South San Francisco City Council
October 23, 2024

APPRAISAL OF
Excess Land Property
701 Spruce Avenue
South San Francisco, California

PREPARED FOR
Mr. Sky Zhang
South San Francisco, California
Effective Date of Value: September 15, 2021
Date of Report: October 7, 2021

PREPARED BY
Joseph I. Napoliello, MAI
South San Francisco, California
APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 2.

Joseph I. Napoliello, MAI
Commercial – Industrial – Residential – Real Estate Appraisal and Consultation 840 Olive Avenue #3, So. San Francisco, CA 94080 415-309-6728 [email protected] October 7, 2021
Mr. Sky Zhang
701 Spruce Avenue
South San Francisco, California 94080
Re: Appraisal of
Excess Land Property
701 Spruce Avenue
South San Francisco, California
Our Job # 2021470
Dear Mr. Zhang:

In accordance with your recent request and authorization, I have inspected and appraised the excess land property at 701 Spruce Avenue in the City of South San Francisco, County of San Mateo, California. There is currently a Larger Parcel comprised of approximately 40,974 square feet of land and a single-family residence. The excess land (Excess Parcel) is comprised of approximately 25,763 square feet of vacant land at the rear of the existing residence. The appraisal was made to provide an independent opinion of market value in the undivided fee simple interest in the property as of September 15, 2021, the date of the most recent physical visit to the property.

The accompanying report has been prepared for your use for excess land valuation purposes and may not be used by or distributed to any other parties without my written consent.

The report, which has been prepared to the standards addressed in the Uniform Standards of Professional Appraisal Practice (USPAP), describes in narrative fashion the area, neighborhood, site, improvements, highest and best use, and my method of appraisal. It contains the pertinent data considered in reaching my valuation conclusions. Please note, in particular, the Statement of Limiting Conditions and Assumptions found in the report.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The property was inspected and appraised by Joseph I. Napoliello, MAI, without significant professional assistance from any other persons. I performed an appraisal process using data and analyses considered necessary to produce a credible value conclusion(s) and prepared an appraisal report as described in USPAP.

Based on my visual inspection of the site and improvements, investigation, and analyses undertaken, I have formed the opinion that as of September 15, 2021, and subject to the definition of value, assumptions and limiting conditions, and certification contained in the report, the Excess Parcel property had an undivided fee simple market value, as is, of

EIGHT HUNDRED TWENTY THOUSAND DOLLARS
($820,000)
Extraordinary Valuation Assumption: The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared a pandemic by the World Health Organization (WHO) in March 2020. The reader is cautioned, and reminded, that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property of any unforeseen event after the effective date of the appraisal.

The valuation is based on the supposition that the excess property (residual lot) can be severed from the residential parcel at 701 Spruce Avenue. A hypothetical condition assumes something about the property that is contrary to known fact but is supposed for valuation purposes. The use of this condition may have an affect on the assignment results and the appraiser reserves the right to review the valuation conclusions should additional information become available.

This letter of transmittal is not intended to be a report of my data and conclusions. The report, which follows, must be read in its entirety to allow the user to fully comprehend the market data I relied on, my value conclusions, assumptions, and limiting conditions.

The above value opinions do not include any personal property, fixtures, or intangibles.

Respectfully submitted,
Joseph I. Napoliello, MAI
Certified General Real Estate Appraiser
CA #AG003794

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Table of Contents
BASIC PROPERTY DATA ............................................................................................. 6 STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS .............................. 10 CERTIFICATION........................................................................................................... 13 SCOPE OF WORK ....................................................................................................... 14 DESCRIPTION OF PROPERTY UNDER APPRAISAL ................................................ 15 Market Area: .............................................................................................................. 15 City of South San Francisco ...................................................................................... 15 Neighborhood Description ......................................................................................... 17 Analyses and Conclusions ......................................................................................... 18 Real Estate Under Appraisal: .................................................................................... 21 Site Characteristics: ............................................................................................... 21 Property History and Taxes: ................................................................................... 23 Building Improvements: .......................................................................................... 23 MARKET TRENDS, HIGHEST AND BEST USE AND METHODOLOGY .................... 30 Market Trends: .......................................................................................................... 30 Comments on Market Trends .................................................................................... 31 Subject Analysis: ....................................................................................................... 34 Highest and Best Use As If Vacant – Larger Parcel: ................................................. 34 Methodology: ............................................................................................................. 40 LAND VALUATION ...................................................................................................... 41 Land Market Data ...................................................................................................... 41 Analysis and Value Conclusion ................................................................................. 53 Price Per Square Foot ............................................................................................... 55 Price Per DU .............................................................................................................. 56 Price per FAR Foot .................................................................................................... 58 Reconciliation ............................................................................................................ 61 Residual Value of Excess Parcel ............................................................................... 63 Marketing/Exposure Time Estimate ........................................................................... 64 Table of Exhibits
Figure 1 - Area Map ...................................................................................................... 19 Figure 2 - Neighborhood Map ....................................................................................... 20 Figure 3 - Plat Map ........................................................................................................ 24 Figure 4 - Survey Map ................................................................................................... 25 Figure 5 - Views of Subject ........................................................................................... 26 Figure 6 - Summary of Comparable Land Sales ........................................................... 42

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 7 - Land Sales Location Map.............................................................................. 43 Figure 8 - Land Sales Comparison Grid – Per Sq. Ft. ................................................... 50 Figure 9 - Price Per Dwelling Unit Adjustment Grid ....................................................... 57 Figure 10 - Price Per FAR Ft. Adjustment Grid ............................................................. 59 Addenda
Definitions
Qualifications of Appraiser

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

SUMMARY OF APPRAISAL

BASIC PROPERTY DATA
PROPERTY ADDRESS: 701 Spruce Avenue
South San Francisco
California 94080
APN: 012-131-040
OWNER: Sky Zhang Tianyi Trust
ZONING: RL-8, Low Density Residential, under the jurisdiction of the City of South San Francisco
PRESENT USE: Excess land property

HIGHEST AND BEST
USE:

Future residential development
LAND AREA: Larger Parcel
+40,974 square feet or +0.941 acres
Excess Land (Excess Parcel)
+25,763 square feet or +0.591 acres

PROPERTY
DESCRIPTION:

The site is improved with a single-family residence. This appraisal is of excess land behind the existing property and no valuation of the residence is intended.

PROPERTY RIGHTS TO
BE VALUED:

Fee simple

EFFECTIVE DATE OF
VALUE:

September 15, 2021
DATE OF REPORT: October 7, 2021
CLIENT: Mr. Sky Zhang
701 Spruce Avenue
South San Francisco, California 94080

INTENDED USE OF
REPORT:

This appraisal is intended to assist the owner in possibly selling the excess land.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

OTHER INTENDED

USERS OF THE
REPORT:

None
FORM OF REPORT: USPAP Standard 2-2 Appraisal Report

CONDITIONS OF
ASSIGNMENT:

The global outbreak of a “novel coronavirus” known as
COVID-19 was officially declared a pandemic by the
World Health Organization (WHO) in March 2020. The
reader is cautioned, and reminded, that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no
representation as to the effect on the subject property of any unforeseen event after the effective date of the
appraisal.

The valuation is also based on the supposition that the excess property can be severed from the residential parcel at
701 Spruce Avenue. A hypothetical condition assumes
something about the property that is contrary to known fact but is supposed for valuation purposes. The use of this condition may have an affect on the assignment results and the
appraiser reserves the right to review the valuation conclusions should additional information become available.

See statement of limiting conditions, assumptions and
appraiser’s certification which follow.

VALUATION
CONCLUSION:

Larger Parcel - $1,475,000, as if vacant, as of the date of valuation and subject to the stated limiting conditions, assumptions and certification
Excess Parcel - $820,000, as vacant, as of the date of
value and subject to the stated limiting conditions,
assumptions and certification

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Unit of Comparison Indicators /Unit
Per Sq. Ft.: $1,536,525 $37.50
Per DU: $1,500,000 $375,000
Per FAR Ft. $1,480,000 $185
Reconciled - As Vacant $1,500,000
Demolition Cost -$19,950
Value - As Is $1,480,050
Rounded to $1,475,000
Value of Larger Parcel $1,475,000
Less Front Parcel -$400,000
Less Subdivision Costs -$50,000
Less Cost Differential -$208,000
Residual Value $817,000
Rounded to $820,000
Back Lot/Sq. Ft. 25,763
Value/Sq. Ft. $31.83

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Views of Subject
Front View
Street Scene

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

STATEMENT OF LIMITING CONDITIONS AND ASSUMPTIONS
This appraisal is made subject to the following extraordinary limiting conditions or assumptions:

The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared a pandemic by the World Health Organization (WHO) in March 2020. The reader is cautioned, and reminded, that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property of any unforeseen event after the effective date of the appraisal.

The valuation is based on the supposition that the excess property can be severed from the residential parcel at 701 Spruce Avenue. A hypothetical condition assumes something about the property that is contrary to known fact but is supposed for valuation purposes. The use of this condition may have an affect on the assignment results and the appraiser reserves the right to review the valuation conclusions should additional information become available.

Use of or reliance on this appraisal or appraisal report, regardless of whether such use or reliance is known or authorized by the appraiser, constitutes acknowledgment and acceptance of these general assumptions and limiting conditions, any extraordinary assumptions or hypothetical conditions, and any other terms and conditions stated in this report.

This appraisal report has been made with the following general assumptions:

1. No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated.

3. Responsible ownership and competent property management are assumed.

4. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. We have not attempted to independently verify any rental, income, or expense data provided to us.

5. It is assumed that the reader or user of this report has been provided with copies of available building plans and all leases and amendments, if any, that encumber the property.

6. If no legal description was furnished, the appraiser used the county tax plat to ascertain the physical dimensions and acreage of the property. Should a survey prove this information to be inaccurate the appraiser reserves the right to review any value conclusions.

7. All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property.

8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

9. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report.

10. It is assumed that all water, sewer facilities and utilities (whether existing or proposed) are or will be in good working order, are safe for use, and are or will be sufficient to serve the current or proposed uses of the subject property or any structures or other improvements. Determining and reporting on such matters were not part of the scope of work for this assignment.

11. It is assumed that the property is in compliance with all applicable federal, state and local laws, ordinances, regulations, building standards, use restrictions and zoning unless the lack of compliance is stated in the appraisal report. Determining and reporting on such compliance were not part of the scope of work for this assignment.

12. Any proposed improvements are assumed to have been completed unless otherwise stipulated, so any construction is assumed to conform with the building plans referenced in the report.

13. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value opinion contained in this report is based.

14. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report.

15. It is assumed that the property has been adequately exposed for a reasonable time in advance of the effective date of this report. In a market value appraisal there is the assumption of hypothetical sale as of the date of value. It is further assumed that the exposure or marketing effort was commensurate with the type of real property interest, the use of the property, its market value, and the likely buyer.

16. Unless otherwise stated in this report, the past or current existence of hazardous materials or environmental contamination on, below or near the subject property was not observed or known by the appraiser. The appraiser, however, is not qualified to detect such substances or to make determinations about their presence. The presence of substances such as asbestos, urea-formaldehyde foam insulation and other potentially hazardous materials or environmental contamination may affect the value of the property. Unless otherwise stated, the value estimated is predicated on the assumption that there is no such material on, below or affecting the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering assistance required to discover them. The intended user is urged to retain an expert in this field, if desired.

This appraisal report has been made with the following general limiting conditions:

1. Any allocation of the total opinion of value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other appraisal and are invalid if so used.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

2. Any opinions of value provided in the report apply to the entire property, and any proration or division of the total into fractional interests will invalidate the opinion of value, unless such proration or division of interests has been set forth in the report.

3. For proposed construction, only preliminary plans and specifications were available for use in the preparation of this appraisal; the analysis, therefore, is subject to a review of the final plans and specifications when available.

4. Possession of this report, or a copy thereof, does not carry with it the right of publication.

5. The appraiser, by reason of this appraisal, is not required to give further consultation or testimony or be in attendance in court with reference to the property in question unless arrangements have been previously made.

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

7. The forecasts, projections, or operating estimates contained herein are based on current market conditions, anticipated short-term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes with future conditions.

8. The Americans with Disabilities Act (ADA) became effective January 26, 1992. The appraiser has not made a specific compliance survey or analysis of the property to determine whether or not it is in conformity with the various detailed requirements of ADA. It is possible that a compliance survey of the property and a detailed analysis of the requirement of the ADA would reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative impact upon the value of the property. Since the appraiser has no direct evidence relating to this issue, possible noncompliance with the requirements of ADA was not considered in estimating the value of the property.

9. This report has been prepared specifically for the stated use and benefit of the client, as named in the introduction, and may not be used by any other party without prior written consent and approval of the appraiser.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

CERTIFICATION
I certify that to the best of my knowledge and belief:
 The statements of fact contained in this report are true and correct.  The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, unbiased professional analyses, opinions, and conclusions.
 I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved.  I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment.
 I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
 My engagement in this assignment was not contingent on developing or reporting predetermined results.
 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. My value conclusion(s), as well as other opinions expressed herein, are not based on a requested minimum valuation, a specific valuation, or the approval of a loan.  My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice.
 I certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.  As of the date of the report, I have completed the requirements of the continuing education program of the Appraisal Institute.
 I, the undersigned, have made a personal inspection of the property that is the subject of this report.
 No other persons provided significant professional assistance to the person(s) signing this report.

Joseph I. Napoliello, MAI
Certified General Real Estate Appraiser
CA Certificate #AG003794

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

SCOPE OF WORK
In preparing this appraisal, the appraiser:

1. Inspected the subject site and the improvements,

2. collected and analyzed regional, city and neighborhood data,

3. collected and analyzed pertinent data on the physical and legal characteristics of the site and improvements including environmental issues, zoning data, legal description and other related matters,

4. collected, verified, and analyzed comparable land sales data,

5. analyzed the highest and best use of the property,

6. developed an independent opinion of market value using the sales comparison and income approaches to value and reconciled the indications to a final opinion of value.

Market data was developed from a number of data services and contacts with real estate brokers and other appraisers.

The property was inspected by Joseph Napoliello, MAI. No other persons provided significant professional assistance in the valuation of the property or the writing of the report to the appraiser.

The comparables selected for analysis of the value of the property have been confirmed with at least one of the principals to the transactions or their employees or brokers or agents involved or through two separate, independent sources. The appraiser also relied on public data from the assessor's and recorder's offices and the planning department to supplement direct contacts. These findings are presented in a narrative report format and the type of data and analyses necessary to produce a credible appraisal of the property have been applied.

The appraisal process and development of the report were intended to meet the standards outlined in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Code of Ethics of the Appraisal Institute. The appraiser has over 30 years of appraisal experience and is familiar with the subject property type and market.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

DESCRIPTION OF PROPERTY UNDER APPRAISAL
Market Area:

The property under appraisal is located in the City of South San Francisco. It is further located in northern San Mateo County, one of the nine counties that make up the San Francisco Bay Area. The city is situated between the San Francisco Bay and Interstate 280 just south of San Bruno Mountain. It is bounded on the north by the City of Brisbane, on the east by San Francisco Bay, to the south by the City of San Bruno and to the west by the city of Pacifica.

The San Francisco Bay Area is the fourth
largest metropolitan area in the United
States. It has a total population of over
seven million. Located approximately 350
miles northwest of Los Angeles, the Bay
Area is a center of international commerce
and a popular tourist destination, as well.

The largest cities are San Jose, San
Francisco and Oakland. San Francisco is a
major headquarters city with over 80
million square feet of office space in its
downtown. San Jose, at the heart of the
Silicon Valley, is now the most populous
city in the area. It is also a major
headquarters city and the center of the
technology industry in California. Oakland is a major port and industrial city with a smaller, but still significant commercial presence. San Mateo County is centrally located between San Francisco and San Jose and the Pacific Ocean and the San Francisco Bay. The County of San Mateo, set on the San Francisco Peninsula between San Francisco and San Jose, benefits from a good location between major metropolitan centers. The county is the home of some major international corporations, and the population is well educated and enjoys a high level of income. Growth has stabilized at under 1% per year, and property prices are high. It should continue to be a desirable location to live and work into the foreseeable future.

City of South San Francisco
The subject property is located in the incorporated city of South San Francisco, San Mateo County, California. South San Francisco is located eight miles south of downtown San Francisco, 400 miles north of Los Angeles, and immediately north of San Francisco International Airport. The city has, for many years, had a significant industrial base and it has also been a popular bedroom community for San Francisco to the north.

Bay Area Population
Land
Area Density
Density 2021 Sq. Mi. / Sq. Mi.

Alameda 1,656,591 737.6 2,245.9
Contra Costa 1,153,854 719.9 1,602.8
Marin 257,774 519.8 495.9
Napa 137,637 753.7 182.6
San Francisco 875,010 46.7 18,736.8
San Mateo 765,245 449.1 1,704.0
Santa Clara 1,934,171 1,290.7 1,498.5
Solano 438,527 829.2 528.9
Sonoma 484,207 1,575.9 307.3
Totals 7,703,016 6,922.6 1,112.7
Source: State of California, Department of Finance,
E-5 Population and Housing Estimates for
Cities, Counties and the State; County Profiles

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The population of South
San Francisco increased
from 46,646 to 67,135
between 1970 and 2021.

While many of the houses
in South San Francisco
are older, there has been more recent development in the western portion of the city near Interstate 280 and along the lower elevations of San Bruno Mountain at the city's northern edge. There is also new higher-density apartment development in the downtown area, as well. Households are larger in South San Francisco (3.1) than the county as a whole (2.84).

Public school students generally score in the 60th percentile in reading and math. There are ten elementary schools, three middle schools and three high schools in the South San Francisco Unified School District and the elementary schools provide day care programs. The city has fourteen parks and playgrounds, several golf courses, an indoor pool, a gymnasium and several community centers.

As of July 2021, South San Francisco had a labor force of 38,900. Unemployment was 6%, reflecting the Covid-19 pandemic. Median household income in (most recent census data) of $96,930 was significantly above the statewide figure of $71,228 but lower than the countywide figure of $113,776. There are more jobs than employment age residents in South San Francisco. ABAG estimated the total number of jobs in South San Francisco in 2010 at 46,170 compared with an employment base of around 40,000. The in-commute will continue as industrial and commercial land is developed and redeveloped to higher uses.

According to the local Chamber of Commerce, the largest employers are United Airlines, Genentech, Kaiser Hospital, South San Francisco Unified School District and Costco. There is limited heavy industry in South San Francisco (nickname "The Industrial City"), but most employment today is in light manufacturing, warehousing, R&D and bio-tech or service industries. The main factor in South San Francisco's recent growth and development is its location. It has become an important distribution location and much of its growth has resulted from the presence of San Francisco International Airport immediately to the south and the demand for space from airline-serving industries such as freight forwarders, distribution companies, customs brokers, hotel operators and car rental companies. Additionally, it is home to the growing bio-tech industry.

Median home prices are high. The figure for South San Francisco was $1,122,500 in July of 2021 compared with the countywide figure of $1,583,000 according to the CoreLogic. There are over 1,600 acres in the city limits zoned for commercial and industrial use. There is also a significant amount of industrial land that is underdeveloped and suitable for redevelopment in the future. Included in this acreage are a Population Growth
Year 2021 % Chg. 2020 % Chg. 2010
So. San Francisco 67,135 -0.9% 67,730 6.4% 63,632
San Mateo Co. 765,245 -0.8% 771,061 7.3% 718,451
California 39,466,855 -0.5% 39,648,938 6.4% 37,253,956
Source: DOF E-5 City/County Population and Housing Estimates

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA total of five industrial parks or districts. Terrain is level to hilly. Drainage is good. Subsoil is good to fair, and piling is sometimes required.

South San Francisco has a council/manager form of government. The mayor and city council members serve on various governmental boards throughout the county and Bay Area. The city has over 500 personnel. The fire rating is City Rating: 2. The city council is committed to industrial and commercial growth and this support is reflected in its policies and general plan.

The city has nine square miles of land. South San Francisco has a slightly better climate than San Francisco, less fog and slightly warmer temperatures, but it is prone to being very windy. Mean temperature in January is 49 degrees, ranging from a low of 42 degrees to a high of 56 degrees. Summer temperatures in July average 63 degrees and range from the mid-50s to mid-80s. Annual rainfall is 19.7 inches, with most rain falling in January. Noon-time humidity averages 69 percent annually, with the lowest humidity in October (67%) and the highest level in April (73%).

All forms of transportation are available. Rail service is provided by CalTrain Commute Service. U.P.S. headquarters are located in South San Francisco. There are a number of freight forwarders and domestic trucking lines with overnight delivery to all of California and parts of Nevada. San Francisco International Airport provides scheduled passenger and air-freight service. San Carlos Airport, eleven miles south, serves executive and private planes. Greyhound Bus Line provides transcontinental service; SamTrans provides city and county bus service. The deep-water port of San Francisco is located 10 miles north and the Port of Redwood City is located sixteen miles south.

U.S. Highway 101, Interstate 280 and 380, and the El Camino Real are major surface routes serving the city and connect it with San Francisco and San Jose. U.S. Highway 101 is the major north/south interstate highway linking the three western states.

Neighborhood Description
The subject is set along the flank of Sign Hill and is at the edge of the older downtown area of South San Francisco. U.S. Highway 101 is the easterly boundary. North Canal Street and an older industrial neighborhood is immediately to the south. The westerly edge of the neighborhood is roughly along Chestnut Street and Sign Hill is the northerly edge. The neighborhood has a diverse mix of older and newer homes, apartments and commercial buildings. The core of the neighborhood, several blocks south of the subject, is Grand Avenue. It serves as the central business district. City Hall is also downtown, but the city has plans to move to a new facility near Chestnut Street and El Camino Real which offers a more centralized location nearer the police department.

The subject's neighborhood is essentially 100% developed. Primary land uses in the district include single-family homes, smaller apartments, larger, mostly newer apartments and service and commercial uses along Grand and Linden Avenues. Much of the development in the general neighborhood is 60 years old or more. The most recent developments are large-scale apartments near the Airport Boulevard corridor.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The immediate blocks near the subject are low-density residential with two public schools also nearby.

The district is characterized by level to sloping terrain with steeper streets on the southerly flank of Sign Hill. All typical urban utilities are available and are of sufficient capacity for any legal uses. There are no detrimental nuisances or hazards in the neighborhood except for high traffic and noise levels due to proximity to U.S. 101 and SFO. Upkeep of nearby properties varies from average to good.

The neighborhood does enjoy reasonable access characteristics from downtown South San Francisco and Highway 101 and limited access from El Camino Real on the west. Public transit is available nearby. The primary surface streets in this area carry moderate-to-high levels of automobile traffic with lower-density residential side streets less congested. Congestion is not a serious problem in this area except during limited rush hour periods. U.S. Highway 101 is the major freeway serving the area and it does carry very high levels of traffic at all hours. Proximity to the airport also adds to congestion on the freeway at certain times. Shopping and services are available within the district and retail and commercial businesses are also found along Airport Boulevard, San Mateo Avenue, Spruce Avenue and El Camino Real provide a variety of goods and services.

Analyses and Conclusions
The subject is located in the city of South San Francisco in northern San Mateo County.

The county and the city have historically served as a bedroom community for San Francisco, but South San Francisco has also had a strong history of industrial development much of which supports the San Francisco airport plus newer life-sciences businesses, as well. The county and the city are both desirable locations for businesses and residences and this market will have better than average asset protection characteristics well into the future.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 1 - Area Map

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 2 - Neighborhood Map

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Real Estate Under Appraisal:

Site Characteristics:

Address: The subject site has a common street address of 701 Spruce Avenue, South San Francisco, California 94080 County of San Mateo
Parcel Number: It is identified by the San Mateo County assessor as parcel 012-131-040
Owner: The property is owned by:

Sky Zhang Tianyi Trust
Land Area: The site has a total land area of approximately 25,763 square feet or 0.591 acres.

Dimensions/Shape: It has irregular dimensions. Its size and shape are not typical for the neighborhood. It has a street frontage of approximately 77.6 feet along the westerly line of Spruce Avenue.

Setting and Plottage Potential: The parcel has a mid-block setting. Adjacent properties are fully improved and there is no potential for plottage to create a higher and better use through assemblage. The lot does appear to afford the potential for subdivision, however.

Topography: The parcel is upward sloping and above the grade of Spruce Avenue.

Soils Conditions/Environment: Soils conditions appear adequate, but this is an active earthquake region.

The subject is not located in a special flood zone (Flood Zone X, Area of Minimal Flood Hazard, Map 06081C0041E, Effective October 16, 2012) nor is the appraiser aware of any other detrimental conditions on the site. The state’s GeoTracker website was checked, and no environmental hazards were reported on the site.

It should be noted, however, that the site is immediately downhill from large water storage tanks.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA According to the Association of Bay Area Governments (ABAG), the property has an earthquake shaking severity index of:

MMI 8 - Severe
And a susceptibility to liquefaction rating of:

Very Low.

The local climate is considered Mediterranean, and it is also semi-arid. The subject is set between the coast and the bay, and it tends to have more fog with milder temperatures.

Utilities: All utilities are available to the site and sufficient in capacity for the current use or any likely higher and better use.

Streets: Spruce Avenue is a two-lane collector street. It is asphalt paved with concrete curbs, gutters and sidewalks. It does tend to carry higher than average traffic because it provides the neighborhood a direct connection with Hillside Boulevard which provides access to western neighborhoods and Highway 101 to the east and there are two schools along the street, as well.

Zoning: The parcel is zoned RL-8, Low Density Residential, under the jurisdiction of the City of South San Francisco. The current use is apparently a legal, conforming use, but it is low in density at just 1.1 units per acre compared to the allowable density of 8 units per acre.

Development standards include:

Minimum Lot: 5,000 square feet, 6,000 for corner lots
Minimum Width: 50 feet for interior lots and 60 feet for corner lots Minimum Depth of 80 feet
Maximum Building Height: 28 feet
Yards: 15 feet front; 5 feet side; 10 feet rear
Maximum Coverage: 50%
Maximum FAR: 0.5 or 2,000 square feet, whichever is larger Maximum Density: 8 DU/acre
Easements: A preliminary title report was not provided, and the valuation assumes there are no easements or conditions of title that would have a material influence the value or marketability of the site. There are some encroachments as noted on the map which follows. These are also assumed to be movable and of nominal value relative to the underlying fee.

Historic Resources: The site is not in a preservation area. The improvements have not been identified as having historic resource characteristics by the city.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Overall Site Utility: Poor overall utility for development/construction difficulty, but the lot affords a good view outlook.

Property History and Taxes:

The property in February 2018 for $1,420,000. A recent listing of the property has not been found.

Property Taxes: Most current taxes and assessments are as follows.

Assessed Value 012-131-040
Land $1,156,296
Improvements $351,011
Exemption -$7,000
Total $1,500,307
Base Tax $15,871.74
Base Tax Rate 1.0579%
Direct Charges $856.02
Total Taxes $16,727.76
Total Tax Rate 1.1150%
Building Improvements:

The site is improved with a residence constructed in 1951 with a total livable area of 1,995 square feet per the public record. As the assignment involves excess land, the house was not valued.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 3 - Plat Map

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 4 - Survey Map

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 5 - Views of Subject
Front View
Interior View

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA View of Subject
Street Scene
Street Scene

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Views of Subject
View From Excess Parcel
Interior View

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Views of Subject
Interior View
View of Rear of Front Parcel

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

MARKET TRENDS, HIGHEST AND BEST USE AND METHODOLOGY
Market Trends:

The latest report on economic trends from the 12th District of the Federal Reserve follows.

FedViews – September 9, 2021
“Andrew Foerster, senior research advisor at the Federal Reserve Bank of San Francisco, stated his views on the current economy and the outlook as of September 9, 2021.  The economy is rebounding with strong growth, as it continues to recover from the recessionary effects of the pandemic. However, high transmission of the Delta variant and low vaccination rates in some areas of the country pose a downside risk to economic growth.  GDP in the second quarter of 2021 exceeded 12% on a year-over-year basis, the highest reading since 1950. The base effects from the very low levels of GDP during the depths of the pandemic in early 2020 play a role in this high reading, but growth on a quarterly basis in the first half of 2021 has been robust.
 The level of GDP now exceeds its pre-pandemic high reached at the end of 2019. While this suggests the economy has made up for the drop in output during the pandemic, GDP still sits below the trend implied by average growth in the pre-pandemic years. Continued above-trend growth is expected to narrow this gap in coming quarters.
 Supply chain disruptions and bottlenecks have exacerbated the price pressures generated by strong demand. Personal consumption expenditures (PCE) inflation was 4.2% in the 12 months through July.

Core PCE inflation over the same horizon was 3.6%. Inflation’s rise above the Federal Open Market Committee’s 2% target is expected to be transitory, with price increases moderating as the economy continues to adjust to the resumption of activity.
 Used vehicles is a relatively small sector. Nonetheless, it has added atypically large contributions to overall inflation readings over the last several months. From 2015 to 2019, this sector averaged a negative contribution to PCE inflation because of generally falling used car prices. However, supply chain disruptions in computer chip manufacturing that began early in the pandemic have limited new vehicle manufacturing. As a result, consumers shifted demand toward used vehicles, leading to monthly double digit price increases. The last several months have thus seen used vehicles contribute around 0.6 percentage points to overall inflation, though the most recent data suggest this dynamic is starting to abate. While prices for used vehicles could remain high, if price increases cease, this sector will stop contributing to inflation. If price increases reverse, a negative contribution is possible, putting downward pressure on inflation.
 The labor market continues to improve, but at an uneven pace. Concerns about the Delta variant slowed hiring in August relative to June and July, as payrolls expanded by a modest 235,000 jobs.

Both the leisure and hospitality and retail trade industries saw tepid job growth, suggesting the increase in cases of the virus is a major factor for the slowdown.  Despite the slowing growth in hiring, the unemployment rate in August fell to 5.2%. This measure however sends an incomplete signal about the extent of the labor market recovery. A number of key groups—including parents who have temporarily left the labor market due to childcare concerns—are not officially counted as unemployed. The employment-population ratio still sits 2.6 percentage points below its pre-pandemic high.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA  Total U.S. employment is still about 5.7 million jobs below its pre-pandemic peak. This aggregate figure masks different employment dynamics across goods-producing and services sectors as well as across states.
 The substantial decline in employment seen in April 2020 hit the services industries relatively harder than the goods-producing industries, as demand for many in-person services declined because of mandated social-distancing restrictions associated with virus concerns. Goods-producing employment fell by a little over 13% relative to January 2020, while services employment fell by 3 percentage points more. Since that initial decline, services employment has recovered at a relatively faster rate as social-distancing limits have been relaxed, and the gap between goods-producing and services employment has narrowed.
 Employment patterns have varied substantially across the United States during the pandemic.

Differences in the composition of sectors play a major role in how some state economies have fared.

Goods-producing employment in Michigan initially fell by over 40% due to particularly large cutbacks in manufacturing jobs, but subsequently recovered toward the national average. Goodsproducing employment in Wyoming remains particularly depressed because its mining and construction sectors were already contracting but have worsened since the onset of the pandemic. On the services employment side, Hawaii has an exceptionally high reliance on its leisure and hospitality sector. With lower tourism, that sector has dragged on employment, leading Hawaii to be the slowest state to recover services employment. Utah has been a relatively strong performer in both goodsproducing and services employment, led by strength in construction and professional and business services.”
Comments on Market Trends
GDP dropped over 31% in the second quarter of 2020 due to the lockdowns throughout the U.S. The third quarter 2020 saw a tremendous rebound with Real GDP growth of

33.4%, annualized. Quarter 4 saw a 4.1% increase and the Q1 2021 figure was a 6.4% annualized rate. The advance figure for Q2 2021 is 6.5%. Return to more normalized growth is expected in 2022. The sectors that saw the most disruption were transportation, recreation, restaurants and hotels according to the Federal Reserve.

Consumer spending has clearly rebounded, and job growth has picked up.

The economy is showing early signs of a return to normalcy in the travel and hospitality sectors. Daily air travel has reached the 2 million passenger level recently. Hotel occupancy has reached over 50%, as well. These are not pre-pandemic levels, but they are significant improvements to rates seen in mid-to-late 2020.

In the real estate markets, brokers report some buyers are still active, but sellers are cautious. Larger institutional investors and owner-users seem to be more active than smaller investors based on anecdotal information from brokers. Likely in part due to a more difficult commercial lending environment.

Property owners with no need to sell quickly who are not highly leveraged can wait out a short disruption. There may be some sellers who will need to liquidate real estate holdings, but this would likely not meet the definition of market value where the seller is not capable of holding on for better conditions or willing to wait. Such transactions will be viewed as forced sales and will likely be outliers compared with the longer-term market trend. Of note, however, the retail and office markets are being viewed

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA skeptically because on-again/off-again shelter-in-place orders and masking requirements have been most disruptive to those sectors. In some markets there is a significant gap between buyers and sellers. Buyers are looking for “Covid Discounts” while sellers are holding to pre-pandemic pricing. There are long-term impacts to be sorted out, but it is difficult in this unusual period of history to reliably measure the influence on value as there are fewer closed sales and rentals.

Inflation, on average, had been below the Fed’s target of 2% on the national level. The Fed expects a “transitory” increase in core inflation in 2021 but a return to more normal levels afterward. There is disagreement, however, with many private economists seeing more long-term effects. The PCE (personal consumption expenditures) inflation index used by the Fed is prepared by the Bureau of Economic Analysis (BEA) instead of the BLS and it tends to run lower than the more volatile CPI measure. The CPI is a betterknown index, and it is also frequently used in real estate transactions, especially leases, as a measure of inflation.

Overall, inflation dropped during the pandemic in the San Francisco Bay Area market. It is trending upward sharply now in the west and nationally. The local rate of inflation as measured by the CPI All Urban Consumers for the San Francisco Bay Area was 3.66% in August 2021 compared with 5.25% on a nationwide basis. As of August 2021, the 24- month average CPI for the San Francisco Bay Area was 2.36% versus 2.26% nationally, but 2.4% locally over the past 12 months versus 2.9% nationally.

Single-family mortgage rates fell in 2020 but stabilized late in the year. Longer rates had been less volatile, but the rates have shown significant variability as shorter-term government yield rates rose, fell, and then rose again recently. Calendar year 2021 started with the FHLMC 30-year fixed rate at 2.65%. The rate hit a low of 2.65% and a high of 3.18% over the past 52 weeks with an average of 2.88%. It was 3.01% as of September 30, 2021. February 2020 marks the beginning of the Covid-19 Pendemic influence on market trends. Even with low mortgage rates home sales have been limited by a small inventory of property for sale and stringent credit requirements for borrowers.

The Fed lowered the discount rate to a range of 0% and 0.25% in early March 2020, but the 12th District’s rate is 0.25%. The discount rate remains low by historical standards and the correlation between interest rates and overall rates of capitalization is often fuzzy. There is, however, expectation that capitalization rates may rise over time. How much and how fast rates will change is uncertain.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Housing prices have increased in core
areas but the pace of the upward trend
in prices moderated in some areas at
year end 2020. Buyers looking to escape
urban areas and a lack of inventory for
sale have pushed prices much higher
recently. While year-over-year figures
were higher, month-over-month figures
fell by an average of -1.9%, but this is
not unusual for August compared with
July.

Multi-family residential land markets
were active through 2019, but slowing
has been evident recently. Land prices
have reached very lofty levels and there
are concerns that the high rental prices
that drove land purchases may not be sustainable in the long run.

In the Bay Area, apartment rental rates were under upward pressure in areas with strong employment growth such as San Francisco, San Mateo County and Santa Clara County but prices moderated in 2019 and have fallen during the pandemic. According to Kidder Mathews, Bay Area vacancy stood at 6.9% as of the second quarter of 2021 – a

4.3% increase over the prior year. Average asking rent is $2,352 per month, virtually unchanged over the prior year. Other data suggest prices have declined sharply at the upper end of the rental market in San Francisco and other urbanized markets.

Over time, the West Bay counties have seen the greatest growth in employment with more modest improvements in the other Bay Area counties. Recent announcements about tech company headquarters being relocated out of the Bay Area pose significant concerns for the future, however. The companies relocating headquarters out of the area include: Oracle Corporation, Tesla, Hewlett Packard Enterprise, Palantir, and Credit Karma. Commonly cited reasons for the departures include the high cost of living and high taxes.

Total current (August 2021) Bay Area employment of 3,802,200 is 192,000 below the recent peak figure of 3,994,200 and the all-time high of 4,174,300 set in December 2018. The labor force is 139,500 below the recent peak figure of 4,161,600 and the alltime high of 4,284,700 set in November 2018. Job growth over the past three months was 57,300 versus 206,700 for the same period last year. March 2020 represents the first month of significant job loss due to the Covid-19 pandemic.

Some speculative commercial real estate developments will likely continue. The life sciences sector appears to remain in favor. Large investors are still acquiring sites for larger-scale multi-family development. The industrial, life science and R&D markets appear to be the most stable. The multi-family market has seen some deals fall through San Francisco Bay Area
Median Home Prices by County
Source: Corelogic
County Aug. 2021 Aug. 2020 % Chg.

Alameda $1,000,000 $880,000 13.6%
Contra Costa $773,500 $720,000 7.4%
Marin $1,377,500 $1,295,000 6.4%
Napa $787,500 $739,500 6.5%
San Francisco $1,450,000 $1,400,000 3.6%
San Mateo $1,500,000 $1,475,000 1.7%
Santa Clara $1,325,000 $1,200,000 10.4%
Solano $566,000 $483,000 17.2%
Sonoma $685,000 $622,000 10.1%
Average of Medians: $1,051,611 $979,389 7.4%

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA and modest price declines. The office market and retail sectors have seen the greatest impact with many stores and offices closed and expected to remain closed into Late2021 or early 2022. Prices in the office and retail sectors have fallen and are expected to stay under pressure for some time.

Gold prices had fallen over time but have seen strength recently. Oil had been relatively stable trading in a $45 to $65 range, but coincident with the Coronavirus outbreak, Saudi Arabia and Russia engaged in a battle for control of the market and the price of oil plunged to $20 to $30 per barrel. The price recovered to the $65 to $75+ range and recently jumped to around $80 per barrel. The energy market is expected to remain volatile.

The economy was strong prior to the impact of the Coronavirus. The real estate markets faced headwinds in 2020 due to uncertainty over recovery and will continue to face uncertainty in 2021. It is too early in the period marked by the pandemic to accurately judge the long-term effects on property prices. Various legislative efforts have been taken to protect tenants from eviction for any reason. Other efforts are being considered to further protections which may be detrimental to property owners in the short run.

Overall property prices have been high which further suggests more market risk in the near term.

Subject Analysis:

The subject is a single-family residential property with excess land. It has a favorable residential location near downtown South San Francisco and a good view outlook. It is near schools, shopping and services and public transit is available nearby. It is in a market segment that has low vacancy and high rental and sale prices. The property is older, but it appears of average quality and condition. Demand for well-located residential property is strong as evidenced by short marketing times and high prices.

There is little likelihood of new competitive supply as this is a near fully built out market.

The overall economy has a favorable long-term outlook, and the subject would likely enjoy a favorable competitive position with above average demand.

Highest and Best Use As If Vacant – Larger Parcel:

RL-8 zoning is intended to permit low-density residential development. Physically, the site has a significant upslope with essentially two levels. The lower level is improved with an existing residence. The upper level or the Excess Parcel is vacant and has limited access with no street frontage. Current zoning permits a maximum of eight dwelling units per acre so the site could accommodate seven or possibly eight residences. The physical features of the site would make this type of density difficult to achieve given the need for access in a conventional subdivision. Providing a direct street connection to the interior of the lot would substantially reduce the developable area. A more logical approach would be a condominium or planned unit type development with shared ownership of the Larger Parcel. This would allow for centralized parking on the front of the property where street access is readily available.

Then there could be separate residential development sites. The most likely arrangement would be one unit at the front above a parking structure with three to five

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA additional units at the rear on the Excess Parcel. Given the slope of the lot, an elevator could be added to the garage to service the upper-level residences. A total density of 4 to 6 units is more probable given the configuration of the land. New development is financially feasible given high residential house prices in the market. The question of maximal development is addressed here in a financial analysis. It is assumed that a reasonable development would likely be permitted by the city given the need for housing and the allowable density of seven to eight units by right.

To test highest and best use, a cost analysis of a theoretical development on the site is developed using standardized building costs from the Marshall Valuation Manual. A static highest and best use analysis is built around the cost estimate. The technique measures feasibility rent versus market rent. Feasibility rent is the income (per square foot) that would produce the necessary net income to make a new project economically viable according to typical (market) cost, expense and required return parameters. It is not indicative of an actual project, so it is not a cost estimate or a means of valuation.

The static analysis also assumes the project is built and occupied so it does not include an allowance for the time cost of money.

The project’s costs are based on a very good quality Class C residential development (Good quality is more typical of newer houses in the neighborhood). The primary analysis assumes four new residences of 2,000 square feet each and a common parking structure and elevator. Land value is developed in the next section.

Cost Inputs
Lot Area: 40,974 sq. ft. (usable)
Land by Extraction/Sq. Ft.: $36 /sq. ft.

Total Land: $1,475,000
Bldg. Area: 8,000 Residential
Sub. Area: 2,000 Garage
1stFloor 4,000 Approximate
Net Land Area 36,974 Approximate
Adjusted base costs for the project follow.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Base Cost Estimate
Use: SFR Garage
Class: C C
Quality: Very Gd. Very Gd.

Base Cost: $166.00 $30.00
Current Adj.: 1.23 1.23
Local Adj.: 1.40 1.40
Sub-Total $285.85 $51.66
HVAC Adj.: $0.00 $0.00
Multi-Story Adj.: $0.00 $0.00
Sprinklers: $5.00 $5.00
Sub-Total $290.85 $56.66
Perim. Adj.: 1.000 1.000
Elevator 1.050 1.050
Adj. Cost: $305.39 $59.49
Bldg. Area: 8,000 2,000
Cost/Use: $305.39 $59.49
Total Base Cost: $2,443,120 $118,980
Total: $2,562,100
Base hard costs are adjusted for site and yard improvements and fixtures and equipment. Soft costs are estimated and an allowance for developer’s overhead and profit is included. Total replacement costs and land are added together to arrive at a total cost new for the project.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Highest and Best Use Analysis
Cost New Estimate
Hard Costs Totals /Sq. Ft.

Base Cost New $2,562,100 $320.26
Site Improvements 15% $384,315 $48.04
Yard Improvements $15.52 $573,660 $71.71
FF&E 4 $11,193 $44,772 $5.60
Total Hard Costs $3,564,847 $445.61
Soft Costs
Financing Fees and Services 3% $106,945
Property Taxes 1.0579% $34,460
Marketing 5% $345,400
Total Soft Costs $486,805 $60.85
Total Hard and Soft Costs $4,051,652 $506.46
Developer's Overhead/Profit (% of Total) 25% $1,381,663 $172.71 Replacement Cost New $5,433,315 $679.16
Less Deterioration and Obsolescence/Adjustments
Physical Deterioration $0
Obsolescence $0
Leased Fee Adjustment $0
Total Depreciation/Adjustments $0 $0.00
Depreciated Replacement Cost $5,433,315 $679.16
Plus Land Value $1,475,000 $184.38
Cost Analysis for HBU - Not Market Value Estimate $6,908,315 $863.54 Rounded to $6,908,000
$864 /sq. ft.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The static analysis follows.

Static HBU Analysis – 4 Units
General Market Rent 8,000 sq. ft.
and (1) $3.25 /sq. ft.

Market NOI $26,000 /mo.

Annualized 12
Annual Rent $312,000
Less Vacancy & Expenses $78,000 25.0%
Projected NOI $234,000
Feasibility Rent
Cost New $5,433,315
Land Estimate $1,475,000
Total $6,908,315
Required Market OAR - New 3.50%
Required NOI – New $241,791
Gross Up (1-Tot. Exp. Ratio) 75.0%
Required Gross Rent - New $322,388
Building Area 8,000
Required Rent/Ann. - New $40.30
Required Rent/Mo.-New (2) $3.36
Typical average market rent for similar properties (1) of $3.25 per square foot is applied to derive a projected NOI for the property As New. Market rent is based on a quick survey of rents in the broad downtown area. The feasibility rent is based on typical costs of construction, market-based operating costs and a typical overall rate of return (OAR) for a new single-family residential property. Required NOI is converted to a gross feasibility rent. The indicated feasibility rent (2) of $3.36 per square foot is 3.3% higher than average market rent for similar space. New development would be likely as feasibility rent is only nominally higher than market rent.

A similar analysis of a larger six-unit development was prepared. As this project would be 50% larger than the primary analysis, a slightly higher rate of return is applied. It indicates a more speculative outcome.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Static HBU Analysis – 6 Units
General Market Rent 12,000 sq. ft.
and (1) $3.25 /sq. ft.

Market NOI $39,000 /mo.

Annualized 12
Annual Rent $468,000
Less Vacancy & Expenses $117,000 25.0%
Projected NOI $351,000
Feasibility Rent
Cost New $7,824,069
Land Estimate $2,080,000
Total $9,904,069
Required Market OAR - New 3.75%
Required NOI – New $371,403
Gross Up (1-Tot. Exp. Ratio) 75.0%
Required Gross Rent - New $495,203
Building Area 12,000
Required Rent/Ann. - New $41.27
Required Rent/Mo.-New (2) $3.44
Typical average market rent for similar properties (1) of $3.25 per square foot is applied to derive a projected NOI for the property As New. The feasibility rent is based on typical costs of construction, market-based operating costs and a typical OAR for a new property. Required NOI is converted to a gross feasibility rent. The indicated feasibility rent (2) of $3.44 per square foot is 5.8% higher than average market rent for similar space.

This analysis suggests a smaller development would enjoy better feasibility and would be the highest and best use in this location. This is logical as a larger project would be more expensive to develop, take longer to building and expose the developer to greater market risk.

The overall analysis suggests new development of a smaller residential project on the site would be feasible and the highest and best use of the site.

Please note that the owner plans to subdivide the property into two lots. The analysis employed looks at the value of the larger parcel for development, so the highest and best use is slightly different. This approach, however, provides the most direct means of valuing the Excess Parcel.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Methodology:

The application of the sales comparison approach is the most logical in valuing vacant land. The cost and income approaches are not typically applied to the valuation of smaller land parcels. and are not necessary to produce a reliable or credible opinion of value.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA

LAND VALUATION
The sales comparison approach is used to value the land. Information on recent sale transactions and listings in the market area of the subject was researched. Certain elements of comparison are used to analyze the market data and adjust for various points of difference. The primary elements of comparison for land sales include property rights conveyed, financing, conditions of sale, market conditions (time), location, physical characteristics and interim-income characteristics.

Land prices are broken down into unit(s) of comparison that are commonly applied in the marketplace. In this case, the most typical units of comparison are the price per square foot of land area along with the price per dwelling unit and the price per floor area ratio (FAR) foot is also included.

Land Market Data
The comparable land sales are summarized on the table that follows this page. A discussion of the comparables and the warranted adjustments are found on the pages that follow.

Date of Sale December-19 To September-21 SP:

Land Area 3,000 To 28,750 40,974
Price Per Sq. Ft. $49.17 To $116.67 $36.61
Price Per DU $180,000 To $450,000 $375,000
Price Per FAR Ft. $90 To $229 $188
Sales and listings from the broad north county market area were reviewed. The market has a limited amount of vacant or under-used land. There are four closed sales and two active listings in the dataset. This is an adequate amount of data even though the sales vary widely in size and location. They present a satisfactory cross section of data for comparison.

Zoning /
Highest and Land Area / per Sq. Ft. per per
No. Location/APN Date of Sale Best Use DU / Acre Total Land DU FAR Ft. 1 141 3rd Street September-21 I-D 28,750 sq.ft. $2,700,000 $94 $180,000 $90 Daly City Residential 0.660 acres
006-254-030 22.7 DU/ac.
2 223 Frankfort Street September-21 R-MLD 3,000 sq.ft. $350,000 $117 $350,000 $140 Daly City Residential 0.069 acres
004-322-120 14.5 DU/ac.
3 52 Franklin Avenue April-21 RL-8 8,379 sq.ft. $412,000 $49 $412,000 $229 South San Francisco Residential 0.192 acres
012-039-180 5.2 DU/ac.
4 565 Magnolia Avenue December-19 RL-8 6,523 sq.ft. $450,000 $69 $450,000 $225 South San Francisco Residential 0.150 acres
012-261-220 6.7 DU/ac.
5 NWC Crocker Avenue and Scenic
Way Listing PD 14,600 sq.ft. $1,600,000 $110 $400,000 $160 Daly City Residential 0.335 acres Est.
004-234-080 11.9 DU/ac.
6 707-717 Templeton Avenue Listing R-MLD 15,589 sq.ft. $1,750,000 $112.26 $437,500 $177.00 Daly City Residential 0.358 acres Est.
004-243-130, 140, 160 & 170
SUBJECT:
701 Spruce Avenue N/A RL-8 40,974 sq.ft.

South San Francisco Residential 0.941 acres $95 $279,308 $129 012-131-040 4.3 DU/ac. /SF Land /DU /FAR Ft.

Sale Price

SUMMARY OF COMPARABLE LAND SALES
701 Spruce Avenue, South San Francisco
Sales Weighted Average
Joseph I. Napoliello, MAI

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Figure 7 - Land Sales Location Map
LAND SALE # 1
LOCATION: 141 3rd Street
CITY: Daly City COUNTY: San Mateo
APN: 006-254-030
ZIP: 94014
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 28,750
LAND AREA: ACRES: 0.660
TOPOGRAPHY: Mostly level
PARCEL SHAPE: Irregular
ZONING: I-D
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Fully improved
DATE OF SALE: 9/30/2021
DOCUMENT: N/A - Date Estimated
BUYER: N/A
SELLER: Winston Chow and Lilly Tsu Fah Trust
SALE PRICE - AS IS: $2,700,000
FINANCING: N/A, All cash to seller
CASH EQUIVALENT: $2,700,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $90 PRICE/DU: $180,000
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: None during prior 3 years
CONFIRMATION: CoStar, public records, Juan DeLeon, 650-572-6573 $93.91 / Sq. Ft.
$4,090,909 / Acre
This is the recent sale (recording date not yet available) of a residential parcel in an unincorporated area of Daly City. The property went into escrow in 2019 and the seller allowed the buyer to go through the entitlement process before closing recently. The buyer has entitlements for the development of 15 townhouse units on the site which is in a low-density residential neighborhood near Mission Boulevard. The property was listed for $2,999,999 and sold for $2,700,000. The sales agent confirmed the price.

PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALE # 2
LOCATION: 223 Frankfort Street
CITY: Daly City COUNTY: San Mateo
APN: 004-322-120
ZIP: 94014
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 3,000
LAND AREA: ACRES: 0.069
TOPOGRAPHY: Sloping
PARCEL SHAPE: Rectangular
ZONING: R-MLD
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Fully improved
DATE OF SALE: 9/17/2021
DOCUMENT: 2021-134175
BUYER: Karen Hong and Mike Hong
SELLER: Ethel Liu Wan Trust
SALE PRICE - AS IS: $350,000
FINANCING: Banner Bank, Conventional
CASH EQUIVALENT: $350,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $140 PRICE/DU: $350,000
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: None during prior 3 years
CONFIRMATION: MLS, public records, Andrew de Vries, 415-585-5200 $116.67 / Sq. Ft.

This is the recent sale of a small residential parcel on the north side of San Bruno Mountain in a neighborhood of mostly attached residences near the San Francisco city limit. The lot is narrow and steep and will require significant site improvements, but it will offer good views to the north. It was listed for $499,000 and sold for $350,000 after a reasonable time on the market. The buyer is a contractor who plans to build a house for personal use. $5,072,464 / Acre
PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALE # 3
LOCATION: 52 Franklin Avenue
CITY: South San Francisco COUNTY: San Mateo
APN: 012-039-180
ZIP: 94080
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 8,379
LAND AREA: ACRES: 0.192
TOPOGRAPHY: Sloping
PARCEL SHAPE: Rectangular
ZONING: RL-8
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Fully improved
DATE OF SALE: 4/28/2021
DOCUMENT: 2021-068478
BUYER: Juan Pedro and Rosa Elena Diaz
SELLER: Satya Naidu
SALE PRICE - AS IS: $412,000
FINANCING: N/A, All cash to seller
CASH EQUIVALENT: $412,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $229 PRICE/DU: $412,000
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: Sold in 2020 for $405,000
CONFIRMATION: MLS, public records, Philip Watson, 650-274-5187 $49.17 / Sq. Ft.

This is the recent sale of a residential parcel in South San Francisco in a neighborhood on the north side of Sign Hill sometimes referred to as Happy Valley or Sterling Terrace. The neighborhood is nearly fully developed with a mix of older and newer single-family residences. The lot was listed for $419,500 and sold quickly for $412,000. It previously sold in early 2020 for $405,000. $2,145,833 / Acre
PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALE # 4
LOCATION: 565 Magnolia Avenue
CITY: South San Francisco COUNTY: San Mateo
APN: 012-261-220
ZIP: 94080
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 6,523
LAND AREA: ACRES: 0.150
TOPOGRAPHY: Terraced
PARCEL SHAPE: Rectangular
ZONING: RL-8
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Fully improved
DATE OF SALE: 12/31/2019
DOCUMENT: 2019-111951
BUYER: Ming Y. Chen and Biqi Xiao
SELLER: DeZordo Family Trust
SALE PRICE - AS IS: $450,000
FINANCING: N/A, All cash to seller
CASH EQUIVALENT: $450,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $225 PRICE/DU: $450,000
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: None during prior 3 years
CONFIRMATION: MLS, public records, John Penna, 650-588-2113 This is the sale of a vacant lot in the Sign Hill neighborhood at the northerly edge of downtown. The neighborhood is near fully developed with a mix of older and newer single-family homes. All cash buyer, there were no entitlements for development, but the lot benefits from ingress/egress over an easement across the front of 567 Magnolia Avenue. It was listed for $500,000 and sold quickly for $450,000.
$3,000,000 / Acre
$68.99 / Sq. Ft.

PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALE # 5
LOCATION: NWC Crocker Avenue and Scenic Way
CITY: Daly City COUNTY: San Mateo
APN: 004-234-080
ZIP: 94014
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 14,600
LAND AREA: ACRES: 0.335
TOPOGRAPHY: Sloping
PARCEL SHAPE: Irregular
ZONING: PD
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Raw land
DATE OF SALE: Listing
DOCUMENT: N/A
BUYER: N/A
SELLER: Frank and Dorothy Cheng
SALE PRICE - AS IS: $1,600,000
FINANCING: N/A, N/A
CASH EQUIVALENT: $1,600,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $160 PRICE/DU: $400,000
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: None during prior 3 years
CONFIRMATION: MLS, public records, Lawrence Ko, 650-995-4049 This is the active listing of a raw parcel that lacks street access and utilities. It has a steep downslope, but new construction is ongoing nearby. The property has been on the market for a short time, but has seen little interest according to the listing agent. The asking price is $1,600,000 or $400,000 per potential unit. $4,776,119 / Acre
$109.59 / Sq. Ft.

PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALE # 6
LOCATION: 707-717 Templeton Avenue
CITY: Daly City COUNTY: San Mateo
APN: 004-243-130, 140, 160 & 170
ZIP: 94014
NEIGHBORHOOD: Residential
LAND AREA: SQ. FT. 15,589
LAND AREA: ACRES: 0.358
TOPOGRAPHY: Sloping
PARCEL SHAPE: Irregular
ZONING: R-MLD
Vacant
HIGHEST & BEST USE: Residential
ENVIRONMENTAL ISSUES: None reported
COMMENTS:

IMPROVEMENTS: Fully improved
DATE OF SALE: Listing
DOCUMENT: N/A
BUYER: N/A
SELLER: Darrell Investments LLC
SALE PRICE - AS IS: $1,750,000
FINANCING: N/A, N/A
CASH EQUIVALENT: $1,750,000 LOAN AMOUNT: N/A
PRICE/SQ. FT./LAND: LOAN TO VALUE: N/A
PRICE/ACRE:

PRICE/FAR FT.: $177 PRICE/DU: $437,500
NON REALTY ITEMS: None
CONDITIONS OF SALE: Market
SALES IN PRIOR 3 YRS.: None during prior 3 years
CONFIRMATION: MLS, public records, Joel Hopman, 415-722-2200 This is the active listing of a vacant parcel that has plans and entitlements for development of four 2,476 square foot residences. It is located in a single-family neighborhood with a mix of older and newer homes on the north side of San Bruno Mountain. It is listed for $1,750,000 or $437,500 per potential unit. The agents reports limited interest to date.
$4,888,268 / Acre
$112.26 / Sq. Ft.

PRESENT USE:

Joseph I. Napoliello, MAI
LAND SALES COMPARISON GRID / SQ. FT.

Subject: Sale No. - 1 Sale No. - 2 Sale No. - 3 Sale No. - 4 Sale No. - 5 Sale No. - 6 Location 701 Spruce Avenue
South San Francisco
141 3rd Street
Daly City
223 Frankfort Street
Daly City
52 Franklin Avenue
South San Francisco
565 Magnolia Avenue
South San Francisco
NWC Crocker Avenue and
Scenic Way
Daly City
707-717 Templeton Avenue
Daly City
Sale Price N/A $2,700,000 $350,000 $412,000 $450,000 $1,600,000 $1,750,000 Property Rts. Conveyed Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Financing Terms Assumed Market All cash to seller Conventional All cash to seller All cash to seller N/A N/A Conditions of Sale Assumed Market Market Market Market Market Market Market Date of Sale Sep-21 Sep-21 Sep-21 Apr-21 Dec-19 Listing Listing Location Residential Residential Residential Residential Residential Residential Residential Zoning/HBU RL-8 / Residential I-D / Residential R-MLD / Residential RL-8 / Residential RL-8 / Residential PD / Residential R-MLD / Residential Density Base Max FAR 0.2 1.0 0.8 0.2 0.3 0.7 0.6
Site Utility Poor Average Fair Fair Fair/Avg. Poor Fair Interim Income Nominal Average Average Average Average Average Average Plans/Entitlements Assumed None None None None None None None Demolition/Environmental Assumed Nominal Nominal Nominal Nominal Nominal Nominal Nominal Land Area (Sq. Ft.) 40,974 28,750 3,000 8,379 6,523 14,600 15,589 Unadjusted Price/Sq. Ft. N/A $93.91 $116.67 $49.17 $68.99 $109.59 $112.26 Financing/Fee/Conditions -15%
Market Conditions (Time) 2.50% 4.28% -25% -10%
Adjusted Price/Sq. Ft. $93.91 $116.67 $49.17 $71.94 $82.19 $84.19 Location -5% 5% 5% 5%
Zoning/HBU -25% -20% -15% -15%
Site Utility -20% -10% -10% -15% -10%
Interim Income
Demolition/Environmental
Size Adj. $0.341 -4% -11% -23% -17% -8% -8%
Net Physical Adjustment -49% -46% -28% -32% -18% -28%
Adjusted Price/Sq. Ft. $48 $63 $35 $49 $67 $61
Net Adjustment -49.0% -46.0% -28.0% -29.1% -38.5% -46.0% Gross Adjustment 49.0% 46.0% 38.0% 36.3% 53.0% 63.0%

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Comparable Land Sale 1 is the September 2021 sale of a parcel of land at 141 3rd Street, Daly City, approximately three and one-half miles northwest of the subject.

This is the recent sale (recording data not yet available) of a residential parcel in an unincorporated area of Daly City. The property went into escrow in 2019 and the seller allowed the buyer to go through the entitlement process before closing recently. The buyer has entitlements for the development of 15 townhouse units on the site which is in a lowdensity residential neighborhood near Mission Boulevard. The property was listed for $2,999,999 and sold for $2,700,000. The sales agent confirmed the price. The immediate neighborhood is residential in character. The site is mostly level and irregular in shape with average site utility and set along a residential street. It contains a total land area of approximately 28,750 square feet or approximately 0.66 acres. The site all off-site improvements. The buyer purchased the site for future development. Demolition costs are estimated by the appraiser to be nominal. The purchase price was $2,700,000 or $94 per square foot of land area, $180,000 per DU and $90 per FAR foot. No environmental issues were reported. The parcel has a zoning classification of I-D (interim district). The sale was all cash to seller. No unusual concessions or conditions of sale were reported.

Comparable Land Sale 2 is the September 2021 sale of a parcel of land at 223 Frankfort Street, Daly City, approximately three and six-tenths miles northwest of the subject. This is the recent sale of a small residential parcel on the north side of San Bruno Mountain in a neighborhood of mostly attached residences near the San Francisco city limit. The lot is narrow and steep and will require significant site improvements, but it will offer good views to the north. It was listed for $499,000 and sold for $350,000 after a reasonable time on the market. The buyer is a contractor who plans to build a house for personal use. The immediate neighborhood is residential in character.

The site is sloping and rectangular in shape with fair site utility and set along a residential street. It contains a total land area of approximately 3,000 square feet or approximately

0.069 acres. The site has all off-site improvements. The buyer purchased the site for future development. Demolition costs are estimated by the appraiser to be nominal. The purchase price was $350,000 or $117 per square foot of land area, $350,000 per DU and $140 per FAR foot. No environmental issues were reported. The parcel has a zoning classification of R-MLD (medium-density residential). The sale was conventionally financed through Banner Bank. No unusual concessions or conditions of sale were reported.

Comparable Land Sale 3 is the April 2021 sale of a parcel of land at 52 Franklin Avenue, South San Francisco, approximately four-tenths of a mile northwest of the subject. This is the recent sale of a residential parcel in South San Francisco in a neighborhood on the north side of Sign Hill sometimes referred to as Happy Valley or Sterling Terrace. The neighborhood is nearly fully developed with a mix of older and newer single-family residences. The lot was listed for $419,500 and sold quickly for $412,000. It previously sold in early 2020 for $405,000. The immediate neighborhood is residential in character. The site is sloping and rectangular in shape with fair site utility and set along a residential street. It contains a total land area of approximately 8,379 square feet or approximately 0.192 acres. The site has all off-site improvements. The buyer purchased the site for future development. Demolition costs are estimated by the appraiser to be

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA nominal. The purchase price was $412,000 or $49 per square foot of land area, $412,000 per DU and $229 per FAR foot. No environmental issues were reported, but the hill upslope from the property has a history of landslides. The parcel has a zoning classification of RL-8 (residential). The sale was all cash to seller. No unusual concessions or conditions of sale were reported.

Comparable Land Sale 4 is the December 2019 sale of a parcel of land at 565 Magnolia Avenue, South San Francisco, approximately four-tenths of a mile west of the subject. This is the sale of a vacant lot in the Sign Hill neighborhood at the northerly edge of downtown. The neighborhood is near fully developed with a mix of older and newer single-family homes. There were no entitlements for development, but the lot benefits from ingress/egress over an easement across the front of 567 Magnolia Avenue.

It was listed for $500,000 and sold quickly for $450,000. The immediate neighborhood is residential in character. The site is terraced and rectangular in shape with fair-to-average site utility and set along a residential street. It contains a total land area of approximately 6,523 square feet or approximately 0.15 acres. The site has all off-site improvements. The buyer purchased the site for future development. Demolition costs are estimated by the appraiser to be nominal. The purchase price was $450,000 or $69 per square foot of land area, $450,000 per DU and $225 per FAR foot. No environmental issues were reported.

The parcel has a zoning classification of RL-8 (residential). The sale was all cash to seller.

No unusual concessions or conditions of sale were reported.

Comparable Land Sale 5 is the current listing of a parcel of land at the northwest corner of Crocker Avenue and Scenic Way, Daly City, approximately three and one-half miles northwest of the subject. This is the active listing of a raw parcel that lacks street access and utilities. It has a steep downslope, but new construction is ongoing nearby. The property has been on the market for a short time, but has seen little interest. The list price is $1,600,000 or $400,000 per potential unit. The immediate neighborhood is residential in character. The site is sloping and irregular in shape with poor site utility and set along a residential street. It contains a total land area of approximately 14,600 square feet or approximately 0.335 acres. The site is raw land and needs off-site improvements.

Demolition costs are estimated by the appraiser to be nominal. The asking price is $1,600,000 or $110 per square foot of land area, $400,000 per DU and $160 per FAR foot.

No environmental issues were reported. The parcel has a zoning classification of PD (planned development). No unusual concessions or conditions of sale are being offered.

Comparable Land Sale 6 is the current listing of a parcel of land at 707-717 Templeton Avenue, Daly City, approximately three and one-half miles northwest of the subject. This is the active listing of a vacant parcel that has plans and entitlements for development of four 2,476 square foot residences. It is located in a single-family neighborhood with a mix of older and newer homes on the north side of San Bruno Mountain. It is listed for $1,750,000 or $437,500 per potential unit. The agent reports limited interest to date. The immediate neighborhood is residential in character. The site is sloping and irregular in shape with fair site utility and set along a residential street. It contains a total land area of approximately 15,589 square feet or approximately 0.358 acres. The site has all off-site improvements. Demolition costs are estimated by the

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA appraiser to be nominal. The asking price is $1,750,000 or $112 per square foot of land area, $437,500 per DU and $177 per FAR foot. No environmental issues were reported.

The parcel has a zoning classification of R-MLD (medium-density residential). No unusual concessions or conditions of sale are being offered, but the property is entitled for development.

Analysis and Value Conclusion
The immediate market has a limited amount of vacant or under-used land. There have been several recent land sales in the immediate market area, and the broad area has been relatively active, but there are limited listings of similar properties. Variation in location, size and density results in a significant spread in price indicators. The adjustment process is subjective as there is too much variation in the data to reliably extract adjustment factors.

The comparable data exhibits the following price ranges before and after adjustment.

Unadjusted Price Adjusted Price
$49 Low $35
$117 High $67
Mean Unadjusted Price $92
Weighted Mean Unadjusted Price $95
Mean Adjusted Price $51
None of the sales required adjustment for unusual conditions of sale, financing or fee interest. Sale 6 includes entitlements for development. It is adjusted for the estimated value of the entitlements.

The market was active prior to the outbreak of the Covid-19 pandemic. Subsequently, there has been more limited activity and agents report limited interest in current listings of multi-lot parcels. Market rents in the core urban areas have fallen suggesting weakness in the demand for land for multi-family development, but single-family home prices have been under upward pressure. A 2.5% upward adjustment is applied to the older closed sales to reflect the best estimate of current market conditions and the listings are adjusted to more probable selling points.

Adjustments for location are subjective. The subject, at the edge of the downtown area, has a more favorable setting than most of the comparable sales. Sale 2 is slightly superior in view outlook with some newer properties nearby. Sales 3, 5 and 6 are nominally inferior.

Sales 1, 2, 5 and 6 are adjusted downward for superior density.

The sales are generally superior in site utility with Sale 5 the most similar.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA A size adjustment is developed using a linear regression analysis of the adjusted price (excluding size). Larger sales will typically have a lower price per square foot and in this instance the market did indicate a minor price differential based on size. The regression analysis produced the following adjustment.

Adj. Pr. Per Sq. Ft. Bef. Size
Sale Area Adj./Sq. Ft.
1 28,750 $51.65
2 3,000 $75.83
3 8,379 $46.71
4 6,523 $61.15
5 14,600 $73.97
6 15,589 $67.36
Correlation -0.352157826
Slope -0.000454827
Slope/1000 -0.454827215
Factor 0.75
Adjustment -$0.341120
The data has a moderate correlation coefficient of -0.35216 with a raw adjustment factor of $0.4548 per 1000. The subject is larger than the comparables in size, so the indicated factor is moved downward slightly to reflect a more probable adjustment for a point outside the comparable size range.

The adjusted prices before size are shown graphically.
y = -0.0005x + 68.603
R² = 0.124
y = 67.718e-7E-06x
R² = 0.1213
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
0 5,000 10,000 15,000 20,000 25,000 30,000
Adj. Pr. Per Sq. Ft. Bef. Size

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Price Per Square Foot
The available market data before adjustment ranges from roughly $49 to $117 per square foot. After adjustment, the range narrows to roughly $35 to $67 per square foot.

Most of the sales fall between roughly $35 and $60 per square foot. The lower end of this range or roughly $35 to $40 per square foot has the most support based on the subject’s larger size, irregular shape and slope.

A weighting technique produces the following benchmark value.

Adjusted Total
Sale Price Weight Weight
1 $47.90 15% $7.18 Superior utility
2 $63.00 15% $9.45 Smaller size
3 $35.40 25% $8.85 Similar density
4 $48.92 25% $12.23 Similar density
5 $67.40 10% $6.74 Listing
6 $60.62 10% $6.06 Listing
100% $50.51
The benchmark figure of $50+ per square foot is a limited indicator as the subject falls outside the range in size with other physical limitations. The lower end of the most probable range is indicated based on the subject’s size, shape and slope. A most probable value range is $35 to $40 per square foot. The most probable market value range is
LAND VALUATION SUMMARY - Per Sq. Ft.
701 Spruce Avenue
40,974 Sq. Ft. @ $35.00 per Sq. Ft. = $1,434,090
40,974 Sq. Ft. @ $37.50 per Sq. Ft. = $1,536,525
40,974 Sq. Ft. @ $40.00 per Sq. Ft. = $1,638,960
The most probable value per square foot value is from the middle of the indicated range or $1,537,000 rounded.

As a check on this estimate, linear and exponential regression trendline analyses were applied. The individual estimates follow.

Linear Forecast: $50
Curvilinear Forecast: $51
The analyses had similar looking trendlines and R2 figures. This range is also limited in reliability based on the subject’s physical attributes. The most proximate sales suggest a lower value range while the higher-density sales indicate the upper end of the range.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Based on current market conditions, but considering the subject’s location, size, shape and topography, the middle of the narrowed range, or $37.50 per square foot is the best indication of value for the property.

The price per dwelling unit (DU) and price per FAR foot are also considered.

Price Per DU
The adjustment grid for price per dwelling unit follows this page.

The elements of comparison adjustments that were applied to the price per square foot unit of comparison were also applied to the price per dwelling unit. The difference is that dwelling unit density adjustment was calculated separately as was done for the size adjustment in the price per square foot adjustment grid.

The available market data before adjustment ranges from roughly $180,000 to $450,000 per unit. After adjustment, the range narrows to roughly $327,302 to $430,633 per unit.

The adjustment process produces a material narrowing in the range.

Unadjusted Price Adjusted Price
$180,000 Low $327,302
$450,000 High $430,633
Mean Unadjusted Price $371,583
Weighted Mean Unadjusted Price $279,308
Mean Adjusted Price $372,886
The best indicators (3 and 4) suggest a range of roughly $400,000 to $430,000 with the other sales indicating a value below $400,000 per unit. Most support is found in the range of $350,000 to $400,000 based on the subject’s density limited by its physical characteristics. The mean unadjusted, weighted mean unadjusted and mean adjusted figures set a range of roughly $280,000 to $370,000. View outlook potential and lower density suggests a higher value.

Linear and exponential analyses produced the following estimates.

Linear Forecast: $411,389
Curvilinear Forecast: $468,159
These figures are of more limited reliability because the subject has a probable density below the low end of the range.

LAND SALES COMPARISON GRID / DU
Subject: Sale No. - 1 Sale No. - 2 Sale No. - 3 Sale No. - 4 Sale No. - 5 Sale No. - 6 Location 701 Spruce Avenue
South San Francisco
141 3rd Street
Daly City
223 Frankfort Street
Daly City
52 Franklin Avenue
South San Francisco
565 Magnolia Avenue
South San Francisco
NWC Crocker Avenue and
Scenic Way
Daly City
707-717 Templeton Avenue
Daly City
Sale Price N/A $2,700,000 $350,000 $412,000 $450,000 $1,600,000 $1,750,000 Property Rts. Conveyed Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Financing Terms Assumed Market All cash to seller Conventional All cash to seller All cash to seller N/A N/A Conditions of Sale Assumed Market Market Market Market Market Market Market Date of Sale Sep-21 Sep-21 Sep-21 Apr-21 Dec-19 Listing Listing Location Residential Residential Residential Residential Residential Residential Residential Zoning/HBU RL-8 / Residential I-D / Residential R-MLD / Residential RL-8 / Residential RL-8 / Residential PD / Residential R-MLD / Residential Density DU / Ac. 4.3 /Ac. 22.7 /Ac. 14.5 /Ac. 5.2 /Ac. 6.7 /Ac. 11.9 /Ac. 11.2 /Ac.

Site Utility Poor Average Fair Fair Fair/Avg. Poor Fair Interim Income Nominal Average Average Average Average Average Average Plans/Entitlements Assumed None None None None None None None Demolition/Environmental Assumed Nominal Nominal Nominal Nominal Nominal Nominal Nominal Land Area (Sq. Ft.) 40,974 28,750 3,000 8,379 6,523 14,600 15,589 Unadjusted Price/DU N/A $180,000 $350,000 $412,000 $450,000 $400,000 $437,500 Financing/Fee/Conditions -15%
Market Conditions (Time) 2.50% 4.28% -25.00% -10%
Adjusted Price/DU $180,000 $350,000 $412,000 $469,243 $300,000 $328,125 Location/Timing -5% 5% 5% 5%
Zoning/HBU -25% -20% -15% -15%
Site Utility -20% -10% -10% -15% -10%
Interim Income
Demolition/Env./Non-RE
FAR Adj. $13,153.337 135% 38% 3% 7% 34% 28%
Net Physical Adjustment 90% 3% -2% -8% 24% 0%
Adjusted Price/DU $342,027 $362,216 $403,995 $430,633 $371,143 $327,302 Net Adjustment 90.0% 3.5% -1.9% -4.3% -7.2% -25.2%
Gross Adjustment 180.0% 73.5% 18.1% 26.0% 78.7% 90.7%

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The adjusted prices before density are shown graphically.

The subject has a mid-block setting at the fringe of downtown with a lower allowable density which tends to have more of an influence on price per unit. The various analyses suggest a broad value range of $350,000 to $400,000, with a more probable range around $375,000, as follows.

LAND VALUATION SUMMARY - Per Dwelling Unit
701 Spruce Avenue
4 Units @ $365,000 per DU = $1,460,000
4 Units @ $375,000 per DU = $1,500,000
4 Units @ $385,000 per DU = $1,540,000
The most probable value per dwelling unit is from the middle of the indicated range or $1,500,000 rounded.

Price per FAR Foot
The adjustment grid for price per FAR foot follows this page.

The elements of comparison adjustments that were applied to the price per square foot unit of comparison were also applied to the price per FAR foot. The difference is that FAR density adjustment was calculated separately as was done for the size adjustment in the price per square foot adjustment grid.

The available market data before adjustment ranges from roughly $90 to $229 per FAR foot. After adjustment, the range narrows to roughly $67 to $190 per FAR foot. y = 658217e-0.08x
R² = 0.9626
y = -17538x + 485939
R² = 0.9703
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000

0.0 5.0 10.0 15.0 20.0 25.0
Price Per DU
LAND SALES COMPARISON GRID / FAR Ft.

Subject: Sale No. - 1 Sale No. - 2 Sale No. - 3 Sale No. - 4 Sale No. - 5 Sale No. - 6 Location 701 Spruce Avenue
South San Francisco
141 3rd Street
Daly City
223 Frankfort Street
Daly City
52 Franklin Avenue
South San Francisco
565 Magnolia Avenue
South San Francisco
NWC Crocker Avenue and
Scenic Way
Daly City
707-717 Templeton Avenue
Daly City
Sale Price N/A $2,700,000 $350,000 $412,000 $450,000 $1,600,000 $1,750,000 Property Rts. Conveyed Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Fee simple Financing Terms Assumed Market All cash to seller Conventional All cash to seller All cash to seller N/A N/A Conditions of Sale Assumed Market Market Market Market Market Market Market Date of Sale Sep-21 Sep-21 Sep-21 Apr-21 Dec-19 Listing Listing Location Residential Residential Residential Residential Residential Residential Residential Zoning/HBU RL-8 / Residential I-D / Residential R-MLD / Residential RL-8 / Residential RL-8 / Residential PD / Residential R-MLD / Residential Density Base Max FAR 0.2 1.0 0.8 0.2 0.3 0.7 11.2 /Ac.

Site Utility Poor Average Fair Fair Fair/Avg. Poor Fair Interim Income Nominal Average Average Average Average Average Average Plans/Entitlements Assumed None None None None None None None Demolition/Environmental Assumed Nominal Nominal Nominal Nominal Nominal Nominal Nominal Floor Area (FAR Ft.) 8,000 30,000 2,500 1,800 2,000 10,000 15,589 Unadjusted Price/DU N/A $90 $140 $229 $225 $160 $177
Financing/Fee/Conditions -15%
Market Conditions (Time) 2.50% 4.28% -25.00% -10%
Adjusted Price/DU $90 $140 $229 $235 $120 $133
Location/Timing -5% 5% 5% 5%
Zoning/HBU -25% -20% -15% -15%
Site Utility -20% -10% -10% -15% -10%
Interim Income
Demolition/Env./Non-RE
FAR Adj. $0.00440 108% -17% -12% -11% 7% 25%
Net Physical Adjustment 63% -52% -17% -26% -3% -3%
Adjusted Price/DU $146 $67 $190 $173 $117 $129
Net Adjustment 62.6% -52.3% -16.9% -23.1% -27.0% -27.1% Gross Adjustment 152.6% 52.3% 26.9% 30.5% 52.3% 88.2%

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Unadjusted Price Adjusted Price
$90 Low $67
$229 High $190
Mean Unadjusted Price $170
Weighted Mean Unadjusted Price $127
Mean Adjusted Price $137
This indicator is more limited in reliability as some unit sizes are estimated. The best indicators suggest a range of roughly $175 to $190 per FAR foot with most support from the upper end of the range based on unit size and view amenity. The mean unadjusted, weighted mean unadjusted and mean adjusted figures set a range of roughly $125 to $170.

Linear and exponential analyses produced the following estimates.

Linear Forecast: $139
Curvilinear Forecast: $126
The adjusted prices before size are shown graphically.

The most probable value range of $180 to $190, as follows.

LAND VALUATION SUMMARY - FAR Ft.
701 Spruce Avenue
8,000 FAR Ft. @ $180 per FAR Ft. = $1,440,000
8,000 FAR Ft. @ $185 per FAR Ft. = $1,480,000
8,000 FAR Ft. @ $190 per FAR Ft. = $1,520,000
y = -0.0044x + 174.02
R² = 0.5565
y = 174.11e-4E-05x
R² = 0.5831
$0
$50
$100
$150
$200
$250
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Price Per FAR Foot

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The most probable value per FAR foot value is from the middle of the indicated range or $1,480,000 rounded.

Reconciliation
The units of comparison that were analyzed provided the following value indications:
/SF Low $1,434,090
/SF Probable $1,536,525
/SF High $1,638,960
/DU Low $1,460,000
/DU Probable $1,500,000
/DU High $1,540,000
/FAR Ft. Low $1,440,000
/FAR Ft. Probable $1,480,000
/FAR Ft. High $1,520,000
This sets a broad range of value of:

Broad Range $1,434,000 to $1,639,000
Each unit of comparison had a most probable value indication of:

Unit of Comparison Indicators /Unit
Per Sq. Ft.: $1,536,525 $37.50
Per DU: $1,500,000 $375,000
Per FAR Ft. $1,480,000 $185
Measures of variance suggest the price per square foot and price per DU units of comparison adjusted well. The price per FAR foot is less reliable.

Coefficient of Variation or Relative Variability
Unadjusted Adjusted
Price Per Square Foot: 0.27 0.20
Price Per DU: 0.25 0.09
Price Per FAR Foot: 0.28 0.29
The data sets a most probable value range of:

Indicators Range $1,480,000 to $1,537,000
The units of comparison are typically applied in the market area with the price per square foot and price per DU given more weight. They set a narrow range of

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA $1,480,000 to $1,537,000. The range is narrow, so most weight is placed on the center of the range.

Based on the preceding, and after considering the factors that influence value including the area, neighborhood, site, improvements, highest and best use, and available market data, and subject to the stated limiting conditions and assumptions, certification, and definition of value, it is my opinion that, as of the date of valuation, the property at 701 Spruce Avenue, South San Francisco, California, had an undivided fee simple estate market value - as is – of
Larger Parcel Reconciled Value - As Is $1,500,000
Extraordinary Valuation Assumption: The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared a pandemic by the World Health Organization (WHO) in March 2020. The reader is cautioned, and reminded, that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property of any unforeseen event after the effective date of the appraisal.

The valuation is based on the supposition that the excess property (residual lot) can be severed from the residential parcel at 701 Spruce Avenue. A hypothetical condition assumes something about the property that is contrary to known fact but is supposed for valuation purposes. The use of this condition may have an affect on the assignment results and the appraiser reserves the right to review the valuation conclusions should additional information become available.

Value As If Vacant
As used in the highest and best use analysis, the land value needs adjustment for demolition costs. Typical estimates for demolition range from $10 to $20 per square foot. The subject would likely have some recyclable items suggesting a lower figure.

Building Area 1,995
Demo. Cost $10
Total $19,950
The indicated value of the property, as vacant, is
Reconciled - As Is $1,500,000
Demolition Cost -$19,950
Value - As Vacant $1,480,050
Rounded to $1,475,000
Larger Parcel Reconciled Value - As Vacant $1,475,000

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA Residual Value of Excess Parcel
The rear or Excess Parcel is approximately 25,763 square feet in size. To estimate the value of the Excess Parcel, the residual value of the front parcel, the costs associated with separation of the parcel from the larger parcel and the differential in costs associated with new development based on slope are deducted from the value of the Larger Parcel.

The smaller front parcel is assumed to support just one unit. The parcel would have more direct street access and is given a slightly higher value than the average of four units. The average estimate is $375,000. With a slightly more favorable setting, the front parcel is valued at $400,000.

Subdivision costs, surveying, mapping, legal, developer’s overhead costs are estimated at $50,000 based on surveys of various sources including developers.

The cost estimate used in the highest and best use section applied a nominally higher building cost factor to account for the type of development the site will require versus what is more commonly found in the neighborhood. The delta is $26 per square foot for 8,000 square feet or $208,000.

These marginal costs are deducted from the value of the Larger Parcel to arrive at the value of the Excess Parcel.

Value of Larger Parcel $1,475,000
Less Front Parcel -$400,000
Less Subdivision Costs -$50,000
Less Cost Differential -$208,000
Residual Value $817,000
Rounded to $820,000
Excess Lot/Sq. Ft. 25,763
Value/Sq. Ft. $31.83
Based on the available market data and subject to the stated limiting conditions and assumptions, as of the effective date of value, the Excess Parcel had a market value of Market Value – Excess Parcel – As Is $820,000
Extraordinary Valuation Assumption: The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared a pandemic by the World Health Organization (WHO) in March 2020. The reader is cautioned, and reminded, that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property of any unforeseen event after the effective date of the appraisal.

APPRAISAL: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA The valuation is based on the supposition that the excess property (residual lot) can be severed from the residential parcel at 701 Spruce Avenue. A hypothetical condition assumes something about the property that is contrary to known fact but is supposed for valuation purposes. The use of this condition may have an affect on the assignment results and the appraiser reserves the right to review the valuation conclusions should additional information become available.

Marketing/Exposure Time Estimate
In order to fully understand the value opinion, it is relevant to place the figure in the perspective of marketing or exposure time. Real estate is not a liquid investment. It takes time to properly market. It is also a complex investment with significant legal impediments to transfer. For these reasons, it is important to understand how long a property may take to sell in the open market. Exposure time is based on the presumption that the property has been on the market in advance of the effective date of value. Marketing time is based on the presumption that the property will be put on the market as of the effective date of value. In this instance, market conditions are uncertain, but the subject has a generally favorable setting, and marketing and exposure times are the same.

Days On Market Times
Sale 1 141 3rd Street 300+-
Sale 2 223 Frankfort Street 40
Sale 3 52 Franklin Avenue 22
Sale 4 565 Magnolia Avenue 113
Sale 5 NWC Crocker Avenue and Scenic Way 57
Sale 6 707-717 Templeton Avenue 32
Based on general market data and other sales reviewed and assuming adequate exposure and competent representation, it is my opinion that the subject would have a marketing time of four to eight months.

ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 65.

Definitions
ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 66.

The following definitions, as applicable, are used in this appraisal. They are taken from the The Dictionary of Real Estate Appraisal, Sixth Edition, unless otherwise noted.

Market Value
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised, and acting in what they consider their best interests;

3. a reasonable time is allowed for exposure in the open market;

4. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and

5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
(Source: The Appraisal of Real Estate, 12th Edition)
"As-Is" Market Value Estimate
The estimate of market value of real property in its current physical condition, use, and zoning as of the appraisal date. (Interagency Appraisal and Evaluation Guidelines and 6 th Edition of The Dictionary of Real Estate Appraisal).

Fee Simple Estate
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. (6th Edition of The Dictionary of Real Estate Appraisal) Leased Fee Interest
The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. (6th Edition of The Dictionary of Real Estate Appraisal) Leasehold Interest
The interest held by the lessee to use and occupy real estate for a stated term under the conditions specified in the lease. (6th Edition of The Dictionary of Real Estate Appraisal)
ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 67.

Easement
The right to use another’s land for a stated purpose. (6th Edition of The Dictionary of Real Estate Appraisal)
Market Rent
The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including the rental adjustment and revaluation, permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements. (6th Edition of The Dictionary of Real Estate Appraisal)
Condominium Ownership (Fee)
A form of fee ownership of separate units or portions of multiunit buildings that provides for formal filing and recording of a divided interest in real property. (6th Edition of The Dictionary of Real Estate Appraisal)
Planned Unit Development (PUD)
A type of building development designated as a grouping of complementary land uses, such as housing, schools, recreation, retail, office, and industrial parks, contained within a single master development; usually includes common area and common area maintenance obligations in the form of owners association dues. (6th Edition of The Dictionary of Real Estate Appraisal)
Cost Approach
A set of procedures through which a value indication is derived for the fee simple interest in a property by estimating the current cost to construct a reproduction of (or replacement for) the existing structure, including an entrepreneurial incentive, deducting depreciation from the total cost, and adding the estimated land value. Adjustments may then be made to the indicated fee simple value of the subject property to reflect the value of the property interest being appraised.

Sales Comparison Approach
A set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, then applying appropriate units of comparison and making adjustments to the sale prices of the comparables based on the elements of comparison. The sales comparison approach may be used to value improved properties, vacant land, or land being considered as though vacant; it is the most common and preferred method of land valuation when an adequate supply of comparable sales are available.

Income Approach
A set of procedures through which an appraiser derives a value indication for an income-producing property by converting its anticipated benefits (cash flows and ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 68. reversion) into property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment, and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate.

R-squared – Coefficient of Determination
R2 is the proportion of the variance in the dependent variable that is predictable from the independent variable and is used in the prediction of future outcomes or the testing of hypotheses. (Multiple sources combined.)
R – Correlation Coefficient or the Coefficient of Correlation The correlation coefficient, denoted by r, tells how closely data in a scatterplot falls along a straight line. The closer that the absolute value of r is to 1 or -1, the closer that the data is described by a linear equation. (Multiple sources combined.) ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 69.

Addendum: Qualifications
ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 70.

Joseph I. Napoliello, MAI
Commercial – Industrial – Residential – Real Estate Appraisal and Consultation 840 Olive Avenue #3, So. San Francisco, CA 94080 415-309-6728 [email protected]

QUALIFICATIONS
Joseph I. Napoliello, MAI
GENERAL Bay Area resident since 1982; born and raised in southern New Jersey
EDUCATION Boston University, Boston, MA
M.S.B.A. Business, 1978
Loyola University, New Orleans, LA
B.B.A. Finance, 1976
Recent professional coursework and exams:

Real Estate Appraisal Principles (AI)
Basic Valuation Procedures (AI)
Capitalization Theory - Part A (AI)
Capitalization Theory - Part B (AI)
Standards of Professional Practice (AI)
Case Studies in R.E. Valuation (AI)
Report Writing and Valuation Analysis (AI)
Highest and Best Use and Feasibility Analysis - Non-Residential (Seminar)
Highest and Best Use and Market Analysis (AI)
Rates, Ratios and Reasonableness (Seminar)
Easement Valuation (Seminar)
Valuation of Detrimental Conditions (Seminar)

PROFESSIONAL

PRESENTATIONS
2004 Appraisal Institute Valley Seminar: “Critical Documents – The Preliminary Title Report”
2004 Appraisal Today – Moderator – Commercial Appraisal Liability
PROFESSIONAL State Certified General Appraiser - California - #AG003794 AFFILIATIONS MAI Member, Appraisal Institute, #11786
Past Member, Board of Directors, Northern California
Chapter of the Appraisal Institute, past Chair of Education Committee
COURT TESTIMONY Qualified as an expert witness in Superior Court - Counties of San Francisco and San Mateo
ADDENDA: 701 SPRUCE AVENUE, SOUTH SAN FRANCISCO, CALIFORNIA PAGE 71.

Joseph I. Napoliello, MAI
- 2 -

EMPLOYMENT
Owner and Senior Appraiser (since August 1989), San Bruno, CA. - independent fee appraisers and consultants specializing in commercial, industrial, and multi-family residential properties. (Formerly Haley Appraisal Company, Inc.) February 2002 to 2006:

Land acquisition agent for County of San Mateo and various cities on the San Francisco Peninsula on public right-of-way projects.

August 1987 to August 1989:

Vice President, General Manager and Associate Appraiser, Haley, O'Brien and O'Brien, San Francisco, CA. - Independent fee appraisers specializing in commercial and industrial properties.

August 1986 to July 1987:

Staff Appraiser, Class II, Sears Mortgage Corporation, South San Francisco, CA. - residential appraisals of single family, condo, PUD, and 2-4 unit properties.

August 1985 to August 1986:

Residential Loan Representative, Sears Mortgage Corporation, Daly City, CA.

January 1981 to August 1985:

Sales and Marketing Positions, Dean Witter Reynolds Inc., Monterey, CA and San Francisco, CA - major securities dealer.

May 1976 to January 1981:

Finance and Accounting Officer, U.S. Army, various duty stations.

PROPERTY TYPES APPRAISED
Office buildings Industrial buildings
Mixed-use buildings Vacant land
Shopping Centers Leased Land
Apartment complexes Retail buildings
Condominium projects Single Family Residences / Condo & PUD Units Hotels Special Purpose Properties
Easements and partial takings Appraisal Reviews