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Item No. 03 - Purchase and Sale Agreement with Mark Development
Staff Report City of San Bernardino Request for Council Action Date: May 20, 2020 To: Honorable Mayor and City Council Members From: Teri Ledoux, City Manager By:Michael Huntley, Community & Economic Development Director Subject: Purchase and Sale Agreement with Mark Development Recommendation It is recommended that the Mayor and City Council, in the capacity as the Successor Agency to the Redevelopment Agency of the City of San Bernardino, California, adopt Resolution No. 2020-91 approving the Purchase and Sale Agreement and Joint Escrow Instructions between the Successor Agency to the Redevelopment Agency of the City of San Bernardino and Mark Development, LLC, a California limited liability company, with respect to the real property located on the north by Highland Avenue, between Arden th Avenue and Guthrie Avenue, and on the south by 20 Street, between Arden Avenue and Guthrie Avenue, San Bernardino, California (APNs 1191-021-01, 1191-021-11 to 69, 1191-041-17 to 22, and 1191-041-25 to 32), and approving certain related actions. Background section 34172 (a) (1), the Redevelopment Agency of the City of San Bernardino was dissolved and the Mayor and City Council of the City of San Bernardino elected to serve in the capacity of the Successor Agency to -Range Property Ma certain properties (APNs 1191-021-01, 1191-021-11 to 1191-021-69, 1191-041-17 to 22, and 1191-041-25 to 32) were not included within the LRPMP due to lengthy negotiating with DOF as whether or the properties were housing assets or assets of the Successor Agency and should be included within the LRPMP. In 2016, after the LRPMP was approved by DOF, DOF made their final determination that the properties were not housing assets and should have been included within the approved LRPMP. Therefore, consistent with the applicable provisions of HSC section 34177 (e), said certain properties must be sold. The Successor Agency is the owner of approximately 17.43 acres of vacant land located on the north by Highland Avenue, between Arden Avenue and Guthrie Avenue, and on the south by 20th Street, between Arden Avenue and Guthrie Avenue, San Bernardino, California (APNs 1191-021-01, 1191-021-11 to 1191-021-69, 1191-041-17 to 22, and 1191-041- Page 1 6725 The City has been negotiating the disposition and development of the Property consistent with the City's 2006 Section 108 Loan with the United States Department of Housing and Urban Development regarding the Property (the "HUD Contract") since January 2011 (a more detailed summary of the history of negotiations from 2011 to 2019 is attached as Attachment 1). On May 1, 2017, the Mayor and City Council approved an Exclusive Right to Negotiate - commercial development of the Property and on November 15, 2017, the 2017-ERN Agreement was amended to extend its term to November 30, 2018, in order for MD to refine certain performance obligations. On November 30, 2018, the 2017-ERN Agreement expired. Following its expiration, MD requested additional time from the City to refine the number of prospective tenants updated numbers for the Property, along with an updated Final Development Concept package, the Mayor and City Council authorized Successor Agency staff to negotiate Discussion Since MD, the City, and the Successor Agency still wished to move forward with the disposition and development of the Property to MD, in March 2019, the Successor Property. On June 7, 2019, CBRE submitted its appraisal with an FMV on the Property and on July 17, 2019, MPA submitted its appraisal with an FMV of $3,535,000 on the Pro Agency and MD agree that the FMV lies somewhere between the two Property appraisals. As a part of the purchase and sale negotiations, MD has agreed to purchase the Property for FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000), and if escrow does not close by March 31, 2021, MD has agreed to pay FOUR MILLION SEVEN HUNDRED THOUSAND DOLLARS ($4,700,000). The Purchase and Sale Agreement and Joint Escrow Instructions he effectiveness of the Purchase and Sale Agreement is subject to the approval of both, the CWOB and DOF. In addition, the Purchase and Sale Agreement specifies that MD shall execute a HUD Compliance Section 108 Loan Agreement regarding any and all continuing reporting Section 108 Loan. Both the City and MD shall execute the Compliance Section 108 Loan Agreement as a condition to the Close of Escrow. The Compliance Section 108 Page 2 6725 Loan Agreement will include a commitment to create jobs, will be recorded against the Property, and will run with the land. The Purchase and Sale Agreement is not subject to environmental review under the Code Regs., § 15000 et seq.) Section 15060(c)(3). Pursuant to State CEQA Guidelines Section 15060 (c) (3), approval of the Resolution does not constitute a project under CEQA as it has no potential to result in a direct or reasonably foreseeable indirect physical change in the environment. 2020-2025 Key Strategic Targets and Goals Approval of the Purchase and Sale Agreement Property aligns with Key Target No. 1: Financial Stability. The sales of this 17.43 acre commercial property will lead to the future development of a new regional shopping center that will generate new sales tax revenue to the City. Fiscal Impact The sale of the Property will pay, in full, the remaining balance of the Section 108 Loan balance, which is expected to be $3,774,000 by the close of escrow. At that time, the City will no longer have to use a portion of the annual CDBG fund allocation to pay down the debt service on the loan. This will free up CDBG funds to be used to fund beneficial projects in the City. No General Funds were used in processing of this action since the Property was a former Redevelopment Agency asset and the costs were covered by the Recognized Obligation Payment Schedule. Conclusion It is recommended that the Mayor and City Council, in the capacity as the Successor Agency to the Redevelopment Agency of the City of San Bernardino, California, adopt Resolution No. 2020-91 approving the Purchase and Sale Agreement and Joint Escrow Instructions between the Successor Agency and Mark Development, LLC with respect to the Property located on the north by Highland Avenue, between Arden Avenue and th Guthrie Avenue, and on the south by 20 Street, between Arden Avenue and Guthrie Avenue, San Bernardino, California (APNs 1191-021-01, 1191-021-11 to -69, 1191-041- 17 to -22, and 1191-041-25 to -32), and approving certain related actions. Attachments Attachment 1 History of Negotiations for the Arden Guthrie Property - 2011 to 2019 Attachment 2 Resolution 2020-91 Attachment 3 CBRE Valuation & Advisory Services June 7, 2019 Appraisal Report Attachment 4 Mission Property Advisors July 17, 2019 Appraisal Report Attachment 5 Purchase and Sale Agreement Attachment 6 Original Purchase and Sale Agreement Ward: 7 Synopsis of Previous Council Actions: Page 3 6725 May 1, 2017 Mayor and City Council approved an Exclusive Right to Negotiate Agreement with Mark Development, LLC. Page 4 Attachment 1 History of Negotiations for the Arden Guthrie Property 2011 2019 November 2006 - Home Depot and the Agency entered into a Redevelopment Project Study and Exclusive Right to Negotiate Agreement. It expired. January 2011 - Home Depot and Mark Development, LLC. entered into an Exclusive Right to Negotiate Agreement ("2011-ERN") as co-developers (the "Co-Developers") with the City's former Redevelopment Agency with respect to the Property. January 2013 - Although the 2011-ERN Agreement expired in 2013, the City's former Redevelopment Agency was unable to amend it due to the state-wide dissolution of redevelopment agencies. However, the Co-Developers, City, and Successor Agency had agreed to continue to negotiate in good faith as though the 2011-ERN Agreement remained in full force. However, during the term of the 2011-ERN Agreement, there had been impediments to the disposition and development of the Property, including a decision not to move forward by Home Depot, resulting from changes to: (i) market conditions; (ii) customer shopping preferences; and (iii) corporate marketplace goals. March 2017 - Mark Development, LLC requested a new Exclusive Right to Negotiate Agreement with respect to the Property for the purpose of a targeted marketing campaign to obtain a new anchor tenant, bring forward an alternative project for the Property, and to assure prospective tenants of the ongoing collaborative working relationship with the Successor Agency and City. May 1, 2017 - City Council approved an Exclusive Right to Negotiate Agreement -ark Development LLC pursue the commercial development of the Property. November 2017 June 19, 2018 - Between November 15, 2017, and June 19, 2018, the 2017-ERN was amended to extend to November 2018. MD met several 2017-ERN obligation deadlines. On Development Concept Plan for the Property. November 2018 - 2017- ERN expired. Following its expiration date, MD requested additional time from the City to refine the number of prospective tenants for the Property due to the lull in real estate transactions over the holiday season. January 16, 2019 - in Closed Session, after reviewi Property, along with their updated Final Development Concept package, the City Council authorized Successor Agency staff to negotiate the sale of the Property based on Resolution No. 2020-91 RESOLUTION NO. 2020-91 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING THE PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS BETWEEN THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AND MARK DEVELOPMENT, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, WITH RESPECT TO THE REAL PROPERTY LOCATED ON THE NORTH BY HIGHLAND AVENUE, BETWEEN ARDEN AVENUE AND GUTHRIE TH AVENUE, AND ON THE SOUTH BY 20 STREET, BETWEEN ARDEN AVENUE AND GUTHRIE AVENUE, SAN BERNARDINO, CALIFORNIA (APNS 1191-021-01, 1191-021-11 TO -69, 1191-041-17 TO -22, AND 1191-041-25 TO -32), AND APPROVING CERTAIN RELATED ACTIONS WHEREAS, pursuant to Health and Safety Code section 34172 (a) (1), the Redevelopment Agency of the City of San Bernardino was dissolved on February 1, 2012; and WHEREAS, consistent with the provisions of the HSC, on January 9, 2012, the Mayor and City Council of the City of San Bernardino elected to serve in the capacity of the Successor Agency to the Redevelopment Agency of the City of San Bernardino WHEREAS, pursuant to HSC section 34179, the Successor Agency previously established the San Bernardino Oversight Board to assist in the wind-down of the former Redevelopment Agency through June 30, 2018, at which time it was dissolved by operation of law; and WHEREAS, consistent with HSC section 34179 (j), on July 1, 2018, the San -down the dissolved redevelopment agencies within the County of San Bernardino; and WHEREAS, on September 15, 2015, the Successor Agency submitted its Oversight Board-approved Long- WHEREAS, and notified the Successor Agency that pursuant to HSC section 34191.3, the approved LRPMP shall govern, and supersede all other provisions relating to the disposition and use of all the real property assets of the former Redevelopment Agency; and Resolution No. 2020-91 WHEREAS, certain properties (APNs 1191-021-01, 1191-021-11 to 1191-021-69, 1191-041-17 to -22, and 1191-041-25 to -32) were not included within the LRPMP due to lengthy negotiating with DOF as whether or not the properties were housing assets and should be included within the Housing Asset Transfer list or assets of the Successor Agency and should be included within the LRPMP; and WHEREAS, in 2016, after the LRPMP was approved by DOF, DOF made their final determination that the properties were not housing assets and should have been included within the approved LRPMP; and WHEREAS, consistent with the applicable provisions of HSC section 34177 (e), properties not included within an approved LRPMP must be sold; and WHEREAS, the Successor Agency is the owner of approximately 17.43 acres of vacant land located on the north by Highland Avenue, between Arden Avenue and Guthrie Avenue, and on the south by 20th Street, between Arden Avenue and Guthrie Avenue, San Bernardino, California (APNs 1191-021-01, 1191-021-11 to 1191-021-69, 1191-041-17 to -22, and 1191-041-25 to -32), WHEREAS, the City has been negotiating the disposition and development of the Property consistent with the City's 2006 Section 108 Loan with the United States Department of Housing and Urban Development regarding the Property (the "HUD Contract"); and WHEREAS, in January 2011, Home Depot and Mark Development, LLC. entered into an Exclusive Right to Negotiate Agreement ("2011-ERN") as co-developers (the "Co- Developers") with the City's former Redevelopment Agency with respect to the Property; and WHEREAS, although the 2011-ERN Agreement expired in 2013, the City's former Redevelopment Agency was unable to amend it due to the state-wide dissolution of redevelopment agencies; and WHEREAS, the Co-Developers, City, and Successor Agency had agreed to continue to negotiate in good faith as though the 2011-ERN Agreement remained in full force; and WHEREAS, over the next several years, the Co-Developers obtained the Property's development entitlements from the City, completed the Final CEQA Report, and received letters of interest from a variety of retail tenants; and WHEREAS, during the term of the 2011-ERN Agreement, there had been impediments to the disposition and development of the Property, including a decision not to move forward by Home Depot, resulting from changes to: (i) market conditions; (ii) customer shopping preferences; and (iii) corporate marketplace goals; and WHEREAS, in March 2017, Mark Development, LLC MD requested a new Exclusive Right to Negotiate Agreement with respect to the Property for the purpose of a targeted marketing campaign to obtain a new anchor tenant, bring forward an alternative project for the Property, and to assure prospective tenants of the ongoing collaborative working relationship with the Successor Agency and City; and Resolution No. 2020-91 WHEREAS, on May 1, 2017, the City Council approved a new Exclusive Right to 2017-ERNd MD to pursue the commercial development of the Property with such uses as may be agreed upon by MD and City; and WHEREAS, on November 15, 2017, the 2017-ERN Agreement was amended to extend its term to November 30, 2018, in order for MD to refine certain performance obligations; and WHEREAS, between November 15, 2017, and June 19, 2018, MD met several 2017- ERN obligation deadlines; and WHEREAS, on June 20, 2018, Concept Plan, which effectively extended the 2017-ERN Agreement to November 30, 2018, for the purpose of negotiating a Purchase and Sale Agreement and establishing a Fair Market Value for the Property; and WHEREAS, on November 30, 2018, the 2017-ERN Agreement expired; and WHEREAS, following the expiration of the 2017-ERN Agreement, MD requested additional time from the City to refine the number of prospective tenants for the Property due to the lull in real estate transactions over the holiday season; and WHEREAS, on January 16, 2019, in Closed Session, after numbers for the Property, along with their updated Final Development Concept package, the City Council authorized Successor Agency staff to negotiate the sale of the Property based on its appraised FMV; and WHEREAS, MD, the City, and the Successor Agency still wished to move forward with the disposition and development of the Property to MD following the expiration of the 2017-ERN Agreement; and WHEREAS, in March 2019, the Successor Agency engaged CBRE Valuation & Advisory Services appraise the Property; and WHEREAS, on June 7, 2019, CBRE submitted its appraisal with an FMV on the Property of $4,950,000, a copy which is attached to this Resolution as Exhibit and WHEREAS, in June 2019, MD appraise the Property; and WHEREAS, on July 17, 2019, MPA submitted its appraisal with an FMV of $3,535,000 on the Property, a copy which is attached to this Resolution as Exhibit ; and WHEREAS, Successor Agency and MD agree that the FMV lies somewhere between the two Property appraisals; and WHEREAS, as a part of the purchase and sale negotiations, MD has agreed to purchase the Property for FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000), and if escrow does not close by March 31, 2021, MD has agreed to pay FOUR MILLION Resolution No. 2020-91 2021A-Purchase B-) and WHEREAS, the 2021A-Purchase Price exceeds MDappraised value, as provided by MPA, of $3,535,000, by $965,000 (or approximately 27.3%); and WHEREAS, the 2021A-Purchase Price appraised value, as provided by CBRE, of $4,950,000 by $450,000 (or approximately 9.1%); and WHEREAS, the Successor Agency has concluded that the 2021A-Purchase Price for the Property is fair and reasonable; and WHEREAS, the 2021B-Purchase Price exceeds MDappraised value, as provided by MPA, of $3,535,000, by $1,165,000 (or approximately 33%); and WHEREAS, the 2021B-appraised value, as provided by CBRE, of $4,950,000 by $250,000 (or approximately 5%); and WHEREAS, the Successor Agency also has concluded that the 2021B-Purchase Price for the Property is fair and reasonable; and WHEREAS, this Resolution will approve the Purchase and Sale Agreement and Joint MD with respect to the Pr and authorize certain related actions; and WHEREAS, consistent with the provisions of the HSC, the effectiveness of the Purchase and Sale Agreement is subject to the approvals of the CWOB and DOF; and WHEREAS, all of the prerequisites with respect to the approval of this Resolution have been met. BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AS FOLLOWS: SECTION 1. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. The 2021A-Purchase Price and 2021B-Purchase Price for the Property are determined to be fair and reasonable. SECTION 3. The Purchase and Sale Agreement between the Successor Agency and Mark Development, LLC for the purchase and sale of the Property, attached hereto as Exhibit C and may be executed. SECTION 4. On behalf of the Successor Agency, the City Manager, in the capacity as Executive Director of the Successor Agency, or designee, is authorized and directed to execute Resolution No. 2020-91 the Purchase and Sale Agreement and the grant deed, the form of which is attached to the Purchase and Sale Agreement, and to take such other actions and execute such other documents as are necessary to effectuate and close the purchase and sale of the Property and as may otherwise be required to fulfill the intent of this Resolution. SECTION 5. The Successor Agency determines this Resolution is not subject to environmental review under the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines (Cal. Code Regs., § 15000 et seq.) section 15060 (c) (3). Pursuant to State CEQA Guidelines section 15060 (c) (3), approval of this Resolution does not constitute a project under CEQA as it has no potential to result in a direct or reasonably foreseeable indirect physical change in the environment. SECTION 6. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable. SECTION 7. Effective Date. This Resolution shall become effective immediately. APPROVED and ADOPTED by The City Council and signed by the Mayor and th attested by the Acting City Clerk this 20 day of May 2020. John Valdivia, Mayor City of San Bernardino Attest: Genoveva Rocha, CMC, Acting City Clerk Approved as to form: Sonia Carvalho, City Attorney Resolution No. 2020-91 CERTIFICATION STATE OF CALIFORNIA) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO) I, Genoveva Rocha, CMC, Acting City Clerk, hereby certify that the attached is a true th copy of Resolution No. 2020- , adopted at a regular meeting held on the 20 day of May 2020 by the following vote: Council Members: AYES NAYS ABSTAIN ABSENT SANCHEZ _____ _____ _______ _______ IBARRA _____ _____ _______ _______ FIGUEROA _____ _____ _______ _______ SHORETT _____ _____ _______ _______ NICKEL _____ _____ _______ _______ RICHARD _____ _____ _______ _______ MULVIHILL _____ _____ _______ _______ th WITNESS my hand and official seal of the City of San Bernardino this 20 day of May 2020. Genoveva Rocha, CMC, Acting City Clerk CBRE VALUATION & ADVISORY SERVICES APPRAISAL REPORT 17.61-ACRES OF COMMERCIAL LAND SAN BERNARDINO, CALIFORNIA 92346 CBRE GROUP, INC. FILE NO. 19-251LA-1243-1 CLIENT REFERENCE NO. 2019-00001064 CITY OF SAN BERNARDINO VALUATION & ADVISORY SERVICES 3501 Jamboree Road, Suite 100 Newport Beach, CA 92660 T 949-725-8500 F 949-725-8545 www.cbre.com June 4, 2019 Andrea M. Miller City Manager C/o Ms. Lisa Connor, Project Manager CITY OF SAN BERNARDINO Successor Agency Vanir Tower, 290 North D Street San Bernardino, California 92401 RE:Appraisal of: 17.61-Acres of Commercial Land San Bernardino, San Bernardino County, California CBRE, Inc. File No. 19-251LA-1243-1 Client Reference No. 2019-00001064 Dear Ms. Connor: At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is a 17.61-gross-acre tract of vacant land (retail/commercial) located at the southwest corner of East Highland Avenue and Arden Avenue, in the city of San Bernardino, within San Bernardino County, California. 17.40-acres of the subject are considered useable. The property is zoned CG-1, Commercial General, which permits retail and commercial uses. The site was formerly improved with a single-family residential community and is currently is platted as 74 individual parcels; however, the site is proposed for assemblage and development as a community retail center. Proposed tenants include Sprouts, Ulta, 5 Below, Burlington, and LA Fitness. A separate food court and four pad sites are also planned. The subject parcel has been partially entitled for development, as of the effective date of this appraisal; however, this appraisal is based on the hypothetical condition that there are no entitlements in place, as of the effective date of the appraisal. Therefore, we have used comparables without entitlements and/or adjusted properties with entitlements in place downward in order to arrive at a hypothetical market value as if unentitled. As of the effective date of the appraisal, some of the underground utility infrastructure from the single-family residential development is remaining, and removal is required for redevelopment of the site. In addition, the site slopes slightly to the south and fill dirt on the southern portion of the site is required for site development. The subject is more fully described, both legally and physically, within the enclosed report. Andrea M. Miller City Manager C/o Ms. Lisa Connor, Project Manager June 4, 2019 Page 2 Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION Interest Value Price per AppraisedDate of ValueConclusionSq. Ft. Appraisal Premise Hypothetical As-Is Market Value Fee SimpleApril 27, 2019$4,950,000$6.53 (As If Unentitled) Compiled by CBRE The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. It also conforms to Title XI Regulations and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) updated in 1994 and further updated by the Interagency Appraisal and Evaluation Guidelines promulgated in 2010. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non-intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Steve Calandra, MAI Director California Certification No. 027877 Expiration Date: November 16, 2020 Phone: (949) 725-8408 Email: steve.calandra@cbre.com © 2019CBRE, Inc. Andrea M. Miller City Manager C/o Ms. Lisa Connor, Project Manager June 4, 2019 Page 3 © 2019CBRE, Inc. Certification Certification We certify to the best of our knowledge and belief: 1.The statements of fact contained in this report are true and correct. 2.The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3.We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4.Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5.Our 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. 6.This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan. 7.Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of California. 8.The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 9.The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10.As of the date of this report, Steve Calandra, MAI has completed the continuing education program for Designated Members of the Appraisal Institute. 11.As of the date of this report, Jennifer Simmonson has completed the Standards and Ethics Education Requirements for Practicing Affiliates of the Appraisal Institute. 12.Steve Calandra, MAI has made a personal inspection of the property that is the subject of this report. 13.Jennifer Simmonson provided significant real property appraisal assistance to the persons signing this report. 14.Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest. 15.Steve Calandra, MAI appraised the subject of this report for the Client within the three-year period immediately preceding acceptance of this assignment. Steve Calandra, MAI worked at a different firm (Integra Realty Resources) at the time of the last appraisal. The report date of this last appraisal was April 8, 2016. Steve Calandra, MAI California Certification No. 027877 © 2019CBRE, Inc. i 17.61-Acres of Commercial Land, San Bernardino, California Subject Photographs Subject Photographs Aerial View Red Line is an Approximation Only © 2019CBRE, Inc. ii 17.61-Acres of Commercial Land, San Bernardino, California Subject Photographs thth Looking Northwest Across Subject from E. 20 E. 20 Street, Looking West Street Northerly View of Arden Avenue, Subject at Left Looking West at Subject from Arden Avenue Foothill Freeway (210) Overpass, and Easterly Corner, 210 Freeway Overpass Pictured View of E. Highland Avenue. Subject at Left. © 2019CBRE, Inc. iii 17.61-Acres of Commercial Land, San Bernardino, California Subject Photographs Looking South at Subject from E. Highland Avenue Westerly View Across Subject from Arden Avenue thth Signalized Intersection at E. 20 Street and Arden Looking East along E. 20 Street, Subject at Left Avenue © 2019CBRE, Inc. iv 17.61-Acres of Commercial Land, San Bernardino, California Executive Summary Executive Summary Property Name 17.61-Acres of Commercial Land Location Southwest Corner of East Highland Avenue & Arden Avenue San Bernardino, San Bernardino County, CA 92346 Client City of San Bernardino Client Reference Number 2019-00001064 Highest and Best Use As If VacantCommercial/Retail Property Rights Appraised Fee Simple Date of Report June 4, 2019 Date of Inspection April 27, 2019 Estimated Exposure Time 12 Months Estimated Marketing Time 12 Months Land Area 17.40 AC757,944 SF Zoning CG-1: Commercial General Buyer Profile Developer VALUATION TotalPer SF $4,950,000 $6.53 Hypothetical As-Is Market Value (As If Unentitled) CONCLUDED MARKET VALUE Date of Value Appraisal PremiseInterest AppraisedValue Fee SimpleApril 27, 2019$4,950,000 Hypothetical As-Is Market Value (As If Unentitled) Compiled by CBRE STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT) Strengths/ Opportunities The subject has access and visibility from four streets, of which one (E. Highland Avenue), is a neighborhood collector. The Foothill Freeway (210) follows the northeastern boundary of the subject. While visibility of the subject from the 210 is minimal, monument signage for retailers would have good visibility from the freeway. All utilities are available to site. The subject topography generally supports retail/commercial development. Weaknesses/ Threats The retail/commercial land market within the subject neighborhood is tepid, as evidenced by limited sales, longer marketing times, and little evidence of appreciating values. © 2019CBRE, Inc. v 17.61-Acres of Commercial Land, San Bernardino, California Executive Summary The recent closure of Carousel Mall in San Bernardino has increased the vacancy rates within the submarket, which are now above the County average. EXTRAORDINARY ASSUMPTIONS an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter 1 . None noted 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 2 assignment results, but is used for the purposes of analysis The appraisal is based on the hypothetical condition that the subject site is unentitled and that no permits have been issued for construction of any type of retail/commercial improvements. The use of these hypothetical conditions may have affected the assignment results. OWNERSHIP AND PROPERTY HISTORY Arden-Guthrie Neighborhood The Arden-Guthrie neighborhood, comprised of four-plexes, was once regarded as the most concentrated crime area in the City of San Bernardino and was a target for redevelopment for years. The city initiated the redevelopment project around 2003. In 2009, the City of San Bernardino received about $8.4 million in Neighborhood Stabilization dollars from the U.S. Department of Housing and Urban Development to fight the after effects of the foreclosures resulting from the sub-prime mortgage crisis, through what was called the Neighborhood Stabilization Program. The city's plan called for 25 area four-plexes to be acquired by a nonprofit and rehabilitated as low-income housing. The concept also called for the demolition of neighboring four-plexes to make way for single-family homes and senior housing. Ultimately, all of the existing four-plexes would be demolished due to code compliance and other issues. In 2011, the City of San Bernardino entered into an agreement to negotiate exclusively with Mark Development and Home Depot for development of a Community Shopping Center anchored by Home Depot. The Property was vacant with all building structures and infrastructure having been previously demolished. The Developer and City contemplated a commercial development with the Developer acquiring the property for fair market value and developing the Project pursuant to a Disposition and Development Agreement which will include compliance with the HUD Contract. 1 The Appraisal Foundation, USPAP, 2018-2019 2 The Appraisal Foundation, USPAP, 2018-2019 © 2019CBRE, Inc. vi 17.61-Acres of Commercial Land, San Bernardino, California Executive Summary The Redevelopment Agency of the City of San Bernardino was dissolved on February 1, 2012. Consistent with the provisions of the HSC, on January 9, 2012, the Mayor and City Council of the City of San Bernardino elected to serve in the capacity of the Successor Agency to the Redevelopment Agency of the City of San Bernardino (the "Successor Agency"). In 2013, the exclusive right to negotiate with Mark Development and Home Depot expired, but the parties continued to negotiate. In March of 2017, Mark Development informed San Bernardino that Home Depot had dropped out of the project, and in May of 2017, San Bernardino approved a one-year exclusive right to negotiate agreement with Mark Development. Representatives from the city reported that the developer has secured Sprouts as an anchor tenant and is moving forward in the entitlement process. To the best of our understanding, as of the date of this report, the outstanding balance on the HUD Section 108 loan is $4,308,000. It is anticipated that if the parties subsequently enter into a DOA for the Project, the net proceeds of sale of the Property will be contributed to pay off the Section 108 loan. Sale History The most recent closed recorded transaction of the subject is summarized as follows: Transaction Date: March 16, 2016 Grantor: San Bernardino Economic Development Corporation, Successor Agency to the Redevelopment Agency of the City of San Bernardino Grantee: Redevelopment Agency of San Bernardino Recording No: 2016-0100766 The transaction is a transfer of ownership between related parties and is non- best of our knowledge, no other sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date. The site was formerly improved with multi-family residential community and currently is platted as 74 individual parcels; however, the improvements have been demolished to prepare for redevelopment. The site was previously zoned PCF (Public/Commercial Recreation), but was rezoned to the current zoning, CG-1 (Commercial General), to accommodate redevelopment for commercial use, considering the good access and exposure along E. Highland Avenue. Pending Transactions To the best of our knowledge, the property is not subject to an agreement of sale or an option to buy, as of the effective appraisal date. However, there are ongoing negotiations in place between the property owner and a potential buyer as discussed in the Property History Section, who intends to clear the site and redevelop with a Sprouts anchored shopping center. Based on our © 2019CBRE, Inc. vii 17.61-Acres of Commercial Land, San Bernardino, California Executive Summary discussions with buyer representatives, there is not a Purchase and Sale Agreement (PSA) in place as of the effective date of this appraisal, and this appraisal report is intended to aid in negotiations. It was further reported that the sale price would be the higher of the balance on the HUD Section 108 loan of $4,308,000 or the appraised market value. Previous Negotiations In 2016 Home Depot intended to develop the western portion of the site with a freestanding big box retail building; however, in 2017 Home Depot significantly scaled back their brick and mortar development plans and abandoned all development plans at this location. Test of Reasonableness Based on information provided by The Home Depot representatives, the subject property was proposed to be purchased on May 1, 2017 (although there was no Purchase and Sale Agreement in place at that time). The proposed buyer included The Home Depot and an additional third-party developer (Mark Development) who was slated to retain ownership interest in the outparcels and land area at the southeastern corner of the site. A budget document provided by The Home Depot delineated an agreement in place dated May 5, 2014, indicates an agreed $2,400,000 purchase price for the 8.98-acre Home Depot site. This equates to $6.14 per square foot of land area (without consideration for improving market conditions since May 5, 2014). When compared to the overall subject 17.4 usable acre site, the Home Depot portion is relatively small; however, this portion of the site does not have frontage along the roadway and would expect to achieve a lower per unit land value when compared to the outparcel areas with frontage along Highland Avenue. This is reasonable when compared to our concluded value of $6.53 per square foot (a 6.35% increase over $6.14 per square foot), which includes all street frontage. EXPOSURE/MARKETING TIME Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration of these factors, we have analyzed the following: exposure periods for comparable sales used in this appraisal; exposure/marketing time information from the PwC Real Estate Investor Survey; and the opinions of market participants. The following table presents the information derived from these sources. © 2019CBRE, Inc. viii 17.61-Acres of Commercial Land, San Bernardino, California Executive Summary EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) Investment TypeRangeAverage Comparable Sales Data6.0-52.021.0 PwC Power Center National Data2.0-18.06.8 Local Market Professionals12.0-24.018.0 CBRE Exposure Time Estimate 12 Months CBRE Marketing Period Estimate 12 Months Source: Comparable Sales, PwC, Local Market Professionals © 2019CBRE, Inc. ix 17.61-Acres of Commercial Land, San Bernardino, California Table of Contents Table of Contents Certification ......................................................................................................................... i Subject Photographs............................................................................................................ii Executive Summary .............................................................................................................. v Table of Contents ................................................................................................................. x Scope of Work ..................................................................................................................... 1 Area Analysis ...................................................................................................................... 6 Neighborhood Analysis ..................................................................................................... 10 Site Analysis ...................................................................................................................... 17 Zoning.............................................................................................................................. 22 Tax and Assessment Data .................................................................................................. 23 Highest and Best Use ........................................................................................................ 24 Land Value ........................................................................................................................ 26 Reconciliation of Value ...................................................................................................... 33 Assumptions and Limiting Conditions ................................................................................ 34 ADDENDA A Land Sale Data Sheets B Site Plans C Client Contract Information D Qualifications © 2019CBRE, Inc. x 17.61-Acres of Commercial Land, San Bernardino, California Scope of Work Scope of Work This Appraisal Report is intended to comply with the reporting requirements set forth under Standards Rule 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied. INTENDED USE OF REPORT This appraisal is to be used for asset valuation purposes, and no other use is permitted. CLIENT The client is City of San Bernardino. INTENDED USER OF REPORT This appraisal is to be used by City of San Bernardino, and no other user may rely on our report unless as specifically indicated in the report. Intended Users - the intended user is the person (or entity) who the appraiser intends will use the results of the appraisal. The client may provide the appraiser with information about other potential users of the appraisal, but the appraiser ultimately determines who the appropriate users are given the appraisal problem to be solved. Identifying the intended users is necessary so that the appraiser can report the opinions and conclusions developed in the appraisal in a manner that is clear and understandable to the intended users. Parties who receive or might receive a copy of 3 the intended users identified in the report, not to all readers of the appraisal report. PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the subject property as of the date of the appraisal, based on the hypothetical condition that the subject is unentitled and that no permits for the construction of retail/commercial permits have been issued. DEFINITION OF VALUE The current economic definition of market value agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 3 th Appraisal Institute, The Appraisal of Real Estate, 14 ed. (Chicago: Appraisal Institute, 2013), 50. © 2019CBRE, Inc. 1 17.61-Acres of Commercial Land, San Bernardino, California Scope of Work 1.buyer and seller are typically motivated; 2.both parties are well informed or well advised, and acting in what they consider their own best interests; 3.a reasonable time is allowed for exposure in the open market; 4.payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5.the price represents the normal consideration for the property sold unaffected by special 4 or creative financing or sales concessions granted by anyone associated with the sale. INTEREST APPRAISED The value estimated represents Fee Simple as defined below: Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, 5 eminent domain, police power and escheat. Extent to Which the Property is Identified The property is identified through the following sources: postal address legal description appraisal inspection aerial imagery, including GIS data Extent to Which the Property is Inspected th The extent of the inspection included the following: On April 27, 2019, Steve Calandra, MAI performed the appraisal inspection of the subject property. The inspection included viewing the subject property from adjacent streets and a cursory inspection of the subject neighborhood. Type and Extent of the Data Researched CBRE reviewed the following: applicable tax data zoning requirements flood zone status demographics comparable data Alquist-Priolo earthquake fault maps Site plans prepared by JDA Associates, inc. 4 Interagency Appraisal and Evaluation Guidelines; December 10, 2010, Federal Register, Volume 75 Number 237, Page 77472. 5 th Appraisal Institute, The Dictionary of Real Estate Appraisal, 6 ed. (Chicago: Appraisal Institute, 2015), 90. © 2019CBRE, Inc. 2 17.61-Acres of Commercial Land, San Bernardino, California Scope of Work Type and Extent of Analysis Applied CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. For vacant land, the sales comparison approach has been employed for this assignment. Jennifer Simmonson provided significant professional assistance in completion of this appraisal report. Jennifer Simmonson completed the following steps within the appraisal process: Market Research Neighborhood Description Property Description Zoning Investigation and Reporting Property Tax Investigation and Reporting Highest and Best Use Analysis, Comparable Sales Research and Confirmation, and Sales Comparison Approach The above were performed under the direct technical supervision of Steve Calandra, MAI. The final conclusion to value was made by Steve Calandra, MAI. The appraisal is signed by Steve Calandra, MAI. Data Resources Utilized in the Analysis DATA SOURCES Item:Source(s): Site Data SizeAssessor parcel map, Site Plan Site PlanJDA Associates, Inc. Dated January 4th, 2019 ZoningCity of San Bernardino Planning Dept. TopographyAppraisal inspection UtilitiesAppraisal inspection Flood ZoneFEMA EathquakeAlquist-Priolo Data Not Provided Preliminary Title Report ALTA Survey Compiled by CBRE APPRAISAL METHODOLOGY 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 land: Sales Comparison Approach; Income Capitalization Procedures; Allocation; and Extraction. © 2019CBRE, Inc. 3 17.61-Acres of Commercial Land, San Bernardino, California Scope of Work The following summaries of each method are paraphrased from the text. The first is the sales comparison approach. This is a process of analyzing sales of similar, recently sold parcels in order to derive an indication of the most probable sales price (or value) of the property being appraised. The reliability of this approach is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data regarding size, price, terms of sale, etc., (c) the degree of comparability or extent of adjustment necessary for differences between the subject and the comparables, and (d) the absence of nontypical conditions affecting the sales price. This is the primary and most reliable method used to value land (if adequate data exists). The income capitalization procedures include three methods: land residual technique, ground rent capitalization, and Subdivision Development Analysis. A discussion of each of these three techniques is presented in the following paragraphs. The land residual method may be used to estimate land value when sales data on similar parcels of vacant land are lacking. This technique is based on the principle of balance and the related concept of contribution, which are concerned with equilibrium among the agents of production--i.e. labor, capital, coordination, and land. The land residual technique can be used to estimate land value when: 1) building value is known or can be accurately estimated, 2) stabilized, annual net operating income to the property is known or estimable, and 3) both building and land capitalization rates can be extracted from the market. Building value can be estimated for new or proposed buildings that represent the highest and best use of the property and have not yet incurred physical deterioration or functional obsolescence. The subdivision development method is used to value land when subdivision and development represent the highest and best use of the appraised parcel. In this method, an appraiser determines the number and size of lots that can be created from the appraised land physically, legally, and economically. The value of the underlying land is then estimated through a discounted cash flow analysis with revenues based on the achievable sale price of the finished product and expenses based on all costs required to complete and sell the finished product. The ground rent capitalization procedure is predicated upon the assumption that ground rents can be capitalized at an appropriate rate to indicate the market value of a site. Ground rent is paid for the right to use and occupy the land according to the terms of the ground lease; it corresponds to the value of the landowner's interest in the land. Market-derived capitalization rates are used to convert ground rent into market value. This procedure is useful when an analysis of comparable sales of leased land indicates a range of rents and reasonable support for capitalization rates can be obtained. The allocation method is typically used when sales are so rare that the value cannot be estimated by direct comparison. This method is based on the principle of balance and the related concept of contribution, which affirm that there is a normal or typical ratio of land value to property value for specific categories of real estate in specific locations. This ratio is generally more reliable when the subject property includes relatively new improvements. The allocation method does not © 2019CBRE, Inc. 4 17.61-Acres of Commercial Land, San Bernardino, California Scope of Work produce conclusive value indications, but it can be used to establish land value when the number of vacant land sales is inadequate. The extraction method is a variant of the allocation method in which land value is extracted from the sale price of an improved property by deducting the contribution of the improvements, which is estimated from their depreciated costs. The remaining value represents the value of the land. Value indications derived in this way are generally unpersuasive because the assessment ratios may be unreliable and the extraction method does not reflect market considerations. For the purposes of this analysis, we have utilized the sales comparison approach as this methodology is typically used for unentitled commercial/retail sites that are feasible for immediate development. The other methodologies are used primarily when comparable land sales data is non-existent. Therefore, these approaches have not been used. © 2019CBRE, Inc. 5 17.61-Acres of Commercial Land, San Bernardino, California Area Analysis Area Analysis ThesubjectislocatedintheRiverside-SanBernardino-Ontario,CAMetropolitanStatistical Area. Key information about the area is provided in the following tables. POPULATION Theareahasapopulationof4,597,980anda AREA POPULATION BY AGE 800,000 medianageof34,withthelargestpopulation 600,000 group in the 20-29 age range and the smallest 400,000 population in 80+ age range. 200,000 0 0-910-1920-2930-3940-4950-5960-6970-7980+ Source: Esri POPULATION BY YEAR Populationhasincreasedby373,129since 6,000,000 2010,reflectinganannualincreaseof1.1%. 5,000,000 4,856,751 4,000,000 Populationisprojectedtoincreasebyan 4,597,980 4,224,851 3,000,000 additional258,771by2023,reflecting1.1% 2,000,000 annual population growth. 1,000,000 0 201020182023 Source: Esri © 2019CBRE, Inc. 6 17.61-Acres of Commercial Land, San Bernardino, California Area Analysis 6 AREA RETAIL Development Activity and Trends San Bernardino County ended 2018 on a high note, as reported in the CBRE San Bernardino Retail, Q4 2018 report. The report emphasized the 6 https://bit.ly/2vsS1lc Accessed April 30, 2019 © 2019CBRE, Inc. 7 17.61-Acres of Commercial Land, San Bernardino, California Area Analysis absorption of 97,677 square feet of space at year end, along with a decreasing vacancy rate? of 6.6 percent. This was the first time the County achieved a vacancy rate below 7 percent since the recession. Factors that continue to make San Bernardino County a top choice for retail investment and expansion are its population growth and housing affordability. According to economic reports, -fastest growing, percent. Economic reports further note that home prices in San Bernardino County are 60 percent less than in neighboring Orange County and 50 percent less than in neighboring Los Angeles County. point, at year end, 99 Ranch Market premiered its new brand: Cravings by 99 Ranch Market, a 56,185-square-foot warehouse-style global grocery store and food hall. Located within the Chino Spectrum Marketplace, the store boasts a trendy dining hall featuring nine curated food vendors such as Cauldron Ice Cream; Dos Chinos fusion of Latin and Asian food; Madbun featuring traditional Chinese bao buns; and Oi Asian Fusion. In addition, Cravings has its own bar, Piju, which serves international flavors of beer and wine. The dining and social area is designed for customers to unwind, connect, and enhance their culinary experiences. Additional retail expansions to San Bernardino County in 2018, included Cardenas, Chuze Cracker Barrel increased its County presence, opening a second 10,486-square-foot location at the Renaissance Marketplace in Rialto in October 2018. Cracker Barrel had opened its first In-anchored San Sycamore Hills Plaza, a 77,690-square-foot retail center in Upland, anchored by 365 by Whole Foods, CVS with a Chipotle, Union Bank and Orange Theory. This bodes well as these are longer term acquisitions in nature and underscore the national and young millennials remain a driver for the region. We hear often that many of the brands in the County are considered top national performers for their location. With an affordability advantage our consumer base has a better spending power that is evide © 2019CBRE, Inc. 8 17.61-Acres of Commercial Land, San Bernardino, California Area Analysis CONCLUSION In summary, the subject is forecasted to experience an increase in population, an increase in household income, and an increase in household values. Retail investors are attracted to the creasing population and housing affordability. © 2019CBRE, Inc. 9 17.61-Acres of Commercial Land, San Bernardino, California Neighborhood Analysis Neighborhood Analysis LOCATION The subject is in the city of San Bernardino which is located at the base of the San Bernardino National Forest. BOUNDARIES The neighborhood boundaries are detailed as follows: North: San Bernardino National Forest; Mount Baldy South: City of Colton, Loma Linda, Redlands East: City of Highland; San Bernardino National Forest West: Cities of Rialto and Fontana LAND USE The area is suburban in character and approximately 85% developed. Th subject is located along the E. Highland Avenue corridor, which is one of the primary commercial corridors in the market. There is an abundance of retail development along this roadway, including small freestanding commercial uses, as wells as anchored and unanchored shopping centers. multifamily residential and single-family residential uses are also concentrated in the market area, primarily located along secondary roadways. In addition, the San Bernardino International Airport is located proximate tot the subject, to the south. Various recreational uses are located in © 2019CBRE, Inc. 10 17.61-Acres of Commercial Land, San Bernardino, California Neighborhood Analysis the market area, including Arrowhead Country Club, Perris Hill Park, the San Bernardino Soccer Complex, and Speicher Memorial Park, among others. Mt. Baldy and the San Bernardino National Forest are located to the north of the subject market area. The neighborhood is suburban, and the predominant age of improvements is 10 to 30+ years. The predominant quality and condition of neighborhood improvements is average to below- average. Roughly 85% of the area is built-out. Infrastructure and planning is average relative to other area neighborhoods. And the predominant location of undeveloped land is east of the subject. IMMEDIATE SUBJECT SURROUNDINGS North: Small freestanding retail, 210 Freeway, multi-family South: Emmerton Elementary School and Rodriguez Prep Academy East: Multifamily, 210 Freeway West: Single-family residential, retail strip center GROWTH PATTERNS Recent/Proposed Development City of San Bernardino Recent and proposed development projects in the City of San Bernardino are summarized in the following paragraphs. OLIVE MEADOWS This 62-unit apartment complex was constructed in 2017. It is entirely comprised of affordable units. VALENCIA VISTA This 75-unit apartment complex was constructed in 2017. It is entirely comprised of affordable units. LOMA LINDA UNIVERSITY HEALTH This 150,000 square foot, owner occupied 3-story building was constructed in 2016. THE CAROUSEL MALL The Carousel Mall, once a hub for Inland Empire shoppers, closed in 2017 after struggling to attract and keep tenants for more than 15 years. Opened in 1972 as Central City Mall, the shopping center in its heyday thrived with as many as 52 stores and three major department 2003, respectively, the Carousel Mall had become internet famous for its shuttered stores and post-apocalyptic feel. In January, entrance doors and windows were boarded up to keep vandals and transients from entering. In place of the 43-acre mall, city leaders envision a mixed-use development with new restaurants and stores, office buildings and housing. © 2019CBRE, Inc. 11 17.61-Acres of Commercial Land, San Bernardino, California Neighborhood Analysis CIVIC CENTER PLAZA Approximately 22,000 square feet of retail stores and 2nd story office space are proposed near th the Civic Center Area of San Bernardino (the northwest corner of 5 Street and Arrowhead Avenue). The project is being marketed for Food Service, Bail Bonds, Attorney's offices, Insurance, Notary services, Box Ship, and Copy services. CALIFORNIA & BASELINE CENTER Approximately 27,000 square feet of retail space is proposed with no pending application for land use entitlements. ACCESS Primary access to the area is provided by the Foothill Freeway (210), a major arterial that crosses the city of San Bernardino in a mostly east-west direction and connects the subject market area to Los Angeles County in the west. In addition, the Interstate 215 Freeway is located west of the subject and extends from Riverside County through the City of San Bernardino northward into the high desert. Another major freeway in the area is the Interstate 10 Freeway, which runs in an east/west direction and links San Bernardino County to Los Angeles County. Overall, vehicular access is average and the primary mode of transportation in this neighborhood is vehicular. Public transportation is provided by OmniTrans, which provides access to San Bernardino and Riverside Counties. San Bernardino is also served by the Metrolink regional rail service. Lines include the Metrolink Inland Empire-Orange County Line and the Metrolink San Bernardino Line. The local market perceives public transportation as average compared to other areas in the region. DEMOGRAPHICS Selected neighborhood demographics from the subject neighborhood are shown in the following table: © 2019CBRE, Inc. 12 17.61-Acres of Commercial Land, San Bernardino, California Neighborhood Analysis SELECTED NEIGHBORHOOD DEMOGRAPHICS Riverside-San Vacant Land 1 Mile Radius3 Mile Radius5 Mile RadiusBernardino- San Bernardino, CA 92346 Ontario, CA Population 2023 Total Population21,576127,125234,8614,856,751 2018 Total Population20,812123,327227,6764,597,980 2010 Total Population19,634117,843218,1534,224,851 2000 Total Population18,307106,642196,6173,254,804 Annual Growth 2018 - 20230.72%0.61%0.62%1.10% Annual Growth 2010 - 20180.73%0.57%0.54%1.06% Annual Growth 2000 - 20100.70%1.00%1.04%2.64% Households 2023 Total Households 6,415 35,632 67,225 1,474,402 2018 Total Households 6,221 34,739 65,356 1,400,513 2010 Total Households 5,967 33,690 63,307 1,297,878 2000 Total Households 5,957 32,903 60,865 1,034,805 Annual Growth 2018 - 20230.62%0.51%0.57%1.03% Annual Growth 2010 - 20180.52%0.38%0.40%0.96% Annual Growth 2000 - 20100.02%0.24%0.39%2.29% Income 2018 Median Household Income$38,462$40,530$43,019$61,724 2018 Average Household Income$50,046$57,704$61,516$85,109 2018 Per Capita Income$15,010$16,938$18,228$26,337 2018 Pop 25+ College Graduates 1,154 7,975 17,901 630,322 Age 25+ Percent College Graduates - 20189.6%11.0%13.3%21.5% Source: ESRI CONCLUSION The neighborhood appears to be growing at a modest pace, with only 0.72% population growth within a one-mile radius forecasted over the next five years. Similarly, within a three-mile radius the growth is projected at 0.61%. verall projected growth rate of 1.10%. The area is in the stability stage of its life cycle. The immediate surrounding area is characterized by a concentrated population base, which bodes well for commercial use in the area. However, the immediate surrounding area is also characterized by below average demographic characteristics, including below average median household income levels, below average levels of educational attainment, and below average median owner-occupied housing values. The area is approximately 85% developed, and many properties in the area are mature. Given the history of the area and the growth trends, it is anticipated that the property values will be stable in the near term and increase as the economic market conditions improve over the long term. © 2019CBRE, Inc. 13 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis PLAT MAP © 2019CBRE, Inc. 14 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis FLOOD PLAIN MAP © 2019CBRE, Inc. 15 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis PROPOSED SITE PLAN © 2019CBRE, Inc. 16 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis Site Analysis The following chart summarizes the salient characteristics of the subject site. SITE SUMMARY AND ANALYSIS Physical Description Gross Site Area17.61 Acres767,092 Sq. Ft. Net Site Area17.40 Acres757,944 Sq. Ft. Primary Traffic Counts (24 hrs.)n/an/a n/an/a Zoning DistrictCG-1: Commercial General Flood Map Panel No. & Date06071C7963H28-Aug-08 Flood ZoneZone X (Unshaded) Adjacent Land UsesCommercial and residential uses Earthquake ZoneNo Comparative AnalysisRating VisibilityAverage Functional UtilityTypical Traffic VolumeGood Adequacy of UtilitiesAssumed adequate DrainageAssumed adequate UtilitiesProviderAvailability Water City of San BernardinoYes Sewer City of San BernardinoYes Natural Gas Southern California Gas Co.Yes Electricity Southern California EdisonYes Telephone Various ProvidersYes OtherYesNoUnknown Detrimental EasementsX EncroachmentsX Deed RestrictionsX Reciprocal Parking RightsX The following research was performed/requested: ItemComments Verified ZoningUsed County GIS Mapping Reviewed PlatPlat received and reviewed. Earthquake ZoneReviewed Alquist-Priolo Fault Maps Flood ZoneFEMA Adjacent Land UsesAppraisal inspection and aerial imagery Source: Various sources compiled by CBRE © 2019CBRE, Inc. 17 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis LOCATION The subject is located on the southwest corner of East Highland Avenue and Arden Avenue. The th site also has frontage along the northern side of East 20 Street, and is located just east of North Guthrie Street. The 210 Freeway traverses just north of the northeastern corner of the subject site, as detailed in the previously presented aerial photographs. LAND AREA The land area size was obtained via the assessor records, roughly confirmed by the Site Plan th prepared by JDA Associates, Inc. (dated January 4, 2019). The site is considered adequate in terms of size and utility. Of the 17.61-gross acres, 17.40-acres are considered useable. The difference is attributable to a 0.21-acre portion of the site along Highland Avenue which must be dedicated to the public right-of-way for a deceleration lane in order to develop this site. SHAPE The subject is generally rectangular, excepting its northwestern boundary which runs diagonal front the northwest to the southeast. The shape of the subject is suitable for development of a retail site. FRONTAGE STREETS, ACCESS AND FRONTAGE StreetE. Highland AvenueArden AvenueE. 20th Street Frontage Feet7295901079 PavingYesYesYes CurbsYesYesYes SidewalksYesYesNo Lanes2 way, 2 lanes each way2 way, 2 lanes each way2 way, 1 lane each way Direction of TrafficEast/WestEast/West ConditionAverageAverageBelow Average Traffic Levels High (21,217 ADT)Moderate (9,795 AADT)Low Signals/Traffic ControlTraffic lightNoneNone VisibilityAverageAverageAverage Compiled by CBRE Ingress and egress is available from the streets which bound the subject site. TOPOGRAPHY AND DRAINAGE The site slopes gently to the south. The topography does not result in any development limitations; however, based on discussions with the potential buyer, approximately $50,000- $100,000 in fill dirt would be required to bring the property to road grade for development. Therefore, the cost of fill dirt is considered in the valuation analysis to follow. © 2019CBRE, Inc. 18 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis SOILS A soils analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soils report, it is a specific assumption that the site has adequate soils to support the highest and best use. EASEMENTS AND ENCROACHMENTS There are no known easements or encroachments impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a current title policy outlining all easements and encroachments on the property, if any, prior to making a business decision. COVENANTS, CONDITIONS AND RESTRICTIONS There are no known covenants, conditions or restrictions impacting the site that are considered to affect the marketability or highest and best use. It is recommended that the client/reader obtain a copy of the current covenants, conditions and restrictions, if any, prior to making a business decision. UTILITIES AND SERVICES The site includes all municipal services, including police, fire and refuse garbage collection. All utilities are available to the site in adequate quality and quantity to service the highest and best use. Utilities from the previous residential development on the site must be removed prior to the development of a new commercial retail site. Based on discussions with the potential buyer, the estimated cost to remove the underground infrastructure is $100,000 to $200,000. ENVIRONMENTAL ISSUES The appraiser is not qualified to detect the existence of potentially hazardous material or underground storage tanks which may be present on or near the site. The existence of hazardous materials or underground storage tanks may affect the value of the property. For this appraisal, CBRE, Inc. has specifically assumed that the property is not affected by any hazardous materials that may be present on or near the property. ENTITLEMENTS This appraisal is based on the hypothetical condition that there are no entitlements in place, as of the effective date of the appraisal. Nevertheless, the following is a brief synopsis of entitlements in-place and their respective costs. © 2019CBRE, Inc. 19 17.61-Acres of Commercial Land, San Bernardino, California Site Analysis ENTITLEMENT COSTS CompanyDescriptionTotal Expense Tait SurveySite survey$41,500 Tait CivilCivil engineering$15,250 ProcostConstruction cost management$7,990 Pitnes BowesMapping and location analysis$12,900 The Tait Group, Inc.Transportation consulting$54,205 Tait & Associates, Inc.Transportation consulting$316,860 Moore, Twining & AssociatesEngineering$74,050 Fehr & PeersTransportation consulting$53,654 KleinfelderArchitecture, planning, & engineering$8,750 GFAArchitecture, planning, & engineering$221,000 ADSADS$1,500 City of San BernardinoRedevelopment project study$200,000 City of San BernardinoCity fees$4,000 AnalyticsPredictive analytics$11,000 KSPStructural engineering$2,710 Compiled by CBRE$1,025,369 CONCLUSION The property is located on the southwest corner of East Highland Avenue and Arden Avenue, with good exposure, and also has exposure from the 210 Freeway. Based on information provided by the property representatives, the subject site totals 17.61 gross acres, of which 17.40 acres are useable. Overall, site utility based on shape and dimensions is average. It is assumed the property is not adversely affected by environmental issues. There do not appear to be any easements, encroachments, o development limitations, fill dirt is required to bring the property to road grade for development. Additionally, removal of some of the existing underground utility infrastructure from the prior residential development is required. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. © 2019CBRE, Inc. 20 17.61-Acres of Commercial Land, San Bernardino, California Zoning ZONING MAP Subject CG-1: Commercial General © 2019CBRE, Inc. 21 17.61-Acres of Commercial Land, San Bernardino, California Zoning Zoning ZONING SUMMARY Current ZoningCG-1: Commercial General Legally ConformingYes Uses PermittedOfficesorcommercialusesserving neighborhoods and community needs Zoning ChangeNot likely Source: City of San Bernardino Planning & Zoning Dept. ANALYSIS AND CONCLUSION The subject site is legally conforming presently. Additional information may be obtained from the appropriate governmental authority. For purposes of this appraisal, CBRE has assumed the information obtained is correct. © 2019CBRE, Inc. 22 17.61-Acres of Commercial Land, San Bernardino, California Tax and Assessment Data Tax and Assessment Data State of California Property Tax Overview In California, privately held real property is typically assessed at 100% of full cash value (which is interpreted to mean market value of the fee simple estate) as determined by the County Assessor. Generally, a reassessment occurs only when a property is sold (or transferred) or when new construction occurs (as differentiated from replacing existing construction). In the case of long- term ground leases, the general rule is that a reassessment is made at the time of assigning or terminating a lease where the remaining term is more than 35 years. For reassessment purposes, the lease term includes all options to extend. Assessments for properties that were acquired before the tax year 1975-1976 were stabilized as of the tax year 1975-1976. Property taxes are limited by state law to 1% of the assessed value plus voter-approved obligations and special assessments. If no sale (or transfer) occurs or no new building takes place, assessments may not increase by more than 2% annually. Subject Property Exempt from Property Taxes Currently the subject property is owned by the Successor Agency to the Redevelopment Agency of the City of San Bernardino and is exempt from real estate taxes. However, if the property is sold to a private entity, the subject would be re-assessed based on the transaction price, and a tax rate likely between 1.1% to 1.4%. © 2019CBRE, Inc. 23 17.61-Acres of Commercial Land, San Bernardino, California Highest and Best Use HIGHEST AND BEST USE In appraisal practice, the concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must meet are: legally permissible; physically possible; financially feasible; and maximally productive. The highest and best use analysis of the subject is discussed below. AS VACANT Legal Permissibility The legally permissible uses were discussed in the Site Analysis and Zoning Sections. Physical Possibility The subject is adequately served by utilities, and has an adequate shape and size, sufficient access, etc., to be a separately developable site. There are no known physical reasons why the subject site would not support any legally probable development (i.e. it appears adequate for development). Existing structures on similar sites provides additional evidence for the physical possibility of development. The subject site will require the removal of some underground utilities remaining from the prior residential development. Additionally, in-fill dirt will be required to bring the topography to street grade in the southern portion of the site. However, these two issues do not preclude development of the site for physical reasons. Financial Feasibility Potential uses of the site include various retail-use concepts. The determination of financial feasibility is dependent primarily on the relationship of supply and demand for the legally probable land uses versus the cost to create the uses. With respect to the legal uses for the subject site, the local retail market appears to lag other submarkets in San Bernardino County but appears to be stabilizing toward recovery. With few exceptions, development of new retail properties has not occurred. Given current construction and land costs, average net base rent would likely support development; however, most investors would not move forward with new construction at this time on a speculative basis without significant pre-leasing. This is supported by a lack of recent development in the immediate area and the proposed redevelopment of the subject site for retail use, which has been in discussions but has not proceeded without an anchor tenant. © 2019CBRE, Inc. 24 17.61-Acres of Commercial Land, San Bernardino, California Highest and Best Use Maximum Productivity - Conclusion The final test of highest and best use of the site as if vacant is that the use be maximally productive, yielding the highest return to the land. Based on the information presented above and upon information contained in the market and neighborhood analysis, we conclude that the highest and best use of the subject as if vacant would be the development of a retail property. The maximum site coverage ratio is 50% in the current zoning regulations. However, similar large (10+ acre) commercial tracts are typically developed at a ratio of 15% to 30% due to parking requirements, open space requirements, and setback requirements. Therefore, the development potential of the site is between 111,075 and 185,125 square feet, based on typical market density. Accordingly, it is our opinion that retail use, developed to the normal market density level, is the maximally productive use of the site. The most likely buyer of the subject site is a developer. © 2019CBRE, Inc. 25 17.61-Acres of Commercial Land, San Bernardino, California Land Value Land Value The subject parcel has been partially entitled for development, as of the effective date of this appraisal; however, this appraisal is based on the hypothetical condition that there are no entitlements in place, as of the effective date of the appraisal. Therefore, we have used comparables without entitlements and/or adjusted properties with entitlements in place downward in order to arrive at a hypothetical market value as if unentitled. The following map and table summarize the comparable data used in the valuation of the subject site. A detailed description of each transaction is included in the addenda. © 2019CBRE, Inc. 26 17.61-Acres of Commercial Land, San Bernardino, California Land Value SUMMARY OF COMPARABLE LAND SALES TransactionActual SaleAdjusted SaleSizePrice 1 No.Property LocationTypeDateProposed UsePrice (SF) Per SF Price 1NEC Fairway Dr. & Auto Center Rd.SaleFeb-16Auto-related use$2,904,500$2,904,500489,614$5.93 San Bernardino, CA 92408 2Highland AvenueSaleOct-17Auto Dealership$4,424,000$4,424,000291,852$15.16 Fontana, CA 92336 3Foothill Blvd & LarchSaleNov-17Gas Station , Circle $1,500,000$1,500,000294,030$5.10 6.75-Acre Commercial SiteK, Car Wash & Rialto, CA 92376Nat'l Drive- Through 4NWC of Little Mountain Drive & N. SaleJan-18Commercial office$1,150,000$1,150,000182,081$6.32 Mt. Vernon Avenue San Bernardino, CA 92405 5SEC Foothill Boulevard & N. Larch Available/Apr-19Commercial / $1,900,000$1,900,000191,664$9.91 AvenueListingindustrial land Rialto, CA 92376 62277 Orange AvenueAvailable/Apr-19Commercial/Retail$1,350,000$1,350,000301,000$4.49 Highland, CA 92346Listing 7NEC of Little Moutain Drive & Available/Apr-19Commercial/Retail$750,000$750,000253,955$2.95 Miramonte DriveListing San Bernardino, CA 92405 SubjectVacant Land,------Commercial/Retail------757,944--- San Bernardino, California 1 Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE The sales utilized represent the best data available for comparison with the subject and were selected from the greater San Bernardino area. These sales were chosen based upon size, zoning, frontage, access, and location. DISCUSSION/ANALYSIS OF LAND SALES Land Sale One This property is located at the northwest quadrant of W. Fairway Drive and S. Camino Real, with exposure on the western side of Interstate Highway 215, as well as frontage along Fairway Drive and S. Auto Center Road. The site includes 4 adjacent commercial parcels totaling 11.24 acres. The site was assembled via 3 individual transactions from 3 different sellers, all recorded in February 2016. The sites measure 2.14 acres, 2.33 acres, 2.50 acres and 4.27 acres in size. Public water and sewer are available, and the site was vacant at the time of sale. The site is zoned CG-1, Commercial General. Traffic counts were not available for the roadways the subject has frontage along, but the eastern site boundary has exposure from Highway 215, with AADT of over 160,000. The three separate acquisitions totaled a sale price of $2,904,500, which equates to an overall sales price of $5.93 per square foot based on the assemblage. The © 2019CBRE, Inc. 27 17.61-Acres of Commercial Land, San Bernardino, California Land Value buyer purchased the site for near term retail auto sales development. The four parcels (0141- 251-47, 0141-251-48, 0141-251-81, 0141-251-82) were assembled into one parcel number: 0141-251-83. The upward market conditions (time) adjustment reflects the improved market conditions since the date of sale. This comparable has an irregular shape, considered inferior, and received an upward adjustment for this characteristic. An upward adjustment for access/exposure was applied to this comparable due to its inferior access/exposure from the 215 Freeway. With respect to zoning/density/entitlements, this comparable was considered superior because of its zoning overlay for auto-related businesses and entitlements and therefore received a downward adjustment. Overall, this comparable was deemed inferior in comparison to the subject and an upward net adjustment was warranted to the sales price indicator. Land Sale Two This comparable represents the sale of 6.70 acres of vacant land located on the north side of Highland Avenue, west of Sierra Avenue, and south the Sierra Avenue Highway 210 off-ramp. The property was not entitled at the time of sale and is located within an auto-overlay zone. The property is generally level and has good visibility from the 210 off-ramp. The property sold on October 10, 2017 for $4,424,000, or $15.19 per square foot. The upward market conditions (time) adjustment reflects the improved market conditions since the date of sale. A downward adjustment was made f economies of scale. A downward adjustment was applied to this comparable for its superior access/exposure based upon its good frontage along the 210 Freeway off-ramp, which provides superior visibility and higher traffic counts. The downward adjustment for location was warranted due to Fontana's superior demographics, higher rents, and lower vacancies. With respect to zoning/density/entitlements, this comparable was considered superior in this aspect and received a downward adjustment because of its zoning overlay for auto-related businesses. Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales price indicator. Land Sale Three This comparable represents the sale of 6.75 acres of commercial land located on the north side of E. Foothill Boulevard, just northwest of the intersection at E. Foothill Boulevard & N. Larch Avenue. The property was vacant land at the time of sale, with generally level topography, and all utilities were available to site. The buyer plans to build a gas station (Circle K), car wash & a national drive-through restaurant. The property was not entitled at the time of sale. According to the listing agent, Larch Avenue is being extended through to Foothill Boulevard, improving the access to this site. The listing agent also indicated that 200 new single-family residences are being built on the lot east of this property. The listing agent also stated that the property's appraisal reassessment was for $1 million more than the sale price. The November 30, 2017 sale price was $1,500,000, or $5.10 per square foot. © 2019CBRE, Inc. 28 17.61-Acres of Commercial Land, San Bernardino, California Land Value The upward market conditions (time) adjustment reflects the improved market conditions since the date of sale. A downward adjustment economies of scale. This comparable received an upward adjustment for corner location as it has less corners than the subject. A modest upward adjustment was applied to this comparable for its inferior access/exposure; even though it has superior traffic counts, it also has inferior accessfrom one street only, E. Foothill Blvd. The downward adjustment for location was warranted due to the population within 3-mile radius of this comparable being approximately 58% greater than subject's. Further, this comparable is located adjacent to big-box retail. Overall, this comparable was deemed inferior in comparison to the subject and an upward net adjustment was warranted to the sales price indicator. Land Sale Four This comparable represents the sale of 4.18-acres of commercial land located at the northwest corner of Little Mountain Drive and N. Mt. Vernon Avenue, within San Bernardino, California. This property was roughly graded at the time of sale and had all utilities available to site. The property is just east of the 215 Freeway. The property is zoned for commercial office, and according to CoStar, an office building for the County will be built on the site. The sale price was $1,150,000, or $6.60 per square foot. The upward market conditions (time) adjustment reflects the improved market conditions since the date of sale. A downward adjustment economies of scale. This comparable received an upward adjustment for corner location as it has less corners than the subject. An upward adjustment was applied to this comparable for its inferior access/exposure attribute when compared to the subject, based upon its less than ideal access and location on a secondary street, as well as being surrounded by mostly residential properties. Overall, this comparable was deemed inferior in comparison to the subject and an upward net adjustment was warranted to the sales price indicator. Land Sale Five This comparable represents the current listing of 4.40-acres of land located at the southeast corner of Foothill Boulevard and Larch Avenue. The property is currently vacant land, with mostly level topography, and is located within the Foothill Boulevard Specific Plan. According to the listing agent's marketing material, the property could be used for either commercial or industrial uses. Major retailers are west of the site, including 99 Cents Only Stores, The Home Depot, Denny's, Walgreens, and Food4 Less. The property is currently listed for $1,900,000, or $9.91 per square foot. It has been on the market for 22 months. In terms of conditions of sale, this comparable received a downward adjustment for its status as a listing. A downward adjustment economies of scale. This comparable received an upward adjustment for corner location as it has less corners than the subject. A downward adjustment was applied to this comparable for its superior access/exposure attribute, based upon superior traffic counts. The downward © 2019CBRE, Inc. 29 17.61-Acres of Commercial Land, San Bernardino, California Land Value adjustment for location was warranted due to the population within 3-mile radius being approximately 58% greater than subject's. Overall, this comparable was deemed superior in comparison to the subject and a downward net adjustment was warranted to the sales price indicator. Land Sale Six This comparable represents the current listing of 6.91 acres of commercial/retail land located on the north side of Highland Avenue and the east side of Orange Street. The property is L-shaped and does not include the NEC of Highland Avenue & Orange Street. Topography is gently sloped to the south, nearly level. Currently the property is improved with an older single-family residence, which is not being given consideration in the agent's marketing materials. The property is currently listed for $1,350,000, or $4.49 per square foot. It has been on the market for approximately 11 months. In terms of conditions of sale, this comparable received a downward adjustment for its status as a listing. A downward adjustment economies of scale. This comparable was considered inferior in terms of shape and received an upward adjustment for its L-shaped lot. This comparable received an upward adjustment for corner location as it has less corners than the subject. An upward adjustment was applied to this comparable for its inferior access/exposure as most property is away from Highland Avenue due to the site depth, and additional frontage is on a less-traveled secondary street. An upward adjustment for location was warranted due to the smaller population within 1- and 3-mile radius. Overall, this comparable was deemed inferior in comparison to the subject and an upward net adjustment was warranted to the sales price indicator. Land Sale Seven This comparable represents the current listing of 5.83-acres of commercial land located at the northeast corner of Little Mountain Drive and Miramonte Drive in San Bernardino, California. The property is of irregular shape, with good frontage along Little Mountain Drive, and additional frontage along Miramonte Drive. The property has generally level topography and is zoned CG- 1, Commercial General. The current list price is $750,000, or $2.95 per square foot. In terms of conditions of sale, this comparable received a downward adjustment for its status as a listing. A downward adjustment smaller size, reflective of economies of scale. shape. This comparable received an upward adjustment for corner location as it has less corners than the subject. An upward adjustment was made for inferior access/exposure. Overall, this comparable was deemed inferior in comparison to the subject and an upward net adjustment was warranted to the sales price indicator. © 2019CBRE, Inc. 30 17.61-Acres of Commercial Land, San Bernardino, California Land Value SUMMARY OF ADJUSTMENTS Based on our comparative analysis, the following chart summarizes the adjustments warranted to each comparable. LAND SALES ADJUSTMENT GRID Comparable Number1234567Subject Transaction TypeSaleSaleSaleSaleAvailable / Available / Available / Listing--- ListingListing Transaction DateFeb-16Oct-17Nov-17Jan-18Apr-19Apr-19Apr-19--- Proposed UseAuto-related Auto Gas Station, Commercial Commercial / Commercial / Commercial / useDealershipCircle K, Car officeindustrial landRetailRetail Actual Sale Price$2,904,500$4,424,000$1,500,000$1,150,000$1,900,000$1,350,000$750,000--- 1 $2,904,500$4,424,000$1,500,000$1,150,000$1,900,000$1,350,000$750,000--- Adjusted Sale Price Size (Acres)11.246.706.754.184.406.915.8317.40 Size (SF)489,614291,852294,030182,081191,664301,000253,955757,944 Price Per SF$5.93$15.16$5.10$6.32$9.91$4.49$2.95--- Price ($ PSF)$5.93$15.16$5.10$6.32$9.91$4.49$2.95 Property Rights Conveyed0%0%0%0%0%0%0% 1 Financing Terms 0%0%0%0%0%0%0% Conditions of Sale0%0%0%0%-10%-10%-10% Market Conditions (Time)10%5%4%4%0%0%0% Subtotal$6.52$15.92$5.30$6.57$8.92$4.04$2.66 Size 0%-5%-5%-5%-5%-5%-5% Shape 15%0%0%0%0%15%40% Corner 0%0%10%10%10%10%10% Access/Exposure 10%-15%20%10%-5%20%10% Topography 0%0%0%0%0%0%0% Location 0%-15%-10%0%-10%15%0% Zoning/Density/Entitlements -15%-5%0%0%0%0%0% Utilities 0%0%0%0%0%0%0% Highest & Best Use 0%0%0%0%0%0%0% Total Other Adjustments10%-40%15%15%-10%55%55% Value Indication for Subject$7.18$9.55$6.10$7.56$8.03$6.26$4.12 Absolute Adjustment50%45%49%29%40%75%75% 1 Adjusted sale price for cash equivalency and/or development costs (where applicable) Compiled by CBRE Entitlement Costs The subject parcel had been partially entitled for development, prior to the effective date of this appraisal. A Conditional Use Permit (CUP) that was in place reportedly expired on June 18, 2017, and to the best of our understanding has not been extended or renewed. The expenses associated with the entitlement of the site are reported at $1,025,369. These expenses include the costs incurred to obtain the CUP, as well as additional entitlements to prepare the site for development. As noted, this appraisal is based on the hypothetical condition that there are no entitlements in place, as of the effective date of the appraisal. Therefore, we have used comparables without entitlements. The exceptions are Sale 1, to which a downward 15% adjustment was made for its entitlements and sale 2 which was adjusted downward by 5% for its location in an auto overlay zone. By using comparables without entitlements, and adjusting downward for the one comparable with entitlements, we were able to arrive at a hypothetical market value as if unentitled. © 2019CBRE, Inc. 31 17.61-Acres of Commercial Land, San Bernardino, California Land Value CONCLUSION After adjustment, the above seven comparables indicate a range of $4.12 to $9.55 , and average $6.97 per square foot. Based on the preceding analysis, Sales 1, 3, 4 and 6 were the most representative of the subject site, and warranted greatest consideration because of similarities in terms of location, access, frontage, size, shape, and/or corner location. These sales indicate a tighter value range for the subject, with a low of $6.10 and a high of $7.56 per square foot. The average of Sales 1, 3, 4, and 6 is $6.77 per square foot. As discussed, the subject reflects a good freeway proximate location with good frontage, visibility and access from three streets. These positive attributes are tempered by current low demand levels for new retail development in the city of San Bernardino. Based on these bifurcated factors a value near the adjusted average is considered most appropriate. As noted, the adjusted average of the range overall is $6.97, while the adjusted average of Sales 1, 3, 4 and 6, considered to be most similar is $6.77 per square foot. We have reconciled near these averages between $6.75 and $7.00 per square foot. To arrive at an indication of value, we estimated the costs to remove the existing infrastructure, level the site with fill dirt, and re-plat the property to prepare for development. The following table presents the valuation conclusion: CONCLUDED LAND VALUE $ PSFSubject SFTotal $6.75x757,944=$5,116,122 $7.00x757,944=$5,305,608 Indicated Value:$5,200,000 Less: Fill Dirt($75,000) Removal of Infrastructure($150,000) Re-Platting Expense($10,000) Indicated Value:$4,965,000 Rounded$4,950,000 (Rounded $ PSF)$6.53 Compiled by CBRE The concluded value equates to approximately $6.53 per square foot, after subtractions for fill dirt, removal of infrastructure, and re-platting expenses are made. © 2019CBRE, Inc. 32 17.61-Acres of Commercial Land, San Bernardino, California Reconciliation of Value Reconciliation of Value In the sales comparison approach, the subject is compared to similar properties that have been sold recently or for which listing prices or offers are known. The sales used in this analysis are considered comparable to the subject, and the required adjustments were based on reasonable and well-supported rationale. In addition, market participants are currently analyzing purchase prices on other properties as they relate to available substitutes in the market. Therefore, the sales comparison approach is considered to provide a reliable value indication. Based on the foregoing, the market value of the subject has been concluded as follows: MARKET VALUE CONCLUSION Interest Value Price per AppraisedDate of ValueConclusionSq. Ft. Appraisal Premise Hypothetical As-Is Market Value Fee SimpleApril 27, 2019$4,950,000$6.53 (As If Unentitled) Compiled by CBRE © 2019CBRE, Inc. 33 17.61-Acres of Commercial Land, San Bernardino, California Assumptions and Limiting Conditions Assumptions and Limiting Conditions 1.CBRE,Inc. throughitshasinspected through reasonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 2. is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purchasing power of the U.S. Dollar on such date. The Report is subject to change as a result of fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date. 3.Unless otherwise expressly noted in the Report, CBRE has assumed that: (i)Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE has not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii)Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this appraisal and, therefore, makes no representations relative to the condition of improvements. CBRE appraisers are not engineers and are not qualified to judge matters of an engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any purchaser would, as a precondition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii)Any proposed improvements, on or off-site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv)Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v)No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi)There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property. (vii)All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based. (viii)The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super-efficiently. (ix)The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x)The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to otwithstanding any discussion of possible readily achievable barrier removal construction items in the Report. © 2019CBRE, Inc. 34 17.61-Acres of Commercial Land, San Bernardino, California Assumptions and Limiting Conditions (xi)All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property. attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover them. Any user of the Report is urged to retain an expert in the applicable field(s) for information regarding such conditions. 4.CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner, or s representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 5.CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit. 6.All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 7.Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. 8.The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 9.No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 10.CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 11.Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the failure to become familiar with and understand the same. 12.The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. © 2019CBRE, Inc. 35 17.61-Acres of Commercial Land, San Bernardino, California Assumptions and Limiting Conditions 13.The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 14.The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 15.The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. © 2019CBRE, Inc. 36 17.61-Acres of Commercial Land, San Bernardino, California Addenda ADDENDA Addenda Addendum A LAND SALE DATA SHEETS SaleLand - Retail/CommercialNo. 1 11.24-Acre Site Property Name NEC Fairway Dr. & Auto Center Rd. Address San Bernardino, CA 92408 CountySan Bernardino Govt./Tax IDMultiple Land Area Net11.240 ac/ 489,614 sf Land Area Gross11.240 ac/ 489,614 sf Site Development StatusRaw UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeRectangular TopographyGenerally Level Flood Zone ClassZone X (Shaded) Flood Panel No./ Date06071C8683J/ Sep 2016 ZoningCG-1 (Commerical General) Entitlement StatusN/A Transaction Details TypeSalePrimary VerificationSecondary Verification, Prior Appraisal Interest TransferredFee SimpleTransaction Date02/26/2016 Condition of SaleNoneRecording Date02/26/2016 Recorded BuyerForce Auto Center LLCSale Price$2,904,500 Buyer TypePrivate InvestorFinancingCash to Seller Recorded SellerMultiple PartiesCash Equivalent$2,904,500 Marketing Time52 Month(s)Capital Adjustment$0 Listing BrokerN/AAdjusted Price$2,904,500 Doc #076404, 067532, 068428 Adjusted Price / ac and $258,407 / $5.93 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Comments This property is located at the northwest quadrant of W. Fairway Drive and S. Camino Real, with exposure on the western side of Interstate Highway 215, as well as frontage along Fairway Drive and S. Auto Center Road. The site includes 4 adjacent commercial parcels totaling 11.24 acres. The site was assembled via 3 individual transactions from 3 different sellers, all recorded in Febraury 2016. The sites measure 2.14 acres, 2.33 acres, 2.50 acres and 4.27 acres in size. Public water and sewer are available, and the site was vacant at the time of sale. The site is zoned CG-1, Commercial General. Traffic counts were not available for the roadways the subject has frontage along, but the eastern site boundary has exposure from Highway 215, with AADT of over 160,000. The three separate acquisitions totaled a sale price of $2,904,500, which equates to an overall sales price of $5.93 per square foot based on the assemblage. The buyer purchased the site for near term retail auto sales development. The four parcels (0141-251-47, 0141-251-48, 0141-251-81, 0141-251-82) were assembled into one parcel number: 0141-251- 83. SaleLand - Retail/CommercialNo. 2 6.69-Acre Commercial Site Property Name Highland Avenue Address Fontana, CA 92336 CountySan Bernardino Govt./Tax IDMultiple Land Area Net6.700 ac/ 291,852 sf Land Area Gross6.700 ac/ 291,852 sf Site Development StatusRaw UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeRectangular TopographyGenerally Level Flood Zone ClassZone X (Unshaded) Flood Panel No./ Date06071C7915H/ Aug 2008 ZoningC-2: General Commercial Entitlement StatusN/A Transaction Details Cushman & Wakefield: Tim Pimentel - TypeSalePrimary Verification 909.942.4647 Interest TransferredFee SimpleTransaction Date10/10/2017 Condition of SaleNoneRecording Date10/10/2017 Recorded BuyerFontanacapital Partners LLCSale Price$4,424,000 Buyer TypeN/AFinancingCash to Seller Recorded SellerLaurence Bonnano Revocable Living TrustCash Equivalent$4,424,000 Marketing Time18 Month(s)Capital Adjustment$0 Listing BrokerCushman & Wakefield: Tim Pimentel - Adjusted Price$4,424,000 909.942.4647 Doc #2017-0417773 Adjusted Price / ac and $660,299 / $15.16 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Comments This comparable represents the sale of 6.70 acres of vacant land located on the north side of Highland Avenue, west of Sierra Avenue, and south the Sierra Avenue Highway 210 off-ramp. The property was not entitled at the time of sale and is located within an auto-overlay zone. The property is generally level and has good visibility from the 210 off-ramp. The property sold on October 10, 2017 for $4,424,000, or $15.19 per square foot. SaleLand - Retail/CommercialNo. 3 6.75-acre commercial site Property Name Foothill Blvd & Larch Address 6.75-Acre Commercial Site Rialto, CA 92376 CountySan Bernardino Govt./Tax IDMultiple Land Area Net6.750 ac/ 294,030 sf Land Area Gross6.750 ac/ 294,030 sf Site Development StatusFinished UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeRectangular TopographyGenerally Level Flood Zone ClassN/A Flood Panel No./ DateN/A ZoningFoothill Boulevard Specific Plan Entitlement StatusN/A Transaction Details Century 21 Commercial, Everest: TypeSalePrimary Verification Randall J. Barondess - 805.990-9940 Interest TransferredN/ATransaction Date11/30/2017 Condition of SaleNoneRecording Date11/30/2017 Recorded BuyerProperty Plus Mobil LLCSale Price$1,500,000 Buyer TypeDeveloperFinancingN/A Recorded SellerBertz Rialto Properties Inc.Cash Equivalent$1,500,000 Marketing Time8 Month(s)Capital Adjustment$0 Listing BrokerCentury 21 Commercial, Everest: Randall J. Adjusted Price$1,500,000 Barondess - 805.990-9940 Doc #2017-0508312 Adjusted Price / ac and $222,222 / $5.10 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Buyer's Primary AnalysisN/AOccupancy at SaleN/A Static Analysis MethodN/AUnderwritten OccupancyStatic Analysis-N/A SourceStatic Analysis-N/APotential Gross IncomeStatic Analysis-N/A NOI / sfStatic Analysis-N/AVacancy/Collection LossStatic Analysis-N/A IRRN/AEffective Gross IncomeStatic Analysis-N/A OERStatic Analysis-N/AExpensesStatic Analysis-N/A Expenses /sfStatic Analysis-N/ANet Operating IncomeStatic Analysis-N/A Cap RateStatic Analysis-N/A Comments This comparable represents the sale of 6.75 acres of commercial land located on the north side of E. Foothill Boulevard, just northwest of the intersection at E. Foothill Boulevard & N. Larch Avenue. The property was vacant land at the time of sale, with generally level topography, and all utilities were available to site. The buyer plans to build a gas station (Circle K), car wash & a national drive-through restaurant. The property was not entitled at the time of sale. According to the listing agent, Larch Avenue is being extended through to Foothill Boulevard, improving the access to this site. The listing agent also indicated that 200 new single-family residences are being built on the lot east of this property. The listing agent also stated that the property's appraisal reassessment was for $1 million more than the sale price. The November 30, 2017 sale price was $1,500,000, or $5.10 per square foot. SaleLand - Retail/CommercialNo. 4 4.18-Acre Commercial Site Property Name NWC of Little Mountain Drive & N. Mt. Address Vernon Avenue San Bernardino, CA 92405 CountySan Bernardino Govt./Tax ID0148-021-66 Land Area Net4.180 ac/ 182,081 sf Land Area Gross4.180 ac/ 182,081 sf Site Development StatusRaw UtilitiesAll to Site Maximum FARN/A Min Land Bldg RatioN/A ShapeOther(See Comments) TopographyN/A Flood Zone ClassZone X (Unshaded) Flood Panel No./ Date06071C7940J/ Sep 2016 ZoningCO: Commercial Office Entitlement StatusN/A Transaction Details CoStar, LandVision, Grant Deed No. TypeSalePrimary Verification 2018-0009853 Interest TransferredFee SimpleTransaction Date01/10/2018 Condition of SaleNoneRecording Date01/10/2018 Recorded Buyer27th Street TAD LLCSale Price$1,150,000 Buyer TypeDeveloperFinancingCash to Seller Recorded SellerGreen Construction Inc.Cash Equivalent$1,150,000 Marketing Time6 Month(s)Capital Adjustment$0 Listing BrokerKorek Land Company: Larry Lynch - Adjusted Price$1,150,000 818.787.3077 Doc #2018-0009853 Adjusted Price / ac and $275,120 / $6.32 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Comments This comparable represents the sale of 4.18-acres of commercial land located at the northwest corner of Little Mountain Drive and N. Mt. Vernon Avenue, within San Bernardino, California. This property was roughly graded at the time of sale and had all utilities available to site. The property is just east of the 215 Freeway. The property is zoned for commercial office, and according to CoStar, an office building for the County will be built on the site. The sale price was $1,150,000, or $6.60 per square foot. Available/ListingLand - Retail/CommercialNo. 5 4.40-Acre Commercial Site Property Name SEC Foothill Boulevard & N. Larch Avenue Address Rialto, CA 92376 CountySan Bernardino Govt./Tax ID0128-071-02, 0128-071-03, 0128-071-09 Land Area Net4.400 ac/ 191,664 sf Land Area Gross4.400 ac/ 191,664 sf Site Development StatusRaw UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeRectangular TopographyGenerally Level Flood Zone ClassN/A Flood Panel No./ DateN/A ZoningFoothill Boulevard Specific Plan Entitlement StatusN/A Transaction Details CoStar, Marketing Material, Public TypeAvailable/ListingPrimary Verification Record Interest TransferredFee SimpleTransaction Date04/29/2019 Condition of SaleNoneRecording DateN/A Recorded BuyerN/A - LISTINGSale Price$1,900,000 Buyer TypeN/AFinancingN/A Recorded SellerLin Hsu-Ting & Family Survivors TrustCash Equivalent$1,900,000 Marketing TimeN/ACapital Adjustment$0 Listing BrokerKW Commercial: Rene Ramos - Adjusted Price$1,900,000 909.980.6868 Doc #N/A - LISTING Adjusted Price / ac and $431,818 / $9.91 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Comments This comparable represents the current listing of 4.40-acres of land located at the southeast corner of Foothill Boulevard and Larch Avenue. The property is currently vacant land, with mostly level topography, and is located within the Foothill Boulevard Specific Plan. According to the listing agent's marketing material, the property could be used for either commercial or industrial uses. Major retailers are west of the site, including 99 Cents Only Stores, The Home Depot, Denny's, Walgreens, and Food4 Less. The property is currently listed for $1,900,000, or $9.91 per square foot. It has been on the market for 22 months. Available/ListingLand - Retail/CommercialNo. 6 6.91-Acre Commercial Site Property Name 2277 Orange Avenue Address Highland, CA 92346 CountySan Bernardino Govt./Tax IDMultiple Land Area Net6.910 ac/ 301,000 sf Land Area Gross6.910 ac/ 301,000 sf Site Development StatusRaw UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeL Shaped TopographyGenerally Level Flood Zone ClassZone X (Unshaded) Flood Panel No./ Date06071C7965H/ Aug 2008 ZoningCG-1: Commercial General Entitlement StatusN/A Transaction Details CoStar, LandVision, Agent's Marketing TypeAvailable/ListingPrimary Verification Information Interest TransferredFee SimpleTransaction Date04/29/2019 Condition of SaleNoneRecording DateN/A Recorded BuyerN/A - LISTINGSale Price$1,350,000 Buyer TypeN/AFinancingN/A Recorded SellerPacific West Co.Cash Equivalent$1,350,000 Marketing Time11 Month(s)Capital Adjustment$0 Listing BrokerLao & Associates: Solomon Lao - Adjusted Price$1,350,000 626.864.9038 Doc #N/A - LISTING Adjusted Price / ac and $195,369 / $4.49 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Comments This comparable represents the current listing of 6.91 acres of commercial/retail land located on the north side of Highland Avenue and the east side of Orange Street. The property is L-shaped and does not include the NEC of Highland Avenue & Orange Street. Topography is gently sloped to the south, nearly level. Currently the property is improved with an older single-family residence, which is not being given consideration in the agent's marketing materials. The property is currently listed for $1,350,000, or $4.49 per square foot. It has been on the market for approximately 11 months. Available/ListingLand - Retail/CommercialNo. 7 5.83-Acres of Commercial Land Property Name NEC of Little Moutain Drive & Miramonte Address Drive San Bernardino, CA 92405 CountySan Bernardino Govt./Tax IDMultiple Land Area Net5.830 ac/ 253,955 sf Land Area Gross5.830 ac/ 253,955 sf Site Development StatusRaw UtilitiesAll to site Maximum FARN/A Min Land Bldg RatioN/A ShapeIrregular TopographyGenerally Level Flood Zone ClassZone X (Unshaded) Flood Panel No./ Date06071C7940J/ Sep 2016 ZoningCG-1: Commercial Office Entitlement StatusN/A Transaction Details TypeAvailable/ListingPrimary VerificationCBRE: Michael S. Day - 909.418.2207 Interest TransferredN/ATransaction Date04/29/2019 Condition of SaleNoneRecording DateN/A Recorded BuyerN/A - ListingSale Price$750,000 Buyer TypeN/AFinancingN/A Recorded SellerN/ACash Equivalent$750,000 Marketing TimeN/ACapital Adjustment$0 Listing BrokerCBRE: Michael S. Day - 909.418.2207Adjusted Price$750,000 Doc #N/A - Listing Adjusted Price / ac and $128,645 / $2.95 / sf Adjusted Price/ FARN/A Adjusted Price/ UnitN/A Buyer's Primary AnalysisOtherOccupancy at SaleN/A Static Analysis MethodN/AUnderwritten OccupancyStatic Analysis-N/A SourceStatic Analysis-N/APotential Gross IncomeStatic Analysis-N/A NOI / sfStatic Analysis-N/AVacancy/Collection LossStatic Analysis-N/A IRRN/AEffective Gross IncomeStatic Analysis-N/A OERStatic Analysis-N/AExpensesStatic Analysis-N/A Expenses /sfStatic Analysis-N/ANet Operating IncomeStatic Analysis-N/A Cap RateStatic Analysis-N/A Comments This comparable represents the current listing of 5.83-acres of commercial land located at the northeast corner of Little Mountain Drive and Miramonte Drive in San Bernardino, California. The property is of irregular shape, with good frontage along Little Mountain Drive, and additional frontage along Miramonte Drive. The property has generally level topography and is zoned CG-1, Commercial General. The current list price is $750,000, or $2.95 per square foot. Addenda Addendum B SITE PLANS Addenda Addendum C CLIENT CONTRACT INFORMATION Addenda Addendum D QUALIFICATIONS © 201 CBRE, Inc. © 201 CBRE, Inc. © 201 CBRE, Inc. Addenda CBRE VALUATION & ADVISORY SERVICES STEVE CALANDRA, MAI Valuation & Advisory Services 949.725.8408 Steve.Calandra@cbre.com www.cbre.com MISSION PROPERTY ADVISORS, INC. 231 E. ALESSANDRO BOULEVARD, SUITE #616 RIVERSIDE, CA 92508 PH: 951.656.1100 FX: 951.848.9300 Type of ReportAppraisal Report Report FormatNarrative Our File Number16-063 Date of Value June 28, 2019 Date Report PreparedJuly 17, 2019 Subject Property Identification Property TypeVacant commercial land LocationSWCArden & Highland Avenues City, State, Zip CodeSan Bernardino, CA 92404 Subject Property CountySan Bernardino Assessor Parcel Numbers1191-021-01 & 11-69 & 1191-041-17-22 & 25-32 Client Mark Sandoval Mark Development P.O. Box 507 Redlands, CA 92373 AppraiserSteven R. Fontes, MAI, CCIM President July 17, 2019 Mark Sandoval Mark Development P.O. Box 507 Redlands, CA 92373 Subject of Appraisal Vacant commercial land locatedat the SWC of Aden & Highland Avenues, San Bernardino,CA 92404.The property is the approximately 17.61 gross acres in size and is known by San Bernardino County Assessor Parcel Numbers 1191- 021-01 and 11-69 and 1191-041-17-22 & 25-32. Dear Mr. Sandoval, Pursuant to your request and authorization, an independent opinion of market value has been prepared concerning the above-referenced subject property. The purpose of this appraisal report is to set forth the data, analyses and conclusions relative to my opinion of current market value. This is an Appraisal Report as defined by the current edition of USPAP. This Appraisal Report has been prepared for the client in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP). Based upon the investigations conducted, analyses made, andmy experience asareal estate appraiser,I have formed the opinion that, as of June 28, 2019andsubject to the General Assumptions, Limiting Conditions, Hypothetical Conditions and Extraordinary Assumptions set forth in thisreport, the estimated market value of the subject property is as follows: Approximately 17.61 gross acres of land Current Fee Simple Market Value as of 06-28-19 $3,535,000 The above value opinion ispresented considering cash or cash equivalent terms consistent with the definitionof market valuecontained within the report body. The value opinion reported is based on the general purchasing power of the U.S. Dollar on the stated date of value. The appraiser cannot be held responsible for any subsequent or unforeseeable events that alter market conditions occurring after the date of value. 1 Mark Sandoval July 17, 2019 1 The termHypothetical Conditionisdefined as: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. None. 2 The term Extraordinary Assumptionis defined as: 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. The subject parcelisappraised assuming it is not impacted by any hazardous substances or conditions or any toxic materials or conditions and the value opinion provided has not been adjusted forthe existence of any such contamination. The subject had a level of entitlement approval which consisted of an approved Conditional Use Permit (CUP). The CUP was approved on 06-18-12 and it would have expired after 2 years but annual extensions have been made which extended the approval out to 06-18-17. The value reported assumes the site were unentitled because Mark Development has paid for the entitlement of the site separately and aside from what will be a future land acquisition. To appraise the subject property as entitled land would have the effect of charging Mark Development twice for their cost of entitling the subject property. The use of extraordinary assumptions and/or hypothetical conditions mighthave affected the assignment results. Based onmy inquiry of active market participants’familiar with the area and reported historical marketing periods for some of the comparable sales,my estimate of reasonable exposure timefor the subject is approximately 12 to 24 months. This estimate isconsidered to be an approximation that should not be construed as absolute. This letter is the first part of a report containing 41 pages plus addenda that should not be read out of context from the total report nor removed. 1 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition (Washington, DC: The Appraisal Foundation, 2016). 2 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition (Washington, DC: The Appraisal Foundation, 2016). 2 Mark Sandoval July 17, 2019 The appraisal that follows sets forth the results of the investigation of the property, analyses, pertinent facts about the area, comparable data, and the reasoning leading to the market value opinions. Your attention is invited to the following report. Respectfully, Steven R. Fontes, MAI, CCIM President CA Certified General Real Estate Appraiser #AG001644 Expiration: 3/21/2020 3 TABLE OF CONTENTS TRANSMITTAL LETTER........................................................................................................................................... 1 TABLE OF CONTENTS...............................................................................................................................................4 SUMMARY OF SALIENT FACTS & OPINIONS......................................................................................................5 INTRODUCTION.........................................................................................................................................................6 Intended Use..............................................................................................................................................................6 Client & Intended Users............................................................................................................................................6 Scope of Work...........................................................................................................................................................6 Date of Value.............................................................................................................................................................7 Interest Appraised......................................................................................................................................................7 Definitions................................................................................................................................................................. 7 Property Identification & Legal Description.............................................................................................................9 Owner of Record........................................................................................................................................................9 Subject History........................................................................................................................................................10 Assessed Valuation and Taxes................................................................................................................................. 10 Neighborhood Description.......................................................................................................................................20 SUBJECT SITE DESCRIPTION................................................................................................................................26 Location, Size & Shape...........................................................................................................................................26 Soil and Sub-Soil.....................................................................................................................................................26 Easements & Restrictions........................................................................................................................................26 Nuisances & Hazards...............................................................................................................................................26 Topography & Drainage..........................................................................................................................................27 Zoning......................................................................................................................................................................27 HIGHEST AND BEST USE ANALYSIS...................................................................................................................28 Highest and Best Use as Though Vacant.................................................................................................................28 VALUATION METHODOLOGY..............................................................................................................................29 Description of the Sales Comparison Approach to Value........................................................................................29 Description of the Reconciliation Process...............................................................................................................29 RECONCILIATION....................................................................................................................................................41 ADDENDA GENERAL ASSUMPTIONS LIMITING CONDITIONS Certification Appraiser Qualifications Engagement Letter Infrastructure Demolition Bid Title Report Zoning Documents Subject Photos 4 SUMMARY OF SALIENT FACTS & OPINIONS Report TypeAppraisal Report Property TypeVacant commercial land Property LocationSWCArden & Highland Avenue San Bernardino, CA 92404 Assessor’s Parcel Numbers 1191-021-01 and 11-69 and 1191-041-17-22 & 25-32. San Bernardino County ApproximateLand Area17.61 gross acres per public records Property Rights AppraisedFee Simple ZoningCG-1, Commercial General General Plan Land UseCommercial EntitlementsCUP approved on 06-18-12, expired 06-18-17 See related comments in Letter of Transmittal Marketing/Exposure Period12 – 24 months Highest and Best Use as Vacant Hold for speculation Date of Value June 28, 2019 Date of ReportJuly 17, 2019 VALUEOPINION Sales Comparison Approach$3,535,000 5 INTRODUCTION Intended Use The intended use of this appraisal is to assistin establishing acurrent marketvalue fora potential purchase. Client & Intended Users Mark Sandoval with Mark Development is the client. The clientand the City of San Bernardino are the intended users. Scope of Work Problem to be Solved The problem to be solved in this analysis is to estimate the current market value of the subject propertyas if unentitled. Disclosure of Scope of Work Performed 1.The subject property was identified byAssessor Parcel Number, Assessor's Plat Map, aerial imagery and a field inspection conducted by the appraiser. 2.The subject property was viewed and photographed on June 28, 2019. A variety of photographs were taken. 3.I searched forvacant commercially zoned and similarly sized land sales throughout the region. Data sources consulted includeCostar,the Multi-Regional Regional MLS, land brokersand my own files.Smaller land sales were rejected because they would skew the value per square foot result. 4.I conducted a Sales Comparison Approach to value to arrive at the land value opinion. 5.A Cost Approach was not employedas it is not relevant to the appraisal of vacant land. 6.An Income Capitalization Approach was not conductedas it is not relevantto the appraisal of vacant land. 7.I reviewed public record information for the subject property. 8.Ireviewed zoning information with the City of San Bernardino Planning Department. 6 Date of Value The opinion of value expressed is based on information available as ofJune 28, 2019.The value opinion reported is based on the general purchasing power of the U.S. Dollar on the stated date of value. The appraiser cannot be held responsible for any subsequent or unforeseeable events that alter market conditions occurring after the date of value. Interest Appraised This report pertains to a valuation of the fee simple interest in the subject property. A title report addressing the interest in the subject property was not provided to the appraiser. A fractional interest in the subject property would not necessarily represent that percentage of the whole. Definitions Terms requiring definition used in this report, are defined as follows: 3 The term fee simpleestateis defined as: 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. 4 The term real estateis defined as: An identified parcel or tract of land, including improvements, if any. 5 The term real propertyis defined as: An interest or interests in real estate. 6 The term personal propertyis defined as: Identifiable tangible objects that are considered by the general public as being “personal” - for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate. 3th Appraisal Institute, The Dictionary of Real Estate Appraisal, 6ed. (Chicago: Appraisal Institute, 2015). 4th Appraisal Institute, The Dictionary of Real Estate Appraisal,6ed. (Chicago: Appraisal Institute, 2015). 5th Appraisal Institute, The Dictionary of Real Estate Appraisal, 6ed. (Chicago: Appraisal Institute, 2015). 6th Appraisal Institute, The Dictionary of Real Estate Appraisal, 6ed. (Chicago: Appraisal Institute,2015). 7 7 The term market valueis defined as: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) Buyer and seller are typically motivated; (2) Both parties are well informed or well advised, and acting in what they consider their own best interests; (3) A reasonable time is allowed for exposure in the open market; (4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Reasonable Exposure Time &Reasonable Marketing Time Reasonable exposure timeis defined in the Uniform Standards of Professional Appraisal Practice as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Reasonable marketing timeis defined in the Uniform Standards of Professional Appraisal Practice as an estimate of the amount of time it might take to sell a property interest in real estate at the estimated market value level during the period immediately after the effective date of appraisal. Based on reported historical marketing periods, interviews with residential land brokersand exercising professional judgment, my estimate of normal reasonable exposure timefor the subject is approximately 12 – 24 months. Reasonable marketing time is estimated to be on par with reasonable exposure time. These time frames are considered to be approximations that should not be construed as absolute. 7 Code of Federal Regulations, Title 12, Part 34, Subpart C, § 34.42(g). 8 Property Identification & Legal Description The subject property contains approximately 17.61 gross acres of vacant land located at the SWC of Arden & Highland Avenues, San Bernardino, CA 92404. It is also referred to asSan Bernardino County Assessor Parcel Numbers 1191-021-01 and 11-69 and 1191-041-17-22 & 25-32.A legal description is includedin the addenda in the preliminary title report. Owner of Record According to the public record, the owner of record for the subject is as follows: Redevelopment Agency of the City of San Bernardino 9 Subject History Therewere no reported sales of the subject parcelwithin the prior 3-year period. Assessed Valuation and Taxes Base real property taxes in California are limited to 1% of the assessed value of a property as of a specified base year. The base year valuation is the 1975 assessor’s market value estimate,or the market value based on reappraisal. Reappraisal can result from sale, further improvement or long-term leasing. If there is no reappraisal, taxes are limited to a 2% annual increase of the assessor’s market value estimate, plus voter approved bond debt or special assessments. Since the subject is owned by amunicipality it is tax exempt. The tax rate in the vicinity isapproximately 1.32%. This rate is typical of the area. 10 Regional Map JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU JOUSPEVDUJPO - - FNQMPZNFOU - INLAND EMPIRE EMPLOYMENT January-2005 to January-2019 Tpvsdf;!Dbmjgpsojb!Fnqmpznfou!Efwfmpqnfou!Efqbsunfou<!Bobmztjt!cz!VDS!Dfoufs!gps!Fdpopnjd!Gpsfdbtujoh 6/1 2-711 2-611 1/1 2-511 2-411 .6/1 Fnqmpznfou!)111t-!TB* Zfbs!up!Zfbs!Dibohf!)&-TB* 2-311 .21/1 2-211 Kbo!3116Kbo!3118Kbo!311:Kbo!3122Kbo!3126Kbo!3128Kbo!312: Kbo!3124 Opogbsn!Fnqmpznfou Vofnqmpznfou!Sbuf - JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU INLAND EMPIRE EMPLOYMENT BY INDUSTRY Tpvsdf;!Dbmjgpsojb!Fnqmpznfou!Efwfmpqnfou!Efqbsunfou<!Bobmztjt!cz!VDS!Dfoufs!gps!Fdpopnjd!Gpsfdbtujoh Jan-19 Employment1-Year1-Year Sector (000s)Change (%)Change (000s) Fevdbujpo0Ifbmui357/95/:22/6 53/54/62/5 Qspg-!Tdj!'!Ufdi 239/24/14/9 Usbotqpsu0Xbsfipvtf 371/22/95/8 Hpwfsonfou ::/52/42/4 Benjo!Tvqqpsu 216/62/22/3 OS0Dpotusvdujpo 212/31/:1/: Nbovgbduvsjoh 281/11/92/5 Mfjtvsf!boe!Iptqjubmjuz 292/91/82/4 Sfubjm!Usbef 75/41/51/4 Xipmftbmf!Usbef 22/21/11/1 Jogpsnbujpo 6/11/11/1 Vujmjujft 9/4.1/21/1 Nbobhfnfou Gjobodjbm!Bdujwjujft54/6.2/5.1/7 55/5.4/3.2/6 Puifs!Tfswjdft Upubm!Opogbsn2-623/12/836/8 - JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU CVTJOFTT!BDUJWJUZ - - - - - JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU INLAND EMPIRE SALES TAX RECEIPTS BY CATEGORY Tpvsdf;!IeM!Dpnqbojft<!Bobmztjt!cz!VDS!Dfoufs!gps!Fdpopnjd!Gpsfdbtujoh Q4-181-Year3-Year Category ($ Thousands)Change (%)Change (&) %2:-:5:7/732/1 Gvfm!boe!Tfswjdf!Tubujpot %31-1667/732/4 Cvjmejoh!boe!Dpotusvdujpo %:-2694/922/3 Gppe!boe!Esvht %44-5:54/622/: Cvtjoftt!boe!Joevtusz %32-3474/129/3 Sftuvsbout!boe!Ipufmt %43-9262/521/4 Bvupt!boe!Usbotqpsubujpo %49-:792/33/8 Hfofsbm!Dpotvnfs!Hppet 5/825/7 Upubm %311-:86 JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU SFTJEFOUJBM!SFBM!FTUBUF - MEDIAN HOME PRICES AND SALES Inland Empire Q1-05 to Q4-18 Tpvsdf;!EbubRvjdl<!Bobmztjt!cz!VDS!Dfoufs!gps!Fdpopnjd!Gpsfdbtujoh 511 36 461 31 411 26 361 21 Nfejbo!Qsjdf!)%!111t-!TB* Tbmft!)111-!TB* 311 6 261 R5.16R5.18R5.1:R5.22R5.24R5.26R5.28R5.29 Ipnf!TbmftNfejbo!Ipnf!Qsjdf 1 JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU - - DPNNFSDJBM!SFBM!FTUBUF - - JOMBOE!FNQJSF!SFHJPOBM!JOUFMMJHFODF!SFQPSU TOTAL NON-RESIDENTIAL PERMITS Inland Empire, Q1-08 to Q4-18 Tpvsdf;!DJSC!)Dpotusvdujpo!Joevtusz!Sftfbsdi!Cpbse*<!Bobmztjt!cz!VDS!Dfoufs!gps!Fdpopnjd!Gpsfdbtujoh 211 811 711 61 611 511 411 1 311 211 Qfsnju!Wbmvft!)%!Njmmjpot-!TB* Zfbs.Pwfs.Zfbs!Dibohf!)&-TB* .61 1 R2.19R2.21R2.23R2.25R2.27R2.29 Opo.Sft!QfsnjutHspxui!Sbuf Neighborhood Map Neighborhood Description The Appraisal of Real Estate defines a neighborhood as a group of complementary land uses. The subject property is located at the SWC of Arden & Highland Avenues, San Bernardino, CA 92404. The neighborhood boundaries (outlined in yellow below) can best be described asHighland Avenue stretching between Victoria and Del Rosa Avenues. Access into the subject neighborhoodisexcellent from the 210 Freeway at the Highland Avenue on/off- ramp. The subject neighborhood is primarily characterized bya mixture of commercial and residential uses (both single and multi-family). The level of maintenance in the neighborhood is average. 20 SUBJECT SITE DESCRIPTION Location, Size & Shape The subject property is located at the SWCof Arden & Highland Avenues, San Bernardino, CA 92404. The size of the subject parcels is approximately17.61 grossacresper the site plan on the prior page.The shape of the subject property isirregular.While the subject benefits from being freewayadjacent, it sits well below freeway grade, which is not considered as desirable from a visibility perspective as property that sits at freeway grade. Soil and Sub-Soil I was not provided with a soil report. The valuationiscontingent upon the soil bearing capacity being adequate for the entire life of any future building improvements. I recommend that the report user have the soil tested to confirm this contingency prior to relying on the opinion rendered. No opinion is expressed as to the value of subsurface oil, gas, water or mineral rights or any other liquid or solid or whether the subject property is subject to surface entry for the exploration or removal of such materials, except expressly stated herein. Oil, gas, water, mineral and subsurface rights, including any slant drilling rights or surface entry rights, were not considered in preparing this appraisal report, unless expressly stated herein. The same exclusion applies to aviation rights or restrictions, if any. Easements & Restrictions It is assumed that no unusual easements impact upon the subject property other than those typical of other real estate or subject property type in the area. It is assumed that no prescriptive easements impact upon the subject property. It is assumedthat no encroachments impacting the subject property exist, unless otherwise stated. It is assumed that the utilization of the land and/or improvements thereon are within the legal boundary or property lines of the subject property as described. Nuisances &Hazards 8 The term Extraordinary Assumptionis defined as: 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. The subject parcel is appraised assuming it is not impacted by any hazardous substances or conditions or any toxic materials or conditions and the value opinion provided has not been adjusted for the existence of any such contamination. 8 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition (Washington, DC: The Appraisal Foundation, 2016). 26 The subject had a level of entitlement approval which consistedof an approved Conditional Use Permit (CUP). The CUP was approved on 06-18-12 and it would have expired after 2 years but annual extensions have been made which extended the approval out to 06-18-17. Thevalue reported assumes the site were unentitled because Mark Development has paid for the entitlement of the site separately and aside from what will be a future land acquisition. To appraise the subject property as entitled land would have the effect of charging Mark Development twice for their cost ofentitling the subject property. The use of this extraordinary assumption might have affected the assignment results. Topography & Drainage The topography of the subject property is nearly level. Drainage was not reported as a problem. Zoning The following summarizes the zoning and General Plan land use classification for the subject property. ZoningCG-1, Commercial General General Plan Land UseCommercial EntitlementsCUP approved on 06-18-12, expired 06-18-17 See related comments in Letter of Transmittal & above The zoning is reported to be in compliance with the General Plan. A copy of allowable uses and development standards is included in the addenda. 27 HIGHEST AND BEST USE ANALYSIS 9 The termHighest and Best Use is defined as: The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Highest and Best Use as Though Vacant Legally Permissible The subject property is zonedCG-1, Commercial General. The General Plan land use classification is Commercial. The zoning is reported to be in compliance with the General Plan. Physically Possible Industrial uses have been constructed in the immediatearea, primarily to the north of the subject site and it is assumed that they could also be constructed on the subject site. Financially Feasible The financial feasibility of the site pertains to the development most apt to return the highest profit in relation to the perceived risk of the development. There are two probable scenarios for the siteas if vacant: (1) Hold for future development, or (2) Develop for immediate use.At the appraised value, the subject parcel is considered financiallyfeasibleas other parcels in the area have been purchased at similar prices with similar industrial development potential. Maximal Productivity At the appraised value, the maximally productive use of the subject site isa commercial use consistent with the allowable uses as outlined in the CG-1 zoning code. Conclusion of Highest and Best Use as Vacant Based on the preceding,the highest and best use as vacant of the subject parcel isconsidered development of a commercial use. 9th Appraisal Institute, The Dictionary of Real Estate Appraisal, 6ed. (Chicago: Appraisal Institute, 2015). 28 VALUATION METHODOLOGY Valuation Approaches Threebasic approaches to value are available to appraisers including the cost approach, the income approach and the sales comparison approach. For reasons previously discussed, the cost and income capitalization approaches have been excluded. The sales comparison approach was utilizedin the valuation of the subject. Description of the Sales Comparison Approach to Value This approach is based upon the principle that the value of a property tends to be set by the price at which comparable properties have recently been sold or for which they can be acquired. This approach requires a detailed comparison of sales of comparable properties with the subject property. One of the main requisites, therefore, is that sufficient transactions of comparable properties are available to provide an accurate indication of value and that accurate information regarding price, terms, property description and use are obtained through interview and observation. Iadjusted for factors that impact value. Market data used in this approach were gathered through a search of available sources including Costar, the MLSand public records. A Sales Comparison Approach was conducted to determine the underlying land value. Description of the Reconciliation Process The Sales Comparison approach to value is used in this analysisto determine the underlying land value. The reconciliation process immediately follows this approach to value. This is a process by which the inherent advantages and disadvantages of this approach to value is analyzed. The quantity and quality of data presented is also considered. This process results in a reasoned selection of afinal value opinion for the subject property. 29 SALES COMPARISON APPROACH The sales comparison approach to valueis the process by which a market value estimate is derived by analyzing the market for similar properties that have sold recently and comparing those propertiesto the subject property. I searched for vacant commercially zoned and similarly sized land sales throughout the region. Data sources consulted include Costar, the Multi-Regional Regional MLS, land brokers and my own files. Smaller land sales were rejected because they would skew the value per square foot result. This section is organized into the following outline format: 1.Comparable Sale Location Map 2.Summary of Comparable Sales 3. Comparable Sale Photos 4. Analysis of Comparable Sales 5.Conclusions on Sale Comparison Approach 30 Land Sales Map %7/17%5/33%7/85%5/36%7/72%6/41%6/61%8/11%9/9: BtljohBtljoh Tbmf!Qsjdf Tff!Sfqpsu Qfs!Tr/!Gu/ 8/196/229/:39/447/17 22/8321/:425/4823/9528/72 Hsptt )Bdsft* Mboe!Bsfb Bqqspyjnbuf OpofOpofOpofOpofOpofOpofOpofOpofOpofOpof Ofbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!MfwfmOfbsmz!Mfwfm Upqphsbqiz Efnpmjujpo!Dptut DT-!Tfswjdf!Dpnnfsdjbm DD-!Hfofsbm!Dpnnfsdjbm SD-!Sfhjpobm!Dpnnfsdjbm DH.2-!Dpnnfsdjbm!Hfofsbm DD-!Dpnnfsdjbm!DpnnvojuzDD-!Dpnnvojuz!Dpnnfsdjbm \[pojoh!ps!Hfofsbm!Qmbo!Mboe!Vtf DD-!Hfofsbm!Dpnnfsdjbm-!!P-!Pggjdf QDD-!Qmboofe!Dpnnvojuz!Dpnnfsdjbm D3!.!HfofsbmDpnnfsjdjbm)1/1!.!2/1!GBS* DDT.2-!Dfousbm!Djuz!Tpvui!.!2!!)Hfofsbm!sfubjm.uzqf!vtft!bsf!qfsnjuufe* BtljohBtljoh Tbmf!Qsjdf %4-1:6-111%2-411-111%2-611-111%2-761-111%3-511-111%2-511-111%3-729-71:%5-492-811%5-:86-111 Tfmmfs Cvzfs )871*!891.5321):5:*!816.1:31):1:*!:48.7421):5:*!332.2943):1:*!:91.2345):1:*!:92.5577):5:*!696.8759):62*!556.5611):62*!387.4723 Kjn!Obebm-!Bhfou Sjdl!Ovof{-!BhfouEbffmm!Ibmf-!BhfouKfgg!Tubomfz-!Bhfou Csjubooz!Xftu!MMD Nbuu!Cspplt-!BhfouDpsfz!Pmtpo-!Bhfou Xppeibwfo!Efw!Jod/ 29778!Iftqfsjb!MMD Ebuf!Qbmn!Hspvq!MMDGpvusjt!E!I!'!D!Usvtu Mpnb!Mjoeb!VojwfstjuzEfBhvjbs!Gbnjmz!Usvtu Nfiej!Nptubfej-!Bhfou Upoz!Ifsnptjmmp-!Bhfou Fsjl!Disjtujbotpo-!Bhfou IDM!Iftqfsjb!Wjtub!MMD Wfsjgzjoh!Qbsuz!'!Qipof Tmpbo!74!Jowftunfout!MMD Kpio!'!Lbuimffo!Hmfjutnboo Ob{bscfljbo!Qspqfsujft!Usvtu Npsfop!Cfbdi!Jowftunfout!MMDSbodip!Tbo!Cfsobsejop!7!'!8!B Lfwjo!U/!Epbo!'!Qbvmjof!M/!Epbo Tvnnbsz!pg!Wbdbou!Dpnnfsdjbm!Mboe!Tbmft :1415171 O0BO0BO0BO0BO0BO0BO0BO0B 731231!ebzt FtdspxFtdspx 281:8521:6255271723:48:5319169229514 Kvof.29 21!zfbst 5/73!zfbst 7/42!npouit3/67!npouitGfcsvbsz.29 Kvof!9-!3129 Bqsjm!2-!312:Kvmz!31-!3129Bqsjm!7-!3129 Opwfncfs.29 Nbz!39-!312:Tfqufncfs.29 Pdupcfs!33-!3129 Fyqptvsf!Qfsjpe Gfcsvbsz!33-!312: 315!ebzt!po!nbslfu965!ebzt!po!nbslfu Epdvnfou!Ovncfs Ebuf!Tbmf!Pddvssfe Ebuf!Tbmf!Sfdpsefe Ftdspx!Qfsjpe!)Ebzt* Qspqfsuz!MpdbujpoBttfttps(t!Qbsdfm!Ovncfs!Djuz!Obnf-!Tubuf-!\[jq!Dpef 29778!Cfbs!Wbmmfz!SpbeBQO;!14::.122.35Iftqfsjb-!DB!:3456Fbtu!pg!Ebuf!Qbmn!EsjwfTpvui!pg!Sptfnpvou!SpbeBQOt;!781.221.159-!15:-!161 -!162-!163-!164!'!67Dbuifesbm!Djuz-!DB!:3345Xftu!pg!Ifbdpdl!Tusffu!'Tpvui!pg!Tvooznfbe!CpvmfwbseBQO;!3:3.211.12:Npsfop!Wbmmfz-!DB!:3664OXD!Fuibobd!Spbe!'Usvncmf!SpbeBQO;!43:.361.123Spnpmboe-!DB!:3696 OXD!Bmfttboesp!Cpvmfwbse!'Npsfop!Cfbdi!EsjwfBQO;!599.331.119Npsfop!Wbmmfz-!DB!:3666436!Tpvui!H!TusffuBQOt;!1247.262.34!'!35<!1247.263.12-!13-!14!'!15Tbo!Cfsobsejop-!DB!:3521:746!Npvoubjo!Wjtub!Bwfovf BQOt;!4168.122.32!'!38Iftqfsjb-!DB!:3456OXD!Nbejtpo!Bwfovf!'Hvbwb!TusffuBQOt;!:21.521.123-!124-!125!'!126Nvssjfub-!DB!:3673Tpvui!pg!Zvdbjqb!Cpvmfwbse!'Xftu!pg!29ui!TusffuBQOt;!1411.2:2.28-!39-!3:-!41 !'!42Zvdbjqb-!DB!:34::Tvckfdu!Qspqfsuz TXD!Bsefo!boeIjhimboe!BwfovftBQO(t;!22:2.132.12!boe!22!up!7:BQO(t;!22:2.152.28!up!33!'!36!up!43!Tbo!Cfsobsejop-!DB!:3515 23456789: Jufn!$ Land Sale 1 Land Sale 2 33 Land Sale 3 Land Sale 4 34 Land Sale 5 Land Sale 6 35 Land Sale 7 Land Sale 8 36 Land Sale 9 37 %7/17%5/33%7/17%4/93%7/39%5/35%5/23%6/46%6/7: Bekvtufe Tbmf!Qsjdf0Tr/!Gu/ 1/11&1/11& .6/11& .21/11&.21/11&.31/11&.36/11&.26/11&.31/11& Tvcupubm Sfnbjojoh Bekvtunfou 1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11& \[pojoh!ps Hfofsbm!Qmbo Tjuf 1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11& .21/11& Jnqspwfnfout 1/11& .21/11&.21/11&.26/11&.21/11&.21/11&.26/11&.21/11&.21/11& Tjuf!Tj{f 6/11&1/11&6/11& .6/11&.6/11& 21/11&21/11& Hfofsbm.26/11&.21/11& Mpdbujpo %7/17%5/33%7/85%5/36%7/72%6/41%6/61%7/41%8/23 Tvcupubm Tbmf!Qsjdf0Tr/!Gu/ 1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11& Nbslfu Dpoejujpot %7/17%5/33%7/85%5/36%7/72%6/41%6/61%7/41%8/23 Tvcupubm Tbmf!Qsjdf0Tr/!Gu/ Mboe!Tbmft!Bekvtunfou!Hsje!! 1/11&1/11&1/11&1/11&1/11&1/11&1/11& pg!Tbmf .21/11&.31/11& Dpoejujpot %7/17%5/33%7/85%5/36%7/72%6/41%6/61%8/11%9/9: Tvcupubm Tbmf!Qsjdf0Tr/!Gu/ 1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11& Gjobodjoh %7/17%5/33%7/85%5/36%7/72%6/41%6/61%8/11%9/9: Tvcupubm Tbmf!Qsjdf0Tr/!Gu/ 1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11&1/11& Sjhiut Qspqfsuz %7/17%5/33%7/85%5/36%7/72%6/41%6/61%8/11%9/9: Vobekvtufe Tbmf!Qsjdf0Tr/!Gu/ 23456789: Jufn!$ Analysis of Land Sales I used sixclosed land sales and two escrows in this analysis. The following is a discussion of the adjustments made to the data items. Property Rights Each data item was reported as feesimple, requiring no adjustments. Financing No adjustments were needed for financing. Conditions of Sale Escrow 8 and 9 were adjusted down for list up as the prices reported are the list prices. Market Conditions No adjustments were needed for market conditions. General Location I adjusted sale 1 upward for an inferior High Desert locationlacking proximity to the freeway. I adjusted sale 2 upward for its inferior low desert Coachella Valley location. I adjusted sale 3 upward for its inferior Moreno Valley location, which lacks a corner but is close to the freeway and other significant retail uses. I adjusted sale 5 upward for its inferior Moreno Valley location, which benefits from a major signalized intersection, but is at the east end of town where significant traffic does not yet occur. I adjusted sale 6 down for its superior more centralized San Bernardino location adjacent to the new Loma University Medical Plaza and veryclose to the San Manuel Baseball Stadium. I adjusted sale 7 down for its superior location inHesperia, close to the freeway and across the street from a Super Walmart. I adjusted escrow 8 down for its superior location in Murrieta, close to the freeway and adjacent to newer retail development. I adjusted escrow 9 down for its superior Yucaipa location, as this parcel sits as a “gateway” parcel to Yucaipa, near the freeway and adjacent to a relatively newer InN Out Burger and Corky’s Restaurant and Bakery. 39 Site Size Smaller parcelsgenerallysell for a higher price per square foot and vice versa. Every sale except sale 8 was adjusted for size. Site Improvements I adjusted sale 7 down for site improvements as this sale included an asphalt paved parking lotand a graded pad. Zoning or General Plan No adjustments were necessary for zoning and/or land use. No other adjustments were considered necessary. Support for thisadjustment is based on a combination of discussions with the verifying parties and an element of my professional judgment. Sales Comparison Approach Conclusion Having made the preceding adjustment, Ishow an adjusted rangefrom $3.82 per square footto $6.28 per square foot.Iselected $5.00 per square foot for the subject parcel considering all the comparable sales. Thisper square foot selectionyields the followingvalue. 17.61 acres = 767,092 square feet 767,092square feet x $5.00 per square foot = $3,835,460 10 Less Estimated Fill Dirt ($75,000) 11 Less Infrastructure Demolition ($189,420) 12 Less Cost of Re-Platting ($10,000) Less 10% Contingency on Costs ($27,442) Subtotal $3,533,598 Rounded LandValue $3,535,000 10 Per client, the estimated cost of fill dirt to bring the grade of the subject site to street grade is from $50,000 to $100,000. 11 Per bid to demolish prior infrastructure (see addenda for copy). 12 Estimated cost of hiring a civil engineer to resubmit a parcel map for the subject site. 40 RECONCILIATION Date of Value June 28, 2019 Date of ReportJuly 17, 2019 VALUEOPINION Sales Comparison Approach$3,535,000 13 The termHypothetical Condition isdefined as: A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. None. 14 The term Extraordinary Assumptionis defined as: 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. The subject parcel is appraised assuming it is not impacted by any hazardous substances or conditions or any toxic materials or conditions and the value opinion provided has not been adjusted for the existence of any such contamination. The subject had a level of entitlement approval which consisted of an approved Conditional Use Permit (CUP). The CUP was approved on 06-18-12 and it would have expired after 2 years but annual extensions have been made which extended the approval out to 06-18-17. The value reported assumes the site were unentitled because Mark Development has paid for the entitlement of the site separately and aside from what will be a future land acquisition. To appraise the subject property as entitled land would have the effect of charging Mark Development twice for their cost of entitling the subject property. The use of extraordinary assumptions and/or hypothetical conditions might have affected the assignment results. Sales Comparison Approach to Value Igathered sevenclosed land salesandtwo escrows.The sales used in this analysis are recent,comparable and overall very good. These facts strengthen the conclusion.Attention was given to larger acreage land sales because the use of smaller acreage land sales would skew the value per square foot result. 13 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition (Washington, DC: The Appraisal Foundation,2016). 14 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2016-2017 Edition (Washington, DC: The Appraisal Foundation, 2016). 41 ADDENDA 42 GENERAL ASSUMPTIONS Definitions Appraisal The act or process of developing an opinion or opinions of value. AppraisalReport Any communication, written or oral,ofanappraisal or appraisalreviewthatistransmitted totheclient upon completion of anassignment. Appraiser Onewhois expectedtoperformvaluationservices competently andin a manner thatis independent, impartial and objective. A signatory of thisappraisalreport. Assignment Anagreementbetweenanappraiser and a clienttoprovide a valuation service. AssumptionThatwhichistakento be true. ClientThe party or partieswhoengage, by employment or contract, anappraiserin a specific assignment. DateofReport The datethattheappraisalreportiscompletedandtransmittedtotheclient. Extraordinary 15 Assumption An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. Hypothetical 16 Condition Acondition, directly related to a specific assignment, which is contrary to what is known by the appraiserto exist on the effective date of the assignment results butis used for the purpose of analysis. IntendedUser The client, and any other party identified, by name or type,asusers of the appraisal, on the basis of communication with the client,atthetime of theassignment. MPAMission Property Advisors,Inc.(MPA),its employees,subcontractors,officers, and affiliates. RealEstate Anidentifiedparcelortract of land, including improvements, ifany. RealProperty The interests,benefits,andrights inherent inthe ownership ofrealestate. SubjectProperty The property thatisthesubject of thisappraisalreport. USPAP The current editionoftheUniform Standards of Professional AppraisalPracticepublished by The Appraisal Foundation. 15 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2018-2019 Edition 16 The Appraisal Foundation, Uniform Standards of Professional Appraisal Practice, 2018-2019 Edition Agreement Governing Use of this Appraisal Report Each person or entity that uses this appraisal reportagrees to be bound by all of the General Assumptions and Limiting Conditions, Hypothetical Conditions and Extraordinary Assumptions outlined herein. Each person or entity that uses this appraisal report covenants that they will not alter any portion of the report as originally delivered. Code of Professional Ethics, USPAP Disclosure of the contents of this appraisal reportis governed by the Code of Professional Ethicsand USPAP. The use of this appraisal reportis subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. Rights of Use & Publication Possession of thisappraisalreport, or a portion ofthisappraisal report, whetheran original hardpaper copy or anelectronic version, does not imply the right of publication, reproduction, use or dissemination forany purpose byanyone other than the client and/or intendeduses(s), without the prior writtenconsent of the appraiser(s)whosigned the report.Neitherall nor anypartof this appraisalreportshall be disseminatedto the general public by use of advertisingmedia,socialmedia or other mediafor public communication without the prior writtenconsent of allappraiser(s)whosignedtheappraisalreport. Accuracy of Information Gathered The information furnished by others is believed to be reliable, however no warranty is given for its accuracy. Any & AllValuesReported Any and all values reported herein are subject to these General Assumptions and/or Limiting Conditions, and to any other assumptions or conditions set forth in the appraisal report, but which may have been excluded from this list of General Assumptions and/or Limiting Conditions. RetrospectiveDates of Value Value opinions reported on retrospective date(s) of valuearebased on thegeneral purchasing powerof the U.S.Dollar on the retrospectivedate(s) of value.Appraisal reports containing retrospective value opinions and conclusions arebased on eithermarket conditions existing on the retrospective dateof value or on datathatoccurredondates subsequent to the retrospectivedate of valuewherein the dataandmarket expectationsat thosetimeswasconsideredsimilarto those inexistence on the retrospective date of value. CurrentDates of Value Value opinions reported on current dates of valuearebased on the general purchasing power of the U.S. Dollar on the stated current date of value.Theappraiser(s) cannot be held responsible forany subsequent or unforeseeableeventsthataltermarket conditions occurringafter the currentdate of value. ProspectiveDates of Value Value opinions reported on prospective date(s) of valuearebased on the generalpurchasingpowerof the U.S.Dollar on the stateddate of the report. Prospective value opinions are intended toreflect the current expectationsand perceptions of marketparticipantsand should be judged on the market support for the forecastswhenmade, not on whether specificitemsin the forecastarerealized.Theappraiser(s) cannot be held responsible forany subsequent or unforeseeableevents that altermarket conditions occurringafter the date of the report but prior to the prospective date(s) of value. Areas, Dimensions, Sizes & Volumes In this appraisal report, any and all areas, dimensions, sizes and volumes should be considered reasonable approximations only and are not to be construed as exact, particularly when such areas, dimensions, sizes and volumes or any other unit of measure are based upon the appraisers own measurements and/or calculations. Areas, dimensions, sizes and volumes obtained from official public records, proprietary and non-proprietary databases, Internet or web-based measurement tools, GIS applications, Auto-CAD files, individuals, property owners, property managers, brokers or any other party are deemed accurate and reliable, unless otherwise stated in the appraisal report. Illustrations, Visual Aids& Exhibits All maps, sketches, graphs, photographs, illustrations, visual aids and exhibits in this report are for illustration purposes only and are to be utilized onlyto assist in visualizing information presented within this report and they are not necessarily to scale. None of the maps, sketches, graphs, photographs, illustrations, visual aids or exhibits are to be altered, removed, reproduced or used apart from this report. Survey of Boundaries, Easements & Encroachments No survey of the boundaries of the subject property or any of the comparable data withinthis appraisal reportwas undertaken by the appraiser(s). It is assumed that no unusual easement(s)impactupon the subject property other than those typical of other real estate or subject property type in the area, unless otherwise stated.It is assumed that no prescriptive easement(s)impact upon the subject property, unless otherwise stated.It is assumed that no encroachments impacting the subject property exist, unless otherwise stated. It is assumed that the utilization of the land and/or improvements thereon are within the legal boundary or property lines of the subject property as described, unless otherwise stated. Zoning & Use Regulations Itisassumedthatallapplicablefederal,stateandlocal zoning and use regulations andlaws have been compliedwith,andthat the subject zoning is conforming to the GeneralPlanland use classification, unless otherwise stated. Condition ofSubjectProperty on theDate(s) of Inspection As of the date of the report,thisappraisalreportassumesthat the condition of the subject propertyhas remainedunchangedinallaspects (including itsentitlementstatus and/or anyandall discretionary or regulatory approvals) andthatitisinsubstantialconformancewith the condition itwasin on the date of the inspection madeby the appraiser(s).If the subject propertyisinspected on morethan one date,then this assumption shallapplyto the most recentdateinspected. Hidden or UnapparentConditions Itisassumedthatthereare no hidden or adverse unapparent conditions impacting the subject property. Noagreement with the clientshall be construed to suggestthat they should be responsible for disclosure of any hidden or adverse unapparent conditions impactingthesubjectproperty, including but not limited to the land (including all conditions and/or tanks below the ground surfacesuchasseptic tanks, solvent or chemical tanks orcontainersand gasoline tanks, ifany)andallsite improvements. Solvent, Chemical & Gasoline Storage Tanks Ifany solvent, chemical or gasoline tanks exist on the subject property, whether they be above ground or below ground, thisappraisalreportwillassumethat they are 1) legallypermittedto the subject property 2) properly installedandperiodicallymaintainedbylicensed professionals 3) not leaking or impacting the surrounding soil or ground waterinanydetrimentalway. HazardousSubstances,ToxicMaterials The subject property is appraised assuming it is not impacted by any hazardous substances or conditions or any toxic materials or conditions. The appraiser(s) are not qualified or trained to detect such substances, materials or conditions nor did the appraiser(s) contract to provide this service, unless otherwise stated. This assumption shall govern all value opinion(s) provided in the appraisal report. Legal Description & Legal Access Anylegal description included in the appraisal report as provided byothersisassumedto be correct. Unless otherwise stated, this appraisalreportassumesthatallsubjectparcel(s) have legalaccess. Title, Taxes, Liens & Encumbrances Titleisassumedtobemarketableandfreeandclearofallclouds,lispendens,liens,encumbrances, unusualoratypicaleasements,andrestrictions, unlessotherwisestatedwithintheappraisalreport. Noopinionastothetitle, legalvestingorownershipofthe subject propertyisrendered.Information pertainingtoownershipandlegaldescriptionwasobtainedfrompublicrecordsandisconsidered reliable.Unlessotherwisestated,thisappraisalreportassumesthatthepaymentofrealestatetaxes iscurrentandthatnodelinquencies or penaltiesexist.Ifdelinquenciesand/orpenaltiesarenotedin theappraisalreport,theyhavenotbeendeductedfromthe reportedvalueopinion(s),unlessotherwise stated. PrivateDeedRestrictions This appraisal reportassumes that there are no private deed restrictions which limit the use of the subject property in any way, unless otherwise stated. CompetentManagement & Ownership The subject property is appraised assuming it is being responsibly and proactivelyowned and managed by competent individual(s) that are acting in a “best practice” and legal manner on behalf of the subject property and in a way that preserves and/or enhances value, unless otherwise stated. Ground Leases If the subject property is groundleasedand the lease and anylease amendments were provided, they are assumed to be complete, accurate and correct, unless otherwise stated. The ground lease tenant is assumed to have the necessary financial ability to fully execute the terms and conditions of their lease, including any lease amendments, if exercised. No attempt has been made by the appraiser(s)to analyze the ability of the ground lease tenant to fully execute the terms and conditions of their lease. FractionalInterests Thisappraisalreport includes value(s) of the total property and not anyfractionalinterest or portion thereof.Thereported value(s) of the subjectproperty cannot be usedto develop or estimate the value of anyfractionalinterest or portion of the whole bymathematical proration. Personal Property,Goodwill & BusinessValue The valuation of the subject property pertains only to the realestateanddoes not include any personal property, goodwill or business value, unless otherwise stated. SubsurfaceRights, Aviation Rights No opinion is expressed as to the value of subsurface oil, gas, water or mineral rights or any other liquid or solid or whether the subject property is subject to surface entry for the exploration or removal of such materials, except expressly stated herein. Oil, gas, water, mineral and subsurface rights, including any slant drilling rights or surface entry rights, were not considered in preparing this appraisal report, unless expressly stated herein. The same exclusion applies to aviation rights or restrictions, if any. Existing Judgments, Pending or Threatened Litigation This appraisal report and all values reported herein assume that therearenoexistingjudgmentsorpending orthreatenedlitigationthatcouldaffectthe value of theproperty, and neither MPA nor Steven R. Fontes, MAI, CCIM have been informed of such, unless otherwise stated herein. LIMITING CONDITIONS NoReliancebyThirdParties This appraisal report was prepared pursuant to a written contract with the client. The intended user(s) of the appraisal report are outlined in the appraisal report and they most typically include the client only. If additional intended users are outlined in the intended user section of the appraisal report, they, together with the client, may rely upon this appraisal report. No other party may rely upon this appraisal report without the prior written consent of the appraiser(s) who signed the appraisal report. NoLiabilitytoThirdParties Noliabilitywill be incurred or acceptedbyMission Property Advisors, Inc.(MPA)or the appraiser(s) whosigned the appraisalreportif a thirdparty who is not identifiedasan intended userofthisappraisal report obtains a copy of this appraisalreportbyanymeans.Possession of thisappraisalreport does not carrywithit the righttorely upon the appraisalreportand no other rightsareinferred beyond those implicit in the contractbetween the appraiserand the client. Ifthisappraisal reportis provided to anyone other thantheclient or specificallyidentified intended user(s), the client and/or intendedusersshallmakesuchpartyaware of allGeneralAssumptions, Limiting Conditions, Hypothetical Conditions, Extraordinary Assumptionsandshallemphasize the factthatneither MPA or the appraiser(s)whoauthoredthisappraisalreport have anyobligations or liabilitiestothemand thattheirpossessionofthisappraisalreportconstitutesimplicitagreementwiththis understanding. Contractual RelationshipbetweenClient & MPA The client and all defined intended users of this appraisal report acknowledge that MPA has been retained as an independent contractor to perform the services outlined in the appraisal contract. Nothing in the appraisal contract shall be deemed to create any other relationship between the client and MPA. This assignment shall be deemed concluded and the services hereunder completed upon delivery of the appraisal report to the client, unless other arrangements have been made in writing in advance and agreed to by signature of both parties or by explicit statements of both parties in email communications. Specialized Knowledge The appraiser(s) signing this appraisal report is a/are commercial real estate appraiser(s) licensed by the State of California. No agreement with the client shall be construed to suggest that they should be responsible for any matter requiring specialized knowledge beyond that which is reasonably and typically expected of commercial real estate appraisers. Value Conclusion(s) An appraisal is the product of a professionally trained individual, but nevertheless is an opinion only, and not a provable fact. As a personal opinion, a valuation may vary between appraisers based upon the same or similar facts. Therefore, the appraiser(s) warrant only that the value conclusions are their best estimate(s) as of the date of value. There are no guaranties, either written or implied, that the subject property will sell for the exact estimate(s) of value. SupplementalStudies &RighttoAmendFindings No environmental or impact studies, special market study or analysis, highest and best use analysis or feasibility study have been requested or made by the appraiser(s), unless otherwise stated in this appraisal report or in the appraisal contract. The appraiser(s) reserves the unlimited right to alter, amend, revise or rescind any of the statements, findings, opinions, conclusions or value estimates upon receipt and review of any subsequent study or analysis or previous study or analysis that is produced after the date of the report, and at the client’s expense. Earthquake & Flood HazardZones Certain lender clients require that the appraiser(s) report whether the subject property is impacted by any earthquake or flood hazard zones. If required, the appraiser(s) will include this information as obtained from third party sources, which are deemed to be reliable and accurate, but for which no guarantees are made or liabilities assumed by the appraiser(s). The determination as to whether to carry earthquake insurance for the subject property should not be made based upon information provided within this appraisal report. If the report user believes that earthquake insurance may be prudent, a licensed insurance agent experienced with earthquake insurance should be consulted at the report user’s own discretion and risk. If the report user believes that flood insurance may be prudent, anagentfamiliar with the National Flood Insurance Program should beconsultedtogether with contacting FEMA todetermineany actual need forFloodHazard Insurance,at the report user’s own discretion and risk. Lenders & Investors If this appraisal report is submitted to a lender or investor with the prior approval of MPA, such party should consider this appraisal report as only one factor, together with its own independent investment considerations and underwriting criteria, in itsoverall investment decision. Lenders and investors are specifically cautioned to understand all Hypothetical Conditions, Extraordinary Assumptions, General Assumptions and Limiting Conditions incorporated in this appraisal report. Accuracy of Information, Comparable Data No responsibility is assumed for accuracy of information furnished by others, including the client, its officers and employees, or public records. Neither the appraiser(s) who authored this appraisal report nor MPA are liable for such information or for the work of contractors, subcontractors and engineers. Legal Opinion(s) & Tax Advice Nopart of thisappraisalreportmay be relied upon or interpretedin a mannerthatconstitutes a legal opinion(s) or taxadvicefrom the appraiser(s)whosigned the report or byMPA.If the client or one of thisappraisalreport’sdefined intended usersrequireslegalortaxadvice,they should seekitfroman attorney, CPA, or other financial advisor attheirowndiscretionandrisk. Testimony at Deposition, Trial or Tax AppealHearing It is the policy of Mission Property Advisors, Inc. that Steven R. Fontes, MAI, CCIM will always be the testifying expert unless the report was co-signed by an Associate or Senior Associate Appraiser and Mr. Fontes is either unavailable or other testimony arrangements are made in writing at the time of engagement. In the event that the appraiser(s)are subpoenaed to testify as either a percipient witness or an expert witness, the client will be responsible for payment to the appraiser(s) for testimony time, including preparation and travel to and from the place of testimony and for all testimony related expenses. Hourly rates for these additional services are outlined on the Rate Sheet included on the MPA website www.MissionPropertyAdvisors.com. A copy of the most current Rate Sheet may also be obtained by contactingMPA. Legal Action & Attorney’s Fees If the client or anythirdpartybringslegalactionagainstMPA or anyappraiser(s)who authoredthis appraisal reportand the appraiser(s) prevail, the partyinitiatingsuchlegalaction shallreimburseMPA and/or the appraiser(s) foranyandallcostsrelatingtotheirdefense, including allattorneyfeesincurred during theirdefense. Claim, Maximum Damages Recoverable,Claim for ConsequentialDamages In the event of a claim against MPA orthe appraiser(s) who authored this appraisal report in connection with or in any way relating to this appraisal report or this engagement, the maximum damages recoverable shall be limited to the amount of money actually collected for this specific appraisal report and under no circumstances shall any claim for consequential damages be made. HazardousorToxicSubstances & Conditions Thisappraisalreportassumesthatnohazardousortoxicsubstancesorconditionsexistwithinor underthesubjectproperty, unlessotherwisestated.Theappraiser(s)arenotqualifiedtodetectthese substancesorconditions.NeitherMPAnortheappraiser(s)contractedtoprovidesuch a service and anycommentbythe appraiser(s)thatmight suggest the possibility of the presence of suchsubstances or conditions should not be takenasconfirmation of the presence of suchsubstances or conditions. Such a determination would requireinvestigationby a qualifiedandlicensedexpert,at the reportuser’sexpense anddiscretion. Confidentiality & DistributionofReportContents Unless otherwise stated, neitherallnoranypartof the contents of thisappraisal report shall be conveyed toanyperson or entity, other than the client or intended user(s),throughadvertising,solicitationmaterials, public offeringmaterials, prospectus, publicrelations,news,sales,television or socialmediawithout the written consent and approval of the appraiserswhosignedthisappraisal report, particularlyastovalue conclusion(s), the identity of the appraisers,MPA or anyreferenceto the AppraisalInstitute, the CCIM Institute, or theMAI or CCIM designations. Certification Certification I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. I have made a personal inspection of the property that is the subject of this report. Other than Gustavo Nobrega who edited the drone aerials, no one provided significant real property appraisal assistance to the person signing this certification. The reported analyses, opinions, and conclusions are limited only by the reported and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. 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. Other than the appraisal I prepared for the client inJune 2016, I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediatelypreceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, a requested minimum value, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. The reported analyses, opinions, and conclusions were developed, and this report has beenprepared, in conformity with the Code of Professional Ethicsand Standards of Professional Appraisal Practiceof the Appraisal Institute. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this report, I have completed the continuing education program of the Appraisal Institute. Sincerely, Steven R. Fontes, MAI, CCIM AppraiserQualifications MISSION 0ROPERTY !DVISORS, ).#ȁ RIVERSIDE, CA 92508 PH:951.656.1100 FX: 951.848.9300 0±®¥¤²²¨® « 1´ «¨¥¨¢ ³¨®² 3³¤µ¤ 2ȁ &®³¤²Ǿ -!)Ǿ ##)- President Steven@MissionPropertyAdvisors.com Ejsfdu!):62*!767.2211!.!Fyu/!2! WWW.M ISSION P ROPERTY A DVISORS.COM 2¤ « %²³ ³¤ 2¤« ³¤£ %¬¯«®¸¬¤³ " ¢ª¦±®´£ Ns/!Gpouft!ibt!tfswfe!bt!Qsftjefou!pg!Njttjpo!Qspqfsuz!Bewjtpst-!Jod/!tjodf!jut!jodfqujpo!jo!3118/!!Njttjpo!Qspqfsuz!Bewjtpst-! Jod/!jt!b!dpnnfsdjbm!sfbm!ftubuf!tfswjdf!gjsn!cbtfe!jo!Tpvuifso!Dbmjgpsojb!tqfdjbmj{joh!jo!dpnnfsdjbm!sfbm!ftubuf!bqqsbjtbm!boe! dpnnfsdjbm!sfbm!ftubuf!csplfsbhf/!! 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B!tfqbsbuf!Sbuf!Tiffu!epdvnfou!xjmm!cf!qspwjefe!up!uif!dmjfou/!!Ju!jt!jodpsqpsbufe!cz!sfgfsfodf!joup! uijt!dpousbdu/!!Ju!pvumjoft!beejujpobm!gfft!uibu!uif!dmjfou!xjmm!cf!sftqpotjcmf!gps!tipvme!uif!bqqsbjtbm! cf!vtfe!jo!b!mjujhbujpo!dpoufyu!ps!tipvme!uif!bqqsbjtfs!cf!dbmmfe!up!uftujgz!bcpvu!uif!qspqfsuz!ps!uif! bqqsbjtbm!bt!bo!fyqfsu!xjuoftt/ 6! 8! Infrastructure Demolition Bid st June 21,2019 Highland Avenue & Arden Avenue, San Bernardino ICON General Contractor A Cut Above Grading, Inc.would like to submit a bid for the above project. We feel we understand this joband would be able to complete this project perconceptual utility plan & scope of work below. Included inprice: Removal of existing utilities per our provided colored sketch 1mobilization Note:Price basedon removal of PVC pipe for the water.If pipe is steel or ductile iron additional costs will occur. Note:If pipe contains asbestos additional costs will occur. Note:Trench plates if required provided by others. 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Fontes, MAI, CCIM on June 28, 2019 superimposed above, however Home Depot will ite plan Proposed s xisting lot layout E Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Looking north Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Looking northeast Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Looking southeast Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Looking south Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 ng southwest Looki Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Looking west Subject Photos Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 reet looking east, subject to left Subject Photos St th 20 Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 to right subject ing west, look Subject Photos reet St th 20 Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Subject Photos Arden Avenue looking south, subject to right Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Subject Photos Arden Avenue looking north, subject to left Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 Subject Photos nd Avenue looking west, subject to left ghla Hi Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 right t, subject to s Subject Photos Highland Avenue looking ea Photos taken by Steven R. Fontes, MAI, CCIM on June 28, 2019 AGREEMENT FOR PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (Arden-Guthrie Property) This AGREEMENT FOR PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (Arden-Guthrie AgreementSUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic Seller and MARK DEVELOPMENT, LLC, a California Buyerand Seller are sometimes individually referred to PartyParties. the dates set forth below next to their respective signatures. This Agreement shall be effective on the date that this Agreement has been approved by governing body or its delegated Effective Date RECITALS A. Seller is the owner of that certain vacant real property consisting of approximately 757,944 square feet or seventeen and 40/100 (17.40) net acres of land located at or near the intersection of Highland Avenue on the north, Arden Avenue on the east in the City of San Bernardino, California, County of San Bernardino and referred to as Assessor Parcel Numbers 1191-021-01, 11 through 69, inclusive, 1191-041-17 through 22, 25 through 32, inclusive (the Site B. Buyer will purchase the Site as more particularly described in attached hereto, together with (i) all rights, privileges, easements, rights of way and appurtenances, if any, that belong or appertain to the Site and are owned by Seller, including, without limitation, rights to all minerals, oil, gas and other hydrocarbon substances on and under the Site, as well as all development rights, air rights, water, water rights and water stock, if any, Appurtenances Improvements Tangible Propertyto the Site or to the development and use thereof, including, without limitation, all permits, authorizations, approvals, leases, licenses, rental contracts, developer impact fee credits, utility Intangible Property C. The Site, Appurtenances, Improvements, Tangible Property, and Intangible Property D. Buyer desires to purchase the Property from Seller, and Seller desires to sell the Property to Buyer, upon the terms and conditions hereinafter set forth. TERMS NOW THEREFORE, in consideration of the above facts and for the covenants and agreements contained herein, the Buyer and Seller agree as follows: 55600.00802\\32868052.4 1. PURCHASE AND SALE. 1.1 Property Property, and Seller agrees to sell its fee interests in the Property to Buyer, upon the terms and provisions set forth in this Agreement. 1.2 Purchase Price. The total Purchase Price the Property is the sum of Four Million Five Hundred Dollars ($4,500,000) if Close of Escrow occurs on or before March 31, 2021. However, if Close of Escrow occurs on or after April 1, 2021, the total purchase price for the SeFour Million Seven Hundred Dollars ($4,700,000). Total purchase price includes, without limitation, full interest, and damages in complete settlement of all claims (known and unknown), causes of action and demands of Seller aga ownership of an interest in the Property, and for any and all claims (known and unknown) arising from or relating to the purchase and sale which is the subject of this Agreement. 1.3 Payment of Purchase Price. At the Close of Escrow (defined below), Buyer shall pay to Seller through escrow the Purchase Price, payable in cash, by 1.4 No CEQA Approval. The execution of this Agreement does not constitute Selle the meaning of the California Environmental Quality Act. Nothing in this Agreement shall be environmental impacts that might result from development of the Property or the Land Use Approvals as that term is defined in Section 2.8.2 herein. Seller expressly reserves the right to impose mitigation measures or alternatives to address environmental impacts, including expressly reserving the in accordance with processes authorized by California law and the charter and Municipal Code of the City. 2. ESCROW. 2.1 Opening of Escrow. Within five (5) business days following the Escrow Escrow Holder contemplated by this Agreement, and Buyer shall deliver an earnest money deposit of One- Earnest MoneyEscrow. For purposes of this Agreement, the Escrow shall be deemed open on the date Escrow Holder shall have received a copy of this Agreement, showing it to be fully executed by Opening of EscrowOpening Date Opening Date. 2.2 Buyer may, at its option, direct Escrow Holder to invest the Earnest Money in an interest bearing account designated by Buyer. All interest accruing on the Earnest Money shall become and be a part of the Earnest Money. The Earnest Money shall be held in -2- 55600.00802\\32868052.4 Escrow to be applied to the Purchase Price, retained by the Seller, or return to the Buyer as provided in this Agreement. 2.3 If Buyer has not elected or been deemed to have elected to terminate this Agreement prior to the expiration of the period commencing when Seller has given notice of the CWOB and DOF Approval (defined in Section 2.10.2 below) and terminating on the 210th day thereafter Inspection Period, the Earnest Money shall be nonrefundable to Buyer, unless the consummation of the transaction contemplated in this Agreement fails to occur by reason of (i) Agreement expressly authorizes the return of the Earnest Money to Buyer, or in any of its obligations under this Agreement in which event Escrow Holder shall refund the Earnest Money to Buyer. 2.4 Escrow Instructions. This Agreement constitutes the joint basic escrow instructions of Buyer and Seller for the conveyance of the Property. Buyer and Seller shall execute, deliver and be bound by any reasonable or customary supplemental or additional Additional Instructions be reasonably required by Escrow Holder in order to consummate the transaction contemplated by this Agreement. Any such Additional Instructions shall not conflict with, amend or supersede any portions of this Agreement unless expressly consented or agreed to in writing by Buyer and Seller. In the event of any conflict or any inconsistency between this Agreement and such Additional Instructions, this Agreement shall govern unless otherwise expressly consented or agreed to in writing by the Parties. 2.5 Close of EscrowClose of EscrowClosingion in Official Records of San Bernardino County, California of a Grant Deed in form reasonably acceptable to Buyer and Title Company Grant Deed which is attached hereto as Exhibit B and the disbursement of funds and distribution of other documents by Escrow Holder, all as described herein. The Closing shall occur on the date that is fifteen (15) days following satisfaction of all the conditions precedent to Closing Closing Dateor on such earlier date as may be designated by Buyer by notice to Seller specifying the earlier date, given not less than ten (10) days prior to the earlier Closing Date. Notwithstanding the foregoing, the Closing Date shall in no event, absent subsequent written agreement of Seller and Buyer to the contrary, be later than eighteen (18) months following the Effective Date Outside Closing Date 2.6 Adjustment of Closing Date. Buyer and Seller may mutually agree to change the Closing Date by joint written notice to Escrow Holder. The Closing shall be conditioned upon satisfaction, or waiver by the Party for whose benefit the condition exists, of all conditions precedent thereto. In the event the Escrow is not in a condition to close by the Closing Date for any reason other than the uncured breach of either Buyer or Seller, then any Party who is not then in default of the terms of this Agreement may terminate this Agreement and the Escrow as provided in Section 6.1. If no notice of termination as provided in Section 6.1 is received by Escrow Holder, Escrow Holder is instructed to proceed with the Close of Escrow as soon as possible. -3- 55600.00802\\32868052.4 2.7 Costs of Escrow and Title Policy. Seller shall pay (a) the premium for the i Title Policyhe amount of the Purchase Price; (b) ; (c) state, local or other recording taxes; (d) documentary stamp taxes, transfer taxes and similar taxes; (e) all recording fees on recordable documents; and (f) the cost of the natural hazard disclosure report. Buyer shall pay (a) its own ; (b) the cost of the Survey; (c) the cost of any endorsements to the Title Policy as well as additional premiums charged for any amount of title insurance desired by Buyer in excess of the Purchase Price. If allowed by applicable law, the amount of documentary transfer taxes shall not be posted on the Deed but shall be supplied by separate affidavit. Any closing costs not otherwise provided for herein shall be paid by the party legally responsible therefor or, if no law applies, according to prevailing custom for commercial transactions in the County and State. 2.8 Deposit of Funds and Documents. 2.8.1 Deposits by Seller. Prior to the Closing, Seller shall deposit or cause to be deposited with Escrow Holder the following documents and instruments: (a) Grant Deed. An original Grant Deed, duly executed by Seller, acknowledged and in recordable form attached hereto as . (b) Seller's Certificate. A non-foreign affidavit satisfying Federal requirements (Seller's Certificate), duly executed by Seller, in the form attached hereto as . (c) Assignment and Assumption. Two (2) original counterparts of the Assignment and Assumption Agreement in the form attached hereto as (d) Bill of Sale. One (1) original Bill of Sale in the form attached hereto as . (e) Compliance Section 108 Loan Agreement. Two (2) original counterparts of the Compliance Section 108 Loan Agreement in substantial conformity to the version presented by Seller to Buyer in accordance with Section 4.6 below. (f) Franchise Tax Form. 2020 Form 593, Real Estate Withholding Certificate, or such other form as required by the State Franchise Tax Board . 2.8.2 Deposits by Buyer. Prior to Closing, Buyer shall deposit or cause to be deposited with Escrow Holder funds that are to be applied towards the payment of the Purchase Price in the amounts and at the times designated in this Agreement and will have executed the Compliance Section 108 Loan Agreement. -4- 55600.00802\\32868052.4 2.9 . The Close of subject to the satisfaction of the following- waiver thereof, it being agreed that Buyer may waive any or all of such conditions) on or prior to the Closing Date, and should such conditions not be satisfied by the Outside Closing Date, then Buyer shall be entitled to terminate this Agreement pursuant to Section 6.1 below, in which event neither Buyer nor Seller shall have any further liabilities, obligations or rights with regard to this Agreement (except for matters that by the express terms hereof survive termination). Escrow Holder shall immediately refund to Buyer all Earnest Money, minus any reasonable escrow expenses or other expenses that have been performed and designated to be paid through escrow, with the exception of the condition set forth in Section 2.9.2, in which event the Earnest Money Deposit may be retained by Seller as non-refundable option consideration. 2.9.1 All representations and warranties of Seller set forth in this Agreement shall be true and correct as of the Close of Escrow. 2.9.2 Buyer shall have obtained any and all permits, licenses, variances and approvals , including City Council and Planning Commission (Land Use Approvals) applications for such Land Use Approvals to the City, and such Land Use Approvals are valid and are no longer subject to appeal or litigation, including appeal under the California Environmental Quality Act. 2.9.3 Seller shall have timely performed all obligations required to be performed by Seller prior to the Close of Escrow by the terms of this Agreement. 2.9.4 Escrow Holder shall have received an irrevocable commitment from the Title Company (defined below) to issue the Title Policy (defined below) required pursuant to this Agreement, as set forth in more detail in Article 3 of this Agreement. 2.9.5 statement. 2.10 ons Precedent to Close of Escrow. The Close of following- Seller may waive any or all of such conditions) on or prior to the Closing Date: 2.10.1 Parties have entered into the Compliance Section 108 Loan Agreement contemplated by Section 4.6 of this Agreement. 2.10.2 Seller obtains approval CWOB and DOF for the sale of the Property to the Buyer pursuant to this Agreement from both the California Department of Finance and the San Bernardino County Wide Oversight Board within one hundred eighty (180) days after the approval of this Agreement by the City Council for the City of San Bernardino. -5- 55600.00802\\32868052.4 2.10.3 Buyer shall have timely performed all obligations to be performed by Buyer prior to Close of Escrow by the terms of this Agreement. 2.11 Notices. All communications from Escrow Holder to either Buyer or Seller shall be directed to the addresses and in the manner established in Section 7.1 for notices, demands and communications between the Buyer and Seller. 2.12 Facsimile/Counterpart Documents. In the event Buyer or Seller , except where this Agreement expressly provides otherwise, to accept and instruct Escrow Holder to rely upon such documents as if they bore original signatures. Buyer and Seller hereby acknowledge and agree notice requesting such originals. Buyer and Seller further acknowledge and agree that facsimile documents bearing non-original signatures will not be accepted for recording and that the Parties will provide originally executed documents to Escrow Holder for such purpose. Escrow Holder is authorized to utilize documents which have been signed by Buyer and Seller in counterparts. 2.13 Non-Municipal Entitlements. Until the Closing, Seller shall Non- Municipal Entitlements which shall include all permits, licenses, variances and approvals, whether ministerial, discretionary or otherwise, from governmental and quasi-governmental authorities other than City that are necessary for the construction and operation of the Property consistent with the Land Use Approvals Buyer is pursuing with the City. Notwithstanding the fact that the Inspection Period has not commenced, Buyer shall use commercially reasonable diligence in evaluating the feasibility of the Non-Municipal Entitlements, provided that Buyer shall not be obligated to retain third party consultants or commission technical studies until after the Seller has obtained CWOB and DOF Approval. . 3. TITLE. 3.1 Title Report. Within five (5) calendar days following the Opening Date, the Parties shall obtain, and provide to Successor Agency , a proforma (as of the Close of Escrow) preliminary report for the Property from Commonwealth Land Title, 888 S. Figueroa St., Ste. 2100, Los Angeles, CA 90017 Title Company documents relating to any Title Report 3.2 Title Policy; Permitted Exceptions. It is a condition to the Close of the Property and the right to possession to any portion of the Property shall be subject only to the Permitted Exceptions (defined below), as evidenced by the receipt by Escrow Holder prior to the Closing Date of an irrevocable commitment from Title Compan Title Policy vested in Buyer, subject only to: (i) a lien to secure payment of general and special real property taxes and assessments, not delinquent and (ii) other exceptions to title disclosed by the Title Report that have been approved in writing by Buyer prior to the Close of Escrow (collectively, Permitted Exceptions, and containing such endorsements and affirmative coverage as -6- 55600.00802\\32868052.4 Buyer may require. In the event Escrow Holder has not received such irrevocable commitment prior to the Closing Date, then Buyer may terminate this Agreement as provided in Section 6.1. 3.3 Inspections. During the Inspection Period, with reasonable advance written notice (no less than forty-eight (48) hours) to Seller, which written notice shall describe in reasonable detail th representatives and consultants may enter onto the Property during reasonable business hours to perform inspections and tests of the Property. All such tests and inspections will be at sole cost. Buyer shall rely solely and exclusively upon this Agreement and the results of inspection of the Site, including, without limitation, inspections regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Site by the Buyer and any other matters relevant to the condition or suitability of the Site, as the Buyer may deem necessary or appropriate. Except as expressly set forth in this Agreement, the Seller makes no representation or warranty to the Buyer relating to the condition of the Site or suitability of the Site for any intended use or development by the Buyer. The Buyer shall be liable for any damage or injury to any person or property arising from the acts of the Buyer, its employees, agents or representatives during the course of any inspections on the Site and the Buyer shall indemnify, defend with counsel reasonably acceptable to the Seller, and hold harmless the Seller, and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any inspections by the Buyer on the Site. Prior to commencing any inspections on the Site, the Buyer shall deliver copies of policies or certificates of insurance to the Seller as may be reasonably required by the Seller. 3.4 Casualty and Condemnation. 3.4.1 If, at any time between the Effective Date and Closing (inclusive), all or any substantial portion of the Property is damaged by casualty or any portion is condemned by any legally constituted authority for any public use or purpose, then either party may terminate this Agreement, in which event Escrow Holder shall immediately refund to Buyer all Earnest Money, minus any reasonable escrow expenses or other expenses that have been performed and designated to be paid through escrow, and neither Buyer nor Seller shall have any further liabilities, obligations or rights with regard to this Agreement (except for matters that by the express terms hereof survive termination). 3.4.2 In addition (and without limiting subparagraph 3.4.1 above), Buyer shall have no obligation to purchase the Property if any casualty, such as (without limitation) earthquake, sinkhole, contamination by hazardous substances or act of God, affects or threatens to affect the Property so as to make construction or operation of any project more expensive or so as materially to increase the time it would take to construct any project, and upon any such occurrence, Buyer may terminate this Agreement by notice to Seller given at any time prior to Closing, whereupon Escrow Holder shall immediately refund to Buyer the Earnest Money, and neither party shall have any further right, duty, liability or obligation hereunder, except for matters that by the express terms hereof survive termination. 3.5 Assignment. Neither Party may assign its interest hereunder without the prior written consent of the other Party, except that any Party may assign its interest -7- 55600.00802\\32868052.4 in this Agreement in connection with a conveyance of the Property to any entity owned and controlled by such Party, provided and so long as (i) the transfer of the Property is expressly subject to this Agreement and any such transferee assumes in writing the obligations of the transferor Party and acknowledges and agrees that it is bound by and subject to this Agreement with respect to the Property, and (ii) no such transfer shall release the transferor Party of its primary liability hereunder. 4. SELLER. Seller hereby represents and warrants to Buyer that the following statements are true and correct as of the Effective Date, and shall be true and correct as of the Close of Escrow, and the truth and accuracy of such stat under this Agreement: 4.1 . Seller has full legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transaction contemplated hereby, subject to successful conveyance of the Property to the Seller and Seller has obtained CWOB and DOF Approval. 4.2 No Breach. The execution and delivery of this Agreement by er, and the consummation of the transaction contemplated hereby will not constitute a violation of any order or decree or result in the breach of any contract or agreement to which Seller is at present a party or by which Seller is bound. 4.3 No Litigation. To the best of no governmental, administrative or regulatory act or proceeding regarding the environmental, health and safety aspects of the Property is pending, proposed or threatened. 4.4 No Possessory Interests; No Further Agreements or Undertakings. Other than what is shown in the Title Report, to the best of there are no agreements for occupancy in effect with respect to the Property and no unrecorded possessory interests or unre of the Property. Seller shall not enter into any agreements nor undertake any obligations prior to Close of Escrow that would in any way burden, encumber or otherwise affect the Property, including, without limitation, any agreements for occupancy with respect to the Property or any portion thereof. 4.5 Hazardous Materials and/or Hazardous Substances. Seller is aware of its obligation under California Health and Safety Code Section 25359.7 to disclose any Hazardous Materials and/or Hazardous Substances upon or under the Property. ledge, Seller is not aware of any Hazardous Materials and/or Hazardous Substances that have been used, generated, manufactured, stored, transported to or from, or disposed of on, under or about the Property or any other adjoining property owned by Seller except electrical transformers on or above the property if any. -8- 55600.00802\\32868052.4 4.6 HUD Section 108 Loan. The Seller will pay any remaining balance required of the United States Department of Housing and Urban Development (HUD) Section 108 Loan Agreement No. B-03-MC-06-539, recorded in the Official Records, County of San Bernardino on March 16, 2007 as Document No. 2007-066-755 Section 108 Loan, for loan guarantee assistance between Seller and Secretary of Housing and Urban Development, prior to the Close of Escrow. No later than 60 days prior to the Close of Escrow, but no later than Close of Escrow, Seller and Buyer will enter into a Compliance Section 108 Loan Agreement, regarding any and all continuing reporting and compliance obligations that survive Seller payment of the remaining balance on the Section 108 Loan, and unless this Agreement has previously been terminated, Buyer and Seller shall both execute the Compliance Section 108 Loan Agreement as a condition to the Close of Escrow. It is anticipated that the Compliance Section 108 Loan Agreement will include a commitment to create jobs, will be recorded against the Property, and will run with the land 4.7 Special Studies Zone. The Property has been identified in the Initial Study (IS) for Home Depot at Highland and Arden Avenues, dated June 2011, and the applicable Environmental Impact Report (EIR), Final Environmental Impact Report (SCH No. 2011061021) dated May 2012, as undertaken by Seller in accordance with CEQA for the approval of this Agreement to be in the immediate vicinity of the presumed location of the Glen Helen Fault and within approximately one-half mile of the San Jacinto Fault. However, except as identified in the IS or the EIR, the Property is not located within a designated earthquake fault zone pursuant to California Public Resources Code Section 2621.9 and is not located in a designated area that is particularly susceptible to ground shaking, liquefaction, landslides or other ground failure during an earthquake pursuant to California Public Resources Code Section 2694; provided, however, the Property is in fact located within a City defined liquefaction zone together with most other properties as generally located in other areas of the City. The IS and the EIR as identified above impose certain mitigation requirements upon any development of the Property, which shall further be the obligation of the Buyer or any successor owner of Buyer. 4.8 Survival of Covenants, Representations and Warranties. The covenants, representations and warranties contained in this Section 4 shall survive recordation of the Grant Deed and the Close of Escrow. 4.9 actual knowledge of the City Manager of the City of San Bernardino with no obligation or duty to investigate. 5. ACKNOWLEDGMENT OF FULL SATISFACTION AND RELEASE. 5.1 Waiver and Release. By execution of this Agreement, Buyer, on behalf of itself and its successors and assigns, waives and releases Seller and its successors and fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, arising from or relating to the physical condition of the Property, the condition of the soils, the suitability of the soils for the improvement of the Property as proposed, or any law or regulation applicable thereto, including the presence or alleged presence of harmful or hazardous substances in, at, on, above, under, from or about the Property including, without limitation, any -9- 55600.00802\\32868052.4 claims under or on account of (i) CERCLA and similar statutes and any regulations promulgated thereunder or (ii) any other environmental laws, provided that the foregoing release shall not misrepresentation or concealment. 5.2 Buyer expressly waives any rights or benefits available to it with respect to the foregoing release under any provision of applicable law which generally provides that a general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time the release is agreed to, which, if known to such creditor, would materially affect a settlement. By execution of this Agreement, Buyer acknowledges that it fully understands the foregoing, and with this understanding, nonetheless elects to and does assume all risk for claims known or unknown, without limiting the generality of the foregoing: 5.2.1 The undersigned on behalf of Buyer acknowledges that it has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASING PARTY The undersigned, being aware of this Code Section, hereby expressly waives any rights it may have thereunder, as well as under any other statutes or common law principles of similar effect. Initials of Buyer: 5.3 Survival of Acknowledgments, Releases and Waiver. The acknowledgments, releases and waivers of Seller in this Article 5 shall survive recordation of the Grant Deed and the Close of Escrow. 6. TERMINATION, DEFAULTS, REMEDIES. 6.1 Exercise of Rights to Terminate. In the event Buyer or Seller elects to exercise its rights to terminate this Agreement and the Escrow if and only if such rights are expressly provided elsewhere in this Agreement, then Buyer or Seller, as applicable, shall terminate by giving notice, in writing, prior to the Close of Escrow, of such termination to the other Party and Escrow Holder. In such event, the Party so terminating shall pay all Escrow Termination Costs except as provided in Sections 6.2 or 6.3 below, as applicable. Upon such termination, the Earnest Money shall be returned to Buyer where authorized under this Agreement minus any reasonable expenses incurred to date and all Termination Costs, and excepting for the obligations under this Agreement that expressly survive any termination of this Agreement (including -10- 55600.00802\\32868052.4 without limitation the obligation of the Party so terminating to pay Termination Costs as provided herein), all obligations and liabilities of the Parties under this Agreement, shall cease and terminate. 6.2 Liquidated Damages u. IF BUYER DEFAULTS UNDER THIS AGREEMENT AS TO ITS OBLIGATION TO PURCHASE THE PROPERTY, AND PROVIDED SELLER IS NOT ITSELF IN DEFAULT, SELLER WILL BE RELEASED FROM ANY OBLIGATION TO SELL THE PROPERTY TO BUYER, SELLER WILL HAVE RELEASED BUYER FROM ANY CLAIMS OR CAUSES OF ACTION ARISING OUT OF SUCH DEFAULT, AND BUYER WILL HAVE AGREED THAT SELLER WILL BE ENTITLED TO RECEIVE FROM BUYER THE SUM OF ONE HUNDRED THOUSAND DOLLARS ($100,000.00LIQUIDATED DAMAGES PLUS ALL TERMINATION COSTS AS THAT TERM IS DEFINED IN SECTION 6.1. THE RECEIPT OF SUCH PAYMENT WILL BE SELLER REGARD TO SUCH DEFAULT. THE PARTIES HAVE CONSIDERED THE AMOUNT OF DAMAGES WHICH SELLER IS LIKELY TO INCUR IN THE EVENT OF A DEFAULT OR BREACH HEREUNDER BY BUYER AND THE PARTIES HAVE AGREED THAT THE LIQUIDATED DAMAGES IS A REASONABLE APPROXIMATION AND LIQUIDATION OF SELLER EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE RANGE OF HARM TO SELLER THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE RECEIPT OF SUCH AMOUNT BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO THE CALIFORNIA CIVIL CODE AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR PROVISION. THE PAYMENT OF LIQUIDATED DAMAGES WILL BE IN LIEU OF ANY OTHER REMEDIES, DAMAGES, OR SUMS DUE OR PAYABLE TO SELLER ARISING UNDER THIS AGREEMENT OR AT LAW OR EQUITY, AND SELLER WAIVES ITS BENEFITS OR RIGHTS TO MAKE ANY CLAIMS PURSUANT TO SECTION 3389 OF THE CALIFORNIA CIVIL CODE. Initials of Buyer: Initials of Seller: 6.3 . In the event Seller breaches any obligation hereunder which Seller is to perform prior to the Close of Escrow, and fails to cure such breach within a reasonable period of time determined in the reasonable discretion of Buyer, then Buyer prior to Close of Escrow, of such termination to Seller and Escrow Holder; or (ii) initiate an action for specific performance of this Agreement. Should Buyer elect to terminate this Agreement and the Escrow as provided herein, then Seller shall pay all Termination Costs. Upon such termination, all obligations and liabilities of the Parties under this Agreement, except for the obligation of the Seller to pay Termination Costs as provided herein, and except for the -11- 55600.00802\\32868052.4 obligations under this Agreement that expressly survive any termination of this Agreement, shall cease and terminate. The options contained in Section 6.3 be irrevocable. If this Agreement is terminated pursuant to this Section 6.3, Escrow Holder shall refund to Buyer the Earnest Money. 6.4 Return of Funds and Documents; Release of Liability as to Escrow Holder In the event Escrow Holder terminates the Escrow as a result of having received notice, in writing, from Buyer or Seller of its election to terminate the Escrow as provided in this Article 6, then Escrow Holder shall terminate the Escrow and return all funds, less Termination Costs, as appropriate, and documents to the Party depositing the same. Further, the Parties shall hereby release Escrow Holder, and shall hold Escrow Holder free and harmless, from all liabilities documents as provided herein. It is expressly agreed that the provisions of this Section 6.4 shall survive any termination of this Agreement. 7. OTHER 7.1 Notices and Demands. All notices or other communications required or permitted between the Parties hereunder shall be in writing, and shall be (i) personally delivered, (ii) sent by United States registered or certified mail, postage prepaid, return receipt requested, (iii) sent by facsimile transmission with confirmation of receipt, (iv) sent by email, or (v) sent by nationally recognized overnight courier service (e.g., Federal Express or United Parcel Service), addressed to the Party to whom the notice is given at the addresses provided below, subject to the right of any Party to designate a different address for itself by notice similarly given. Any Party who gives notice by facsimile or email, shall send a hard copy of the notice by first class mail (not certified) within 24 hours following the transmission of the facsimile or email. Any notice so given by registered or certified United States mail shall be deemed to have been given on the third business day after the same is deposited in the United States mail. Any notice not so given by registered or certified mail, such as notices delivered by personal delivery, facsimile transmission or courier service, shall be deemed given upon receipt, rejection or refusal of the same by the Party to whom the notice is given. Rejection or other refusal to accept notice, or the inability to deliver notice because of a changed address of which no notice was given, shall be deemed to constitute receipt of the notice or other communication sent. Successor Agency to the Redevelopment Agency To Seller: of the City of San Bernardino Attention: City Manager/Executive Director San Bernardino, California 92401 (T) 909-384-5122 (F) 909-384-5138 Ledoux_Te@sbcity.org Best Best & Krieger, LLP With a copy to: 18101 Von Karman Ave., Suite 1000 Irvine, CA 92614 -12- 55600.00802\\32868052.4 Attention: Elizabeth Hull (T) 949-263-2600 (F) 949-260-0972 Email: Elizabeth.Hull@bbklaw.com Mark Development, LLC To Buyer: Attention: Mark Sandoval 285 W. Rialto Avenue Rialto, California 92376 (T) (909) 335-0330 Email: mark@markdevelopmentinc.com Gresham, Savage, Nolan and Tilden, PC With a copy to: 550 E. Hospitality Lane, Suite 300 San Bernardino CA 92408 Attention: Paul Cliff (T) (909-890-4499 (F) (909)-890-9877 Email: Paul.Cliff@GreshamSavage.com Commonwealth Land Title If to Escrow Holder: Attn: Crystal Leyvas 888 S. Figueroa St, Suite 2100 Los Angeles, CA 90017 (T) 909-921-2622 (F) 213-947-4324 Email: cleyvas@cltic.com 7.2 Indemnity by Buyer. Buyer shall, at Buyer indemnify, protect and defend (with counsel of choice) and hold Seller, its officers and/or directors and its successors and assigns, harmless from and against any and all claims, liabilities, obligations, losses, damages, costs and expenses of any kind or nature whatsoever, Seller may reasonably incur or sustain after the Close of Escrow, by reason of or in connection with (i) Buyerafter the Close of Escrow, (ii) the use after the Close of Escrow of the Property by Buyer or any third party, including, without limitation, any tenant, invitee or licensee of Buyer, (iii) any breach of any covenant, agreement, representation or warranty of Buyer contained in this Agreement after the Close of Escrow; (iv) the presence, use, handling, storage, disposal or release after the Close of Escrow of Hazardous Materials and/or Hazardous Substances on, under or about the Property caused by Buyer; and (v) the Buyer allegedly occurring with respect to the Property after the Close of Escrow. This indemnity by Buyer herein contained shall survive recordation of the Grand Deed and the Close of Escrow. 7.3 Prevailing Wages. Buyer acknowledges that Seller has not made any representation, express or implied, to the Buyer or any person associated with the Buyer regarding whether or not laborers employed relative to the construction of any project on Property must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Buyer -13- 55600.00802\\32868052.4 agrees with the Seller that the Buyer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of any project on Property must be paid the prevailing per diem wage rate for their labor classification. 7.3.1 The Buyer, on behalf of itself, its successors, and assigns, waives and releases the Seller from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Buyer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 7.3.1, which reads as follows: THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER BY INITIALING BELOW, THE BUYER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.3.1. _________________ Additionally, Buyer shall indemnify, defend with counsel acceptable to Seller and hold the Seller harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of any project. 7.4 Possession; Risk of Loss.. Buyer shall be entitled to sole possession, of the Property immediately upon Close of Escrow. All risk of loss or damage to the Property will pass from the Seller to the Buyer at the Close of Escrow. 7.5 Brokers and Sales Commissions. Buyer represents and warrants to the Seller that no broker, agent or finder has been engaged by them in connection with the transaction described in this Agreement. 8. MISCELLANEOUS 8.1 Required Actions of Buyer and Seller. Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the transaction herein contemplated and shall use their best efforts to accomplish the Close of Escrow in accordance with the provisions hereof. 8.2 Time of Essence. Time is of the essence of each and every term, condition, obligation and provision hereof. -14- 55600.00802\\32868052.4 8.3 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. 8.4 Captions. Any captions to, or headings of, the paragraphs or subparagraphs of this Agreement are solely for the convenience of the Parties, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. 8.5 No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the Parties to, any person or entity other than the Parties. 8.6 Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. 8.7 Applicable Law. All questions with respect to this Agreement, and the rights and liabilities of the Parties and venue hereto, shall be governed by the laws of the State of California, without application of conflicts of law principles. Any and all legal actions sought to enforce the terms and provisions of the Agreement shall be brought in the courts of the County of San Bernardino. 8.8 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the voluntary and involuntary successors and assigns of the Parties hereto. 8.9 Severability. If any term or provision of this Agreement shall be held invalid or unenforceable, the remainder of this Agreement shall not be affected. 8.10 Construction. This Agreement will be liberally construed to effectuate the intention of the Parties with respect to the transaction described herein. In determining the meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this Agreement, neither this Agreement nor any uncertainty or ambiguity herein will be construed or resolved against either Party (including the Party primarily responsible for drafting and preparation of this Agreement), under any rule of construction or otherwise, it being expressly understood and agreed that the Parties have participated equally or have had equal opportunity to participate in the drafting thereof. 8.11 Legal Fees. Each Party shall be responsible for payment of its own ation of this Agreement and processing of the Escrow. In the event any action is brought to enforce or interpret any of the provisions of this Agreement, the prevailing Party in such action or proceeding, shall be entitled to have and recover its reasonab 8.12 Exhibits. The exhibits attached hereto are hereby incorporated herein by this reference. -15- 55600.00802\\32868052.4 8.13 Entire Agreement. This Agreement supersedes any prior agreements, negotiations and communications, and contains the entire agreement between Buyer and Seller as to the subject matter hereof. No subsequent agreement, representation, or promise made by either Party hereto, shall be of any effect unless it is in writing and executed by the Party to be bound thereby. 8.14 Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the Parties hereto. \[Signatures on following page\] -16- 55600.00802\\32868052.4 SELLER: Successor Agency to the Redevelopment Agency of the City of San Bernardino By: Name: Teri Ledoux Title: City Manager/Executive Director Date of Execution by Seller: _______________ BUYER: Mark Development, LLC, a California limited liability company By: Name: Title: Date of Execution by Buyer: _______________ Acceptance by Escrow Holder: Commonwealth Land Title hereby acknowledges that it has received a fully executed counterpart of the foregoing Real Property Purchase and Joint Escrow Instructions and agrees to act as Escrow Holder hereunder and to be bound by and perform the terms thereof as such terms apply to Escrow Holder. Dated:___________________ COMMONWEALTH LAND TITLE By: Name: Its: -17- 55600.00802\\32868052.4 EXHIBIT A LEGAL DESCRIPTION Approximately seventeen and 40/100 (17.40) acres of the following described property (the City of San Bernardino, County of San Bernardino, State of California, described as follows: Parcel No. 1: Lots 22 to 54 inclusive of Tract No. 6898, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 88 of Maps, Pages 34 and 35, records of said County. Parcel No. 2: Lots 1 to 40 inclusive of Tract No. 7106, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 90 of Maps, Pages 61 and 62, records of said County. APNs 1191-021-11 to 69 1191-041-17 to 22 1191-041-25 to 32 Parcel No. 3: That portion of Lot 6, Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the Map of West Highlands, recorded in Book 5, Page 77, of Maps, described as follows: Beginning at the Northwesterly corner of Lot 9, Tract 7106, as per map recorded in Book 90 of Maps, Page 62, in said Recorder's Office; thence Easterly along the North line of said Lot 9 a distance of 120 thence along said West line North feet to the West line of a 20 foot alley as shown on said Tract 7106; 00 31' 24" 16.63 feet; °thence North 64° 07' 32" West 132.65 feet to an intersection with that certain 20 foot radius curve concave Southeasterly in the Northwesterly corner of that certain parcel of land designated as "not a part" on said Map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; thence Southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the East line of said Dumbarton Avenue 60 feet wide as shown on said Map; thence Southerly along said East line of Dumbarton Avenue to the point of beginning. APN 1191-021-01 55600.00802\\32868052.4 EXHIBIT GRANT DEED NOT FOR SIGNATURE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Mark Development, LLC Attention: Mark Sandoval 335 N. Riverside Avenue Rialto, California 92376 APNs: 1191-021-01 \[Space above for recorder.\] 1191-021-11 to 69 DOCUMENTARY TRANSFER TAX 1191-041-17 to 22 $ computed 1191-041-25 to 32 on the consideration or value of property conveyed; OR computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINOMARK DEVELOPMENT, LLC, a California limited liability company property located in the County of San Bernardino, State of California, more particularly described on Attachment No. 1 attached hereto and incorporated herein by this reference (the t to existing easements, restrictions and covenants of record. SUBJECT TO: all existing taxes, assessments, reservations in patents, liens, encumbrances, covenants, conditions, restrictions, rights of way and easements of record. Grantor binds itself and its successors to warrant the title against its acts and none other, subject to the matters above set forth. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of , 2020. SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: NOT FOR SIGNATURE Teri Ledoux Executive Director 55600.00802\\32868052.4 ATTACHMENT NO. 1 TO GRANT DEED LEGAL DESCRIPTION Approximately seventeen and 40/100 (17.40) acres of the following described property (the situated in the City of San Bernardino, County of San Bernardino, State of California, described as follows: Parcel No. 1: Lots 22 to 54 inclusive of Tract No. 6898, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 88 of Maps, Pages 34 and 35, records of said County. Parcel No. 2: Lots 1 to 40 inclusive of Tract No. 7106, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 90 of Maps, Pages 61 and 62, records of said County. APNs 1191-021-11 to 69 1191-041-17 to 22 1191-041-25 to 32 Parcel No. 3: That portion of Lot 6, Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the Map of West Highlands, recorded in Book 5, Page 77, of Maps, described as follows: Beginning at the Northwesterly corner of Lot 9, Tract 7106, as per map recorded in Book 90 of Maps, Page 62, in said Recorder's Office; thence Easterly along the North line of said Lot 9 a distance of 120 thence along said West line North feet to the West line of a 20 foot alley as shown on said Tract 7106; 00 31' 24" 16.63 feet; °thence North 64° 07' 32" West 132.65 feet to an intersection with that certain 20 foot radius curve concave Southeasterly in the Northwesterly corner of that certain parcel of land designated as "not a part" on said Map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; thence Southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the East line of said Dumbarton Avenue 60 feet wide as shown on said Map; thence Southerly along said East line of Dumbarton Avenue to the point of beginning. APN 1191-021-01 55600.00802\\32868052.4 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF ____________ ) On _____________________________ , before me, __________________________________ , Notary Public, (Print Name of Notary Public) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual Corporate Officer ___________________________________________ Title Or Type Of Document ___________________________________________ Title(s) Partner(s) Limited General Attorney-In-Fact ___________________________________________ Trustee(s) Number Of Pages Guardian/Conservator Other: _________________________________ ___________________________________________ Signer is representing: Date Of Documents 55600.00802\\32868052.4 Name Of Person(s) Or Entity(ies) ___________________________________________ ___________________________________________ Signer(s) Other Than Named Above ___________________________________________ 55600.00802\\32868052.4 EXHIBIT CERTIFICATE OF NON-FOREIGN STATUS To inform Mark Development, LLC, a California limited liability company (Transferee), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended (Code) will not be required by Successor Agency to Redevelopment Agency of the City of San Bernardino, a public entity corporate and politic (Transferor), the undersigned hereby certifies the following on behalf of Transferor: 1. Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. Transferor's U.S. employer or tax (social security) identification number is _____________________. 3. : City of San Bernardino Successor Agency 3rd Floor San Bernardino, CA 92401 \[4. Transferor is not a disregarded entity as defined in Section 1.1445- 2(b)(2)(iii) of the Code.\] Transferor understands that this Certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalty of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor. Successor Agency to the Redevelopment Agency of the City of San Bernardino By: Name: Teri Ledoux Title: City Manager/Executive Director 55600.00802\\32868052.4 EXHIBIT ASSIGNMENT AND ASSUMPTION AGREEMENT 55600.00802\\32868052.4 EXHIBIT BILL OF SALE 55600.00802\\32868052.4 AGREEMENT FOR PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (Arden-Guthrie Property) This AGREEMENT FOR PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (Arden-Guthrie AgreementSUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic Seller and MARK DEVELOPMENT, LLC, a California Buyerand Seller are sometimes individually referred to PartyParties. the dates set forth below next to their respective signatures. This Agreement shall be effective on the date that this Agreement has been approved by governing body or its delegated Effective Date RECITALS A. Seller is the owner of that certain vacant real property consisting of approximately 757,944 square feet or seventeen and 40/100 (17.40) net acres of land located at or near the intersection of Highland Avenue on the north, Arden Avenue on the east in the City of San Bernardino, California, County of San Bernardino and referred to as Assessor Parcel Numbers 1191-021-01, 11 through 69, inclusive, 1191-041-17 through 22, 25 through 32, inclusive (the Site B. Buyer will purchase the Site as more particularly described in attached hereto, together with (i) all rights, privileges, easements, rights of way and appurtenances, if any, that belong or appertain to the Site and are owned by Seller, including, without limitation, rights to all minerals, oil, gas and other hydrocarbon substances on and under the Site, as well as all development rights, air rights, water, water rights and water stock, if any, Appurtenances Improvements Tangible Propertyto the Site or to the development and use thereof, including, without limitation, all permits, authorizations, approvals, leases, licenses, rental contracts, developer impact fee credits, utility Intangible Property C. The Site, Appurtenances, Improvements, Tangible Property, and Intangible Property D. Buyer desires to purchase the Property from Seller, and Seller desires to sell the Property to Buyer, upon the terms and conditions hereinafter set forth. TERMS NOW THEREFORE, in consideration of the above facts and for the covenants and agreements contained herein, the Buyer and Seller agree as follows: 55600.00802\\32868052.4 1. PURCHASE AND SALE. 1.1 Property Property, and Seller agrees to sell its fee interests in the Property to Buyer, upon the terms and provisions set forth in this Agreement. 1.2 Purchase Price. The total Purchase Price the Property is the sum of Four Million Five Hundred Dollars ($4,500,000) if Close of Escrow occurs on or before March 31, 2021. However, if Close of Escrow occurs on or after April 1, 2021, the total purchase price for the SeFour Million Seven Hundred Dollars ($4,700,000). Total purchase price includes, without limitation, full interest, and damages in complete settlement of all claims (known and unknown), causes of action and demands of Seller aga ownership of an interest in the Property, and for any and all claims (known and unknown) arising from or relating to the purchase and sale which is the subject of this Agreement. 1.3 Payment of Purchase Price. At the Close of Escrow (defined below), Buyer shall pay to Seller through escrow the Purchase Price, payable in cash, by 1.4 No CEQA Approval. The execution of this Agreement does not constitute Selle the meaning of the California Environmental Quality Act. Nothing in this Agreement shall be environmental impacts that might result from development of the Property or the Land Use Approvals as that term is defined in Section 2.8.2 herein. Seller expressly reserves the right to impose mitigation measures or alternatives to address environmental impacts, including expressly reserving the in accordance with processes authorized by California law and the charter and Municipal Code of the City. 2. ESCROW. 2.1 Opening of Escrow. Within five (5) business days following the Escrow Escrow Holder contemplated by this Agreement, and Buyer shall deliver an earnest money deposit of One- Earnest MoneyEscrow. For purposes of this Agreement, the Escrow shall be deemed open on the date Escrow Holder shall have received a copy of this Agreement, showing it to be fully executed by Opening of EscrowOpening Date Opening Date. 2.2 Buyer may, at its option, direct Escrow Holder to invest the Earnest Money in an interest bearing account designated by Buyer. All interest accruing on the Earnest Money shall become and be a part of the Earnest Money. The Earnest Money shall be held in -2- 55600.00802\\32868052.4 Escrow to be applied to the Purchase Price, retained by the Seller, or return to the Buyer as provided in this Agreement. 2.3 If Buyer has not elected or been deemed to have elected to terminate this Agreement prior to the expiration of the period commencing when Seller has given notice of the CWOB and DOF Approval (defined in Section 2.10.2 below) and terminating on the 210th day thereafter Inspection Period, the Earnest Money shall be nonrefundable to Buyer, unless the consummation of the transaction contemplated in this Agreement fails to occur by reason of (i) Agreement expressly authorizes the return of the Earnest Money to Buyer, or in any of its obligations under this Agreement in which event Escrow Holder shall refund the Earnest Money to Buyer. 2.4 Escrow Instructions. This Agreement constitutes the joint basic escrow instructions of Buyer and Seller for the conveyance of the Property. Buyer and Seller shall execute, deliver and be bound by any reasonable or customary supplemental or additional Additional Instructions be reasonably required by Escrow Holder in order to consummate the transaction contemplated by this Agreement. Any such Additional Instructions shall not conflict with, amend or supersede any portions of this Agreement unless expressly consented or agreed to in writing by Buyer and Seller. In the event of any conflict or any inconsistency between this Agreement and such Additional Instructions, this Agreement shall govern unless otherwise expressly consented or agreed to in writing by the Parties. 2.5 Close of EscrowClose of EscrowClosingion in Official Records of San Bernardino County, California of a Grant Deed in form reasonably acceptable to Buyer and Title Company Grant Deed which is attached hereto as Exhibit B and the disbursement of funds and distribution of other documents by Escrow Holder, all as described herein. The Closing shall occur on the date that is fifteen (15) days following satisfaction of all the conditions precedent to Closing Closing Dateor on such earlier date as may be designated by Buyer by notice to Seller specifying the earlier date, given not less than ten (10) days prior to the earlier Closing Date. Notwithstanding the foregoing, the Closing Date shall in no event, absent subsequent written agreement of Seller and Buyer to the contrary, be later than eighteen (18) months following the Effective Date Outside Closing Date 2.6 Adjustment of Closing Date. Buyer and Seller may mutually agree to change the Closing Date by joint written notice to Escrow Holder. The Closing shall be conditioned upon satisfaction, or waiver by the Party for whose benefit the condition exists, of all conditions precedent thereto. In the event the Escrow is not in a condition to close by the Closing Date for any reason other than the uncured breach of either Buyer or Seller, then any Party who is not then in default of the terms of this Agreement may terminate this Agreement and the Escrow as provided in Section 6.1. If no notice of termination as provided in Section 6.1 is received by Escrow Holder, Escrow Holder is instructed to proceed with the Close of Escrow as soon as possible. -3- 55600.00802\\32868052.4 2.7 Costs of Escrow and Title Policy. Seller shall pay (a) the premium for the i Title Policyhe amount of the Purchase Price; (b) ; (c) state, local or other recording taxes; (d) documentary stamp taxes, transfer taxes and similar taxes; (e) all recording fees on recordable documents; and (f) the cost of the natural hazard disclosure report. Buyer shall pay (a) its own ; (b) the cost of the Survey; (c) the cost of any endorsements to the Title Policy as well as additional premiums charged for any amount of title insurance desired by Buyer in excess of the Purchase Price. If allowed by applicable law, the amount of documentary transfer taxes shall not be posted on the Deed but shall be supplied by separate affidavit. Any closing costs not otherwise provided for herein shall be paid by the party legally responsible therefor or, if no law applies, according to prevailing custom for commercial transactions in the County and State. 2.8 Deposit of Funds and Documents. 2.8.1 Deposits by Seller. Prior to the Closing, Seller shall deposit or cause to be deposited with Escrow Holder the following documents and instruments: (a) Grant Deed. An original Grant Deed, duly executed by Seller, acknowledged and in recordable form attached hereto as . (b) Seller's Certificate. A non-foreign affidavit satisfying Federal requirements (Seller's Certificate), duly executed by Seller, in the form attached hereto as . (c) Assignment and Assumption. Two (2) original counterparts of the Assignment and Assumption Agreement in the form attached hereto as (d) Bill of Sale. One (1) original Bill of Sale in the form attached hereto as . (e) Compliance Section 108 Loan Agreement. Two (2) original counterparts of the Compliance Section 108 Loan Agreement in substantial conformity to the version presented by Seller to Buyer in accordance with Section 4.6 below. (f) Franchise Tax Form. 2020 Form 593, Real Estate Withholding Certificate, or such other form as required by the State Franchise Tax Board . 2.8.2 Deposits by Buyer. Prior to Closing, Buyer shall deposit or cause to be deposited with Escrow Holder funds that are to be applied towards the payment of the Purchase Price in the amounts and at the times designated in this Agreement and will have executed the Compliance Section 108 Loan Agreement. -4- 55600.00802\\32868052.4 2.9 . The Close of subject to the satisfaction of the following- waiver thereof, it being agreed that Buyer may waive any or all of such conditions) on or prior to the Closing Date, and should such conditions not be satisfied by the Outside Closing Date, then Buyer shall be entitled to terminate this Agreement pursuant to Section 6.1 below, in which event neither Buyer nor Seller shall have any further liabilities, obligations or rights with regard to this Agreement (except for matters that by the express terms hereof survive termination). Escrow Holder shall immediately refund to Buyer all Earnest Money, minus any reasonable escrow expenses or other expenses that have been performed and designated to be paid through escrow, with the exception of the condition set forth in Section 2.9.2, in which event the Earnest Money Deposit may be retained by Seller as non-refundable option consideration. 2.9.1 All representations and warranties of Seller set forth in this Agreement shall be true and correct as of the Close of Escrow. 2.9.2 Buyer shall have obtained any and all permits, licenses, variances and approvals , including City Council and Planning Commission (Land Use Approvals) applications for such Land Use Approvals to the City, and such Land Use Approvals are valid and are no longer subject to appeal or litigation, including appeal under the California Environmental Quality Act. 2.9.3 Seller shall have timely performed all obligations required to be performed by Seller prior to the Close of Escrow by the terms of this Agreement. 2.9.4 Escrow Holder shall have received an irrevocable commitment from the Title Company (defined below) to issue the Title Policy (defined below) required pursuant to this Agreement, as set forth in more detail in Article 3 of this Agreement. 2.9.5 statement. 2.10 ons Precedent to Close of Escrow. The Close of following- Seller may waive any or all of such conditions) on or prior to the Closing Date: 2.10.1 Parties have entered into the Compliance Section 108 Loan Agreement contemplated by Section 4.6 of this Agreement. 2.10.2 Seller obtains approval CWOB and DOF for the sale of the Property to the Buyer pursuant to this Agreement from both the California Department of Finance and the San Bernardino County Wide Oversight Board within one hundred eighty (180) days after the approval of this Agreement by the City Council for the City of San Bernardino. -5- 55600.00802\\32868052.4 2.10.3 Buyer shall have timely performed all obligations to be performed by Buyer prior to Close of Escrow by the terms of this Agreement. 2.11 Notices. All communications from Escrow Holder to either Buyer or Seller shall be directed to the addresses and in the manner established in Section 7.1 for notices, demands and communications between the Buyer and Seller. 2.12 Facsimile/Counterpart Documents. In the event Buyer or Seller , except where this Agreement expressly provides otherwise, to accept and instruct Escrow Holder to rely upon such documents as if they bore original signatures. Buyer and Seller hereby acknowledge and agree notice requesting such originals. Buyer and Seller further acknowledge and agree that facsimile documents bearing non-original signatures will not be accepted for recording and that the Parties will provide originally executed documents to Escrow Holder for such purpose. Escrow Holder is authorized to utilize documents which have been signed by Buyer and Seller in counterparts. 2.13 Non-Municipal Entitlements. Until the Closing, Seller shall Non- Municipal Entitlements which shall include all permits, licenses, variances and approvals, whether ministerial, discretionary or otherwise, from governmental and quasi-governmental authorities other than City that are necessary for the construction and operation of the Property consistent with the Land Use Approvals Buyer is pursuing with the City. Notwithstanding the fact that the Inspection Period has not commenced, Buyer shall use commercially reasonable diligence in evaluating the feasibility of the Non-Municipal Entitlements, provided that Buyer shall not be obligated to retain third party consultants or commission technical studies until after the Seller has obtained CWOB and DOF Approval. . 3. TITLE. 3.1 Title Report. Within five (5) calendar days following the Opening Date, the Parties shall obtain, and provide to Successor Agency , a proforma (as of the Close of Escrow) preliminary report for the Property from Commonwealth Land Title, 888 S. Figueroa St., Ste. 2100, Los Angeles, CA 90017 Title Company documents relating to any Title Report 3.2 Title Policy; Permitted Exceptions. It is a condition to the Close of the Property and the right to possession to any portion of the Property shall be subject only to the Permitted Exceptions (defined below), as evidenced by the receipt by Escrow Holder prior to the Closing Date of an irrevocable commitment from Title Compan Title Policy vested in Buyer, subject only to: (i) a lien to secure payment of general and special real property taxes and assessments, not delinquent and (ii) other exceptions to title disclosed by the Title Report that have been approved in writing by Buyer prior to the Close of Escrow (collectively, Permitted Exceptions, and containing such endorsements and affirmative coverage as -6- 55600.00802\\32868052.4 Buyer may require. In the event Escrow Holder has not received such irrevocable commitment prior to the Closing Date, then Buyer may terminate this Agreement as provided in Section 6.1. 3.3 Inspections. During the Inspection Period, with reasonable advance written notice (no less than forty-eight (48) hours) to Seller, which written notice shall describe in reasonable detail th representatives and consultants may enter onto the Property during reasonable business hours to perform inspections and tests of the Property. All such tests and inspections will be at sole cost. Buyer shall rely solely and exclusively upon this Agreement and the results of inspection of the Site, including, without limitation, inspections regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Site by the Buyer and any other matters relevant to the condition or suitability of the Site, as the Buyer may deem necessary or appropriate. Except as expressly set forth in this Agreement, the Seller makes no representation or warranty to the Buyer relating to the condition of the Site or suitability of the Site for any intended use or development by the Buyer. The Buyer shall be liable for any damage or injury to any person or property arising from the acts of the Buyer, its employees, agents or representatives during the course of any inspections on the Site and the Buyer shall indemnify, defend with counsel reasonably acceptable to the Seller, and hold harmless the Seller, and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any inspections by the Buyer on the Site. Prior to commencing any inspections on the Site, the Buyer shall deliver copies of policies or certificates of insurance to the Seller as may be reasonably required by the Seller. 3.4 Casualty and Condemnation. 3.4.1 If, at any time between the Effective Date and Closing (inclusive), all or any substantial portion of the Property is damaged by casualty or any portion is condemned by any legally constituted authority for any public use or purpose, then either party may terminate this Agreement, in which event Escrow Holder shall immediately refund to Buyer all Earnest Money, minus any reasonable escrow expenses or other expenses that have been performed and designated to be paid through escrow, and neither Buyer nor Seller shall have any further liabilities, obligations or rights with regard to this Agreement (except for matters that by the express terms hereof survive termination). 3.4.2 In addition (and without limiting subparagraph 3.4.1 above), Buyer shall have no obligation to purchase the Property if any casualty, such as (without limitation) earthquake, sinkhole, contamination by hazardous substances or act of God, affects or threatens to affect the Property so as to make construction or operation of any project more expensive or so as materially to increase the time it would take to construct any project, and upon any such occurrence, Buyer may terminate this Agreement by notice to Seller given at any time prior to Closing, whereupon Escrow Holder shall immediately refund to Buyer the Earnest Money, and neither party shall have any further right, duty, liability or obligation hereunder, except for matters that by the express terms hereof survive termination. 3.5 Assignment. Neither Party may assign its interest hereunder without the prior written consent of the other Party, except that any Party may assign its interest -7- 55600.00802\\32868052.4 in this Agreement in connection with a conveyance of the Property to any entity owned and controlled by such Party, provided and so long as (i) the transfer of the Property is expressly subject to this Agreement and any such transferee assumes in writing the obligations of the transferor Party and acknowledges and agrees that it is bound by and subject to this Agreement with respect to the Property, and (ii) no such transfer shall release the transferor Party of its primary liability hereunder. 4. SELLER. Seller hereby represents and warrants to Buyer that the following statements are true and correct as of the Effective Date, and shall be true and correct as of the Close of Escrow, and the truth and accuracy of such stat under this Agreement: 4.1 . Seller has full legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transaction contemplated hereby, subject to successful conveyance of the Property to the Seller and Seller has obtained CWOB and DOF Approval. 4.2 No Breach. The execution and delivery of this Agreement by er, and the consummation of the transaction contemplated hereby will not constitute a violation of any order or decree or result in the breach of any contract or agreement to which Seller is at present a party or by which Seller is bound. 4.3 No Litigation. To the best of no governmental, administrative or regulatory act or proceeding regarding the environmental, health and safety aspects of the Property is pending, proposed or threatened. 4.4 No Possessory Interests; No Further Agreements or Undertakings. Other than what is shown in the Title Report, to the best of there are no agreements for occupancy in effect with respect to the Property and no unrecorded possessory interests or unre of the Property. Seller shall not enter into any agreements nor undertake any obligations prior to Close of Escrow that would in any way burden, encumber or otherwise affect the Property, including, without limitation, any agreements for occupancy with respect to the Property or any portion thereof. 4.5 Hazardous Materials and/or Hazardous Substances. Seller is aware of its obligation under California Health and Safety Code Section 25359.7 to disclose any Hazardous Materials and/or Hazardous Substances upon or under the Property. ledge, Seller is not aware of any Hazardous Materials and/or Hazardous Substances that have been used, generated, manufactured, stored, transported to or from, or disposed of on, under or about the Property or any other adjoining property owned by Seller except electrical transformers on or above the property if any. -8- 55600.00802\\32868052.4 4.6 HUD Section 108 Loan. The Seller will pay any remaining balance required of the United States Department of Housing and Urban Development (HUD) Section 108 Loan Agreement No. B-03-MC-06-539, recorded in the Official Records, County of San Bernardino on March 16, 2007 as Document No. 2007-066-755 Section 108 Loan, for loan guarantee assistance between Seller and Secretary of Housing and Urban Development, prior to the Close of Escrow. No later than 60 days prior to the Close of Escrow, but no later than Close of Escrow, Seller and Buyer will enter into a Compliance Section 108 Loan Agreement, regarding any and all continuing reporting and compliance obligations that survive Seller payment of the remaining balance on the Section 108 Loan, and unless this Agreement has previously been terminated, Buyer and Seller shall both execute the Compliance Section 108 Loan Agreement as a condition to the Close of Escrow. It is anticipated that the Compliance Section 108 Loan Agreement will include a commitment to create jobs, will be recorded against the Property, and will run with the land 4.7 Special Studies Zone. The Property has been identified in the Initial Study (IS) for Home Depot at Highland and Arden Avenues, dated June 2011, and the applicable Environmental Impact Report (EIR), Final Environmental Impact Report (SCH No. 2011061021) dated May 2012, as undertaken by Seller in accordance with CEQA for the approval of this Agreement to be in the immediate vicinity of the presumed location of the Glen Helen Fault and within approximately one-half mile of the San Jacinto Fault. However, except as identified in the IS or the EIR, the Property is not located within a designated earthquake fault zone pursuant to California Public Resources Code Section 2621.9 and is not located in a designated area that is particularly susceptible to ground shaking, liquefaction, landslides or other ground failure during an earthquake pursuant to California Public Resources Code Section 2694; provided, however, the Property is in fact located within a City defined liquefaction zone together with most other properties as generally located in other areas of the City. The IS and the EIR as identified above impose certain mitigation requirements upon any development of the Property, which shall further be the obligation of the Buyer or any successor owner of Buyer. 4.8 Survival of Covenants, Representations and Warranties. The covenants, representations and warranties contained in this Section 4 shall survive recordation of the Grant Deed and the Close of Escrow. 4.9 actual knowledge of the City Manager of the City of San Bernardino with no obligation or duty to investigate. 5. ACKNOWLEDGMENT OF FULL SATISFACTION AND RELEASE. 5.1 Waiver and Release. By execution of this Agreement, Buyer, on behalf of itself and its successors and assigns, waives and releases Seller and its successors and fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, arising from or relating to the physical condition of the Property, the condition of the soils, the suitability of the soils for the improvement of the Property as proposed, or any law or regulation applicable thereto, including the presence or alleged presence of harmful or hazardous substances in, at, on, above, under, from or about the Property including, without limitation, any -9- 55600.00802\\32868052.4 claims under or on account of (i) CERCLA and similar statutes and any regulations promulgated thereunder or (ii) any other environmental laws, provided that the foregoing release shall not misrepresentation or concealment. 5.2 Buyer expressly waives any rights or benefits available to it with respect to the foregoing release under any provision of applicable law which generally provides that a general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time the release is agreed to, which, if known to such creditor, would materially affect a settlement. By execution of this Agreement, Buyer acknowledges that it fully understands the foregoing, and with this understanding, nonetheless elects to and does assume all risk for claims known or unknown, without limiting the generality of the foregoing: 5.2.1 The undersigned on behalf of Buyer acknowledges that it has been advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASING PARTY The undersigned, being aware of this Code Section, hereby expressly waives any rights it may have thereunder, as well as under any other statutes or common law principles of similar effect. Initials of Buyer: 5.3 Survival of Acknowledgments, Releases and Waiver. The acknowledgments, releases and waivers of Seller in this Article 5 shall survive recordation of the Grant Deed and the Close of Escrow. 6. TERMINATION, DEFAULTS, REMEDIES. 6.1 Exercise of Rights to Terminate. In the event Buyer or Seller elects to exercise its rights to terminate this Agreement and the Escrow if and only if such rights are expressly provided elsewhere in this Agreement, then Buyer or Seller, as applicable, shall terminate by giving notice, in writing, prior to the Close of Escrow, of such termination to the other Party and Escrow Holder. In such event, the Party so terminating shall pay all Escrow Termination Costs except as provided in Sections 6.2 or 6.3 below, as applicable. Upon such termination, the Earnest Money shall be returned to Buyer where authorized under this Agreement minus any reasonable expenses incurred to date and all Termination Costs, and excepting for the obligations under this Agreement that expressly survive any termination of this Agreement (including -10- 55600.00802\\32868052.4 without limitation the obligation of the Party so terminating to pay Termination Costs as provided herein), all obligations and liabilities of the Parties under this Agreement, shall cease and terminate. 6.2 Liquidated Damages u. IF BUYER DEFAULTS UNDER THIS AGREEMENT AS TO ITS OBLIGATION TO PURCHASE THE PROPERTY, AND PROVIDED SELLER IS NOT ITSELF IN DEFAULT, SELLER WILL BE RELEASED FROM ANY OBLIGATION TO SELL THE PROPERTY TO BUYER, SELLER WILL HAVE RELEASED BUYER FROM ANY CLAIMS OR CAUSES OF ACTION ARISING OUT OF SUCH DEFAULT, AND BUYER WILL HAVE AGREED THAT SELLER WILL BE ENTITLED TO RECEIVE FROM BUYER THE SUM OF ONE HUNDRED THOUSAND DOLLARS ($100,000.00LIQUIDATED DAMAGES PLUS ALL TERMINATION COSTS AS THAT TERM IS DEFINED IN SECTION 6.1. THE RECEIPT OF SUCH PAYMENT WILL BE SELLER REGARD TO SUCH DEFAULT. THE PARTIES HAVE CONSIDERED THE AMOUNT OF DAMAGES WHICH SELLER IS LIKELY TO INCUR IN THE EVENT OF A DEFAULT OR BREACH HEREUNDER BY BUYER AND THE PARTIES HAVE AGREED THAT THE LIQUIDATED DAMAGES IS A REASONABLE APPROXIMATION AND LIQUIDATION OF SELLER EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE RANGE OF HARM TO SELLER THAT REASONABLY COULD BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. THE RECEIPT OF SUCH AMOUNT BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO THE CALIFORNIA CIVIL CODE AND WILL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR PROVISION. THE PAYMENT OF LIQUIDATED DAMAGES WILL BE IN LIEU OF ANY OTHER REMEDIES, DAMAGES, OR SUMS DUE OR PAYABLE TO SELLER ARISING UNDER THIS AGREEMENT OR AT LAW OR EQUITY, AND SELLER WAIVES ITS BENEFITS OR RIGHTS TO MAKE ANY CLAIMS PURSUANT TO SECTION 3389 OF THE CALIFORNIA CIVIL CODE. Initials of Buyer: Initials of Seller: 6.3 . In the event Seller breaches any obligation hereunder which Seller is to perform prior to the Close of Escrow, and fails to cure such breach within a reasonable period of time determined in the reasonable discretion of Buyer, then Buyer prior to Close of Escrow, of such termination to Seller and Escrow Holder; or (ii) initiate an action for specific performance of this Agreement. Should Buyer elect to terminate this Agreement and the Escrow as provided herein, then Seller shall pay all Termination Costs. Upon such termination, all obligations and liabilities of the Parties under this Agreement, except for the obligation of the Seller to pay Termination Costs as provided herein, and except for the -11- 55600.00802\\32868052.4 obligations under this Agreement that expressly survive any termination of this Agreement, shall cease and terminate. The options contained in Section 6.3 be irrevocable. If this Agreement is terminated pursuant to this Section 6.3, Escrow Holder shall refund to Buyer the Earnest Money. 6.4 Return of Funds and Documents; Release of Liability as to Escrow Holder In the event Escrow Holder terminates the Escrow as a result of having received notice, in writing, from Buyer or Seller of its election to terminate the Escrow as provided in this Article 6, then Escrow Holder shall terminate the Escrow and return all funds, less Termination Costs, as appropriate, and documents to the Party depositing the same. Further, the Parties shall hereby release Escrow Holder, and shall hold Escrow Holder free and harmless, from all liabilities documents as provided herein. It is expressly agreed that the provisions of this Section 6.4 shall survive any termination of this Agreement. 7. OTHER 7.1 Notices and Demands. All notices or other communications required or permitted between the Parties hereunder shall be in writing, and shall be (i) personally delivered, (ii) sent by United States registered or certified mail, postage prepaid, return receipt requested, (iii) sent by facsimile transmission with confirmation of receipt, (iv) sent by email, or (v) sent by nationally recognized overnight courier service (e.g., Federal Express or United Parcel Service), addressed to the Party to whom the notice is given at the addresses provided below, subject to the right of any Party to designate a different address for itself by notice similarly given. Any Party who gives notice by facsimile or email, shall send a hard copy of the notice by first class mail (not certified) within 24 hours following the transmission of the facsimile or email. Any notice so given by registered or certified United States mail shall be deemed to have been given on the third business day after the same is deposited in the United States mail. Any notice not so given by registered or certified mail, such as notices delivered by personal delivery, facsimile transmission or courier service, shall be deemed given upon receipt, rejection or refusal of the same by the Party to whom the notice is given. Rejection or other refusal to accept notice, or the inability to deliver notice because of a changed address of which no notice was given, shall be deemed to constitute receipt of the notice or other communication sent. Successor Agency to the Redevelopment Agency To Seller: of the City of San Bernardino Attention: City Manager/Executive Director San Bernardino, California 92401 (T) 909-384-5122 (F) 909-384-5138 Ledoux_Te@sbcity.org Best Best & Krieger, LLP With a copy to: 18101 Von Karman Ave., Suite 1000 Irvine, CA 92614 -12- 55600.00802\\32868052.4 Attention: Elizabeth Hull (T) 949-263-2600 (F) 949-260-0972 Email: Elizabeth.Hull@bbklaw.com Mark Development, LLC To Buyer: Attention: Mark Sandoval 285 W. Rialto Avenue Rialto, California 92376 (T) (909) 335-0330 Email: mark@markdevelopmentinc.com Gresham, Savage, Nolan and Tilden, PC With a copy to: 550 E. Hospitality Lane, Suite 300 San Bernardino CA 92408 Attention: Paul Cliff (T) (909-890-4499 (F) (909)-890-9877 Email: Paul.Cliff@GreshamSavage.com Commonwealth Land Title If to Escrow Holder: Attn: Crystal Leyvas 888 S. Figueroa St, Suite 2100 Los Angeles, CA 90017 (T) 909-921-2622 (F) 213-947-4324 Email: cleyvas@cltic.com 7.2 Indemnity by Buyer. Buyer shall, at Buyer indemnify, protect and defend (with counsel of choice) and hold Seller, its officers and/or directors and its successors and assigns, harmless from and against any and all claims, liabilities, obligations, losses, damages, costs and expenses of any kind or nature whatsoever, Seller may reasonably incur or sustain after the Close of Escrow, by reason of or in connection with (i) Buyerafter the Close of Escrow, (ii) the use after the Close of Escrow of the Property by Buyer or any third party, including, without limitation, any tenant, invitee or licensee of Buyer, (iii) any breach of any covenant, agreement, representation or warranty of Buyer contained in this Agreement after the Close of Escrow; (iv) the presence, use, handling, storage, disposal or release after the Close of Escrow of Hazardous Materials and/or Hazardous Substances on, under or about the Property caused by Buyer; and (v) the Buyer allegedly occurring with respect to the Property after the Close of Escrow. This indemnity by Buyer herein contained shall survive recordation of the Grand Deed and the Close of Escrow. 7.3 Prevailing Wages. Buyer acknowledges that Seller has not made any representation, express or implied, to the Buyer or any person associated with the Buyer regarding whether or not laborers employed relative to the construction of any project on Property must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Buyer -13- 55600.00802\\32868052.4 agrees with the Seller that the Buyer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of any project on Property must be paid the prevailing per diem wage rate for their labor classification. 7.3.1 The Buyer, on behalf of itself, its successors, and assigns, waives and releases the Seller from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Buyer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 7.3.1, which reads as follows: THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER BY INITIALING BELOW, THE BUYER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.3.1. _________________ Additionally, Buyer shall indemnify, defend with counsel acceptable to Seller and hold the Seller harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of any project. 7.4 Possession; Risk of Loss.. Buyer shall be entitled to sole possession, of the Property immediately upon Close of Escrow. All risk of loss or damage to the Property will pass from the Seller to the Buyer at the Close of Escrow. 7.5 Brokers and Sales Commissions. Buyer represents and warrants to the Seller that no broker, agent or finder has been engaged by them in connection with the transaction described in this Agreement. 8. MISCELLANEOUS 8.1 Required Actions of Buyer and Seller. Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the transaction herein contemplated and shall use their best efforts to accomplish the Close of Escrow in accordance with the provisions hereof. 8.2 Time of Essence. Time is of the essence of each and every term, condition, obligation and provision hereof. -14- 55600.00802\\32868052.4 8.3 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. 8.4 Captions. Any captions to, or headings of, the paragraphs or subparagraphs of this Agreement are solely for the convenience of the Parties, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. 8.5 No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the Parties to, any person or entity other than the Parties. 8.6 Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. 8.7 Applicable Law. All questions with respect to this Agreement, and the rights and liabilities of the Parties and venue hereto, shall be governed by the laws of the State of California, without application of conflicts of law principles. Any and all legal actions sought to enforce the terms and provisions of the Agreement shall be brought in the courts of the County of San Bernardino. 8.8 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the voluntary and involuntary successors and assigns of the Parties hereto. 8.9 Severability. If any term or provision of this Agreement shall be held invalid or unenforceable, the remainder of this Agreement shall not be affected. 8.10 Construction. This Agreement will be liberally construed to effectuate the intention of the Parties with respect to the transaction described herein. In determining the meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this Agreement, neither this Agreement nor any uncertainty or ambiguity herein will be construed or resolved against either Party (including the Party primarily responsible for drafting and preparation of this Agreement), under any rule of construction or otherwise, it being expressly understood and agreed that the Parties have participated equally or have had equal opportunity to participate in the drafting thereof. 8.11 Legal Fees. Each Party shall be responsible for payment of its own ation of this Agreement and processing of the Escrow. In the event any action is brought to enforce or interpret any of the provisions of this Agreement, the prevailing Party in such action or proceeding, shall be entitled to have and recover its reasonab 8.12 Exhibits. The exhibits attached hereto are hereby incorporated herein by this reference. -15- 55600.00802\\32868052.4 8.13 Entire Agreement. This Agreement supersedes any prior agreements, negotiations and communications, and contains the entire agreement between Buyer and Seller as to the subject matter hereof. No subsequent agreement, representation, or promise made by either Party hereto, shall be of any effect unless it is in writing and executed by the Party to be bound thereby. 8.14 Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the Parties hereto. \[Signatures on following page\] -16- 55600.00802\\32868052.4 SELLER: Successor Agency to the Redevelopment Agency of the City of San Bernardino By: Name: Teri Ledoux Title: City Manager/Executive Director Date of Execution by Seller: _______________ BUYER: Mark Development, LLC, a California limited liability company By: Name: Title: Date of Execution by Buyer: _______________ Acceptance by Escrow Holder: Commonwealth Land Title hereby acknowledges that it has received a fully executed counterpart of the foregoing Real Property Purchase and Joint Escrow Instructions and agrees to act as Escrow Holder hereunder and to be bound by and perform the terms thereof as such terms apply to Escrow Holder. Dated:___________________ COMMONWEALTH LAND TITLE By: Name: Its: -17- 55600.00802\\32868052.4 EXHIBIT A LEGAL DESCRIPTION Approximately seventeen and 40/100 (17.40) acres of the following described property (the City of San Bernardino, County of San Bernardino, State of California, described as follows: Parcel No. 1: Lots 22 to 54 inclusive of Tract No. 6898, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 88 of Maps, Pages 34 and 35, records of said County. Parcel No. 2: Lots 1 to 40 inclusive of Tract No. 7106, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 90 of Maps, Pages 61 and 62, records of said County. APNs 1191-021-11 to 69 1191-041-17 to 22 1191-041-25 to 32 Parcel No. 3: That portion of Lot 6, Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the Map of West Highlands, recorded in Book 5, Page 77, of Maps, described as follows: Beginning at the Northwesterly corner of Lot 9, Tract 7106, as per map recorded in Book 90 of Maps, Page 62, in said Recorder's Office; thence Easterly along the North line of said Lot 9 a distance of 120 thence along said West line North feet to the West line of a 20 foot alley as shown on said Tract 7106; 00 31' 24" 16.63 feet; °thence North 64° 07' 32" West 132.65 feet to an intersection with that certain 20 foot radius curve concave Southeasterly in the Northwesterly corner of that certain parcel of land designated as "not a part" on said Map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; thence Southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the East line of said Dumbarton Avenue 60 feet wide as shown on said Map; thence Southerly along said East line of Dumbarton Avenue to the point of beginning. APN 1191-021-01 55600.00802\\32868052.4 EXHIBIT GRANT DEED NOT FOR SIGNATURE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Mark Development, LLC Attention: Mark Sandoval 335 N. Riverside Avenue Rialto, California 92376 APNs: 1191-021-01 \[Space above for recorder.\] 1191-021-11 to 69 DOCUMENTARY TRANSFER TAX 1191-041-17 to 22 $ computed 1191-041-25 to 32 on the consideration or value of property conveyed; OR computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINOMARK DEVELOPMENT, LLC, a California limited liability company property located in the County of San Bernardino, State of California, more particularly described on Attachment No. 1 attached hereto and incorporated herein by this reference (the t to existing easements, restrictions and covenants of record. SUBJECT TO: all existing taxes, assessments, reservations in patents, liens, encumbrances, covenants, conditions, restrictions, rights of way and easements of record. Grantor binds itself and its successors to warrant the title against its acts and none other, subject to the matters above set forth. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of , 2020. SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO By: NOT FOR SIGNATURE Teri Ledoux Executive Director 55600.00802\\32868052.4 ATTACHMENT NO. 1 TO GRANT DEED LEGAL DESCRIPTION Approximately seventeen and 40/100 (17.40) acres of the following described property (the situated in the City of San Bernardino, County of San Bernardino, State of California, described as follows: Parcel No. 1: Lots 22 to 54 inclusive of Tract No. 6898, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 88 of Maps, Pages 34 and 35, records of said County. Parcel No. 2: Lots 1 to 40 inclusive of Tract No. 7106, in the City of San Bernardino, County of San Bernardino, State of California, as per plat recorded in Book 90 of Maps, Pages 61 and 62, records of said County. APNs 1191-021-11 to 69 1191-041-17 to 22 1191-041-25 to 32 Parcel No. 3: That portion of Lot 6, Block 3, in the City of San Bernardino, County of San Bernardino, State of California, as shown on the Map of West Highlands, recorded in Book 5, Page 77, of Maps, described as follows: Beginning at the Northwesterly corner of Lot 9, Tract 7106, as per map recorded in Book 90 of Maps, Page 62, in said Recorder's Office; thence Easterly along the North line of said Lot 9 a distance of 120 thence along said West line North feet to the West line of a 20 foot alley as shown on said Tract 7106; 00 31' 24" 16.63 feet; °thence North 64° 07' 32" West 132.65 feet to an intersection with that certain 20 foot radius curve concave Southeasterly in the Northwesterly corner of that certain parcel of land designated as "not a part" on said Map of Tract 7106 and lying between Dumbarton Avenue and said 20 foot alley; thence Southerly along said curve 6.90 feet to the point of tangency thereof with the tangent portion of the East line of said Dumbarton Avenue 60 feet wide as shown on said Map; thence Southerly along said East line of Dumbarton Avenue to the point of beginning. APN 1191-021-01 55600.00802\\32868052.4 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA ) ) ss. COUNTY OF ____________ ) On _____________________________ , before me, __________________________________ , Notary Public, (Print Name of Notary Public) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual Corporate Officer ___________________________________________ Title Or Type Of Document ___________________________________________ Title(s) Partner(s) Limited General Attorney-In-Fact ___________________________________________ Trustee(s) Number Of Pages Guardian/Conservator Other: _________________________________ ___________________________________________ Signer is representing: Date Of Documents 55600.00802\\32868052.4 Name Of Person(s) Or Entity(ies) ___________________________________________ ___________________________________________ Signer(s) Other Than Named Above ___________________________________________ 55600.00802\\32868052.4 EXHIBIT CERTIFICATE OF NON-FOREIGN STATUS To inform Mark Development, LLC, a California limited liability company (Transferee), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended (Code) will not be required by Successor Agency to Redevelopment Agency of the City of San Bernardino, a public entity corporate and politic (Transferor), the undersigned hereby certifies the following on behalf of Transferor: 1. Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. Transferor's U.S. employer or tax (social security) identification number is _____________________. 3. : City of San Bernardino Successor Agency 3rd Floor San Bernardino, CA 92401 \[4. Transferor is not a disregarded entity as defined in Section 1.1445- 2(b)(2)(iii) of the Code.\] Transferor understands that this Certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalty of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor. Successor Agency to the Redevelopment Agency of the City of San Bernardino By: Name: Teri Ledoux Title: City Manager/Executive Director 55600.00802\\32868052.4 EXHIBIT ASSIGNMENT AND ASSUMPTION AGREEMENT 55600.00802\\32868052.4 EXHIBIT BILL OF SALE 55600.00802\\32868052.4