City Council and Authorities Concurrent
April 21, 2026

Resolution/Fees Due in Lieu of Parkland Dedication for New Residential Development Page 1 of 5 Rev: 7/27/2023
RESOLUTION NO. 24-9383

A RESOLUTION OF THE CITY OF SANTA CLARA, CALIFORNIA,

TO ESTABLISH THE AVERAGE PER-ACRE LAND VALUES, THE

PARK DEVELOPMENT COST PER CAPITA VALUE, AND THE

AVERAGE NUMBER OF PERSONS PER HOUSEHOLD 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; WHEREAS, the report entitled “Public Facilities Impact Fee Study” dated June 25, 2014 (“Nexus Study”), was prepared and approved by Council in June 2014; WHEREAS, on July 15, 2014, the City Council adopted Ordinance No. 1928, which added Chapter 17.35 to the City Code, and requires new residential developments to provide adequate community and neighborhood park land for active recreational uses, and/or under certain conditions to pay a fee in lieu of parkland dedication; WHEREAS, on 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;
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;
Resolution/Fees Due in Lieu of Parkland Dedication for New Residential Development Page 2 of 5 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; 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, 2023, 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 October 1, 2024 .

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, 2023 ) 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 Development Page 3 of 5 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, 2023 , as: $5.455 million per acre in 95050; $5.650 million per acre in 95051; and $5.255 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 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 2023 Santa Clara average park improvement value per capita is $3,818. From 2022 to 2023, construction costs have increased by $9.4 % 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, 818 per capita would be $4,177 per capita as of January 1, 2024. The Council hereby sets for use in the Park in-Lieu Fee calculations a park improvement value of $4,177 per capita (20223 base value plus 10% for cost escalation recovery) for use in the FY 2024/2025 fees. //
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Resolution/Fees Due in Lieu of Parkland Dedication for New Residential Development Page 4 of 5 Rev: 7/27/2023

3. Average Density.

A. On September 12, 2024, the U.S. Census Bureau released the 2023 American Community Survey (ACS) data. The ACS contains two relevant data points in determining average density by dwelling unit—total population by units in structure (Table B25033) and units in structure (Table B25024). The average density of single-family dwelling units was derived by dividing the total population of residents in single family units by the total amount of single -family dwelling units in the City. Similarly, the average density of multi -family dwelling units was derived by dividing the total population of residents in multi -family units by the total amount of multi-family units in the City.

B. In calculation of parkland dedication or fees due in- lieu, the types of dwelling units and average density factors (2023 American Community Survey) shall be as follows : (1) Single-Family Dwelling equals 2.84 persons per household; and (2) Multi -Family Dwelling equals 1.92 persons per household.
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4. Implementat ion Schedule. For development projects subject to the Quimby Act, the proposed fees will become effective immediately. For development projects subject to the Mitigation Fee Act, the proposed fees will become effective 60 days after the effective date of this resolution.

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

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

AND ADOPTED BY THE CITY OF SANTA CLARA, CALIFORNIA, AT A SPECIAL MEETING THEREOF HELD ON THE 29TH DAY OF OCTOBER, 2024, BY THE FOLLOWING VOTE:

AYES : COUNCILORS:

NOES: COUNCILORS:

ABSENT: COUNCILORS:

ABSTAINED: COUNCILORS:

Attachments incorporated by reference:

Becker, Chahal, Hardy, Jain, Park, and Watanabe
None
Mayor Gillmor
None
ATTEST:~/)
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ASSISTANT CITY CLERK

CITY OF SANTA CLARA

1. Santa Clara Land Valuation Appraisal Report 12-31-2023

2. Fee Calculation Tables A, B, C
Resolution/Fees Due in Lieu of Parkland Dedication for New Residential Development Rev: 7/27/2023

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)

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 :

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.

Real Es

Frank S

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and exp r
highways
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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

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n
a new lea
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through Q4
at 12.0% fo
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n & Wakefie
ase of 205,77
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453 Great A
oulevard.
rage office a
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s are bundle
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4-2023. The
or Q4-2023,s
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asking rent in
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a Clara’s incl
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Frank S

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Real Es

Frank S

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4Q-2023
$2.67/S
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expense
and rese
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compared
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sales. T y
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n above, Sili
. Meanwhi l
F/month in 1
basis in thi s
rves for repla
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ilicon Valley
d to negative
net absorpti
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n & Wakefie
Jose metro a
ult of the ri
yment rate
of jobs still s
education a n
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at $156,70 0
a steady grow
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market con d
ypically, a m
sed: Three Hy
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icon Valley’
le, asking
1Q-2023 to
s market m e
acement, wh
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y R&D mark
e 350,444 sq
ion, and a tot
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from 2.6%
saw a year-o
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0, reflecting
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market wh e
ypothetical O
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$2.63/SF/mo
eans the lan d
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Silicon Val
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tal of negativ
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al estate se g
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s, One for Eac
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have rema i
2023 on a N
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all increasin
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eports for th
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be indicated
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Santa Clara,
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vely stable
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ate in
from
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with
ket in
l that:
ase in
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Real Es

Frank S
additiona
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Average

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from 5.5%
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of $3.01/
4Q-2022
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projects
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e
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al retail de v
d in entering
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% rate last q
Valley remain
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mately 77,90
rt below d i
et, Sunnyv a
(Silicon Vall
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ated in the ta
/SF/Mo NNN
. Neighbor h
n 4Q-2023
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cancy rate i n
in the city
etail subma r
1sq.ft. in 4Q
sed: Three Hy
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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,
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asking ren t
a decrease
n Santa Cla
of Santa Cl
rket invent o
Q-2023. Key
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s Phone: 51
s existing r e
. The conver
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gh the same
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aken from C
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rse is true wh
acancy Rates
beat Silicon
vacancy rat
as last year’
are feet (msf)
f approximat
space.
king rental
t, Downto w
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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
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s
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s figure. The
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rate and v a
wn San Jose
akefield and
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ount for m o
Mo NNN i n
/Mo NNN i
%. As discu s
rting retail d
from 2,5 4
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ch Zip Code,
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xpand and n
retail sales a
ilreported th
down 20 basi
e total retail
of 2023, leav
(96.1%) of d
acancy for
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its predeces
et had an av
ared to $2.9 9
ost of the v
n the subje c
in 1Q-2023.
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a new lease
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new retaile r
are declining
hat:The Silic
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ving almost
direct space a
the Santa C
and Santa C
ssor retail r e
erage asking
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vacancies i n
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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] 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:

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 provi ders 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

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. Th e next chart indicates that the index for the subject’s San Francisco Metropolitan Area in creased 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.

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

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 medi an 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.

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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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 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 gene rally 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.

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

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

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

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 de nsity 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

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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midt@valu
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uationconsu
ultant.net
5 52

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
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praised: Thre
ne: 510-468
ee Hypothetic
8-9219
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or Each Zip C
fschm
Code, Santa Cl
midt@valu
lara, CA
uationconsu
ultant.net
5 55
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 industria l, 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:

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 ne ighborhoods 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:

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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

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 aver age 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 co de is affected by airport noise and has a higher concentration of higher-d ensity housing units; there is less detached

Real

Fran
single
units.
by DQ

The m
News/
2019
differe
suppo

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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

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Fran

Based
weigh
new a
95054

Comm

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hotel
Clara.
higher
additio
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Class
sever
a
custom

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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

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

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

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

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

COMMERCIAL SALE COMPARABLE LOCATION MAP

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

INDUSTRIAL SALE COMPARABLE LOCATION MAP

Re

Fra

eal Estate Ap
ank Schmid
ppraised: Thr
dt & Associ
C
ree Hypotheti
iates Pho

COMPARAB
Very Low De
Very Low De

ical One-Acre

one: 510-468

BLE LAND
ensity Land Com
nsity Land Com
e Lots, One fo
-9219 fsch m

D SALE PA
mparable Sale V
mparable Sale V
or Each Zip C
midt@valuat

ARCEL MA
VLD1
VLD 2
Code, Santa C
tionconsultan
APS

Clara, CA
nt.net 74

Re

Fra

eal Estate Ap
ank Schmid
ppraised: Thr
dt & Associ
C
ree Hypotheti
iates Pho

COMPARAB
Very Low De
Very Low De

ical One-Acre

one: 510-468

BLE LAND
nsity Land Com
nsity Land Com
e Lots, One fo
-9219 fsch m

D SALE PA
mparable Sale V
mparable Sale V
or Each Zip C
midt@valuat

ARCEL MA
VLD 3
VLD 4
Code, Santa C
tionconsultan
APS
Clara, CA
nt.net 75

Re

Fra

eal Estate Ap
ank Schmid
ppraised: Thr
dt & Associ
C
ree Hypotheti
iates Pho

COMPARAB
Very Low De
Very Low De
ical One-Acre

one: 510-468

BLE LAND
nsity Land Com
nsity Land Com
e Lots, One fo
-9219 fsch m

D SALE PA
mparable Sale V
mparable Sale V
or Each Zip C
midt@valuat

ARCEL MA
VLD 5
VLD 6
Code, Santa C
tionconsultan
APS
Clara, CA
nt.net 76

Re

Fra
eal Estate Ap
ank Schmid
ppraised: Thr
dt & Associ
ree Hypotheti
iates Pho
Very Low De
ical One-Acre

one: 510-468
nsity Land Com

e Lots, One fo
-9219 fsch m
mparable Sale V
or Each Zip C
midt@valuat
VLD 7
Code, Santa C
tionconsultan

Clara, CA
nt.net 77

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 78

COMPARABLE LAND SALE PARCEL MAPS

High Density Land Comparable Sale HD 1

High Density Land Comparable Sale HD 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

High Density Land Comparable Sale HD 3

High Density Land Comparable Sale HD 4

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 80

COMPARABLE LAND SALE PARCEL MAPS

High Density Land Comparable Sale HD 5

High Density Land Comparable Listing HD 6

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

Commercial Land Comparable Sale C 1

Commercial Land Comparable Sale C 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

Commercial Land Comparable Sale C 3

Commercial Land Comparable Sale C 4

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

Commercial Land Comparable Sale C 5

Commercial Land Comparable Sale C 6

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

Frank Schmidt & Associates Phone: 510-468-9219 [email protected] 84

COMPARABLE LAND SALE PARCEL MAPS

Industrial Land Comparable Sale I 1

Industrial Land Comparable Sale I 2

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

Industrial Land Comparable Sale I 3

Industrial Land Comparable Sale I 4

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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

COMPARABLE LAND SALE PARCEL MAPS

Industrial Land Comparable Sale I 5

Real Estate Appraised: Three Hypothetical One-Acre Lots, One for Each Zip Code, Santa Clara, CA

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