ,A_ Reed.StrNtM.,oci:1:te: 980?,.,Lnti::..A.,'CllellC u.c !.WIIO'""' Bu"'\:'ER 1'.!25 Mmin!'ropmy U.C 2l75Mmin Pt-,yll.C I..BAKVIC-XU\," P""1'<1'<= Carp Haldin,: l U.C ~Im & K,Uy Vmn I.LC I.LC SAlEPRICE S"..S.250,GO0 SB.900.000 Sl'.!,SOO,GO0 S5.35S.0GO S1100,000 DOCUMENIN"c'MBEK 25195861 '.?50'.!0411 2.;90232s 24721853 24381016 BONDSASSUMED .' SF SO.GO SO.GO SO.GO SO.GO SO.GO
TOT.-\!. COST TO Bni:K · SF S!,,"7,03 SlS9.94 I SSl.17 S10-t70 SI0S.37 TR.-1.'iSACTIO:S-AI. ADJliSn!D,'TS
REA.I. PROPER.TY RIGHI'S CONVEYED F .. Simpll F .. Sim;,i.. FH Simpl• F .. Sqle FM Simple FM Sim;,lo . ./]]JC'STJID7 o.~• 0.00!1, O.OO!t 0J)0!t o.°""• rei.ANCING '!Et.\!S Can-m.tiotw AllC>2 C.,,,,-.ctio,ul Alic.cl, c~...i . ./]]J1."SDfL\7 0.00!·, 0.00!'. 0.00!·1' 0.00'-1 0.Olll, CONDIDONS OF SALE Ami,-I.eo;d, Am,',-1.ugtl, Ami,-1.eo&th Ami,-Length Pmcl=e byT..w:r . ./]]J1."SDtL\7 o.~• 0.lllll', 0.OOl, 0.1)0!, -10.lllll, ADDIDO.'iAL COSTS 10 BID.'ER Dema!iticmOf!'::et DemolitianO!f,,t Demoliri011 O&t Nooe Ne,., • ./]]JC."SDIE:-7 0.()('J!r.. o.~ • 0.Olll, 0.001!-• 0.00!.

CONTRIBUTORYVAI.i::E OF ~IPROVEMEXIS Nm:,e X<ine N.,,. Ye".!4.145SF Ye''4.000SF .-IDJ1."SDtL\ 7 o.~ • OJ)O~'. 0.Ollli -~.53~1 .lJ.64':·t CLOSE OF ESCROW 12'1512021 7,'i:1011 4/1/2021 lll:!4/'.!010 l/15,.'1020 TIME OF SA.LE ! MARKET Ccr..'DITION ~31.2021 I ND Jmie-2021 Septembe2020 Sopm,,b,,-2020 N"'-.mber2019 MO'S FROMSAU1'HR.Ot:Gl!Deo. 31. 2020 0 0 3 3 13
ADJ1."SDID7-a i; PERJI0.\7H 0.75~~ 0.00!1- 0.00!,!' ~ •;. 2..25!,0 51.75~·• .-ID.Jt'S'ID) PRICE I SF I S!,,"'.',03 SlS9.9~ SSJ.00 5r-.94 S9!..J; LOCATIO:(Al. • .\DJt'SU.l[ll'TS
E:t:POSURF:VJSI3JUIY .A.,;w:-ap Si:oibr Simibr Sup·'Fw:r Si:oibr Si:oibr ACCESS A\-er.i:p Smnlu- Sm,ibr Si:oibr Similu: SmnluNEIGHBORHOOD APPEAL A=p Similar Sm,il.n- w,,;,,,. Smhr Smhr 2JPCODE 95050 95050 95050 95112 95050 95050
OYD,.-\l.I. LOCATIO:<.U. R.-1.TI:-C Si:m!.,r Sm,ibr lmricr Sin,iJ,,r Simihr PHYSIC . .U. & USEIZO;\l:s-G .-UJJUSnIL'\'TS
PAKCEI. SlZE (ACRES) I.OD 4.13 1.6S 3.62 1.17 0.47
PAKCEI. SIZE (SF) 43,560 179,903 73,181 157.6S7 51.17~ 20,300 U!IllIY A....,.;e Simwr Simwr Sinwr Simi!ar Simwr
OFF-SITES fini,b,d Lot Simwr - Smilir Simbr Similar
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zo=G He:n-:-•Iw:u.."1rW li,:!,t- I.igbrJ,,,d,ctrw liury!odir:ttw Lip:.tlnc!u,ttul He::n-y~ G=PUN LigbtI,,dn."tri,J l.Dw 1-rity OllkolR&D l.Dw~Ollko= Ru-..-y~ L,!:Indn."1rial Ru-..~-~ OYDl.-\l.I. PH\'SIC.-\I. & l"SE,ZO:S'D(C R.-\TI:-C I Suoihr Sapmor I 1::erior !nfmO< lmrio.- O\ll.-\l.I. R.-1.'II:-G, Sl.11.JECT SHOl.l..D S!.I.L FOR: I snm..-\R LESS I MORE l!ORE l!ORE Frank Schmidt& Associates Phone: 510-468-9219 [email protected] 61 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Adjustment Process
Adjustments were considered for and applied in a similar manner as above for the commercial sales. Because there are few industrial land sales in this market, we used two sales that were improved with buildings that contributed value to the selling price: Comparables 1-4 and 1-5. To estimate the residual land value of these transactions, we estimated and deducted the contributory value of the building improvements based on our observations, feedback from the verifying broker(s), and the adjustment that was a good fit for the data. Additionally, data center land sales (see Industrial Land Comparables 1-1 and 1-2) are the most recent industrial sales that we uncovered.

Comparable 1-5 was purchased by the tenant and based on the data, a downward adjustment was warranted for buyer motivation. After making all other adjustments first, a downward adjustment was warranted for motivation on the part of the buyer.

Market conditions adjustments were applied at the rate concluded to in the Market Conditions section. As stated in the preceding material, industrial property in the City of Santa Clara (and Silicon Valley in general) continues to be in demand, supported by rising asking rental rates, generally stable vacancy rates, and the opinions of market participants.

Like the commercial sales grid, locational adjustments were considered for exposure, visibility, access (to freeways and amenities), and overall desirability of the location, including zip code.

Sale 1-3 was adjusted downward for its inferior San Jose location. Locational adjustments are warranted as summarized on the grid.

Physical and use/zoning adjustments were considered for size, utility, intended use, zoning, general plan land use designation, and off-site improvements. Both 1-1 and 1-2 were purchased by Prime Data Centers. For 1-1 the buyer plans to develop a 207,000 square foot data center with a 32MW capacity. For 1-2 the buyer plans to develop a three story 80,000 square foot data center with a reported 9MW capacity. The selling agent report that the property sold entitled and has a "will serve letter' from Silicon Valley Power. These sales were adjusted downward for the entitlements. Within the range of the comparables, only Comparable 1-5 rated superior for its smaller site size, warranting a downward adjustment. Any other warranted adjustments are summarized on the grid.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 62 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Conclusion
Following the adjustments discussed above and considering the overall rating comparison for each comparable, the unit values of the most recent comparables suggested a land value in the $130 to $135 per square foot range.

We concluded to the following for industrial land in the 95050 zip code:

Unit$/SF X Land Area (SF)
$130 43,560
Estimated Market Value of a 1-Acre
Industrial Lot in Zip Code 95050:

Average Value Estimate in 95050 Zip Code
= Indicated Value
$5,662,800
$5,662,800
The average value was estimated by applying a weighted average based on the land area of the total sales in Santa Clara in 2021 by property type. The information was obtained from Old Republic Title Company (ORTC). It was an extraordina,y assumption of this appraisal that the land areas provided by Old Republic Title Company were accurate.

ORTC repmied a total of 1,442 sale transactions in Santa Clara in calendar year 2021. These included 31 commercial sales, 26 industrial sales, 731 residential single-family sales, 50 2-4 residential unit sales, and 587 medium to high-density residential sales which comprised residential unit sales greater than 5 units, condominiums, and townhomes. This compares to 922 total transactions repo1ied in 2020 by ORTC.

Residential transactions included single family, townhomes, and condominiums, 2 to 4 unit, and residential units greater than 5 units. Of the total residential sales, and similar to the 2016, 2017, and 2020 data, single family transactions comprised the most land area, as shown in the next table, in 2021. In 2019, commercial and industrial sales comprised about half of the total land area in the city by area. In both 2020 and 2021, a greater percentage of land area sold in the city was residential. This will result in higher 2021 values for the hypothetical I-acre lot because residential land in this market transacts at higher unit prices than commercial and industrial. This is congruent with overall market trends over the last year.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 63 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The total number of land square feet (SF) sales (broken out by property type) is reflected in the next table:
2021 City of Santa Clara Sales
Sale Type land SF Total Percent
Commercial 1,197,542 11.25%
Industrial 3,275,752 30.76%
Very Low Density Residential 4,654,623 43.71%
Low Density Residential 394,618 3.70%
Medium to High Density Residential 1,126,563 10.58%
Total 10,649,098 100.00%
Source: Old Republic Title Company
Old Republic Title Company provided the data depicted in the preceding table, segregated by prope1ty type. The single-family sales were grouped into very low density, 2-4 residential sales were grouped into low-density, the townhome and condominium data were grouped into the medium to high-density residential, retail and office was grouped into commercial, and industrial, R&D, and manufacturing was designated industrial. As shown in the table, within the city limits of Santa Clara, commercial/industrial sales accounted for about 42.01 % of the total while residential sales accounted for about 57.99% of the total.

Conclusion
The Total Percent in the previous table was applied to the appropriate categories for each prope1ty type. Since the data provided by the title company did not segregate medium and highdensity residential, we split the total percentage evenly between the two densities (10.58% /2 =

5.290% to each). As shown in the next table, the appropriate weighted values are summed to produce the average value of a hypothetical 1-acre lot in the 95050 zip code:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 64 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA 2021 VALUES FOR 95050 ZIP CODE SUMMARY
Land Use Price per SF Price per Acre
Very Low Density Residential $125 $5,445,000
Low Density Residential $136 $5,924,160
Medium Density Residential $200 $8,712,000
High Density Residential $195 $8,494,200
Commercial $95 $4,138,200
Industrial $130 $5,662,800
Average Value of a Hypothetical 1-Acre
Lot in the 95050 Zip Code:

A VERA GE VALUE ESTIMATE IN 95051 ZIP CODE
x Weighted Average = Weighted Value
X 43.71¾ = $2,380,010
X 3.70¾ = $219,194
X 5.290¾ = $460,865
X 5.290¾ = $449,343
X 11.25¾ = $465,548
X 30.76¾ = $1,741,877
TOTAL AVERAGE VALUE $5,716,837
$5,715,000 (Rounded)
We estimated the value of I acre of land for zip code 95050 above. Following we apply any differences in value between the 95051 and 95050 zip codes to estimate the average value of one acre of land in 95051.

Estimating Differences Between Zip Codes
Differences between the 95050 and 95051 zip code for each use was based upon market feedback and anecdotal information. We also considered differences in values/rents for the commercial and industrial uses, and compared median selling prices and rents for the residential uses.

Residential Difference
Market participants and selling prices provided support that residential prices in the 95051 zip code are generally higher compared to the 95050 zip code. Some brokers believed that the 95050 area was slightly better due to Santa Clara University and a larger upper-middle class. Others pointed to the fact that the 95051 includes an area of the city close to Apple's headquarters and also within the Cupe1tino Union School District, a higher rated school district, which commands residential price premiums. Several brokers reported that some of the nicest neighborhoods in the City are in and around San Tomas Expressway, which bisects 95050 and 95051.One market pa1ticipant opined that the neighborhoods in 95051 were generally safer and that insurance premiums were lower rendering 95051 to be more desirable. Recent residential yearly-summary median prices/SF and Year End 2021 median prices/SF between the 95050 and 95051 zip codes, as reported by CoreLogic, indicated the following:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 65 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA $1,000
$900
$800
$700-
$600
$500
$400
$300
S20C
$100
$0
2019
95050
2020
50 51
2021
95054
The chart above indicates that the median selling price/SF has historically been higher in zip code 95051 , corroborating the general consensus among market participants. In 2018 the median price per square foot was about 5.3% higher in 95051 than 95050. In 2019, the difference was about 2.7% and it was 4.1 % in 2020. In 2021 the difference was 6.3%. The CoreLogic data indicated that the aggregate median selling price in 95051 was 14.6% higher than 95050 in 2018,

8.3% higher in 2019 and 16.7% higher in 2020. In 2021 the median selling price was 15.5% higher. This data supports the opinions of market participants that 95050 rates inferior to 95051.

In the next table, based on data reported by MLS the median price in 95051 has historically been higher than zip code 95050. In the most recent year 95051 was about 28% higher in December than 95050, however this appears to be an anomaly in the zip code 95050 as the fomth qua1ter had some of the lowest median selling prices rep01ted in 2021. However, unlike CoreLogic which rep01ts all recorded sales transaction, MLS only reports listings marketed on MLS, which often does not include all new construction. This is because builders, in the current market environment, often market their product in-house without using MLS, which is probably more cost effective and garners more marketing control to the builder.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 66 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Housing Type Zip Code December-19 December-20 December-21 SFR, Condo, & 95050 $1,210,000 $1,265,000 $1,230,000
95051 $1,425,000 $1,415,000 $1,575,000 Townhouse
95054 $1,202,500 $1;128,000 $1,450,000
Source: Local MLS
Based on market feedback, historical norms, and giving more weight to the CoreLogic data, which includes all recorded transactions, supported by MLS data, we concluded 2021 residential prices in zip code 95051 were 10.0% higher than zip code 95050.

Commercial Difference
We discovered that commercial land values are generally similar among commercial uses located along El Camino Real and Stevens Creek Blvd. within the 95050 and 95051 zip codes, which are the primary commercial corridors in Santa Clara. A comparison of the 3-year average asking rental rate (2018-2020), as compiled by CoStar, revealed that the average rents (for office and retail combined) between these zip codes were $4.53/SF/Month in 95050 vs. $3.49/SF/Month in 95051, or a difference of about 29.8% higher in 95050. This metric is skewed somewhat by newer retail construction over the last several years in 95050. The 4Q 2021 average rents for retail only between these zip codes were $2.39/SF/Month in 95050 vs. $3.05/SF/Month in 95051. A comparison of the 3-year average asking rental rate (2018-2020) among office properties as reported by CoStarwas $3.70/SF/Month in 95050 vs. $3.83/SF/Month in 95051, or about 3.5% higher in 95051. Additionally, CoStar reported a lower vacancy rate in 95051 over the same period (2.14% vs. 6.00% among all office and retail). The 4Q 2021 average rents for office only between these zip codes were $4.78/SF/Month in 95050 vs. $4.08/SF/Month in 95051. The average selling price per square foot among these two zip codes was within 6% of each other over the last three years (2018-2020), $451 in 95050 vs $478 in 95051 for both office and retail prope1ties. Based on market data, rental rates differences, selling price differences, and vacancy rate differences we concluded that commercial land values in 95051 rated 15% inferior to 95050.

Industrial Difference
Among industrial properties, much of the product in the 95051 zip code is built as, or allows for R&D and higher intensity office uses, and greater floor area ratios, rating superior to 95050.

Furthermore, about 65 acres of industrial lands in the 95051 zip code, around Kifer Rd and Lawrence Expressway, are converting to residential uses, reducing the supply of industrial prope1ties, and pushing increasing demand and value for industrial at the same time. A comparison of the average rental rate per SF, as compiled by CoStar, showed that the average Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 67 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA rental rates were equal in 95051 during 2021 ($2.21/SF vs. $2.21/SF). The rental rates are partly skewed because there are a greater number of older buildings in 95050 and many of those buildings are more warehouse in nature, which command lower rental rates. The average selling price per square foot among these two zip codes was within about 6% over the last three years (2018-2020), $325 in 95050 vs $345 in 95051, according to CoStar. CoStar reported that investors were not active in 95051 during 2021 and therefore an accurate comparison cannot be made in 2021. Again, the difference in prior years is partly explained by the type of product within each zip code, with 95050 having older and generally lower quality finishes/build-out A discussion with a local industrial broker felt that all areas of the city were generally comparable.

After consideration for differences in asking rents, sale prices, and the opinions of the market, we concluded that industrial land prices rated about equal in 95051 compared to 95050.

Conclusion of Value in 95051 Zip Code
Based on the above, we concluded residential uses in zip code 95051 rated 10.0% superior, while commercial values rated 15% inferior, and industrial values rated similar. In the next table, the adjusted price per acre for each land use in the 95051 zip code was adjusted and the appropriate weighted values are summed to produce the average value of a hypothetical I-acre lot in the 95051 zip code:
95051 ZIP CODE LAND USE VALUES & AVERAGE VALUE PER ACRE Land Use
95050 Average Adjustment 95051 Average
X = Price/ Acre Weighted Factor Price per Acre
Very Low Density Residential $2,380,010 X 110.0% = $2,618,011 Low Density Residential $219,194 X 110.0% = $241,113
Medium Density Residential $460,865 X 110.0% = $506,952 High Density Residential $449,343 X 110.0% = $494,277
Commercial $465,548 X 85.0% = $395,716
Industrial $1,741,877 X 100.0% = $1,741,877
TOTAL AVERAGE VALUE PER ACRE $5,997,946
Average Value of Hypothetical 1-Acre
Lot in the 95051 Zip Code: $6,000,000 (Rounded)
AVERAGE VALUE ESTIMATE IN 95054 ZIP CODE
We utilize the same weighted land values from zip code 95050 and apply any differences in value between the 95054 and 95050 zip codes.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 68 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Estimating Differences Between Zip Codes
For 95054 value conclusions, we applied the same methodology used above to estimate the value differences between the 95050 and 95051 zip codes.

Residential Difference
Median and average selling prices provided suppo1t that the residential prices in the 95054 zip code were generally similar or a little inferior when compared to the 95050 zip code. Brokers active in the market reported a range of opinions, that generally these two zip codes are not much different, but that 95054 tends to rate a little inferior. The 95054 zip code is affected by airport noise and has a higher concentration of higher-density housing units; there is less single-family selection and therefore fewer traditional residential neighborhoods with detached units. Recent yearly-summary median prices/SF for the 95050 and 95054 zip codes, as reported by CoreLogic, indicated the following:

Sl .000
S900
$800
$700
$600
$500
S400
$300
s200
$100
so
2019
50 50
2020
95051
2021
95054
The median selling prices/SF has been historically higher in the 95050 zip code. The CoreLogic data indicated that the aggregate median price in 95054 was 5.0% lower in 2019 and about 2.1 % Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 69 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA lower in 2020. In 2021 the difference was about 2.7% lower. This data supports the opinions of market participants that 95054 generally rates inferior to 95050.

The next table is the same MLS data displayed above. In this data set the median price in 95050 ranged from about 12.1 % more in 2020 and about 15% less in 2021 than in 95054 in the most recent year. However this appears to be an anomaly in the zip code 95050 as the fourth quarter had some of the lowest median selling prices reported in 2021 . Again, unlike CoreLogic which reports all recorded sales transaction, MLS only reports listings marketed on MLS, which often does not include all new construction.

Housing Type Zip Code December-18 December-19 December-20 SFR,Condo,& 95050 $1,074,000 $1,210,000 $1,265,000
Townhouse 95051 $1,275,000 $1,425,000 $1,415,000
95054 $1,025,000 $1,202,500 $1,128,000
Source Local MLS
Based on market data, the oprmons of market participants, and giving more weight to the CoreLogic price differences, which includes new and resale residential construction, we concluded that residential land prices in zip code 95054 were lower than zip code 95050, on the order of 5%.

Commercial Difference
Most of the new commercial planned or proposed for the 95054 zip code comprises office and hotel uses, however, there are several mixed-use projects in process, notably Related Santa Clara. This area of Silicon Valley includes the Golden Triangle and has historically supported higher intensity uses and properties offering freeway visibility (U.S. 101 and CA-237). The addition of Levi's Stadium and the draw of Great America theme park and the Santa Clara Convention Center create additional synergies for this zip code. The greatest concentration of Class A office is located within this zip code and more is planned. As noted above, there are several mixed-use projects in process, which if built-out, will add both retail and new residential customers.

A comparison of the 3-year average rental rate (2018-2020) compiled by CoStar, revealed that the average rents between these zip codes was slightly lower in 95054, $4.33/SF vs. $4.53/SF in 95050, a difference of about 4.4% based on office and retail uses. The 4Q 2021 average rents for office only between these zip codes were lower in 95054, $4.27/SF vs. $4.78/SF in 95050. As before, the 95050 rental rate is influenced by newer retail construction which typically commands higher rental rates. A comparison of office rents indicates that the 3-year average Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 70 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA (2018-2020) of $4.35/SF/Month in 95054 is about 14.9% higher than the $3.70/SF/Month in 95050. And the average selling price per square foot in the 95054 zip code was 15.5% higher over the last three years (2018-2020) compared to 95050 ($451 in 95050 vs $521 in 95054) for office and retail sales. Based on the data, including broker estimates and rental rate differences in each zip code, and considering that there is a greater proportion of office uses compared to retail uses, we concluded that an upward adjustment of 10% was warranted for 95054 for higher commercial land value.

Industrial Difference
Among industrial properties, much of the product in the 95054 zip code is built as, or allows for R&D and higher intensity office uses, rating superior to 95050. This also allows for greater floor area ratios in 95054. Most market participants reported higher prices in 95054 due primarily to superior freeway access and fewer heavy-industrial uses. A comparison of the average rental rate per SF, as compiled by CoStar, showed that the average rental rates were slightly lower in 95054 during 2021 ($2.21/SF in 95050 vs. $2.16/SF in 95054). The average selling price per square foot in the 95054 zip code was about 26% higher over the prior three years compared to 95050 ($325 in 95050 vs $410 in 95054) based on industrial sales repo1ied by CoStar. 2021 average selling prices were ($725 in 95050 vs $229 in 95054), these numbers do not appear to be representative of the market as 95050 had a 525,000 square foot building that sold for $1,027 per square foot. Again, the difference in rental rates and selling prices is paiily explained by the type of product within each zip code, with 95050 having older and generally lower quality finishes/build-out compared to 95054. After consideration for differences in asking rents, sale prices, and the opinions of the market, we concluded that industrial land prices rated about equal the 95054 zip code compared to 95050.

Conclusion of Value in 95054 Zip Code
Based on the above data and analysis, the adjusted price per acre for each land use in the 95054 zip code was adjusted and the appropriate weighted values are summed to produce the average value of a hypothetical I-acre lot in the 95054 zip code:

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 71 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA 95054 ZIP CODE LAND USE VALUES & AVERAGE VALUE PER ACRE Land Use
95050 Average Adjustment
=
95054 Average
X
Price/ Acre Weighted Factor Price per Acre
Very Low Density Residential $2,380,010 X 95.0% = $2,261,010 Low Density Residential $219,194 X 95.0% = $208,234
High Density Residential $460,865 X 95.0% = $437,822
Medium Density Residential $449,343 X 95.0% = $426,876
Commercial $465,548 X 90.0% = $418,993
Industrial $1,741,877 X 100.0% = $1,741,877
TOTAL AVERAGE VALUE PER ACRE $5,494,812
Average Value of a Hypothetical 1-Acre
Lot in the 95054 Zip Code: $5,495,000 (Rounded)

RECONCILIATION AND OPINION OF AVERAGE VALUES
The sales comparison approach was the appropriate value approach for each land use. Total sales statistics revealed that about 42% of the total sales in the city by land area were commercial and industrial transactions and the other 58% were residential. This represents a slightly greater percentage of residential sales than in 2020. Because residential unit values are greater than commercial and industrial, this resulted in higher concluded values for each zip code in 2021 compared to 2020. Industrial sales in 2021 comprised 30. 76% of the total land sold, much higher than the 15.59% reported in 2020 by Old Republic Title Company. Additionally, industrial land values are much higher in 2021 due in part to the influence of data center land sales. All these factors resulted in higher 2021 values for the hypothetical one-acre lots.

We concluded to the following average value for each zip code on December 31, 2021 , the effective date of value opinion:

Opinion of Average Value of a 1-Acre
Lot in the 95050 Zip Code: $5,715,000
(Five Million Seven Hundred Fifteen Thousand Dollars)
Opinion of Average Value of a 1-Acre
Lot in the 95051 Zip Code:
(Six Million Dollars)
$6,000,000
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 72 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Opinion of Average Value of a 1-Acre
Lot in the 95054 Zip Code: $5,495,000
(Five Million Four Hundred Ninety Five Thousand Dollars)

ADDENDA
• Old Republic Title Company 2021 Sales data in City of Santa Clara (on file) • City of Santa Clara Supplemental Instructions for the Appraisal of the Fair Market Value of Land
• Maps of the Sale Com parables
• Land Sale Comparable Parcel Maps
• Brokerage Reports ( on file)
• Qualifications of Appraiser
Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 73 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA The Center of What's Po ssible
Attachment A
Supplemental Instructions
for the Appraisal of the Fair Market Value of Land
The following information and instructions will be used by the City when setting the land value used in the formula for determining the impact fees due in lieu of park and recreational land dedication pursuant to Santa Clara City Code 17.35. (Approved by Santa Clara City Council-June 7, 2016) Background.

On July 15, 2014, Council added Chapter 17.35 "Park and Recreational Land" to the Santa Clara City Code to ensure that new residential development provides adequate community and neighborhood park land for active recreational uses and/or pays a fee in-lieu of parkland dedication to mitigate the impacts of the new growth pursuant to the California Quimby Act and/or Mitigation Fee Act.

17.35.040 Formula for calculation of fee in lieu of laud dedication. (a) When a fee is required to be paid in lieu of parkland dedication, the maximum amount of such fee shall be determined by the fair market value of the amount of land that would otherwise be required to be dedicated pursuant to SCCC 17.35.030, as set fo1ih below. The date of valuation of the property for in-lieu fee purposes shall be the date that the City determines that the developer's application for a parcel map or tentative subdivision map, or application for projects not involving a subdivision, is complete. (b) Fair Market Value.
( 1) The City shall determine the fair market value of the property by using the average per acre land value for property in the City of Santa Clara, based upon a survey of land values and sale records in the City. The City Council shall set a minimum of three such average values, one for each of the three existing Zip Codes in the City (95050, 95051, 95054). The City Council may, at its discretion, set average values for additional subregions of the City. The City Council shall review the fair market values not less than annually and set the values in a Council resolution. (2) If the developer objects to this determination of fair market value, the developer may elect to have the value established by appraisal. If the developer chooses this option, the developer shall deposit with the City an amount sufficient to cover the cost of an appraisal, which the City shall conduct. The appraisal shall be completed prior to approval of the tentative or parcel map or, for developments not involving a subdivision, prior to the issuance of a building permit. (c) Based on the determination of fair market value set fmih in subsection (b)(l) of this section, for each of the dwelling unit categories, the City Council shall set the amount of fees to be paid in lieu of parkland dedication in a Council resolution, which the Council shall review annually. (Ord. 1928 § 3, 7-15-14).

Attachment A-Supplemental Instructions for Appraisal Page I of3 Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 74 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Guidelines for Appraiser:
a. Appraiser is to provide a "Fair Market Value "for an average acre of land (hypothetical, rectangu/a,; useable site) for property in each of the three existing City of Santa Clara Zip Codes 95050, 95051, 95054. The opinion will co,iform to Uniform Standards of Professional Appraisal Practice. b. Valuation Date: December 31 of each yea,:
c. Location & Property Sales Data Set Boundaries: Data set will begin with sales data from within Santa Clara City limits.
d. Data Set Date Range: Use dataji·om Janumy t'1 to December 31st of each year. Example: Janua,y 1, 2015 to December 31, 2015 for "December 31, 2015 Valuation Date. " See contingencies below. e. Property Types: Use all of the following property types: Single Family (low and ve1y low density), High Density Residential, Medium Density Residential, Commercial, Industrial, Lots and Land. f. Contingencies for Limited Data Set of each Property Type: If there are insz!lficient, credible data points or sales of a particular property type, then appraiser will explore and use comparable sales from the local competitive market area, adjacent to City of Santa Clara. Ajixed distance from City of Santa Clara city limit is not given, however a compelling, rational basis for the selection of the competitive market area must be given by the appraiser in the report. Preference is for closer, more recent, and comparable; discretion is given to the appraiser.
g. Sales Transactions Data not to be used: Do not use transactions if they are not an arms-length transaction, have encumbered/clouded title, are e,n,ironmentally impaired site, or are more than three (3) years old. h. Inflation factors for Comparable between 1 and 3 years: An injlationjactor will be computed and applied to comparable sales over one year based on reasonable and rational considerations such as sales and rental trends or other appropriate methods.
i. Sales Transactions Data that may be included: May use real estate sales transactions by the City of Santa Clara for additional neighborhood or community parkland. j. Data Values excluded: No values or set of values at the high or low end of the data set are to be excluded ji'Oln consideration in the average values on the sole basis of being relatively high or low; howeve1; a check for consistency among comparable values will be done, and a rational basis should be provided for credible comparable transactions if not used.

Attachment A--Supplemental Instructions for Appraisal Page 2 of 3 Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 75 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA k. Research Factors to be considered for Comparable sales: The factors to be used to compare property values include, but are not limited to physical factors, economic factors, market conditions verification to parcel maps, public records, CoStar data bank. Additional factors may be used provided there is a rational basis for doing so.

I. Reconciliation of value differences: The approach will be comparative, iterative, qualitative and quantitative, and will be made at the appraiser's discretion. m. Weight to be applied to Property Types: The weighted average of each property type will be based on the percentage of land area in the sales transactions,for example, if25% of total acreage is high density residential, then the relative weight of that property type will be 25%. (J'he weight will not be done by the quantity of sales of each type or the percent of value of sales of each type).

11. Reporting: A draft valuation report will be generated by March 15. City will provide for a two week circulation and comment period The valuations included the final valuation report will be used in the calculation formulaforfees prepared by staff to be reviewed by Council as part of the annual City budget process and Municipal Fee Schedule adoption by June 30. Fees will be implemented on or after July I depending upon Quimby Act or Mitigation Fee Act provisions of the Council resolution.

Attachment A-Supplemental Instructions for Parkland Dedication In Lieu Fee Process and Schedule 2016 Attachment A-Supplemental Instructions for Appraisal Page 3 of 3 Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 76 Rancho San Antonio
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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 92 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA FRANKE. SCHMIDT, MAI, SRA
CURRICULUM VITAE, January 2022
Valuation Consulting, Forensic and General Appraisal, Expert Testimony MAJ and SRA MEMBER of the APPRAISAL INSTITUTE, No. 11933 [email protected] (510) 468-9219
San Francisco Bay Area
For more than four decades, Mr. Schmidt has been a real estate appraiser and consultant with a practice primarily in Nmthern California and the San Francisco Bay Area. He began his career as a residential appraiser, earning the coveted SRA designation from the Appraisal Institute in 1989, and the prestigious MAI designation in 2002. In 1995, he paitnered with Wayne Prescott to form the Schmidt-Prescott Group, a commercial appraisal firm of which he was president until its dissolution in 2017.

During his career, Mr. Schmidt has appraised a wide variety of real estate including residential, commercial, industrial, raw land, and special purpose properties for various property rights. His experience includes litigation supp01t and testifying as an expert witness for both plaintiffs and defendants. Mr. Schmidt's client list includes attorneys, municipalities, private entities, lenders, and publicly traded companies. He was engaged as a diminution in value consultant on PG&E cases involving the destruction of thirty-eight homes in the 2010 San Bruno gas-line rupture fires.

Mr. Schmidt was recently retained by the City of Santa Clara as an expe1t to assist the city's task force in the process of setting Parkland Dedication fees.

Mr. Schmidt has served on several professional committees throughout his career, including the International Right-ofWay Association and the Appraisal Institute. He currently serves on the Sai1ta Clara County Assessment Appeals Board, of which he was elected Chairperson in 2017.

Expert Witness Testimony
U.S. District Comt, Santa Clara County Superior Comt, San Joaquin County Superior Court, San Francisco County Superior Comt, Public Utility Commission of the State of CA, American Arbitration Association, Standard of Care, Eminent Domain Professional Affiliations
Membership in: Appraisal Institute [MAI (2002) and SRA Member (1989)] Work Experience
1/2019 to Present:
2018
2/95 to 12/2017:
4/78 to 2/95 :
6/76 to 4/78:
1/76 to 6/76:
2/75 to 12/75:

Formal Education
B.S. Business Management, 1997
Graduated with Honors
Frank Schmidt & Associates
Frank Schmidt & Associates, President
San Francisco Bay Area
Carneghi-Nakasako, Appraiser Consultant
San Jose, CA
The Schmidt-Prescott Group, President
San Jose, California
Schmidt & Associates, Inc., President
San Jose and Fremont, CA
Senior Supervising Appraiser, Mercury Savings & Loan
Cupertino, CA
Staff Appraiser, American Savings & Loan
San Jose, CA
Real Estate Appraiser and Consultant,
B.A. Ericson Appraisal Co., San Jose, CA
University of Phoenix
San Jose, CA
Phone: 510-468-9219 [email protected] 93 Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA Erratum: The following corrections to errors in the document are hereby made and appended to the Report.
• Page 25 the word should be "unemployment" and not "employment." "At the end of 2021, Silicon Valley recorded an [un]employment rate of 4.5% down from

6.2 % one year ago. Increasing population, job growth, high incomes and strong consumer spending continued to strengthen the performance of retail sector in Silicon Valley. At the end of 2021, the vacancy rate for Silicon Valley's shopping centers remained the lowest in the Bay Area at 5.2%, with approximately 1.9 million square feet of vacant retail space. Santa Clara continued to record the lowest vacancy rate in the region at 3.9%. The quarterly net absorption continued in the positive territory. There was no new retail space completed in the fourth quarter of 2021 and the total retail invent01y remained at 37.4 million square feet."
• Page 36 -- the CoreLogic table below was referenced in the narrative but not visible in the blank space at the top of page 36.
2018 Year End Summary Sales
Community .. Zip · . Sales %Chg Media1fl>rice %Ctig HlghPrlce · ... $/SqF:t ..··•%Chg Santa Clara 95050 380 -0.5% $1,184,500 24.4% $2,609,000 $959 20.3% Santa Clara 95051 484 -16.6% $1,358,000 17.0% $2,800,000 $1,043 13.2% Santa Clara 95054 185 -25.4% $1,250,000 23.3% $2,400,000 $823 14.5% 2019 Year End summary Sales
Community Zip .· .· .. Sales. • .. · %Chg Median Price %t::hg High Price · < ,$/SqFt %Chg Santa Clara 95050 332 -12.6% $1,200,000 1.3% $2,350,000 $910 -5.1% Santa Clara 95051 461 -4.8% $1,300,000 -4.3% $2,400,000 $973 -6.7% Santa Clara 95054 162 -12.4% $1,140,000 -8.8% $2,450,000 $782 -5.0% 2020 Year End Summary Sales
Community Zip .Sales %Chg .Median .Price ···•%Chg·. .. High Price • $/SqFt· ·.•. %Chg Santa Clara 95050 301 -9.3% $1,200,000 0.0% $2,780,000 $834 0.9% Santa Clara 95051 614 33.2% $1,400,000 7.7% $2,200,000 $869 2.3% Santa Clara 95054 160 -1.2% $1,175,000 3.1% $2,090,000 $774 3.5% 2021 Year End Summary Sales
Community .. Zip Sale.s %Chg Median Price %Chg .. HighPrice $/SqFt· · .%Chg Santa Clara 95050 441 46.5% $1,289,500 7.5% $3,218,500 $858 2.9% Santa Clara 95051 855 39.3% $1,490,000 6.4% $3,180,000 $912 5.0% Santa Clara 95054 242 51.3% $1,255,000 6.8% $2,900,000 $794 2.6% • Page 39 -the word should be "while" and not "with".
• Page 39 - the word "following" should be removed.

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 1 RESOLUTION NO. 21-8970

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA

TO ESTABLISH THE PARKLAND IN LIEU FEE SCHEDULE FOR

NEW RESIDENTIAL DEVELOPMENT IN ACCORDANCE WITH
CHAPTER 17.35 ("PARK AND RECREATIONAL LAND") OF
TITLE 17 ("DEVELOPMENT") OF THE CODE OF THE CITY OF

SANTA CLARA
BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

WHEREAS, the City of Santa Clara is the Government entity responsible for providing public parks, recreation and open space facilities within the City of Santa Clara; WHEREAS, the 2010-2035 General Plan includes a goal that new parks, open space and recreation be provided with new development so that existing facilities are not overburdened; WHEREAS, the report entitled "Public Facilities Impact Fee Study" dated June 25, 2014 ("Nexus Study"), was prepared by Willdan Financial Services, Inc. and approved by Council in June 2014;
WHEREAS, on July 15, 2014, the City Council adopted Ordinance No. 1928, which added Chapter 17.35 to the City Code, and requires new residential development to provide adequate community and neighborhood park land for active recreational uses, and/or under certain conditions to pay a fee in lieu of parkland dedication; WHEREAS, on February 24, 2015, the City Council adopted Ordinance No. 1937, adding duplex dwellings to the types of developments subject to the parkland dedication requirement, and removing the one (1) acre minimum parkland dedication prior to a developer being able to receive financial credit for private recreational amenities and open space; II
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Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2021/22 Rev: 11 /22/17