City Council and Authorities Concurrent
April 29, 2025

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

Ms. Cynthia Bojorquez, Acting 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, 2023

Frank Schmidt & Associates Phone: 510- 468-9219 [email protected]

March1, 2024

Ms. Cynthia Bojorquez, Acting 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.

Ms. Cynthia Bojorquez:

Pursuant to your request, I have completed the a nnual land valuation appraisal to aid the City of Santa Clara in establishing park impact fees. Foll owing 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 C ouncil approved Supplementa l 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 valu ation date occurs each year on December 31.

Since the date of my opinion of value, D ecember 31, 2023 precedes the date I wrote and transmitted this appraisal by about 2months, this is considered a retros pective 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 consider ed data that was available and/or public as of the date of value. The exception to this was the 2023 land area data provided by Old Republic Title Company which was not available until February 2024, and some brokerage reports published in January and February 2024, but containing 2023 data.

I have appraised the subject of this appraisal numerous times since 2014, and most recently with a date of opinion of December 31, 2023. Based on land area, 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 wh ile residential sales accounted for about 72.94% of the total. In 2023, approximately 50% of all transactions sold were industrial and commercial, while the remain ing 50% were categorized as residential.Data provided by Old Republic Title Company shows only 386 single family home sales in 2023 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 compared to 516 single family home sales in 2022. However, the median residential selling price in 2023 in the city of Santa Cl ara was generally increasing thr oughout the first ha lf of 2023 and generally trending downwards in the last half of 2023. This resulted in sl ightly higherresidential unit values for 2023.Industrial and commercial la nd values were unchanged in both 2022and 2023. In 2023, the combination of higher interest ratesand expected slower economic growth has impacted the market. All these factors resulted in only slight changes to the 2023 values for the hypothetical one-acre lots for each zip codecompared to 2022.

To complete this appraisal, I conducted an inve stigation, 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 component s of high-density residential, medium-density residential, low-density resident ial, very low-density residential, commercial, and industrial, to form and repo rt the average value per acre of land in the three existing Zip Codes in the City of Santa Clara consis ting of 95050, 95051, and 95054. Th e 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 Re port is intended for use by the C lient, the City of Santa Clara, for assistance in determining park impact fees.

Hypothetical Conditions, Extraordinary Assumptions, and Contingencies

Hypothetical Condition is defined as “a conditi on, 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.”1Isupposed 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 woul d allow the different property types on the same lot, it was necessary to apply a hypothe tical 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.

12020-2021Uniform 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

 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 2023. It was an extraordinary a ssumption of this appraisal that the land areas provided by Old Republic were accurate.

The use of these hypothetical conditions and extraordinary assu mption 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, 2023, the effective date of opinion, for each zip code was:

Sincerely,

Frank E. Schmidt, MAI, SRA

22020-2021Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Zip, Code 2023 A, e1·a~e Value per Acre
95050 $5455000 ' . '
95051 $5 ,650000 ' . . '
95054 $5,255 i000
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 18
LAND USE ORDINANCES 37
HIGHEST AND BEST USE 38
APPRAISAL PROCESS 39
AVERAGE VALUE ESTIMATE IN 95050 ZIP CODE 40
AVERAGE VALUE ESTIMATE IN 95051 ZIP CODE 59
AVERAGE VALUE ESTIMATE IN 95054 ZIP CODE 62
RECONCILIATION AND OPINION OF AVERAGE VALUES 65
ADDENDA 66

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, High-
Density Residential, Commercial, and Industrial
Land

SITE AREA : Each Hypothetical Lot is OneAcre

FLOOD HAZARD STATUS : Zone X; the hypothetical lots are outside any flood zones

EARTHQUAKE FAULT ZONE : The hypothetical lots ar e 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, 2023

PROPERTY RIGHTS APPRAISED : Fee Simple Estate

AVERAGE VALUE CONCLUSIONS :

Use of Hypothetical Lot General Plan Highe st & Best Use \ ery Low Density Res idential Very Low Density Residential Very Low Density Residential Low Density R esidential Low Density Residential Low Density Residential Medium Density Res idential M edimn Den sity Residential M edimn Density Residential High Density R esidential High Density Residential High Density Residential Commercial Regional Co= ercial Hold for Development of a Co= ercial Building Industrial Light Industrial Industrial Building
I I
Zip, Code 2023 A, e1·a~e Value per Acre
95050 $5 4 55000 ' . '
95051 $5 ,650000 ' . . '
9505 4 $5,255 i000
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 desc ription or for matters including legal or title considerations. Title to the hypothetical prope rties 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 ot hers 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 va luable. No responsibility is assumed for such conditions or for arranging fo r engineering studies that may be required to discover them;

7. Unless otherwise stated in th is report, the existence of ha zardous 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 qualifi ed to properly investigat e 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 im pairment to the subject property or to other property caused by conditions present at the subject prope rty. Our opinion(s) were predicated on the assumption that there is no su ch 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 w ith all applicable federal, state, and local environmental regulations and laws unles s 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 appl icable zoning and use regulations and restrictions have been complied with, unless a nonconfor mity has been stated, defi ned, and considered in the appraisal and reported in the report; and

10. It was assumed that all required licenses, ce rtificates 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 th e Client(s), for the Intended Use specified in the engagement agreement and/or report;

2. The consultant is not require d 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 w ith 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 coverletter 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 March 1, 2023 and having a date of value of December 31, 2022.

5. I have no bias with respect to the pr operty that is the subject of this repo rt or to the parties involved with this assignment.

6. My engagement in this assignment was not continge nt 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.

March1, 2024
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 fr om the Parks and Recreation F acilities Fee Study completed by Willdan Financial Services. Old Republic Title Co mpany 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 Cl ara 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 prev ious appraisals, City Parks provided us the Park Impact Fee Ordinance (No. 1928).

Extent of Research into Physical Factors

We drove several streets throughou t Santa Clara over the past se veral years including various times in 2016, 2017, 2020, 2021, 2022 and 2023. 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-eco nomic information gleaned from many sources, including:

 The Wall Street Journal
 12th District Beige Book
 GlobeSt.com
 CoStar News
 The Kiplinger Letter
 DQ News/CoreLogic

We gathered, analyzed, and applied data abou t 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
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  Discussions with agents active in the subject market

We talked to the buyers, sellers, and agents w hose 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 th e 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 othe r 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 displa yed in the Analysis sections following. The analysis was comparative, iterative, qualitative, and quantitative.

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 Compliance

It was the intent of this appraisal to comply with the requirements of:

 The Uniform Standards of Professional Appr aisal Practice (USPAP) including the Ethics and Competency Provisions as promulgated by the Appraisal Standards Board of the Appraisal Foundation.

 The Code of Professional Ethics and Standard s 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 valuati on 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 determin ed by any method of valuation that is just and equitable.”

Revised federal definitions in the Uniform Act identify the defi nitions 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 th e multiplication of ea ch component by a factor reflecting its importance or contribution.

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

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 Fee Simple Estate means absolute ownership unencumbere d 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

REAL PROPERTY, REAL ESTATE, AND PERSONAL PROPERTY APPRAISED

Real Property is defined as all of the interest s, benefits, and rights in the ownership of the physical real estate, that is, the bundle of rights w ith 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 fini shed 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 t ypical frontage along one street.

Topography : Level, at street grade

Drainage : Adequate

Utilities & Services : The municipality provides wa ter, 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 easem ents along frontage presumed.

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

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] 13

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.

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 loca ted in an Earthquake Fault Zone as designated under the Alquist-Priolo Earthquake
Fault Zoning Act.

Improvements : None

Personal Property Appraised

Wedid 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 Apprai sal Report transmitted March 1, 2023 with an effective date of opinion of December 31, 2022. The next most recent appraisal of the subject was transmitted April 1, 2022 with an effec tive date of opinion of December 31, 2021. The intended use of all appraisals was the same: to assist the City in determining park impact fees.

REGION & CITY DESCRIPTION

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 The County of Santa Clara is located at the sout hern end of San Francisco Bay. It encompasses about 1,304 square miles of land with 15 incor porated cities and towns. According to the California Department of Finance (CDF) Populati on and Housing Estimates (E-1) last released May 1, 2023, on January 1, 2023, the county had a population of 1,886,079, a decrease of 3.0 percent from the January 2022 estimate. Over th e past several years, Santa Clara County had been experiencing strong employment cond itions. Prior to the COVID-19 pandemic, unemployment was at historical lows and esse ntially reflected full employment conditions.

According to statistics published by the Stat e of California Employment Development Department (EDD), the Santa Clara County unemployment ra te was 3.9% in December 2023, based on a labor force of 1,046,800. This is anin crease from the March 2020 unemployment rate of 3.4%, prior to COVID-19. It is alsohigher co mpared with the one-year prior unemployment rate (December 2022) of 2.3%, based on a labor force of 1,059,200 jobs.

Santa Clara County, which makes up the bulk of Silicon Valley, is highly dependent on technology employment, including Adobe, Apple, Applied Material s, 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 squa re 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 132,476 as of January 1, 2023 (released on May 1, 2023), according to the CDF, about 1.5% 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 3.5% in the city of Santa Clara as of December 2023, based on a labor force of 73,300. The unemployment rate has generally followed a downward trend since peaking in April 2020 at 9.5% . Still, the current rate is a bove the rate of 2.1% reported in December 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 high- tech companies, such as AMD, Nvidia, Oracle, Ericsson, Palo Alto Networks, Sun Microsystems, ServiceNow, and Agilent Technologies have headquarters in the City. Other large employers include California’s Great America Th eme Park, Levi’s Stadium, Santa Clara City Hall, EMC Corporation, Macy’s, Mission College 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 Franci sco 49ers, opened over the summer of 2014 in the northern portion of the city, adjacent to Gr eat America Theme Park and the existing 49ers practice facility. The Santa Clara Convention Ce nteris also nearby and offers about 302,000 square feet of meeting space.

The opening of Levi’sStadium spurred an incr ease 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 re sidential. 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 was approved and was slated to open to the public in 2023 but was delayed by the pandemic. Currently ther e is an application to amend the Master Community Plan (MCP) to accommodate a new alternative development scheme with a different

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 mix of land uses. The Kylli mixed use development project Mission Point is currently pending review and is located at 3005 De mocracy Way. This project is a 46 acresite that proposes 3,000,000+- SF of commercial office/lab sp ace, 100,000+- SF of neighborhood retail, 1,800+- new multi-family residential, a child care fac ility, and indoor and outdoor community spaces. A 190-room hotel on a 1.96 acre site is curren tly under construction at 2900 Lakeside Drive (Cambria Hotel project). The Agrihood Mixed- Use Development Project located at 1834 Worthington Circle and 90 N. Wi nchester Blvd. is a residentia l mixed-use development on a 5.8 acre site consisting of up to 160 mixed-income ap artments, 165 affordable senior apartments, 36 townhomes and approximately 1.5 acres of ag ricultural open space.Gateway Crossings (Hunter/Storm) at 1205 Coleman Avenue is the construction of a phased, mixed-use development on 23.8 acres consisting of 1,565 residential units, a 152,000 square foot, 225 room, full-service hotel, 45,000 square f eet of supporting retail, a 2.1 acr e park, and structured parking facilities. The Santa Clara dual-branded hotel project is located at 1290 Coleman Avenue. This is a 396 room, 6-story hotel, totaling 204,444 square f eet. The hotel will feat ure 5 stories over 1 parking level with 284 stacked pa rking stalls.Laguna Clara II De velopment Project (Equity) at 3131 Homestead Roadis a residential developmen t involving the demolition of three two-story apartment buildings and one-half of a two-stor y apartment building (removing 42 dwelling units and retaining 222 dwelling units), two accesso ry buildings (central boiler room and a clubroom/leasing office) and four ca rport structures to construct a four-story apartment building with 225 units over a partially subgrade parking ga rage for a total of 447 dwelling units on the site.Villa Bella residential projectat 1890 El Camino Real is the construction of 56 condominium units over a podium parking structure on 1.51 acres.Civic Center Drive Family Housing projectat 1601 Civic Center Drive is a five-story affordable housing development with 106 rental units at a density of 75 dwelling units pe r acre.Additional development in the City includes both smaller residential and commercial developments and continued residential build-out of the Tasman East and Lawrence Station areas.

The City’s median household income was esti mated by the U.S. Census Bureau at$165,352 in 2022 and the per capita income was about $78,084. The United States Census Quick Facts for 2018-2022 indicated the following demographics in Santa Clara:

Total Households 47,434
Owner Occupied Housing Unit Rate 41.9%
Average Household Size 2.60
Bachelor’s Degree or Higher 64.6%
In Civilian Labor Force 71.4%

The City is home to Santa Clara University, Mission College, a public community college, and Golden State Baptist College. The City is pr imarily served by Santa Clara Unified School District, which includes 19 school s spanning transitional kindergarten through high school. The southwest corner of the City is served by Cupertino schools.

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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 Conclusion

All locations within Santa Clar a are proximate to nearby job centers, retail, housing, and linkages, contributing to the long-term demand for sites within the city.

MARKET CONDITIONS

The Winter 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey“reflects both overall optimism and a mixed picture in the composition making up the aggregate numbers. Even though there is more optimism in many sectors, particularly retail, the Winter 2024 Survey panelists across all types of commercial real estate and regions of California indicated they are facing a more challenging financial landscape as required equity percentages and required investment return hurdle rates (IRR) are expected to increase over the coming three years.”
In the following narrative wepresent some st atistics 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 la nd market for these uses typically trend with the improved properties, oftentimes leadi ng. We report on the sale, rental, and construction trends of the respective market s, in estimating the appropriate market conditions adjustments used in our following analysis.

Regional Economic Conditions

Integra Realty Resources (IRR)reported in their 2024 Viewpoint, “Despite the oft-cited predictions from 2022 that interest rates would stabilize in 2023, and even decline by Q3 of 2023, the economic impact of 11 continuous interest rate hikes from 2022 through 2023 began to destabilize the trading market for real estate early in the year. As we close out the year, the current lack of lending capital is now affecting holding strategies. Of course, there are some who predict interest rates will decline in 2024, and that suchchanges will help asset values recover.

This misses the fundamental point. Post-COVID values were driven up by cheap money, but they were also driven up because capital was being deployed to offset rising inflation expectations. This arbitrage only works if inflation can’t be tamed and capital remains plentiful.

The sharp rise in rates brought inflation expectation down, and crippled exit pricing since buyers no longer had access to cheap long-term capital. Values had to reset, in light of these market forces.”

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 Commercial Market Conditions

Commercial properties typically include office and retail uses . We discovered that office properties are generally being built in the centr al business districts and in light industrial locations. Research and development (R&D) propert ies 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 Cami no 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 pres ent the relevant statistics pertaining to the Santa Clara market and provide comments from market particip ants regarding the perceived differences in each of the Santa Clara zip codes that the three hypothetical lots being appraised are located.

Office Market

The Silicon Valley office market from early 2017 through 4Q-2023 was generally characterized by increasing vacancy rates, negative net absorp tion, and overall flat to slightly increasing average asking rental rates. The next table disp lays data from the Colliers International’s 4Q- 2023 Silicon Valley R&D Market Snapshot and its predecessor reports. The table includes statistics from the Silicon Valley market, the subj ect’s submarket (Santa Clara), and the adjacent Sunnyvale submarket.

Real Es

Frank S

The data
Q1-2023
reported
region’s

Cushma
n
a new lea
of 61,457
feet at 54
Creek Bo

The ave
r
Full Ser v
expenses
rate from

Marcus &
includes
and sever

Marcus
&

state Apprais
Schmidt &
a indicates t h
through Q4
at 12.0% fo
availability r
n & Wakefie
ase of 205,77
7 square feet
453 Great A
oulevard.
rage office a
vice expen s
s are bundle
m one year ag
& Millicha p
Santa Clara,
ral speculati
& Millichap
sed: Three Hy
Associates
hat the offic
4-2023. The
or Q4-2023,s
represents 2
eld reported
74 feet at 45
t at 2445 Au
America Park
asking rent in
se basis, w h
d into the b
go.
p’s 4Q-2023
, office vaca
ive deliverie
reported the
ypothetical O
s Phone: 51
OFFICE
Sources: Col
e vacancy r a
Silicon Vall
slightly down

0.8 million s
key 2023 lea
555 Great Am
ugustine Driv
kway, and a
n 4Q-2023 f
hereby tax e
base rent. T h
Market R e
ancyincrease
s placed upw
e following t
One-Acre Lots

10-468-9219

E STATIST
lliers Market
ate in Santa
ey market ha
n from the 1
square feet o
ase transacti
merica Parkw
ve, Arista N
lease renew
for the City o
es, insuranc e
his is slightl y
eport shows
ed. “A sizabl
ward pressur
trends in the
s, One for Eac
fschmidt@
TICS
Reports
Clara gener
as been over

12.5% rate in
of vacancy in
ions in the C
way, Cambr
Networks leas
wal of 59,384
of Santa Cla
e, mainten a
y more tha n
that in the
le increase in
re on vacanc
San Jose M
ch Zip Code,
@valuationco
rally decreas
rall more sta
n the third q
n 4Q-2023.

City of Santa
ridge Industr
se renewal o
4 square feet
ara was $4.5
ance, utiliti e
n the $4.45/ S
San Jose M
n space avail
y.”
Metro:

Santa Clara,
onsultant.net
sed slightly
able with vac
quarter 2023
a Clara’s incl
ries lease ren
of 149,608 sq
t at 5425 St e
3/SF/Month
es, and jani
SF/Month as
Metro area, w
lable for sub
CA
t 20

from
cancy
. The
luded
newal
quare
evens
h on a
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blease
Average Asking Rate & Vacancy Rate Office Market
$8.00 ---------------------------------------------------~ 35.0 % $ 7.00
-I
$ 6.00
$ 5.00 I
$4 .00
$ 2.00
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/ '---~~-~--~~
$ 1.00
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Sunnyvale Vacancy Rate --. ...,,,;
-- -­'------
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2 5 .0 %
20 .0 %
15 .0%
10 .0%

5.0%
Real Es

Frank S

There a r
Notable
Californ
i

Research

The next
Snapshot
the subje

The next
state Apprais
Schmidt &
re several o f
developmen
ia,and Kylli.
h and Devel
t table displ a
t and its pred
ect’s submark
t tables displ
sed: Three Hy
Associates
ffice devel o
nts previou

lopment (R&
ays data fro m
decessor rep
ket (Santa C
ay data from
ypothetical O
s Phone: 51
opments un d
sly discuss e
&D) Marke
m Colliers I
ports.The tab
Clara), and th
Source: Col
m CBRE’s 4Q
One-Acre Lots

10-468-9219
der construc t
ed in the
et
nternational
ble includes s
he adjacent S
lliers Market R
Q-2023 Silic
s, One for Eac
fschmidt@
tion in Sili c
City of S a
’s 4Q-2023
statistics fro
Sunnyvale su
Reports
con Valley R
ch Zip Code,
@valuationco
con Valley a
anta Clara i
Silicon Vall
om the Silico
ubmarket.

R&D Market
Santa Clara,
onsultant.net
and Santa C
include: R e
ley R&D M
on Valley ma
t:

CA
t 21

Clara.
elated
Market
arket,

- Completions
,t
.20
Rent Trends
NetAbsorption - Vacancyl?ate - All'eroge Rent - Y-0--Y Percent Change 2!JI;;
- 1,4,Y,
[I !',;
8!',;
21 22 23' ID 20 21 22 23"
R&D Average Asking Rate & Vacancy Rate
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
Santa aara Vacancy Rate Sunnyvale Vacancy Rate - SiliconValleyVacancyRate --Santa aaraAsking Rate --Sunnyvale Asking Rate --SiliconValleyAskinf: Rate Real Es

Frank S

As shown
4Q-2023
$2.67/S
F
expense
and rese
r

CBRE r
e
for the Si
compared
negative

Retail
M

Cushman
the San J
As a res u
unemploy
number o
private e
places. In
country a
showed a

Spending

General
sales. T y
state Apprais
Schmidt &
n above, Sili
. Meanwhi l
F/month in 1
basis in thi s
rves for repla
eported in the
ilicon Valley
d to negative
net absorpti
Market
n & Wakefie
Jose metro a
ult of the ri
yment rate
of jobs still s
education a n
naddition, th
at $156,70 0
a steady grow
g Patterns
market con d
ypically, a m
sed: Three Hy
Associates
icon Valley’
le, asking
1Q-2023 to
s market m e
acement, wh
eir 4Q-2023
y R&D mark
e 350,444 sq
ion, and a tot
eld is a broke
area. They r
se in layof f
from 2.6%
saw a year-o
nd health se
he median i n
0, reflecting
wth rate at 0
ditions for t
market wh e
ypothetical O
s Phone: 51
Sou
’s R&D mark
rents in S a
$2.63/SF/mo
eans the lan d
hile the tenan
Silicon Val
ket closed Q
q. ft. in Q4 2
tal of negativ
erage firm th
reported in t h
fs at tech c o
in 2022 to
over-year (Y
rvices, leis u
ncome hous
a 3.0% in c

0.6%.
the retail re a
ere taxable r
One-Acre Lots

10-468-9219
urce: CBRE
ket experien
anta Clara
onth in 4Q- 2
dlord is onl y
nt typically p
lley R&D M
4 2023 at ne
022. This m
ve 2.42 mill
hat publishes
heir Q4-202
ompanies, Si

3.6% at th e
YOY) increas
ure and hos p
seholds in S
crease from
al estate se g
retail sales
s, One for Eac
fschmidt@
nced an over
have rema i
2023 on a N
y paying fo r
pays all othe
Market that “T
egative 373,6
marks the sixt
ion sq. ft. th
s quarterly re
23 Marketbe
ilicon Valle y
e close of 2 0
se of 11,800
pitality, an d
ilicon Valle
the previo u
gment can b
are increas i
ch Zip Code,
@valuationco
all increasin
ined relati v
NNN expens
r managemen
er operating e
The overall n
617square fe
th consecutiv
hrough 2023.
eports for th
eat Silicon V
y experienc e
023. Despit e
0, mainly fue
d food servi c
ey remains t h
us year. Th e
be indicated
ing would b
Santa Clara,
onsultant.net
ng vacancy ra
vely stable
se basis. A N
nt of the ac c
expenses.
net absorptio
eet (sq. ft.)
ve quarter w
.”
he retail mark
Valley Retail
ed an incre a
e this uptic k
eled by grow
ces and dri n
he highest i
e populatio n
by taxable
be supporti v
CA
t 22

ate in
from
NNN
count
on
with
ket in
l that:
ase in
k, the
wth in
nking
in the
n also
retail
ve of
(%)

14.0 13.0

12.0 11.0

10.0 9.0

8.0 - Total Vacancy % - Availability %
~ 6

10.7 02 03 04 01 02 03 04 01 02 03 04
2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2024
Asking Rate
($/SF)

3.20 3.00

2.80 2.60

2.40 2.20

2.00 $2.94
--------------~ --------
02 03 04 01 02 03 04 01 02 03 04
2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023
Real Es

Frank S
additiona
interested

Average

The Cush
Valley re
from 5.5%
Silicon V
msfof va
approxim

The cha
r
submarke
County (
from 3Q-

As indica
of $3.01/
4Q-2022
market.In
submarke
retail va c
projects
Clara r
e
2,570,47
state Apprais
Schmidt &
al retail de v
d in entering
Asking Reta
hman & Wak
etail market c
% rate last q
Valley remain
cant retail sp
mately 77,90
rt below d i
et, Sunnyv a
(Silicon Vall
-2017 onwar
ated in the ta
/SF/Mo NNN
. Neighbor h
n 4Q-2023
et which is
cancy rate i n
in the city
etail subma r
1sq.ft. in 4Q
sed: Three Hy
Associates
velopment a s
g the market.
ail Rental R
kefield Q4-2
closed the y
quarter thoug
ned at 37.5 m
pace, which
0 sf (3.9%) o
isplays the
ale/Cupertino
ley Total) t a
rds:
able above,
N in 4Q-20 2
hood and c
asking ren t
a decrease
n Santa Cla
of Santa Cl
rket invent o
Q-2023. Key
ypothetical O
s Phone: 51
s existing r e
. The conver
Rates and Va
2023Marketb
ear with the
gh the same
million squa
consisted of
of sublease s
average as k
o submarke t
aken from C
the Santa Cl
23 which is
ommunity c
ts averaged
compared t
ra was rep o
ara include
ory increas
y lease transa
One-Acre Lots

10-468-9219
etailers are w
rse is true wh
acancy Rates
beat Silicon
vacancy rat
as last year’
are feet (msf)
f approximat
space.
king rental
t, Downto w
Cushman Wa
lara County
a slight incr
centers acc o
$3.22/SF/M
to $3.39/SF /
orted at 6.1 %
new suppo r
ed slightly
actions in 20
s, One for Eac
fschmidt@
willing to e
hen taxable r
s
Valley Reta
e of 5.3%, d
s figure. The
f) at the end o
tely 1.9 msf(
rate and v a
wn San Jose
akefield and
retail marke
rease compa
ount for m o
Mo NNN i n
/Mo NNN i
%. As discu s
rting retail d
from 2,5 4
023 include a
ch Zip Code,
@valuationco
xpand and n
retail sales a
ilreported th
down 20 basi
e total retail
of 2023, leav
(96.1%) of d
acancy for
submarket
its predeces
et had an av
ared to $2.9 9
ost of the v
n the subje c
in 1Q-2023.
ssed previou
developmen
44,591sq.ft.
a new lease
Santa Clara,
onsultant.net
new retaile r
are declining
hat:The Silic
is points (bp
inventory in
ving almost
direct space a
the Santa C
and Santa C
ssor retail r e
erage asking
9/SF/Mo NN
vacancies i n
ct’s Santa C
In 4Q-202
usly, severa l
t.Subject’s S
in 1Q-20 2
of 12,900sq
CA
t 23
rs are
g.
on
ps)
n

2.0 and
Clara
Clara
eports

g rent
NN in
n the
Clara
3 the
l new
Santa
23 to
q.ft. at
Retail Asking Rates and Vacan cy
$44 .00 8 .0 %
$42.00
$40.00
z z z $38 .00
►
;.-
~ $36.00
~
.
i $34 .00
..
~
$3 2.00
!I $30 .00 e
~
<(
$28 .00
.
- I\ A
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-
r -
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~ I
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-
f1 - ~ t;O .-- 7 :---.-: - ,-.. ;:::: 12: === ;:::: R
r-.. ,-
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7.0 %

6.0%

5.0%
*
4 .0%
;;-
!

3.0%

2.0%
$26 .00 1 .0%
$24 .00 0 .0%
- Downtown SJ Vacanc y - Silicon Vall ey Vacanc y - Santa Clara Vacanc y - Sunn yvale/ Cupe rt ino Vacancy - Dow ntow n SJ Ask ing Rent -Silicon Valley Ask ing Rent - Santa Clara Asking Rent - Sunn yvale/ Cuper t ino Asking Rent 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 1285 Homestead Road and a new lease of 40,000s q.ft. at 5201 Stevens Creek Boulevard (Stevens Creek Plaza).

According to Marcus & Millichap’s Hospitality Report for Midyear 2023 - San Francisco Metro Area (which includes Santa Clara), “Over the near term, local room demand and revenue metrics are expected to remain well below their pre-pandemic marks in San Francisco due to the sector’s reliance on tech-driven business travel and conventi ons, which have yet to return in full force.

Still, the metro should record some improvement s over the near term, albeit moderate. Across the international and domestic segments, more th an 23 million visitors are expected to visit the area this year, a 5 percent increase over 2022.”

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 Q4-2023, that “The Bay Area has struggled to return to its pre-pandemic economic strength. Technology companies have been both a blessing and curse for the region, though more of the latter recently, with layoffs prevalent among Big Tech and startups. One bright spot is the recent push of many companies to mandate a hybrid work situation with at least some time during the week spent in office. All this fluidity in the workforce has caused tenants and landlords alike to pause and reassess space needs moving forward.”

In their Q4 2023 San Jose Silicon Valley Market Report for industrial/warehouse properties, Collier’s International reported “S ilicon Valley’s industrial mark et continued to see healthy leasing activity in Q42023. Gross absorption, the measure of the total volume of non-renewal lease and user-sales, recorded 593,138 square f eet in the fourth quarter, down 40.8% from the previous quarter, but up 2.3% year-over-year.”

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 slightly increasing asking rental rates in Santa Clara.

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

Vacancy rates for manufacturing were generally stable in Silicon Valley in 2023. A similar trend has played out in the Santa Clara submarket w ith some fluctuation, but a generally decreasing vacancy rate to the 1.1% range in both 4Q-2 022 and 4Q-2023. However, manufacturing rental rates in Santa Clara continue to increase; the asking rental rate rose from $1.81/SF/month NNN in 4Q-2022 to $2.05/SF/month in 4Q-2023. Within Silicon Valley, the average asking rate for warehouse was$1.66/SF/month in 4Q-2023 compared to last year’s rate of$1.46/SF/month.

Warehouse data collected from Colliers Inte rnational’s Silicon Valley Research & Forecast Report Q4 2023and its predecessor reports are displayed in the next chart:

Industrial Average Asking Rate & Vacancy Rate
$4 .00
$3.50
$3 .00
z z z
<!. $2.50
"' .
ii $2 .00
~
~ $1.50
• ~
~
$1.00
so.so
$0.00
- S<lnta Clara V;,c;,ncy -5;,n Jose V5CancyRat e - sunnyvaleV1JC11ncy - siliconV<lllcy VIJC;,ncy - S,1nta Clara Asking Rate - San Jose Asking Rate - Sunnyv;, leAsk ing Rate - Sili con Valley Asking Rate Warehouse Average Asking Rate & Vacancy Rate
$1.70 14.0%
z z SL SO z 12.0 %
....
~
~ Sl.30
"

10.0 %
i i $1.1 0 ::,0
:.
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so.so 0 .0%
- Santa Clara Vacancy -San Jose Vacancy - Silicon Valley Vacancy --Santa Clara Ask ing Rat e --San Jose Asking Rate --Sili co n Valley Ask ing Rat e 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 Warehouse vacancy rates in Silicon Valley have been fluctuating for several years with a slightlyincreasing vacancy rate of 2% in th e 4Q-2023 compared to 1.5% in Q4-2022.Warehouse rental rates in Santa Clara are re ported to havedecreased; the asking rental rate decreased from $1.54/SF/month in 4Q-2022 to $1.32/SF/month in 4Q -2023. Within Silicon Valley, the average asking rate for warehouse generally increased to $1.32/SF/month in 4Q-2023compared to last year’s rate of $1.23/SF/month.

Data centers are one of the larg est 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 da ta centers. We discovered several expansion plans and construction occurring on existing sites. There have been several land sales in recent years in Santa Clara that are proposed for new data centers. Market particip ants report that data center operators will pay a premium for a larger site in Santa Clara.Two (data center) sites in Santa Clara were sold in 2021 (see Industrial La nd 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 Sant a Clara (not included in the sale s grid) is also a data center land sale that was reported to have been purch ased 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.

CBRE’s U.S. Data Center Trends report for the 1H 2023(September 2023) indicated the following market changes in Silicon Valley’s data center market:

Limited land and ability to deliv er 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 have been land-banking available sites while waiting for power delivery. Some of the current projects in the city of Santa Clara include the following: 2805 Bowers Avenue is currently pending review. Th e project requires a General Plan Amendment, Use Permit and Architectural Review to demolish the existing approximately 104,000 square foot 2-story building and construct a new 4-st ory 244,068 square foot data center with a substation. The proposal also involves a lot lin e adjustment.3060 Raymond Street is currently MW
160
Under Construction Preleased New Deliveries Vacancy
Vacancy MW
10% 70
9%
60 8%
50 6%
5% 40
4% 30
3% 20
1 1%
10 0
2015 2016 2017 2018 2019 2020
Absorption Vacancy
2021
Vacancy
12%
10%
9%
7%
5%
3%
"'
2022 Hl 2023
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 pending review. The proposal is to convert an existing 24,422 square foot , two-story industrial building to a 9 megawatt data center. The project requires a Use Permit and Architectural Review to allow for the change in use and alte rations to the building, su rface parking area, site landscaping. The project includ es interior and exterior improvements to the building, the installation of five 2,000 kilowatt back-up diesel generator and six closed-circuit cooling towers, and frontage improvements.2905 Stender Way is currently under cons truction. The project required rezoning from Planned Development (P D) to Light Industrial (ML), Architectural Review and Minor Modification to increase the height to 85’ and reduce the parking space requirements of a 3.8-acre project site. The site is bounded by Central Expressway to the south, Stender Way to the west, adjacent buildings to the north, and San Toma s Aquino Creek to the east. Project includes demolition of the existing single-story buildings, and construction of a four-story, 246,660 square-foot data center bu ilding.1200 Memorex Drive Data Center is currently under construction. The project is the development of a four-story 472,920 square foot data center building with an attached six-story 87,520 square foot ancillary use office and storage component, for a combined square footage of 560,440, along with the asso ciated electrical substation, paved parking areas and landsca ping. The data center building would be approximately 85 feet in height, with additional screening features extending to a height of 99 feet. The data center portion of the building would house computer servers for private clients in a secure and environmentally controlled structure and would be designed to provide 60 megawatts (MW) of information technology (IT) power.2 600 De La Cruz Blvd - Sequoia Data Center Project is currently pending review to constr uct a 703,450 square-foot, f our-story data center, backup generating facility with a generati on capacity up to 96.5 megawatts (MW), surface parking, landscaping and site improvements. Ther e is a Modification to increase the maximum building height from 70 feet to 85 feet and decr ease parking requirement to one space per 5,000 square feet of gross floor area . The site was previously devel oped with a one-story recycled paperboard mill and warehouse. The site is currently vacant and unpaved.

Residential Market Conditions

The National Association of Home Builders, reported;Mortgage rates well under 7% over the past month have led to a sharp increase in builder confidence to begin the new year.

Builder confidence in the market for newly built single-family homes climbed seven points to 44 in January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This second consecutive monthly increase in builder confidence closely tracks with a period of falling interest rates. “Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market after being sidelined in the fall by higher borrowing costs,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “Single-family starts are expected to grow in 2024, adding much needed inventory to the 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] 28 However, builders will face growing challenges with building material cost and availability, as well as lot supply.”
“Mortgage rates have decreased by more than 110 basis points since late October per Freddie Mac, lifting the future sales expectation component in the HMI into positive territory for the first time since August,” said NAHB Chief Economist Robert Dietz. “As home building expands in 2024, the market will see growing supply-side challenges in the form of higher prices and/or shortages of lumber, lots and labor.”
The California Association of Realtors (C.A.R.) published their December Home Sales and Price Report in mid-January 2023. The report notes that closed escrow sales of existing, single-family detached homes in California totaled a seas onally adjusted annualized rate of 224,000 in December, according to information collect ed by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The stat ewide annualized sales figure represents what would be the total number of homes sold during 2023 if sales maintained the December pace throughout the year. It is adjusted to accoun t for seasonal factors that typically influence home sales.

December’s sales pace was essentially unchanged from the revised 223,940 homes sold in November and was down 7.1 percent from a year ago, when a revised 241,070 homes were sold on an annualized basis. Sales of existing single-family homes in California have been below the 300,000 threshold since September 2022 and will likely stay below that level in the first quarter of 2024. While the deceleration in the year-over-year loss was due primarily to the low level of pending sales recorded a year ago, the slowdown could be a sign that the market is turning the corner, especially since rates in the past couple of weeks have remained well-below the recent peak recorded in late October. For the year as a whole, the state recorded an annual sales level of 257,630, a decline of 24.8 percent from the revised sales level of 342,530 reported in 2022. The annual sales decline in 2023 was the biggest drop in existing home sales in California since 2007.
“The housing market had a tough year in 2023 as a shortage of homes for sale and high costs of borrowing continued to have a negative impact on housing inventory and demand,” said 2024 C.A.R. President Melanie Barker, a Yosemite REALTOR®. “With mortgage rates expected to come down in the next 12 months, home sales will bounce back as buyers and sellers return to a more favorable housing market. Home prices should see a moderate increase in 2024 as well.” While California’s statewide median price dipped 0.3 percent from November’s $822,200 to $819,740 in December, it posted its largest year-over-year gain since May 2022. The December median home price rose 6.4 percent from a revised $770,490 recorded a year ago. With mortgage rates softening since mid-October, home prices will likely maintain their upward momentum, and the market should continue to observe a mid- to single-digit, year-over-year growth rate in California’s median price in at least the early part of 2024. For 2023 as a whole, California’s 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 median home price slipped 0.6 percent to $813,980 from 2022’s $818,900 figure but is expected to climb to $860,300 in 2024.
“Easing inflationary pressure and a soft economic outlook suggest that we will see some interest rate cuts in the upcoming year, which bode well for a housing market recovery,” said C.A.R.

Senior Vice President and Chief Economist Jordan Levine. “With rates declining to a 7-month low in late 2023, Americans are feeling more positive about the market, and we could begin to see some increase in market activity at the start of the year. The improvement is expected to be gradual as tight housing supply will remain the norm in 2024.”

Regional Housing Market

The Standard & Poor/Case-Shiller Home Price I ndex measures the average change in value of residential real estate given a constant level of quality and re flects 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 2.0% from 342.977 in November 2022 to 350.092 in November 2023, or about 0.17% /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 701,539units as of January 1, 2023. This represents an increase of housing units over the 696,489 units as of January 1, 2022.

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Source: S&P Dow Jones Indices LLC fred stlouisfed org
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 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 C ounty households will ha ve 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 53,370housing units as of January 2023.

This represents an increase of housing units from the 52,000housing units as of January 2022.

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 projecte d 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 View point 2024 San Jose Multifamily Annual Report, “The Silicon Valley is a hub for t ech employment in the nation, a nd despite some recent layoffs, a dominant tech presence is expected to be ma intained. Tech giants such as Google and Apple continue to expand in the re gion, creating high-income job gr owth and additional demand for housing. The region is one of th e highest-priced housing markets in the nation, both for renters and homeowners, and though there is a significant gap in affordability between the two, forcing most new households to rent rather than purch ase a home. The market experienced a slowdown during the pandemic as remote working environm ents allowed renters to relocate to more affordable markets. The most expensive submarkets experienced the greatest occupancy loss and rent decline. However, improvement began in 2021 and conditions reached pre-pandemic levels by mid -20022. Strong demand prompted develope rs towards new construction activity with roughly 8,000 units reported to be underway. This represents among the highest volume in over a decade. Activity is concentrated in Sunnyvale , Mountain View, Downtown San Jose and Santa Clara.”

Integra Realty Resources Viewpoint 2024 San Jo se Multifamily Annual 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] 31

Source: Integra Realty Resources Viewpoint 2024 San Jose Multifamily Annual Report

According to a CoStar report on the local multifamily market, “Heading into 2024, demand in San Jose's multifamilymarket is softening, as evidenced by falling totals of netabsorption in the second half of 2023. High interest ratesand economic uncertainty in the face of tech layoffs Market Rate nd1cators (VfY)
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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] 32 andbank failures have reduced tenant demand, and whilevacancy has stayed relatively low, rent growth hasslowed, as landlords focus on tenant retention over rentincreases.

The structure and characteristics of the San Josemultifamily market derive from the success and growth ofthe technology-based economy of Silicon Valley. Theimpressive growth of this sector over the past 30 yearshas driven large increases in employment and incomeand generated strong growth in housing demand. Oneconsequence of the region's success is that housing inSan Jose is among the costliest in the nation. Apartmentrents are the third highest, after San Francisco and New York, while for-sale housing is out of the reach of many residents.”

Local Single-Family Market

According to the City of Santa Clara General Pl an, 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 Genera l 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 53,370 housing units (January 2023) in Santa Clara, as reported by the DOF, the single-family(attached and detached) market represents about 24,760 or about 46% of the totalhousing units in Santa Clara.

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

DQ Newshas in the past tracked theannual medi an 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 ava ilable, all of 2022 and 2023year 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] 33

The data above indicates that zip code 95051 cons istently 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 we re increasing in 2018, stabilizing in 2019 and 2020, increasing in both 2021 and 2022, and relatively stable to slightly increasing in 2023. By the end of 2023, compared to the previous year, median prices had increased about 0.0% per year in 95050, decreased about -1.8% per year in 95051 and increased about 7.8% per year in 95054.

The $/SF indicators showed an overallincreasing trend from 2020 to 2023. The total number of sales indicator showed an overall decreasing rate from 2022 to 2023 in all three zip codes.

2018 Yea r End Summary Sa les
Community 7.i:p Sales % Chg Median Price % Chg High Price S/SqFt % Chg Santa Clara 95050 380 -0.5% $1,184,500 24.4% $2,609,000 $887 25.0% Santa Clara 95051 484 -16.6% $1,358,000 17.0% $2,800,000 $934 14.7% Santa Clara 95054 185 -25.4% $1 ,250,000 23.3% $2,400,000 $799 13.9% 2019 Yea r End Summary Sales
Community 7.i:p Sales % Chg Median Price % Chg High Price S/SqFt % Chg Santa Clara 95050 332 -12.6% $1,200,000 1.3% $2,350,000 $837 -5.6% Santa Clara 95051 461 -4.8% $1,300,000 -4.3% $2,400,000 $860 -7.9% Santa Clara 95054 162 -12.4% $1,140,000 -8.8% $2,450,000 $748 -6.3% 2020 Yea r End Summary Sa les
Community 7.i:p Sales % Chg Medi an Price % Chg High Price S/SqFt % Chg Santa Clara 95050 301 -9.3% $1,200,000 0.0% $2,780,000 $834 -0.4% Santa Clara 95051 614 33.2% $1,400,000 7.7% $2,200,000 $869 1.0% Santa Clara 95054 160 -1.2% $1,175,000 3.1% $2,090,000 $774 3.5% 2021 Yea r End Summary Sales
Community 7.i:p Sales % Chg Median Price % Chg High Price S/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% 2022 Yea r End Summary Sales
Community 7.i:p Sales % Chg Median Price % Chg High Price S/SqFt % Chg Santa Clara 95050 258 -41.5% $1,472,500 14.2% $3,650,000 $1,024 19.4% Santa Clara 95051 483 -43.5% $1,630,000 9.4% $3,500,000 $1,119 22.7% Santa Clara 95054 138 -43.0% $1,278,044 1.8% $3,330,000 $887 11.7% 2023 Year End Summary Sales
Community 7.i:p Sales % Chg Medi an Price % Chg High Price S/SqFt % Chg Santa Clara 95050 204 -20.9% $1,472,500 0.0% $3,600,000 $1,007 -1.7% Santa Clara 95051 299 -38.1% $1,600,000 -1.8% $3,030,000 $1,102 -1.5% Santa Clara 95054 94 -31.9% $1,377,500 7.8% $3,180,000 $888 0.1% 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 following tables depict the median price trend by zip code over the 60 months ending December 2023 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:

As shown above, market data derived from the local MLS shows that prices were oscillatingup and down over the 60 months ending December 2023. However, prices for single family homes were generally relatively stable to slightly increasing in 2023. In addition, the median days to sell increased in the last half of 2023.

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 36 early part of 2020 through the sp ring of 2020. Prices were genera lly stable over remainder of 2020 in Santa Clara and Santa Clara County but declined in Sunnyvale. The median selling prices for each of these thre e areas generally incr eased throughout 2021 and the first half of 2022. Prices were generally trending downwards in last half of 2023, as a result of higher interest rates.

Conclusions

The Winter 2024 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Surveyreports “For developers in the office sector, the rationalization of existingoffice space and a return-to-the-office are going to bekey elements in deciding where and when to invest.”“The forecast is for at least three more years of declining rents and occupancy rates.”

Commercial (retail and office) pr operties exhibitedmixed indica tions due to the pandemic in 2021. Some retail is doing fine, butthe 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. Ba sed 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 comparab les usedofnegative 0.75% per month from the start of 1Q-2020 through 4Q-2021. For the year2022 and 2023 prices were more stable for commercial and did not warrant adjustment.

In prior years, industrial(and warehouse) market statistics indicated that rental rates had been trending upwards, whilevacancy rates generally st abilized near5%. Market participants opined that selling prices werealso in creasing, especially for large site s suitable for da ta 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 10
th Street in San Jose sold for $3,000,000 in
August 2018 and again for $3,801,000 in October 2020, in dicating a straight-line increase of about 1.0% per month. Based on changing rents and prices, we concluded that competing industrial land prices were increa sing at the rate of about 0.75% pe r month from the date of sale of the comparablesthrough Q4-2020, with no additional adjustment in 2021, 2022 or 2023.

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

Market data and market pa rticipants report that residential pri ces declined in the latter part of 2018 and were stable overall during 2019. In 2020, the residential market showed different 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 trends depending on property type . The residential market gene rally saw greater demand for detached residential over th e course of 2020 and 2021 as buyers looked to have more indoor/outdoor space since they began spendi ng a greater proportion of time at home.

Meanwhile, condominiums and apartments e xperienced a slower market during 2021.

Comparing just the December 2022 city of Santa Cl ara overall median resi dential sales price to the December 2021 overall median residential sale s price, MLS Listings shows a decline of

4.83% year or a decreasing rate of change of about .40% per month. Howe ver, comparing just the December 2023 city of Santa Clara overall me dian residential sales price ($1,400,000) to the November 2022 overall median resi dential sales price ($1,400,000) in dicates that no adjustment is necessary for 2023. 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 analysiswe applied an increasing rate of cha nge 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 d ecreasing rate of change of 0.40% per month from the start of 2022 through the fourth quart er 2022. We conclude no market change is warranted during 2023 for this property type.

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.

However, CoStar’s Santa Clara Multi-Family report showed stagnating rent growth in the second half of 2022. CoStar reported; “Challenging economic conditions over the past 12 months, including high inflation, rising interest rates, and layoff concerns, have dampened tenant demand.” “While expensive in comparison to most other areas of the country, many renters in San Jose have few alternative options for housing. Median home prices have more than doubled over the past decade, and with mortgage rates at around 7%, the monthly cost of homeownership is substantially more expensive than renting.As the metro area is geographically constrained, commutes to areas with lower-priced homes are time consuming and arduous. As a result, many Silicon Valley workers are willing to pay high rental rates for lower grade multifamily units near suburban office campuses.” 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. We conclude no market change is warranted during 2023 for this property type.

LAND USE ORDINANCES

Since we are analyzing hypotheti cal lots, we supposed that ea ch 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 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 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-us es and higher-density residential is allowed.We supposed the following General Plan designations for each hypothetical use:

HIGHEST AND BEST USE

Westudied the legally permissible, physically possible, financially feasible, and maximally productive uses of each hypothetical lot. We cons idered 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 fo r each respective property type. However, forthe commercial use, since many retail and offi ce projects are on hold, constr uction 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 co mmercial use would be to hold for future development of a commercial building until the market improves, unless preleased or a build-to- suit. 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:

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

Use of Hypothetical Lot Genera] PJan
Very Low Uensirty Residentia l V,ery L-0\v Density Itesidentia] Low Uensirty Residen tial Low Density ItesidoofiiaJ
l\1Iediuw Density Residentia l edmm Density Residential High Uensirty Residen tial ffigh Density ItesidenfiiaJ
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Very Low Uensirty Residen tial Very Low Density &esid!entiaJ Low Uensirty Residen tial L-ow Density Re.sidentiaJ
l\{edium Uensrty Residen tial Medium Den,sity ResidentiaJ High Uensity Residential ffigh Den,sit)r &esidentiaJ
Commer,cia] Hold for Deveillopment of a. CommerciiaJ Bnilcfing fadustrial IndusmaJ Blllilcfing
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 For this analysis and based on the marketand th e 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):

 10 dwelling units per gross acre (DU/AC) for Very Low-Density Residential;

 13 dwelling units per gross acre (DU/AC) for Low-Density Residential;

 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 la nd would support a subdivi sion 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 bu ilding, but only if prelea sed or a build-to-suit.

The likely industrial use would be a data center, flex, light industr ial 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 ther e 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 simila r to the hypothetical subjectlots.Therefore, we did not undertake a cost or income capitalization approach.

Following we estimated the value of a hypothe tical one-acre lot under each use scenario described above, as if located w ithin the 95050 zip code, since th e 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] 40 based on the percentage of total land area asso ciated with the differe nt property types (as described above) that sold in the City of Santa Cl ara 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 a ppropriate 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 th e subject market; revi ewing DataTree.com, MLSlistings.com, and CoStar.com databases for recent sales; and searching Loopnet.com and broker databases for curre nt 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 ac re 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 follo wing adjustment grid. The adjustment grid serves two purposes. First, it presents data, an alysis, and conclusions about the subject and comparables in a way that facilitates compar ison. 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 displaye d in the Addenda. Selling prices were verified using our summary transcript of the public record and conversat ions with sell ing 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] 41

VIRY LOW DENSITY COMPARABLE LAJ•m SALES
ELEMENT OF ADJUSTMl'.NT SUBJr:CT COMPARAB LE VLD-1 COMPARABLE VLD-2 COMPARAB LE VLD--3 COMPARABLI'. VLD-4 COMPARABLE VI.D--5 COMPARABLE \1I.D"6 COMPARABLE VLD-7 ADDRESS Ave::r.a.g~ Stf'eet 2303 Gianera Stro2t [ 59 Bmok:sicl,, Av""-"" 3159 Bi,tte Stree t Fill.mme Stree t 20860 McClellan Roo.d 4249 • Cli.eeru,y Street Ha.nso:nAv~U2 ,_ Santa Cw-.t - Sant;a Cw-a Sa.nt;a Cw-a Santa Cw-a Santa Clara Cupertino &int.a Cw-a &in Jo,., APN 04-06-037 303 -22--02-S 290--04-044 04--10--077 359 -20--030 104 -12--025 & 026 303-4 1--013 SELLER J<»= T rinidad Nimo Domingo [ 9•92 Revocable T ru-st Willis 19S3 fancily Tru-st Ma.nisha Ka.m;tl Sitla.ni District McC1ellan LLC Marleru, Mu.nson Reballo RROCA LLC BUYER Gianer;tl ST Estate LLC Ranj an Trust, et ;tl Cheng C & Tsai L Ch"'1 Vn-.-s lnves tm=<1t Group LLC Alphamccl alhn LLC 1!1.!ruti Builders LLC Bakh tiari fancily T ru-st DOCUME.NT NUMBER 25354 {16 2459 S55 24420940 2549:094 [ 2552585 0 2529 [ 69 25326305 VER.IFICA TION SOURCE Broker , MLS, P.blic Recmd Broker, MLS, h blic R""°'d Broker , MLS, P.blic R""°' d Broker, MLS, h blic R<!CO!d Broker , MLS, P.blic Recmd Broker, Subscription Svcs, P.blic Recmd Broker , MLS, P.blic Recmd A~IBNT BONDS None None None None None None None
NUMBER OF UNITS 10 4 2- 2- 4 6 3 4
S,U.I I LISTING PRICE S2 .. 443 .000 Sl.325, 000 Sl 600 000 Sl.19 0 000 S9.3 00.000 $2,(iSOSOO Sl 600000 IS,U.I I OFFERING PRlCI PIR SF Sl4S ,42 S96.72 SH0.92 Sl 26.93 Sl6&.ll Sll9.3-l Sll9 .05 TRA .. IIISACTlONAL ADJUSTMINTS
RE AL PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple Fee Simple Fee Simple F""Simple Fee Simple F...,Simple Fee Simple ADJ1lS1ilfE N T 0 .00% 0 .00% 0 .00%, 0 .00% 0 .00% 0 .(H)% 0 .00% FlNA .. 1'TCING TERMS Convention;,! Convention;,! A11Ca4 A11Ca4 Altc..sh All Ca-sh Al!Caili .. 4DJ1lS1ilfE N T O.OO~t 0.00'% 0.00'% 0 .00% 0 .00% 0.(H)% OJ}0% cm-mmoNS OF &ALE Arm's-Leng th Arm's-Len gth Arm'o-Leng th/lm p,ove= t V;tl-.e Ann'o-Leng th A.rm's-Length A.rm'o-Len_gth A.rm'o-Leng th "4D.llISDlfE~iT 0 .000/4 0 .00% -9.38% 0 .00% 0 .00% 0 .00% O(H)% EXPENDITURES AFTER SALE Demolition Offu,t Demolition Ofu•t None None None None None "4DJlIS1ilfE!<,'T 0.00% 0 .00% 0.00% 0 .00% 0 .000/, 0 .1}0% 0.00% CLOOE OF ESCROW - Ai,g-.cSt 8, 202-2. September 2, 2020 March 4 , 2020 June 2 1, 2023 September I , 2.02.3 May 5, 202.2. June 2 7, 2-02.2 TIME OF SALE I MARKET CONDillON
,.

Dacember 3 1, 2023 J-.ne 2022. Au,gi;,t 2-02.0 February 2020 r fone:2-023 ,.

April 2-023 r April 2022.
,. 1=• 2.02-2
MONTHS FROM START IQ-2020 THROUGH 4Q-2020
,.
0 4
,.
0 0 0 0 0
"4DJ1lSn.IFA'T@ % PER MONTII 0.25'% 0.00'% 1.0-0'%.,. 2.50'% 0 .00% 0.00% 0 .00% 0 .000/4 MONTHS FROM START iQ-202.i THRO UGH 4Q-202.1 0 r 12
,.
[2 0 0 r 0 0
ADJUSiilfE i"\'T@ % PER ilIONTII l .W% 0.00'% r [2.00'%,,. I .~'El 0 .00% 0.00% r 0 .00% 0.00% MONTHS FROM START IQ-2022 THROUGH 4Q-202.2 6
r -
12 ,.- 12 r 0
,.
0 r 3
,.
6 _4J)J1lS1ilfE!<,'T@ % PER ilIONTII -0.40'% -2.40'% -4.80'% --4.SO~'n 0 .tn}, 0 .00% -3 .2.00/o -2.40% r,uoNTHS FROM START Ql -1013 IHROUGH 4Q-2013 12 12 2 6 s n 12 ,. "4DJ1lS1ilfEi"\'T@ % PER MONTH 0 .00% 0 .000/4 0 .00% 0 .000/4 0 .00% 0.00% 0 .00% 0 .00% ADJ PRlCT PIR SF AFTIR TRANSACTlON.U. A.DJS Sl41.93 Sl04 .15 Sl09 ,8 6 Sl2 6.93 Sl 6&.ll Sll 5A9 Sll 6.19

LO CATIONAL ADJUSTMINTS
E.."WOSURE I VISIBJLITY Ave:ra_ge Similar Similar Similar Similar Simil.u Simil.u Siniilar ACCESS Aver age &imilar &imilar &imilar Similar Similar Simil.u Similar APPEAL/SITE INFLUENCES Aver age Similar Inferior/San Tmnas &py Similar Inferior Similar Inferior Similar ZIP CODE 95050 950 54 95050 950 51 95 0 54 95 014 95 0 54 95 !17 OVIR,U.L LOCATIONAL RATING Average lnferim lnferim Similar Inferior Superior Inferior Similar PHYSIC ,U. ADJUSTMINTS
SITE SIZE (ACRP.S) 1.00 0.3 86 0 .3 1 0 .33 0 .2.2 L2.7 0 .51 0.3 5 SITESIZE(ID 43,5 60 1,6,800 [3 ,700 14,425 9,3 75 55,32 1 22,2.1•6 15,120 UTILITY/TOPOGRAPHY Rectan,;tda,-I I Stree t Fron t Rec t.an-rular I 1 Stree t Fron t Rect.anrular I 1 St.reel Fron t Interim I St l m,e;ula.,-I 1 Stree t Front lm,ru lar Rect.ane;ula.,-Corner I 2 Fron t.a~" Rectane;ular I I Stree t Front Rec tane;uw I I Stree t Fron t St lrree;ula.,-I I Stree t Fron t

USEJZONING ADJUSTMINTS
ZONING Rl 0 6L Rl -8L Rl 0 6L Rl 0 6L Rl -10 R1-6L Rl -8 GENERAL PLAN Very Low Densit y Reo Low Densi ty Reo Very Low D=sity Res Very Low D=si ty Res Very Low Density Res Resic!,,nti;tl Low Density Very Low Density Reo Resic!,,nti;tl Neighborhood AI.LO WED DENSITY (<h.elling 1'nits per acre) up to 10 S to 19 upto!O up to 0 1>p to 10 up to 5 up to lO up to 10 NUMBER OF UNITS 10 6 2..0 2.0 4.0 6.0 s {I 4 .0
E.STl!l4..TED I PROPOSED DU/ACRE 10_0 15_,6 ,6_4 ,<i O 18_6 4_ 15_ 11_5 INTENDED USE Resiclential 4 Resiclent.ial Units SFD + ADU Re,id"'1tial + ADU 4 Resi.clent.ial Units 6Res.ic!,,ntial Unit, S m 91'ni ts 4 Resic!,,ntial Units ENTITL EMENT STATUS fus Zonin-e: & GP & , Zonin~ & GP fud Zonin-e: and GP fud Zonin-e: and GP &d Zonin ~ and GP - No A=oval, &d Zonin~ and GP -With A=ov;tl, Had Zonin~ and GP - No Aom-ov;tl, fud Zonin-e: and GP - No A=ov"1, OVIRALL PHYSIC,U. & USLIZONINC RATING Superior Inferior Similar Inferior S,;_perior Inferior Similar OVIR.U.L RATING--SUBJICT SHOULD Sill FOR Le.,. More Similar Slie:bth• Mor" 1 ...... Sli.e:bth-Mor" Similar 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 Adjustment Process

Transactional adjustments were made sequentially for pr operty rights conveyed, financing terms, conditions of sale/motivation of particip ants, expenditures incurred by the buyer after the sale, i.e. demolition costs, and market conditi ons since the sale da te. Market conditions adjustments are applied from the start of the first quarter 2020 through December 2023, 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 un its in the past, however that transaction never consummated. A lthough the lot was most recently marketed with the potential of being subdivided to provide four multiple guara nteed 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 gr oss 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 dwel ling 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 im proved lot that could support two lots or a SFD and an ADU. The listing broker opined that the ex isting 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 adju stment 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 was the sale 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. The lot was marketed as having the potential for a duplex or fourplex.

Comparable Sale VLD-5 is the sale of a 1.27 acre parcel with an approv ed tentative map and a plan to build six single-family homes with A DU’s. This was an all- cash sale. The buyer is 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 reported to be a developer. The older single fami ly home and garage are to be demolished by the buyer. This Cupertino location is considered to be superior, ba sed on higher median prices and generally superior schools.

Comparable Sale VLD-6 was the sale of two vacan t 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 th e lots currently do not have any pending approvals. Th e 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 the interim rental income.

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 a nd condition of nearby properties, proximity to enhanci ng 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 th e 95054 zip code but inferior to the 95051 zip code; thus, the 95054 comparable located in 95054 is adju sted upward and the comparable located in 95051 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.

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

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 Comparable VLD-3 is located at the elbow of tw o streets and thus has an irregular pie-slice shape; an upward adjustment is concluded fo r inferior utility. For this analysis, upward adjustments were warranted for the lower dens ities of Comparables VLD-2 and VLD-3, rating inferior for this element of comparison.

As discussed in the preceding ma terial, market conditions adjust ments are applied from the start of the first quarter 2020 through the end of the fourth quarter 2023.

Conclusion

Following adjustment for the elements summari zed on the grid, we concluded to the overall ratings displayed at the bottom of the sales gr id. Bracketed by the comparable ratings, giving most weight to the sale comparableslocated 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
$120 x 43,560 = $5,227,200

Estimated Market Value of a 1-Acre
Very Low-Density Residential Lot in 95050 Zip Code: $5,227,200

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 prim ary value difference between very low and low- density land relates to density. The density ad justment 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 land comparables used in the following low-density value scenario.

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

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 ma rket 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. Similarly, the price/SF difference is less when compared to the median or higher densities. We concluded that there is a difference in value/SF between the preceding very low density and the low-density residential which has a higher density. The trendline in the chart above indi cates that the appropriate unit value based on a density of 13 dwelling units per acre would be about $125 per square foot. Historically, there has been a 5% to 10% price differencebetween 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 $125/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
$125 x 43,560 = $5,445,000

Estimated Market Value of a 1-Acre
Low-Density Residential Lot in 95050 Zip Code: $5,445,000

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 transactio ns and examined data that was discovered by 2023 Comparable Price p er Squa re Foot vs. Propo sed OU/ Ac •
■
-. --■
-----
■ -

10.0 Propose d Dwc llin£ Unit s pe r Acre
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 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, aboutthe midpoint of the allowe d 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 loca tion 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, selle rs, 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 info rmation 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] 47

HIGH DENSITY COMPARABLE LAND SALES
ELEMENT OF ADJUSTMENT SUBJECT COMPARABLE HD-1 COMPARABLE HD-2 COMPARABLE HD-3 COMPARABLE HD-4 COMPARABLE HD-5 COMPARABLE HD-6 LISTING ,_ Average Street - 950 Monroe St 1601 Civic Center Drive 3941 Stevens Creek Blvd. 2303-2319 Calle Del Mundo 2221-2251 Calle De Luna 2301-2317 Calle De Luna ADDRESS 2232-2246 Calle Del Mundo ,- -Santa Clara Santa Clara Santa Clara Santa Clara Santa Clara Santa Clara Santa Clara ,_ APN 269-20-086 224-49-006 294-39-010 097-05-060 & 061 097-46-020 & 027 097-46-007 , 008, 009 SELLER Von Raesfeld Family Partnership K & K Outdoor Advertising LLC MB E8clusively Properties LLC Beta & Properties LLC Laison LLC/2232 Calle Del Mundo LLC TGR Associates LLC BUYER Lamb Partners LLC CIVIC Center LP CRP The Meridian LP 2263 Calle Del Mundo LLC GS Tasman East Subsidiarl), LLC Listing DOCUMENT NUMBER 24395084 24380714 25233709 24840021 25062330125062315 Listing VERIFICATION SOURCE Broker, Public Record Subscription Svcs, Public Record Subscription Svcs, Public Record Subscription Svcs, Public Record Subscription Svcs, Public Record Broker, Subscription Svcs, Public Record EXPOSURE TO MARKET 12Months 12Months 12 Months 12Months 12 Months 36Months NUMBER OF UNITS 45 .35(Avfhta.l 1.24 ~?? ~?? ~?? 235
SALE I LISTING PRICE $4,700,000 $12,100,000 $5,075,000 $8,000,000 $21,995,000 $15,000,000 SALE I OFFERING PRICE PER SF $207 .73 $197.03 $197.47 $181.83 $235.95 $249.53

TRANSACTIONAL ADJUSTMENTS
REAL PROPERTY RIGHTS CONVEYED ,_ Fee Simple Fee Simple (Short Term Leases) Fee Simple Fee Simple Fee Simple Fee Simple Leased Fee ADJlJST/tfENT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
FINANCING TERMS Conventional Conventional Conventional Conventional Conventional Listing ADJlJST/tfENT 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
CONDITIONS OF SALE Assemblage Arm's-Length Arm's-Length Assemblage Assemblage Listing ADJlJST/tfENT -5.00% 0.00% 0.00% -5.00% -5.00% -10.00%
Solvent contamination in soil and ground
EXPENDITURES AFTER SALE Demolition Offset Demolition of 30k SF Office Building Demolition Offset Demolition Offset Demolition Offset water ADJlJST/tfENT 0.00% 1.65% 0.00% 0.00% 0.00% -15.00%
CLOSE OF ESCRO\./ February 3, 2020 January 15, 2020 February 03, 2022 February 19, 2021 August 11, 2021 Listing TIME OF SALE I MARKET CONDITION ,.. December 31, 2023 - December 2018 Est. Sept 2019 April 2021 Est. April 2019 Est. Feb. 2020 .. December 2023 MONTHS FROM START 10-2019 THROUGH 40-2019 12 3 0 8 0 0
ADJlJST/tfENT@ X PER NONTH ... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% MONTHS FROM START 10-2020 THROUGH 40-2020 12 12 0 12 10 .. 0 ADJlJST/tfENT@ X PER NONTH ,..

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
MONTHS FROM START 10-2021 THROUGH 40-2021 12 12 8 12 12 .. 0 ADJlJST/tfENT@ X PER NONTH ... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% MONTHS FROM START 01-2022 THROUGH 40-2022 12 12 12 12 12 .. 0 ADJlJST/tfENT@ X PER NONTH ,..

0.30% 3.60% 3.60% 3.60% 3.60% 3.60% 0.00%
MONTHS FROM START 01-2023 THROUGH 40-2023 12 12 12 12 12 0 ADJlJST/tfENT@ X PER NONTH 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% ADJ PRICEISF AFTER TRANSACTIONAL ADJS $204.45 $207.50 $204.58 $178.96 $232.22 $190.89

LOCATIONAL ADJUSTMENTS
EXPOSURE I VISIBILITY Average Similar/Corner Similar Similar Similar Similar Similar ACCESS Average Similar Similar Similar Similar Similar Similar APPEAL/SITE INFLUENCES Average Similar Similar Similar Similar Similar Similar ZIP CODE 95050 95050 95050 95051 95054 95054 95054
OVERALL LOCATIONAL RATING Similar Similar Similar Similar Similar Similar PtNSICAL ADJUSTMENTS
SITE SIZE (ACRES) 1.00 0.52 1.41 0.59 1.01 2.14 1.38
SITE SIZE (SF) 43,560 22,625 61,411 25,700 43,996 93,218 60,114 UTILITY ITOPOGRAPliY Rectanaular I1 Street Front Mostly Rectanaular/2 Frontaaes Mostly Rectanaular/Deed Rest Rectanaular 12 Street Frants Rectanaular I1 Street Front Mostly Rectanaular 13 Street Frants Rectanaular 11 Street Front

USEIZONING ADJUSTMENTS
ZONING CC (Community Commercial) OG CT TN (Tr ans it Neighborhood) TN (Transit Neighborhood) TN (Transit Neighborhood) GENERAL PLAN High Density Residential Community Mi8ed Use Community Commercial Community Mi8ed Use Transit Neighborhood Transit Neighborhood Transit Neighborhood ALLO\./ED DENSITY (dwelling units per acre) 37-50 NIA NIA 20-36 Minimum 100, Up to 350 du/ acre Minimum 100, Up to 350 du/acre Minimum 100, Up to 350 du/acre NUMBER OF UNITS 45 36 (Pro Ratal 119 59 303 371 235
ESTJ11A TED I PROPOSED DU/ACRE 450 65.3 84.4 W O .. i'56.0 1?3.4 1?0.0 INTENDED USE Residential Mi8ed-Use Condos and Retail Affordable Housing Affordable Housing Residential Residential Residential AFFORDABLE HOUSING COMPONENT 10% or in-lieu 10% or in-lieu Yes/100% Yes/100% In-lieu Fee In-lieu Fee 10% or in-lieu ENTITLEMENT ST A TUS Has Zoning & GP Had Gener al Plan Needs Zoning and Gener al Plan Had Gener al Plan Has Zoning & GP Has Zoning & GP Has Zoning & GP OVERALL PtNSICAL & USEIZONING RATING SliahtlY Suoerior SliahtlY Suoerior SliahtlY Suoerior SliahtlY Inferior SliahtlY Suoerior SliahtlY Inferior OVERALL RATING - SUBJECT SHOULD SELL FOR LESS LESS LESS MORE LESS Sliqhtl11 MORE 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 Adjustment Process

Transactional adjustments were made sequentially for pr operty rights conveyed, financing terms, conditions of sale/motivation of particip ants, 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 th e market for approximately 36 months and a downward adjustment is warranted for conditions of sale. The adjustment we used was a good fit for the data.

ComparablesHD-1, HD-3, HD-4, an d HD-5 required the demolition of existing improvements before their new, intended use could be realiz ed. 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 w ill require the demolition of three industrial buildings which can be offset by the current rent al 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 enclos ure located on one of the parcels (2301 Calle De Luna). In September 2016, the property ow ner submitted a Voluntary Cleanup Program application and entered into a Voluntary Clea nup Agreement with the DEH for oversight of future property assessment activities and mitig ation activities, if required, to facilitate redevelopment of the property. The listing broker stated that the cu rrent 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. Th is element of comparison is shown as an upward adjustment on the Expenditures After Sale line.

Locational adjustmentswere broken into elements that reflec t 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 a nd condition of nearby properties, proximity to enhanci ng 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] 49 relating to address (locational appeal, zip code ).Locational adjustments were warrantedfor 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/de velopment density, affordable housing component,park fees, and entitlement stat us.Physical and use/z oning 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% afford able 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 a nd private amenities. The comparablesproposed 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 changeor general plan amendment to allo w 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 summari zed 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 comp arison. The range of adjusted valuesis more consistent on a price/SF basis rather than a pri ce/density unit basis;therefore, the price/SF is utilized as the primary comparison of value. Br acketed by the comparable ratings, the following value of unentitled high-density 45 DU/Acreresidential 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] 50 Medium Density Land Value

For the medium-density value component, a dens ity of 30dwelling 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 hi gh-density land value relates to density. The density adjustment was estimated based on the re lationship between price per SF and density, as evidenced by the comparables. In the chart below, we plotted the preceding high-density comparablesthat were less than 90 DU/acre and th e very-low density comp arables 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 sh ows 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 $150, but is somewhat skewed by the cluster of low density sales.

Historically, there has been a 10% to 20% difference between the medium density residential and the preceding high density.Based on the comparab le data, with a density of 30 DU/acre for the medium-density land use, a unit value of$150/SF is concluded.

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
$150 x 43,560 = $6,534,000

Estimated Market Value of a 1-Acre
Comparable Price per Square Foot vs. Proposed DU/Ac
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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] 51 Medium -Density Residential Lot in 95050 Zip Code: $6,534,000

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, ag ents, property owners, a nd market participants from within the subject market. We searched fo r recent sales of competing retail and office properties throughout Sant a Clara and nearby cities. Thos e we found most comparable are displayed on the grid on afollowing page. A map showing the location of these comparables is displayed in the Addenda.

Frank S
Schmidt&
& Associate
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Rea
al Estate App
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praised: Thre
ne: 510-468
ee Hypothetic
8-9219
cal One-Acre

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or Each Zip C
fschm
Code, Santa Cl
midt@valu
lara, CA
uationconsu
ultant.net
5 52
cm,,ffi,fERCL-\L LAl"'ID ,COMPARABLE SALES
ELEMENT OF ADJUSillENT SUBJE,CT Compar:1ble C-1 Compar:1ble C-2 Compar:1ble C-3 Compar:1ble C-4 Comp:1r:1ble C-5 Compar:1ble C....(i ADDRESS Average Street 3375 El Camino Real 3318 El Camino Real 203 5 White Oak Lane 855 E Homestead Road 1220 Oakmea1i PJ...y 160 SM:a.foga Aveni SanraC1.ia,ra Sanra G1.ia,ra Sanra C"hra Sanra C1.ia,ra Sunnyvale Sunnyvale Soora G1.ia,ra ,_ -APN 220-02-049 290-02--102 213-30-053 309-51-005 216-44--048 294-38,-(110 & 01'.

SELLER N01111a E Rioe, Trustee An SShin :&mdello family Trust Su.ndby Living Trust Prinret,on Ga!den Pmpcerfies LLC 13omrera Trust 13UYER 33 5 Camino Ci:ty SqOO!e LLC egoord USA LLC Shell Oil Products US T Investments LLC 13PR Properties UCSC LLC In Escrow SIi.LE PRICE I USTL 'G .PRICE ' 9,,925,000 '.ll5,,340,000 '.ll3,, 00,000 '.ll,6,,400,000 M,,450,,000 ,,000,000 ,- -PARCEL SIZE (Acres) 1.00 1.630 0.S 7 0. 16 1.130 0.9' 0 1.210 PIUWEL SIZE (Sn 43,560 71,003 38,211 31,173 49,2.23 42,240 52,107 SALES PRICE/SQUARE FOOT $139 .. ,78 $13'9.75 $118.16i9 SIJo.m, $105.35 ..

DOCillvlENT NUI\ffiER 24595053 24569843 25575802 24998730 25091522 In Escrow EXPOSURE TilvfE 2Months Off Market (6 Months: in 2019) 103 Days 2Month s 1 Month 500-+-Days:

TR..o\..NS.o\CTIONAL ADJUSnlENTS
REAL PROP. RIGHTS OON\IEYED Fee Simple F. Simple (Short-rerm Leases) F. Simple (Short-'rerm l.eaS"'...s) Fee Simple fee Simple Fee Simple Fee Simple ,_ - f'IN'ANC -GTER1 S'.ll All Cash A.1!1Cash A.1!l.Cash A.1!l.Cash Convenfioml Convenb:000!1 OONDmo _ s OF SALE Arm'~Lengthllmproved lumi'~Lengthllmproved Motivaf:ed 13uyer Am1i'~Lengfhllmproved Arm'~Length/lmproved In Escrow ADJUSTMF.NT -15.0% -11.0% -10.0% 0.o<'/4 0.o<'/o
EXPENDfflJRES IIJTER PURCR.A..SE - on-e None Noo-e Demoli:fion Offret by Income Demoli:fion Offret by Income - on-e ADJUS'T..MF. rT 0.0% 0.o<'/4 0.o<'/4 0.o<'/4 0.o<'/o ,- OONTR..A..CT DATE I MK.T OONDIDONS ,_ Dooember 31, 2023 July 2020 lTu.ne 2020 Nov.ember 2023 March2021 August202 1 December 2023 REOORDINU DA TE August 31, 2020 August 10, 2020 Deoember 15, 2023 Jun-e 1 , 2021 S.eprember OS, 2021 In Escrow MONTHS FROM END lQ-20 THROUGH 4Q-21 1 1S 0 9 3 0
ADJUSIME N I' ta). % PEil.1V:ONilI -0. 5% -12. 5% -13.50% 0.00% --6. ] 5% -2.25% M ONTHS FROM START l Q-2022 THROUGH 4Q-2022 12 12 0 12 12 0 ADJUSI'ME lli T @ % PER 1V:ONilI .. 0.00% .. 0.00% .. 0.Oo<'/4 ,- 0.00% " 0.Oo<'/4 .. 0.00% ..

MONTHS fRO M START Ql-2023 THROUGH 4-Q--2023 12 12 0 12 12 0 ADJUSfME l li T @ % PER rtlONilI 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% AD.1 PRICE/SF WITH TRANS . ADJ .. , 8103.67 Slo-7.,59 Sl,1}6,82, Sl21.24 SIO'l-.98 LOCATIONAL ADJUSnlENTS
EXPOSURE Average Superior/Corner Simihr Superior Simi.liar Similiar Similiar l,.PPEALISITE INilUENCESIACCESS Average Simitlar Simitlar S,imitlar Simitlar Simitlar Simitlar ZIPOODE 95050 95051 95051 95051 94087 94085 95051
LOCATIONAL COMPARISON Superior Simi.hr Suµ-erior Simi.liar Simi1lar Simitlar PHYSIC.o\L & USE/ZONING ADJUS'flilENTS
PARCEL SIZE (Acre~) 1.000 1.630 0.871 0.716 1.130 0.9"70 1.210 UTil.ITY Average Similiar Similiar Similiar Simillar Simitlar Similiar OIT-SJTE JI\.tPR:OVEMENTS Finish-ed Lot Simitlar Simitlar Simitlar Similar Simitlar Simibr eighborhood C--ommercial I
ZONING/GENERAL PLAN CT I Regi.Oftal Gommcercial CT I Community IvfrredLU.re CT I Community Ivfued-Use Neighborhood C--ommercial OJPD I C-ommcercial _ AS / Industrial OG I Commu.ni:ty Mixe PROPOSED USE.(S) Gommcerci>al Re rail in Near-Term Rerail in Near-Term Gil,m:in:e; Srafions Office or Presclrnol Ho!iel Not Dis.clo-.sied PHYSIC.o\L & USEl1iONING OOMPARISON Superior S1 Superior Superior Superior Superior SlSuperior SUBJECT SHOULD SELL FOR: Less SI Less Less Less Less SI Less 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 Adjustment Process

The adjustment methodologywas 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 improvement s contributed little to the overall selling price. Comparables C-1, C-2, C-4, andC-5 were improved at the time of sale.

ComparableC-1 was marketed as a development s ite; the eventual buyer planned to continue the retail uses. Based on a discussi on with the listing broker, our observations, and the age and condition of these improvements, which compri sed 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 conditions of sale downward adjustment.

Similarly, the sale of Comparab le 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 contributor y value for the buildingwas estimated at about $75 per square foot of buildi ng area, or about 11% of the selling price as shown on the adjustment grid. This is shown as a conditions of sale downward adjustment.

Comparable C-3 was previously improved with an older retail center that was completely destroyed by fire prior to the listing. The 0.716 acr e site was reported to be vacantat the time of sale with only old asphalt paving remaining. Th e buyer will reportedly de velop the property and install charging stations.

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

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

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

Comparable C-6 at 160 Saratoga Avenue in Santa Clara is in escrow and 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 curren tly reported to be vacant. This property was reportedly listed at $7,000,000 ($132.81/sq.ft. of land area unadjusted) and went into escrow in December of 2023 at an undisclosed price.

Market conditions adjustments were applied fr om the contract date through the date of opinionusing 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] 54 Locational adjustments were broken into elements that reflect the hypothetical property’s identity to potential tenants, buyers, or occupants (exposure, vi sibility), 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 enhanci ng or detrimental factors, or an identifiable valuation element relating to addr ess (locational appeal). Locational adjustments were warranted as summarized on the grid.

Physical and Use/Zoning adjustments were consideredfor size, ut ility, off-site improvements, zoning/General Plan, and planning /entitlement status. Within the range of the comparables, largerComparablesC-1 warrantedan upward adjustment per square foot.Among the differences in land use ordinances, those of ComparablesC-1 an d C-2 were more favorable, rating superior and warranted a downward adjustment.

Conclusion

Bracketed by the comparables, weconcluded 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 a nd reviewed other data discovered by talking to brokers, agents, property owners, a nd market participants from w ithin the industrial market. We searched for recent sales of competingindustr ial 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 c ontributed little to the overall sale price. Those we found most comparable are displa yed on the following grid. A map showing the location of these comparables is displayed in the Addenda.

Frank SSchmidt&
& Associate
es
Rea
al Estate App
Phon
praised: Thre
ne: 510-468
ee Hypothetic
8-9219
cal One-Acre

e Lots, One fo
or Each Zip C
fschm
Code, Santa Cl
midt@valu
lara, CA
uationconsu
ultant.net
5 55

INDUSTRIAL LAND COMPARABLE SAHS
ILIMI:NT OF ADJUSIMINI SUBJECT COMPAR...IBLE 1-1 COMPARABLE 1-2 COMP.>IBABLE 1-3 COl.i.IPARABLE 1-4 COMPARABLE 1-S ADDRE88 Average Street 2225 Illw t.rn Ave 2 5 1.1:i.tt:i.n Ave 535 &. 5 5 L:i.d~trial Ave 365 Reoo St Doyle Ro.a &. Lawrence Expre;5;way &Jnt.a Clara &Jnt.a Clara &Jnt.a CLar.a 83n fose &Jnt.a Clara 83n Jose ,_ - AP N 22 - 0-119 224--10-115 23 7-30-020 & 025 230-4 -105 33 1-19 -015 SELLER Pmj:ect 3 3 LLC LVP 11..'w t:i.n Ave A ;.c;oc LL.C Fr.l.11k J. & Le;:lie A. M.1.11gi.one Reoo Stfeet Asc;oci..te. Vop Ref Doyle LLC BUYER 2225 _ •w t:i.n Propei-ty LLC 2 7S Ma:rt:i.n Pfopei-ty LLC LBA RVI Company XL.IV LLC Pn l;;perou;-. Cmgi. Holdi.ny.. 1 LLC Ha:rker School SALE! PRICE! S23,250,0{t0 13 ,,90-0,,00-0 12,.300,000 S5 ,3 5 S ,,000 5,100 ,00{1 D OCUMENT NID.'ffiER. 25195 361 2 50204 1 2 90232.3 24721353 2.55 77 BONDS ASSUMED I SF S0,00 S0,00 S0,00 S0,00 00,00
TOTAL COST TO BUYER / SF $15'7.,03, $18:9 .. 94- $81.17 $104 .. 7,o $114.38

TRANSACITO NAL ADJUSTMINTS
RE..,U, PROPER.TI:- RIGHTS CONVE!"r'"ED Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple -ADJl]STMEl•,T 0,00% 0 .00% 0 ,00% 0 .00%, 0 .00% FINA NCIN G T ERMS Convention.al AllCaclt Convention.al AllCatli All Catli AD.JllSThfENT 0,00% 0 .00% 0,00% 0 .00% 0 .00%
COND m ONS OF SALE! Amt's-Leng th .ium's-Leng th Amt's-Length Amt's-Leng th .ium's-Len gth AD.JllSTMENT 0,00'% 0 .00% 0 ,00% 0 .00¼ 0 .00%
ADDmONA L COSTS TO BUYER Demolition Offu,t Demolition Om:et Demolition Offset None None ADJl]SlMENT 0.00% 0 .00% 0 ,00% 0 .00°/4 0 .00%
CONTRIBUTO RY .,U,UE! OF IMPROVEMENT S None None None y ·2 ,.14-5SF None AD.JllSTilofENT 0,00'% 0 .00¼ 0 ,00% -2 .53% 0 .00'%
CLOSE! OF ESCROW 5 l7 l 11 n JJ?fl?.O l ')l'.)fln_,023 ,_ - P' TIME OF S.,U,E! I M.t\RKET COND m ON Deoem !)er 31,, 2023 ND fane :2021 Sep tem!)er 2020 Septem!)er 2020 Unkno wn ,_ P' MO'S FROM SALE THROUGH Dec. 3 1,, 2020 0 0 3 3 0 AD.JllSTMEJVT@ ·% PER M Ol"lTH
,..
0 . 5% " 0,00°/2 .. 0 .00% " 2 .25% ., 2.25% ., 0 .00%
MONTiiS FROM START l Q-2021 THROUG H 4-Q-2021 0 ,6 12 12 P' 0 ... 0 .00% ... - 0.00'% r - 0 .00% ... - 0 .00% r
- 0 .00°/4 P' -AD.JllSTME,VT@ % PER MOl\'Tll 0 .00%
MONTiiS FROM START l Q-2022 THROUGH 4-Q-2022 2 2 12 2 .. 0 AD.JllSTME,\ T@ % PER M Ol\'Tll
,..
0 .00% " 0.(H)'% r 0 .00% " 0J}0% ., 0 .00% P' 0 .00%
MONTiiS FROM START Ql -2023 THROUG H 4-Q-2023 12 12 12 12 0 AD.JllSTMENI' @ % PER M Oi\ 'Tll 0 .00¼ .. 0.00°/2 0 .001. 0 .00% 0 .00°/2 0 .00% ADJUSTID PR.IOI: I SF $15'7.,,1)13, $18:9 .. 94- $83,00 $8'.2.94 $114.38 LOCATIO NAL ADJUSTMI:NTS
E,WQSUR EIVISIBILITY Average S:imi.la:r Simi.la:! S11p/Fwy S:imila:r Simi.la:! ACCESS Average S:imi.la:r Simila:r Simi.la:! S:imi.la:r Simi.la:! NEIGHBORHOOD AP PEAL Average S:imi.la:r Simi1a:r Inferim S:imi.la:r fuferim ZIPCO DE! 950 50 950 50 950 50 9 5112 950 50 9 5H 9
O VERALL LO CATI ONAL RATING Simi.la:! Simi.la:! fuferim Sw1i.la:r fuferim PHYSICAL & USE/ZONING ADJUSnaNIS
PARCEL SIZE (ACRES) 1.0 0 4 .13 1.,68 3.,62 1.17 1.02
P.~CE!L SIZE (SF) 3 ,.56{1 9 ,903 73 ,131 15 ,63 7 5 ,, 4-4-,,59{1 UTILITY Average Simila:r Simi.la:! Simi.la:r Simi.la:r Simi.la:! OFF-SITES F:i.niclied L-.ot S:imi.1a:r Simila:r Simi.la:! S:imi.la:r Simi.la:! ,_ - INTEND ED USE! L:i.c.u:c;trial Llc.u;-;.trial Inc!u;-;.tri.tl L:i.c!~tri.tl Pa:rk:i.ng ~ m School ehi.cles ,_ -ZONING Heavy Ioo~t fia.1 Ligh t L:i.d~trial Ligh t fudu;stria.1 Heavy fuc.'u.strial Light fu1fac;t rial Ligh t loo11strial GENERAL PLAN Light fuc.'u.strial L-.o,v L:i.tensity Office/R &D Low futen s:i.ty Offi.ce/R.&.D Heavy fuc.'u,trial Light lru!:ll8trial Light fuc!u;-;.trial O VERALL PHYSICAL & USE/ZONING RATING S:imi.la:r Si;-perim L:i.ferim fuferim L:i.ferim O VIR.ALL RATING-SUBJI!CT SHOULD SILL FOR SllfilAR LESS M ORE M ORE M ORE 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 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 one sale that was improved with a building that c ontributed value to th e selling price:ComparableI-4. 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 th e 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 B oulevard in Santa Clara (not included in the sales grid) is also a data center land sale th at 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.

Market conditions adjustments were applied at th e rate concluded to in the Market Conditions section.Like the commercial sales grid, locationa l 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 cons idered 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 devel op a three story 80,000 square foot data center with a reported 9MW capacity. The selling agent re ported that the property sold entitled and has a “will serve letter’ from Silicon Valley Power. These sales were adjusted downward for the entitlements. 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] 57 Conclusion

Following the adjustments discussed above and considering the overall rating comparison for each comparable, the unit values of the most recent comparablessuggested 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 we ighted average based on the land area of the total sales in Santa Clara in 2023 by property type. The information was obtained from Old Republic Title Company (ORTC). It was an extraordinary assumpti on of this appraisal that the land areas provided by Old Republic Title Company were accurate.

ORTCreported a total of 686sale transactions in the city of Santa Clara in the calendar year 2023.

The 2023 salesincluded 24 commercial sales, 15 industrial sales, 386 resi dential single-family sales, 25 2-4 residential unit sales, 5 vacant sa les, and 231medium to high-density residential sales which comprised residential unit sales greater than 5 units, condominiums, and townhomes.

The 2023 sales volume shows a decline when compar ed to the1,064 total sa le transactions in 2022 and the 1,442total sale transactions in 2021.

Residential transactions included single famil y, townhomes, and condominiums, 2 to 4 unit, and residential units greater than 5 units. Historically, the total residential sales component comprised the majority of the land area sold. However, as shown in the next table thecommercial and industrial sales increased comprisingabout half of the total land area sold in the city in 2023. This is due primarily to the purch ase of the former Owens Corn ing factory by Amazon. This improved property at 960 Central Expressway is a 41.9 acre industrial complex that was used for more than 70 years by the maker of fibergla ss insulation and roofing products.The median residential selling price in 2023 in the city of Santa Clara was genera lly increasing throughout the first half of 2023 and generally trending downwar ds in the last half of 2023. This resulted in slightly higher residential unit values for 2023.Industrial and commercial land values were unchanged in both 2022 and 2023. In 2023, the combination of higher interest rates and expected slower economic growth has impacted the market . All these factors resu lted in only slight 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 changes to the 2023 values for the hypothetical one-acre lots for each zip code compared to 2022.This is congruent with overall market trends over the last year.

The total number of land square feet (SF) sale s (broken out by property t ype) is reflected in the next table:

Old Republic Title Company provided the data depicted in the preceding 2023 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 gr ouped 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 50.04% of th e total while reside ntial sales accounted for about 49.96% of the total.

Conclusion

The Total Percent in the previ ous table was applied to the appropriate categories for each property type. Since the data pr ovided by the title company did not segregate medium and high- density residential, we split the total percenta ge evenly between the two densities (9.97% /2 =

4.985% to each). As shown in the next table, the appropriate weighted values are summed to produce the average valueof a hypothetical 1-acre lot in the 95050 zip code:
2023 City of Santa Clara Sales
Sale Type Land SF Total Percent
Co=ei-ciaJ 1,032,134 13.93%
Industrial 2,676,581 36.11%
Very l. ow Density Residential 2,778,344 37.48%
l. ow Density Residential 186,371 2.51%
M edium to High Density Residential 738,928 9.97%
Total 7,412,358 100.00%
Somce: Old Repub lic Title Compan y
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

Average Value of a Hypothetical 1-Acre
Lot in the 95050 Zip Code: $5,455,000 (Rounded)

AVERAGE VALUE ESTIMATE IN 95051 ZIP CODE

We estimated the value of 1 acre of land fo r 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 informa tion. We also considered differe nces in values/rents for the commercial and industrial uses, a nd comparedmedian selling prices and rents for the residential uses.

Residential Difference

Market participants and selli ng prices provided support that re sidential prices in the 95051 zip code are generally highercompared to the 95050 zip code. Some brokers believed that the 95050 area was slightly better due to Santa Clara Univ ersity 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 Uni on 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 Expressw ay, which bisects 95050 and 95051.One market participant opined that the neighborhoods in 95051 were generally safer a nd that insurance premiums were lower rendering 95051 to be more desirable. Recent residential yearly- summarymedian prices/SFand Year End 2023median prices/SFbetween the 95050 and 95051 zip codes, as reported by DQ News /CoreLogic and MLS Listings, indicated the following:

2023 VALUES FOR 95050 ZIP CODE SUM:U\RY
Land Use Ptice pet· SF Ptice pet· An·e x Weighted Average = Weighted Value Very Low Densit y Residential $ 120.00 $5,227,200 X 37.48 % = $1,959,155 Low Density Residentfal $ 125.00 $5,445,000 X 1.5 1% = $H6,670 I l\.lediwn Density Residential $ 150.00 $6,534,000 X 4.985% = $325 ,720 High Densit y Residential $ 190.00 $8,276,400 X 4.985% = $4 12,579 Commet·cial $95.00 $4,138,200 X 13.93% = $576,45 1
Industri al $130.00 $5,662,800 X 36. 11% = .$2,044, 837 TOTAL A 'VIRAGI VALUI PIR ACRI SS.455.412
Real

Fran

The ch
95051
opinio

In th
e
been h
about
sales t
new c
produ
marke

l Estate App
k Schmidt
hart above in
1, corrobora t
ons of marke
e next table,
higher than
10% higher
transaction,
construction.
uct in-house
eting control
raised: Three
& Associa
ndicates that
ting the ge n
et participant
based on da
zip code 95
r than 9505 0
MLS only r
This is bec
without usin
l to the build
e Hypothetica
ates Phon
t the median
neral conse n
ts that 95050
ata reported
050. In the

0.However, u
reports listin
ause builder
ng MLS, w h
der.
al One-Acre L

ne: 510-468-9
n selling pric
nsus among m
0 rates inferi
by the MLS
most recent
unlike DQ N
ngs marketed
rs, in the cu r
hich is pro b
Lots, One for
9219 fschm i
ce/SFhas hist
market part i
ior to 95051
S the median
year the 2 0
News/CoreL
d on MLS, w
rrent market
bably more c
Each Zip Co
idt@valuatio
torically bee
icipants. T h
.
n price in 9 5
023 median p
Logic which
which often
t environmen
cost effectiv
ode, Santa Cla
onconsultant.
en higher in z
his data sup p
5051 has hist
price for 95 0
reports all r
does not in c
nt, oftenmark
ve and garn e
ara, CA
.net 60

zip code
ports the
torically
051 was
recorded
clude all
ket their
ers more
Sl ,200
Sl ,000
s aoo
S6oo
S4oo
s200
so
2019 2020
■ 95 0 5 0
2021
■ 95 0 5 1
2022
95054
202 3
Real

Fran
Based
by his
were 1

Comm

We di
along
the p
r
asking
$3.14/
proper
rents f
in 95 0
vacan
inferio

Indus

Amon
R&D
Furth
e
Lawre
proper
compa
rental
about
consid
of the
compa

l Estate App
k Schmidt
d on market
storic DQ N

10.0% highe
mercial Diff
iscovered tha
El Camino R
rimary com m
g rents fo r
/SF/Month i
rties was $ 4
for office on
051.Based o
ncy rate di ff
orto 95050.
strial Differ
ng industrial
and higher
ermore, ab o
ence Expre s
rties, and p
arison of th e
rates were
equal and r
deration for
e market, w e
ared to 9505
raised: Three
& Associa
feedback,his
News/CoreLo
er than zip co
ference
at commerci
Real and Ste
mercial cor r
r retail be t
in 95051. C

4.44/SF/Mon
nly between t
on market d a
fferences w e
ence
properties,
intensity o f
out65 acres o
ssway, are c
pushing inc r
e average r e
equal in 9 5
elatively un
differences
e concluded

50. e Hypothetica
ates Phon
storical norm
ogic data, w
ode 95050.
ial land valu
evens Creek
ridors in S a
tween thes
CoStar repo r
nth in 9505 0
these zip cod
ata, rental r
e conclude d
much of the
ffice uses, a
of industrial
converting t
reasing de m
ental rate p e
5051 during
changed in 2
in asking r e
that industr
al One-Acre L

ne: 510-468-9

ms, and giv i
we concluded
ues are gener
Blvd. within
anta Clara.
e zip cod e
rted that th e
0 vs. $3.87/ S
des were $4
rates differe n
d that com m
e product in
and greater
lands in t h
to residenti a
mand and v
er SF, as co m
2022 ($2.3 3
2023 ($2.27
ents, historic
rial land pri c
Lots, One for
9219 fschm i
ing more w e
d 2023 resi d
rally similar
n the 95050
CoStar rep o
es were $
e 4Q 2023 a
SF/Month i n
.75/SF/Mon
nces, histor i
mercial lan d
the 95051 z
floor area r a
he 95051 z i
al uses, re d
value for i n
mpiled by C
3/SF in 95 0
7/SF in 9505
c selling pri c
ces rated a b
Each Zip Co
idt@valuatio
eight to the M
dential prices
amongcomm
and 95051 z
orted that t h

2.43/SF/Mo
average as k
n 95051. T h
nth in 95050
ic selling p r
d values i n
ip code is bu
atios, ratin g
ip code, ar o
ducing the s
ndustrial at
CoStar, show
050 vs. $2.3
0 vs. $2.31/
ce difference
bout equal i n
ode, Santa Cla
onconsultant.

MLS data,su
s in zip co d
mercial uses
zip codes, w
he 4Q 202 3
nth in 95 0
king rents f o
he 4Q 2022
vs. $4.08/SF
rice differen c
n 95051 rat
uilt as, or al
g superior t o
ound Kifer
supply of i n
the same t
wed that the
3/SF in 95 0
/SF in 95051
es, and the o
n the95051 z
ara, CA
.net 61

upported
de 95051
s located
which are
3average
050 vs.
or office
average
F/Month
ces, and
ed 15%
lows for
o 95050.

Rd and
ndustrial
time. A
average
051) and
1). After
opinions
zip code
Median Sales Ptioe . . % Change pet· % Change pet· Housing Type Zip Code 21>-21 2°022 21123 Month Last l2 Month Last 2-Yearn SFR, Con do, & 95050 Sl,350,000 Sl, 2,500 St , 72,SOO 0.00% 0.38% To,,rnho u se 95051 Sl,550,000 St,650,000 St,.600,000 -02 5% 0.13% 95054 Sl,290,000 St,278,044 St ,377)00 0 .. 65% 0.18%
Sout·oe : Loc-.a.l MLS
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 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 th e 95051 zip code was adjusted and the appropriate weighted values are summed to produce the average value of a hypotheti cal 1-acre lot in the 95051 zip code:

Average Value of Hypothetical 1-Acre
Lotin the 95051 Zip Code: $5,650,000 (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.

Residential Difference

Median and average selling pric es provided support that the re sidential pricesin the 95054 zip code were generally sim ilaror a little inferior when comp ared 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 te nds to rate a litt le inferior. The 95054 zip code is affected by airport noise and has a higher concentration of higher-density housing units; there is less detached 95051 ZIP CODE LAND USE VALUES & AVERA.GE 2023 VA.LUE PER ACRE Land Us.e 95050 Anra:ge Adjustment 95051 Average
I = Price h\cre Weighted Fa,ctor Price per Acre
Very Low Densit y Residenrial $ 1,959, 155 I 110_0% = $2,155,071 Lo,w Density Residential $136 ,670 I 110_0% = $ 150,337 l\,lediwu Densit y Residential $325,720 I 110_0% = $358,29"2 High Density Residential $4 12,579 I 110_0% = $453 ,837 Commercial $576,45 1 I 85_0% = $489 ,983
fudu.snial $2,044,837 I 100_0% = $2,044,837
TOTAL AVERA.GE lilALUE PER ACRE '$5.~652 ,.3,57
Real

Fran
single
units.
by DQ

The m
News/
2019
differe
suppo

The n

l Estate App
k Schmidt
e-family sele
Recent year
Q News /Cor
median sellin
/CoreLogic
and about 2
ence was a b
orts the opini
ext table is t
raised: Three
& Associa
ection and t h
rly-summary
reLogic and
ng prices/SFh
data indica t
.1% lower i
bout 15% lo
ions of mark
the same ML
e Hypothetica
ates Phon
herefore few
y median p r
MLS Listin
has been his
ted that the
in 2020. In 2
ower. In 20 2
ket participan
LS data displ
al One-Acre L

ne: 510-468-9
wer traditio n
rices/SFfor th
gs, indicated
storically hig
aggregate m
2021 the di f
23 the 9505 4
nts that 9505
layed above
Lots, One for
9219 fschm i
nal residentia
he 95050 a n
d the followi
gher in the 9
median pric
fference was
4 zip code w
54 generally
in the previ
Each Zip Co
idt@valuatio
al neighborh
nd 95054 zi p
ing:
95050 zip co
e in 95054
s about 2.7 %
was about 7
rates inferio
ous section.
ode, Santa Cla
onconsultant.
hoods with d
p codes, as r
ode. The hist
was 5.0% l
% lower. In 2
7% lower. T
or to 95050.

ara, CA
.net 63
detached
reported

toric DQ
lower in
2022 the
This data
$1,200
$1,000
$800
$600
$400
$200
$0
20 19 2020
■ 9 5 0 5 0
202 1
■ 9 5 0 5 1
2022
9 50 54
2023
Real

Fran

Based
weigh
new a
95054

Comm

Most
hotel
Clara.
higher
additio
Conve
Class
sever
a
custom

A co m
reveal
$4.53/
averag
$4.75/
only b
The 9
rental
code,
conclu
value.

Indus

Amon
R&D
area
r
l Estate App
k Schmidt
d on market
ht to the his t
and resale r e
4 werehistori
mercial Diff
of the new
uses, howe v
. This area o
r intensity u
on of Levi’
ention Cent e
A office is
al mixed-use
mers.
mparison o f
led that the a
/SFin 9505 0
ge rents fo r
/SF in 9505
between thes
5050 rental
rates. Based
and conside
uded that a
.
strial Differ
ng industrial
and higher i
ratios in 95 0
raised: Three
& Associa
data, histo r
torical norm
esidential c o
ically lower
ference
commercial
ver, there a
of Silicon V
uses and pr o
s Stadium a
er create ad d
located wi t
e projects in
f the histo r
average rent
0, a differe n
r office on l

0. This patt
se zip code s
rate is influe
d on the dat a
ering that the
downwarda
ence
properties,
intensity off
054. Most m
e Hypothetica
ates Phon
rical norms,
s, supported
onstruction),
than zip cod
planned or
are several m
Valley includ
operties of fe
and the dra w
ditional sy n
thin this zip
process, wh
ric 3-year a
ts between th
nce of abo u
ly between
ern was rep
s being abo u
enced by new
a, including
ere is a great
adjustment o
much of the
fice uses, rati
market partici
al One-Acre L

ne: 510-468-9
the opinio n
d by historic
we conclu d
de95050, on
proposed fo
mixed-use p
des the Gol d
fering freew
w of Great
nergies for t h
code and m
hich if built-
average re n
hese zip cod
ut 4.4% base
these zip c
eated in th e
ut 8% lower
wer retail co
broker estim
ter proportio
of 10% wa s
e product in
ing superior
ipants report
Lots, One for
9219 fschm i
ns of marke
DQ News/C
ded that res i
the order of
or the 9505 4
projects in p
den Triangle
ay visibilit y
America t h
his zip cod e
more is pla n
out, will add
ntal rate (2 0
des was sligh
ed on offic e
codes were
e 4Q 2023 w
in 95054, $
nstructionwh
mates and re
on of office u
s warranted
the 95054 z
r to 95050. T
ted higher p
Each Zip Co
idt@valuatio
t participan t
CoreLogic d
idential lan d
f 5%.
4 zip code c
process, no t
e and has h i
y (U.S. 101
heme park a
e. The great e
nned. As no t
d both retail
018-2020)co
htly lower in
e and retail
lower in 9
with the ave r
$4.13/SF vs.
hich typicall
ental rate dif
uses compar
for 95054 fo
ip code is bu
This also allo
prices in 95 0
ode, Santa Cla
onconsultant.
ts, and givi n
data (which
d prices in z
comprises of
tably Relat e
istorically su
and CA-2 3
and the San
est concent r
ted above, t
and new res
ompiled by
95054, $4.3
uses.The 4
5054, $4.2 5
rage rents f o
$4.44/SF in
ly command
fferences in
red to retail u
for commer c
uilt as, or al
ows for grea
054 due pri m
ara, CA
.net 64

ng more
includes
zip code
ffice and
ed Santa
upported
37). The
ta Clara
ration of
there are
sidential
CoStar,
33/SFvs.
4Q 2022
5/SF vs.
or office
n 95050.
ds higher
each zip
uses, we
cial land
lows for
ater floor
marily to
Median Sales Ptioe . . % Change pet· % Change pet· Housing Type Zip Code 21>-21 2°022 21123 Month Last l2 Month Last 2-Yearn SFR, Con do, & 95050 Sl,350,000 Sl, 2,500 St , 72,SOO 0.00% 0.38% To,,rnho u se 95051 Sl,550,000 St,650,000 St,.600,000 -02 5% 0.13% 95054 Sl,290,000 St,278,044 St ,377)00 0 .. 65% 0.18%
Sout·oe : Loc-.a.l MLS
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 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 95050vs. $2.33/SF in 95054) and only slightly different in 2023($2.27/SF in 95050 vs. $2.19/SF in 95054). After consideration for di fferences in asking rents, historic selling price differences, and the opinions of the market, we concluded that indust rial 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 adjust ed price per acre for each land use in the 95054 zip code was adjusted and the appropriate weig hted 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
Lotin the 95054 Zip Code: $5,255,000 (Rounded)

RECONCILIATION AND OPINION OF AVERAGE VALUES

The sales comparison approach was the appropriate value approach for each land use. Total sales statistics in 2023 revealed that about 50.04% of the total sales in the city by land area were commercial and industrial transactions and the ot her 49.96% were residential. This represents a greater percentage of commercial and industrial transactions by land area than in prior years.

Data provided by Old Republic Title Company shows only 386 single family home sales in 2023 compared to 516 single family home sales in 2022. However, the median residential selling price in 2023 in the city of Santa Cl ara was generally increasing thr oughout the first ha lf of 2023 and generally trending downwards in the last half of 2023. This resulted in slightly higher residential unit values for 2023.Industrial and commercial land values were unchanged in both 2022 and 2023. In 2023, the combination of higher interest rates and expected slower economic growth has 95054 Z1P CODE LAND USE VALUES & A VER.\GE 211>23 VALUE PER ACRE Land Use 95050 Average Adjustment 95D54 Average ][ = Price/Acre Weighted Factor Price pe.r An·e Ve.tJ' Lo,w Densicy Residen tial $ 1,959,155 ][ 95.0% = $ 1,861,197 Lo,w Densi cy Residen tial $ 136,670 ][ 95.0% = $ 129,837 High Densi ty Res idential $325,720 ][ 95.0% = $309 ,434 l1"1ed!ium Dens .icy Residen tial $4 12, 579 ][ 95.0% = $39 1,950 Comme.rdal $576 ,45 1 ][ 90.0% = $5 18,806
Indu strial $2,044,837 ][ 100.0% = $2,044,837
TOTAL AVERAGE VALUE PER ACRE '$5,256~&61
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 impacted the market. All these factors resulted in only slight changes to the 2023 values for the hypothetical one-acre lots for each zip code compared to 2022.

We concluded to the following average value for each zip code on December 31, 2023, the effective date of value opinion:

Opinion of Average Value of a 1-Acre
Lot in the 95050 Zip Code: $5,455,000 (Rounded)

(Five Million FourHundredFifty FiveThousand Dollars)

Opinion of Average Value of a 1-Acre
Lot in the 95051 Zip Code: $5,650,000 (Rounded)

(Five Million Six Hundred Fifty Thousand Dollars)

Opinion of Average Value of a1-Acre
Lot in the 95054 Zip Code: $5,255,000 (Rounded)

(FiveMillion Two Hundred Fifty FiveThousand Dollars)

ADDENDA

 Old Republic Title Company 2022 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 Comparables
 Land Sale Comparable Parcel Maps
 Brokerage Reports (on file)
 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] 67

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 pa rkland 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 appraisa l, 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] 68 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] 69 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] 70

VERY LOW-DENSITY RESIDENTIAL SALE COMPARABLE LOCATION MAP

Moffett Federal Air Field
nt Ave
ltos
VLD-2
»-'r-----11L---1.. _ _j~--4~ tloJ=,leJ'li:LliC1.t----- ...j 159 Brookside Ave San Jose, CA 95117
°Cupertino
c.-.lli.-,nP':° Rd -
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

HIGH-DENSITY RESIDENTIAL SALE COMPARABLE LOCATION MAP

cho San
ntonio
ntyPark
,
°Cupertino
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

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 73

INDUSTRIAL SALE COMPARABLE LOCATION MAP

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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] 78

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 79

COMPARABLE LAND SALE PARCEL MAPS

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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] 80

COMPARABLE LAND SALE PARCEL MAPS

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 81

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 82

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 83

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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] 84

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 85

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 86

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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] 87 FRANK E. SCHMIDT, MAI, SRA
CURRICULUM VITAE, January 2024

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 es tate 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-Presco tt Group, a commercial apprai sal 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 propert y 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 a ssist the city’s task force in the process of setting Parkland Dedication fees.

Mr. Schmidt has served on several professional committees th roughout his career, including the International Right-of- Way 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 S a n F r a n c i s c o B a y A r e a
2018 Carneghi-Nakasako, Appraiser Consultant
S a n J o s e , C A
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 C u p e r t i n o , C A
1/76 to 6/76: Staff Appr aiser, American Savings & Loan S a n J o s e , C A
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
Attachment 2

Table A
Proposed Parkland Dedic.ation In Lieu Fee Schedule- FY2024-25 95050
Annlk.able Fee Type Calculation MFA
S/Acre (valuation date 12-31-2023) A S5,455,000
Par!< Acres/ 1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C =Ax B Sl4,183,000
Cost per capita D = C/1000 Sl4,183
Density Single Family (Census ) Dx 2.84 S40,280
Impro vement value (2023: S3,818 + 9.4%) $4,177 X 2.84 Sll,863 Admin Charge 0.02 Sl,043 ..................................... . .....................................

Total Single Family (SF) Dwelling Fee S53,186
Density Multi Family (Census ) D x 1.92 S27,231
Impro vement value (2023: S3,818 + 9.4%) $4,177 x 1.92 S8,020 S705 .................................... Admin Charge ................ .0:0.2_················======= Total Multi Family ~m Dwelline Fee S35,9S6
TableB
Proposed Parkland Dedic.ation In Lieu Fee Schedule- fYl.024-25 95051
A••lk.able Fee T 1-oe
S/Acre (valuation date 12-31-2023)
Par!< Acres/ 1000 Pop. LOS Standard
Total Cost per 1,000
Cost per capita
Density Single Family (Census )
Impro vement value (2023: S3,818 + 9.4%)
..................................... Admin.Charge
Total Single Family (SF) Dwelling Fee
Density Multi Family (Census )
Impro vement value (2023: S3,818 + 9.4%)
Admin Charge
Total Multi Family /MFl Dwelline Fee
Calculation
A
B
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D = C/1000
Dx 2.84
$4,177 X 2.84

0.02 . .....................................

Dx 1.92
$4,177 X J.92

0.02 TableC
MFA
S5,650,000

2.6 Sl4,690,000
Sl4,690
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Sll,863
Sl,072
SS4,655
S28,205
S8,020
S724
$36,9 49
Proposed Parkland Dedic.ation In Lieu Fee Schedule- fYl.024-25 95054
Annlk.able Fee Type Calculation MFA
S/Acre (valuation date 12-31-2023) A S5,255,000
Par!< Acres/ 1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C =Ax B Sl3,663,000
Cost per capita D = C/1000 Sl3,663
Dnim by
S5,455,000
3 Sl6,365,000
Sl6,365
S46,477
Sll,863
Sl,167
S59,S07
S31,421
S8,020
S789
S40,230
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3 Sl6,950,000
Sl6,950
S48,138
Sll,863
Sl,200
S61,201
S32,544
S8,020
S811
S41,375
Dnim by
S5,255,000
3 Sl5,765,000
Sl5,765
Density Single Family (Census ) D x 2.84 S38,803 S44,773 Impro vement value (2023: S3,818 + 9.4%) S4,177x2.84 Sll,863 Sll,863 ..................................... Admin Charge ................ 0.·.q?._···············==== S=l"',0=1=3 ====S=I,., I .. 393 Total Single Family (SF) Dwelling Fee S51,679 S57,769
Density Multi Family (Census ) D x 1.92 S26,233 S30,269 Impro vement value (2023: S3,818 + 9.4%) S4,l 77xl.92 S8,020 S8,020 .................................... Admin Charge ................ .0:0.2_················==== S=6=85=====S=7=66=1 Total Multi Family ~m Dwelline Fee $34,938 S39,055
Resolution/ Fees Due In Lieu of Parkland Dedication for New Residential Development FY2023/24 Rev: 4/19/2022

RESOLUTION NO. 23-9220

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 PER-

ACRE 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 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, //

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

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,
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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

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.

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

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.
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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.

7. 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 18TH DAY OF APRIL, 2023 , BY THE FOLLOWING VOTE:

AYES : COUNCILORS: Becker, Chahal, Hardy, Jain, and Watanabe, and Mayor Gillmor
NOES: COUNCILORS :

ABSENT: COUNCILORS:

ABSTAINED : COUNCILORS:

Attachments incorporated by reference:

Park
None
None

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

2. Fee Calculation Tables A, B, C

NORA PIMENTEL, C

ASSISTANT CITY CLERK

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

Attachment 1
Santa Clara Land Valuation Appraisal Report 12-3 1-22

ANNUAL LAND VALUATION APPRAISAL REPORT
VAL

UATION 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.” 1I 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.

12020-2021Uniform 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

22020-2021Uniform Standards of Professional Appraisal Practice (USA, The Appraisal Foundation,2020) Zip Code 2022 Ave1rage Value per Ac1re
95050 $5 500 000 ., .,
95051 $5,840 ,000
95054 $5 ,,240, ,000
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, High-
Density 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 :

Use or Hypothetical Lot General Plan Highest & Best Use \ ery Low Density Residential Very Low Density Residential Very Low Density Residential Low Density Residential Low Density Residential Low Density Residential Medium Density Residential Medium Density Residential Medium Density Residential High Dens ity Residential High Density Residential High Density Residential Commercial Regional Co=ercial Hold for Development of a Co=ercial Building Industrial Light Industrial Industrial Building
Zip Code 2022 Ave1rage Value per Ac1re
95050 $5 500 000 ., .,
95051 $5,840,000
95054 $5,,240, ,000
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 high- tech 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, CA- 85, 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.

Real Estate Appraised: Three H

Frank Schmidt & Associates
Source: zipma

Conclusion

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MARKET CONDITIONS

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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.” Multi- family 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 4Q- 2022 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.

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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] 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:

.Supply and Demand Sales Trends
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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] 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.

R&D Average Asking Rate & Vacancy Rate

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OVERALL VACANCY & ASKING RENT

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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] 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 Sunnyvale- Cupertino 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:

Reta il Asking Rates and Vacancy
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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 COVID- 19 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 4Q- 2021. 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.

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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] 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.

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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.

Historical Supply Growth
MW
120
100
80 60
40 20
Vacancy
10%
8%
6%
4%
2%
0 0%
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Historical Demand Growth
MW
70 60
50 40
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10 Vacancy
12%
10%
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0 ~-~-~-~~~~-~~~~~~-~ ~
2015 2016 2017 2018 2019 2020 2021 H1 2022
• Absorption • Vacancy
Soorc:e CBRE Research. CBRE Data cent-er SOl.rtbns, Hl 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, single- family 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 in fluence 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.

FRED~ - S&P/Case ♦ Shiller CA♦ San Francisco Home Price Index 400
380
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g 340
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0 320
N
~ 300
I 280
260
240
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Jan 2018 Jul 2018 Jan 2019
Shaded areas indicate U.S. recessions .

J ul2019 Jan 2020 Jul2020 Jan 2021 Jul 2021 Jan 2022 Jul 2022 Source: S&P Dow Jones Indices LLC fred.stlouisfed.o rg
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 Market Rate Indicators (Y/V)
Categories Class A Class B
Going In Cap Rate (%!
◄► ◄► Aski ng Rent ($/Unit) ..... .....

Vacancy Rate(%} ..... .....

Going In Cap Rate Comparisons (%1

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■ San Jose, CA
Vacancy Rates (%)

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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] 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:

2018 Year End Summary Sales
Community Zip Sales %Chg Median Price %Chg High Price $/SqFt %Chg San ta Clara 95050 380 -0.5% $1,184,5 00 24.4% $2,609,000 $959 20.3% Sa nta Clara 95051 484 -16.6% $ 1,358,000 17.0% $2,800 ,000 $ 1,04 3 13.2% Sa nta Clara 95054 1 85 -25.4% $1,250,000 23.3% $2,400,000 $823 14.5% 2019 Year End Summary Sales
Community Zip Sales %Chg Median Price %Chg 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 Sales %Chg Median Price %Chg High Price $/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% 2022 Year End Sumw,11-y Sales
CommDDity Zip Sales %Chg Median Price %Chg High Price S/SqFt %Chg Santa Clara 95050 258 -4 1-5% $1,472,500 14_2% $3,650,000 $1,024 19-4% Santa Clara 95051 4 83 -43-5% $1 ,630,000 9-4% S3,500,000 $1,119 22_7% Santa Clara 95054 138 -43_0% $1,278,044 1-8% $3,330,000 $887 11-7% 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 $2,000,000
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Townhouse/Condom inum
--95050 Med ian SP --95051 Median SP
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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] 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:

Median Sales Price
Housing Type Zip Code 2020 2021 2022 % Change per Month % Change per Month Last 12 Months Last 2 Years
SFR, Condo, 95050 $1,257,750 $1,350 ,000 $1,472 ,500 0.76% 0.71% & 95051 $1,390 ,000 $1,550 ,000 $1,630 ,000 0.43 % 0.72% Townhouse 95054 $1,2 12,500 $1,290 ,000 $1,278 ,044 -0.08% 0.23% Source: Local MLS
Med ian Sales Price For All Resident ial
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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 10 th 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-to- suit. 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
I I
Use of Hypothetica] Lot Highest & Best Use
Very Low Densirty Residentia] Very Low Density Res.identiiaJ Low Densirf) ResidentiaJ L-0w Densify Res.identiaJ
Medium Densify ResidentiaJ Medrom Density Res.identiall Digh Densirfy Residential High Density Res.idenuaJ
CommerciaJ Ho]d for Development of a. Commerdall Building lndustria] Indus.triaJ Building
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

\1'.RY LOW DL"NStn· COMPARABtr LAND SALIS

ADDRESS
APN
SELLER
BUYER
[LL\flNT or ADJU STMLl'ljl

DOCUMENT NUMBER

VERIFICATIO N SOURCE
ASSESS?-.1ENT BONDS
Nm.,mER OF UNITS
SALi I LISTING PRICI
SALi I OfTIRINC PRICI PIR SF
TRA.~SACl10!1lAL ADJUSD,IL.~IS

REAL PROPERTY RIGHTS CONVEYED
ADJlJSTME.NT
FINA.~CING TERMS
ADJVST,\IE.i.\·T
CONDmONS OF SALE
ADJlJST,\IE.i.\T
E.-'G>ENDITURES AFTER SALE
ADJlJST,\IE.i.\7

CLOSE OF ESCROW
TIME OF SALE I MARKET CONDmO N
ADJ PRICI PIR SF AITER TRANS.\Cl10NAL AD.JS
LO CATIONA L ADJUSTil'IThl S
E.-'G>OSURE f VISIBil..TIY
Ace=
APPE.Al..lSITE INFLUENCES

ZIP CODE
OVIR..\1.1. LOCA110N .. \l. R..-\TJNG
PHVSICAL ADJUSThlL"l\lS
SITE SIZE. (ACRES)

SITESIZE (SF)
UTILm·!ToPOGR.APHY
USI/ZO'.\lNG ADJUSD,IL.'a S
ZONING
GENER.Al PLAN
ALLO\VEO DENSITY (dwellin_;: units per xre)
Nu"l·IBER.OF ~ TI'S
EST/ .. \lffED f PROPOSED DU/ACRE

INTENDED USE
PARK FEE COMPO:,m,IT PER UNIT
~"TITI..E.\ ·IENTSTATUS
O\'IR..\1.1. PHY SIC.\l. & USI/ ZO~lNC R..-\TING
O\'IR..\1.1. R..U'INC-SUBJICT SHOULD Slll. FOR

SUBJICT
Aven_i:eStrHt
$.mt;iCun.
10 FHSimple
December 31, 2022
Aver:1.;e
Aven;e
Aven;e
95050

1.00 43,560
~t~gubr I 1 StrHt Front
\"eryLow Oeru.ityRu
upto 10
10 10.0
Residentul
S65,263
fus Zonin; & GP
COMPARABLE H .D-1
2303Gi;iner;iStrfft
$.mt;iC4n.
104-06 -037
Jose Trinid.ldNuno
Guner.U ST Ea.me UC
25354706
Broker , ?\U.S, Public: Record
None
S2,443 ,000
Fu Simple
Conventi~
Ann's-length
D=olition Offie1
Au_;ust 8, 2022
June2022
0 Simwr
Simwr
Simwr
95054
Inferior

0.386
S145.4!

0.O<f/4

0.O<f/4
o.w.-.
5141.93
16,800
~ungubr I 1 StrHt Front
Rl -6L
low Density Ru
8 to 19
6 15.6
4 RHidentW Units
SimiwfS60 ,658
fus Zoning & GP
s ·~
LIS S
CO:MPARABLE \1.0..!
159 Broobi~ Aveni;e
$.mt2CUn .
303-22-028
Domin_;:o 1992 R~ oc:..ib!e Trust
RMlj;inTrus1, e1.U
2459 7855
Broker, t,n.s, Public: Record
None
Sl,3 ! 5,000
596.1!
Fu Simple
Conventi~
COMPARABLE \l.D-3
3 159 ButteStrfft
$.mt2CUn .
290-04-044
\V.ulis 198 3 FMnily Trust
Cb.en_;:C&TuiLCb.Mi
24420940
Broker, }.,fi.S, Public: Rec:ord
None
2 S1,600,000
S110.9!
Fu Simple
AJIC,,h

0.O<f/4
Ann's-length Arm'i-Length/lmpfovement V.Ui;e

0.W. '. .9.33-,,
D=olition Offw,1 None
$ept"1?lber 2, 2020
Au;uu 2020
4 12
12 -4.80";'.
510-t.15
Simwr
Simwr
lnferior/S.m Tomu Expy
95050
Inferior

0.31 13,700
~tm_gul.u- I 1 Sm~et Front
Rl -8L
Very Low Deruity Ru
upto 10
l.0

6../
SFD+ADU
Superior!None
fud Zonin; md GP
Inferior
Much 4, 2020
Febrully2 020
10 12
12 12.0Cf.)
-4.80";)
5109 .. 86
Simwr
Simwr
Simwr
95051
Simiw

0.33 14,42:S
lnferior / Sllrre_gu4r l l StrHtFront
Rl -6L
Very Low Deruity Res
upto 10

2.0 6.0
Residentul - ADU
Superior!None
fud Zonin; md GP
Simwr
Simil:ar
COMPARABLE \l.0-4
1334MillerAve
$.mJose,
375-25-0:53
Sm•en K. Doi 20 11 Trust
Zlun_;:T 20
2496:5466
Buyer, Public R.ec:ord
None
3 SJ,100,000
S139.87
fHSimplt
AUC...di
Ann't.-Length
D=olition Offwt
May 18, 202 1
}.,wclt 202 1
0 12

0.~-.
o.oo-;-.

9.00, ..
-4_300;-_
5145 .. 14
Simwr
Simwr
Superior
95 129
Supfflor

0.:51
22,164
~tm_gu!u I 1 Street Front
Rl -8
Reiidentul Nei_;hborhood
upto 10

3.0 5.9
3 Residentul Units
SuperiodS27,300
fus Zonin; & GP
LISS
COMPAR.WLE HD-S
l348MillerA ve
$.mJose,
375-25-0:55
Li Shiofun_;:
2496 :5471
Buyer, Public Record
None
S3,Z3! ,000
S145.8!
Fu Simple
Allc,,h
D=olition Ofuet
MJ.yl8 , 202 1
}.,wclt202 1
0 0.O<f/4

0.O<f/4
0 .00,)
-4_300;-.

Simiw
Simiw
Superior
95 129
Supfflor

0.:51
5151..3!
22,164
~tm_gu,br I 1 StrHt Front
Rl -8
Reiiden1W Nei_;hborhood
upto 10

3.0 5.9
3 RHidentW Units
S1.--periorlS27,300
fus Zonin; & GP
s ·~
LIS S
C OlIPAR.WLE \l.D-6
4249 Ch~ey StrHt
$.mt:1.Cun.
104· 12-02:5 & 026
MulMie Muruon Rebello
MuutiBcitc!.!nUC
25297169
Broker, Subscription Svcs, Public Record
None
' S!,650,500
Fu Simple
AUC...di
Arm't.-Length
None
?\fay5 , 2022
Apri12022
0 Simiw
Simiw
Inferior
95054
lnffflor

0.:51
S119,31
o.oo-;-.
o.oo-;-.
o.oo-;-.
.3_200;-.
5115..49
22,216
Rec:tvifl,11..u' I 1 Street Front
Rl --61.

Very Low Deruity Res
upto 10

8.0 15.i
8or9unill
Simwr /S60,6:58
fud Zonin; ~d GP · No Appronh
Inferior
Sli hth-MORI
COMPAR...WLE HD-7
fun!IOflAvenue
$.mlose,
303-4 1-018

RROCAUC
B3.1.:htwi FMnily Trust
25326305
Broker, ?\·Il.S, Public: Rec:ord
None
S1,800,000
S119,0S
Fu Simple
AUC...sh
Arm't.-length
None
June2 7, 2022
June 2022
0 0.00, )
.2,40";)
Simiw
Simiw
Simiw
95 117
Simwr

0.35 5116.19
15,120
Sllrre_;ub.rl l StrHtFront
Rl -8
RMidentW Nei_;hborhood
upto 10

4.0 11.5
4 Residentul Units
Simwr /S60,6:58
fud Zonin_a: ~d GP · No Appro"ili
Simiw
Simil:ar
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

VERY LOW DENSITY COMPARABLE LAl'ID LISTINGS
ELEMENT OF ADJUSTMENT SUBJECT LISTING I LISTING OFFER 2a LISTING OFFER 2b ADDRESS A Yerage Street 1530-1540 Pomeroy Avenue Fillmore Street Fillmore Street Santa Clara Santa Clara Santa Clara Santa Clara ,_ -
APN 290-02-096 & 097 104-10-077 104-10-077
SELLER Maesumi/Pascual M.snisha Kamal Sitlani M.snisha Kamal Sitlani BUYER Listing Listing Listing
DOCUMENT NUMBER Listing Listing Listing
VERmCATION SOURCE Broker, MLS, Public Record Broker, MLS, Public Record Broker, MLS, Public Record ASSESSMENT BONDS None None None
NUMBER OF UNITS 10 s 4 4
SALE / U ST/N G PRJCE 54,600,000 Sl,100,000 S1,115,000
SALE / OFFERJNG PRJCE PER SF S220.00 Sll7.33 Sll8 .93
TRA..l'iSACTIONAL ADJUSTMENTS
REAL PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple Fee Simple Fee Simple ADJUSTMENT 0.00% 0.00% 0.00%
flNA_l'iCING TER-',.fS Listing Offer Offer
ADJUSTM.El'IT 0.00% 0.00% 0.00%
CONDmONS OF SALE Listing Offer Offer
ADJUSTM EN T -20.00%~ 0.00%~ 0.00%
EXPENDITURES AFTER SALE Listing Offer Offer
ADJUSTMEN T 000"/4 0.00"/o 0.00"/4
CLOSE OF ESCROW ,~ - Listing Offer Offer
TIME OF SALE / 1'.fARKET CONDmO N D=ber 31, 2022 D=ber2 022 November 2022 November 2022 MON1HS FROM START IQ-2022 TIIROUGH 4Q-2022 0 I I
ADJUS I?,IEN T (iij % PER MONlli -0.40% 0.00"/4 -0.40% -0.40% ADJ PRJCE PER SF AFTER TRANSACTIONAL ADJS Sl 76.00 Sll6 .86 SIIS .46

LOCATIONAL ADJUSTMENTS
EXPOSURE I VISIBILITY Average Similar Similar Similar
ACCESS Average Similar Similar Similar
APPEAL/SITE INFLUENCES/Approval, Average Superior Inferior Inferior ZIPCODE 95050 95051 95054 95054
OVERALL LOCATIONAL RATING Averae;e SunPnor Inferior Inferior PHYSICAL ADJUST!\,IENTS
SITE SIZE (ACRES) 1.00 0.480 0.215 0.215
SITE SIZE (SF) 43,560 20,909 9,375 9,375
UTILITY/fOPOGRAPHY Rectan_,;ular I I Street Front Rectan,;ular I I Street Front lrre_,;ular Rectan,;ular Comer I 2 F ronta~es lrrey;ular Rectan_,;ular Comer I 2 F ronta~es

USE/ZONING ADJUSTMENTS
ZONING R3-18D I A R3-18D I A R3-18D I A
GENERAL PU.1'1 Very Low Density Res Very Low Density Res I Community Very Low Density Res I Community Very Low Density Re, I C<>mmunity ALLOWED DENSITY (dwelling units per acre) upto 10 up to 10 upto 10 up to 10 NUMBER OF UNITS 10 8 4 4
ESTIMATED I PROPOSED DU/ACRE 10.0 16.1 18.6 18.6
INTENDED USE Residential 8 Residential Units Residential Residential PARK FEE COMPONENT PER UNIT S65,263 S65,263 S60,658 S60,65S ENlTTLE.i\.fENT STATUS Ha, Zonin~ & GP Had Zonin~ and GP & Approval, Had Zonin~ and GP Had Zonin~ and GP OVERALL PHYSICAL & USE/ZONING RATING Surw.rior Inferior Inferior OVERALL RATING-SUBJECT SHOULD SELL FOR LESS l\lORE MORE 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 low- density 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 $160.00
$155.00
SlS0.00
$145.00
$140 .00
$135.00
$130 .00
$125.00
$120 .00
$115.00
$110.00
$105.00
$100.00
$95.00
$90.00
SSS.00
SS0.00
2022 Comparable Price per Square Foot vs. Proposed DU/Ac -. ----♦ ----• .

Proposed Dwelling Units per Acre
.
-
----
,
•
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

mGH DL\'oJSITY COi\lPARABLI LA.t'"'JD SALES

ADDRESS
APN
SELLER
BUYER
ELBIE!\I or ADJUSTMEI"'il

DOCUMWT NUMBER
VERmCA TION SOURCE
EXPOSURE TO M'\RKET

NUMBER OF UNITS

SALE / U STING PRICE

SALE / OITERING PRICE PER SF
TR...\.NSACIIONAL ADJUSTMENTS
RE.Al PROPERIT RIGHTS CONVEYED

ADJUSTMENT
fINA .. N"CING TER!\olS

ADJUSTMENT
cmmmoNS OF SA!.£

ADJUSTMENT
EXPTh'DITURES AFTER SAU

ADJUSTMENT
Cl.OS£ OFESCROW
TIME OF SAU / MARKET cmmmo)J
MO:'<TIIS FRm~ START lQ-2019 TIIROUGH 4Q-2019
ADJUSTMENT @% PERMO Nffi
MO:'<TIIS FROM START lQ-2020 TIIROUGH 4Q-2020
ADJUSTMEN T @% PER MONTH
MO:'<TIIS FRO:.! START lQ-2021 TIIROUGH 4Q-2021
ADJUSTMENT @% PER MONTH
MO:-JTHS FROM STA.RT Ql-2022 lHROUGH 4Q--2022
ADJUSTMENT @% PER MONTH
ADJ PRICI ISF AFTER lR\.ll{SACTIONAL ADJS
LOCA l!ONAL ADJUSBII N1S
EXPOSURE I VISffill.ITY
ACCESS

APPEAL/SITE INRUENCES

ZIP CODE
O\'IR\LLLOCATIONALR...\Tll\"G

PHYSICAL ADJUSTMENTS
sm SIZE (ACRES)
sm SIZE (SF)
UTil.ITYITOPOGRAPHY
USE.aO:NING ADJUSTMENTS
20:<ING
GENERAL Pl.A."N"
ALLOWED DEl~SITY (dwelling Wlits per acre)

NUMBER OF UNITS
ESll},!4.TED / PROPOSED DU/ACRE
INTI..ll{l)EDUSE
AFFORDABLE HOUSING CO:\.fPONE.i~
PARK FEE cm1PONHIT PER UNIT
E.."-lllTl.E...Mf.i."'ff STATUS
OYER...\LL PHYSI CAL & USI/Z ONING R...\TING
0\ l'R-\LL RUING - SUBJECT SHOULD SILL FOR

SUBJECT
Average Street
Santa Clara
4l
Fee Simple
December31,2022
Average
Average
A n rag e
9l0l0
LOO

0.00%

0.00%

0.00%

0.30%
Rectangular / I Street Front
High Density Residential
37-lO
4l

45.0 Residential
l0% orin-li eu
136,908
Has Zoning&GP
COllPARABLE HD-1
950 Mo nroe St
Santa Clara
269-20-086
Von Raesfeld family Partnership
LambPartnm LLC
2439l084
Broker , Public Reco rd
t2Months
36 (Pro Rata)
S4,70 0,000
S207.73
Fee Simple (Short Term Leases)

0.00%
Conventional

0.00%
Assemblage
Demolition Offset
February 3, 2020
December 201 S
12 12
12 12
Similar/Comer
Similar
Similar
9l0l0
Suru!a,
O.l2
22,62l
.5.()1}%

0.00%

0.00%1

0.00%

0.00%

3.60%
S204 .45
M ostlv Rectangular/2 Frontages
CC (Community Commercial)
Community ~·fixed Use
N/A
36(Pro Ra.ta)
693
Mixed-Use Condos and Retail
10%or in-lieu
132,688
Ha d General Plan
Slightl y Superior
LISS
COllPAR..-\BLE HD-2
1601 Ci,-icCenterDrin
Santa Clara
224-49-006
K & K Outdoor Adnrtising LLC
CMC Center LP
243S0714
Subscri ption Svcs, Public Recor d
12 Months
114
S12 ,100,00 0
S197.03
fee Simple

0.00%
Conve ntional

0.00%
Ann's-length

0.00%
Demolition of 30k SF Office Building

1.65%
January l5, 2020
Est. Sept 2019

0.1)0%
12 0.00%
12 0.00%
12 3.60%:o
5207.50
Similar
Similar
Similar
9l0l0
Suru!a,

1.41 61,411
Mos tlv Rectan,11111:!r/Oe ed Rest
0G
Community Commercial
N/A
119

84.4 Affordable Housing
Yes / 100%
131,0lS
Needs Zoning and General Plan
Slightly Superior
LISS
COllPARABLI HD-3
3941 Stevens Creek Blvd.

Santa Clara
294-39.010
MB Exclusive ly Properties UC
CRP The Meridian LP
25233709
Sub scription Svcs, Public Record
12Months
27 S5,075,000
S197.47
Fee Simple

0.00%
Conventional

0.()0%
Ann 's-Length

0.00%
Demolition Offset

0.00%
Febnwy 03,2022
April 2021
0 o.~11

0.00%
o.~11
12 3.60%
S104 .58
Similar
Similar
Suru!a,
9l0ll
Similar
O.l9
2l,700
Rectangular / 2 Street Fronts
CT
Community Mixe d Use
20-36
l9
100.0
Affordable Housing
Yes / 100%
$33,536
Had General Plan
Sli~tly Superior
LISS
CO~IPARABLE HD-4
2303-2319 Calle Del Mundo
Santa Clara
097-0l-060 & 061
Beta & Properties LLC
2263 Calle Del Mundo LlC
24840021
Subscription Svcs, Public Reco rd
t2M onths
27 S8,00 0,000
S181 .83
Fee Simple

0.00%
Com·entional

0.00%
Assemblage
-HM)%
Demolition Offset

0.00%
February 19, 2021
Est. April 2019
s

0.00%
12 0.00%
12 0.00%
12 3.60%
Sl78.96
Similar
Similar
Similar
95054
Suru!a,

1.01 43,996
Rectangular / I Street Front
TN (Tran sit Neighbo rhood )
Transit Neighborhood
Minimum 100, Up to 350 du/acre
303
156.0
Residential
In-lieu Fee
121,683
Has Zoning & GP
Slightly Inferior
MORI
COllPARABLI HD-5
2221-2251 Calle De l una
2232-2246 Calle Del Mundo
Santa Clara
097-46-020 & 027
Laison LLC/2232 Calle Del Mundo LLC
GS Tasman East Subsidiary , LLC
2l062330/2l06231l
Subscription S,·cs, Public Reco rd
t2Mo nths
2 7
$21,995 ,000
S135 .95
fee Simple

0.00%
Conventional
O.OOo/o
Assemb lage
-5.t'.10%
Demolition Offset

0.00%
August 11, 2021
Est. Feb. 2020
0 O.OOo/o
10 0.00%
12 O.OO°A
12 3.60%
S232.22
Similar
Suru!a,
Similar
95054
Suru!a,

2.14 93,218
M ostl y Rectangular / 3 Street Fronts
TN (Transit N~ghbo rhood}
Transit Neighb orhood
Minimum 100, Up to 350 du/acr e
371
173.4
Residential
In-lieu Fee
130,918
Has Zoning & GP
Slightly Sup erior
LISS
COllPAR..-\BLE HD-6 LISTING
2301-2317 Calle Deluna
Santa Clara
097-46-007, 008, 009
TGR Associates LLC
Listing
Listing
!Broker, Subscription Svcs, Publi c Reco re
24-Months
235
S15,000,000
Listing
Listing
S249 .53

0.00%

0.00%)
-10.00%
Solvent contaminati on in soil and
ground water
-15.<)(}%
Listing
December 2022
0 0.00%

0.00%

0.00%

0.00%
Sl90.89
Similar
Similar
Similar
95054
Similar
us
60,114
Rectangular / I Street Front
TN (Tran sit Neighbo rhood )
Transit Neighborh ood
Minimum 100, Up to 350 du/acre
235
170.0
Residential
10%or in-lieu
S36,90S
Has Zoning&GP
Slightly Inferior
S lie:hdyMORE
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.

>
"
$260.00
$240.00
! $2.20.00
.. ...
~ 5200.00
• ~
! $180.00
ti $160.00
'.;
i f--1--
i $140.00
]
l s120.oo
"
$100 .00
$80.00

0.00 10.00
Comparable Price per Square Foot vs. Proposed DU/Ac

20.00 30.00 40.00 SO.OD 60.00 70.00 80.00 90.00
Proposed Dwelling Unrts per Acre
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

COMMIRCL-\L L.-\ND COMP.-\R.-\BLI S.-\LIS
ELEMENT OF .-\DJUSThlINT SUBJECT Comparable C-1 Comparab le C-2 Comp.arable C-3 Comparab le C-4 Comparable C-5 Comparable C-6 1240& 1290C olemanA venue, 312Brokaw
ADDRESS A verage Street 3375 El Camino Real 3378 El Camino Real t 125 Coleman Annue 855 E Homestead Road 1220 Oakmead Pl.-y. Road Santa Clara Santa Clara Santa Clara San Jose Sunnyvale Sunnyvale Santa Clara APN 220.02--049 290-02-102 230--46--093 309-51.005 216--44--048 230.05-0-15, 049, 050 SELLER Nonna E Rice, Tru stee An S Shin Cap Phase 1 LLC Sundby living Trust Princeton Garden Properties LLC Ke.,in E. Wennergr en 2013 Revocable Trust BUYER 3375 Camino City Square.LLC Vegua,d USA UC San Jose Hotel Investme nts LLC SST hwestments UC BPR Properties UCSC LLC Mogul hospitalit y Partners - Coleman UC SALE PRICE/ LISTING PRICE S9,925,000 S5,340,000 S9,800,000 16,400,000 S4,450,000 Sl0,100,000 PARCEL SIZE (Acres) 1.00 1.630 0.877 1.873 t.130 0.970 1.658 PARCEL SIZE /SF\ 43,560 71,003 38,211 81,588 49,223 42,240 72,204 SALES PRICE/SQUARE FOOT S139.78 S139.75 Sl20.12 S130.02 SI0S .35 S139.88 DOCUMENT NUMBER 24595053 24569843 24339364 24998730 25091522 25294738, 25294739 EXPOSURE TIME 2Months Off M arket (6 M onths in 2019) Unkno "'n 2Months 1 Month 1,177 Dav s lR-\NS.-\CilON.-\L .-\DJUSThlENTS
REAi. PROP. RIGHTS CONVEYED Fee Simple F. Simple (Shott-tenn Leases) F. Simple (Shott -tenn Leases ) Fee Simple Fee Simple Fee Simple Fee Simple FINA.1'/CING TERMS S A.11Casb All Cas h Construction Loan A.11Cash Conventio nal Conventional CONDmONS or SALE Arm.'s-Length llmpro ved Ann's-Length/lmprnnd Ann's Length Ann's-Length/Im proved Ann's-Lengthflrnprove d .-!\nn's-Length/1:mproved ADJUSTMENT -15.0% -11.0% 0.0% 0.0% 0.0% 0.0%
EXPENDITTJRES AFTER PURCIL-1.SE None None None Demolition Offset by Income Demolition Offset by Income Demolition Offset by Income ADJUSTMENT OJ)% 0.0% 0.0% 0.0% OJ)% OJ)%
CONIRACT DATE / MKT CONDmONS December3 l,2022 /uly2020 1wu 2020 Est. Septem ber 2019 Mareh2 02I August2 021 Est. July 2020 RECORDING DA TE August 31, 2020 August 10, 2020 November 22. 2019 1W1e 17, 2021 September OS, 2021 May03,2022 MONTHS FRO~ I.c'm lQ-20 THROUGH 4Q-2 l lJ 18 15 9 3 17
Adjustment rate per month -0.75% -12.75% -13.50% -1125% -6.75% -225% -12.75% MONTHS FROM START lQ-2022 THROUGH 4Q-2022 12 12 12 12 12 12 ADJUSTMENT @% PERMO Nlli 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% .-\DJ. PRICI/SF WITH lR-\NS .. -\DJ. S103.67 S107.59 S106.60 Sl21.24 Sl02 .98 Sl22 .0S LOC.-\TION.-\L .-\DJUSThlE1'"TS
EXPOSURE Average Superior /Come r Similar Comer/Inferio r Traffic Similar Similar Superior /Comer APPEAI./SITE !Nfl.UE."ICES/ACCESS Average Similar Similar Superior /Access Similar Similar Similar ZIP CODE 95050 95051 95051 9l110 940S7 94085 95050
LOCATION.-\L COMPARISON Sup erior Suru!a,- Similar Similar Similar Similar PHYSIC.-\L & USE/ZONING .-\DJUSThlI.1'"TS
PARCEL SIZE (Acres) 1.000 1.630 0.8JJ 1.873 t.130 0.970 1.65S urn.m Average Similar SuruJa,- Similar Similar Similar Similar OFF-SITE IMPROVEME.1'/TS Finished Lot Similar Similar Similar Similar Similar Similar ZO~lNGIGE.1'/I.RAI. PLA.1'/ CT I Regional Commercial CT I Commwtity Mixed-Use CT I Commwtity Mixed-Use A.(PD)I Combined Ind/Comm.. O/PD I Commercial MS / Industrial ~ - Light Industrial / Regio nal Commercial PROPOSED USE,S) Commercial Retail in Near-Tenn Retail in Near-Tenn Hotel/Entitled Office or Pres chool Hotel Hotel/Pending Review PHYSIC.-\L & USE/ZONING COMP.-\RISON Suuerior Sl Suuerior Superior Suuerio r Suuerior Suuerior SUBJECT SHOULD SILL FOR: Less SlLess Less Less Less Less 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

INDUSlRLU, LA.l'ID COMPARABLE SALES
ELEMENl OF . .\D.nJSlM ENl SUBJICT COMPARABLE 1-1 COMPARABLE 1-2 COMPARABLE 1-3 COl\lPARABLE 1-4 COl\lPARABLE 1-S ADDRESS A verage Street m5MartinA ve 2175 Martin Ave 1535 & 1575 Indu strial Ave 365 Reed St 980 Martin Avenue Santaaara Santaaara Santaaara San Jose Santaaara Santaaara ,- - APN 224-10-119 224-10-115 237-30-020 & 025 230-47-105 224-62-010 SELLER Project 38 LLC L VP M artin Ave Assoc LlC Frank J. & Leslie A. Mangione Reed Street Associates 980 Martin A venue LlC BUYER 2225 M artin Prop erty LLC 2175 M artin Property LLC LBA RV! Compan y XI.N LLC Prosperous Corgi Holding s I LLC M ark & Kelly Verni lLC SALE PRICE $28,250,000 m ,900,ooo Sl2,SOO,OOO $5,358,000 $2,200,000 DOCUMENT NUMB ER 25195861 25020411 24902328 24721853 24381016 BONDS ASSUMED / SF S0.00 S0.00 S0.00 S0.00 S0.00
lOT.-\L COSl TO BUYER I SF $1S7.03 $189 .94 S81.17 $104 .70 $108.37 lRANSACTION.-\L ,.\D.nJSTMENlS
REAL PROPERTY RIGHTS CONVEYED Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple ADJUST,•JENT 0.00% 0.00% 0.00"/o 0.00% 0.00%
FINANCING TERMS Conventional All Cash Conventional ."'11Cash Con,·entional ADJUST,\,fENT 0.00% 0.00% 0.00% 0.00% 0.00%
CONDITTONS OF SALE Ann's-Length Ann's-Length Ann's-Length Ann's-1 ength Purchase by Tenant ADJUST,\fE N T 0.00% 0.00% 0.00% 0.00% -10.00%
ADD ITTONAL COSTS TO BUYER Demolition Offset Demolition Offset Demolition Offs et None None ADJUS TMENT 0.00% 0.00"/o 0.00% 0.00% 0.00%
CONTRIBUTORY VALUE OF Il\1PROVEME1'ITS None _ one None Yes/24,145 SF Yes/4,000 SF ADJUST,\!ENT 0.00% 0.(11)% 0.00% -22.53% -13.64%
CLOSE OF ESCROW 12115/2021 7 /2021 4/ 1/2021 11/24/2020 1115/2020 TIME OF SALE / M ARKET CONDITTON December 31, 2022 ND June 2021 September 2020 September 2020 November 2019 MO' S FROM SALE THROUGH Dec . 31, 2020 0 0 3 3 13
ADJUST,\,fENT @% PER MONTH 0.75% 0.00% 0.00% 225% 225% 9.75% M ONTHS FROM START IQ-2021 THROUGH 4Q-2021 0 6 12 12 12 ADJUSTMENT @% PER MONTH 0.00% 0.00% 0.00"/o 0.00"/o 0.00% 0.00% M ONTHS FROM START l Q-2022 THROUGH 4Q-2022 12 12 12 12 12 ADJUSH1E NT @% PER MONTH 0.00"/o 0.00% 0.(11)% 0.00% 0.00% 0.00% • .\D.nJSTED PRICE I SF S1S7.03 $189.94 $83.00 $82.94 $92.45 LOCATION.-\L . .\D.nJSTMENTS
EXPOSURE/VISIBILITY Average Similar Similar Sup/Fwy Similar Similar ACCESS Average Similar Similar Similar Similar Similar
NEIGHBORHOOD APPEAL Average Similar Similar Inferior Similar Similar ZIPCOD E 95050 95050 95050 95112 95050 95050
O\1:R-\LL LOCATION.-\L RUING Similar Similar Inferior Similar Similar PHYSIC-\L & USE/ZONING • .\D.nJSTM ENlS
PARCEL SIZE (ACRES) 1.00 4.13 1.68 3.62 117 0.47
PARCEL SIZE (SF) 43,560 179,903 73,181 157,687 51,174 20,300 UTILITY Average Similar Similar Similar Similar Similar OFF-SITES Finished 1 ot Similar Similar Similar Similar Similar - - INlEND ED USE Industrial Industri al Industrial Industrial Contractor Yard ZONING Heavy Industrial Light Industrial light Industrial Heavy Industrial Light Industrial Heavy Industrial GE..NERAL PLA.N Ll_ght Industrial Low Inte nsity OfficelR&D Low Int ensity Office/R&D Heavy Industrial Ll$t Industri al Heavy Industrial O\"ER-\LL PHYSIC-\L & USE/ZONING R-\TING Similar Superior Inferior Inferior Inferior O\'IR-\LL R-\TING-SUBJICT SHOULD SELL FOR Sll\ULAR LESS MORE MORE MORE 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 high- density 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:
2022 City of Santa Clara Sales
Sale Type Land SF Total Percent
Commerci al 844,663 13.02%
Industrial 911,.037 14.04%
Very Low Density Residential 3,427,343 52.83%
Low Density Residential 223,257 3.44%
Medrum to High Density Residential 1,081,815 16.67%
Total 6,488,115 100.00%
Source : Old Republic Title Company
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:

W22 VALUES FOR 95050 ZIP CODE SUMU\RY
Land Use Price per SF Pt'.ice per Act·e :x Weighted A Yenge = Weighted Value Very Low Density Residential $115.00 $5,009,400 X 52.83% = $2,646,466 Low DellSitJ Residential $120.00 $5,217,200 X 3.44% = $ 179,8 16 l\.fediUlll DellSitJ• Residential $ 180.00 $7,840,800 X 8.335% = $653,53 1 High DellSity Residential $190.00 $8,276,400 X 8.335% = $689,838 Commercial $95.00 $4,138 ,200 X 13.02% = $538,794
Industrial $130.00 $5,662,800 X 14.04% = $795,057
I TOTAL A 'VIRAG[ VALUE $.S,50'3.502
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.

$1,200
$1,000
$800
$600
$400
$200
$0
2019 2020 2021 2022
■ 95050 ■ 95051 ■ 95054
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, l\ledian Sales l'-tire . . . OA, Change pet· % Changeper Housing Type .Zip Code 2,&20 21121 20-22 Month Last 12 Month L:ist 2 Years SFR, Condo, & 95050 st,257,750 Sl,350 ,000 Sl, 72,,500 0.76% 0.71% To,vnho use 95051 st,390 ,000 Sl,550,000 Sl ,630,000 0. 3% 0.72% 95054 Sl,212,.500 Sl,290 ,000 Sl,27&,044 -O.OS% 0.23%
Source : Local l\U,S
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.

95051 ZIP CODE LAND USE VALUIS & AVER.\.GI 2022 VALUE PIR ACRI Land Use 95050 Average Adjus tment 95051 Average
J: = Price/Acre Weighted Factor Price per Acre
Vet1 Low Density Residential $2,646,466 X 110.0% = $2,911,113 Lo,w Densicy Residential $.179,816 X 110.0% = $197,798
Medium Density Residential $653,531 X 110.0% = $718,884 High Densi ty Residential I $689,838 X H 0.00/4 = $758,822 Commerdal I $.538,794 X 85.00/4 = $457,975
lndustdal $795,057 X 100.0% = $795,057
TOTAL AVERAGE VALUE PER ACRE $5,8:3:9'~1,49
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] 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 $1,200
$1,000
$800
$600
$400
$200
$0
2019 2020 2021 2022
■ 95050 ■ 95051 95054
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 Medillll Sales J>tic,e , , , o;o Chllllge pet· % Change pet· Housing Type .Zip Code W20 21Jr21 20r22 MonthLa.stU Month La.st 2 Yea.rs SFR,,Condo , & 95050 Sl,257,750 Sl,350 ,000 Sl,472,,500 0.76% 0.71% 95051 Sl,390 ,000 Sl,550,000 Sl,630,000 0. 3% 0.72% To\vnhouse 95054 Sl,212 ,500 Sl,290 .,000 Sl,27 8,,044 -0.0&% 0.23% Source: Local MLS
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)

95i054 ZIP CODE LAND USE VALUES & AVIR.\.GE 2022 VALUE PER ACRI Land Use 9505i0 Anrage Adjustment 95054 Average
X = Price/Acre Weighted Factor Price per Acre
Very Low Density Residential $1,646,466 X 95.0% = $1,5 14,143 Lo,w Density Residential $179,816 X 95.0% = $ 170,825
High Density Residential
I
$653,531 95.0% $620,854 X =
l\Iedium Density Residential $689,838 X 95.0% = $655,346 Cmnmercial $538,794 X 90.0% = $484,9 15
Industrial
I
$795,057 100.0% $795 ,057 X =
TOTAL AVERAGE VALUI PER ACRE '$5,241,140
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

City of
Santa Clara
The Center of What's Possible
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 Rancho San Antonio
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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] 74

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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] 75

COMMERCIAL SALE COMPARABLE LOCATION MAP

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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] 76

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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] 78

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 82

COMPARABLE LAND SALE PARCEL MAPS

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 83

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COMPARABLE LAND SALE PARCEL MAPS

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 85

COMPARABLE LAND SALE PARCEL MAPS

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 86

COMPARABLE LAND SALE PARCEL MAPS

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Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 88

COMPARABLE LAND SALE PARCEL MAPS

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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] 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-of- Way 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: Fran k 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

Attachment 2
Tab le A
Parkla nd 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=AxB $14,300,000
Cost per capita D = C/1000 $14,300
Quimby
$5,500,000
3 $16,500,000
$16,500
Density Single Family (Census) D x 2.98 S42,614 $49,170 Improvement value (2018: $3,471 + 10%) S3,818 x 2.98 $11,378 $11,378 .............................................. Admin Charge .................... 0.·.0.? .................... ====Sl..,,0=8=0====S=l=,2=1-1 Total Single Family (SF) Dwelling Fee S55,072 S61,759
Density Multi Family (Census) D x 2.4 $34,320 $39,600
Improvement value (20 18: $3,471 + 10%) S3,818 x 2.4 S9,163 $9,163 ............................................... Admin.Charge ..................... 0.:~? ................... ____ S8_7_0 _____ S9_7-t5 Total Mult i Family (MF) Dwe lling Fee $44,353 $49 ,738 Table B
Parkland D edic.atioo In Lieu Fee Sched ule - 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=Ax 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%) $3,8/8x2 .98 $11,378 $1 1,378 .............................................. Admin.Charge ..................... 0.:0.? ..................... ===S=l=,1=33=====$=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%) S3,818 x 2.4 S9,163 $9,163 .............................................. Admin Charge ..................... o:.0.2. .................... ====S=91=2====$=1=,0=2==l4 Total Multi Family (MF) Dwelling Fee 546,517 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 = AxB $13,624,000
Cost per capita D = C/1000 $13,624
Density Single Family (Census) D x 2.98 $40,600
lmprovement value (2018: $3,471 + 10%) $3,818x 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 $9,163 ··················································J\·chlli,i·<:::h.ar~~ .................... 0.·.0.? ..................... ====S=8=37=====$=9=38~ I Total Multi Family (MF) Dwelling Fee S42,698 S47,829
Attachment 6
Table A
Proposed Parkland Dedication lo Lien Fee Sched ule - FY2025-26 95050
Applicable Fee Type
$/Acre (valuation date 12-31-2024)
Park Acres/1000 Pop. LOS Standard
Total Cost per 1,000
Cost per capita
Density Single Family (Census)
Improvement value (2024: $4,177 + 2.3%)
Calculation
A
B
C = AxB
D = C/1000
D x 2.84
$4,273 X 2.84
MFA
$5,180,000

2.6 $13,468,000
$13,468
$38,249
$12,135
$1,008 ................................................ Admin Charge ..................... q:.q_?·····················========= Total Single Family (SF) Dwelling Fee $51,392
Quimby
$5,180,000
3 $15,540,000
$15,540
$44,134
$12,135
$1,125
$57,394
Density Multi Family (Census) D x 1.92 $25,859 $29,837
Improvement value (2024: $4,177 + 2.3%) $4,273 x 1.92 $8,204 $8,204 ................................................ Admin. Charge ..................... ~:~? ..................... ====$=6=81=====$=7=6==11 Total Multi Family (MF) Dwelling Fee $34,744 $38,802
Table B
Proposed Parkland Dedication lo Lien Fee Schedule - FY2025-26 95051
Applicable Fee Type Calculation MFA
$/Acre (valuation date 12-31-2024) A $5,340,000
Park Acres/1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C = AxB $13,884,000
Cost per capita D = C/1000 $13,884
Quimby
$5,340,000
3 $16,020,000
$16,020
Density Single Family (Census) D x 2.84 $39,431 $45,497 lmprovement value (2024: $4,177 + 2.3%) $4,273 x 2.84 $12,135 $12,135 ................................................ Admin Charge ..................... q:?? ..................... ====$=1=,0=3=1 ====$=1=,1=5==13 Total Single Family (SF) Dwelling Fee $52,597 $58 ,785
Density Multi Family (Census) D x 1.92 $26,657 $30,758
Improvement value (2024: $4,177 + 2.3%) $4,273 x 1.92 $8,204 $8,204 ................................................ Admin. Charge ..................... ~:~? ..................... ====$=6=97=====$=7=79==1 Total Multi Family (MF) Dwelling Fee $35,558 $39,741
Table C
Proposed Parkland Dedication lo Lien Fee Schedule - FY2025-26 95054
Applicable Fee Type Calculation MFA
$/Acre (valuation date 12-31-2024) A $5,000,000
Park Acres/1000 Pop. LOS Standard B 2.6
Total Cost per 1,000 C = AxB $13,000,000
Cost per capita D = C/1000 $13,000
Quimby
$5,000,000
3 $15,000,000
$15,000
Density Single Family (Census) D x 2.84 $36,920 $42,600 Improvement value (2024: $4,177 + 2.3%) $4,273 x 2.84 $12,135 $12,135 ................................................ Admin Charge ..................... q:?? ..................... ====$=9=8=1 ====$=1=,0=9==15 Tota l Single Family (SF) Dwelling Fee $50,036 $55,830
Density Multi Family (Census) D x 1.92 $24,960 $28,800
Improvement value (2024: $4,177 + 2.3%) $4,273 x 1.92 $8,204 $8,204 ................................................ Admin. Charge ..................... ~:~? ..................... ====$=6=63=====$=7=40==1 Total Multi Family (MF) Dwelling Fee $33,827 $37,744
Resolution/Fees Due in Lieu of Parkland Dedication for New Residential D evelopment Page 1 of 4 Rev: 7/27/2023
RESOLUTION NO. _____

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA

TO ESTABLISH THE AVERAGE PER-ACRE LAND VALUES AND

THE PARK DEVELOPMENT COST PER CAPITA VALUE IN

ORDER TO SET THE PARKLAND IN LIEU FEE SCHEDULE IN
ACCORDANCE WITH CHAPTER 17.35 (“PARK AND
RECREATIONAL LAND”) OF TITLE 17 (“DEVELOPMENT”) OF

THE CODE OF THE CITY OF SANTA CLARA

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 over-burdened; and,
WHEREAS, the report entitled “Public Facilities Impact Fee Study” dated June 25, 2014 (“Nexus Study”), was prepared 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 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; and, 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 Recreational Facilities Impact Fee Update Study” dated April 2019 (“Nexus Study Update”) 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; and,
WHEREAS, SCCC 17.35.030 provides the formula for determining a developer’s parkland dedication acreage requirement as follows: the average density for the specific dwelling unit category (single family/multi-family); multiplied by the parkland dedication standard; divided by one thousand (1,000) population; and,
Resolution/Fees Due in Lieu of Parkland Dedication for New Residential D evelopment Page 2 of 4 Rev: 7/27/2023
WHEREAS, the methodology for calculating fees in-lieu of parkland dedication is based on the average cost to purchase lands for parks in Santa Clara, the average cost per capita to develop the land into a useable park facility, and the cost to administer the program; and, WHEREAS, the City desires to update the average density standard for single family and multi- family dwelling units as used to determine a developer’s parkland dedication requirement with the most recently available Federal census data and, in addition, update the average per-acre land values and park development costs as used in setting the park in-lieu fee; and, WHEREAS, the City has surveyed land values and sales records, and has conducted a professional appraisal with a valuation date of December 31, 2024 to determine the fair market value of property in the City and made available to the public for review and comment the appraisal report as posted on the City website on March 4, 2025; and, NOW THEREFORE, BE IT RESOLVED BY THE CITY OF SANTA CLARA AS FOLLOWS:

1. Land Valuation Appraisal.

A. An independent real estate-appraisal firm, Frank Schmidt & Associates, was retained to provide a “Fair Market Value” opinion (valuation date of December 31, 2024) 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.

Resolution/Fees Due in Lieu of Parkland Dedication for New Residential D evelopment Page 3 of 4 Rev: 7/27/2023
B. Based on the findings of the appraisal report, the City Council hereby sets the average per acre land value for each ZIP Code as of December 31, 2024, as: $5.180 million per acre in 95050; $5.340 million per acre in 95051; and $5.000 million per acre 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 SCCC 17.35.040(b)(2).

2. Park Improvement Cost.

A. 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 (CCCI) reported by the Real Estate Services Division of the Bay Area. In accordance with Resolution No. 23-9220, annual changes (increases/decreases) in the park improvement value used in calculation of In-Lieu Fees shall be indexed to changes in CCCI for the previous calendar year as reported by the Real Estate Services Division for the Bay Area, not to exceed a change of more than 10%.

B. The 2024 Santa Clara average park improvement value per capita is $4,177. From 2023 to 2024, construction costs have increased by 2.3% 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 $4,177 per capita would be $4,273 per capita as of January 1, 2025. The Council hereby sets for use in the Park in Lieu Fee calculations a park improvement value of $4,273 per capita for use in the FY 2025/2026 fees.

3. Implementation Schedule. The fees set forth herein shall be effective on July 1, 2025.

For development project applications “deemed complete” prior to this date, the existing fees will apply as adopted in Resolution No. 24-144.

Resolution/Fees Due in Lieu of Parkland Dedication for New Residential D evelopment Page 4 of 4 Rev: 7/27/2023

4. 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 _________, 2025, 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 12-31-2024

2. Fee Calculation Tables A, B, C

City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
25-370 Agenda Date: 4/29/2025

REPORT TO COUNCIL

SUBJECT
Action to Adopt a Resolution of Commitment as a Condition of the Award from the Metropolitan Transportation Commission of Transit-Oriented Communities Implementation Grants

COUNCIL PILLAR
Deliver and Enhance High Quality Services and Infrastructure

DISCUSSION
The Metropolitan Transportation Commission (MTC) is in the process of awarding approximately $20 million for local planning and policy development related to MTC’s 2024 Regional Transit-Oriented Communities (TOC) Policy. The TOC policy seeks to support the region’s transit investments by centering housing, jobs, and services within one half-mile of a station area (Attachment 1). The City of Santa Clara has several transit-rich areas, four stations along the Tasman light rail, Santa Clara Caltrain/BART, and Lawrence Station/Caltrain. The purpose of this report is to obtain Council approval to accept the grants only and authorize the City Manager to execute grant agreements with MTC as necessary.

There are four components within the TOC Policy to help center housing, jobs, and services within one half mile of transit areas:
• Increasing residential and commercial densities around station areas; • Adopting housing policies related to housing production, preservation, and protection (also known as the three P’s);
• Adjusting minimum and maximum parking ratios as well as transportation demand management policies; and
• Planning for station access that includes active transportation uses and mobility hub infrastructure.

At the November 19, 2024, City Council meeting, the Council adopted a Resolution of Local Support for the City's application for the Transit-Oriented Communities grant. The City subsequently applied for technical assistance grants relating to all four components of the TOC Policy and received grants in three of the policy areas (including increasing commercial densities, adjusting parking ratios, and station access planning). The total award of the grant was $800,000 across the three policy areas.

The Planning Division and Traffic Engineering Division were awarded grants to implement the following policy areas:

Rezoning along Tasman light rail: $250,000
Parking Management at TOC areas: $150,000
Station Access & Circulation at Santa Clara Caltrain/BART $400,000 City of Santa Clara Printed on 4/25/2025Page 1 of 3
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25-370 Agenda Date: 4/29/2025
As the next step in the grant award process, MTC is requesting a resolution of local commitment from the City Council. The resolution is to include a commitment to complete the work associated with the grant award and express the City’s intent to adopt the relevant plans and policies that result from the work., a Resolution of Commitment is provided as Attachment 2 to this report to implement this requirement. In addition, MTC requires each local agency to complete a funding agreement, or a supplemental agreement if a master funding agreement between the two agencies already exists, and/or a liability waiver. The acceptance of the award and authorization of the City Manager to execute grant agreements will allow staff to develop detailed work plans for use of the grant funds that will then come back to the City Council at a later date.

The Community Development Department will manage the two grant awards for Rezoning along Tasman Light Rail and Parking Management at TOC areas. The Public Works Department will manage the third grant award of the Santa Clara Caltrain/BART Station Multimodal Crossing Feasibility Study (Study) in the Station Access & Circulation policy area. The Study will develop and evaluate various design concepts for a direct connection between Benton Street and Brokaw Road near the Santa Clara Caltrain Station.

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 a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.

FISCAL IMPACT
This action does not have a cost to the City, except for associated staff time in preparation of the agenda materials.

COORDINATION
This report has been coordinated with the Department of Public Works, Finance Department and 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] or at the public information desk at any City of Santa Clara public library.

RECOMMENDATION

1. Adopt a Resolution of Commitment for the City’sexpenditure of technical assistance grant funds and intent to adopt implementing policies related to MTC’sTransit-Oriented Communities Policy; and

2. Authorize the City Manager to execute all documents related to accepting the technical assistance grants in final forms approved by the City Attorney.

Reviewed by: Afshan Hamid, Director, Community Development Department City of Santa Clara Printed on 4/25/2025Page 2 of 3
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25-370 Agenda Date: 4/29/2025
Approved by: Jovan D. Grogan, City Manager

ATTACHMENTS

1. MTC Transit-Oriented Communities Policy

2. Resolution of Commitment

3. Weblink MTC Transit-Oriented Communities Policy
City of Santa Clara Printed on 4/25/2025Page 3 of 3
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Date: September 28, 2022
W.I.: 1611
Referred by: PLNG
Revised: 10/25/23

ABSTRACT
MTC Resolution No. 4530, Revised

This Resolution sets forth MTC’s regional Transit-Oriented Communities (TOC) Policy, which seeks to support the region’s transit investments by creating communities around transit stations and along transit corridors that not only support transit ridership, but that are places where Bay Area residents of all abilities, income levels, and racial and ethnic backgrounds can live, work and access services, such as education, childcare, and healthcare. The TOC Policy is rooted in Plan Bay Area 2050 (PBA2050), the region’s Long Range Transportation Plan/Sustainable Communities Strategy. The TOC Policy applies to areas within one half-mile of the following types of existing and planned fixed-guideway transit stops and stations: regional rail, commuter rail, light-rail transit, bus rapid transit, and ferries. The policy requirements consist of the following four elements: 1) minimum required and allowed residential and/or commercial office densities for new development; 2) policies focused on housing production, preservation and protection, and commercial anti-displacement and stabilization polices; 3) parking management; and 4) transit station access and circulation. Further discussion of the Transit-Oriented Communities Policy is contained in the Joint MTC Planning with the ABAG Administration Committee summary sheet dated September 9, 2022.

On October 25, 2023, Appendix 1 was added and related changes were made to Attachment A to clarify the scope of the TOC Policy’s application to transit extensions. Further discussion of the amendment to the Resolution is contained in the Joint MTC Planning with the ABAG Administrative Committee summary sheet dated October 13, 2023.

Date: September 28, 2022
W.I.: 1611
Referred by: PLNG

Re: Adoption of a Transit-Oriented Communities (TOC) Policy.

METROPOLITAN TRANSPORTATION COMMISSION
RESOLUTION NO. 4530
WHEREAS, the Metropolitan Transportation Commission (MTC) is the regional transportation planning agency for the San Francisco Bay Area pursuant to Government Code Section 66500 et çq; and

WHEREAS, MTC adopted Resolution No. 3434 which set forth MTC’s Regional Transit Expansion Program of Projects in 2001, which was amended to add the Transit-Oriented Development Policy in 2005; and

WHEREAS, the TOD Policy successfully increased zoned capacity for residential development in key transit expansion corridors and initiated the regional Station Area Planning Program by requiring major transit expansion projects to meet minimum housing density thresholds around stations in new transit corridors before programming regional discretionary funds for project construction; and

WHEREAS, the TOD Policy applied to a specific set of transit expansion projects listed in Resolution No. 3434, the majority of which have been completed or are under construction; and
WHEREAS, the Station Area Planning program was expanded to become the Priority Development Area Program in 2008 which has resulted in over 61 completed plans with zoning for more than 100,000 housing units and more than 75 million square feet of commercial development near transit to date; and

WHEREAS, California law (California Government Code Section 65080) requires development of a regional Sustainable Communities Strategy to achieve a specified greenhouse gas (GHG) reduction target; and

MTC Resolution 4530