Agenda packet — Vallejo City Council, March 22, 2022 (part 11 of 12)

Reuse Areas 5 and 8 are located near the Connolly Street corridor but are located farther away from the access roads on and off Mare Island.

Trip Generation Analysis
Generally, a project’s impacts on intersection LOS are proportional to the number of trips that a project generates and the concentration of project trips at intersections. Thus, if the project’s trip generation is in-line with (or lower than) the previously-completed EIR trip generation analysis, the project’s LOS impacts should be substantially similar to (or less than) the impacts in the adopted EIR.

As indicated in the Transportation section of the EIR for Mare Island, trip generation for the previously-completed EIR is based on data from the 2004 City of Vallejo Travel Demand Model; the analysis was performed for the weekday PM peak hour only. The trip generation rates used in the previously-completed analysis have been superseded by over 15 years’ worth of new trip generation data, including data published in the Institute of Transportation Engineers’ Trip Generation Manual, 10th Edition. Thus, this transportation assessment assumes that the Connolly Street corridor project should be analyzed using the latest available trip generation data (from ITE), and the trip generation from this calculation should be compared against the trip generation calculations from the previously-completed EIR to determine consistency with the LOS-based findings from the previously-completed analysis. Table 1 summarizes the trip generation comparison calculation.

Table 1: Trip Generation Comparison
Land Use Quantity PM Peak Hour Trip Generation Rate PM Peak Hour Trips Previously-Completed EIR Transportation Analysis1
Hotel 149,100 square feet 6.5 trips / 1,000 square feet 969 Office 29,000 square feet 1.86 trips / 1,000 square feet 54 Multifamily
Residential 373 units 0.37 trips / unit 138
Total Trips 1,161
Connolly Street Corridor Project2
Hotel 149,100 square feet 3.81 trips / 1,000 square feet 569 Office 29,000 square feet 1.15 trips / 1,000 square feet 33 Multifamily
Residential 373 units 0.51 trips / unit 190
Total Trips 792
Notes:

1. Trip generation based on data from previously-completed EIR, including data from 2004 City of Vallejo Travel Demand Model

2. Trip generation based on data from the ITE Trip Generation Manual, 10th Edition.

Source: Fehr & Peers, 2021.

Andrea Jones, Southern Land Company
September 3, 2021

Page 3 of 3 ends

The trip generation comparison in Table 1 indicates that the proposed Connolly Street corridor project would generate fewer trips than assumed under the previously-completed EIR. Thus, the project’s CEQA impacts (relative to the adopted EIR) would remain consistent with the previous environmental document. It is also noted that the hotel was previously analyzed under a mixeduse retail category; if the hotel (as proposed in the Connolly Street corridor project) were to be analyzed under ITE Land Use Code 310 (which analyzes trip generation based on number of rooms), then the Connolly Street corridor project trip generation estimate would be further reduced.

Effect of Project Location on LOS and VMT
The proposed Connolly Street corridor project includes the locational movement of previouslyapproved land uses from Reuse Areas 5 and 8 to Reuse Areas 3B and 6. These Reuse Areas are generally in the same portion of Mare Island, and thus the proposed shifting of land uses would not result in a substantial reallocation of project trips on the Mare Island street system or the offMare Island street system. Therefore, the transportation network is not anticipated to be substantially affected (versus the findings of the previous EIR transportation analysis) as a result of the project. Moving the land uses closer to the existing Mare Island vehicular access points (the Mare Island Causeway and SR 37/Mare Island interchange) would generally suggest no change to VMT or a reduction in VMT versus the previously-approved land use plan.

Conclusions
The proposed Connolly Street corridor project on Mare Island includes the shifting of previouslyapproved land uses to the project site. These land uses are not anticipated to generate more PM peak hour trips than what was previously studied as part of the Mare Island Specific Plan EIR, and thus the CEQA impacts of the Connolly Street corridor project are expected to be in-line with the findings of the previously adopted EIR. Because the land uses proposed by the project are expected to move closer to the gateway facilities for off-Mare Island travel, it is anticipated that the project’s effect on VMT (versus the previously-adopted land use program) would be negligible.
1 RESOLUTION NO. 22-_________

RESOLUTION OF THE CITY COUNCIL FOR THE CITY OF VALLEJO DECLARING APPROXIMATELY 157-ACRE PORTION OF REUSE AREA 1-A ON NORTH MARE ISLAND (APNs 0066-020-130 AND -140, AND PORTIONS OF 0066-020-110 and -150) AS SURPLUS LAND EXEMPT FROM THE PROVISIONS OF AB 1486 PURSUANT TO GOVERNMENT CODE SECTION 54234(a)(1) AND MAKING CEQA FINDINGS OF

EXEMPTION RELATING THERETO
WHEREAS, City is the fee owner of approximately 125.3 acres of Reuse Area 1-A (“City-Owned Property”) and the lessee of approximately 31.8 acres of Reuse Area 1-A still owned by United States Navy (“Navy-Owned Property” and, collectively with the City-Owned Property, the “Property”); and
WHEREAS, City will receive fee title to the Navy-Owned Property from the Navy following issuance of a Finding of Suitability for Transfer and a determination by the State of California Department of Toxic Substances Control that no further remediation related action is required; and WHEREAS, on May 15, 2018, the City Council authorized the City Manager to negotiate an exclusive negotiating agreement with The Nimitz Group, LLC (“Developer”) for the transfer and development of the Property to be set forth in a disposition and development or purchase and sale agreement; and
WHEREAS, City and Developer entered into an Exclusive Right to Negotiate Agreement dated July 31, 2018, which has been further amended, most recently by a 7th Amended and Restated Exclusive Negotiating Agreement dated March 22, 2022 (as so amended and restated, the “ENA”), providing, among other things, for City and Developer to negotiate terms for Developer’s acquisition of a fee interest in the City-Owned Property and a sub-leasehold interest in the NavyOwned Property, with a must take obligation to accept fee title conveyance of the Navy-Owned Property following City’s acquisition thereof from Navy as part of a Disposition and Development Agreement (“DDA”); and
WHEREAS, City staff have negotiated with Developer a proposed DDA with respect to the Property, which is being considered by the City Council concurrently herewith; and WHEREAS, the DDA provides among other things for City to sell the Property to Developer via phased closings and, following close of escrow, for Developer to complete a list of actions as described by the DDA which is a public document on file with the City Clerk for the City; and 2 WHEREAS, the DDA contemplates the disposition of the City Owned Property and the Sublease of the Navy Owned Property as described to be completed within 120 days following the date of full execution of the DDA; and
WHEREAS, the Surplus Land Act, as amended by AB 1486 (Ting), Government Code Section 54220 et seq. (“Act”) requires public entities to provide a notice of availability and offer public land to, specific entities as set forth in the Act; and WHEREAS, Section 54234(a)(1) of the Act provides an exemption from the notice of availability requirements of AB 1486. More specifically, Government Code Section 54234(a)(1) states; If a local agency, as of September 30, 2019, has entered into an exclusive negotiating agreement or legally binding agreement to dispose of property, the provisions of this article as it existed on December 31, 2019, shall apply, without regard to the changes made to this article by the act adding this section, to the disposition of the property to the party that had entered into such agreement or its successors or assigns, provided the disposition is completed not later than December 31, 2022.

WHEREAS, the ENA was entered into prior to September 30, 2019 and the DDA contemplates a disposition of the Property prior to December 31, 2022 in conformance with Government Code Section 54234(a)(1), thus exempting the Property from the specific noticing requirements of AB1486; and

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL FOR THE CITY OF VALLEJO AS FOLLOWS:

1. The foregoing recitals are true and correct and incorporated herein by this reference as if set forth in full.

2. Designation of the Property as surplus is exempt from the requirements of the California Environmental Quality Act (Public Resources Act Section 21000 et seq.) (“CEQA”) pursuant to CEQA Guidelines (California Code of Regulations, Title 14, Chapter 3, Section 15000 et seq.) Section 15312, “Surplus Government Property Sales.”

3. The City Council hereby finds and declares that the Property is no longer necessary for the City’s use and is therefore surplus land as defined in Gov. Code section 54221.

4. The City Council further hereby finds and declares that disposition of the Property is exempt from the noticing requirements of the AB 1486 amendments to the Act pursuant to Government Code section 54234(a)(1). The City makes this declaration on the basis that the ENA was entered into prior to September 30, 2019, and that conveyance of the Property pursuant to the DDA is contemplated to occur before December 31, 2022.

5. The City Council hereby directs City staff, in compliance with the California Department of Housing and Community Development’s Surplus Land Act Guidelines, 3 to provide a copy of this Resolution and of the ENA to HCD and, upon disposition of the Property, to notify HCD that the Property has been disposed of prior to the deadline set forth in Section 54234(a)(1).

ADOPTED, by the City Council of the City of Vallejo at a regular meeting held on March 22, 2022, with the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ROBERT H. MCCONNELL, MAYOR
ATTEST ____________________________________

DAWN ABRAHAMSON, CITY CLERK
1 RESOLUTION NO. 22-_________

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VALLEJO MAKING

CEQA FINDINGS AND APPROVING AN ADDENDUM TO THE PREVIOUSLY

CERTIFIED FINAL ENVIRONMENTAL IMPACT STATEMENT /

ENVIRONMENTAL IMPACT REPORT (EIS/EIR) FOR THE DISPOSAL AND REUSE OF MARE ISLAND NAVAL SHIPYARD PROJECT (1998), AND THE

MARE ISLAND AMENDED AND RESTATED SPECIFIC PLAN PROJECT FINAL SUBSEQUENT ENVIRONMENTAL IMPACT REPORT (2005)
WHEREAS, following closure of the Mare Island Naval Shipyard in April 1996, the City of Vallejo (City) undertook an extensive community-based planning process for reuse of the area that resulted in the Mare Island Final Reuse Plan (Final Reuse Plan), which identified 13 Reuse Areas, as well as wetlands and dredge pond areas; and
WHEREAS, the City Council of the City of Vallejo (City Council) approved the Final Reuse Plan in July 1994, and in November 1998 pursuant to the requirements of the California Environmental Quality Act (CEQA), the City Council certified a Final Environmental Impact Statement/Environmental Impact Report for the Disposal and Reuse of Mare Island Naval Shipyard (State Clearinghouse #94093029). The 1998 EIS/EIR evaluated the disposal of federal surplus land at the former Mare Island Naval Shipyard and reuse of the site and facilities as proposed under the 1994 Reuse Plan; and
WHEREAS, in March 1999, the City Council adopted the 1999 Mare Island Specific Plan (1999 Specific Plan) after approving an Addendum to the 1998 EIS/EIR in 1999 (collectively referred to herein as the 1998 EIS/EIR). The 1999 Specific Plan included additional detail regarding land use policies, allowable land uses and development standards for Mare Island; and WHEREAS, in December 2005, the City Council adopted the 2005 Mare Island Specific Plan Amended and Restated (2005 Specific Plan), covering the entirety of Mare Island and setting forth a development program similar to the 1999 Specific Plan and 1994 Reuse Plan, while adding an additional 2.7 million square feet of development potential and making certain other development program changes as described therein; and
WHEREAS, pursuant to the requirements of CEQA, the City Council certified a Final Subsequent EIR (State Clearinghouse #2004092057) for the 2005 Specific Plan in November 2005 (2005 Subsequent EIR). The 2005 Subsequent EIR identified and analyzed the environmental impacts associated with the incremental change in intensity and distribution of land uses on Mare Island from the 1999 Specific Plan, as described in the 2005 Specific Plan, and analyzed the impact of the expanded development program; and
2 WHEREAS, in July 2007, an Addendum to the 2005 Subsequent EIR was prepared (2007 Addendum) which addressed amendments to policies in the 2005 Specific Plan and the Vallejo Municipal Code related to historic resources on Mare Island (the 1998 EIS/EIR the 1999 Addendum, the 2005 Subsequent EIR, and the 2007 Addendum are collectively referred to herein as the Previously Certified Environmental Documents); and WHEREAS, the 2005 Specific Plan was subsequently amended in June 2007 and June 2008 to address changes related to historic resources, and bicycle and pedestrian facilities on Mare Island; and further amended in June 2013, July 2013, August 2013, and June 2017 (as amended, the 2013 Specific Plan), to incorporate changes to the Vallejo Municipal Code regarding beer and wine manufacturers, tasting rooms, brewpubs, fast-food quick service restaurants, and alcohol sales, service, and production establishments. The 2005 Specific Plan project, as amended by the foregoing amendments, is referred to herein as the 2013 Specific Plan Project; and WHEREAS, subsequent to the approval of this resolution, the City Council will consider approval of a proposed Disposition and Development Agreement (DDA) between the City and Nimitz Group, LLC (Developer) with respect to approximately 157 acres of Reuse Area 1A on the northern portion of Mare Island (North Mare Island Property), which provides, among other things, for the City to sell the North Mare Island Property to the Developer via phased closings and, following close of escrow, for the Developer to: (i) undertake sampling and testing of soil stockpiles at six locations on Mare Island (Soil Testing Work), (ii) demolish 10 remaining nonutilized buildings located on the North Mare Island Property (Demolition Work), (iii) construct and develop within an approximately 3 acre portion of the historic core area of Mare Island, new buildings, or substantial rehabilitation of existing vacant historic buildings, to accommodate use and occupancy of approximately 46,000 gross square feet of retail space, approximately 29,000 gross square feet of office space, 194,000 square feet of open space, up to 373 multifamily units, and a hotel including up to 200 rooms (Connolly Street Corridor Redevelopment), (iv) site remediation and clean-up activities where Building 571 was previously located in Reuse Area 1A (Site Remediation), and (v) undertake certain planning related work for Mare Island including preparation of a proposed interim beautification plan (Beautification Plan) and a new proposed specific plan (New Specific Plan) to replace the existing Mare Island Specific Plan. All such actions are described herein collectively as the Project; and WHEREAS, the DDA makes clear that the City Council reserves full and complete discretion as to the consideration any proposed Beautification Plan and New Specific Plan for approval including discretion under CEQA to require additional review of any proposed development plan or project under CEQA, the right to impose mitigation measures, and the ability to require modifications to the proposed development plan or project or to disapprove the proposed development plan or project; and
WHEREAS, if and only if a Beautification Plan and/or New Specific Plan are approved, the DDA provides for the Developer to undertake interim beautification work and site preparation work to be described in the Beautification Plan and New Specific Plan, respectively, which site preparation work may include importing of clean fill to raise the elevation of the North Mare Island Property and grading and surcharging to ready the North Mare Island Property for development; and 3 WHEREAS, while the specific parameters and details of the Soil Testing Work, Demolition Work, Site Remediation Work, and Connolly Street Corridor Redevelopment are known at this time, the particulars of the potential beautification and development programs to be addressed in the proposed future Beautification Plan and New Specific Plan are not currently known and will not be known until such time as the Developer has undertaken the relevant planning work and such plans have been considered for approval by the City Council and approved, if ever; and WHEREAS, the City engaged the services of Stantec Consulting Services, Inc. (Stantec) to analyze the Previously Certified Environmental Documents and to determine if, pursuant to CEQA and the CEQA Guidelines any additional environmental review would be required for the Project; and
WHEREAS, Section 15162(a) of the CEQA Guidelines states that when an EIR has been certified or a negative declaration adopted for a project, no subsequent EIR shall be prepared for that project unless the lead agency determines, on the basis of substantial evidence in the light of the whole record, one or more of the following:

1. Substantial changes are proposed in the project which will require major revisions of the previous EIR or negative declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects;

2. Substantial changes occur with respect to the circumstances under which the project is undertaken which will require major revisions of the previous EIR or Negative Declaration due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; or

3. New information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the previous EIR was certified as complete or the Negative Declaration was adopted, shows any of the following:
a. The project will have one or more significant effects not discussed in the previous EIR or negative declaration;
b. Significant effects previously examined will be substantially more severe than shown in the previous EIR;
c. Mitigation measures or alternatives previously found not to be feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the mitigation measure or alternative; or
d. Mitigation measures or alternatives which are considerably different from those analyzed in the previous EIR would substantially reduce one or more significant 4 effects on the environment, but the project proponents decline to adopt the mitigation measure or alternative.

WHEREAS, Section 15162(b) of the CEQA Guidelines states that if changes to a project or its circumstances occur or new information becomes available after certification of the EIR, the lead agency shall either prepare a subsequent EIR if the above conditions are present or make a determination whether to prepare a subsequent negative declaration, an addendum to the EIR or no further documentation; and
WHEREAS, based upon the analysis prepared by Stantec, an Addendum, attached as Exhibit B and incorporated herein by reference (Addendum) has been prepared in accordance with Section 15162(b) of the CEQA Guidelines documenting the determination that no further environmental review is required for the Project; and
WHEREAS, the Record of Proceedings ("Record") upon which the City Council bases its decision includes, but is not limited to: (1) the staff reports, City files and records and other documents prepared for and/or submitted to the City relating to the Project; (2) the evidence, facts, findings and other determinations set forth in this resolution; (3) the Previously Certified Environmental Documents, and all technical studies and other evidence referenced therein; (4) the City of Vallejo General Plan and its environmental document and the Vallejo Municipal Code; (5) all designs, plans, studies, data and correspondence submitted to the City in connection with the proposed project; (6) all documentary and oral evidence received at public workshops, meetings, and hearings or submitted to the City; (7) all other matters of common knowledge to the City Council including, but not limited to, City, state, and federal laws, policies, rules, regulations, reports, records and projections related to development within the City of Vallejo and its surrounding areas.

The location and custodian of the records is the Vallejo Planning Department, 555 Santa Clara Street, Vallejo, California, 94590.

NOW, THEREFORE, BE IT RESOLVED, based on the information in Record as a whole, the City Council of the City of Vallejo hereby finds and determines as follows:

1. The City Council hereby finds and determines that the foregoing recitals are true and correct.

2. The City Council has independently reviewed, analyzed, and considered the Addendum and the Previously Certified Environmental Documents, the 2013 Specific Plan, the staff report and all attachments thereto, as well as all written documentation and public comments thereto.

3. The Addendum was prepared and reviewed in compliance with the provisions of CEQA and the CEQA Guidelines.
5 4. The information and analysis contained in the Addendum reflects the City Council’s independent judgment as to the environmental consequences of the proposed Project.

5. That, based upon the evidence submitted and as demonstrated by the analysis included in the Addendum, and as more particularly described in Exhibit A attached hereto and incorporated herein by reference, none of the conditions described in Sections 15162 of the CEQA Guidelines calling for the preparation of a subsequent or supplemental EIR or negative declaration have occurred; specifically:
a. There have not been any substantial changes in the project analyzed in the Previously Certified Documents that require major revisions of the Previously Certified Environmental Documents due to new significant environmental effects or a substantial increase in the severity of previously identified significant effects;
b. There have not been any substantial changes with respect to the circumstances under which the Project is undertaken that require major revisions of the Previously Certified Environmental Documents due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects; and
c. There is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the Previously Certified Environmental Documents were certified, that shows any of the following: (a) the project will have one or more significant effects not discussed in the Previously Certified Environmental Documents; (b) significant effects previously examined will be substantially more severe than shown in the Previously Certified Environmental Documents; (c) mitigation measures or alternatives previously found not to be feasible would in fact be feasible and would substantially reduce one or more significant effects of identified in the Previously Certified Environmental Documents, as proposed to be modified, but the project proponents decline to adopt the mitigation measure or alternative; or (d) mitigation measures or alternatives which are considerably different from those analyzed in the Previously Certified Environmental Documents would substantially reduce one or more significant effects on the environment, but the project proponents decline to adopt the mitigation measure or alternative.

6. Pursuant to the above findings, the City Council of the City of Vallejo determines that the Previously Certified Environmental Documents, together with the Addendum, are adequate to serve as the required environmental documentation for the proposed Project, as proposed to be modified, and thus hereby approves and adopts the Addendum and finds that the development-related activities described in the proposed 6 DDA are within the scope of the development program described and evaluated in the Previously Certified Environmental Documents.

7. The City Council of the City of Vallejo shall consider the Previously Certified Environmental Documents together with the Addendum, prior to making a decision on the proposed DDA.

8. This resolution shall become effective immediately upon its passage and adoption.

ADOPTED, by the City Council of the City of Vallejo at a meeting held on March 22, 2022 by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ROBERT H. MCCONNELL, MAYOR
ATTEST:

DAWN G. ABRAHAMSON, CITY CLERK
7 EXHIBIT A

CEQA FINDINGS
In February 2022, Stantec Consulting Services, Inc. prepared an Addendum to the Final 1998 Environmental Impact Statement / Environmental Impact Report (1998 EIS/EIR) and Addendum (1999) for the Disposal and Reuse of the Mare Island Naval Shipyard Project, and the 2005 Mare Island Amended and Restated Specific Plan Project Final Subsequent EIR and Addendum (2007) that were previously certified by the City of Vallejo (City) for the Mare Island Specific Plan (collectively referred to herein as the Previously Certified Environmental Documents).

The purpose of the Addendum is to evaluate the potential environmental impacts of the proposed Disposition and Development Agreement (DDA) between the City and Nimitz Group, LLC (Developer), which involves the following proposed Project components: (i) undertake sampling and testing of soil stockpiles at six locations on Mare Island (Soil Testing Work); (ii) demolish 10 remaining non-utilized buildings located on the North Mare Island Property (Demolition Work); (iii) construct and develop within an approximately 3-acre portion of the historic core area of Mare Island, new buildings, or substantial rehabilitation of existing vacant historic buildings, to accommodate use and occupancy of approximately 46,000 gross square feet of retail space, approximately 29,000 gross square feet of office space, 194,000 square feet of open space, up to 373 multifamily units, and a hotel including up to 200 rooms (Connolly Street Corridor Redevelopment); (iv) site remediation and clean-up activities where Building 571 was previously located in Reuse Area 1A (Site Remediation); and (v) undertake certain planning related work for Mare Island including preparation of a proposed interim beautification plan (Beautification Plan) and a new proposed specific plan (New Specific Plan) to replace the existing Mare Island Specific Plan.

Section 15164 of the California Environmental Quality Act (CEQA) provides that the lead agency shall prepare an addendum to a previously adopted EIR if some changes or additions are necessary but none of the conditions described in Section 15162 calling for a subsequent EIR have occurred.

Section 15162 of the CEQA Guidelines states that when an EIR has been certified for a project, no EIR shall be prepared for the project unless the lead agency determines, on the basis of substantial evidence in the light of the whole record, that one or more of the following occur:

3. New information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the previous EIR was certified as complete or the Negative Declaration was adopted, shows any of the following:
8 a. The project will have one or more significant effects not discussed in the previous EIR or negative declaration;
b. Significant effects previously examined will be substantially more severe than shown in the previous EIR;
c. Mitigation measures or alternatives previously found not to be feasible would in fact be feasible, and would substantially reduce one or more significant effects of the project but the project proponents decline to adopt the mitigation measure or alternative; or d. Mitigation measures or alternatives which are considerably different from those analyzed in the previous EIR would substantially reduce one or more significant effects on the environment, but the project proponents decline to adopt the mitigation measure or alternative.

The Addendum analysis relies on the Previously Certified Environmental Documents for the current 2013 Mare Island Specific Plan (2013 Specific Plan). As evidenced in the Environmental Checklist of the Addendum, none of the proposed components of the Project would result in new or substantially more severe environmental impacts, and no new information has come to light regarding new or significant environmental effects that would require major revisions to the Previously Certified Environmental Documents or the preparation of a Subsequent EIR. Therefore, based upon the Addendum analysis, the following findings are supported:

Facts in Support of Findings

1. For the Project, there are no substantial changes which will require major revisions of the Previously Certified Environmental Documents due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects. No new significant effects or increase of severity of effects are anticipated.

2. For the Project, no substantial changes with respect to the circumstances under which the Project is undertaken which will require major revisions of the Previously Certified Environmental Documents due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.

3. For the Project, there is no new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the Previously Certified Environmental Documents were adopted.

4. The Project does not constitute a change in the level of significance discussed in the Previously Certified Environmental Documents. As such, it is concluded that the Project will not have one or more significant effects not discussed in the Previously Certified Environmental Documents. Furthermore, significant effects previously examined will not be substantially more severe than identified in the Previously Certified Environmental Documents. There are no mitigation measures or alternatives previously found not to be feasible that would in fact be feasible and would substantially reduce one or more significant 9 effects of the Project. No new potential impacts have been identified requiring new mitigation measures to be developed.

5. There are no mitigation measures identified in this analysis which are considerably different from those analyzed in the Previously Certified Environmental Documents, and which would substantially reduce one or more significant effects on the environment.

Findings regarding potentially significant impacts that will be avoided or reduced to a less than significant level by the implementation of mitigation measures.

A. Air Quality Impact: Construction and operation of the Project may conflict with or obstruct implementation of an applicable air quality plan (Addendum p. 3-11 to 3-12).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to conflicting with or obstructing implementation of an applicable air quality plan by implementation of Mitigation Measure C.1, Mitigation Measure C.2, and Mitigation Measure C.4 previously identified in the 2005 Subsequent EIR. With the implementation of Mitigation Measure C.1, Mitigation Measure C.2, and Mitigation Measure C.4 identified in the 2005 Subsequent EIR, the Project would not result in new or substantially more severe impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure C.1, Mitigation Measure C.2, and Mitigation Measure C.4 identified in the 2005 Subsequent EIR would reduce the Project’s potential to conflict with or obstruct implementation of an applicable air quality plan.

Mitigation Measure C.1 would require implementation of dust control measures as required by the Bay Area Air Quality Management District (BAAQMD). Mitigation Measure C.2 would require implementation of traffic design measures that would reduce traffic-related emissions. Mitigation Measure C.4 would require that appropriate buffers are established to ensure residential land uses within Reuse Area 6 are not exposed to toxic air contaminants from diesel truck traffic.

B. Air Quality Impact: The Project may result in a cumulatively considerable net increase of criteria pollutants (Addendum p. 3-12 to 3-13).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to criteria pollutants by implementation of Mitigation Measure C.2 identified in the 2005 Subsequent EIR. With the implementation of Mitigation Measure C.2, the Project would not result in new or substantially more severe impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.
10 Facts in Support of Finding: Mitigation Measure C.2 identified in the 2005 Subsequent EIR would reduce or avoid impacts related to criteria pollutants. Mitigation Measure C.2 would require the Project to incorporate design features that would reduce traffic-related emissions.

C. Air Quality Impact: The 2005 Subsequent EIR identified building demolition, renovation, and construction activities would cause temporary fugitive dust emissions (PM10). The 2005 Subsequent EIR also identified the potential impact of demolition and renovation activities releasing asbestos containing materials to the air as buildings constructed prior to 1980 often include building materials containing asbestos. The Project would involve the demolition of 10 existing buildings within Reuse Area 1A and would reuse Buildings 69, 71, 77, and the Coal Shed buildings within Reuse Area 3B. Therefore, the Project could create temporary fugitive dust emissions and release asbestos containing materials into the air and potentially expose sensitive receptors (Addendum p. 3-13 to 3-14).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to the exposure of substantial pollutant concentrations and asbestos containing materials by implementation of Mitigation Measure C.1 and Mitigation Measure C.4 identified in the 2005 Subsequent EIR. The Project would also be required to comply with applicable regulatory requirements, including BAAQMD’s current asbestos removal regulations (BAAQMD 11-2-401.3) and the requirements of the Project’s Demolition and Management Plan to reduce potential impacts related to fugitive dust and asbestos. With the implementation of Mitigation Measure C.1 and Mitigation Measure C.4 of the 2005 Subsequent EIR, compliance with applicable regulatory requirements, and the Demolition and Management Plan, the Project would not result in new or substantially more severe air quality impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: The implementation of Mitigation Measure C.1 and Mitigation Measure C.4 of the 2005 Subsequent EIR, applicable regulatory requirements, and the requirements of the Demolition and Management Plan would reduce or avoid the potential for the Project to impact air quality. Mitigation Measure C.1 would require implementation of dust control measures as required by the BAAQMD. Mitigation Measure C.4 would require that appropriate buffers are established to ensure residential land uses within Reuse Area 6 are not exposed to toxic air contaminants from diesel truck traffic.

D. Cultural Resources Impact: The 2005 Subsequent EIR determined that redevelopment activities within Reuse Areas 1B through 10A would involve the demolition, reuse, and relocation of resources within the Mare Island Historic District. The Project would involve the reuse and relocation of existing structures within Reuse Areas 3B and 6, which may cause a substantial adverse change in the significance of a historical resource pursuant to Section 15064.5 (Addendum p. 3-23 to 3-27). 11 Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to historical resources by implementation of Mitigation Measure A.1a, Mitigation Measure A.1b, Mitigation Measure A.2, Mitigation Measure A.4, and Mitigation Measure A.6a (same as A.4) previously identified in the 2005 Subsequent EIR. With the implementation of these mitigation measures, the Project would not result in new or substantially more severe impacts related to historical resources than identified in the 2005 Subsequent EIR.

Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure A.1a, Mitigation Measure A.1b, Mitigation Measure A.2, Mitigation Measure A.4, and Mitigation Measure A.6a (same as A.4) previously identified in the 2005 Subsequent EIR would reduce or avoid the potential for the Project to impact historical resources. Mitigation Measure A.1a requires that all Contributing Resources within Reuse Areas 2A, 2B, 3A, and 6 north of 5th Street to be retained. Mitigation A.1b requires that the Architectural Heritage and Landmarks Commission review the demolition or relocation of Contributing Resources at the northern end of the Historic District. Mitigation Measure A.2 requires relocation rather than demolition of notable resources where appropriate. Mitigation Measure A.4 requires implementation of the Mare Island Historic District Design Guidelines by requiring that all new construction or alterations within the Historic District comply with the Historic District Design Guidelines. Lastly, Mitigation Measure A.6a is the same as Mitigation Measure A.4 and requires that all new construction or alterations within the Historic District comply with the Historic District Design Guidelines.

E. Geology and Soils Impact: The 1998 EIS/EIR and Addendum (1999) identify that the Specific Plan area is within a seismically active region, and earthquake-related ground shaking is expected to occur. Therefore, the Project may be exposed to strong seismic ground shaking that could lead to structure or foundation damage (Addendum p. 3-34).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to strong seismic ground shaking, by implementation of Geology and Soils Mitigation Measure 2 identified in the 1998 EIS/EIR and Addendum (1999). With the implementation of Geology and Soils Mitigation Measure 2, the Project would not result in new or substantially more severe impacts related to seismic ground shaking than identified in the 1998 EIS/EIR and Addendum (1999).

Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Geology and Soils Mitigation Measure 2 identified in the 1998 EIS/EIR and Addendum (1999) would reduce or avoid the potential impacts from strong seismic ground shaking. Geology and Soils Mitigation Measure 2 requires earthquake vulnerability studies for proposed reuse buildings, evaluation of infrastructure 12 links to the mainland for vulnerability to earthquakes, and development of a seismic contingency plan.

F. Geology and Soils Impact: The 1998 EIS/EIR and Addendum (1999) determined portions of Mare Island may be susceptible to liquefaction and unstable soils since all areas on Mare Island, outside the line of historic uplands, are underlain with Younger Bay Mud.

Therefore, the Project may be susceptible to liquefaction and unstable soils that could lead to structure or foundation damage (Addendum p. 3-34 to 3-35).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to liquefaction and unstable soils by implementation of Geology and Soils Mitigation Measure 3 identified in the 1998 EIS/EIR and Addendum (1999). With the implementation of Geology and Soils Mitigation Measure 3, the Project would not result in new or substantially more severe impacts related to liquefaction and unstable soils than identified in the 1998 EIS/EIR and Addendum (1999).

Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Geology and Soils Mitigation Measure 3 identified in the 1998 EIS/EIR and Addendum (1999) would reduce or avoid the potential for the Project to be exposed to liquefaction or unstable soils. Geology and Soils Mitigation Measure 3 requires the evaluation of the foundations and design of existing structures to determine the feasibility of retrofitting these structures and that buildings be designed to meet California Building Code requirements or be replaced if they cannot be made adequately safe.

G. Hydrology and Water Quality Impact: The 1998 EIS/EIR and Addendum (1999) determined grading, demolition, and construction activities could result in erosion and sedimentation, and accidental release of pollutants into surround water bodies.

Construction of the Project would involve grading, demolition, and construction activities that could lead to potential water quality impacts. Additionally, the Project would involve delivery, handling, and storage of construction materials and waste, as well as use of construction equipment on site that could introduce a risk of stormwater contamination if these materials are not appropriately stored and handled (Addendum p. 3-47 to 3-48).

Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Water Resources Mitigation Measure 1 identified in the 1998 EIS/EIR and Addendum (1999) would reduce or avoid the potential for construction 13 of the Project to result in water quality impacts. Water Resources Mitigation Measure 1 requires compliance with the State General Construction National Pollutant Discharge Elimination System permit and implementation of a Stormwater Pollution Prevention Plan, which includes best management practices (BMPs) to limit the discharge of sediment and non-stormwater discharges from the site. The City also requires submittal of a Grading and Erosion Control Plan with a building permit application that identifies the location of hydrodynamic devices, or other BMPs, to remove pollutants from onsite stormwater runoff.

The Project would be required to implement the requirements of the Grading and Erosion Control Plan and BMPs as a standard condition of approval.

H. Hydrology and Water Quality Impact: The 1998 EIS/EIR and Addendum (1999) identified that Reuse Areas 1, 3, 4, 5, and 10 are within the 100-year flood hazard zone and could expose occupants within these areas to flood hazards. The Project involves demolition activities within Reuse Area 1A, which is within a 100-year flood hazard zone and tsunami evacuation zone and may result in the release of pollutants due to inundation (Addendum p. 3-49).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to flooding by implementation of Water Resources Mitigation Measure 2a and Water Resources Mitigation Measure 2b identified in the 1998 EIS/EIR and Addendum (1999). With the implementation of Water Resources Mitigation Measure 2a and Water Resources Mitigation Measure 2b, the Project would not result in new or substantially more severe flood hazards than identified in the 1998 EIS/EIR and Addendum (1999). Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Water Resources Mitigation Measure 2a and Water Resources Mitigation Measure 2b identified in the 1998 EIS/EIR and Addendum (1999) would reduce or avoid the potential for flooding and the release of pollutants. Water Resources Mitigation Measure 2a would require the Project to raise the elevation of Reuse Area 1A above 10 feet mean sea level so that future development is not located within a 100-year flood hazard zone or subject to flooding. Water Resources Mitigation Measure 2b would require that new development in previously undeveloped areas outside are located of the 100-year flood zone unless measures are taken to raise these areas above the 100-year flood zone.

I. Noise Impact: The 2005 Subsequent EIR identified that the “normally acceptable” 60 Ldn level for residences could be exceeded by short-term construction activities if they are within 800 feet of the construction site. The Project would involve short-term construction and demolition activities within 800 feet of existing residences, and therefore could exceed the “normally acceptable” 60 Ldn level (Addendum p. 3-59 to 3-60).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to construction noise and demolition activities by implementation of Mitigation Measure D.1 identified in the 2005 Subsequent 14 EIR. With the implementation of Mitigation Measure D.1, the Project would not result in new or substantially more severe construction noise impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure D.1 identified in the 2005 Subsequent EIR would reduce or avoid noise impacts from Project construction and demolition activities. Mitigation Measure D.1 would require construction and demolition activities to be limited to normal daytime work hours as set forth in the Vallejo Municipal Code and General Plan Action NBE-5.13C, which restricts allowable hours between 7 AM and 7 PM on weekdays for construction, demolition, maintenance, and loading/unloading activities that may impact noise-sensitive land uses.

J. Noise Impact: The 2005 Subsequent EIR determined new residences under construction and planned within Reuse Areas 2A, 3B, 4, 6, and 8; educational land uses; recreation areas; and off-island neighborhoods along major access routes could be adversely affected by increased traffic noise. The Project involves development of new residences within Reuse Area 6, which may be impacted by increased traffic noise on Mare Island (Addendum p. 3-60 to 3-61).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to increased traffic noise on Mare Island by implementation of Mitigation Measure D.5a, Mitigation Measure D.5.b, and Mitigation Measure D.5.c identified in the 2005 Subsequent EIR. With the implementation of these mitigation measures, the Project would not result in new or substantially more severe traffic noise impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure D.5.a, Mitigation Measure D.5.b, and Mitigation Measure D.5.c identified in the in the 2005 Subsequent EIR would reduce or avoid traffic noise impacts on residential uses. Mitigation Measure D.5.a would require the Project to provide roadway designs and traffic controls that discourage high volumes and speeds along Azuar Drive. Mitigation Measure D.5.b would require preparation of a detailed acoustical study for operation, and Mitigation Measure D.5.c would require implementation of noise insulation features as required in Title 24 of the California Code of Regulations.

K. Transportation Impact: The Project may cause level of service to degrade to unacceptable levels for certain intersections, roadways, and freeway segments (Addendum p. 3-74 to 3-75).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to level of service by implementation of Mitigation Measure B.1, Mitigation Measure B.2, and Mitigation Measure B.3 identified 15 in the 2005 Subsequent EIR. With the implementation of these mitigation measures, the Project would not result in new or substantially more severe level of service impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure B.1, Mitigation Measure B.2, and Mitigation Measure B.3 identified in the 2005 Subsequent EIR would reduce or avoid level of service impacts. Mitigation Measure B.1, Mitigation Measure B.2, and Mitigation Measure B.3 would require the Project to provide traffic improvements and contribute fair share payments to reduce potential impacts on roadway and freeway segments.

L. Transportation Impact: The Project would increase demand for public transit and rail service (Addendum p. 3-75 to 3-76).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to increased demand on public transit and rail service by implementation of Mitigation Measure B.6 and Mitigation Measure B.7 identified in the 2005 Subsequent EIR. With the implementation of these mitigation measures, the Project would not result in new or substantially more severe public transit and rail service impacts than identified in the 2005 Subsequent EIR. Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project.

Facts in Support of Finding: Mitigation Measure B.6 and Mitigation Measure B.7 identified in the 2005 Subsequent EIR would reduce or avoid impacts on public transit and rail service. Mitigation Measure B.6 would require the Project to contribute its fair share of the costs associated with providing public transit service to the Specific Plan area.

Mitigation Measure B.7 would require the Project to contribute its fair share of the costs associated with providing rail improvements in the Specific Plan area.

M. Utilities and Services Systems Impact: The 1998 EIS/EIR and Addendum (1999) determined that where significant changes in population distribution occur on Mare Island, the existing wastewater collection system may be inadequate. The Project would change the distribution of land uses within Reuse Area 3B and Reuse Area 6, which may exceed the capacity of the existing wastewater collection system (Addendum p. 3-86 to 3-87).

Finding: Based on the Record, the City Council finds that changes or alterations have been required in, or incorporated into, the Project which will avoid or substantially lessen the potentially significant environmental impact related to wastewater capacity by implementation of Utilities Mitigation Measure 1 identified in the 1998 EIS/EIR and Addendum (1999). With the implementation of Utilities Mitigation Measure 1, the Project would not result in new or substantially more severe impacts than identified in the 1998 EIS/EIR and Addendum (1999). Therefore, no new mitigation is required to reduce previously undescribed or under evaluated impacts resulting from the Project. 16 Facts in Support of Finding: Utilities Mitigation Measure 1 identified in the 1998 EIS/EIR and Addendum (1999) would reduce or avoid impacts on the existing wastewater collection system. Utilities Mitigation Measure 1 would require the Project to assess the existing wastewater collection system and provide the necessary improvements and connections as necessary to ensure the wastewater collection system is adequate.

Findings regarding impacts that will result in a less than significant impact or no impact.

A. Aesthetics (Addendum p. 3-5 to 3-8)
The Project would not result in any significant impacts related to aesthetics. The Project site is not located within a state designated scenic highway and would be required to comply with the Mare Island Historic District Design Guidelines, Urban Design policies, and Architectural Design Guidelines outlined in the 2013 Specific Plan and identified in the 1998 EIS/EIR and Addendum (1999) to ensure the Project design is compatible with the surrounding land uses. The Project would also be subject to the City’s Development Review process, including Design Review. As required by the DDA for the North Mare Island Property, the Applicant would be required to submit a Beautification Plan. The Beautification Plan would identify interim landscaping, hardscaping, enhanced fencing, lighting, and security which may include elements such as trees and flowers, public seating, and public art for the North Mare Island property. Additionally, all site lighting would be required to comply with the Vallejo Municipal Code that requires lighting to be directed downward and limited to the site (implemented under Section 16.72.100 of the Vallejo Municipal Code). The Project would also be required to comply with the exterior lighting standards outlined in the 2013 Specific Plan, which states that light fixtures should be shielded or diffused to avoid glare to motorists, pedestrians, and residents. Therefore, aesthetic impacts would be less than significant.

B. Agriculture and Forestry Resources (Addendum p. 3-9 to 3-10) The Project would have no impacts related to agriculture and forestry resources. Mare Island is a former naval shipyard developed with industrial uses and redeveloped with commercial, residential, and public facility uses. It also contains open space, parks, and recreation uses. The Project site does not contain important farmland or lands contracted under the Williamson Act, and is not zoned for agriculture or timberland uses. As such, consistent with the determination in the Previously Certified Environmental Documents, the Project would not result in the conversion of any land from agricultural to nonagricultural use. No impact would occur.

Finding: The City Council finds that, based upon substantial evidence in the Record, the conclusions of the Previously Certified Environmental Documents apply to the Project and there would be no impact on agriculture and forestry resources. No new mitigation is required to reduce previously undescribed or under evaluated agriculture and forestry resources impacts resulting from the Project.
17 C. Biological Resources (Addendum p. 3-18 to 3-22)
The Project would not result in any significant impact related to biological resources. The Project would occur within portions of Mare Island that have been developed, are covered with impervious surface, or have been previously disturbed by development. Due to the developed nature of the Project site and the surrounding area, no special-status species would be expected to occur and there are no federally protected wetlands, riparian habitat, or others sensitive natural communities present onsite. The Project would be required to comply with General Plan Policies NBE-1.1, NBE-1.2, and NBE-1.6 aimed to protect special-status species, sensitive natural communities, wetlands, and open space.

Additionally, the Project would be required to comply with Actions NBE-1.2C and NBE1.1F by completing pre-construction surveys for nesting birds and a biological resources assessment for roosting bats. Compliance with these General Plan Policies and Actions would ensure that Project impacts on biological resources would be less than significant and would not result in new or substantially more severe impacts than identified in the Previously Certified Environmental Documents.

D. Energy (Addendum p. 3-28 to 3-31)
The Previously Certified Environmental Documents generally discuss that new and upgraded structures would be developed to meet Title 24 energy conservation requirements. Title 24 of the California Code of Regulations and California Green Building Code have more stringent energy usage requirements for all new construction than the 1998 EIS/EIR and Addendum (1999) contained, and the construction and operation of the Project would be required to adhere to all current regulations in place related to energy conservation. The Project would be required to comply with General Plan Policy NBE1.15, which supports measures to reduce energy consumption and increase energy efficiency in residential, commercial, industrial, and public buildings. Additionally, the Project would be subject to the requirements of the Vallejo Municipal Code, including Chapters 12.32 and 12.50: Energy Code and Green Building Code, Chapter 16.71: Water Efficient Landscape Requirements, and Chapter 16.74.020: Energy Conservation Guidelines; Circulation and Transportation. The Project would be subject to the policies contained in the City’s 2012 Climate Action Plan related to green building practices, energy efficiency, transit-oriented development, mixed-use/higher density development, recycling and composting, water conservation, and renewable energy. Compliance with the City’s General Plan policies, Municipal Code, and Climate Action Plan would ensure the Project would not result in the wasteful, inefficient, or unnecessary consumption of energy resources, or conflict with a plan for renewable energy or energy efficiency. Therefore, impacts related to energy resources would be less than significant.

E. Greenhouse Gas Emissions (Addendum p. 3-37 to 3-40)
The Project would be required to comply with the Title 24 standards of the California Code of Regulations, the California Green Building Code, the BAAQMD greenhouse gas threshold requirements, and all City regulations including the policies from the City’s Climate Action Plan and the City’s Climate Action Plan Compliance Checklist for new Development. Compliance with these applicable regulations would ensure the Project does not conflict with any applicable plan, policy, or regulation of an agency adopted for the purpose of reducing the emissions of greenhouse gases. Therefore, impacts related to greenhouse gases would be less than significant.

Finding: The City Council finds that, based upon substantial evidence in the Record, the Project would result in a less than significant impact related to greenhouse gases. No new mitigation is required to reduce previously undescribed or under evaluated impacts related to greenhouse gases resulting from the Project.

F. Hazards and Hazardous Materials (Addendum p. 3-41 to 3-45) The Project would involve the reuse of existing Buildings 69, 71, 77, and the Coal Shed buildings; and the demolition of 10 existing buildings within Reuse Area 1A that may contain polychlorinated biphenyls. Based on the age of Buildings 69, 71, 77, and the Coal Shed buildings, asbestos containing materials and lead based paint may be present, and the Project would be required to comply with current BAAQMD asbestos removal regulations. The removal of hazardous materials and demolition activities associated with the 10 buildings in Reuse Area 1A will be completed in accordance with the Demolition and Management Plan for the Project.

The Demolition and Management Plan outlines pre-demolition surveys of each building; site mobilization; verification of utility disconnects; removal of remaining chemicals and hazardous materials; removal of asbestos containing materials, lead based paint, and polychlorinated biphenyls; demolition of the existing buildings; and post demolition surveys, soil sampling, and remediation of contaminated soils. The demolition and removal of hazardous materials, including asbestos containing materials, lead based paint, and polychlorinated biphenyls, would be removed, transported, and disposed of in accordance with federal, state, and local regulations, and the Project’s Demolition and Management Plan. Therefore, Project impacts would be less than significant and would not result in new or substantially more severe impacts than identified in the 1998 EIS/EIR and Addendum (1999).

The 1998 EIS/EIR and Addendum (1999) determined that redevelopment of Mare Island would not create any significant hazards relating to reuse of hazardous materials sites as onsite clean-up and remediation activities would be required to comply with rigorous federal and state requirements governing hazardous materials cleanup and siting, as well as regulatory and community oversight. The Developer is completing onsite remediation activities throughout Mare Island. The 2020 Annual Review Development Agreement identifies Reuse Area 6 as an “Unrestricted Area with Closure,” where there are no environmental restrictions. The 2020 Annual Review Development Agreement also 19 identifies Building 77 within Reuse Area 3B, which would be reused for office space, in a “Commercial/Industrial Area with Closure.” Portions of Reuse Area 3B, where the hotel and open space uses would be located are within an area that the 2020 Annual Review Development Agreement identifies as “Commercial/Industrial Areas without Closure.” However, the 2020 Annual Review Development Agreement does not identify Buildings 69, 71, or the Coal Shed buildings within Reuse Area 3B as requiring remediation. Furthermore, based on review of the State Water Resources Control Board Geotracker database, previous clean-up activities have occurred for Buildings 69, 71, 77, and the Coal Shed buildings, and all cases are closed. Following demolition of the 10 structures within Reuse Area 1A, the Developer would conduct post-demolition soil sampling and remediate contaminated soils to appropriate residential levels as required by the City, San Francisco Bay Regional Water Quality Control Board, and Department of Toxic Substances Control.

The Project would also involve site remediation and clean-up activities where Building 571 was previously located in Reuse Area 1A. As identified in the 1998 EIS/EIR and Addendum (1999), the site remediation and clean-up activities would be completed in accordance with the requirements of a remedial action workplan, and areas that are planned for residential development would be remediated to acceptable residential standards in compliance with the applicable federal, state, and local requirements of the San Francisco Bay Regional Water Quality Control Board, California Environmental Protection Agency, California Division of Occupational Safety and Health, Department of Toxic Substances Control, and the City. Compliance with applicable federal, state, and local regulations governing the removal, transportation, disposal, and remediation of soils from the site would ensure the Project would not create a significant hazard to the public or the environment, and the impact would be less than significant. Therefore, the Project would not result in new or substantially more severe impacts than identified in the 1998 EIS/EIR and Addendum (1999).

G. Land Use and Planning (Addendum p. 3-52 to 3-55)
The Project would not physically divide an established community because it would occur within the Mare Island Specific Plan area, which is intended to create a vibrant civilian employment center and balanced new neighborhood for the City.

The Project would not conflict with any applicable land use plan, policy, or regulation. The Project is proposing a density transfer of 115 units from Reuse Area 8 to Reuse Area 6 for development of 373 multi-family units. It also involves the density transfer of approximately 145,000 square feet from Reuse Area 5 to Reuse Area 3B for the proposed hotel, event space, and food and beverage kiosks. The proposed office and open space uses 20 would be within the allowable development parameters for Reuse Area 3B, and therefore a density transfer is not required for these uses.

The 2013 Specific Plan indicates that the development program may vary by a maximum of 20 percent. This variation may consist of a change of use within a Reuse Area or transfer of development square footage to another Reuse Area. The 2013 Specific Plan limits density transfers to the major land use categories, and does not have specific criterion on how the density transfer should be allocated within land use subcategories such as those identified under the Mixed Use category. The transfer of 115 units from Reuse Area 8 to Reuse Area 6 would result in a density transfer just below 20 percent. After density transfer, Reuse Area 8 would be limited to 490 residential units. To accommodate development of the hotel, the Project would transfer approximately 17 percent (145,000 square feet) of the development square footage from Reuse Area 5’s Mixed Use (light industrial) category to Reuse Area 3B’s Mixed Use (retail commercial) category. After the density transfer, the total development for the Mixed Use category in Reuse Area 3B would increase by 9.8 percent from approximately 1,475,838 to 1,620,838 square feet. The total development for the Mixed Use category in Reuse Area 5 would decrease from approximately 853,499 to 708,499 square feet. The overall development program for the 2013 Specific Plan would remain the same after the density transfers and the Project would be consistent with the development program analyzed in the 2005 Subsequent EIR.

The Project would be consistent with the existing General Plan land use designation and zoning for Reuse Area 3B and Reuse Area 6. Reuse Area 6 is designated Residential Medium-Density and Residential High Density, and zoned Mixed Use Planned Development. The 2013 Specific Plan identifies Reuse Area 6 to be primarily residential and would provide a range of housing types, including high density townhomes, medium density detached homes, and low density duplexes. Therefore, the proposed multi-family residential units would be consistent with the existing land use and zoning for Reuse Area

6. The proposed office space, hotel, event space, food and beverage kiosks, and open space uses would be within a portion of Reuse Area 3B designated Mixed Use and zoned Mixed Use Planned Development. Office and open space uses are allowed within the Mixed Use land use and zoning. The hotel, event space, and food and beverage kiosks would be allowed within the Mixed Use land use and zoning with the approval of a Conditional Use Permit.

The Project would be subject to the City’s Development Review process, including Design Review, to ensure all structures are compatible with surrounding land uses and consistent with the Urban Design policies, Architectural Design Guidelines, and the Mare Island Historic District Design Guidelines. Additionally, the Project would be subject to meet the obligations of the DDA. Therefore, the Project would not conflict with any land use plan, policy, or regulation, and the impact would be less than significant. The Project would not result in new or substantially more severe impacts than identified in the 2005 Subsequent EIR.

H. Mineral Resources (Addendum p. 3-56 to 3-57)
The Mare Island Specific Plan does not identify any mineral resources of value on or near the Project site and no mineral extraction activities exist on or near the site. Additionally, the Project site has not been delineated as a locally important mineral resource recovery site by the General Plan, General Plan EIR, or 2013 Specific Plan. The Project would not result in the loss of availability of a known mineral resource of value, or loss of an important mineral resource recovery site. Therefore, no impact would occur.

Finding: The City Council finds that, based upon substantial evidence in the Record, the Project would have no impact on mineral resources. No new mitigation is required to reduce previously undescribed or under evaluated impacts on mineral resources resulting from the Project.

I. Population and Housing (Addendum p. 3-63 to 3-64)
The Project would not result in substantial unplanned growth in the area, or the displacement of existing people or housing that would necessitate the construction of replacement housing elsewhere. The Project would require a density transfer of 115 units from Reuse Area 8 to Reuse Area 6. Additionally, approximately 145,000 square feet would be transferred from Reuse Area 5 to Reuse Area 3B to accommodate development of the proposed hotel. Development of the office space would not require a density transfer.

Though the Project would result in more development in Reuse Area 3B and Reuse Area 6 than what was approved in the 2013 Specific Plan, the density in other reuse areas would be less and the proposed transfers would not increase the overall development program as identified in the 2013 Specific Plan.

The 1998 EIS/EIR and Addendum (1999) determined the Specific Plan would increase the population in the region as a result of the additional jobs created. The 1998 EIS/EIR and Addendum (1999) estimated the Specific Plan would create 15,119 new jobs and generate 33,367 new residents. The Project would construct 373 multi-family residential units. The average person per household number for the City of Vallejo as of January 1, 2021 was

2.81. Based on this average, it is estimated the multi-family residential component would generate up to 1,044 residents within Reuse Area 6. The addition of 1,044 residents would represent approximately 3 percent of the new residents anticipated by the 2013 Specific Plan Project and would not result in unplanned population growth.

The addition of office space, hotel, event space, and food and beverage kiosks would create new jobs and increase the demand for new employees. The unemployment rate in Solano County was 7.3 percent in August 20212; therefore, the Project’s employment is expected to be absorbed by the regional labor force and would not substantially increase population 1 California Department of Finance (DOF). 2021. E1 Population Estimates for Cities, Counties and the State – January 1, 2021. http://www.dof.ca.gov/Forecasting/Demographics/Estimates/e-1/. Accessed October 2021. 2 Employment Development Department (EDD), 2021. Solano County. https://www.labormarketinfo.edd.ca.gov/file/lfmonth/vall$pds.pdf.

Accessed October 2021.
22 growth. The proposed hotel would also temporarily attract people to the City. Based on an average of two guests per hotel room, the proposed hotel could generate up to 400 guests.

However, the hotel would not result in the provision of permanent housing, because the hotel would only allow guests to stay short-term. Therefore, the Project would be within the population projections estimated for the 2013 Specific Plan and would not directly or indirectly induce substantial unplanned population growth. The impact would be less than significant. Therefore, the Project would not result in new or substantially more severe impacts than identified in the 1998 EIS/EIR and Addendum (1999).

J. Public Services (Addendum p. 3-65 to 3-69)
The Project would be within the overall development program for the 2013 Specific Plan and the growth projections identified in the Previously Certified Environmental Documents; therefore, the Project would not substantially increase demand on fire and police protection services than identified in the Previously Certified Environmental Documents. The Project would be required to annex into and contribute to the existing Community Facility District. Additionally, the Project would be required to comply with Chapter 3.06 of the Vallejo Municipal Code and pay a Public Facilities Impact Mitigation Fee. Therefore, impacts on fire and police protection services would be less than significant.

The Project would not result in greater school impacts than those identified in the Previously Certified Environmental Documents. The Previously Certified Environmental Documents estimated the 2013 Specific Plan Project would result in approximately 2,271 students in grades K-12. The Project is estimated to generate 335 students, which would represent approximately 15 percent of the expected student population for the 2013 Specific Plan Project. The Project would also be required to pay a School Facilities Impact Mitigation Fee in accordance with Chapter 3.14 of the Vallejo Municipal Code. The payment of the school impact fee would fully mitigate potential school impacts to a less than significant level.

The Project would develop approximately 194,000 square feet (4.45 acres) of open space within Reuse Area 3B consisting of a waterfront promenade, event lawn, children’s playground, and a dog park. The Project would be within the growth projections identified in the Previously Certified Environmental Documents. Additionally, the proposed open space is 1.45 acres more than that envisioned in the 2013 Specific Plan for Reuse Area 3B.

Section 8.3.1 C(iii) of the 2013 Specific Plan states the City does not anticipate the necessity for additional environmental review so long as the total development does not exceed the overall development program for the Specific Plan. Open space is not identified as one of the major land use categories for the 2013 Specific Plan’s development program, and therefore it is interpreted as not having a cap on the amount of open space development. 23 As the Project would provide more open space than that envisioned under the 2013 Specific Plan, this would further reduce the use of other nearby parks and open space and the impact would be less than significant.

K. Recreation (Addendum p. 3-70 to 3-71)
Construction of the proposed 373 multi-family residential units would directly increase the City’s population with the generation of approximately 1,044 residents. The addition of office space, hotel, event space, and food and beverage kiosks would create new jobs and increase the demand for new employees. The proposed hotel would also temporarily attract people to the City. The addition of residents, employees, and hotel guests would increase demand on parks and recreation facilities. However, residents and employees generated by the Project would be within the population projections anticipated in the Previously Certified Environmental Documents. The Project would also include approximately 194,000 square feet (4.45 acres) of open space within Reuse Area 3B consisting of a waterfront promenade, event lawn, children’s playground, and a dog park. The 2013 Specific Plan Project allocated 3 acres of open space in Reuse Area 3B, and therefore the Project’s open space is 1.45 acres more than envisioned in the 2013 Specific Plan for Reuse Area 3B. Section 8.3.1 C(iii) of the 2013 Specific Plan states the City does not anticipate the necessity for additional environmental review so long as the total development does not exceed the overall development program for Mare Island. Open space is not identified as one of the major land use categories in the overall development program, and therefore is interpreted as not having a cap on the amount of open space development. As the Project would provide more open space for residents than envisioned under the 2013 Specific Plan, this would further reduce impacts on nearby parks and open space. Therefore, impacts on parks would be less than significant.

L. Tribal Cultural Resources (Addendum p. 3-81 to 3-82) The Project would not result in a significant impact on tribal cultural resources. The Project would be required to comply with General Plan Policy NBE-1.9 to protect and preserve archaeological, historic, and other cultural resources. General Plan Action NBE-1.9A and Action NBE-1.9B also require that land use activities comply with State requirements, maintain dialogue with local Native American groups regarding sensitive cultural resources in the City, follow best practices to ensure that cultural resources are not impacted, and that appropriate agencies and technical experts are involved in the evaluation 24 and protection of resources and sites. In the event previously undiscovered tribal cultural resources are found on the site, the Project would be required to implement standard inadvertent discovery procedures as a condition of approval. Implementation of standard inadvertent discovery procedures would require all work to stop within 50 feet of the find until a qualified archaeologist assesses the discovery. If the discovery is determined to be a potentially significant tribal cultural resource, a site-specific investigation plan will be developed by a qualified archaeologist. With the implementation of this standard condition of approval, the Project would not cause a substantial adverse change in the significance of a tribal cultural resource and the impact would be less than significant.

Finding: The City Council finds that, based upon substantial evidence in the Record, the Project would have a less than significant impact on tribal cultural resources. No new mitigation is required to reduce previously undescribed or under evaluated tribal cultural resources impacts resulting from the Project.

M. Wildfire (Addendum p. 3-88 to 3-89)
The Project site is not located within a State Responsibility Area for fire protection and is not located within a very high fire hazard severity zone. Therefore, the Project would have no impact related to wildfire.

Finding: The City Council finds that, based upon substantial evidence in the Record, there would be no potential impacts related to wildfire. No new mitigation is required to reduce previously undescribed or under evaluated wildfire impacts resulting from the Project. 1 RESOLUTION NO. 22-_________

RESOLUTION APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT

BETWEEN THE CITY OF VALLEJO AND THE NIMITZ GROUP, LLC REGARDING AN APPROXIMATELY 157-ACRE PORTION OF REUSE AREA 1-A ON NORTH MARE ISLAND (APNs 0066-020-130 AND -140, AND A PORTION OF APNs 0066-020- 110 and -150) AND AUTHORIZNG THE CITY MANAGER TO EXECUTE SAME WHEREAS, the City of Vallejo is the fee owner of approximately 125.3 acres of Reuse Area 1- A (“City-Owned Property”) and the lessee of approximately 31.8 acres of Reuse Area 1-A still owned by United States Navy (“Navy-Owned Property”). The City-Owned Property and the Navy-Owned Property are collectively referred to herein as the “Property”); and WHEREAS, the City will receive fee title to the Navy-Owned Property from the Navy following issuance of a Finding of Suitability for Transfer and a determination by the State of California Department of Toxic Substances Control that no further remediation related action is required; and WHEREAS, in December 2017, the City issued a Request for Qualifications for development of the Property and received nine responses, including from The Nimitz Group, LLC (“Developer”); and
WHEREAS, after considering the responses, on May 15, 2018, the City Council authorized the City Manager to negotiate an exclusive negotiating agreement with Developer outlining a process for City and Developer to negotiate mutually acceptable terms and conditions for the transfer and development of the Property to be set forth in a disposition and development or purchase and sale agreement; and
WHEREAS, in July 2018, City and Developer entered into an Exclusive Right to Negotiate Agreement which has been further amended, most recently by a 6th Amended and Restated Exclusive Negotiating Agreement dated December 14th, 2021 (as so amended and restated, the “ENA”), providing, among other things, for City and Developer to negotiate terms for Developer’s acquisition of a fee interest in the City-Owned Property and a sub-leasehold interest in the NavyOwned Property, with a must take obligation to accept fee title conveyance of the Navy-Owned Property following City’s acquisition thereof from Navy; and WHEREAS, concurrently herewith, the City Council will consider a 7th Amendment to the Restated Exclusive Negotiating Agreement dated December 14th, 2021 (as so amended and restated, the “ENA”), providing, for an extension to the Term thereof to December 31, 2022; and 2 WHEREAS, pursuant to Section 54234(a)(1) of the Surplus Land Act, concurrently herewith the City Council considered and adopted a resolution declaring the Property as Surplus; and WHEREAS, City staff have negotiated with Developer a proposed Disposition and Development Agreement (“DDA”) with respect to the Property; and
WHEREAS, the DDA provides among other things for City to sell the Property to Developer via phased closings and, following close of escrow, for Developer to: (i) undertake sampling and testing of soil stockpiles at six locations on Mare Island, (ii) demolish 10 remaining non-utilized buildings located on the North Mare Island Property, (iii) construct and develop within an approximately 3 acre portion of the historic core area of Mare Island located south of the Property, new buildings, or substantial rehabilitation of existing vacant historic buildings, to accommodate use and occupancy of approximately 45,000 gross square feet of retail space, approximately 29,000 gross square feet of office space, 194,000 square feet of open space, up to 373 multifamily and townhome units, and a hotel including up to 200 rooms within 60 months following the initial closing, and (iv) undertake certain planning related work for Mare Island including preparation of a proposed interim beautification plan (“Beautification Plan”) and a new proposed specific plan (“New Specific Plan”) to replace the existing Mare Island Specific Plan; and WHEREAS, if and only if a Beautification Plan and/or New Specific Plan are approved, following applicable environmental review and public hearings, the DDA provides for Developer to undertake interim beautification work and site preparation work to be described in the Beautification Plan and New Specific Plan, respectively, which site preparation work may include importing of clean fill to raise the elevation of the Property and grading and surcharging to ready the Property for development; and
WHEREAS, a fair market appraisal prepared for City by Smith & Associates appraisal consultants determined that, as a result of the substantial site development and demolition costs required to develop the Property for its highest and best use, the fair market value of the Property in its existing condition is $0; and
WHEREAS, City has negotiated a sale of the Property to Developer for a purchase price of $3,000,000.00, which exceeds the City appraiser’s determination of the fair market value of the Property; and
WHEREAS, the Property was and continues to be subject to an exclusive negotiating agreement entered into prior to September 30, 2019, and the City desires to complete the disposition of the Property prior to December 31, 2022 thereby complying with the exemption to AB1486 as described in Government Code 54234(a)(1); and
WHEREAS, prior to consideration of this Resolution, the City Council of the City of Vallejo has adopted a resolution Making CEQA Findings and Approving an Addendum to the Previously Certified Final Environmental Impact Statement / Environmental Impact Report (EIS/EIR) for the Disposal and Reuse of Mare Island Naval Shipyard Project (1998), and the Mare Island Amended and Restated Specific Plan Project Final Subsequent Environmental Impact Report (2005); and
3 WHEREAS, the Record of Proceedings ("Record") upon which the City Council bases its decision includes, but is not limited to: (1) the staff reports, City files and records and other documents prepared for and/or submitted to the City relating to the Project, (2) the evidence, facts, findings and other determinations set forth in this resolution, (3) the 1998 EIS/EIR, the 1999 Addendum, the 2005 Subsequent EIR, and the 2007 Addendum and related technical reports (collectively, the Previously Certified Environmental Documents) (4) the City of Vallejo General Plan and its environmental document and the Vallejo Municipal Code, (5) all designs, plans, studies, data and correspondence submitted to the City in connection with the proposed project (6) all documentary and oral evidence received at public workshops, meetings, and hearings or submitted to the City (7) all other matters of common knowledge to the City Council including, but not limited to, City, state, and federal laws, policies, rules, regulations, reports, records and projections related to development within the City of Vallejo and its surrounding areas.

NOW, THEREFORE, BE IT RESOLVED, that based on the information in the Record, the City Council of the City of Vallejo hereby finds and determines as follows:

1. The foregoing recitals are true and correct and are incorporated herein by reference;

2. The proposed sale price of $3,000,000 is not less than the fair market value of the Property at its highest and best use;

3. The disposition of the Property as set forth in the DDA is in the best interest of the City in that the disposition will lead to reuse of the Property in a manner that addresses the undesirable current conditions at the Property, and provides opportunity for economically productive re-use thereof with substantial private investment;

4. The disposition of the Property is consistent with Chapter 3.70 of the Vallejo Municipal Code and the City’s Real Property Asset Management Policy.

BE IT FURTHER RESOLVED that the City Council hereby approves the DDA in the form attached hereto and incorporated herein by reference, subject to such further minor conforming, technical or clarifying changes or revisions as may be agreed to and approved by the City Manager and City Attorney, which do not materially increase the obligations of the City thereunder. The City Manager is hereby authorized to execute the DDA and the City Manager and City Clerk are further authorized and directed to take such further actions and to execute such documents on behalf of the City as are necessary to carry out the transaction contemplated by the DDA on behalf of the City, including without limitation, all actions and documents necessary for the sale of the Property to Developer and any and all obligations of the City as set forth in the DDA.

ADOPTED, by the City Council of the City of Vallejo at a regular meeting held on March 22, 2022, with the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:
4 ROBERT H. MCCONNELL, MAYOR
ATTEST ____________________________________

DAWN ABRAHAMSON, CITY CLERK
1 RESOLUTION NO. 22 -

RESOLUTION APPROVING A SEVENTH AMENDMENT TO THE NORTH MARE ISLAND

EXCLUSIVE NEGOTIATING AGREEMENT AND AUTHORIZING

THE CITY MANAGER TO EXECUTE SAME
WHEREAS, in early 2018, the City of Vallejo issued a Request for Qualifications (RFQ) for the development of the City’s 157 acres on North Mare Island (NMI); and WHEREAS, on May 15, 2018, the City Council directed staff to negotiate an Exclusive Negotiating Agreement (ENA) with The Nimitz Group, LLC (Nimitz) with respect to the 157- acre North Mare Island property; and
WHEREAS, on July 24, 2018, the Council authorized the City Manager to execute the ENA with Nimitz to negotiate a proposed Disposition and Development Agreement (“DDA”) providing for the City’s conveyance of the NMI land to Nimitz for development; and WHEREAS, in addition to the NMI negotiations, Nimitz was working with Lennar Mare Island, LLC (LMI) on a proposed Purchase and Sale Agreement for LMI’s holdings on Mare Island, referred to as “South Island”; and
WHEREAS, on July 31, 2019, the Council approved a Consent Agreement for the transfer of LMI’s holdings to Nimitz concurrently with a Fourth Amended and Restated ENA for NMI which identified the negotiation and execution of an initial ground lease and a Purchase Option Agreement as the goal of the City/Nimitz negotiations.

WHEREAS, on October 22, 2019, the Council approved an initial Term Sheet for NMI and directed staff and Nimitz to continue to work diligently toward finalizing their agreement; and
WHEREAS, in November 2019, Nimitz closed escrow for the acquisition of South Island from LMI and assumed the role of Mare Island Master Developer; and WHEREAS, in early 2020, Nimitz contracted with Southern Land Company (SLC) to act as its land manager for Mare Island. Based on in-depth analysis of the geologic hazards and geotechnical challenges, including compressible soils, undocumented fills, slope stability, flooding, sea level rise and seismic hazards, SLC determined that a great amount of soil importation would be required to raise the NMI site grades, potentially increasing NMI development costs and delaying vertical development.
2 WHEREAS, on December 15, 2020, the Council approved a Fifth Amended and Restated ENA for NMI, which included a new Term Sheet addressing the additional soil importation and land preparation costs, and directed staff and Nimitz to continue to work on the drafting of the NMI DDA; and
WHEREAS, on December 14, 2021, the Council approved a Sixth amendment to the ENA for NMI, which extended the term of the ENA by 90 days, through March 31, 2022, to provide additional time for the parties to complete negotiations and the drafting of the proposed DDA; and
WHEREAS, City staff is presenting a proposed DDA, together with various ancillary agreements, to the City Council for its consideration on March 22, 2022; and WHEREAS, if the proposed DDA is approved by the Council, an extension of the ENA is necessary to allow the parties to execute and record the DDA and all necessary ancillary documents and close escrow by the end of the year.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Vallejo, State of California, that the Seventh Amended and Restated ENA extending the term by an additional nine months through December 31, 2022 is hereby approved and the City Manager or designee is authorized to execute same.

Adopted by the City Council of the City of Vallejo at a regular meeting held on March 22, 2022 with the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ROBERT MCCONNELL, MAYOR
ATTEST:

DAWN G. ABRAHAMSON, CITY CLERK
East Bay/Corporate Office
140 Town & Country Drive, Suite F
Danville, CA 94526
p: 925 855‐4950 / f: 925 855‐4951
Sacramento/Central Valley Office
111 Woodmere Road, Suite 140
Folsom, CA 95630
p: 916 357‐5860 / f: 916‐357‐5868

AN APPRAISAL REPORT OF
157.1 Acres of Land
Mare Island Reuse Area 1A
Vallejo, CA 94592
Real Estate Appraisal
and Consulting
www.smithassociatesinc.com
East Bay/Corporate Office Sacramento/Central Valley Office 140 Town & Country Drive, Suite F 111 Woodmere Road, Suite 140 Danville, CA 94526 Folsom, CA 95630
Phone 925 855‐4950 Phone 916 357‐5860
Fax 925 855‐4951 Fax 916 357‐5868
July 11, 2019
Mr. Will Morat, MPA
Assistant to the City Manager
Economic Development
City of Vallejo
555 Santa Clara Street
Vallejo, CA 94590
RE: An Appraisal Report of 157.1 Acres of Land
Mare Island Reuse Area 1A
Vallejo, CA 94592
Dear Mr. Morat:

This appraisal report is intended to comply with the reporting requirements set forth in the 2018‐2019 Uniform Standards of Professional Appraisal Practice (USPAP).

The subject property is identified by Reuse Area 1A (North Industrial Park) located on the north portion of Mare Island, north of G Street, east of Azur Drive and south of State Route 37 in the City of Vallejo, Solano County. It is currently identified by the Solano County Assessor’s Office as parcel 0066‐020‐130, ‐140, ‐110 (portion of) and ‐150 (portion of) and represents 157.1 acres of land. This property has the Industrial (I) Designation in the 2040 General Plan but is currently zoned Mixed Use Planned Development Mare Island Specific Plan (MUPD). The property is a former Navy Shipyard that was closed in 1996. The site has entitlements for and is proposed to be developed into 1,222,000 square feet of mixed‐use (54,000 office/R&D; 348,000 retail; and 370,000 warehouse, and 450,000 square feet light industrial) and 6,000 square feet educational/civic. Improvements currently existing on the subject site include approximately (17x) older buildings that are at the end of their economic life, in poor condition and are given no contributory value. As of the date of inspection, the subject represented vacant, unimproved land. The Navy parcels numbers, Assessor’s parcel numbers, current ownership and (Navy) parcel sizes are identified in the following table.
* This parcel is to be transferred to the City of Vallejo in 2019 Navy Parcel No. APN Owner Acres
XV‐1(A) 0066‐020‐110 City of Vallejo 67.2
XV‐A(2) 0066‐020‐130 City of Vallejo 27.9
XV‐B(2) 0066‐020‐110 (portion of) City of Vallejo 4.5
II 0066‐020‐150 (portion of) City of Vallejo 25.7
Sub‐total 125.3
XV‐B(1) 0066‐020‐140 * Navy 31.8
TOTAL 157.1
Mr. Will Morat
City of Vallejo
Page Two
The purpose of this report is to derive an opinion of value under the following scenarios:
 Market Value “As Is”
 Hypothetical Market Value “As if Complete”
The intended use of this report is for City of Vallejo (Intended User) is to assist the City of Vallejo and the potential buyer (Nimitz Group) in the potential purchase of the subject property. This appraisal is not to be used as a basis of sale, limited partnership, etc., without the prior written consent of the appraiser.

Assignment conditions specific to this assignment include the following.

1. There was no preliminary title report provided for review in preparation of this assignment. The opinion of value identified in this report assumes typical utility easements of record with no atypical easements, encroachments or adverse conditions in connection with the subject property.

2. The acreages of the subject’s Navy parcels used in this report obtained from the client are different from the acreages based on the assessor’s parcel maps. The acreages ofthe subject’s parcels used in thisreport are assumed to be accurate.

Based on the analysis described in the attached report, in conjunction with the Assignment Conditions, it is our opinion that the opinion of value is as follows.

SCENARIO DATE OPINION OF VALUE EXPOSURE PERIOD
Hypothetical Market Value “As if Complete”
(A) (B) (C)
June 28, 2019 $15,400,000 6 Months
Market Value “As Is” (D) June 28, 2019 $0 12 Months
(A) The Hypothetical Market Value “As if Complete” is predicated on the Hypothetical Condition that the existing improvements are demolished and the site development is complete and that the title of the Navy owned parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1) has been transferred to the City of Vallejo as of the effective date of valuation.
(B) According to the Navy, all contamination has been removed from Parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1). The Hypothetical Market Value “As if Complete” is predicated on the Extraordinary Assumption that this parcel is free of any contamination as of the effective date of valuation. (C) According to the City of Vallejo, it is not known if the pier extending to the east of Parcel APN 0066‐ 020‐150 is included in the subject property. For the purposes of this appraisal and per request of the client, the Hypothetical Market Value “Asif Complete” is predicated on the Extraordinary Assumption that this pier is not included in the subject property. (D) Due to the estimated site development costs and demolition costs, the Market Value “As Is” is considered to be zero.

Mr. Will Morat
City of Vallejo
Page Three
The following report contains the factual data and reasoning upon which the opinions of value are based.

The assumptions and limiting conditions and extraordinary assumptions are a vital part of this report. This report has been prepared in conformance with the requirements of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA); the Interagency Appraisal and Evaluation Guidelines; City of Vallejo’s Appraisal Guidelines (including scope work); and the Uniform Standards of Professional Appraisal Practice (USPAP).

Please feel free to call if there are any questions regarding this assignment.

Respectfully Submitted,
SMITH & ASSOCIATES, INC.

Thomas M. Venuti John E. Carrothers, MAI
Certified General Real Estate Appraiser Certified General Real Estate Appraiser AG011501, Expiration 05/10/20 AG014187, Expiration 04/11/21

SUBJECT PHOTOGRAPHS
Looking NW from the Intersection of Railroad Avenue and G Street Looking North from Railroad Avenue

SUBJECT PHOTOGRAPHS
Looking South from Railroad Avenue
Looking SE from the Intersection of Railroad Avenue and Walnut Avenue

SUBJECT PHOTOGRAPHS
Looking NE from the Intersection of P Street and Oak Street Looking SE from the Intersection of P Street and Walnut Avenue

SUBJECT PHOTOGRAPHS
Existing Building #503
Looking North from the Intersection of Azuar Drive and G Street

SUBJECT PHOTOGRAPHS
Looking SE from the Intersection of Walnut Avenue dan J Street

TABLE OF CONTENTS
Summary of Salient Facts................................................................................................................. 1 Extraordinary Assumptions and Hypothetical Conditions............................................................... 3 PART 1 – INTRODUCTION
Identification of the Subject Property ................................................................................ 4 Scope of the Appraisal ........................................................................................................ 6 Property Rights Appraised .................................................................................................. 6 Purpose / Intended Use / Intended User of the Appraisal ................................................. 7 Definition of Market Value ................................................................................................. 7 Ownership/Property History............................................................................................... 7 PART 2 – LOCATION AND PROPERTY DESCRIPTIONS
Regional Description ........................................................................................................... 8 City Description................................................................................................................. 14 Site Description................................................................................................................. 20 PART 3 – MARKET ANALYSIS & HIGHEST AND BEST USE
Market Analysis................................................................................................................. 27 Highest and Best Use ........................................................................................................ 33 PART 4 – METHODOLOGY & VALUATION
Methodology..................................................................................................................... 36 Hypothetical Market Value “As if Complete”
Sales Comparison Approach ................................................................................ 38 Conclusion............................................................................................................ 53 Market Value “As Is” ........................................................................................................ 54

ADDENDA

Smith & Associates, Inc.

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SUMMARY OF SALIENT FACTS
Property Type: 157.1 Acres of Land
Property Address: Mare Island Reuse Area 1A
Vallejo, CA 94592
APN: 0066‐020‐130, ‐140, ‐110 (portion of) and ‐150 (portion of)
Land Area: 6,843,276 square feet or 157.1 acres
Zoning: Mixed Use Planned Development Mare Island Specific Plan (MUPD), by the City of Vallejo Planning Department.

Flood Zone: Zone X and Zone AE – FEMA Flood Map 06095C‐0606F and 06095C‐0607F, dated August 3, 2016. Flood
insurance not required for Zone X but is required for
Zone AE.

Earthquake Zone: Not located in Fault‐Rupture Hazard Zone Present Use: Vacant Land
Highest and Best Use: Hold for possible future development Effective Date of Valuation: June 28, 2019 (Final Date of Inspection)

Interests Appraised: Fee Simple Interest
Appraiser: John E. Carrothers, MAI
Certified General Real Estate Appraiser
AG014187, Expiration 04/11/21
Thomas M. Venuti
Certified General Real Estate Appraiser
AG011501, Expiration 05/10/20

Smith & Associates, Inc.

Page 2 ends

Value Conclusions

Smith & Associates, Inc.

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ASSIGNMENT CONDITIONS
Assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work. Assignment conditions specific to this assignment include the following.

1. There was no preliminary title report provided for review in preparation of this assignment. The opinion of value identified in thisreport assumestypical utility easements of record with no atypical easements, encroachments or adverse conditions in connection with the subject property.

2. The acreages ofthe subject’s(Navy) parcels used in thisreport obtained from the client are different from the acreages based on the assessor’s parcel maps. The acreages of the subject’s parcels used in this report are assumed to be accurate.

EXTRAORDINARY ASSUMPTIONS
An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. Extraordinary Assumptions specific to this assignment include the following.

1. According to the Navy, all contamination has been removed from Parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1). The Hypothetical Market Value “As if Complete” is predicated on the Extraordinary Assumption that this parcel is free of any contamination as of the effective date of valuation.

2. According to the City of Vallejo, it is not known if the pier extending to the east of Parcel APN 0066‐020‐ 150 is included in the subject property. For the purposes of this appraisal and per request of the client, the Market Value “As Is” is predicated on the Extraordinary Assumption that this pier is not included in the subject property.

HYPOTHETICAL CONDITIONS
A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis.

Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions or trends; or about the integrity of data used in an analysis.

Hypothetical Conditions specific to this assignment include the following.

1. The Hypothetical Market Value “As if Complete” is predicated on the Hypothetical Condition that the existing improvements are demolished and the site development is complete and that the title of the Navy owned parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1) has been transferred to the City of Vallejo as of the effective date of valuation.

It is noted that the use of Assignment Conditions, Extraordinary Assumptions and Hypothetical Conditions might alter the assignment results if found untrue.

Smith & Associates, Inc.

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PART 1 – INTRODUCTION

IDENTIFICATION OF THE SUBJECT PROPERTY
The subject property is identified by Reuse Area 1A (North Industrial Park) located on the north portion of Mare Island, north of G Street, east of Azur Drive and south of State Route 37 in the City of Vallejo, Solano County. It is currently identified by the Solano County Assessor’s Office as parcel 0066‐020‐130, ‐140, ‐110 (portion of) and ‐150 (portion of) and represents 157.1 acres of land. The Navy parcels numbers, Assessor’s parcel numbers, current ownership and (Navy) parcel sizes are identified in the following table. * This parcel is to be transferred to the City of Vallejo in 2019 The assessor’s parcels are identified below.

The Navy parcels are identified below.

Navy Parcel No. APN Owner Acres
XV‐1(A) 0066‐020‐110 City of Vallejo 67.2
XV‐A(2) 0066‐020‐130 City of Vallejo 27.9
XV‐B(2) 0066‐020‐110 (portion of) City of Vallejo 4.5
II 0066‐020‐150 (portion of) City of Vallejo 25.7
Sub‐total 125.3
XV‐B(1) 0066‐020‐140 * Navy 31.8
TOTAL 157.1
Smith & Associates, Inc.

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Smith & Associates, Inc.

Page 6 ends

SCOPE OF WORK
This appraisal report is prepared in conjunction with the 2018‐2019 Uniform Standards of Professional Appraisal Practice, FIRREA appraisal regulations, most notably 12CFR, part 34, section 34.44, and the Appraisal Standards of the Office of the Comptroller of the Currency (as modified October 10, 2010), and City of Vallejo’s Appraisal Guidelines. Elements inherent with this process include the following.

1. Review of all documents provided to determine the purpose, client, intended use and intended user of the appraisal report. Identify the appraisal problem and appropriate approaches of value necessary to provide credible results.

2. Complete a physical inspection including applicable photographs. The inspection included an exterior inspection.

3. Research of the neighborhood, city and county factors was based on neighborhood analysis, information from local government sources, and data sources utilized by Smith & Associates, Inc.

4. In developing the approaches to value, market data was used and verified. Data sources included in‐ house data files, brokers and agents, property owners, and other knowledgeable market participants.

Data is believed reliable but not guaranteed (Refer to assumptions and limiting conditions).

5. Review and analyze all pertinent data to determine the subject’s highest and best use. Steps 1‐4 noted above were considered with particular emphasis placed on current market conditions and trends.

6. Assemble and analyze the data outlined above and opinions of value formulated. In the case of the subject property, we have completed the Land Sales Comparison Approach to arrive at the opinion of the Hypothetical Market Value “As if Complete”. Then, deductions for the site development costs and demolition costs are deducted to derive the Market Value “As Is”. The Income and Cost Approaches were not applicable as the subject has no income stream. Typical buyers and sellers of this type of property are not utilizing the income or cost approach in deriving value. Exclusion of this approach does not have any impact on the assignment results.

7. Review the report for content and compliance with 2018‐2019 USPAP, FIRREA, and client requirements.

8. Preparation of an appraisal report with information presented to the client that is adequate to allow for an understanding of the appraisal process and the opinion of value. The depth of discussion contained in this report is specific to the needs of the client and for the intended use.

PROPERTY RIGHTS APPRAISED
The property rights appraised reflect the Fee Simple Interest for the Market Value “As‐Is”. A definition of the individual property rights appraised is included in the Glossary contained in the addenda of this appraisal report.

Smith & Associates, Inc.

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PURPOSE, INTENDED USE, AND INTENDED USER OF THE APPRAISAL The purpose of this report is to derive an opinion of value under the following scenarios:
 Market Value “As Is”
 Hypothetical Market Value “As if Complete”
The intended use of this report is for City of Vallejo (Intended User) is to assist the City of Vallejo and the potential buyer (Nimitz Group) in the potential purchase of the subject property. This appraisal is not to be used as a basis of sale, limited partnership, etc., without the prior written consent of the appraiser.

DEFINITION OF MARKET VALUE
The following definition of market value is used by agencies that regulate federally insured financial institutions in the United States.

The most probable price that a property should bring in a competitive and open market under all conditions prerequisite to a fair sale, the buyer and seller each acting prudently and knowledgably, 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 time from seller to buyer under conditions whereby:
a. Buyer and seller are typically motivated;
b. Both parties are well informed or well advised, and acting in what they consider their own best interests;
c. A reasonable time is allowed for exposure in the open market; d. Payment is made in terms of cash in U.S. dollars or financial arrangements comparable thereto; and
e. The price reflects the normal consideration by the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (12 C.F.R. Part 24.42(g); 55 Federal Register 54696, August 24, 1990, as amended at 57 Federal Register 12201, April 9, 1992; 59 Federal Register 29499, December 10, 2010)

OWNERSHIP AND HISTORY OF THE PROPERTY
Title to the subject property parcels APN 0066‐020‐110, ‐130 and ‐150 are vested to the City of Vallejo who has had ownership transferred from the Navy in 2001, 2009 and 2011. Title to the subject property parcel APN 0066‐020‐140 is vested to the US Navy who has owned this parcel for decades; however, owner ship is to be transferred to the City of Vallejo sometime in 2019. The subject property has not transferred title in the last three years nor is it currently listed for sale.

Smith & Associates, Inc.

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PART 2 – LOCATION AND PROPERTY DESCRIPTIONS
REGIONAL ANALYSIS – BAY AREA
The subject property is located within Alameda County that is located in the northern portion of the State of California, and in the northern section of the San Francisco Bay Area. This county, as well as eight other surrounding counties comprises the San Francisco Bay Area. The other counties are Contra Costa, Marin, Napa, San Francisco, San Mateo, Solano and Sonoma Counties.

Population
The population of the San Francisco Bay Area is estimated to be over 8.0 million residents (2020), according to the Association of Bay Area Governments (ABAG). Currently, the total population as identified from the State of California for the various counties is identified as follows.

LOCATION
2010
CENSUS
2018

ESTIMATES
2019

ESTIMATES
% CHANGE
(2018‐2019)
Alameda County 1,509,240 1,656,884 1,669,301 0.7%
Contra Costa County 1,047,948 1,147,879 1,155,879 0.7%
Marin County 252,279 262,803 262,879 0.0%
Napa County 136,316 140,966 140,779 ‐0.1%
San Francisco County 804,989 880,980 883,869 0.3%
San Mateo County 718,614 772,372 774,485 0.3%
Santa Clara County 1,781,117 1,947,798 1,954,286 0.3%
Solano County 413,268 439,102 441,307 0.5%
Sonoma County 482,961 502,866 500,675 ‐0.4%
REGION 7,147,011 7,751,650 7,783,460 0.4%
Source: State of California Department of Finance
The actual population identified for the region was slightly over 7.1 million residents in 2010, which has increased 8.9% since this time. According to population estimates released on May 1, 2019, the total population increased approximately 0.4% over the past year to the current estimate of 7,783,460 residents. The subject property is located in Alameda County with total population over 1,600,000.

Growth increased slightly at 0.7% in the past year.

Job Growth
The employment picture has turned positive with job growth in the region, primarily in the South Bay.

There is job formation in the various jurisdictions and the following table identifies the current labor force and unemployment in the Bay Area Counties through March 2019, according to data from the State of California.

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LOCATION
MAR 2019

LABOR FORCE
MAR 2019

EMPLOYMENT
MAR 2019

UE RATE
MAR 2018

EMPLOYMENT
% CHANGE EMP.
(2018‐2019)
Alameda County 857,400 829,100 3.3% 819,500 1.2%
Contra Costa County 570,800 550,600 3.5% 544,600 1.1%
Marin County 142,000 138,200 2.7% 136,600 1.2%
Napa County 74,400 71,800 3.5% 71,400 0.5%
San Francisco County 587,100 572,000 2.6% 556,700 2.7%
San Mateo County 463,600 452,400 2.4% 451,100 0.3%
Santa Clara County 1,063,500 1,033,000 2.9% 1,016,600 1.6% Solano County 210,400 201,100 4.4% 199,800 0.7%
Sonoma County 260,700 252,200 3.3% 252,700 ‐0.2%
REGION 4,229,900 4,100,400 3.0% 4,049,000 1.3%
Total employment in the Bay Area is on the rise. Data from the total employment for March 2019 shows an increase of 1.3% or approximately 51,400 jobs above levels noted in March 2018. Employment is surpassing pre‐recessionary levels and isshowing strong levels of employment. The employment market is strong in the Bay Area which is currently pressing the housing market upward.

Housing Elements
New data released today by CoreLogic® shows a total of 6,124 new and existing houses and condominiums were sold in Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma counties in March 2019. This number is up 39.4 percent month over month from 4,393 sales in February 2019, and down 14.8 percent year over year from 7,184 sales in March 2018.

Total March 2019 home sales in the San Francisco Bay Area were the lowest for that month in 11 years, since 4,898 homes were sold in March 2008. Each month since December 2018 has logged the lowest sales for that month in 11 years. Sales have fallen on a year‐over‐year basis for the past 10 consecutive months. Those declines have been in the double digits— from 12 to 21.6 percent— for the last five consecutive months.

Since 1988, the average change in San Francisco Bay Area home sales between February and March is a gain of 39.9 percent. March sales have ranged from a low of 4,898 in 2008, to a high of 12,645 in 2004.

March 2019 sales were 27.4 percent below the March average of 8,435.

In March 2019, sales of newly‐built homes (detached houses and condos combined) were 42.6 percent below the month’s historical average, while resales were 25.5 percent below the month’s average.

Ignoring the 2003–2006 housing boom that wasfueled by risky home loans, March 2019 resales were 21.8 percent below the long‐term average for the month.
“The Bay Area logged a normal, seasonal surge in home sales between February and March this year, but last month still marked the fourth month in a row in which sales were the lowest for that month in 11 years,” said Andrew LePage, a CoreLogic analyst. “The home sales recorded in March mainly reflect buyer purchasing decisions in February. This was after the end of the partial federal government shutdown as the stock market was trending higher while mortgage rates were trending lower, although rates fell further in March. Those factors bode well for stronger sales than we’ve seen in recent months, but any impending upswing in activity wasn’t evident in the March data. Beginning in late spring last year, some potential buyers got priced out and others simply stepped out of the market amid concerns prices were near a peak. The next two months will likely clarify whether many of those who put plans on hold in 2018 Smith & Associates, Inc.

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are being lured back into the market by this year’s lower mortgage rates, higher inventory and buyers’ improved negotiating position.”
The median price paid for all homes sold in the San Francisco Bay Area in March 2019 was $830,000, up

7.8 percent from $770,000 in February 2019 and down 0.1 percent from $831,000 in March 2018. The annual decline for the March 2019 median marked the first year‐over‐year decrease since March 2012, when the median dipped 0.6 percent. Before March 2019, the median sale price had risen year‐over‐year for 83 consecutive months (since April 2012). Both May and June 2018 had the highest ever median sale price: $875,000.
“The tiny, year‐over‐year decline—0.1 percent—in the Bay Area’s overall median sale price last month marked the first such decrease in seven years. It reflects a trend that began in mid‐2018 when home sales slowed and inventory grew, forcing sellers to be more competitive,” LePage said. “The year‐over‐year increase in the region’s median sale price was 16.2 percent in March last year. But after that, the gains in the median gradually decreased each month and fell to the 2 to 3 percent range early this year and then disappeared this March. Combined with other data, this suggests home prices in March were about the same as 2018 and in some cases were up or down a bit, depending on the area. Of the region’s nine counties, three of them—Marin, Santa Clara and Sonoma—posted annual declines last month in their overall median sale prices, while one (San Mateo) experienced no change and the rest had gains from 0.4 to 5.3 percent.”
Home sales of $500,000 or more accounted for 79.1 percent of all sales in March 2019, up from 76.2 percent in February 2019 and up from 78.8 percent in March 2018.

Additional San Francisco Bay Area Highlights for March 2019:
► Absentee buyers—mostly investors, but also second‐home buyers—bought 16.7 percent of all homes sold in March 2019. This is down from 19.4 percent in February 2019, and down from 20.2 percent in March 2018. The absentee buyer share peaked at 28.8 percent in February 2013, and since 2000, the monthly average has been 16.5 percent.
► Jumbo mortgages accounted for 38.1 percent of the total number of home purchase loans used in the San Francisco Bay Area in March 2019, up from 32.4 percent in February 2019 and down from 40.4 percent in March 2018.
► Jumbo loans represented 60.5 percent of the total dollar volume of all home purchase originations in March 2019, up from 54.5 percent in February 2019 and down from 62.7 percent in March 2018. ► Jumbo loans are those that exceed the “conforming loan limit,” which isregulated and varies by county.

Nationally, the base conforming loan limit for single‐family homes in 2019 is $484,350, up from $453,100 in 2018. In high‐cost areas, including most of the San Francisco Bay Area, the limit is now $726,525, up from the 2018 maximum of $679,650.
► Adjustable‐rate mortgages (ARMs) made up 24.8 percent of the number of purchase loans used to buy homes in the Bay Area in March 2019. This is up from 22.4 percent in February 2019 and up from 24.6 percent in March 2018. ARMs, which offer lower initial interest rates and monthly payments compared with fixed‐rate mortgages, are more common in the middle and high‐end of the market where the impact on monthly payments is larger. In March 2019, the median price paid for Bay Area homes purchased with Smith & Associates, Inc.

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ARMs was $1,224,500, compared with a median of $830,000 for all homes purchased. The ARM share ranged from 5.1 percent of purchase loans in Solano County to 41.1 percent in San Francisco County. ► Real estate‐owned (REO) sales represented 0.8 percent of total San Francisco Bay Area home sales in March 2019, down from 1 percent in February 2019 and down from 0.9 percent in March 2018. REOs are foreclosed homes that lenders sold on the open market.

The overall demand for new homes is escalating in the Bay Area. The average price of a new home ranges from $574,761 (Solano County) to $1,520,620 (San Mateo County). According to the Gregory Group (New Housing Trends), 1st Quarter 2019, the historic pricing for the Bay Area Counties are identified on the following table. This pricing is for attached and detached housing.

COUNTY 1Q 2016 1Q 2017 1Q 2018 1Q 2019 %Δ 16‐19 %Δ 18‐19 Alameda $1,010,597 $984,693 $1,024,036 $1,088,550 7.7% 6.3% Contra Costa $950,005 $946,631 $1,037,557 $1,023,361 7.7% ‐1.4% Napa $763,900 $598,000 $1,206,703 $1,138,950 49.1% ‐5.6% Solano $561,754 $570,954 $554,392 $574,761 2.3% 3.7%
Sonoma ‐‐ $642,499 $710,303 $659,164 0.1% ‐7.2%
Santa Clara $1,148,753 $1,198,118 $1,338,182 $1,196,671 4.1% ‐10.6% San Mateo $1,182,133 $1,182,796 $1,345,119 $1,520,620 28.6% 13.0% Pricing changes from 2016 to 2019, are identified on the table above. Alameda, Solano and San Mateo showed significant increases over the past year, with declines showing in Contra Costa, Napa, Sonoma and San Mateo. These declines are more a direct result of the number of projects offering homes. Pricing istrending upward in the region. Annualized sales are trending upward, most notably in 2012, when 4,407 total sales were registered. This reset in 2013 but sales for 2014 were back and levels noted for 2012.

The following table shows historic trends in the overall sales for the Bay Area counties since 2010 based on information derived from the Gregory Group. This includes a mix of detached and attached new housing units.

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COUNTY 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q Alameda 714 928 1,502 900 1,140 1,130 1,846 2,829 2,173 456 Contra Costa 687 596 1,094 647 1,139 1,369 1,449 1,362 1,104 268 Napa 130 38 84 7 7 27 57 35 17 10
Solano County 327 246 118 198 320 848 689 695 788 241
Sonoma County 6 0 151 172 45 37 168 340 252 87
Santa Clara County 587 660 1,112 831 1,863 2,011 1,330 2,101 1,545 409 San Mateo County 51 32 36 205 348 176 205 257 142 64
TOTALS 2,502 2,500 4,407 2,950 4,862 5,598 5,744 7,619 6,021 1,535 The total sales in the region were slightly improved from 2010 to 2011. In 2012, total sales were 4,407 units, approximately 76% higher than the past two years. In 2013, total sales dropped primarily due to the lack of new home projects. This element started trending upward again in 2014 noted by the 4,862 home sales. This trend continued into 2015 and 2016 noted by the 5,598 and 5,744 sales respectively.

Total sales in 2017 were the highest level of sales over the past seven years noted at 7,619 sales. Sales are especially strong in Alameda, Solano, Santa Clara and Sonoma Counties with high levels of sales than demonstrated in the past few years. 2018 ended with 6,021 sales, a slight decline from 2017.

Income Levels
Income levels for the San Francisco Bay Area are higher than most regions of California. Median Income levels identified for the various regions are illustrated as follows from 2013‐2017 as derived from the US Department of Housing and Urban Development are displayed below.

AREA 2014 2015 2016 2017 2018
San Jose MSA (Santa Clara County) $101,000 $106,300 $107,100 $113,600 $125,200 San Francisco MSA (Marin, San Francisco, San Mateo) $97,100 $101,900 $107,700 $115,300 $118,400 Oakland MSA (Alameda, Contra Costa County) $88,500 $92,900 $93,600 $97,400 $104,400 Vallejo‐Fairfield‐Napa MSA (Solano, Napa County) $76,700 $74,500 $77,600 $80,400 $83,700 Santa Rosa PMSA (Sonoma County) $76,900 $73,600 $75,900 $83,900 $84,100 CALIFORNIA $68,100 $69,700 $70,000 $73,300 $77,500
As of mid‐2018, the Oakland MSA shows a median income level at $104,400. Income levels show rising incomes since 2015 in Santa Clara, Marin, San Francisco, Alameda, Contra Costa, Solano, Napa, and Sonoma Counties.

Conclusion
The San Francisco Bay Area is expected to increase in population and household growth through the next twenty‐five years, which will ultimately increase demand for housing. This area has some of the highest wages in California, but qualifying for home ownership is still very difficult, especially for the first‐time buyer. Recently employment growth has had a positive impact on the residential market and new construction. The overall outlook into the foreseeable future is strong.

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REGIONAL MAP
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AREA DESCRIPTION – City of Vallejo
The subject property is situated within the City of Vallejo, which lies in the southwestern portion of Solano County. Vallejo is the largest city in Solano County, located just north of the San Francisco Bay Area and south of Sacramento MSA. Over the past several years, Vallejo has been developing into a quickly growing suburb in the San Francisco region. The area within the city limits is located approximately 30 miles east of downtown San Francisco and 60 miles west of Sacramento. Primary access to Vallejo comes via Highway 80 which provides access to east and west and Highway 780 provides access to the southeast. As such, it is well located for commuters who work in the several local employment centers such as San Francisco / Oakland areas, Sacramento and the Benicia / Martinez / Concord area along the Interstate 680 corridor.

Transportation
Access to the City of Vallejo is currently from Interstate 80, which essentially bisects the city in two. The older portion of Vallejo is generally identified along the western side of this freeway, whereas new development has occurred to the region over the past 5‐10 years along the eastern side of Interstate 80.

Major north‐south venues through town include Marine World Parkway (Highway 37) and Columbus Parkway running in east/west directions, as well as Sonoma Boulevard and Broadway/Alameda Streets running in a north/south direction. Vallejo offers a traditional city design with commercial and retail land uses configured along the major arterials, with residential uses occupying the infill or suburban locations.

Retail uses are most prevalent near the Interstate 80 corridor and 780.

The Capital Corridor rail services provides passenger, including commuter, train service six times daily between San Jose and Sacramento, connecting at Suisun City. The Bay Area Rapid Transit (BART) commuter rail serving the Bay Area is connected through BARTLink vans serving Solano cities. Additional rail access is provided by the Union Pacific Railroad and AMTRAK. Public transportation is provided by Vallejo Transit for local transport within the city of Vallejo. Greyhound Bus Service is available for transit to major cities within the United States.

Seaport access is provided in Benicia, Oakland, San Francisco, Sacramento and Stockton, all within 40 miles. Passenger water ferry service, including commuter runs, connects Vallejo and the rest of the Bay Area. The Vallejo Ferry connects Solano directly with San Francisco, with a service schedule to meet every business and personal need
Vallejo’s geography has played an important role in its development and growth. Located at the northern tip of the San Pablo Bay, Vallejo’s waterfront location has made it a harbor for the military, commercial shipping, industry and ferry transportation.

Population
The total population for the City of Vallejo is 119,544 residents as of January 1, 2019. Thisis a 0.1% decline from the 2018 population of 119,637 residents. The population has increased from the 2010 Census of 115,942 residents, or 3.11%.

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Employment
Vallejo is currently showing an unemployment rate at 3.6% as of May 2019. This is slightly above Solano County as a whole identified at 3.3%. The following table summarizes these totals for Vallejo since 2010.

CITY OF VALLEJO – HISTORICAL UNEMPLOYMENT RATE
Year Labor Force Employment Unemployment % Rate
2019 56,200 54,100 2,000 3.6%
2018 57,100 54,600 2,500 4.4%
2017   57,900 55,000 2,900 4.9%
2016 57,400 53,900 3,500 6.1%
2015   57,600 53,300 4,300 7.5%
2014 57,600 52,200 5,300 9.3%
2013   58,200 51,500 5,700 11.5%
2012   58,500 50,800 7,600 13.1%
2011 59,000 49,700 9,300 15.7%
2010 58,900 49,300 9,600 16.3%
Source: State of California Employment Development Department, *Information through May 2019 Total employment has continued to increase in Vallejo while the unemployment rate continues to drop.

As of May 2019, total employment dropped to 56,200 jobs, 900 less than in 2018.

Housing
The overall demand for new homes is continuing in the City of Vallejo. The average price for new home is $820,000 in Vallejo in the first quarter of 2019. According to the Gregory Group (New Housing Trends), 1st Quarter 2019, the historic pricing for the City of Vallejo and Solano County are identified on the following table. This pricing is for attached and detached housing.

AREA 1Q 2017 1Q 2018 1Q 2019 %Δ 17‐19 %Δ 18‐19
Vallejo $583,375 $846,904 $820,000 40.6% ‐3.2%
Solano County $570,954 $554,392 $574,761 0.7% 3.7%
Pricing changes from 2017 to 2019 are identified on the table above. Vallejo has shown an increase of

40.6% over this time frame, and a decline of 3.2% in the past year. This is more of a function of the number of active projects city wide. The following table shows historic trends in the overall sales for the two regions since 2010 including 1st quarter 2019, based on information derived from the Gregory Group.

This includes a mix of detached and attached new housing units.

AREA 2010 2011 2012 2013 2014 2015 2016 2017 2018 *2019 Vallejo 19 4 25 0 8 39 32 42 32 15
Solano County 327 246 428 198 320 872 689 695 788 241
% of Total Sales 5.8% 1.6% 5.8% 0.0% 2.5% 4.5% 4.6% 6.0% 4.0 6.2 The total sales in the Vallejo improved slightly from 2011 to 2012, with no sales noted in 2013. Sales since 2014 have generally improved, with a slight dip in 2016; an increase in 2017 and decrease in 2018. Vallejo has had very little new home development which is reflected in the previous table and was only 4.0% of all new homes sold in Solano County in 2018.

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Resale Characteristics
The following table shows the total number of homes sold in 2014 through 2018 including the 1st quarter 2019 in the City of Vallejo. It is clearly noted that this total includes those identified as secondary homes, or those sales reported through the local MLS. Also, current listings or active homes are shown on this table.

PRICING TRENDS
AREA 2014 2015 2016 2017 2018 *2019 ACTIVE
# of Sales 1,297 1,369 1,474 1,408 1,408 536 148
Vallejo – Median Price $250,000 $286,500 $325,000 $370,000 $420,000 $420,000 $467,000 Vallejo – Median Size 1,400 1,418 1,419 1,436 1,469 1,475 1,619 Median $/SF $178.57 $202.05 $229.03 $257.66 $285.91 $284.75 $288.45 *Source: Metrolist MLS, Active Information as of July 9, 2019 Overall, the median resale housing price in Vallejo in $420,000 in 2018 and during the first half of 2019.

This element has continued to increase in recent years and is 13.5% higher than prices noted in 2017.

Inventory levels are stable at 1.3 months based on sales levels identified in 2018. Currently, there are 148 homes on the market at a median price of $467,000.

Vallejo has had little product introduced to the market in the past five years. This is mostly due to the recovery of the market when pricing dropped significantly due to the recession. As pricesimproved in the past five years, buyers were able to recapture their equity and seek the purchase of another home.

Coupled with the lack of new home building, inventory is tight and the market is able to support new home development.

Immediate Area Description (Mare Island)
Mare Island islocated on the western edge of the City of Vallejo, approximately 3.5 mileslong by one mile wide, comprising approximately 5,250 acres. The Island is bound by the Napa River on the east, the San Francisco Bay on the west, the Carquinez Strait on the south, and Highway 37 on the north. The entirety of Mare Island, including the subject site, lies within the incorporated boundaries of the City of Vallejo.

There are four existing points of access to the site: two from Highway 37, the primary route across the North Bay that connects U.S. Highway 101 and Interstate 80; a direct bridge across the Napa River between the Island and Downtown Vallejo, providing a primary arterial that connects to Interstate 80; and via commuter ferry, which connects Mare Island and Downtown Vallejo via direct service to the Financial District and Pier 41 in San Francisco
For over a century, Mare Island hosted the Navy's Mare Island Naval Shipyard. The growing size and number of the country's naval fleet was making older facilities obsolete and led to increased building and refitting of shipyards nationally. In 1872, the U.S. Public Works Department commenced construction of a 508‐foot (155m) drydock on the island, setting it on a foundation of cut granite blocks. The work was completed in 1891. A second drydock was begun in 1899, a concrete structure 740 feet (230 m) long set on wooden piles; it was completed in 1910. By 1941 a third drydock had been completed and drydock number four was under construction. The ammunition depot and submarine repair base were modern, fireproof buildings. A million dollar, three‐way vehicle causeway to Vallejo replaced a ferry service.

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In 1993 Congress approved the findings of the Base Realignment and Closure report, leading to the closure of Mare Island Naval Shipyard. The shipyard had long been the economic engine of the city of Vallejo, employing 10,000 workers after reductions in 1988. When Congress ordered the base closure, the shipyard employed 5,800 workers.

The vision of rebuilding Mare Island as a vital place where people lived and worked was a key goal in the base conversion planning process undertaken by the city of Vallejo in the early 1990’s. After the base was recommended for closure in 1993, the City undertook an extensive community‐based reuse planning process, which resulted in a Final Reuse Plan that was approved by the Vallejo City Council in 1994. The Final Reuse Plan laid out the general vision for the Island's redevelopment. The Reuse Plan was the basis for the Mare Island Specific Plan, which was approved in 1999 and amended in 2005 and 2007. The Mare Island Specific Plan designated land uses and established development standards for identified reuse areas and provided an implementation program to guide all subsequent planning activities.

Preservation of many of Mare Island's 661 structures and other cultural resources was an additional factor in the planning process. As the oldest shipyard and naval facility on the West Coast, the shipyard earned a National Historic Landmark designation by the federal government in 1975. In 1979 California listed the entire naval base as a State Historical Landmark. In 1999 the city of Vallejo added Mare Island to the National Register of Historic Districts with 42 individual city landmarks. Finally, as with any restoration of an industrial, brownfield landscape, both city and government agencies required environmental reviews, toxic substance removal, and soil remediation.

In 1998, Vallejo contracted with Lennar Mare Island LLC (LMI) to develop 650 acres(263 ha) of the eastern portion of Mare Island into a multi‐use community. LMI contracted the Sausalito‐based SWA Group to provide a Master Development Plan for Vallejo, additional historical research and landscape architectural services.

The Specific Plan included a variety of land uses, including a university district, an industrial zone, historic core, and residential neighborhoods. In addition, 78% of the island was set aside for wildlife habitat and wetlands, parkland and open space, and dredge ponds. In 2007, LMI finished construction on the residential neighborhoods. Farragut Village, with 277 homes, was the first completed neighborhood.

Additional neighborhoods include Coral Sea and Kirkland Isle II. Mare Island's Specific Plan calls for a total of 1,400 homes and condos, plus 7,000,000 square feet (650,000 m2) of commercial, retail, entertainment, and industrial space.

Mare Island's residents petitioned LMI and the City of Vallejo to eliminate the dredge ponds, whose role had been to collect silt, drainage, and storm water from the Napa River and the Bay, and instead restore that acreage to wetlands. The city and the developer agreed, and in January 2006, the land use plan was amended to add the Mare Island Shoreline Heritage Preserve. An advisory board was appointed by the city to restore the 215‐acre (0.87 km2) site into publicly accessible parkland.

Today, Mare Island is home to more than 100 businesses, Touro University, an active residential neighborhood and an 18‐holegolf course.

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Conclusion
Vallejo is home to approximately 119,544 people and has grown at a reasonable pace in the past decade.

Jobs are growing in the region and housing is fairly affordable relative to other Bay Area communities.

Demand generators such as job increases and low inventory levels in the resale market are favorable as of the effective date of valuation.

AREA MAP

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AERIAL VIEW
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SITE DESCRIPTION
The subject site in its “As Is” condition consists of 157.1 acres of vacant land. Descriptions for this project are based on physical inspection of this project, as well as review of information provided by the client and data provided by Solano County. Pertinent information identified for this project includes the following.

Location
The subject property is identified by Reuse Area 1A (North Industrial Park) located on the north portion of Mare Island, north of G Street, east of Azur Drive and south of State Route 37 in the City of Vallejo, Solano County. Access to this property is from Mare Island Causeway from the east, the intersection of Highway 37 and Railroad Avenue from the north and Azur Drive, Walnut Avenue or Railroad Avenue from the south.

APN/Legal Description
The subject property is currently identified by the Solano County Assessor’s Office as parcel 0066‐020‐ 130, ‐140, ‐110 (portion of) and ‐150 (portion of). A legal description was provided for review, a copy of which is included in the addenda. A copy of the assessor’s parcel map is depicted on the following page.

Site Size
The total site area for the subject property is approximately 157.1 acres. This property is basically rectangular in shape.

Topography/Drainage
The topography of the property is generally level and drainage appeared adequate upon inspection of the site.

Offsite Improvements / Utilities
Railroad Avenue, Walnut Avenue, Azuar Drive, G Street and Mare Island Causeway are existing roads and in average condition. The subject site is a previously developed site with all utilities available to the site; however, the subject’s site requires a significant infrastructure investment for any development.

Demolition costs were verbally provided by the City of Vallejo. Total demolition costsfor the (23x) buildings to be demolished was estimated at $4,700,000; however, $1,400,000 has been incurred to demolish (6x) of the buildings with $3,300,000 of costs remaining to demolish the remaining (17x) buildings.

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ASSESSOR’S PARCEL MAP

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NAVY PARCEL MAP

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PROJECT SITE MAP

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Soil Conditions
Much of the subject’s land is comprised of land fill. Geotechnical conditions at the subject will affect the cost of development. Earth materials encountered during subsurface explorations consist of fill and San Francisco Bay mud. The depth of the fill and Bay mud varies, with the land toward the intersection of G Street and Azuar being the most suitable for immediate construction, and the depth of fill increasing to the north and east. In some areas of subject, soils can be surcharged to stabilize the fill; in other areas, pile foundations are likely required. A 2017 Geotechnical Investigation Report on Mare Island prepared by Amec Foster Wheeler Environmental & Infrastructure, Inc is included in the addenda.

Nuisances and Hazards
Based on review of inspection of thissite, there were no signs of potential nuisances or hazards apparent on this property. No environmental report was provided for review in preparation of this assignment. Assuch, the opinion of value identified in this report assumes that there are no surface or subsurface contaminants impacting the subject property. The appraiser is not a recognized expert in identifying potential environmental contaminants. The appraiser is not an expert with respect to identifying potential environmental contaminants and the opinions of value assume that there are no detrimental environmental hazards impacting the subject property. Please refer to the Assumptions and limiting conditions for further documentation.

Easements, Encroachments & Adverse Conditions
A preliminary title report was not provided to the appraisers. Overall, the opinion of market value expressed in this report assumes marketable title with no atypical easements, encroachments or adverse conditions. Refer to the Assumptions and limiting conditions for further documentations.

Seismic Hazard
Special Studies Zones are delineated and adopted by the State of California as part of the Alquist‐Priolo Act of 1972. The subject property is not in a special studies (earthquake) zone as designated by the Alquist‐ Priolo Act.

Wetlands/Endangered Species
No reports specific to wetlands or endangered species were provided for review for this analysis. As such, this appraisal assumes that no wetlands or endangered plants or animal habitat the subject property.

Flood Zone
According to the Federal Emergency Management Agency Flood Insurance Rate Map (FIRM), Community‐ Panel Number 06095C‐0606F and 06095C‐0607F, with a date of August 3, 2016, the majority of the subject is located in Zone X, areas of minimal flood hazard that does not require flood insurance. The north and northwest portions of the subject are located in Zone AE with elevation of 10 feet. These areas are subject to periodic flooding up to 10 feet above sea level. These areas will need to be filled and/or require raised foundations above the flood plain, if developed.

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Mare Island Specific Plan
The City of Vallejo refined its policy vision through the Mare Island Specific Plan. The Specific Plan designates land uses, establishes development standards, and guides all subsequent planning activities.

The adopted Specific Plan land use policies are focused on development that will make Mare Island a major employment center for the City and region. These policies also provide for the mix and range of land uses necessary to create a dynamic district that will be an integrated part of the City. Criteria are provided to offer a level of flexibility, including the ability to transfer development density from one part of Mare Island to another. Selected policies of the Specific Plan include; a) a balance of land use, including industrial, office, retail commercial, recreational, cultural, educational, open space and habitat conservation, in order to make Mare Island a community where adequate services and resources are readily available to its residents, workers and visitors; b) a financially sustainable community that generates revenues sufficient to provide basic municipal services and infrastructure improvements; c) employment‐producing land use on Mare Island to satisfy two needs: (1) to replace the jobs that were lost with the closure of the Naval Shipyard in 1994; and (2) to ensure a balance of quality jobs and housing on Mare Island and within the greater City area; and d) more intensive land use producing higher employment densities are encouraged and less intensively‐developed uses, such as those requiring large laydown or outdoor storage areas, are discouraged.

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Zoning/Entitlements
The subject property is currently zoned Mixed Use Planned Development Mare Island Specific Plan (MUPD) by the City of Vallejo. This category includes office/research & development (R&D), light industrial, retail, commercial, and on‐site warehousing associated with other uses on the same or proximate site. Although its purpose is to provide primarily for employment uses, the mixed‐use category also allows residential uses. The subject property is subject to the land use regulations contained in the Mare Island Specific Plan and is approved for development of 1,222,000 square feet of commercial mixed uses(light industrial, warehouse, office, retail) and 16,000 square feet of educational/civic space. An Environmental Impact Statement (EIS) and Environmental Impact Report (EIR) have been certified based on the 1.222 million square feet of development. The City is amenable to development beyond these thresholds if the City’s objectives for this site are achieved; however, additional environmental review and approvals may be required, at proposer’s expense. Planning officials revealed that the subject’s proposed use represents a legal and conforming use under the current zoning requirements. A change in zoning is an unlikely event in the near future.

Taxes and Assessments
The 2018/2019 property taxes for the subject property are exempt due to the government ownership.

Under the values of this report, it is assumed that property taxes are reassessed at the current value. This is discussed in detail in the income approach for this property. Tax rates are also limited by Proposition 13 to 1% of the property's assessed value. Increases in this rate can only be achieved by special assessments approved by the voters. Additional assessments cannot be legislated. Most total tax rates in El Dorado County are between 1.00% and 1.20% of the assessed value. Taxes are levied for a fiscal year of July through June. They are paid in semi‐annual installments being delinquent in December and April, respectively.

Improvement Description
Improvements currently existing on the subject site include approximately (17x) older buildings that are at the end of their economic life, in poor condition and are given no contributory value. Demolition costs will be included in the estimated site development costs and then deducted to arrive at the “as is” market value.

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PART 3 – MARKET ANALYSIS & HIGHEST AND BEST USE
A market analysis is presented in conjunction with assignment. The depth of discussion is specific to the needs of the client and for the intended use. This includes information extracted from Cushman Wakefield’s 1st quarter 2019 Solano County Industrial Market Beat and CoStar.

Asking Rates Skyrocket as Vacancy Dwindles
The MSAs of Napa and Solano
counties started off 2019 with a
minimal uptick in employment
growth, adding about 1,000 jobs
year‐over‐year (YoY), bringing the
total to 215,000 non‐farm payroll
positions. Since mid‐2015, the region
has acquired more skilled workers
from the economic expansion period,
which made the unemployment rate
fall from 5.4% to the current 3.3%,
somewhat lower than the national
metric of 3.8%. Thanks to the
growing warehousing and industrial
market in the Napa Solano area,
every year unemployment slowly
decreases. Popular industries in the
market are typically wine warehouse
users and ecommerce distribution
tenants rather than heavy industrial
manufacturing. Currently, there are
several projects under construction
awaiting completion late 2019, and
employment levels are predicted to expand yet again as more tenants move to the area to fill the new vacancies.

The first quarter of 2019 ended with the
overall vacancy rate of the Napa Solano
industrial market reporting at a lower

4.4%, down 170 basis points (bps) from

6.0% in the fourth quarter of 2018. The
market finally saw a monumental change
in vacancy, after lingering around the 6%
range for quite a few quarters. The
massive 404,950 square feet (sf) at 700
Crocker Drive was taken by 24 Seven
Enterprises/We Ship Express, a wine
company, after being on the market for
almost two years. Vacaville was in the
spotlight this quarter, consisting of the
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largest leases. As predicted, the Vacaville submarket vacancy rate fell to 2.6%. Now the market is patiently waiting for the 430,500 sf at 2950 Cordelia Road in Fairfield to lease, and if demised, it should be taken quickly due to the fact that it is a newer building with high clearance.

American Canyon also contributed to
occupancy gains this quarter, with the
recently built 120,080 sf warehouse
space at 100 Jim Oswalt Way leased
by Western Wine, a winemaker.

These large leases clearly illustrate
the healthy activity in the Napa Solano
industrial market. The majority of
available space is between 10,000 and
20,000 sf, with low activity. However,
there is strong demand for
availabilities 250,000 sf and above,
with low product to choose from.

Fortunately, there are several
projects delivering in Solano County in
late 2019 including and not limited to
the following: Interstate 80 Logistics Center, located in Fairfield, with 378,405 sf completing in the fourth quarter 2019; Logistics Center at Vacaville, with 252,160 sf completing also in the fourth quarter; and lastly Interchange Business Park, located in Vacaville, with 263,400 sf completing in third quarter 2019.

The total new deliveries in Napa and Solano counties (not including projects still in the planning stages) equal to 893,965 sf. All are available, and given the past market behavior, should prelease within a few quarters.

There is strong demand for availabilities
250,000 sf and above, with low product to
choose from. Net absorption in the first
quarter of 2019 totaled positive 758,286
sf, a considerable jump from positive
346,281 sf in the fourth quarter of 2018.

The two aforementioned leases, along
with several smaller leases, propelled the
Napa Solano industrial market into the
green, with little space givebacks. Vallejo,
after almost two years of full occupancy,
put space back onto the market, but at a
premium price of $1.56 per square foot
(psf) on a monthly triple‐net basis. Sales
activity, on the contrary, was at a
standstill, with only small buildings and
condos trading hands.

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2019 started off with higher pricing; the overall average asking rentskyrocketed to $0.71 psf on a monthly triple‐net basis, an eleven‐cent increase from $0.60 psf at the close of the fourth quarter of 2018. Vallejo definitely set the bar high at $1.56 psf, and smaller spaces in Napa are introduced at $1.00 psf and higher.

This year we expect hundreds of thousands ofsquare feet introduced to the market, and the trend islikely to continue. The few older large blocks of manufacturing product are likely to remain vacant in 2019 as the pipeline grows.

Outlook
 Labor, drayage and rent will continue to drive the market, with new deliveries to keep it level.  Asking rates may continue to rise, especially with new product coming online.  The market will keep its steady demand, with no sign of slowing down.

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Vallejo Industrial Market
According to CoStar, the Vallejo industrial market currently shows a current vacancy rate of 1.4% with 5,700,000 square feet of industrial product. Twelve‐month net absorption was 379,000 square feet which is up from the prior period’s net absorption of 54,300 square feet with nothing currently under construction. Average asking NNN lease rates are approximately $6.79 per square foot per year or approximately $0.57 per square foot per month reflecting a 5.45 increase from the prior period. Market sales price/sf was $98 up 7.0% from the prior period’s sale price/sf of $91. Market capitalization rate was reported at 5.9% with no change from the prior period. Current industrial market parameters for Vallejo are identified below.

The vacancy rate for industrial properties in Vallejo has been on a downward trend during the past 10 years. Overall, vacancy has decreased from approximately 24% in 2009 to the current vacancy rate of 1.4% as identified in the following table.

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The average market rents increased from approximately $4.50 per square foot per year ($0.38 per square foot per month) in 2011 to the current rate of $6.79 per square foot per year ($0.57 per square foot month) as identified in the following table.

Market cap rates have decreased from approximately 7.9% in late 2009 to the current rate of 5.9% as identified in the following table.

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Conclusion
The Vallejo industrial market is strong with increasing rents, increasing sale prices and decreasing capitalization rates. In the next year, vacancy should hold level or fall, since new inventory coming online over the next 6‐18 months will keep the market level. The main drivers of activity for the first quarter of 2019 is labor, drayage, and rent, in that order. We predict that the rest of 2019 will remain strong, and new projects will catapult the market into the spotlight of tenants and investors alike.

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HIGHEST AND BEST USE
Highest and best use may be defined as that reasonable and probable use that will support the highest present value as of the effective date of the report. It is also defined as “the reasonable, probable, and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible and that results in the highest value.” Elements integral in the highest and best use analysis include the following.
a. Physical characteristics of the subject property;
b. Location and the immediate environs;
c. Current zoning and municipality planning goals;
d. Neighborhood and area demographic trends;
e. Market supply and demand; and
f. Motivation of the most probable purchaser and/or user.

The highest and best use of a specific parcel of land is not determined through subjective analysis; rather highest and best use is shaped by the competitive forces within the market where the property is located.

Therefore, the analysis and interpretation of highest and best use is an economic study of market forces focused on the subject property. The use that maximizes value represents the highest and best use. In accordance with the definition of highest and best use, it is appropriate to analyze the subjectsite asthough vacant, followed by analysis of the existing improvements.

Legally Permissible
The subject property is currently zoned Mixed Use Planned Development Mare Island Specific Plan (MUPD) by the City of Vallejo. This category includes office/research & development (R&D), light industrial, retail, commercial, and on‐site warehousing associated with other uses on the same or proximate site. Although its purpose is to provide primarily for employment uses, the mixed‐use category also allows residential uses. The subject property is subject to the land use regulations contained in the Mare Island Specific Plan and is approved for development of 1,222,000 square feet of commercial mixed uses(light industrial, warehouse, office, retail) and 16,000 square feet of educational/civic space. An Environmental Impact Statement (EIS) and Environmental Impact Report (EIR) have been certified based on the 1.222 million square feet of development. The City is amenable to development beyond these thresholds if the City’s objectives for this site are achieved; however, additional environmental review and approvals may be required, at proposer’s expense. Planning officials revealed that the subject’s proposed use represents a legal and conforming use under the current zoning requirements. A change in zoning is an unlikely event in the near future.

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Physically Possible
This criterion considers the physical features of the site such as street frontage, depth, topography, access, soil conditions, utilities, etc. The subject property consists of 157.1 acres of land situated on the northern portion of Mare Island in the City of Vallejo in Solano County. All typical off‐site improvements are in place and most typical public utilities are available. No soils report was provided to the appraisers; therefore, the soils are assumed physically suitable for development of improvements permitted underthe presentzoning.

This appraisal assumes the property to be free and clear of any potential contamination. Based on these considerations, the subject site could physically support any type of suburban improvement that would fit within the site boundaries, including those previously mentioned in the legally permissible section.

Financially Feasible/Maximally Productive
Any use of the subject site that provides a financial return to the land in excess of that required to satisfy operating expenses, financial expenses, and capital amortization is considered financially feasible. The cost of land limits those uses that are financially feasible for the site. The maximally productive criterion considersthe specific use thatis physically possible, legally permissible, and financially feasible and produces the greatest rate of return to the property. In considering the financial feasibility of the subject property, consideration must be given to current market trends.

The Vallejo industrial market is strong with increasing rents, increasing sale prices and relatively low and stable capitalization rates. According to CoStar, the Vallejo industrial market currently shows a current vacancy rate of 1.4% with 5,700,000 square feet of industrial product. Twelve‐month net absorption was 379,000 square feet which is up from the prior period’s net absorption of 54,300 square feet with nothing currently under construction. Average asking NNN lease rates are approximately $6.79 per square foot per year or approximately $0.57 per square foot per month reflecting a 5.45 increase from the prior period. Market sales price/sf was $98 up 7.0% from the prior period’s sale price/sf of $91. Market capitalization rate was reported at 5.9% with no change from the prior period.

The determination of financial feasibility for a project such as the subject is dependent primarily on demand. In the Market Analysis section of this report, an overall assessment of local market conditions was analyzed and discussed. Based on the overall size of the property and the demand for industrial space, the most probable use of the subject is for industrial or commercial development.

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Highest and Best Use ‐ As Is
Current market trends dictate the highest and best use of the subject site, as though vacant. Development of an industrial/mixed‐use is the most logical and feasible use for the subject property due to the location and presentzoning; however, due to the above market infrastructure/site development costs estimated for the subject and after further analysis, there is no residual land value and thus the Market Value “As Is” (derived later in this report) is determined to be zero as shown in the following table.

As such, development is currently not financially feasible and based on a review of these elements, the highest and best use for the subject property is to hold for possible future development.

Reconciled Hypothetical Market Value "As if Complete" 15,400,000 Less:

Site Development Costs = ($30,311,500)
Demolition Costs = ($3,300,000)
Total Costs = ($33,611,500)
Profit @ 8% = ($2,688,920)
Total ($36,300,420)
(Rounded) ($36,300,000)
"As Is" Market Value ($20,900,000)
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PART 4 – METHODOLOGY AND VALUATION

METHODOLOGY
The valuation process is the orderly program in which the data used to derive an opinion of value for the subject property as it is acquired, classified, analyzed and presented. The first step in the process is to define the appraisal problem, i.e., identify the real estate, the effective date of the value estimate, the property rights being appraised, and the type of value sought. Once this has been accomplished, the appraiser collects and analyzes the factors that affect the market value of the subject property. These factors are addressed in the area and neighborhood analysis, the site and improvement analysis, and the highest and best use analysis, and in the application of the three approachesto value. Appraisers generally use three approaches to value; the Cost Approach, the Sales Comparison Approach and the Income Approach. The final step in the valuation process is the reconciliation or correlation of the value indications. In the reconciliation, the appraiser considers the relative applicability of each of the approaches used, examines the range of the value indications, and gives most weight to the approach or approaches that appear to produce the most reliable solution to the appraisal problem.

The first step in the appraisal of the subject property is to examine the different value scenarios required for this property under the purpose of this report. In order to derive an opinion of value for this property, all three approaches to value will be considered.

In the Cost Approach, the reproduction or replacement cost of the building and land improvements, as the date of the appraisal, is developed together with an estimate of the losses in value (depreciation) that have taken place due to wear and tear, design and plan, or neighborhood influences. To the depreciated building cost estimate is added the value of the land. The total represents the value indicated by the cost approach. This approach assumes that the site is developed to its highest and best use. It is also a good test of project feasibility in the case of proposed projects. This approach to value is based on a comparison that a prudent investor would pay no more for a property than the amount the investor can obtain a comparable site and construct a building of equal desirability and utility without undue delay. This approach is most applicable when a property is new or relatively new, and sufficient comparable land sales are available to support a reasonable conclusion of land value.

In the Sales Comparison Approach, the subject property is compared to similar properties that have been sold recently or for which listing prices or offering figures are known. Data for generally comparable properties are used and comparisons are made to demonstrate a probable price at which the subject property would sell if offered in the open market. This is a good indication of value assuming the market data considered is recent and reliable.

In the Income Capitalization Approach, value is based on the present value of the anticipated net income stream from the subject property. Two common techniques are typically utilized, direct Capitalization and yield Capitalization. In direct Capitalization, the current or estimated rental income is projected with deductions for vacancy and collection loss and operating expenses. A conclusion about the prospective net operating income of the property is developed. In support of this net operating income estimate, operating statements for previous years may be reviewed, together with available operating cost estimates of similar properties. An applicable Capitalization method and appropriate Capitalization rates are developed for use in computationsthat lead to an indication of value by the Income Approach. In yield Capitalization (or discounted cash flow analysis), the net income stream is projected over a typical investment holding period for the property type being appraised, with a reversion at the end of the holding period. The income stream and reversion are then discounted to a present value utilizing a Smith & Associates, Inc.

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discount rate, typically derived from market analysis and investor surveys. In most cases, the Income Approach is considered to be the best method of estimating value for an income producing property.

After an indication of value is achieved in each of the approaches, the applicability and reliability of each approach is then evaluated and weighed by the appraiser. Through physical inspection of the property and the appraiser’s analysis, judgment, and experience, a final opinion of value is then made for the subject property.

Subject Property Valuation
First the property will be valued via the Sales Comparison Approach to arrive at the Hypothetical Market Value “Asif Complete”. The Hypothetical Market Value “Asif Complete” is predicated on the Hypothetical Condition that the existing improvements are demolished and the site development/infrastructure is complete which will bring the subject site to a condition to support the proposed uses under the current zoning. Then, deductions for site development/infrastructure costs and demolition costs are deducted to derive the Market Value “As Is”.

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SALES COMPARISON APPROACH
HYPOTHETICAL MARKET VALUE “AS IF COMPLETE”
The Sales Comparison Approach involves a comparison of the subject property with other properties which have been sold or have been offered for sale in the open, competitive market. These transactions serve the primary function of providing a unit comparison used to estimate an independent opinion of value by this approach. The reliability of the value estimate depends upon the degree ofsimilarity between the property being appraised and the comparables. Adjustments are made to the comparablesto reflecttheir differences from the subject.

Our search for comparables focused on agricultural and residential land properties with no improvements.

The unit of comparison that was determined most applicable in the valuation of the subject property was the price per square foot of lot size. Comparable properties are noted on the table on the following page:

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BUYER LAND SIZE (AC)
SALE # PROPERTY ADDRESS SALES PRICE SELLER LAND SIZE (SF) PRICE APN SALE DATE DOCUMENT NO. ZONING PER SF
2264 Meister Way $10,600,000 River Rock Airport LLC 72.00 Sacramento, CA 95835 December 7, 2018 Metro Gateway Centre LLC 3,136,320 201‐1020‐093 & ‐068 2018‐1207/0892 C‐H
3575 ‐ 3640 Ramos Drive $7,876,500 Sacramento Land Holding Company 60.26 West Sacramento, CA 95691 May 11, 2018 Southport Business Park Land Fund X LLC 2,624,926 045‐551‐069 & ‐070 011061 M1 & M2
SEQ I‐5 & Hwy. 120 $19,794,500 South Lathrop Land LLC 315.00 Lathrop, CA 95330 March 2, 2018 Slv Lc Center LLC 13,721,400 241‐020‐70, 241‐030‐13, 241‐410‐02, ‐03, ‐06 & ‐07 024156 IL‐SL Giant Road @ Brookside Road $6,508,000 6200 Gr LLC 60.00 Richmond, CA 94806 June 26, 2017 Pimole Point Properties LLC 2,613,600 405‐030‐042 and ‐045 through ‐049 113598 PA
850 Admiral Callaghan Lane $12,500,000 N/A 52.76
Vallejo, CA 94591 (Escrow) Frank Toller 2,298,226
408‐100‐028 & ‐029 N/A CP/MUPD/LDR
NEC Richmond Pkwy & Goodrick Ave. $8,500,000 N/A 55.60
Richmond, CA 94801 (Escrow) Murray Parkway Properties LLC 2,421,936 408‐100‐028 & ‐029 N/A SC/IA
Mare Island Reuse Area 1A N/A N/A 157.10
Vallejo, CA 94592 N/A N/A 6,843,276
0066‐020‐130, ‐140, ‐110 (portion) and ‐150 (portion)   MUPD 4 $2.49
Comments:  This property was sold in June 2017 for $6,508,000. The property is located at the east end of Giant Road and is commonly referred to as Pinole Point Business Park‐ Phase III. This sale is comprised of a total of (6x) parcels totaling approximately 60 acres, however, 33.41 acres of wetlands are not buildable and thus only 26.59 acres can be developed.  APN: 405‐030‐045,46,47 & 48 are buildable. Parcels APN 405‐030‐042 are not buildable. The parcels have been re‐configured since the sale. The property is zoned PA‐ Planned Area District. Entitlements were in place ATOS and the buyer plans to construct two industrial warehouse buildings totaling 312,700 sf. Bldg. A is a 253,500 sf for Mattress Firm distribution building (203,500 square feet plus a 50,000 square‐foot expansion area on north side) of which 12,000 square feet would be for office space, with 50 trailer parking spaces, (60x) dock‐high loading doors and (185x) standard parking spaces to the south and west. Bldg. B is a 109,200 square foot industrial building (single‐story, 32‐foot high warehouse of which 5,000 square feet will be office space with (10x) trailer parking spaces and (105x) parking spaces to the south. The site is level and all utilities are available to the site. 1 $3.38
Comments:  This is the sale of (2x) contiguous parcels of vacant Highway Commercial (C‐H) zoned land totaling 72.00 acres located along the east side of Metro Parkway and north of Interstate‐5 in the Natomas area of Sacramento next to the Sacramento International Airport.  This site is a part of the Metro Air Park, an 1,892 acre master planned business park slated for 20 million square feet of mixed‐use development.   Escrow lasted approximately one year for entitlements for retail, office and hotel development.  An Interstate‐5 and Metro Parkway freeway interchange has been approved which will provide immediate access to the site.  The site is level and has all utilities stubbed to the site.  This property is located in a flood zone.
2 $3.00
Comments:  This is the May 2018 sale of (2x) contiguous parcels of split zoned industrial land (M1 & M2) located within the Southport Business Park in West Sacramento. All utilities were available at the site ATOS.  The two parcels have since been combined into one parcel but has two addresses. The zoning for 3640 Ramos Drive totaling 27.69 acres was M‐2 which entitles for heavy industrial usage. The buyer has since constructed a 163,308 square foot industrial build at this property.  The zoning for 3575 Ramos Drive totaling 31.59 acres was M‐1 which entitles for light industrial usage. The buyer has since constructed a 244,408 square foot industrial building at this property.  The property was on the market for 3 years 8 months and 21 days. Escrow lasted for approximately 4 months due to the buyer starting the entitlement process with the City of West Sacramento. The buyer was Northpoint Development through Sacramento Land Holding Company which paid cash for the acquisition.  This property is not  located in a flood zone. 3 $1.44
Comments:  Comparable Sale #3 represents the March 2018 sale of (6x) parcels of IL‐SL (Limited Industrial‐South Lathrop) zoned land located at the southeast quadrant of Interstate‐5 and State Highway 120 in the City of Lathrop in San Joaquin County.  Total gross acreage is 315 acres; however, this included approximately 112 acres of wetlands which is not buildable and only 203 acres can be developed.  The parcels have since been re‐configured for development.  This property is within the South Lathrop Specific Plan allowing industrial warehouse and some commercial.  A site plan was approved in May 2016 for the development of 4.2 million sf of warehouse space. Currently, a 1.1 million square foot, built‐to‐suite distribution center for Wayfair is currently being constructed.  The property was subsequently approved for an additional 6 million square feet of warehouse space.  There were some older industrial buildings on site ATOS; however, were beyond their economic li fe and were given no value. The site is level and has all utilities available to the site. This property is not  located in a flood zone.
5 $5.44
Comments:  This property is in escrow and includes (2x) non‐contiguous parcels totaling 52.76 acres; however, there is approximately 12 acres of wetlands/vernal pools that is not buildable and thus approximately 40.76 acres are developable. The larger 51.29‐acre parcel is located at the southeast corner of Admiral Callaghan Lane and Turner Parkway, is zoned CP/MUPD/LDR (Pedestrian Shopping & Service/Mixed‐Use Planned Development/Low Density Residential) and has good visibility along Interstate‐80 with Admiral Callaghan being a frontage road along Interstate‐

80. The smaller 1.50‐acre is located across Interstate‐80 from the larger parcel with Interstate‐80 frontage and is zoned LDR (Low Density Residential). The property is located just south of Gateway Plaza, a major retail center in Vallejo anchored by Costco, Target, Home Depot, Kohl's and Bed, Bath & Beyond. The buyer will have entitlements at closing for the development of a 153,000 square foot Super Costco and (4x) retail strip centers ranging from 3,000 to 9,400 square feet and (176x) single family homes. The site is relatively level with all utilities available at the site. This property is not located in a flood zone. The property has been on the market for nearly five years.

SP
6 $3.51
Comments: This is the pending sale of (2x) contiguous parcels of IA (Industrial Agriculture) zoned land located at the northeast corner of Richmond Parkway and Goodrick Avenue in the City of Richmond. The site is within 1/4 mile of San Pablo Bay and is just north of industrial development which is along the south side of Richmond Parkway. The 2030 City of Richmond General Plan designates this site for Business and Industry development. The site is flat with all utilities available at the site. There were no entitilements ATOS. A portion of this property is located in a flood zone. The property has been on the market for over seven years.

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LOCATION MAP – COMPARABLE SALES
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COMPARABLE LAND SALE #1 PARCEL MAP & AERIAL VIEW

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COMPARABLE LAND SALE #2 PARCEL MAP & AERIAL VIEW
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COMPARABLE LAND SALE #3 PARCEL MAP & AERIAL VIEW
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COMPARABLE LAND SALE #4 PARCEL MAP & AERIAL VIEW
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COMPARABLE LAND SALE #5 PARCEL MAP & AERIAL VIEW

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COMPARABLE LAND SALE #6 PARCEL MAP & AERIAL VIEW

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APPLICATION OF ADJUSTMENTS
The comparable sales identified above reflect the most recent transactions in the area. Prior to any adjustments, these sales range from $1.44 to $5.44 per square foot, the typical unit of comparison.

Market activity seems to be increasing for vacant land as noted by the sales presented for comparison.

The following is a discussion of the adjustments made to the comparable sales.

Property Rights Conveyed
Each of the comparable sales represents the conveyance of the fee simple.

Financing
Each of the comparablesrepresents all cash transactions or their equivalent. No adjustments are necessary.

Condition of Sale
All of the properties presented for comparison are arms‐length transactions. No adjustments are noted for the sales.

Market Conditions
If property values have appreciated or depreciated over time, the appropriate adjustment is required.

The comparables range from June 2017 to December 2018 and include two pending sales. Sale 4 is adjusted upward for its inferior market conditions. Sales 5 & 6 were on the market for nearly five years and over seven years, respectively, and thus are adjusted accordingly.

Location
The location adjustment is oriented towards the concept that structures located in areas perceived as more desirable due to a number of factors, including accessibility, frontage and land prices, may achieve a higher price. The subject property is deemed to have a good location in Vallejo. Sales 1, 2 and 3 are located in areas with overall lower property values compared to the subject and are therefore adjusted upwards. The remaining sales are considered overall similar in location and no other adjustments are warranted.

Visibility/Accessibility
The subject has average visibility and accessibility justsouth of Highway 37. Sales 1, 3 and 5 are considered to have superior visibility/accessibility along major freeways and intersections and are therefore adjusted downwards. Sale 6 is adjusted downward for its superior visibility/accessibility based on its railroad track frontage along the north and south sides of the site. Sale 2 is given an upward adjustment since it is situated relatively far from freeway access with inferior visibility/accessibility compared to the subject.

All other sales are considered overall similar to the subject in visibility/accessibility and thus no other adjustments are required.

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Topography
The subject’s topography is level. All sales have generally level topography and thus no adjustments are applied.

Site Size
The size adjustment from the comparables to the subject property reflects the adjustment warranted for varying site sizes. The principle of supply and demand holds that price varies directly, although perhaps not proportionately, with demand. Thus, increased demand increases price. This adjustment is based on the assumption that there are a greater number of buyers for small to mid‐size properties than for extremely large properties. This adjustment is best derived through paired sales analysis however appraiser judgment is also heavily relied upon. The sales represent a range in size from 52.76 acres to 315.00 acres. As such, downward adjustments are applied to Sales 3 for its larger lot size.

Buildable/Gross Land Area Ratio
Sales 3, 4 & 5 include areas of wetlands that are not buildable; however, are identified on a price per square foot based on total gross land area. As such, these sales are adjusted upward for their inferior buildable area based on each sale’s ratio of buildable area to total gross land area.

Zoning/Entitlements
The subject has entitlements for the development of 1,222,000 square feet of industrial/retail/office mixed‐use development. Most sales have relatively similar zoning and entitlements for industrial, commercial or mixed‐use development and no adjustments are necessary; however, a downward adjustment is given to Sale 5 for its superior entitlements for zoning (176x) single‐family homes. In addition, Sale 6 has no entitlements ATOS and is therefore given an upward adjustment.

Flood Zone
The subject and Sale 1 are in Flood Zone A99 while Sales 2, 3, 4 and 5 are not in a flood zone and thus downward adjustments were applied. Sale 6 is partially in a flood zone and thus a smaller downward adjustment is given.

Topography
The subject’s topography is generally level. All sales are also generally level and thus no adjustments are warranted.

Utilities/Off‐Site Improvements
The subject and all sales have utilities available to the site and paved roads accessing the sites and thus no adjustments are warranted.

Please refer to the following adjustment grid for a summary of the adjustments.

Smith & Associates, Inc.

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The six comparable sales demonstrate an adjusted price per square foot range from $1.59 to $3.30 and indicate a mean of $2.49 per square foot. Sale 1 is within Metro Air Park, an 1,892‐acre master planned business park slated for 20 million square feet of mixed‐use development just west of The Sacramento International Airport. The site is smaller than the subject, is inferior in location but superior in visibility/accessibility along Interstate‐5 and Metro Parkway. Sale #2 was purchased for the development of two industrial buildings in the Southport Business Park in West Sacramento. It is inferior in location and inferior in visibility/accessibility situated relatively far from freeway access and visibility. Sale 3 has good visibility/accessibility along Interstate‐5 and Highway 120 in Lathrop. The site was re‐parceled for the development of 4.2 million square feet of industrial warehouse buildings. It is inferior in location, superior in visibility/accessibility and larger in size but consists of some undevelopable land. Sale 4 is within the Pinole Pont Business Park in San Ramon and was developed for the construction of two industrial warehouses. It is similar in location and visibility/accessibility and is just south of the San Pablo Bay but consists of some undevelopable land. Sale 5 is a pending sale proximate to the subject but it has superior visibility/accessibility along Interstate‐80 just south of Gateway Plaza. It also has superior partial residential zoning. It is an older sale and consists of some undevelopable land. Sales 6 is a pending sale located next to newer industrial development along Richmond Parkway. The general plan for this land in for business and industry development.

ELEMENTS OF COMPARISON SUBJECT SALE 1 SALE 2 SALE 3 SALE 4 SALE 5 SALE 6 Price Per SF (Unadjusted) $3.38 $3.00 $1.44 $2.49 $5.44 $3.51 Property Rights Appraised
‐‐‐‐Adjusted Value $3.38 $3.00 $1.44 $2.49 $5.44 $3.51
Financing Terms
‐‐‐‐Adjusted Value $3.38 $3.00 $1.44 $2.49 $5.44 $3.51
Conditions of Sale
‐‐‐‐Adjusted Value $3.38 $3.00 $1.44 $2.49 $5.44 $3.51
Expenditures After Purchase
‐‐‐‐Adjusted Value $3.38 $3.00 $1.44 $2.49 $5.44 $3.51
Market Conditions Jun‐19 Dec‐18 May‐18 Mar‐18 Jun‐17 (Escrow) (Escrow) Adjustment 5% ‐15% ‐15%
‐‐‐‐Adjusted Value $3.38 $3.00 $1.44 $2.61 $4.62 $2.98

PHYSICAL CHARACTERISTICS
Location Good Inferior Inferior Inferior Similar Similar Similar 20% 20% 20%
Visibility/Accessibili ty Average Superior Inferior Superior Similar Superior Superior ‐25% 10% ‐25% ‐25% ‐10%
Topograpgy Gen. Level Similar Similar Similar Similar Similar Similar Site Size (Acres) 157.10 72.00 60.26 315.00 60.00 52.76 55.60 ‐12% ‐15% 10% ‐15% ‐15% ‐15%
Buildable/Gross Land Area (%) 100% 100% 100% 64% 44% 77% 100% 10% 15% 5%
Zoning/Entitlements MUPD C‐H M1 & M2 IL‐SL PA CP/MUPD/LDR SC/IA ‐10% 10%
Flood Zone Yes Yes No No No No Partial
‐5% ‐5% ‐5% ‐5% ‐3%
Topography Level Similar Similar Similar Similar Similar Similar Utili ties/Off‐site Improvements All Off‐sites Similar Similar Similar Similar Similar Similar in place
NET ADJUSTMENTS ‐17% 10% 10% ‐5% ‐50% ‐18%
ADJUSTED PRICE/SF $2.81 $3.30 $1.59 $2.48 $2.31 $2.45
Smith & Associates, Inc.

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All sales are given relatively large adjustments with gross adjustments between 40% and 75% and all sales are given near equal weight with most weight given to Sale 4 due to its proximity to the subject and least gross adjustments. Sale 5 is proximate to the subject but is a pending sale and is given the most gross adjustments. Due to the anticipated above market infrastructure costs, a value lower than the mean of the comparable sales, at $2.25 per square foot is justified. 6,843,276 Square Feet @$2.25 Per Square Foot = $15,397,371 Rounded = $15,400,000

Smith & Associates, Inc.

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Conclusion
With the inclusion of only one approach to value, there is no reconciliation. Based on the analysis described in the attached report, in conjunction with the Assignment Conditions, it is our opinion that the opinion of value is as follows.

SCENARIO DATE OPINION OF
VALUE

EXPOSURE
PERIOD
Hypothetical Market Value “As if Complete” (A) (B) (C) June 28, 2019 $15,400,000 6 Months (A) The Hypothetical Market Value “As if Complete” is predicated on the Hypothetical Condition that the existing improvements are demolished and the site development is complete and that the title of the Navy owned parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1) has been transferred to the City of Vallejo as of the effective date of valuation.
(B) According to the Navy, all contamination has been removed from Parcel APN 0066‐020‐140 (Navy Parcel XV‐B (1). The Hypothetical Market Value “As if Complete” is predicated on the Extraordinary Assumption that this parcel is free of any contamination as of the effective date of valuation. (C) According to the City of Vallejo, it is not known if the pier extending to the east of Parcel APN 0066‐ 020‐150 is included in the subject property. For the purposes of this appraisal and per request of the client, the Hypothetical Market Value “Asif Complete” is predicated on the Extraordinary Assumption that this pier is not included in the subject property.

ESTIMATE OF PROBABLE EXPOSURE PERIOD / REASONABLE MARKETING PERIOD A reasonable exposure time for the subject has been estimated based on analysis of comparable sales of a similar nature with market participants including owners and brokers. Discussions with active industrial brokers revealed a range from 6 to 12 months for the subject property. Based on a review of comparable transactions and discussions with active brokers, it appears that there is adequate demand for reasonably priced properties. At the opinion of value noted above, an exposure period of 6 monthsis noted. A similar marketing period is concluded for this property.

Smith & Associates, Inc.

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MARKET VALUE “AS IS”
In order to derive an opinion of the Market Value “As Is” the site development costs and demolition costs are deducted from the Hypothetical Market Value “As if Complete”.

The estimated site development costs prepared by David Taussig & Associates in early 2019 were provided to the appraisers, a copy of which isincluded in the addenda. Site development costs at $30,311,500. These site development costs will bring the subject site to a condition to support the proposed uses under the currentzoning. Furthersite costs will mostlikely be required forfinished lots. Demolition costs were verbally provided by the City of Vallejo. Total demolition costs for the (23x) buildings to be demolished was estimated at $4,700,000; however, $1,400,000 has been incurred to demolish (6x) of the buildings with $3,300,000 of costs remaining to demolish the remaining (17x) buildings. Based on the subject’s required work of demolition and site development costs, entrepreneurial profit is assigned in the lower end of the range at 8%.

Based on the proceeding discussions, the Market Value “As Is” of the subject is calculated as follows:

Based on these elements, the value conclusion is estimated at zero.

Based on the analysis described in the attached report, in conjunction with the Assignment Conditions, it is our opinion that the opinion of value is as follows.

SCENARIO DATE OPINION OF VALUE EXPOSURE PERIOD
Market Value “As Is” (A) June 28, 2019 $0 12 Months
(A) Due to the estimated site development costs and demolition costs, the Market Value “As Is” is considered to be zero.

ESTIMATE OF PROBABLE EXPOSURE PERIOD / REASONABLE MARKETING PERIOD A reasonable exposure time for the subject has been estimated based on analysis of comparable sales of a similar nature with market participants including owners and brokers. Discussions with active industrial brokers revealed a range from 6 to 12 months for the subject property. Based on a review of comparable transactions and discussions with active brokers, it appears that there is adequate demand for reasonably priced properties. At the opinion of value noted above, an exposure period of 12 months is noted. A similar marketing period is concluded for this property.

Reconciled Hypothetical Market Value "As if Complete" 15,400,000 Less:

ADDENDA
Assumptions and Limiting Conditions
Certification of the Appraisers
Glossary
Qualifications of the Appraisers
Engagement Letter
Estimated Site Development Costs
Legal Description
Assumptions and Limiting Conditions

ASSUMPTIONS AND LIMITING CONDITIONS
The Certification of the appraiser(s) appearing in this report is subject to the following assumptions and limiting conditions.

1. The appraiser(s) assumes no responsibility for the legal description provided for matters pertaining to the legal or title considerations. Title is assumed to be good and marketable and the property is appraised free and clear of any encumbrances, unless otherwise stated. It is assumed that the property is under responsible ownership and management.

2. Information, estimates and opinions furnished to the appraiser(s) and contained in this report were obtained from sources considered reliable and believed to be true and correct. However, the appraiser(s) give no warranty of the accuracy of such items furnished by others.

3. The appraiser(s) is notrequired to give testimony or appearin court in connection with this appraisal unless prior arrangements have been made.

4. The sketches, maps, plats and exhibits in this report are included to assist the reader in visualizing the property. The appraiser(s) has made no survey of the property and assumes no responsibility in connection with such matters.

5. The appraiser(s) assumesthat there are no hidden or unapparent conditions of the property,subsoil or structures, which would render it more or less valuable. The appraiser(s) assumes no responsibility for such conditions or for engineering which might be required to discover such factors.

6. The appraiser(s) assumes the property in full compliance with all applicable federal, state, and local environmental regulations and laws unless non‐compliance isstated, defined, and considered in the appraisal. The appraiser(s) assumes the property contains no hazardous materials or substances or for engineering which might be required to discover such factors.

7. The appraiser(s) assumes 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 opinions contained in the report is based.

8. The appraiser(s) assumes that the property complies with applicable zoning requirements, use regulations and other restrictions, unless a lack of conformity has been stated, defined, and considered in the appraisal report.

9. Any allocation of the total value opinion stated in this report between the site and improvements applies only under the stated program of use. The separate values allocated to the site and improvements may not be used in connection with any other appraisal and are invalid if so used.

Any value opinions provided in the appraisal report apply to the entire property and any proration or division of the total into fractional interests will invalidate the value opinion unlesssuch proration or division of interests has been stated in the report.

10. Disclosure of the contents of the appraisal report is governed by the Code of Professional Ethics of the Appraisal Institute and is subject to peer review.

ASSUMPTIONS AND LIMITING CONDITIONS (Continued)

11. The appraiser(s) assumes that the site and improvements are contained within the boundaries or property lines of the property described and that there are no encroachments unless noted in this report.

12. If only preliminary plans and specifications were available for use in the preparation of this assignment, then this appraisal is subject to a review of the final plans and specifications when available (at additional cost) and the appraiser(s) reserves the right to amend this appraisal if substantial deviations exist.

13. The dates of value to which the opinions expressed in this report apply are set forth in this report.

The appraiser(s) assume no responsibility for economic or physical factors occurring at some point at a later date, which may affect the opinionsstated herein. The forecasts, projections, or operating estimates contained herein are based on current market conditions and anticipated short‐term supply and demand factors and are subject to change with future conditions.

14. This appraisal was prepared for the sole and exclusive use of the client for the intended use outlined in this report. Any party who is not the client or intended user identified in the appraisal or the engagement letter is not entitled to rely upon the contents of this appraisal without the express written consent of Smith & Associates, Inc. The appraiser assumes no obligation, liability, or accountability to any third party.

15. The Americans with Disabilities Act (ADA became effective January 26, 1992. The appraiser(s) have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could 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(s) have no direct evidence relating to this issue, possible non‐compliance was not considered in estimating the value of the property.

16. No part of the appraisal report (nor any copy of it)shall be used for any purpose by any party except the client without the previous written consent of the appraiser(s). No portion of the appraisal report may be reproduced. The report shall not be used for advertising, public relations, news, or other media without the consent of the appraiser(s).

17. Acceptance and/or use of this appraisal report by the client or any third party constitutes acceptance of the previously stated assumptions and limiting conditions.

18. Any estimate of the Insurable Replacement Costs, if included within the scope of work and presented herein, is based on figures developed consistent with industry practices. However, actual local and regional construction costs may vary significantly from estimates noted in this report and individual insurance policies and underwriters have varied specifications, exclusions, and non‐ insurable items. It is highly recommended that the client obtain estimates from professionals experienced in providing insurance coverage. The appraiser(s) make no warranties regarding the accuracy of estimates for Insurable Replacement Costs noted in this report.

Certification of The Appraisers

CERTIFICATION
The Appraiser certifies and agrees that:

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

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

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

4. I have not performed 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 acceptance of this assignment.

5. I have no bias with respect to the property that isthe subject of thisreport or to the partiesinvolved with this assignment.

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

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

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

9. I have made a personal inspection of the property that is the subject of this report.

10. No one provided significantreal property appraisal assistance to the person signing this certification.

11. The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
___________________________________
Thomas M. Venuti
State Certified General Real Estate Appraiser
AG011501, Expiration 05/10/20

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

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

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

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

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

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

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

9. I have made a personal inspection of the property that is the subject of this report.

10. No one provided significant real property appraisal assistance to the person signing this certification.

11. The use of thisreport is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

12. As of the date of this report, I John E. Carrothers, MAI have completed the continuing education program for Designated Members of the Appraisal Institute.

John E. Carrothers, MAI
State Certified General Real Estate Appraiser
AG014187, Expiration 04/11/21
Glossary

GLOSSARY
Definitions are taken from the Dictionary of Real Estate Appraisal, 5th Edition, the Uniform Standards of Professional Appraisal Practice (USPAP) and Building Owners and Managers Association International (BOMA)

ABSOLUTE NET LEASE
A lease in which the tenant pays all operating expenses including structural maintenance, building reserves, and management, often a long‐term lease to a credit tenant. (Dictionary)

AGGREGATE OF RETAIL VALUES (ARV)
The sum of the separate and distinct market value opinions for each of the units in a condominium, subdivision
development, or portfolio of properties, as of the date of valuation. The aggregate of retail values does notrepresent an opinion of value; it is simply the total of multiple market value conclusions. (Dictionary)
AS‐IS MARKET VALUE
The estimate of the market value of real property in its current physical condition, use, and zoning as of the
appraisal date. (Dictionary)

ASSUMPTION
That which is taken to be true. (USPAP)

BUILDING RENTABLE AREA
The sum of all floor rentable areas. Floor rentable area is the result of subtracting from the gross measured area of the floor the major vertical penetrations on the same floor.

It is generally fixed for the life of the building and is rarely affected by changes in corridor size or configuration.
(BOMA)

CASH EQUIVALENCY
An analytical processin which the sale price of a transaction with nonmarket financing or financing with unusual
conditions or incentives is converted into a price expressed in terms of cash. (Dictionary)
CLIENT
The party or parties who engage, by employment or
contract, an appraiser in a specific assignment. The client may be an individual, group, or entity, and may engage and communicate with the appraiser directly or through an
agent. (USPAP)

CONDOMINIUM
A form of ownership in which each owner possesses the
exclusive right to use and occupy an allotted unit plus an undivided interest in common area. A multi‐unit structure or a unit within such a structure with a condominium form of ownership. (Dictionary)

COVERAGE
The proportion of the net or gross land area of a site that is occupied by a building or buildings. (Dictionary)

DEED RESTRICTON
A provision written into a deed that limits the use of land.

Deed restrictions usually remain in effect when title passes to subsequent owners. (Dictionary)

DEPRECIATION
1) In appraising, the loss is a property value from any cause; the difference between the cost of an improvement on an effective date of the appraisal and the market value of the improvement on the same date. (Dictionary)

DISPOSITION VALUE
The most probable price that a specified interest in real property is likely to bring under the following conditions:
 Consummation of a sale within an exposure time
specified by the client;
 The property is subjected to market conditions
prevailing as of the date of valuation;
 Both the buyer and seller are acting prudently and
knowledgeably;
 The seller is under compulsion to sell;
 The buyer is typically motivated;
 Both parties are acting in what they consider to be
their best interests;
 An adequate marketing effort will be made during the
exposure time specified by the client;
 Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
 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. (Dictionary)

EASEMENT
The right to use another’s land for a stated purpose.
(Dictionary)

EFFECTIVE AGE
The age of property that is based on the amount of
observed deterioration and obsolescence it has sustained, which may be different from its chronological age.
(Dictionary)

EFFECTIVE DATE
1) The date at which the analyses, opinions, and advice in an appraisal, review, or consulting service apply. 2) In a lease document, the date upon which the lease goes into effect. (Dictionary)

EFFECTIVE RENT
The rental rate net of financial concessions such as periods of no rent during the lease term and above‐ or below‐
market tenant improvements (TIs). (Dictionary)

EXCESS LAND
Land that is not needed to serve or support the existing improvement. The highest and best use of the excess land may or may not be the same as the highest and best use of the improved parcel. Excess land may have the potential to be sold separately and is valued separately. (Dictionary)

EXPOSURE TIME
Estimated length of time that the property interest being appraised would have been on the market prior to the
hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. (USPAP)

EXTRAORDINARY ASSUMPTION
An assumption, directly related to a specific assignment, as of the effective date of the assignment results, which if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market
conditions or trends, or about the integrity of data used in an analysis. (USPAP)

EXTERNAL OBSOLESCENCE
An element of depreciation; a diminution in value caused by negative externalities and generally incurable on the part of the owner, landlord, or tenant. (Dictionary)

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. (Dictionary)

FLOOR AREA RATIO (FAR)
The relationship between the above‐ground floor area of a building, as described by the building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. (Dictionary)

FULL SERVICE GROSS LEASE
A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating and fixed expenses; also called a full service lease. (Dictionary)

FUNCTIONAL OBSOLESCENCE
The impairment of functional capacity of a property
according to market tastes and standards. (Dictionary)

GOING CONCERN VALUE
1) The market value of all of the tangible and intangible assets of an established and operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. 2) The value of an operating business enterprise. Goodwill may be
measured separately but is an integral component of going‐ concern value when it exists and is recognizable.
(Dictionary)

GROSS BUILDING AREA
The total constructed area of a building. It is generally not used for leasing purposes. (BOMA)

GROUND LEASE
A lease that grants the right to use and occupy land.

Improvements made by the ground lease typically revert to the ground lessor at the end of the lease term. (Dictionary)

HIGHEST & BEST USE
The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are 1) legal permissibility; 2) physical possibility; 3) financial feasibility; and 4) maximally profitability.

Alternatively, the probable use of land or improved
property‐specific with respect to the user and timing of the use – that is adequately supported and results in its highest present value. (Dictionary)

HYPOTHETICAL CONDITION
A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of the analysis. Hypothetical conditions are
contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions or trends; or about the integrity of data used in an analysis. (USPAP)

INTENDED USE
The use or uses of an appraiser’s reported appraisal or appraisal review assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment. (USPAP)

INTENDED USER
The client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser on the basis of communication with the client at the time of the assignment. (USPAP)

INDUSTRIAL GROSS LEASE
A lease of industrial property in which the landlord and tenant share expenses. The landlord receives stipulated rent and is obligated to pay operating expenses, often
structural maintenance, insurance and real estate taxes as specified in the lease. There are significant regional and local differences in the use of this term. (Dictionary)

INSURABLE VALUE
A type of value used for insurance purposes. (Dictionary)

LEASED FEE INTEREST
A freehold (ownership‐interest) where the possessory
interest has been granted to another party by creation of a contractual landlord‐tenant relationship (i.e., a lease). (Dictionary)

LEASEHOLD INTEREST
The tenant’s possessory interest caused by a lease.
(Dictionary)

LESSEE (TENANT)
One who hasthe right to occupancy and use of the property for a period of time according to a lease agreement.
(Dictionary)

LESSOR (LANDLORD)
One who conveys the right of occupancy and use to others under a lease agreement. (Dictionary)

LIMITING CONDITIONS
Constraints which are imposed on valuations by clients, the Valuer, or local statutory law. (Dictionary)

LIQUIDATION VALUE
The most probable price that a specified interest in real property should bring under the following conditions:
 Consummation of a sale within a short period;
 The property is subjected to market conditions
prevailing as of the date of valuation;
 Both the buyer and seller are acting prudently and
knowledgably;
 The seller is under extreme compulsion to sell;
 The buyer is typically motivated;
 Both parties are acting in what they consider to be
their best interests;
 A normal marketing effort is not possible due to the
brief exposure time;
 Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto;
 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. (Dictionary)

MARKET ANALYSIS
A process for estimating the productive attributes of a specific property, its demand and supply, and its geographic market area. Marketability analysis (often referred to erroneously as market analysis) is an essential part of the highest and best use for every valuation assignment.
(Dictionary)

MARKET RENT
The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement including permitted uses, use restrictions, expense obligations; term,
concessions, renewal and purchase options and tenant
improvements (TIs). (Dictionary)

MARKET VALUE
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fairsale, the buyer and seller each acting prudently and knowledgably, 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:
a. Buyer and seller are typically motivated;
b. Both parties are well informed or well advised, and
acting in what they consider their own best interests;
c. A reasonable time if allowed for exposure in the open market;
d. Payment is made in terms of cash in U.S. dollars or in financial arrangements comparable thereto;
e. 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. (Office of the Comptroller of the Currency)
MARKET VALUE “AS IF COMPLETE”
A hypothetical scenario representing the market value of the property with all proposed construction, conversion or rehabilitation completed under specified hypothetical
conditions as of the date of the appraisal.

MARKET VALUE “AS IF STABILIZED”
A hypothetical scenario representing the market value of the property at a current point in time when all
improvements have been physically constructed and the
property has been leased to its optimum level of long term occupancy underspecified hypothetical conditions as of the date of the appraisal.

MARKETING TIME
An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level immediately after the effective date of the appraisal.

Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the Appraisal Standards Board of the Appraisal Foundation and Statement on Appraisal
Standards No. 6, “Reasonable Exposure Time in Real
Property and Personal Property Market Value Opinions”
address the determination of reasonable exposure and
marketing time.) (Dictionary)

MODIFIED GROSS LEASE
A lease in which the landlord receives stipulated rent and is obligated to pay some, but not all, of the property’s
operating and fixed expenses. Since assignment of
expenses varies among modified gross leases, expense
responsibility must always be specified. In some markets, a modified gross lease may be called a double net lease, net net lease, partial net lease, or semi‐gross lease.
(Dictionary)

PARTIAL INTEREST
Divided or undivided rights in real estate that represent less than the whole (a fractional interest). (Dictionary)

PHYSICAL DETERIORATION
The wear and tear that begins when a building is completed and placed into service. (Dictionary)

PROSPECTIVE OPINION OF VALUE
A value opinion effective as of a specified date in the future.

The term does not define a type of value. Instead, it identifies a value opinion as being effective atsome specific future date. An opinion of value as a prospective date is frequently sought in connection with projects that are
proposed, under construction, or under conversion to a
new use, or those that have not yet achieved sellout or a stabilized level of long‐term occupancy. (Dictionary)

REMAINING ECONOMIC LIFE (REL)
The estimated period during which improvements will
continue to represent the highest and best use of the
property; an estimate of the number of years remaining in the economic life of the structure of structural components as of the date of the appraisal; used in the economic age‐ life method of estimating depreciation. (Dictionary)

REPLACEMENT COSTS
The estimated cost to construct, at current prices as of the effective appraisal date, a substitute for the building being appraised, using modern materials and current standards, design, and layout. (Dictionary)

REPRODUCTION COSTS
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of
workmanship and embodying all of the deficiencies, super‐ adequacies, and obsolescence of the subject building.
(Dictionary)

RETROSPECTIVE VALUE OPINION
A value opinion as of a specified historical date. The term does not define a type of value. Instead, it identifies a value as being effective at some specific prior date. Value as of a historic date is frequently sought in connection with
property tax appeals, damage models, lease renegotiation, deficiency judgments, estate tax, and condemnation.

Inclusion of the type of value with this term is appropriate, e.g., “retrospective market value opinion.” (Dictionary)

SANDWICH LEASEHOLD ESTATE
The interest held by the original lessee when the property is subleased to another party; a type of leasehold estate. (Dictionary)

SCOPE OF WORK
The type and extent of research and analysesin an appraisal or appraisal review assignment. (USPAP)

SURPLUS LAND
Land that is not currently needed to support the existing improvement but cannot be separated from the property
and sold off. Surplus land does not have an independent highest and best use and may or may not contribute value to the improved property. (Dictionary)

TRIPLE NET (NET NET NET) LEASE
A lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management. Also called NNN, triple net lease, or fully net lease. (Dictionary)

USABLE AREA
The measured area of an office area, store area, or building common area on a floor. The total of all of the useable areas of a floor shall equal floor usable area of that same floor. The amount of floor usable area can vary over the life of a building as corridors expand and contract and as floors are remodeled. (Dictionary)
Qualifications of the Appraiser
Thomas M. Venuti
State Certification #AG011501

SUMMARY
Certified General Appraiser with over 20 years of appraisal experience in Sacramento, Placer, Solano, Sutter, Sonoma, Santa Clara, Yolo, Stanislaus, Merced, Contra Costa, Alameda, San Joaquin, El Dorado and Yuba Counties.

Property types valued and analyzed include the following:
 Single & Multi-Family Residential
 Commercial (Retail, Industrial and Office)
 Subdivision (Feasibility and Valuation)
 Vacant Land (Improved and Unimproved)

EXPERIENCE
2005 – Present Appraiser Smith & Associates, Inc.
2003 – 2005 Appraiser Seevers٠Jordan٠Ziegenmeyer
1998 – 2003 Appraiser CB Richard Ellis, Inc.
1991 – 1995 Residential Appraiser Property Sciences, Inc.

EDUCATION
Bachelor of Science, California Polytechnic State University Mechanical Engineering San Luis Obispo, California

Real Estate Courses:

Matrix School of Appraisal; Uniform Standards of Professional Appraisal Practice; Real Estate Finance; Federal Laws and Regulations; Tax Free Exchanges in Real Estate; Income Capitalization; General Applications (AI 320); General Market Analysis and Highest & Best Use (AI 400G); Advanced General Market Analysis and Highest & Best Use (AI)

AFFILIATIONS
Candidate for Designation – Appraisal Institute
Certified General Appraiser – State of California (AL011501)

John E. Carrothers, MAI
State Certification #AG014187

SUMMARY
Certified General Appraiser with over twenty five years of appraisal experience in Sacramento, Placer, Solano, Sutter, Yolo, Stanislaus, Contra Costa and Alameda Counties. Extensive experience focusing on the analysis of residential subdivisions over the past twenty years.

Property types valued and analyzed include the following:
 Single & Multi-Family Residential
 Commercial (Retail and Industrial)
 Subdivision (Feasibility and Valuation)
 Vacant Land (Improved and Unimproved)

EXPERIENCE
1998 - Present Manager/Sr. Appraiser Smith & Associates, Inc. 1991 - 1998 Staff Appraiser Smith Denton Associates, Inc. 1990 - 1991 Staff Appraiser Professional Appraisal Services, Inc.

EDUCATION
Bachelor of Science Degree University of California at Davis Appraisal Institute Courses:

Real Estate Appraisal Principles; Valuation Procedures; Capitalization Theory and Techniques, A; Capitalization Theory and Techniques, B; Farm Valuation Seminar; Standards of Professional Practice A and B; Real Estate Principles; Subdivision Analysis; Assessment Bond Mello Roos Seminar; Report Writing; Advanced Sale Comparison and Cost Approach; National USPAP Equivalent Course.

AFFILIATIONS
MAI, Appraisal Institute

Engagement Letter
Real Estate Appraisal
and Consulting
www.smithassociatesinc.com
East Bay/Corporate Office Sacramento/Central Valley Office 140 Town & Country Drive, Suite F 111 Woodmere Road, Suite 140 Danville, CA 94526 Folsom, CA 95630
Phone 925 855-4950 Phone 916 357-5860
Fax 925 855-4951 Fax 916 357-5868
June 12, 2019
Mr. Will Morat
Assistant to the City Manager
Economic Development
City of Vallejo
555 Santa Clara Street
Vallejo, CA 94590
Dear Will,
This letter will serve as a scope of services for the Appraisal Report for 157.1 acres of land noted as follows.

AP No.

Navy Parcel
No. Transfer Date
Navy
Acres
0066-020-110 XV-A(1) 9/26/2001 67.2
0066-020-130 XV-A(2) 9/26/2001 27.9
part of 0066-020-110 XV-B(2) 10/6/2008 4.5
0066-020-150 II 4/13/2011 25.7
125.3
0066-020-140 XV-B(1) Navy owned 31.8
157.1
This property consists of approximately 157.1 acres located on Mare Island which is zoned for

1.2 million square feet of industrial space.

The purpose of this assignment is to provide an opinion of value of the property to assist the City of Vallejo and the potential buyer (Nimitz Group) in potential purchase of the asset. The City of Vallejo is the identified client. The overall value will be reported on an “As Is” basis, as well as the fair market rent for this property.

This appraisal report will utilize the most applicable method(s) of valuation to arrive at market value of the subject property. The fee for this assignment is $9,000. The anticipated timing for the appraisal report is delivery with 3 weeks of acceptance of this agreement. The specific scope of work for this assignment includes the following.

1. Review of all documents provided to determine the purpose, intended use and intended user of the appraisal report. Identify the appraisal problem and appropriate approaches of value necessary to provide credible results.

Mr. Will Morat
City of Vallejo
Page Two

2. Complete a physical inspection of the property.

3. Research of the neighborhood, city and county factors was based on neighborhood analysis, information from local government sources, and data sources utilized by Smith & Associates, Inc.

4. In developing the approaches to value, market data will be used and verified. Data sources included in-house data files, brokers and agents, property owners, and other knowledgeable market participants.

5. Review and analyze all pertinent data to determine the subject’s highest and best use.

Steps 1-4 noted above were considered with emphasis placed on current market conditions and trends.

6. Assemble and analyze the data outlined above and opinions of value formulated. The sales comparison approach to value will be utilized to develop the opinion of value for the subject property. In appraisal practice, an approach to value is included or omitted based on its applicability to the property type being valued and the quality and quantity of information available. Depending on a specific appraisal assignment, any of the following four methods may be used to determine the market value of the fee simple interest of vacant land:
o Sales Comparison Approach;
o Income Capitalization Procedures (land residual technique, ground rent capitalization, and subdivision development analysis);
o Allocation; and
o Extraction.

The Sales Comparison Approach to value is most likely the only applicable approach to value for this property, but all applicable methods will be considered. The methodology will also consider the required infrastructure needed before any development could be undertaken, as identified and estimated by David Taussig & Associates in the attached summary report, and estimated at $30.3 million. In the absence of other costs, these costs will be relied upon in the valuation process.

7. Review the report for content and compliance with USPAP 2018-2019 and client requirements.

Mr. Will Morat
City of Vallejo
Page Three

9. The scope of work will specifically exclude the valuation of mineral rights, fixture values, timber values or other rights. Valuation is limited to the value of the land as of the effective date of valuation.

10. Testimony is specifically excluded from the scope of work. Subsequent to the completion of the appraisal assignment and if such services become necessary, a separate contract may be written. No commitment is made by the appraiser in the scope of work to testify about the results.

Please feel free to call if there are any questions. Please sign and return this document which will serve as an engagement letter. An invoice will be sent along with the completed appraisal report.

Sincerely,
SMITH & ASSOCIATES, INC.

John E. Carrothers, MAI
State Certified General Real Estate Appraiser
AG014017, Expiration 04/11/21
Will Morat
Assistant to the City Manager
Economic Development
City of Vallejo
Estimate Site Development Costs

DRAFT - FOR DISCUSSION PURPOSES ONLY
North Mare Island Infrastructure Improvement Cost Analysis prepared by David Taussig & Associates
Infrastructure Improvement Indirect Costs Total Costs
Engineering and Consultants $2,609,086
Planning Fee, Deposits, Permits and Bonds $985,574
Indirect Contingency - 10% $359,466
Infrastructure Improvement Indirect Costs $3,954,126
Infrastructure Improvement Direct Costs
Site Preparation, Erosion and Dust Control $5,589,024
Underground Utilities (Sewer, Water, Storm and Joint
Trench) $8,111,560
Streets including Sidewalks, Curb and Gutter $5,324,606 Landscaping (Parks, Parkways, Median and Trails) $1,005,436 Repairs For Bond Release $244,276
Direct Contingency - 30% $6,082,471
Infrastructure Improvement Direct Costs $26,357,374
Total Lot Improvement Costs $30,311,500
Infrastructure Direct Cost of Streets and Utilities
(excludes Site Preparation, Landscaping, Common
Costs, Repairs for Bonds, Contingency and the
allowance for Island Wide C3 Storm Water Solution)
Quantity Unit Price Total
Intract Streets and Underground Utilities Only 6,175 LF $630.84 $3,895,455.39 Backbone Streets and Underground Utilities Only 8,275 LF $911.26 $7,540,710.76

DRAFT - FOR DISCUSSION PURPOSES ONLY
North Mare Island Infrastructure Improvement Direct Cost Analysis Site Preparation Quantity Unit Price Total
Remove Existing Storm Drain Pipe 16,300 LF $5.00 $81,500.00 Remove Existing Sewer Pipe 18,150 LF $5.00 $90,750.00
Remove Existing Water Pipe 18,150 LF $5.00 $90,750.00
Remove Existing Joint Trench 18,150 LF $5.00 $90,750.00 Remove Existing Roadways 782,125 SF $2.00 $1,564,250.00 Relocate Island Energies' Operations 1 LS $500,000.00 $500,000.00 Miscellaneous Other Costs (Construction Water, Erosion & Dust Control, etc.) $3,171,024.19 $5,589,024.19
Storm Drain System Quantity Unit Price Total
Intract 15 Inch Pipe 4,325 LF $75.00 $324,375.00
Backbone 24 Inch Pipe 8,275 LF $100.00 $827,500.00
Island Wide C3 Storm Water Solution Allowance 1 LS $2,000,000.00 $2,000,000.00 Miscellaneous Other Costs $12,500.00
$3,164,375.00
Sanitary Sewer System Quantity Unit Price Total
Intract 8 Inch PVC Pipe 6,175 LF $58.00 $358,150.00
Backbone 10 Inch PVC Pipe 8,275 LF $60.00 $496,500.00
48 Inch Manholes 59 EA $6,000.00 $354,000.00
Miscellaneous Other Costs $18,500.00
$1,227,150.00
Potable Water Distribution System Quantity Unit Price Total Intract 8 Inch PVC Pipe 6,175 LF $41.00 $253,175.00
Backbone 12 Inch PVC Pipe 8,275 LF $47.00 $388,925.00
Fire Hydrants 49 EA $7,200.00 $352,800.00
Gate Valves 49 EA $2,521.43 $123,550.00
Blow Off Assembly / Air-Vac Release 16 EA $3,900.00 $62,400.00 Miscellaneous Other Costs $41,800.00
$1,222,650.00
Dry Utilities Quantity Unit Price Total
Intract Main Line Trench and Electrical Contractor Charges 6,175 LF $90.00 $555,750.00 Backbone Main Line Trench and Electrical Contractor Charges 8,275 LF $110.00 $910,250.00 Distribution CIAC Tax $691,625 % $0.22 $152,157.50
Intract Gas Lines 6,175 LF $17.00 $104,975.00
Backbone Gas Lines 8,275 LF $25.00 $206,875.00
Gas Tax $311,850 % $0.22 $68,607.00
Intract Street Lights 39 EA $5,500.00 $214,500.00
Backbone Street Lights 42 EA $6,000.00 $252,000.00
Miscellaneous Other Costs $32,270.40
$2,497,384.90
Street Improvements Quantity Unit Price Total
Sidewalks - 5 Feet Wide, 4 Inches Thick - 2 Sides (28900 LF) 144,500 SF $6.30 $910,350.00 Intract Curb and Gutter - 2 Sides 12,350 LF $21.00 $259,350.00 Backbone Curb and Gutter - 2 Sides 16,550 LF $23.00 $380,650.00 Cross Gutters 19,600 SF $10.00 $196,000.00
Wheelchair Access Ramps 49 EA $1,450.00 $71,050.00
Intract Street - 24 Feet Wide AC - 4 Inch AC Over 10 Inch Base (6175 LF) 148,200 SF $4.95 $733,590.00 Backbone Street - 40 Feet Wide AC - 4 Inch AC Over 12 Inch Base (1200 LF) 48,000 SF $5.45 $261,600.00 Backbone Street - 49 Feet Wide AC - 4 Inch AC Over 12 Inch Base (3425 LF) 167,825 SF $5.45 $914,646.25 Backbone Street - 74 Feet Wide AC - 4 Inch AC Over 12 Inch Base (3650 LF) 270,100 SF $5.45 $1,472,045.00 Miscellaneous Other Costs $125,325.00
$5,324,606.25
Landscaping and Common Costs Quantity Unit Price Total
8 Foot Wide DG Trail (3500 LF) 28,000 SF $2.00 $56,000.00 Fencing on One Side 3,500 LF $16.00 $56,000.00
Parkway and Median Trees 482 EA $210.00 $101,220.00
Parkway Landscaping 78,030 SF $3.50 $273,105.00
Median Landscaping 86,888 SF $5.50 $477,881.25
6 Months of Landscape Maintenance 164,920 SF $0.25 $41,230.00 Repairs for Bond Release (% Varies by Trade) $244,276.27 $1,249,712.52
Direct Cost Contingency (30%) $6,082,470.86
TOTAL DIRECT CONSTRUCITON COSTS $26,357,373.72
Legal Description

OAK #4843-5079-9573 v17 v18

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

City of Vallejo
P.O. Box 3068
555 Santa Clara Street
Vallejo, CA 94590
Attn: City Clerk
Record for the Benefit of
The City of Vallejo
Pursuant to Government Code
Section 27383
Space Reserved for Recorder's Use Only

DISPOSITION AND DEVELOPMENT AGREEMENT
by and between

CITY OF VALLEJO
and

THE NIMITZ GROUP, LLC
DATED: _____________, 2022
OAK #4843-5079-9573 v17 v18
2 (described below) and other portions of Reuse Area 1A, by Quitclaim Deed dated September 26, 2001, recorded in the Official Records of the County of Solano on October 17, 2001, Series No. 2001 00120695. Following the 2001 conveyance, the Navy issued further Findings of Suitability for Transfer in 2008 and 2011, and, in connection therewith, transferred to City by Quitclaim Deeds dated October 6, 2008 and April 13, 2011, and recorded in the Official Records of the County as Instrument Nos. 2009-00004941 and 2011-00042113, respectively, additional Mare Island property, including the balance of the City-Owned Property. The three Findings of Suitability for Transfer referenced above are referred to herein individually and collectively as the “FOST(s)” and the Navy Quitclaim Deeds are referred to herein individually and collectively as the “Navy Quitclaim Deed(s)”.

G. On or about March 30, 1999, City adopted a Mare Island Specific Plan governing the land use policy and development process for Mare Island. On or about December 6, 2005, City amended the Mare Island Specific Plan by adopting the Amended and Restated Mare Island Specific Plan. The City further amended the Amended and Restated Mare Island Specific Plan in July 2007, June 2008, June 2013, August 2013 and June, 2017. The Amended and Restated Mare Island Specific Plan, as further amended, is hereinafter referred to as the “Existing Specific Plan.”
H. In connection with City’s adoption of the Amended and Restated Mare Island Specific Plan, the City certified a final Subsequent Environment Impact Report on November 29, 2005 (SCH #2004092057) (“SEIR”). The SEIR identified and analyzed the significant impacts associated with the incremental change in intensity and distribution of land uses on Mare Island as compared to those described in the prior specific plan as originally adopted in 1999. In July 2007, an Addendum to the SEIR was prepared. The purpose of the 2007 Addendum was to address proposed amendments to policies in the Amended and Restated Mare Island Specific Plan and the Vallejo Municipal Code related to historic resources on Mare Island.

I. City, as successor in interest to the Navy, is the fee owner of approximately 125.3 acres of Reuse Area 1A (the “City-Owned Property”). The City-Owned Property is more particularly described in Exhibit B-1. An additional approximately 31.8 acre portion of Reuse Area 1-A 1A more particularly described in Exhibit B-2 (the “Navy-Owned Property”) is owned by the Navy and leased to the City pursuant to a Lease in Furtherance of Conveyance (“LIFOC”) dated September 30, 1999. City and Navy anticipate that following Navy’s completion of remediation activities and issuance of one or more additional Findings of Suitability for Transfer, the Navy-Owned Property will be conveyed by Navy to City via one or more further quitclaim deeds. As used herein the term “Property” means collectively, the City-Owned Property and the Navy-Owned Property (which collectively comprise approximately 157 acres as depicted in Exhibit A), together with all appurtenances thereto and all improvements located thereon.

J. Developer, as successor to Lennar Mare Island, LLC, is the fee owner of that certain real property located on Mare Island as generally depicted in Exhibit I and more particularly described in Exhibit J attached hereto (“South Mare Island Property”).

K. Most developable real property properties on Mare Island, including the CityOwned Property and the South Mare Island Property, are subject to certain Existing CFDs which OAK #4843-5079-9573 v17 v18
3 finance through the levy of Special Taxes the provision of certain public services to Mare Island.

The parties desire to work in good faith to explore establishment of one or more new Mare Island-wide community facilities districts (the "New CFD(s)") pursuant to the Mello-Roos Act over all residential and commercial property on Mare Island, including the Property and the South Mare Island Property, which New CFD(s) would replace some or all of the Existing CFDs.

As with the Existing CFDs, payment of the costs of CFD Services through the levy of Special Taxes under the New CFD(s) would strengthen the planning process by improving the linkage between development and the financing of essential governmental services; encourage participation by private landowners in the coordinated reuse and redevelopment of Mare Island; reduce economic risk by spreading the costs of needed services over time and among subsequent purchasers; and allow Developer, in exchange for voluntary participation in the New CFD(s), to acquire and coordinate development of the Property with development activities of Affiliates of Developer at the South Mare Island Property. The parties acknowledge that the long-term funding of public services through either the Existing CFDs or, alternatively, the long-term funding of CFD Services through New CFD(s) to replace some or all of the Existing CFDs, is critical to the financial success of the Project and other development projects on Mare Island, including the South Mare Island Property.

L. In July 2018, City and Developer entered into an Exclusive Right to Negotiate Agreement which has been further amended, most recently by a Sixth Amended and Restated Exclusive Negotiating Agreement dated December 14, 2021 (as so amended and restated, the “ERN”), providing, among other things, for City and Developer to negotiate terms for Developer’s (i) acquisition of a fee interest in the City-Owned Property and a sub-leasehold interest in the Navy-Owned Property (with a must take obligation to accept fee title conveyance of the Navy-Owned Property following City’s acquisition thereof from Navy); (ii) demolition of certain Non-Utilized Structures located on the Property; (iii) preparation and implementation of an interim Beautification Plan for the Property and South Mare Island Property, excluding the Connolly Corridor area; (iv) preparation and submittal to City for review and consideration and potential approval a comprehensive new proposed specific plan for the entirety of Mare Island, including those portions owned or controlled by Developer or its affiliatesAffiliates of Developer, including the Property and the South Mare Island properties which Developer or its affiliates Affiliates of Developer have acquired or are under contract to acquire from Lennar Mare Island, LLC, which plan shall include a plan for phased installation and construction of new Backbone Infrastructure to serve all new development and redevelopment contemplated by such plan (“New Specific Plan”); (v) testing of certain soil previously stockpiled by Lennar Mare Island at six locations (i.e. two within Area 14, two within Area 8, one within Area 18 and one within Area 21) as shown on the draft stockpile site plan prepared by ENGEO dated September 2007, to determine its suitability for use as Clean Fill; (vi) importation of Clean Fill, surcharging and grading to raise the elevation of the Property to mitigate the risks of sea level rise and prepare the Property for development consistent with the New Specific Plan; (vii) construction and installation of the Backbone Infrastructure to serve the development contemplated by the New Specific Plan; and (viii) development of the Property with improvements and uses consistent with the New Specific Plan at such time as market and financing conditions will support such development.

OAK #4843-5079-9573 v17 v18
5 “Agreement” means this Disposition and Development Agreement. “Ancillary Agreements” is defined in Section 601.3.
“Applicable Laws” is defined in Section 306.
“AV” is defined in the PILOT Agreement.
“Backbone Infrastructure” means the infrastructure improvements, including roadways, pedestrian paths, and other public rights of way and public access facilities; potable water, sanitary sewer, storm water, electrical, telephone/cable/data and natural gas lines, conduits and facilities; parks; landscaping; public parking; and lighting; and other public facilities and utilities to be constructed and installed by Developer in connection with its development of the Property and South Mare Island Property, the details of which will be set forth in the proposed New Specific Plan.
“Baseline Commercial Square Footage” is defined in Section 204.3. “Baseline Residential Unit Count” is defined in Section 204.3. “Beautification Plan” means the plan for installation of interim landscaping, hardscaping, fencing, lighting and security to be submitted by Developer to City for consideration, and potential approval, as more particularly described in the Scope of Work as well as any such final plan that may be approved by the City, and all amendments and modifications made to such final approved plan, from time to time, as the same may be approved by the City to the extent required. “Beautification Work” means the interim beautification work to be described in the Beautification Plan.
“Building 571 Remediation Work” is defined in Section 210.1. “Building 571 Remediation Agreement” means the agreement to be entered into by City and Developer at Closing of the Initial Conveyance pursuant to which City will commit to complete certain PCB-related remediation activities at the former Building 571 site in the form attached hereto as Exhibit S. “CEQA” is defined in Recital D.
“CERCLA” is defined in Recital E.
“Certificate of Completion” means the City certificate substantially in the form of Exhibit K, evidencing satisfactory completion of all of Developer’s Work, including the Demolition Work, Soil Testing, Connolly Corridor Development Work, Planning Work, Beautification Work, and Site Preparation Work.

OAK #4843-5079-9573 v17 v18
7 “Connolly Corridor” means the approximately three (3)-acre portion of South Mare Island, as generally depicted on Exhibit I.
“Connolly Corridor Development Work” means Developer’s subdivision of parcels and construction and development within the Connolly Corridor area of new buildings, or substantial rehabilitation of existing vacant historic buildings, to accommodate use and occupancy of approximately 45,000 gross square feet of retail space, approximately 29,000 gross square feet of office space, approximately 194,000 square feet of open space, up to 373 multifamily and townhome units, and a hotel including up to 200 rooms. Construction of any Connolly Corridor Development Work will require the submission and approval of such work through the City of Vallejo’s Unit Plan process. As part of that process, Developer will be required to submit detailed architectural, utility and landscape plans.
“Construction Staging Area License” means the irrevocable floating license for periodic use of a construction laydown area to be granted by Developer to City immediately following recordation of the Deed for the Initial Conveyance in substantially the form attached hereto as Exhibit Q.
“Conveyance(s)” is defined in Section 201.
“CRUP(s)” means the recordable covenants to restrict use of the Property, or applicable portion thereof, as a result of the presence on the land of hazardous materials such portion(s) of the Property (or applicable portion thereof) of Hazardous Materials that have been entered or will be entered into in the future by Navy or its successor and the State of California acting by and through the Department of Toxic Substances Control or other environmental regulatory agency in accordance with Health and Safety Code section 25355.5, California Civil Code section 1471, and California Code of Regulations, Title 22 section 67391.1 for purposes of protecting human health, safety, and the environment. “Date of Agreement” is defined in the introductory paragraph preceding the Recitals of this DDA.
“DDA” means this Disposition and Development Agreement. “Deed” means the quitclaim deed for each Conveyance of the Property by City to Developer in substantially the form attached hereto as Exhibit F and defined in Section 201.
“Default” is defined in Section 801.
“Demolition Work” means and includes all work of demolishing the Non-Utilized Buildings, including containing, removing and disposing of all debris, including lead based paint, PCB and asbestos containing materials in accordance with OAK #4843-5079-9573 v17 v18
8 Applicable Laws, including Environmental Laws, as more particularly described in the Scope of Work.
“Deposit” is defined in Section 204.2.
“Designated City Employee” is defined in Section 102.1d. “Designated Developer Employee” is defined in Section 102.2e. “Developer” means The Nimitz Group, LLC, a California limited liability company.
“Developer Conditions Precedent” is defined in Section 206. “Developer Parties” is defined in Section 202.1.
“Developer’s Response” is defined in Section 208.2.
“Developer Title Policy” is defined in Section 206.4.
“Developer’s Work” means and includes all of the Demolition Work, Soil Testing, Connolly Corridor Development Work, Planning Work (including new New Specific Plan and Beautification Plan), Beautification Work and Site Preparation Work that Developer must commence and complete following Closing of the Initial Conveyance, subject to and in accordance with the terms and conditions of this Agreement. Developer’s Work is described with particularity in the Scope of Work.
“DTSC” means the State of California Department of Toxic Substances Control. “Elections Code” means the State of California Elections Code, as amended and modified from time to time.
“EIS/EIR” is defined in Recital D.
“Environmental Laws” means all federal, state and local laws, ordinances, rules and regulations now or hereafter in force, as amended from time to time, in any way relating to or regulating human health or safety, or industrial hygiene or environmental conditions, or protection of the environment, or pollution or contamination of the air, soil, surface water or groundwater, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601 et seq.; the Solid Waste Disposal Act, 42 U.S.C. §6901 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.; the Hazardous Substance Account Act, California Health and Safety Code §25300 et seq.; the Hazardous Waste Control Law, California Health and Safety Code §25100 et seq.; and the Porter-Cologne Water Quality Control Act, California Water Code §13000 et seq.

OAK #4843-5079-9573 v17 v18
13 “Recession” means a quarterly decline in the monetary value of all finished goods and services produced in the United States, as measured by initial quarterly estimates of US Gross Domestic Project (“GDP”) published by the US Department of Commerce Bureau of Economic Analysis (and not BEA’s subsequent monthly revisions), lasting more than two (2) consecutive calendar quarters. Any quarter of positive GDP growth shall end the period of such Recession.
“Reuse Plan” is defined in Recital B.
“ROFO Transfer Agreement” is defined in Section 1025.
“RWQCB’ means the State Water Quality Control Board for the San Francisco region.
“SEIR” is defined in Recital H.
“Schedule of Performance” means the Schedule of Performance attached hereto as Exhibit D.
“Scope of Work” means the Scope of Work attached hereto as Exhibit C describing the scope of the Developer’s Work to be performed by Developer following the Initial Conveyance.
“SEIR Addendum” is defined in Recital M.
“Sewer and Storm System Reimbursement Agreement” means the sewer and storm system reimbursement agreement in substantially the form of the agreement attached hereto as Exhibit R to be executed by Developer and VFWD and recorded against the Property, or applicable portion thereof, at each Closing as provided in Sections 203 and 318 below.
“Site Preparation Work” means the work of importing clean-fillClean-Fill, grading and surcharging the Property so as to raise the elevation of the Property and otherwise prepare the Property for horizontal and vertical development as generally described in the Scope of Work, the details of which will be set forth in the New Specific Plan.
“Soil Testing” means the sampling and testing of soil previously stockpiled by Lennar Mare Island at six locations (i.e. two within Area 14, two within Area 8, one within Area 18 and one within Area 21) as shown on the draft stockpile site plan prepared by ENGEO dated September 2007, to determine its suitability for importation and use as Clean Fill suitable for development of residential or residential mixed-use development.

OAK #4843-5079-9573 v17 v18
24 a. Within the time set forth in the Schedule of Performance, the parties shall cause the negotiation deposit in the amount of Fifty Thousand and No/100 Dollars ($50,000.00) previously made by Developer and currently held by City pursuant to the terms of the ERN to be deposited into Escrow and held as the good faith deposit (“Deposit”) for the transactions contemplated by this DDA. Escrow Agent shall place the Deposit with a federallyinsured state or national bank doing business in the State of California, in an interest bearing account, to the extent elected by Developer. All interest thereon shall become part of the Deposit. The Deposit shall be non-refundable except in the event this Agreement is terminated due to a default by City or the failure of any Developer Conditions Precedent. b. If the Initial Conveyance is consummated, then the Deposit (and all accrued interest thereon) shall be applied towards the Purchase Price. c. If the Initial Conveyance is not consummated for any reason other than default by City hereunder or the failure of a Developer Condition Precedent, then City shall retain the Deposit (and all accrued interest thereon) as provided in Section 803 below. d. If the Conveyance is not consummated due to a default by City hereunder or the failure of a Developer Condition Precedent, and Developer has not elected to bring an action for specific performance, then the Deposit (and all accrued interest thereon) shall be refunded to Developer. Nothing herein shall be construed to prevent or limit any of Developer’s rights or remedies provided under Section 802 of this DDA.

24.3Potential Additional Payment for Property. [TO BE INSERTED] 204.3 Potential Additional Payment for Property. Additional payments to the City may be required to be made by Developer if, following approval of a New Specific Plan (if any), Developer or its successors obtain approval to increase the permitted density of any portion of Mare Island and such increase results in more development than identified in the New Specific Plan as approved by City. Developer will be required to make any such additional payments to the City following a future agreed upon methodology which methodology will be determined and agreed upon by the parties prior to City Council considering approval of the New Specific Plan, Backbone Infrastructure Plan and any new, revised, amended or extended statutory development agreement relating to any portion of Mare Island. If the parties cannot agree on such methodology at that time, the City in its sole discretion may disapprove any proposed New Specific Plan, Backbone Infrastructure Plan, and any proposed new, revised, amended or extended development agreement on any portion of Mare Island. Nothing herein shall be deemed to prevent the parties from agreeing that no additional payment is owed in connection with a particular density increase proposal. 205. City’s Conditions Precedent to Conveyance. City’s obligation to proceed with each Conveyance is subject to the fulfillment or written waiver by City of each and all of the conditions precedent described below (individually and collectively “City Conditions Precedent”), which are solely for the benefit of City, and which shall be fulfilled or waived within the time periods provided for herein:

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28 Developer), and copies of all of the documents underlying the exceptions, Developer shall give City and Escrow Agent written notice (“Title Notice”) of Developer’s approval or disapproval of the legal description and every item or exception disclosed by the Title Report and Survey, if any, and of any title insurance endorsements which Developer requires, provided Developer shall be deemed to have approved the Pre-Approved Exceptions. Developer’s failure to give such Title Notice to City within the Title Review Period shall be deemed Developer’s disapproval of the condition of title to the Property and election to terminate this Agreement. In the event Developer disapproves of any title matter (other than the Pre-Approved Exceptions) shown in the Title Report, City shall, within twenty (20) days after receipt of the Title Notice give Developer written notice (“City’s Response”) of those disapproved title matters, if any, which City is unable or unwilling to eliminate as of Closing. City’s failure to give City’s Response within such time period shall be deemed City’s notice that it will not eliminate any of the disapproved title matters. Developer shall notify City in writing, within ten (10) days after receipt of City’s Response (or within ten (10) days after City is deemed to have refused to eliminate title matters to which Developer has objected) whether Developer is willing to purchase the Property subject to such disapproved exceptions, or is electing to terminate this DDA (“Developer’s Response”).

If Developer so elects to terminate this DDA, Escrow Agent shall immediately disburse the Deposit to City. The failure of Developer to give Developer’s Response to City shall be deemed Developer’s election to terminate this Agreement. City, at Developer’s cost and expense, shall cause any disapproved title matters that City has not objected to in City’s Response, if any, to be removed from title prior to Closing. All monetary liens and exceptions, including without limitation any liens or other exceptions relating to the HUD 108 Loan (collectively, “Monetary Liens”) shall be automatically deemed rejected by Developer. 208.3 New Exceptions. The Pre-Approved Exceptions, together with those exceptions to title approved by Developer as provided herein, are individually and collectively referred to as the “Condition of Title.” If any new exceptions other than Pre-Approved Exceptions, or there are changes with respect to any other exceptions previously approved pursuant to this Section 208 are reported by the Title Company after Developer has approved the Condition of Title pursuant to the foregoing procedures, then any such new exception or changes to an existing exception shall be subject to the same procedures for review and approval set forth above.
209. Property Taxes and Assessments. All ad valorem taxes and assessments, including Existing CFD Special Taxes, levied, assessed or imposed on the Property or part thereof for any period prior to Closing of the Initial Conveyance shall be borne by City. Ad valorem taxes and assessments, including Existing CFD and, if applicable, New CFD Special Taxes, levied or imposed on the Property or part thereof for the period from and after Closing of the Initial Conveyance, and any taxes upon this DDA or the Conveyances, shall be paid by Developer as provided herein and in the Sublease. Developer acknowledges that the Existing CFDs, including CFD 2002-1, impose different special tax rates on property depending upon status and characterization of the property, as provided in the rates and methods of apportionment adopted in connection with the Existing CFDs. If the Closing of the Initial Conveyance occurs on a date other than the first day of the property tax year, the Existing CFD OAK #4843-5079-9573 v17 v18
29 Special Tax payments for the first year shall be prorated between the parties based upon a three hundred sixty-five-(365) day year.
210. Environmental Matters.
210.1 Building 571 Remediation Agreement. As set forth in the Building 571 Remediation Agreement, Developer, during performance of its due diligence work has identified the presence of PCB contaminated soils near the surface of the site of the former Building 571.

City believes that the existence of such contamination within upper most soil levels of the Building 571 site was the result of demolition of former Building 571 and distribution of debris from that activity (“PCB Contaminated Debris”) across the surface of the former Building 571 site. City has notified the City contractors and subcontractors responsible for performance of Building 571 demolition work, including pre-demolition building inspection , of the issue. City shall retain all rights and remedies City has or may have against such contractors and subcontractors, including the right to recover damages from and against such contractor contractors and subcontractors, and Developer shall have no right to share in any damage awards or settlements that City may receive in connection with City’s pursuit of claims against such contractors and subcontractors, if any. Notwithstanding the foregoing, to the extent City’s contractor (and Developer’s contractor in the case of importation of clean fill Clean Fill to replace removed soil) has not completed the work of remediating and removing the PCB Contaminated Debris at the former Building 571 site (“Building 571 Remediation Work”) in accordance with a work plan approved by DTSC (or other applicable regulatory agency) prior to the Closing of the Initial Conveyance, City and Developer shall enter into a Building 571 Remediation Agreement in substantially the form attached hereto as Exhibit S which, among other things, will commit City, at its expense (except to the extent City recovers all or a portion of the costs from the contractors and subcontractors noted above), to complete the Building 571 Remediation Work (other than importation of clean fill Clean Fill to replace removed soil, which fill importation shall be performed by Nimitz Developer at its expense), in accordance with the DTSC-approved work plan, all as more particularly set forth in the Building 571 Remediation Agreement. Except as expressly set forth in this Section 210.1 and the Building 571 Remediation Agreement, from and after the Closing, City shall have no obligations with respect to Hazardous Materials that may be located on, under or about the Property. 210.2 No Warranties as to Property. Developer is purchasing the Property on the basis of Developer’s own investigation of the physical and environmental conditions of the Property and the buildings, improvements and facilities thereon, including subsurface facilities and ground water and soils conditions. Subject to any Navy obligations under the Navy Deed Covenants, Developer assumes the risk that adverse physical and environmental conditions may not have been revealed by its own investigation, and each portion of the Property, including the buildings, improvements and facilities thereon shall be conveyed by City to Developer in its “AS-IS” condition, “WITH ALL FAULTS,” including the presence of Hazardous Materials (whether or not revealed by Developer’s due diligence investigations) and any violations of Applicable Laws, including Environmental Laws, with no warranty expressed or implied by City regarding the presence of Hazardous Materials or the condition of the soil, its geology, the presence of known or unknown seismic faults, title to the Property or the suitability of the OAK #4843-5079-9573 v17 v18
31 after Closing. Nothing herein shall be deemed to relieve Navy of its obligations under the Navy Deed Covenants. Developer’s and City’s obligations under this Section 210, including subsections 210.1 through 210.7 shall survive the Closing and expiration or termination of this DDA.
210.5 Duty to Prevent Further Hazardous Materials Contamination. Both before and after each Closing, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment. Such precautions shall include compliance with all Environmental Laws. In addition, Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with Environmental Laws as to disclosure, storage, use, removal and/or disposal of Hazardous Materials. 210.6 Environmental Inquiries. Both before and after each Closing, Developer shall notify City, and provide to City a copy or copies, of any and all environmental permits, disclosures, applications, entitlements, or inquiries relating to the Property or applicable portion thereof, including notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Environmental Laws. 210.7 Notice of Hazardous Materials Release. In the event of a release of any Hazardous Materials onto or from the Property or any portion thereof, Developer shall, as soon as possible after the release, furnish to City a copy of any and all reports relating thereto and copies of all correspondence with regulatory agencies relating to the release. Developer shall immediately furnish to City a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Property or any portion thereof, including all permit applications, permits, and reports, including those reports and other matters which may be characterized as confidential.
300. DEVELOPER’S POST CLOSING COVENANTS
301. Scope and Schedule for Developer’s Work. Developer shall commence and complete each component of Developer’s Work, consisting of the Demolition Work, Soil Testing, Connolly Corridor Development Work, Planning Work (including New Specific Plan and Beautification Plan), Beautification Work and Site Preparation Work, all as provided in the Scope of Work, within the times established therefor in the Schedule of Performance, subject to Section 1002, subject to delays caused by Force Majeure Conditions as provided in Section 1002. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between Developer and the City Manager, and in all events shall be revised as reasonably required and agreed to by the parties, working in good faith, to address any delays caused by Force Majeure Conditions.
301.1 Reservation of City’s Right to Pursue New Specific Plan. Nothing herein shall be deemed to prohibit City from pursuing approval of a new specific plan with respect to the entirety of Mare Island as allowed by applicable law, if within the time set forth in the Schedule of Performance, Developer fails to obtain City approval of a New Specific Plan as contemplated by this Agreement; provided, however, the effect of any new City-initiated specific OAK #4843-5079-9573 v17 v18
33 the City, and any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Developer, the Property or Developer’s Work, including all Environmental Laws and applicable provisions of CEQA and NEPA; any orders, permits, requirements and approvals of the San Francisco Bay Conservation and Development Commission, DTSC and/or the RWQCB; any and all agreements or approvals from the State of California State Lands Commission and/or the Navy; and any amendments of any of the foregoing (all of the foregoing, collectively, “Applicable Laws”). 307. Prevailing Wages. If and to the extent applicable, Developer shall comply, and shall ensure that its contractors and subcontractors comply, with California Labor Code Section 1720 et seq., including implementing regulations of the Department of Industrial Relations, applicable to public works and payment of prevailing wages, as well as all applicable Federal prevailing wage laws, including the Davis-Bacon Act of 1931, as amended, and implementing regulations (collectively, “Prevailing Wage Laws”) in connection with development of the Property. Without limiting the generality of the foregoing, Developer shall (i) require its contractors and subcontractors to submit certified copies of payroll records to Developer; (ii) maintain complete copies of such certified payroll records; and (iii) make such records available to City and its designees for inspection and copying during regular business hours at the Property or at another location within the City of Vallejo, or deliver copies thereof to City. Developer shall defend (with counsel reasonably acceptable to City), indemnify and hold harmless City and City Parties from and against any and all present and future Claims to the extent arising out of Developer’s failure to comply with all Prevailing Wage Laws, including any and all Claims that may be asserted by contractors, subcontractors or other third party claimants pursuant to California Labor Code Sections 1726 and 1781. Developer hereby waives, releases and discharges City and its employees, officers, volunteers, agents and representatives, from any and all present and future Claims arising out of or in any way connected with Developer’s failure to comply and to cause its contractors and subcontractors to comply with all Prevailing Wage Laws in connection with construction and development of the Property. Developer’s obligations under this Section 307 shall survive the expiration or termination of this DDA. 308. Local Economic Benefits. In connection with the development of the Property, Developer and its successors and assigns and its and their contractors and subcontractors shall comply with the Local Economic Benefit Program Requirements set forth in Exhibit M attached hereto. Developer and its successors and assigns shall report to City the results of its compliance with the Local Economic Benefit Program Requirements not less than annually. Developer’s obligations under this Section 308 and Exhibit M shall survive the Closing and the issuance of the Certificate of Completion.
309. Existing and New Services CFDs; Funding of Services. 309.1 New Community Facilities District Formation. Subject to the terms of this Section 309, the parties shall cooperate in good faith to establish New CFD(s) to replace the Existing CFDs and finance the provision of those CFD Services on Mare Island that may lawfully be financed under the Mello-Roos Act, as implemented and modified by Municipal Code Chapter 14.45 (the City of Vallejo-Mare Island Services Financing Code or the OAK #4843-5079-9573 v17 v18
36 of pocket costs of formation of each New CFD and/or annexation into each Existing CFD. Such advanced costs may include (a) in the case of formation of any New CFD(s), the legal, financial, appraisal and engineering costs and expenses associated with (i) determination of the rate and method of apportionment and levy of the Special Taxes with respect to each New CFD, (ii) determination of the value of property, and (iii) any other costs or expenses reasonably incurred in connection with the New CFD(s); and (b) in the case of annexation of the Navy-Owned Property into the Existing CFDs and annexation of the City-Owned Property into CFD 2005-1A and CFD 2005-1B, the legal, financial, appraisal and engineering costs and expenses associated with such annexations.
309.8 Limited Liability of City. Notwithstanding any other provision of this Agreement, City shall not be liable for or obligated to pay any costs or expenses in connection with formation of, or failure to form, any New CFD(s) or, if one or more New CFD(s) are not established, annexation of the Navy-Owned Property into the Existing CFDs and annexation of the City-Owned Property into CFD 2005-1A and CFD 2005-1B. 309.9 Owner’s Association Financing Mechanism for Public Services. If, for any reason, New CFD(s) have not been formed or, alternatively, annexation of the Navy-Owned Property into the Existing CFDs and annexation of the City-Owned Property into CFD 2005-1A and CFD 2005-1B has not been completed, or Existing CFDs or New CFD(s) have been challenged or repealed, at the time Developer applies to City for permits and entitlements for vertical development on the Navy-Owned Property (or portion thereof), then, City, at its option, may require Developer, prior to issuance of any final map or building permit, to prepare for review and approval a plan for establishment of one or more property owner associations to ensure payment of the on-going costs of services that would otherwise have been funded through the Existing CFD(s). In proposing a particular plan to City, Developer shall demonstrate to the satisfaction of City Manager and City Attorney, or their designee (in their reasonable discretion) that funding of such on-going services costs is assured. The property owner association(s) (and not City) shall be solely responsible for bearing all costs in connection with the provision of such services. City shall be named as an express third party beneficiary under all owner association documents with the right to independently enforce such associations' obligation to pay all costs of such services. The form of Developer's owner association documents, including conditions, covenants and restrictions, shall be subject to review and approval by the City Manager and City Attorney.
309.10 Survival of Obligations. Developer’s obligations under this Section 309 shall survive the Closings and the expiration or termination of this Agreement. 310. Minimum Assessed Value/Property Tax Covenant. As more specifically set forth in the PILOT Agreement, Developer on behalf of itself and its successors and assigns agrees that the assessed valuation of the Mare Island Property on the Minimum Tax Revenue Date (as defined in the PILOT Agreement) will equal or exceed the Minimum Owner Property AV (as defined in the PILOT Agreement) and if not, then Developer and/or its successor(s) will pay City and VUSD beginning on July 1st of the year following the Minimum Tax Revenue Date and each year thereafter, an amount equal to the difference between the property taxes actually OAK #4843-5079-9573 v17 v18
39 pursuing, at its expense, minor amendments to the Existing Specific Plan as needed to accommodate the Interim Permitted Specific Plan Development. 316. Island Energy Facility Relocations. Developer, at its expense, shall be responsible for relocating and/or reconstructing Island Energy electric and gas utility facilities on Mare Island and for obtaining required approvals from Island Energy in connection with Developer’s performance of Developer’s Work and any further development proposed by Developer on Mare Island, all as contemplated by the 2005 Operations Agreements between City and Island Energy regarding distribution of electricity and gas on Mare Island, copies of which have been provided to Developer. Developer’s obligations under this Section 316 shall survive the Closings.
317. Construction Staging Area License. Developer hereby agrees, subject to the terms and conditions of this Section, to grant City, at no cost to City, a Construction Staging Area License in the form attached hereto as Exhibit Q authorizing City to access and use from time to time a portion of the Property for the sole and limited purpose of using such area as a construction lay down area for storage of equipment and materials for major repair and maintenance work that City will perform or cause to be performed from time to time on the Mare Island Causeway Bridge all in accordance with the terms of the Construction Staging Area License.
318. Water and Sewer and Storm System Reimbursement Agreements. As more specifically set forth in the Water System Reimbursement Agreement and Sewer and Storm System Reimbursement Agreement, Developer on behalf of itself and its successors and assigns shall reimburse City and VFWD for the ongoing costs to be incurred by City and VFWD, respectively, in connection with the maintenance and repair of the existing Water Lines and Sewer Lines water and sewer systems (including storm drains) to be retained by City and VFWD, respectively, until such time as Developer or its successors have constructed and installed new Backbone Infrastructure, including new potable and fire suppression water lines, sewer and storm drain lines and ancillary water, sewer and storm drainage facilities and improvements, and such new infrastructure improvements, together with customary easements for same, have been accepted by City or VFWD, as applicable, all as set forth herein and in the Water System Reimbursement Agreement and Sewer and Storm System Reimbursement Agreement. Developer’s obligations set forth in this Section shall survive the Closings and shall be set forth in the Water System Reimbursement Agreement and Sewer and Storm System Reimbursement Agreement to be recorded against the City-Owned Property and Navy-Owned Property, or applicable portion thereof, at the time of each Conveyance. 400. CITY OBLIGATIONS AND RESERVATIONS OF DISCRETION
401. Future Application Processing. Upon submission by Developer of all appropriate applications, processing fees and reimbursement payments for any Future Applications, City shall, to the full extent allowed by Applicable Laws, promptly and diligently, subject to City ordinances, policies and procedures regarding hiring and contracting, commence and complete all steps necessary to act on Developer’s currently pending Future Applications including: (a) upon the written request of the Developer, providing at Developer’s sole cost and OAK #4843-5079-9573 v17 v18
42 costs incurred in the case of professional and consulting services) necessary to review Future Applications and implement and administer this DDA and consummate the transactions contemplated by this DDA, including fees and expenses of outside counsel and other consultants selected by City to assist in terminating the public trust as to those portions of the Property comprised of “trust termination parcels” as described in the State Lands Settlement Agreement; forming the New CFD(s) or, in the alternative, annexing the Navy-Owned Property into the Existing CFDs and annexing the City-Owned Property into CFD 2005-1A and CFD 2005-1B; and, if applicable, forming such new proposed capital CFD or other Backbone Infrastructure financing mechanism as the parties may mutually agree.

Notwithstanding the foregoing, “City Costs” shall expressly exclude any costs, fees, and expenses: (i) arising from third party property damage and/or personal injury claims to the extent caused by the active negligence or willful misconduct or City or any other City Parties, (ii) arising from the breach of this Agreement, any Transaction AgreementDocument, or any other ancillary agreements or contracts between City, on the one hand, and Developer, and/or any Developer Parties, on the other hand (collectively, “Ancillary Agreements”), (iii) arising from the breach of any other agreement or contract by City or any other City Parties, (iv) that are reimbursed by insurance proceeds or third parties, (v) that are expressly stated to be the sole obligation or responsibility of the City or any other City Party pursuant to this Agreement, any Transaction Document, or any Ancillary Agreement, and (vi) that are not substantiated by commercially reasonable cost verification documents; provided the foregoing exceptions shall in no way limit the Developer’s express indemnity obligations under this Agreement. 602. Project Account. Within five (5) business days following the Date of Agreement, Developer shall deposit with City the sum of Two Hundred Thousand Dollars ($200,000) referred to herein as the “Project Account Deposit”. City will hold the Project Account Deposit and replenishments thereof in an interest bearing account reasonably approved by Developer (“Project Account”). All interest earned on the funds in the Project Account shall be added to the Project Account Deposit. City shall be entitled to draw funds from the Project Account solely to pay City Costs consistent with properly submitted Invoices (defined below).

City will promptly provide written notice to Developer in the event the Project Account Deposit falls below Fifty Thousand Dollars ($50,000) in which case Developer shall replenish the Project Account to Two Hundred Thousand Dollars ($200,000) within fifteen (15) business days of receipt of such notice. If Developer fails to replenish the Project Account within such time, City shall have no obligation to continue processing any pending or new Future Applications, incurring any further City Costs or working in connection with the New Specific Plan, Beautification Plan, or any regulatory approval until such time as the additional funds required to supplement the Project Account Deposit have been delivered. Developer acknowledges and agrees that City shall have no obligation to repay or reimburse to Developer any funds that Developer has paid to City for City Costs incurred if for any reason City disapproves one or more of Developer’s planning, entitlement and/or development-related applications. City shall provide the Developer with a detailed accounting of all funds in the Project Account quarterly along with its Invoices submitted pursuant to Section 604 below, and promptly after receipt of written request from Developer, an accounting to be certified by the City Finance Director as being true, correct and complete. The funds in the Project Account shall not be comingled with OAK #4843-5079-9573 v17 v18
44 applicable, the insurance policies set forth in Exhibit L. None of such insurance shall not be construed to relieve Developer or its contractor(s) of any liability in excess of such coverages. 702. Developer’s Indemnity. Developer shall indemnify, defend (with counsel reasonably acceptable to City), protect, and hold City and City Parties harmless from and against any and all Claims, including Claims for any bodily injury, death, or property damage, to the extent directly or indirectly arising or resulting from (i) investigation of the Property as provided for in Section 202.1 above; (ii) the performance of Developer’s Work; (iii) discovery of Hazardous Materials on or about the Property, including requirements for additional remediation work; (iv) the construction and installation of Backbone Infrastructure or development of other horizontal or vertical improvements by or on behalf of Developer; and/or (v) any acts, omissions, negligence or willful misconduct of Developer under this DDA, whether such acts, omissions, negligence or willful misconduct are by Developer or any Developer Parties. Developer’s indemnity obligations under this Section 702 shall not apply to the extent such Claims arise from the active negligence or willful misconduct of City or any City Parties. Developer’s obligations under this Section shall survive the Closings as well as issuance of the Certificate of Completion and any termination of this DDA.
703. Cooperation and Indemnity in the Event of Legal Challenge. In the event any third party or other governmental entity or official institutes a court action or proceeding challenging the validity of this DDA or any provision hereof or City’s approval of this DDA, including any of the Transaction Documents or any CEQA documents or findings in connection therewith, or any land use approvals or entitlements for development of all or any portion of the Property or South Mare Island Property, City and Developer, at Developer’s sole cost and expense, shall cooperate in the defense of such action, and City shall, upon request of Developer, appear in the action and defend its decision at Developer’s sole cost and expense, except that City shall not be required to be an advocate for Developer. Developer shall indemnify, defend (with counsel reasonable reasonably acceptable to City), hold harmless and reimburse City, within fifteen (15) business days following Developer’s receipt of City’s detailed written demand therefor (which shall include copies of all applicable invoices and other non-privileged information), which may be made from time to time during the course of such litigation or other legal proceeding, all actual and reasonable costs incurred by City in connection with the legal challenge, including City’s reasonable attorneys' fees and costs, expert witness and consultant fees, and administrative, legal, and court costs. Developer’s obligations under this Section 703 shall survive the Closings and shall include the obligation to indemnify, defend, and hold harmless City and its officials and employees from and against any Claims assessed or awarded against City by way of judgment, settlement, or stipulation, including any attorneys’ fees or costs awarded against City under any applicable statute, including Code of Civil Procedure Section 1021.5, by way of judgment, settlement, or stipulation. Nothing herein shall authorize Developer to settle any legal challenge on terms that would constitute an amendment or modification of this DDA, or any land use approvals or entitlements for development, unless such amendment or modification is approved by City in accordance with applicable legal requirements, and City reserves its full discretion with respect thereto.

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46 THEREFORE, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE

DATE OF AGREEMENT, IN THE EVENT OF A CLOSING FAILURE, CITY SHALL

RETAIN THE DEPOSIT AND SUCH AMOUNT SHALL SERVE AS LIQUIDATED DAMAGES TO CITY FOR SUCH CLOSING FAILURE. RETENTION OF THE DEPOSIT SHALL BE THE CITY’S SOLE AND EXCLUSIVE REMEDY AGAINST

DEVELOPER IN THE EVENT OF A CLOSING FAILURE, AND CITY WAIVES ANY

AND ALL RIGHT TO SEEK OTHER RIGHTS OR REMEDIES AGAINST
DEVELOPER, INCLUDING WITHOUT LIMITATION, SPECIFIC PERFORMANCE; PROVIDED, HOWEVER, ALL OF DEVELOPER’S OBLIGATIONS TO INDEMNIFY

CITY AS PROVIDED HEREIN THAT, BY THEIR TERMS, EXPRESSLY SURVIVE

THE TERMINATION OF THIS AGREEMENT, SHALL BE SEPARATE,

ADDITIONAL, AND INDEPENDENT OBLIGATIONS OF DEVELOPER SURVIVING THE TERMINATION OF THIS AGREEMENT.
803.1 Statutory Acknowledgments Regarding Liquidated Damages Remedies. THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION 803 ARE

NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF SECTIONS 3275 OR 3369 OF THE CALIFORNIA CIVIL CODE, BUT ARE INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO CITY PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. BY PLACING THEIR INITIALS BELOW,

DEVELOPER AND CITY SPECIFICALLY CONFIRM THE ACCURACY OF THE

STATEMENTS MADE ABOVE, THE REASONABLENESS OF THE AMOUNT OF

LIQUIDATED DAMAGES AGREED UPON, AND THE FACT THAT EACH PARTY WAS

REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION.

INITIALS: _________ ______________

CITY DEVELOPER
804. Acceptance of Service of Process. In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the City Clerk of City or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made by personal service upon Developer’s registered agent for service of process in California, at or in such other manner as may be provided by law. 805. Termination. In addition to the automatic termination provided for under Sections 202.3 and 208.2 above, this Agreement may be terminated if there is an uncured Default, after notice from the party not in default and expiration of all cure periods. 806. Additional City Remedy Following Conveyance - Option to Repurchase, Reenter and Repossess.
806.1 City Option. Subject to the terms of this Section 806, City shall have the right at its option to repurchase, reenter and take possession of the Property (with all OAK #4843-5079-9573 v18
Exhibit C Page 1

Exhibit C

SCOPE OF WORK
I. PLANNING WORK
A. Beautification Plan and Beautification Work. Within the time set forth in the Schedule of Performance, Developer will submit to City for review, input and comment, refine based on City’s comments, and submit (and, if necessary, revise and resubmit one or more times) to City for consideration and potential approval a proposed Mare Island Beautification Plan for installation of interim landscaping; hardscaping; and fencing, lighting and security; which may include elements such as trees and flowers, public seating, and public art; with particular emphasis on the Mare Island Causeway Bridge and Highway 37 entry points to Mare Island and North Mare Island and also portions of South Mare Island as set forth below. The quality and scope of Beautification Work to be performed at the Causeway Bridge and Highway 37 entry points to Mare Island and at the Property will be generally commensurate with the illustrative interim landscaping examples submitted by Developer to City in the “Island Beautification – Potential Areas of Island Beautification” packet prepared by HOK Architects submitted to City on or about February 1, 2022. In the event City approves the proposed Beautification Plan then Developer will commence and complete the Beautification Work described in the City-approved Beautification Plan in two phases as set forth in the Schedule of Performance, with the first phase consisting of the Causeway Bridge and Highway 37 entry point work and the second phase consisting of work on the remaining portions of Mare Island, including the Property. The Parties acknowledge and agree that given the scale of the South Mare Island Property the interim Beautification Work shall address major public gathering points and connectivity corridors in and around South Mare Island but not all of the land comprising the South Mare Island Property.

For avoidance of doubt, the Parties further acknowledge and agree that since the landscaping and hardscaping work to be constructed and installed by Developer in connection with the Connolly Corridor Development Work will be permanent in nature, the Beautification Plan does not need to address the Connolly Corridor area.

B. New Specific Plan Work (Entirety of Mare Island). Within the time set forth in the Schedule of Performance, Developer will submit to City for review and consideration of approval a proposed New Specific Plan for Mare Island, which New Specific Plan shall include a plan for phased installation and construction of Backbone Infrastructure to serve all new development and redevelopment contemplated by the New Specific Plan. The New Specific Plan will cover the entirety of Mare Island, including those portions owned or controlled by Developer or its affiliates, including the Property and the South Mare Island properties which Developer or its affiliates have acquired or are under contract to acquire from Lennar Mare Island, LLC, which plan shall include all requisite statutory requirements per Government Code Section 65421 and address, among other items, the following: a range of permitted land uses which are potentially to include commercial, retail, residential, office, hotel, industrial, community/civic and recreational uses, and the timing for construction and installation of Backbone Infrastructure. The infrastructure sections of the New Specific Plan will specify that substantially all existing utility and related infrastructure will need to be decommissioned and replaced and not reused or repurposed to serve new development on Mare Island. Developer’s proposed New Specific Plan shall also address all requirements associated with the interfacing OAK #4843-5079-9573 v17 v18
Exhibit K Page 1
Exhibit K

CERTIFICATE OF COMPLETION
Recording Requested By
And When Recorded Mail To:

City of Vallejo
P.O. Box 3068
555 Santa Clara Street
Vallejo, CA 94590
Attn: City Clerk
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(Space Above This Line for Recorder’s Use Only)
[Exempt from recording fee per Gov. Code § 27383]

CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (“Certificate”) is made by the CITY OF VALLEJO, a California municipal corporation (“City”), in favor of __________________, a _________________________________ (“Developer”), as of the date set forth below. Certain terms used but not defined herein shall have the meaning provided in Section 101 of the Disposition and Development Agreement described in Recital A below.

RECITALS
A. City and Developer have entered into that certain Disposition and Development Agreement (“DDA”) dated _______________, 2022, concerning the purchase and sale of, and performance of planning and pre-development work with respect to, certain real property constituting of an approximately ________-acre portion of North Mare Island, as more fully described in Attachment No. 1 attached hereto and made a part hereof (the “Property”).

B. As referenced in Section ____ 1022 of the DDA, upon Developer’s satisfactory completion of Developer’s Work and fulfillment of certain of its other obligations under the DDA, City is required to furnish Developer or its successors with a Certificate of Completion, which Certificate is required to be in such form as to permit it to be recorded in the Recorder’s Office of Solano County. This Certificate is conclusive determination of Developer’s satisfactory completion of ___________, ______________, and _____________.

C. City has conclusively determined that all such Developer’s Work [Insert: “other than the Site Preparation Work” if that work is addressed in separate recordable agreement] has been satisfactorily completed.

NOW, THEREFORE, City hereby certifies as follows:

1. Developer’s Work consisting of the Soil Testing, Planning Work (including new Specific Plan and Beautification Plan), Beautification Work, Demolition Work, Connolly OAK #4843-5079-9573 v18 Exhibit R Page 1
Exhibit _R

FORM OF SEWER SYSTEM REIMBURSEMENT AGREEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

Vallejo Flood and Wastewater District
450 Ryder Street
Vallejo, CA 94590
Attn: District Manager
Record for the Benefit of
Vallejo Flood and Wastewater District
Pursuant to Government Code
Section 27383
Space Reserved for Recorder's Use Only

SEWER AND STORM DRAIN SYSTEM REIMBURSEMENT AGREEMENT
This SEWER AND STORM DRAIN SYSTEM REIMBURSEMENT AGREEMENT (“Agreement”) is made and entered into as of ______________________, 2022 (“Effective Date”), by and between the VALLEJO FLOOD AND WASTEWATER DISTRICT, a sanitation and flood control district created by the State of California (“VFWD”), and THE NIMITZ GROUP, LLC, a California limited liability company (“Developer”).

Recitals
The following Recitals are a substantive part of this Agreement.

A. The City of Vallejo (“City”) and Developer are parties to that certain Disposition and Development Agreement (“DDA”) dated ______________, 2022, recorded in the Official Records of the County of Solano as Instrument No. _____________, which provides, among other things, for (i) City’s phased conveyance to Developer of approximately 157 acres of real property comprising a portion of Mare Island Reuse Area 1-A, consisting of the City-Owned Property and Navy-Owned Property (collectively, the “Property”), as described in the DDA, excluding certain existing storm drain and sanitary sewer lines and ancillary above and below ground facilities and improvements, including but not limited to sanitary sewer lift stations, storm drain lines, and storm drain pump stations (collectively, “Sewer/Storm Facilities”) located on and under such Property; (ii) Developer’s construction and installation of new backbone infrastructure improvements, including roadways, pedestrian paths, and other public rights-of-way and public access facilities; potable water, sanitary sewer, storm water, electrical, telephone/cable/data and OAK #4843-5079-9573 v18 Exhibit R Page 2
natural gas lines, conduits and facilities; parks; landscaping; public parking; and lighting; and other public facilities and utilities in connection with Developer’s development of the Property; and (iii) Developer’s commitment, on behalf of itself and its successors and assigns, to reimburse VFWD for the costs incurred by VFWD in connection with the ongoing maintenance and repair of such existing Sewer/Storm Facilities, until such time as Developer or its successors or assigns have either confirmed with VFWD that the existing Sewer/Storm Facilities are adequate and/or have upgraded or replaced the existing Sewer/Storm Facilities with new storm drain and sanitary sewer facilities and improvements and such new facilities and improvements, together with customary easements for same, have been accepted by VFWD. Nothing herein shall be deemed to prohibit VFWD and Developer from pursuing alternatives to public dedication of new facilities and improvements, including establishment of privatized utility systems, to the extent acceptable to VFWD and Developer, each in its sole and absolute discretion. Capitalized terms not otherwise defined herein shall have the meanings set forth in the DDA.

B. Concurrently herewith, City is conveying to Developer the City-Owned Property described in Attachment No. 1 attached hereto and incorporated herein so that Developer may undertake certain planning related work and thereafter undertake comprehensive redevelopment of the City-Owned Property and, following Developer’s acquisition of the Navy-Owned Property from City as provided in the DDA, the balance of such Property, all as provided in the DDA.

C. City has agreed to provide Developer requested flexibility under the DDA regarding timing of development of the Property on the condition that Developer commit to reimburse VFWD for the ongoing costs to be incurred by VFWD in connection with the maintenance and repair of the existing Sewer/Storm Facilities until such time as Developer or its successors or assigns have either confirmed with VFWD that the existing Sewer/Storm Facilities are adequate and/or have upgraded or replaced such existing Sewer/Storm Facilities with new storm drain and sanitary sewer lines and ancillary above and below ground facilities and improvements and such new facilities and improvements, together with customary easements for same, have been accepted by VFWD, all as set forth herein and in the DDA.

NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the parties hereby agree as follows:

Agreements

1. Term. The term (“Term”) of this Agreement shall commence on the Effective Date set forth above and shall continue in effect until such time as Developer has upgraded and/or replaced all of the existing Sewer/Storm Facilities with new storm drain and sanitary sewer lines and ancillary above and below ground facilities and improvements and such new facilities and improvements, together with required easements for same, have been accepted by VFWD. As and when all of the existing Sewer/Storm Facilities are upgraded and/or replaced by Developer and accepted by VFWD, VFWD upon written request of Developer, shall execute and record a notice of termination or other similar instrument evidencing the termination of this Agreement as to the Property or portion thereof, as applicable.

OAK #4843-5079-9573 v18 Exhibit R Page 3

2. Reimbursement Obligation. For the Term of this Agreement, Developer, at its sole cost and expense, shall bear all actual labor and materials costs and expenses directly or indirectly incurred or payable by VFWD in connection with maintenance and repair of the existing Sewer/Storm Facilities (“Eligible Costs”); provided, that such Eligible Costs shall not exceed $175,000.00 in any calendar year (the "Eligible Cost Cap”); provided further, that the Eligible Cost Cap shall be inclusive of any and all taxes and fees paid by Developer to VFWD. By way of example only, if Developer pays $100,000 in fees to VFWD during a calendar year, Developer shall be obligated to reimburse VFWD for $75,000 in Eligible Costs (i.e., the Eligible Cost Cap minus feed paid by Developer to VFWD). VFWD shall prepare a detailed annual budget of anticipated Eligible Costs (the “Annual Budget”) and shall present such Annual Budget to Developer for approval no later than 90 days before the end of the then-current calendar year. Any Eligible Costs not included in the Annual Budget (i.e., in excess of the Eligible Cost Cap) must be mutually agreed upon by Developer and VFWD. The scope of anticipated maintenance and repair work includes, by way of illustration and without limitation, the tasks and services described in Attachment No. 2 attached hereto and incorporated herein. Developer acknowledges that the existing Sewer/Storm Facilities may be well beyond their anticipated useful life and that Developer’s decision to delay development of the Property and associated upgrading and/or replacement of the existing Sewer/Storm Facilities is likely to result in escalating maintenance and repair costs over time. VFWD shall have the right to perform Sewer/Storm Facilities maintenance and repair work with its own staff and/or outside contractors as reasonably determined by VFWD if such maintenance and repair work is covered in the Annual Budget. If VFWD utilizes outside contractors to perform such work, those contractors will be properly licensed and insured and selected through applicable VFWD contracting procedures, including competitive bidding to the extent applicable. To the extent Sewer/Storm Facilities maintenance and repair work is performed by VFWD personnel, Developer shall pay the fully-loaded hourly cost of such personnel at the then current hourly rates for such personnel as reasonably determined by VFWD. For convenience of reference, the fully loaded hourly rates for VFWD staff as of the Effective Date are listed in the Hourly Rate Sheet attached hereto as Attachment No. 3 and incorporated herein. Developer acknowledges that the rates set forth in the Hourly Rate Sheet will be adjusted annually by VFWD and VFWD, upon request by Developer from time to time during the Term, shall provide Developer with a copy of VFWD’s then current Hourly Rate Sheet.

To the extent Sewer/Storm Facilities maintenance and repair work is performed by third-party contractors, Developer shall pay the actual out-of-pocket costs of such work, plus an administrative fee equal to 20% of the cost of such work. Developer’s obligation to reimburse VFWD for Eligible Costs incurred by VFWD during the Term, subject to the Eligible Cost Cap, shall survive the expiration or termination of this Agreement.

3. Deposit and Payment.
a. Deposit. Upon execution of this Agreement, Developer shall deposit with VFWD the sum of Fifty Thousand Dollars ($50,000) in cash or other immediately available funds acceptable to VFWD (“Deposit”). The Deposit shall be held by VFWD in a non-interest bearing account. The Deposit is not a “source of income” within the meaning of the California Political Reform Act (pursuant to California Government Code Section 87103.6).

OAK #4843-5079-9573 v18 Exhibit R Page 4
b. Payment Process. VFWD is authorized to pay or deduct from the Deposit all reasonably incurred Eligible Costs, whether incurred for work performed by a third-party contractor or for work performed by VFWD personnel. VFWD shall maintain reasonably detailed records of all Eligible Costs, which shall be available for review by the Developer upon the Developer’s request. If the Eligible Costs are incurred for work performed by a third-party contractor, such records will consist of bills, invoices or demands for payment prepared by the third-party contractor describing in reasonable detail the work performed and the costs for such work. If the Eligible Costs are incurred for work performed by VFWD personnel, such records will consist of a reasonably detailed description of the work, the VFWD personnel that performed the work, and the Hourly Rate(s) of the VFWD personnel that performed the work. Such records of Eligible Costs, whether received from a third-party contractor or prepared by VFWD, are referred to herein as “Invoices.” VFWD may draw upon the Deposit to pay any Invoice within thirty (30) calendar days of the Invoice date (or such longer time period as provided under the applicable Invoice) to the extent sufficient Deposit funds are available. If the amount of any unpaid Invoice(s) exceeds the available Deposit funds, VFWD shall promptly notify Developer in writing, and Developer shall have twenty (20) business days after the date of VFWD’s notice to deposit with VFWD cash or other immediately available funds reasonable acceptable to VFWD to cover any such Invoice(s), which notice shall include copies of applicable Invoices. Notwithstanding anything to the contrary contained herein, Developer shall only be obligated to deposit the amount of the Eligible Cost Cap each calendar year.
c. Deposit Replenishment. If at any time the funds in the Deposit amount to less than Twenty-Five Thousand Dollars ($25,000), Developer shall replenish the Deposit to the full amount set forth in subsection 3.a. above, by remitting to VFWD cash or other immediately available funds reasonably acceptable to VFWD in the required amount within twenty (20) business days following VFWD’s written demand therefor. Developer’s failure to timely replenish the Deposit will result in a Late Charge in accordance with Section 3.d.
d. Late Charge. Late replenishment of the Deposit, or late payment by VFWD of any Eligible Costs due to the insufficiency of the Deposit, will cause VFWD to incur additional costs, including administration and collection costs and processing and accounting of expenses (“Delinquency Costs”). If Developer has not timely replenished the Deposit or timely paid Eligible Costs as provided in this Agreement, Developer shall immediately be charged a late charge of ten percent (10%) of the delinquent amount (“Late Charge” or “Late Charges”). VFWD is authorized to deduct any and all Late Charges from the Deposit. VFWD and Developer recognize that all expenses VFWD may suffer as a result of Developer's failure to make timely payments is difficult to ascertain and agree that the ten percent (10%) late charge represents a reasonable estimate of the Delinquency Costs that would be incurred by VFWD by reason of late payment by Developer. Late Charges are in addition to any penalties, late charges, and/or interest assessed by third parties under any Invoice. VFWD's acceptance of any Late Charge does not prevent VFWD from exercising any rights and remedies available under this Agreement, at law, or in equity, all of which are and shall remain available to VFWD.

OAK #4843-5079-9573 v18 Exhibit R Page 5
e. Interest on Unpaid Amounts. In the event Developer fails to timely reimburse VFWD for Eligible Costs, any unpaid amount shall accrue interest at ten percent (10%) per annum, compounded annually, or the maximum amount allowed under applicable law, whichever is less.

Interest on unpaid amounts is in addition to any Late Charges assessed by VFWD, as well as late charges, penalties, and/or interest assessed by third parties under any Invoice. f. Return of Deposit. Within thirty (30) days following expiration or termination of this Agreement, VFWD shall refund that portion of the Deposit (if any) that has not been expended or committed by VFWD.

4. Notice of Maintenance and Repair Work. VFWD shall provide Developer with at least forty-eight (48) -hours prior notice of scheduled Sewer/Storm Facilities maintenance and repair work, except in case of (i) routine maintenance work (i.e., work that occurs on a regular schedule), in which case, VFWD shall only be required to notify Developer at the outset of such work, or (ii) emergency repairs, in which case VFWD shall endeavor to provide e-mail notice to Developer prior to commencing such work.

VFWD’s failure to provide such prior notice shall not relieve Developer of its obligation to reimburse VFWD for the Eligible Costs of such work. Developer shall provide contact information for notification by VFWD that will be the Developer’s responsibility to keep updated.

5. Recording; Amendment upon Acquisition of Navy-Owned Property. This Agreement shall be recorded with the County of Solano Recorder's Office upon execution. Upon City’s acquisition of fee title to the Navy-Owned Property or portion thereof from the Navy and conveyance thereof to Developer pursuant to the DDA, VFWD and Developer, upon request by either party, shall execute and record an amendment to this Agreement to add the Navy-Owned Property or portion thereof to the property which is the subject of this Agreement as of the Effective Date.

6. Covenants Run with the Land. All covenants contained in this Agreement shall be covenants running with the land, but only for the duration of the Term, and thereafter shall be of no further force or effect. All covenants in this Agreement shall be binding for the benefit of the VFWD and such covenants shall run in favor of the VFWD for the Term, without regard to whether the VFWD is or remains an owner of any land or interest therein to which such covenants relate, but only for the duration of the Term.

7. Statement of Good Faith. The parties acknowledge and agree the payment obligations established by this Agreement were negotiated in good faith in recognition of and with due consideration of the cyclical nature of the real estate development business. Each party was represented by counsel in negotiation and preparation of this Agreement and has entered into this Agreement after full and due consideration and with the advice of its counsel and its independent consultants.

8. Notices. All notices, consents, requests, or other communications provided for or permitted to be given hereunder by a party must be in writing (which may include email) and will be deemed to have been properly given or served upon the personal delivery thereof, via courier delivery service, upon actual OAK #4843-5079-9573 v18 Exhibit R Page 6
receipt of an email, or otherwise. Such notices shall be addressed or delivered to the parties at their respective addresses shown below.

To Developer: The Nimitz Group, LLC
c/o Southern Land Company
1195 Walnut Ave
Vallejo, CA 94592
Attn.: Andrea Jones
Telephone: (707) 356-8810
Email: [email protected]
With a copy to: The Nimitz Group, LLC
c/o Southern Land Company
Attn.: Legal Department
3990 Hillsboro Pike, Ste. 400
Nashville, TN 37215
Email: [email protected]
To VFWD: Vallejo Flood and Wastewater District
450 Ryder Street
Vallejo, CA 94590
Attn: Melissa Morton, District Manager
Telephone: (707) 644-8949
Email: ________________
With a copy to: Daniel P. Doporto
The Law Office of Daniel P. Doporto
3478 Buskirk Avenue, Suite 1000
Pleasant Hill, CA 94523
Telephone: 510-368-6413
Email: [email protected]

9. Representations of VFWD. VFWD represents and warrants to Developer (i) it has secured all approvals necessary to duly authorize the execution, delivery and performance of this Agreement and its obligations hereunder, and (ii) it is not prohibited from entering into this Agreement and discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement by the terms, conditions or provisions of any law, any order of any court or other agency or authority of government, or any agreement or instrument to which VFWD is a party or by which VFWD is bound, and (iii) this Agreement is a legal, valid and binding obligation of VFWD and is enforceable in accordance with its terms.

10. Representations and Covenants of Developer. Developer represents and warrants to VFWD (i) it is duly organized and is authorized to conduct business in the State of California, and (ii) it is authorized and has the power under the laws of the State of California to enter into this Agreement and the transactions contemplated hereby, and possesses the necessary capacity, expertise, and financial and other resources to perform and carry out all covenants and obligations on its part to be performed under and OAK #4843-5079-9573 v18 Exhibit R Page 7
pursuant to this Agreement, and (iii) the performance of its obligations hereunder will not violate, result in a breach of, or constitute a default under, any agreement or instrument to which such Developer is a party or by which Developer is bound, and this Agreement is a legal, valid and binding obligation of such Developer enforceable in accordance with its terms. During the Term of this Agreement, Developer will not voluntarily seek to invalidate this Agreement.

11. VFWD’s Enforcement Rights; Mortgagee Protection. In the event Developer fails to make any payment to VFWD by the date such payment is due, VFWD shall have a lien on the Property, or applicable portion thereof, for the amount of such Eligible Costs, which lien shall be perfected by the recordation of a “Notice of Claim of Lien” against the Property or applicable portion thereof. Any lien in favor of VFWD created or claimed hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in good faith and for value, recorded on title to the Property as of the date of the recordation of the Notice of Claim of Lien, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority of any such mortgage or deed of trust. VFWD may also pursue any and all other remedies available in law or equity in the event of a breach of Developer’s obligations and covenants set forth herein.

12. Miscellaneous.
(a) Relationship. Nothing contained herein, shall be construed as creating a relationship of principal and agent, employer or employee, partnership, joint venture, or other relationship between VFWD and Developer.
(b) Attorneys’ Fees. If, by reason of any default on the part of any party in the performance of its respective obligations hereunder, the non-defaulting party employs one or more attorneys, the defaulting party shall pay the non-defaulting party’s reasonable costs, expenses, and attorneys’ fees reasonably expended or incurred by the non-defaulting party in connection therewith, whether or not suit is instituted.
(c) Non-Waiver. The failure of any party to exercise any of its rights under this Agreement or to insist upon strict performance of any of the provisions of this Agreement shall not be construed as a waiver of any such right or of any subsequent default of the same or a similar nature.
(d) Severability. Invalidation of any one of the provisions of this Agreement shall in no way affect any other provision each of which shall remain in full force and effect. (e) Entire Agreement. This Agreement is fully integrated and contains the entire agreement between the parties as to the subject matter hereof. There are no representations, inducements or promises of any kind other than expressly stated herein. This Agreement may not be modified except by a writing signed by all parties.
(f) Construction and Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of California, without reference to choice of laws principles, and, unless otherwise required by applicable law, the parties agree that any action brought by either party under or in relation to this Agreement, including without limitation to interpret or enforce any provision of this Agreement, shall be brought in, and each party agrees to and does hereby submit to the jurisdiction and venue of, any state court located in Solano County, California, or, if there is federal jurisdiction, the United States District Court (Eastern District) Sacramento. This Agreement is OAK #4843-5079-9573 v18 Exhibit R Page 8
deemed to be joint work product of the parties, and shall not be construed against any particular party as the drafter.
(g) Captions. The captions in this Agreement are for convenience and ease of reference only, and in no way define or limit the intent of this Agreement. (h) Incorporation of Recitals and Attachments. The recitals of this Agreement and the attachments hereto are hereby incorporated into the body of this Agreement as though fully set forth herein.
(i) Independent Representation. Each of the parties to this Agreement is equally sophisticated. Each has conducted an independent investigation of all facts and circumstances they consider necessary or desirable. And each has consulted with its respective attorneys and advisors, to the extent it considers necessary or desirable, before entering into this Agreement. [Remainder of page intentionally left blank]
[Signatures on next page]
OAK #4843-5079-9573 v18 Exhibit R Page 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written above.

VFWD:

VALLEJO FLOOD AND WASTEWATER
DISTRICT, a sanitation and flood control district
created by the State of California
By:__________________________________
Print Name:___________________________
Its:__________________________________
[Signature must be notarized]
ATTEST:
_________________________________
_____________, District Secretary
APPROVED AS TO FORM:
_________________________________
Daniel P. Doporto, Special Counsel
DEVELOPER:

THE NIMITZ GROUP, LLC, a California limited
liability company
By: ______________________________
[Signature must be notarized]
Print Name: ________________________
Its: _________________________
OAK #4843-5079-9573 v18 Exhibit R Page 10

NOTARY ACKNOWLEDGMENTS
To be inserted
OAK #4843-5079-9573 v18 Exhibit R Page 11
ATTACHMENT NO. 1

PROPERTY LEGAL DESCRIPTION
To be inserted
OAK #4843-5079-9573 v18 Exhibit R Page 12
ATTACHMENT NO. 2

ILLUSTRATIVE LIST OF MAINTENANCE AND REPAIR SERVICES
Sanitary Sewer and Storm Drain Systems
• Corrective Maintenance
• Preventative Maintenance (provided such work is detailed in the Annual Budget and agreed to by Developer)
• Jetting/Cleaning
• CCTV/Inspection
• Repairs
o Pipe break
o Blockage/obstruction
o Pipe burst
o CIPP
o Remove and replace
o Surveying
o Maintenance Hole rehabilitation/coating/replacement
• Lift Station - L Street, DOM 2, and Pump Station - Storm 15 o Pump maintenance and repair and, if needed, rehabilitation/replacement  Pump parts maintenance and repair and, if needed,
rehabilitation/replacement
o Motor maintenance and repair and, if needed, rehabilitation/replacement OAK #4843-5079-9573 v18 Exhibit R Page 13
ATTACHMENT NO. 3

HOURLY RATE SHEET
(IN EFFECT FOR FISCAL YEAR 2021/22)
OAK #4843-5079-9573 v18 Exhibit R Page 14
OAK #4843-5079-9573 v17 v18
Exhibit S

Exhibit S
BUILDING 571 REMEDIATION AGREEMENT
OAK #4843-5079-9573 v18 Exhibit S - Attachment 1 Page 1 ATTACHMENT 1
Map of Building 571 Site
OAK #4843-5079-9573 v18 Exhibit S - Attachment 3 Page 1 ATTACHMENT 3
PCB Excavation Areas
ACTION ITEM 9.C.

DATE: March 22, 2022
TO: Mayor and Members of the City Council
FROM: Mike Malone, Interim City Manager
Veronica A.F. Nebb, City Attorney
SUBJECT: POLICE OVERSIGHT MODEL PUBLIC OUTREACH PLAN

RECOMMENDATION
Staff recommends that the City Council receive and provide input, if any, on the public outreach/community engagement plan for police oversight.

REASONS FOR RECOMMENDATION
The City Council, the Vallejo Police Department and City Leadership staff have made a firm commitment to our ongoing police reform efforts. One of the key aspects of our ongoing efforts is the establishment of a model of independent oversight for the Vallejo Police Department. In working toward this effort, staff has committed to a robust community engagement program that provides multiple input points for the entire community, does not pre-determine or assume any preferred model and does not, in any way, seek to restrict the input of our community and interested stakeholders. Staff believes that the proposed public outreach plan achieves the goals of inclusion, diversity and the honest opportunity for input desired by our community.

BACKGROUND AND DISCUSSION
The City engaged the services of the OIR Group to conduct an Independent Assessment of the Operations, Internal Review Systems and Agency Culture of the Vallejo Police Department in 2019. In May of 2020, the OIR Group provided its written report and recommendations (OIR Report).

A staff team has been working with the California Department of Justice, through a cooperative agreement, on implementation measures relating to the recommendations in the OIR Report. Recommendation 45 of the OIR report provides that “VPD should work with City leadership to create a model of independent oversight specifically tailored to meet the needs of Vallejo.”
Based upon the City’s clear commitment to the goals of collaborative reform of the police department and the desire for input from all segments of the community, we have prepared a community engagement plan that we believe will provide meaningful input into the process of developing a police oversight model that is specifically tailored to meet the needs of Vallejo.

The key components of the Plan are as follows:

March 2022 - City Manager and City Attorney to prepare matrix of key components of oversight models keeping in mind the goals of collaborative reform and the City’s commitment to independent oversight By end of March 2022– City Communications staff to prepare and launch a web location for the process to include:
 A central location where the public may provide written input; Date: March 22, 2022
Subject: POLICE OVERSIGHT MODEL PUBLIC OUTREACH PLAN

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Vallejo City CouncilMarch 22, 2022

Vallejo City Council
March 22, 2022