APPRAISAL REPORT OF: MODESTO MUNICIPAL GOLF COURSE …

APPRAISAL REPORT OF: MODESTO MUNICIPAL GOLF COURSE LAND 718 TUOLUMNE BOULEVARD & 601 NEECE DRIVE MODESTO, CALIFORNIA 95351 STANISLAUS COUNTY APN: PORTION OF 102-012-001 FOR: MS CYNTHIA BIRDSILL DIRECTOR COMMUNITY & ECONOMIC DEVELOPMENT CITY OF MODESTO 1010 TENTH STREET, SUITE 3300 MODESTO, CALIFORNIA 95353 DATE OF VALUE: JANUARY 7, 2016 BRI 15-193

______________________________ BENDER ROSENTHAL, INC. _____________________________

January 27, 2016 Ms. Cynthia Birdsill Director Community & Economic Development City of Modesto 1010 Tenth Street, Suite 3300 Modesto, California 95353

Re: Appraisal of Modesto Municipal Golf Course Land 718 Tuolumne Boulevard & 601 Neece Drive Modesto, California 95351 Portion of APN: 102-012-001

Dear Ms. Birdsill: As per the contract, we have appraised the above identified property. The subject consists of a portion of city-owned property totaling 53± net acres of residential zoned land, currently improved and utilized as a golf course. We have been directed by the client to appraise the property as though vacant and available for development to the highest and best use, therefore the inspection of the property was limited to the land areas only. The purpose of the appraisal assignment is to establish market value of the fee simple interest of the land only for internal planning regarding the future potential of the property by the City. The appraisal assumes that the area appraised is a separately saleable property. The subject has a concluded highest and best use for future residential development. No costs to convert or subdivide the property have been included in the analysis. Based upon discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would eventually be approved. The protracted timeline to development reflects the lengthy, expensive process of obtaining a General Plan amendment and also the potential opposition or impact to neighboring properties as a result of converting the golf course to its highest and best use as speculative development land. The purpose of the appraisal assignment is to establish market value of the fee simple interest of the land only for internal planning regarding the future potential of the property by the City. The client and intended user of this report is the City of Modesto. The appraisal constitutes a narrative Appraisal Report of that property. The following appraisal report contains the scope of the assignment, required investigation, data and analyses upon which our opinion of market value is based. The appraisal is subject to the hypothetical condition, extraordinary assumptions, general assumptions and limiting conditions and certification included in the report.

City of Modesto Ms. Birdsill Page 2

BRI 15-193 ____________________________ BENDER ROSENTHAL, INC. ____________________________

We have prepared this report in conformance with and subject to the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation. We are pleased to have this opportunity to provide you with professional appraisal services. BENDER ROSENTHAL, INC. ___________________________ ____________________________ David B. Wraa, MAI, ARA Amy J. Woodward California Certified General California Certified General Real Estate Appraiser Real Estate Appraiser Certificate No. AG023713 Certificate No. AG044210

Modesto Municipal Golf Course Land Modesto, California

BRI 15-193 iv ______________________________ BENDER ROSENTHAL, INC. _____________________________

TABLE OF CONTENTS TITLE PAGE ................................................................................................................................... i LETTER OF TRANSMITTAL ...................................................................................................... ii TABLE OF CONTENTS ............................................................................................................... iv PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS.............................. vi APPRAISAL EXHIBIT ................................................................................................................ vii AERIAL PHOTOGRAPH ............................................................................................................. ix SUBJECT PROPERTY PHOTOGRAPHS ................................................................................... xi SECTION

I. INTRODUCTION ...................................................................................................1 Subject Property Client and Intended User of the Appraisal

Purpose of the Appraisal; Property Rights Appraised Scope of the Appraisal Type of Report Definitions Used in the Report Date of Valuation and Date of the Report Extraordinary Assumptions & Hypothetical Conditions General Assumptions and / or Limiting Conditions II. STANISLAUS COUNTY REGIONAL OVERVIEW ............................................7

Regional Map Population Future Population Cities / Communities Transportation Education Healthcare Retail / Shopping Centers Cultural/Recreational Industry Employment Unemployment Rates Major Employers Household Income Housing Tenure / Values Regional Analysis Conclusions

III. NEIGHBORHOOD DESCRIPTION/IMMEDIATE ENVIRONS ......................15 Neighborhood Map Demographic Analysis Conclusion


BRI 15-193 v ____________________________ BENDER ROSENTHAL, INC. ____________________________

Table of Contents, continued

IV. RESIDENTIAL MARKET OVERVIEW .............................................................22 National Home Value Trends Northern Central Valley Region Housing Market Analysis New Home Housing Trends Modesto New Residential Market Conditions Discussions with Market-Participants V. PROPERTY DESCRIPTION ................................................................................28

General Site Attributes Assessor’s Parcel Map Other Property Matters VI. HIGHEST AND BEST USE ANALYSIS .............................................................33 Highest and Best Use of the Site, As Vacant Highest and Best Use of the Property, As Improved VII. VALUATION ANALYSIS ...................................................................................35 Valuation Method and Considerations Sales Comparison Approach VIII. APPRAISER’S CERTIFICATION .......................................................................44

ADDENDA ITEM 1 PROFESSIONAL QUALIFICATIONS


BRI 15-193 vi BENDER ROSENTHAL, INC.

PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS

Appraisal Assignment: Per the request of the client, the appraisal assignment is to establish the market value of the fee simple interest of the land only for internal planning regarding the future potential of the property by the City.

Property Location: 718 Tuolumne Boulevard & 601 Neece Drive Modesto, California 95351 (Stanislaus County)

PROPERTY DATA

Assessor’s Parcel Number: A Portion of 102-012-001 Ownership: City of Modesto Sales History: Based on review of public records, there have been

no transactions noted involving the subject property within the last 3 years. To the best of our knowledge, the subject property is not currently in contract or listed for sale.

Site Area: 53± acres based on an appraisal exhibit provided by

the city identifying the boundaries of the property to be appraised. See the exhibit on the following page.


BRI 15-193 vii BENDER ROSENTHAL, INC.

APPRAISAL EXHIBIT (The land area appraised is identified by the black outline)


BRI 15-193 viii BENDER ROSENTHAL, INC.

Zoning: R-1 (Low Density Residential) – City of Modesto General Plan Designation: OS – (Open Space) – City of Modesto. Based upon

discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would eventually be approved.

Flood Zone: The property is located in Flood Zone X (unshaded);

per the Federal Emergency Management Agency (FEMA) flood insurance rate maps, Community Panel No. 06099C0325E, dated September 25, 2008.

Seismic Information: Earthquake risk is low; the properties are not located

in an Alquist-Priolo Special Studies earthquake zone. Toxic Hazards Information: We have not been provided with a Phase I

assessment for the subject property. No evidence of contamination was noted upon inspection of the property. However, the appraiser is not an expert in this field and is not qualified to detect or advise on similar matters. This appraisal therefore assumes that there is no toxic contamination on the subject property. Please refer to General Limiting Condition Number 15 regarding hazardous materials.

Wetlands: No studies provided and none known to exist. Current Use: 53± acres of government owned residential zoned

land used for a municipal Golf Course. Highest and Best Use: Future single family residential development. Market Value, as if Vacant and not Improved with a Municipal Golf Course, As of January 7, 2016: $1,600,000

Date of Report: January 27, 2016 Date of Value: January 7, 2016


BRI 15-193 ix BENDER ROSENTHAL, INC.

Exposure Period: Relatively few recent bulk sales of residential lots and raw residential land were identified in the market. However, discussions with market participants and analysis of the few data points available, indicated marketing times ranging from about 2 months to several years. Given historical and current market conditions, an estimated exposure period of 9 to 12 months is considered appropriate for the subject property.


BRI 15-193 x BENDER ROSENTHAL, INC.

AERIAL PHOTOGRAPH


BRI 15-193 xi BENDER ROSENTHAL, INC.

SUBJECT PROPERTY PHOTOGRAPHS

View of subject property from Tuolumne Boulevard

Typical view of subject property


BRI 15-193 xii BENDER ROSENTHAL, INC.


Street view facing east on Tuolumne Boulevard

Street view facing west on Tuolumne Boulevard


BRI 15-193 xiii BENDER ROSENTHAL, INC.


Street view facing south on Neece Drive

View of golf course clubhouse improvements facing northwest from Neece Drive


BRI 15-193 xiv BENDER ROSENTHAL, INC.


Street view facing north on Roselawn Avenue

Street view facing west on South Avenue


BRI 15-193 xv BENDER ROSENTHAL, INC.


View of southeast corner of property near the baseball park


BRI 15-193 1 ______________________________ BENDER ROSENTHAL, INC. _____________________________

I. INTRODUCTION SUBJECT PROPERTY The property appraised consists of a portion of city-owned property totaling 53± net acres of residential zoned land. The property fronts Tuolumne Boulevard, a four lane thoroughfare just west of Highway 99 and the Tuolumne River. The land is adjacent to single family residential neighborhoods to the north and west, with additional residences, the John Thurman Baseball Park and the Dryden Golf Course to the south. Homes in the immediate neighborhood are identified by the city as the oldest housing stock in the city at 60+ years old. The homes are in average to fair condition, with an average sale price of $128,224 over the past year in a one-mile radius of the property. The river and highway are located to the east. The site is located just south of Downtown Modesto and has municipal utilities proximate to the site. CLIENT AND INTENDED USER OF THE APPRAISAL The client and intended user of this report is the City of Modesto. PURPOSE OF THE APPRAISAL; PROPERTY RIGHTS APPRAISED The purpose (intended use) of the appraisal assignment is to determine the market value of the fee simple interest of the land for internal planning regarding the future potential of the property by the City. Other uses of the appraisal may be inappropriate. Limiting Condition No. 10 applies to subsequent additional use of the appraisal (see General Assumptions and Limiting Conditions). SCOPE OF THE APPRAISAL This appraisal is intended to determine the market value of the fee simple interest of the land only. The property was inspected on January 7, 2016 by Amy Woodward of Bender Rosenthal, Inc., accompanied by the Dryden and Creekside golf course manager, Kelly Smith. David Wraa inspected the property subsequently. The purpose of the appraisal assignment is to establish market value of the fee simple interest of the land only for internal planning regarding the future potential of the property by the City. We have been directed by the client to appraise the property as though vacant and available for development to the highest and best use, therefore the inspection of the property was limited to the land areas only. The appraisal assumes that the area appraised is a separately saleable property. The subject has a concluded highest and best use for future residential development. No costs to convert or subdivide the property have been included in the analysis. Based upon discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would eventually be approved. The protracted timeline to development reflects the lengthy, expensive process of obtaining a General Plan amendment and also the potential opposition or impact to neighboring properties as a result of converting the golf course to its highest and best use as speculative development land.



The appraisal assignment involved an inspection of the subject properties by the appraiser, interviews with government departments having jurisdiction over the property, and collection of data pertaining to the subject property and the relevant market. Information was obtained from the client, the owner, public records, publications, appraisal office files, developers, builders, real estate agents, and/or knowledgeable persons. Sales data were confirmed with parties directly involved in the transactions, unless otherwise stipulated. Opinions were sought from knowledgeable persons. Professional experts in such fields as site engineering, etc., were not hired, as this would have been beyond the scope of the assignment. The valuation process also involved an investigation and analysis of regional area demographic and economic trends, and the Stanislaus County regional housing markets. Neighborhood attributes such as amenities, services, facilities, and other factors that could influence value were identified. The highest and best use of the property has been considered in light of these trends and factors, the degree of marketing success for the existing use, and the economic virtues and consequences of changing the property’s use. Information considered relevant to the appraisal assignment has been summarized in the appraisal, and data pertaining to value have been analyzed using the Sales Comparison Approach. The steps taken to estimate the market value of the property include the following:

• Overview of the current real estate market;

• Overview of regional and neighborhood data;

• Inspection of the subject property and data pertaining to the subject;

• Research of comparable properties through sources including Co-Star, MLS, and Loopnet;

• Discussions with real estate agents and/or buyers/sellers in the area;

• Analysis of this data and calculations; and

• Preparation of the report. The appraisal is reported in a narrative Appraisal Report format (contains a summary of information significant to the solution of the appraisal problem)

We have been directed by the client to appraise the property as though vacant and available for development to the highest and best use, therefore the inspection of the property was limited to the land areas only. TYPE OF REPORT Utilizing USPAP nomenclature, this appraisal is presented in a narrative “Appraisal Report” format.



DEFINITIONS USED IN THE REPORT Market Value1 means the most probable price that 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; and

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.

Fee Simple Estate2 is the absolute ownership of real property unencumbered by any other interest, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Reasonable Exposure Time3 is 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; a retrospective estimate based upon an analysis of past events assuming a competitive and open market. We estimate an exposure period of 9 to 12 months based upon the market data gathered for this report. VALUE PREMISES We have been directed by the client to appraise the property as though vacant and available for development to the highest and best use, as opposed to its current use as an improved golf course. The property is appraised under the premise that the property is separately saleable. The market value estimate is stated in terms of cash. DATE OF VALUATION AND DATE OF THE REPORT The effective date of the valuation is the date of inspection on January 7, 2016. The date of the report is the date of the letter of transmittal on January 27, 2016.

1 Office of the Comptroller of the Currency under 12 CFR, Part 34, Subpart C – Appraisals, 34.42 Definitions [f]. 2 The Dictionary of Real Estate Appraisal (Fifth Edition), Appraisal Institute, Chicago, Illinois, 2010, Pg. 78.. 3 Source: Uniform Standards of Professional Appraisal Practice 2010 Edition; Statement 6.



EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS Note to Reader: The subject property is subject to the following extraordinary assumptions and/or hypothetical conditions, which might have affected the assignment results.4 EXTRAORDINARY ASSUMPTIONS

1. A current preliminary title report was not provided for review. This report is based upon the extraordinary assumption that there are no conditions associated with title that adversely affect the value of the property.

2. Based upon discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would be approved.

3. The appraisal of the subject assumes that the area appraised is a separately saleable property. No costs to convert or subdivide the property have been included in the analysis.

HYPOTHETICAL CONDITION

1. The subject property consists of an improved golf course with associated buildings and improvements. We have been directed by the client to appraise the property as though vacant and available for development to the highest and best use.

4 Source: Uniform Standards of Professional Appraisal Practice 2014-2015 Edition, Pg. U-25.



GENERAL ASSUMPTIONS AND / OR LIMITING CONDITIONS This appraisal report and the value estimates it contains are expressly subject to the following assumptions and/or limiting conditions.

1. Title to the property is marketable.

2. The proposed property lines as they appear on the ground or on maps are assumed to be correct; the appraisers have not in any way surveyed the property.

3. Data, maps, and descriptive data furnished by the client or his representatives are accurate and correct.

4. No responsibility is assumed for matters of law or legal interpretation.

5. No conditions exist that would affect the use and value of the property that are not discoverable through normal, diligent investigation.

6. The valuation is based on information from sources believed reliable, and that such information is correct and accurately reported.

7. The value estimates are made subject to the purpose, date, and definition of value.

8. The report is to be considered in its entirety and use of only a portion will invalidate the appraisal.

9. This appraisal was made on the premise that there are no encumbrances prohibiting utilization of the property under the appraiser's estimate of highest and best use.

10. Possession of this report or a copy does not carry with it the right of publication, nor may it be used for any purpose or function other than those stated in the report, nor may it be used by anyone other than the client without the previous written consent of the appraiser and the appraisal firm, and then only with proper qualifications and arrangements, possibly including the payment of an additional fee to the appraisal firm. No part of this narrative report may be reproduced by any means nor disseminated to the public in any way without the prior written consent of the appraiser.

11. This report is subject to review by duly authorized representatives of the Appraisal Institute.

12. The liability of the appraiser, the appraisal firm and its employees and associates is limited to the client only. There is no accountability, obligation, or liability to any third party. If the appraisal report is disseminated to anyone other than the client, the client shall make such party or parties aware of all limiting conditions and assumptions affecting the appraisal assignment. Neither the appraiser nor the appraisal firm are in any way to be responsible for any costs incurred to discover or correct any physical, financial, and/or legal deficiencies of any type present in the subject property. In the case of limited partnerships or syndication offerings or stock offerings in real estate, the client agrees that in the event of a lawsuit brought by a lender, a partner or part owner in any form of ownership, a tenant or any other



party, the client will hold the appraiser and the appraisal firm completely harmless in such action with respect to any and all awards or settlements of any type in such lawsuits.

13. Any person or entity who obtains or reads this report, or a copy, other than the client specified in this report, expressly assumes all risk of damages to himself or third persons arising out of reliance on this report and waives the right to bring any action based on the appraisal, and neither the appraiser nor Bender Rosenthal, Inc. shall have any liability to any such person or entity.

14. The appraiser shall not be required to give testimony or appear in court by reason of this appraisal with reference to the property described in this report unless prior arrangements have been made.

15. No responsibility is assumed for building permits, zone changes, engineering, or any other services or duty connected with legally utilizing the subject property.

16. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property, except as discussed in the report. The appraiser, however, is not qualified to detect such substances. The presence of such substances as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No

responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

17. The property appraised may or may not be subject to the Americans with Disabilities Act of 1990 (ADA). Title III of this act provides for penalties for discrimination in failing ". . . to remove architectural barriers. . . in existing facilities [unless] an entity can demonstrate that the removal. . . is not readily achievable. . ." Unless otherwise noted in this appraisal, it is assumed that the property appraised is not substantially impacted by this law. However, no detailed compliance review has been undertaken by the appraiser, nor is the appraiser an expert in ADA matters.

18. It is assumed that the property receives competent management and marketing.

19. We may or may not have reviewed a title report for this valuation. Unless stated otherwise, we assume that there are no title matters that would adversely influence value.



II. STANISLAUS COUNTY REGIONAL OVERVIEW The subject is located in the City of Modesto in Stanislaus County, California. Modesto is a part of the Modesto Metropolitan Statistical Area (MSA). A regional map is shown below.

REGIONAL MAP

Stanislaus County is located in the north San Joaquin Valley in Central California encompassing 1,515 square miles of land bound by Santa Clara County to the west, San Joaquin County to the north, Calaveras and Tuolumne Counties to the east, and Merced County to the south. The county has nine incorporated cities within its boundaries: Modesto, Ceres, Turlock, Riverbank, Hughson, Oakdale, Waterford, Patterson, and Newman. Population. As of January of 2015, Stanislaus County had an estimated population of 532,297, an increase of 0.8 percent over the 2014 population. The rate of growth of Stanislaus County is generally similar to the State as a whole over the same time period. It is noted, however, that many of the cities in Stanislaus County have experienced relatively high population growth rates with Oakdale, Hughson and Turlock leading the way from 2014 to 2015. The table below contains the 2010 Census data through January of 2015 populations for the state, county, cities, and the unincorporated county area.



Area (State/County/City) 4/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015

14-15 %

Change California 37,253,956 37,427,946 37,680,593 38,030,609 38,357,121 38,714,725 0.9

Stanislaus County 514,453 516,244 519,105 523,707 528,157 532,297 0.8

Ceres 45,417 45,534 45,764 46,251 46,596 46,989 0.8

Hughson 6,640 6,687 6,785 6,969 7,137 7,222 1.2

Modesto 201,165 201,730 202,834 205,972 207,878 209,186 0.6

Newman 10,224 10,474 10,546 10,626 10,695 10,753 0.5

Oakdale 20,675 20,776 20,904 21,200 21,499 21,773 1.3

Patterson 20,413 20,500 20,593 20,814 20,979 21,094 0.5

Riverbank 22,678 22,773 22,879 23,113 23,305 23,485 0.8

Turlock 68,549 68,809 69,244 69,803 70,362 71,043 1.0

Waterford 8,456 8,477 8,515 8,582 8,639 8,686 0.5

Balance Of County 110,236 110,484 111,041 110,377 111,067 112,066 0.9 Source: Department of Finance Population Estimates Future Populations. As shown in the table below, population projections indicate that Stanislaus County is expected to increase by 2.6% between 2015 and 2020, or approximately 0.5% per year. It is noted there is a slight variance between the Stanislaus County population estimate reported below by STDB Data and the California Department of Finance, presented in the prior table.

Cities / Communities. Stanislaus County contains nine incorporated cities and 14 unincorporated communities. The four largest urban areas of the county are Modesto, Ceres, Turlock, and Oakdale. Modesto is one of the largest cities in northern San Joaquin Valley. Modesto is the county seat of Stanislaus County and has an established commercial downtown area surrounded by older residential neighborhoods. Modesto’s boundaries have spread over time, with residential, commercial, and industrial development typical of growth in the latter half of the 20th century. Ceres has developed as a suburb of the City of Modesto. Turlock has a similar development pattern to Modesto, but is less densely populated. Turlock is also home to California State University, Stanislaus. Oakdale has a small historic district surrounded by recent growth, and has retained a greater degree of agricultural use than Modesto. These four cities also contain higher density commercial and industrial uses, and are supported by multi-lane arterial roadways. The towns of

Population City Total

2020 Projection 537,3672015 Estimate 523,9652010 Population 514,4532000 Population 446,997 Growth 2015-2020 2.6%Growth 2000-2015 17.2%

Stanislaus County Historical and Projected Population Growth



Riverbank, Hughson, Patterson, Waterford, and Newman are smaller suburban areas that maintain agricultural uses. These cities contain small downtown areas with established neighborhoods, and relatively new subdivisions having been developed within these communities in the last decade. Transportation. State Route 99 bisects Stanislaus County with the majority of development found along it. Interstate 5 also runs through the county, along the southwest portion with less intense development. Route 108, also known as McHenry Avenue, runs north and south through the center of Modesto and intersects major streets, as well as State Route 219. State Route 132 runs east and west through Modesto and is the direct access to Interstate 5. Amtrak provides passenger train service to the County via the Parker Road Station in Modesto. Routes from Modesto connect passengers to other locations including Bakersfield, Sacramento, San Francisco, and the Sierra Foothill communities. Union Pacific Railroad provides commercial rail service to Modesto via a vast rail system throughout the western and Midwestern regions of the United States. Burlington Northern Santa Fe operates in the western two-thirds of the United States including Mexico and Canada. Modesto and Empire Traction Company (M & ET) operates a short-line railroad situated in a 2,000 acre industrial park known as the Beard Industrial District. The Beard Industrial District is located in the heart of California’s agricultural San Joaquin Valley and is fully developed and zoned for the construction and operation of industrial plants and processors, distributors and warehouses, and business offices. A large number of industries are situated in this industrial area, several of which are food related. The local airport is located two miles southeast of downtown Modesto at 700 Tioga Drive off South Santa Rosa Avenue and State Route 132, with direct access from Interstate 5. The Modesto City-County Airport has daily flights to San Francisco through United Airlines under their SkyWest brand. Education. Modesto Junior College has two campuses: the east campus is the older campus located on College Avenue off Tully Road, northwest of the downtown business district, and the west campus on Blue Gem and Carpenter. The west campus is the newer campus with more buildings and additional development plans. Stanislaus State University, CSU Stanislaus, is located on West Monte Vista Avenue in the City of Turlock. Healthcare. The region is served by three hospitals in the Modesto area: Doctors Medical Center and Memorial Hospital, and the recently completed Kaiser Permanente facility. Doctors Medical Center is located north of the central downtown area on Florida Avenue off State Route 108. A $22 million expansion allows the 465-bed multi-specialty hospital to meet the growing health care needs of the region. Memorial Medical Center opened as a 72,000 square foot, 99-bed facility in 1970. Affiliated with Sutter Health System, it has grown with the needs of the community to a 311-bed acute care facility.



Retail / Shopping Centers. Vintage Fair Mall is located northeast from the downtown area of Modesto off State Route 99 and has been a part of Modesto since 1977. Vintage Fair Mall is an approximately 1.1 million square foot mall with over 120 specialty stores and five major department stores. The North Pointe Shopping Center, located near Highway 99 at Pelandale Avenue, is one of the most recent retail development areas and is home to large anchors such as Lowe’s, Costco, Save Mart, Cost Plus World Market, and Pier 1 Imports. This area is a mix of freestanding and strip retail structures with a strong mix of national, regional, and local tenants. Cultural / Recreational. The region offers a number of cultural and recreational activities, and is within close proximity to state parks that offer opportunities for hiking, mountain biking, fishing and water sports. Presently, there are a number of local golf courses of which Creekside (the subject of this appraisal), Dryden and Modesto Municipal are among the most popular. Fishing and water sports can be found within the county. Industry Employment. The economy of the Modesto MSA provides a desirable mix of jobs for those migrating to the area. The Modesto MSA is an increasingly diverse economy and its geography has attracted a number of employers and residents to the area in recent years. Per the November 2015 statistics provided by the California Employment Development Department, trade transportation, utilities is the County’s leading employer, followed by educational services and health care. Shown on the following page are the leading industries and their respective percentage of Modesto MSA’s total employment.

Looking ahead through 2022, the California Employment Development Department (EDD) projects that the most significant job growth will continue to be the Mining, Logging and Construction trade.

Total Farm8%

Mining, Logging, and Construction

5%

Manufacturing11%

Trade, Transportation &

Utilities20%

Information0%

Financial Activities

3%

Professional & Business Services

8%

Educational & Health …

Leisure & Hospitality

10%

Other Services3%

Government15%

2015 Employment by Industry



Unemployment Rates. The following table presents the civilian labor force, employment, and the unemployment rate for The Modesto MSA for 2006 to November 2015, the most current data available.

Area Year Labor Force Employment UnemploymentUnemployment

Rate

Modesto MSA 2006 224,300 206,400 17,800 8.0%2007 226,900 207,200 19,700 8.7%2008 231,700 206,000 25,700 11.1%2009 234,500 198,100 36,400 15.5%2010 242,900 201,800 41,100 16.9%2011 242,000 202,100 39,900 16.5%2012 242,300 206,100 36,100 14.9%2013 241,700 210,400 31,200 12.9%2014 241,400 214,400 27,100 11.2%

2015 Nov 241,400 220,100 21,400 8.8%

Modesto MSA Labor Force & Employment (2006 to Current)

Source: California Employment Development Department (EDD) According to the Employment Development Department, the most current unemployment statistics indicate an unemployment rate of 8.8% for the Modesto MSA. The unemployment rate spiked in the 2008, 2009 and 2010 years in accordance with the depressed economic conditions. Since that time, the unemployment rate has been steadily declining. The average unemployment rate for the State of California is 5.7%.



Major Employers. Shown below are the major employers within the region (Stanislaus County).

Employer Name Location Industry Andre Champagne Cellars Modesto Wineries (mfrs)

California State University Turlock Schools-Universities & Colleges Academic

Carlo Rossi Winery Modesto Wineries (mfrs) Community Services Agency Not Available Government Offices-County

Con Agra Foods Inc Oakdale Canning (mfrs) Copperidge Winery Modesto Beverages (whls)

CVS Caremark Distribution Ctr Patterson Distribution Centers (whls)

Del Monte Foods Inc Modesto Food Products & Manufacturers

Doctors Medical Ctr of Modesto Modesto Hospitals E & J Gallo Winery Modesto Wineries (mfrs)

Ecco Domani Winery Modesto Wineries (mfrs) Fairbanks Cellars Not Available Wineries (mfrs)

Foster Farms Turlock Poultry Processing Plants (mfrs)

Frito-Lay Inc Modesto Potato Chips (whls) Hornsby's Pub Draft Cider Ltd Not Available Beverages (whls)

Macdonald Group Modesto Real Estate Memorial Medical Ctr Modesto Hospitals

Modesto Bee Modesto Newspapers (publishers/Mfrs) Oak Valley Hospital District Oakdale Hospitals

Peter Vella Winery Modesto Wineries (mfrs) Stanislaus County Community Svc Turlock Government Offices-County

Stanislaus County Community Modesto Government Offices-County

Stanislaus County Welfare Dept Modesto County Government-Social/Human Resources

Women Infants Child Prgm-W I C Modesto Health Services Zabaco Winery Modesto Wineries (mfrs)

Source: State of California Employment Development Department

http://www.labormarketinfo.edd.ca.gov/aspdotnet/databrowsing/empDetails.aspx?menuchoice=emp&geogArea=0604000099&empId=623436185



























Household Income. As of 2015, approximately 49% of the County’s households generated income greater than $50,000 per year. From 2015 through 2020, income levels are estimated to increase by 13%. The following table is presented summarizing the 2015 estimated and 2020 projected household income levels for Stanislaus County:

As can be seen from the table presented previously, the estimated 2015 average household income is $65,092 and the median income is estimated at $48,989. Current average household income for all U.S. households is $72,641, with a median household income of $51,939 (per 2014 U.S. Census Bureau). Housing Tenure / Values. Of the total number of housing units in the County, it is estimated that nearly 54% are owner occupied. The balance is renter occupied or vacant as summarized in the following table:

Number Percentage Number Percentage

<$15,000 21,006 12.5% 20,632 12.0%

$15,000 - $24,999 19,325 11.5% 15,130 8.8%$25,000 - $34,999 19,493 11.6% 16,506 9.6%$35,000 - $49,999 25,543 15.2% 24,587 14.3%$50,000 - $74,999 30,752 18.3% 31,120 18.1%$75,000 - $99,999 20,166 12.0% 25,618 14.9%

$100,000 - $149,999 20,838 12.4% 23,727 13.8%$150,000 - $199,999 6,554 3.9% 8,941 5.2%

$200,000+ 4,537 2.7% 5,502 3.2%Total 168,046 100% 171,936 100%

Avg. Household Income $65,092 $73,650Est. M edian Household Income $48,989 $55,398

Stanislaus County Household Income Distribution

Income Cohort2015 2020

Tenure County Total Percent

Owner-Occupied 53.7%Renter-Occupied 38.6%Vacant 7.6%

Total Units 99.9%

County 2015 Tenure of Occupied Housing Units



As of 2015, the estimated median owner-occupied housing value was $200,688. As shown in the following table, 41% of owner-occupied homes have housing values between $100,000 and $200,000, and 50% of the owner-occupied homes have estimated values over $200,000.

Regional Analysis Conclusion. Stanislaus County offers its residences and visitors a variety of amenities. It offers a diverse work force and the County experienced significant gains in both residential and commercial growth during 2003-2005. However, after 2006, residential growth in the County began to slow significantly in accordance with the downturn in the markets. In addition, significant increases in unemployment were observed over the course of the 2008, 2009 and 2010 years. That being said, general macroeconomic conditions have been improving over the course of the past 2-3 years through observed decreases in unemployment, albeit at a slow pace. Although there are still uncertainties with regard to future market conditions, continued stabilization of the markets are anticipated over the course of the next several years. Further, as will be discussed in the sections that follow, some new residential development has begun in the Region as well. Although a full recovery has not yet been achieved, general trends suggest an overall stabilization of the markets.

Number Percentage

<$50,000 977 1.0%

$50,000 - $99,999 7,722 7.9%$100,000 - $149,999 15,542 15.9%$150,000 - $199,999 24,339 24.9%$200,000 - $249,999 18,865 19.3%$250,000 - $299,999 10,948 11.2%$300,000 - $399,999 9,872 10.1%$400,000 - $499,999 3,714 3.8%$500,000 - $749,999 3,030 3.1%$750,000 - $999,999 977 1.0%

$1,000,000 + 1,759 1.8%Total 97,746 100%

Estimated Median Housing Value

County Total

Stanislaus County Estimate of Owner-Occupied Housing Values

$200,688

Value



III. NEIGHBORHOOD DESCRIPTION/IMMEDIATE ENVIRONS The property appraised is located in the City of Modesto. More specifically, the property is located at 718 Tuolumne Boulevard and 601 Neece Drive in Modesto, California. The property is located just south, a few blocks from Downtown Modesto, immediately west of highway 99. A map of the subject’s neighborhood location is seen below:

NEIGHBORHOOD MAP

The City of Modesto is located in Stanislaus County, in the northern section of the San Joaquin Valley. The Central Pacific Railroad founded the original Modesto community in 1870, on a site near the Tuolumne River. Incorporated in 1884, the City of Modesto is the county seat of Stanislaus County (County), and has traditionally served as the regional center for the County and the surrounding areas.



The city is going through a time of economic growth which is demonstrated by the growth strategy diagram, which shows the city incorporating the northern areas surrounding the city as well as the western areas outside of the city are seen as next to be incorporated. These areas are shown as planned urban areas. See map below for additional details.



The subject is located near the center of the city, just south/southwest of Downtown and west of the Tuolumne River. The neighborhood is bounded from the northeast to southwest by Paradise Road/H Street and from the east and curving around to the south the neighborhood is bounded physically by the Tuolumne River. Paradise Road/H Street is a primary thoroughfare which has neighborhood serving retail uses along the corridor. The Paradise Shopping Center and Modesto Marketplace are located west of the subject at the terminus of Tuolumne Boulevard. These centers are anchored by Maxx Value Foods and coming soon, the Dollar Tree opening January 2016. Bank of America and Walgreens are junior tenants. Tuolumne Boulevard, located along the northern boundary of the property consists of a four lane thoroughfare that connects to Paradise Road/H Street to the west and becomes B Street immediately east of Highway 99, after the underpass heading into Downtown. Immediately south of the subject parcel is the Dryden Park Golf Course, single-family residential properties and the wastewater treatment plant further south near the river. To the subject’s southeast across the river lies industrial properties. To the north and west are additional single family residential properties, and to the east is Tuolumne River and Highway 99. The subject’s neighborhood consists mainly of older residential subdivisions, built on average in the 1950s to 1960s. This neighborhood is identified in the General Plan to have some of the oldest housing stock in the city at 60+ years old. Homes closest to the subject were estimated to have been constructed in the 1920’s to 1940’s. The homes are in average to fair condition, with an average sale price of $128,224 over the past year in a one-mile radius of the property. The homes average around 1,100 square feet in size. To the northwest of the property lies Modesto High School. The subject is proximal to several parks, including the Ballenita Park and the Robertson Road Park. The subject property is located within the Tuolumne River Comprehensive Planning District area which encompasses approximately 1,630 acres. This approximately 1,630-acre Comprehensive Planning District contains a significant amount of public land, owned by a joint powers agreement between the cities of Modesto and Ceres, and Stanislaus County. A linear park is anticipated in this Comprehensive Planning District, as provided in the Tuolumne River Regional Park Master Plan (TRRP Master Plan). The land use designation as of currently for these 1,630 dwelling units. The limited potential of additional dwelling units in this area would account for one unit per 10 acres. The result would encompass a development potential of approximately 160 dwelling units over 1,630 acres. The general intention for this specific planning district is to provide recreational opportunities that accommodate multiple purposes and changes in recreational preferences over time, expand park and trail systems as land becomes available, create active and passive recreational areas with universal access, develop adequate facilities for recreational activities and also consider the natural forces influencing the development of recreational areas, including potential flooding, prevailing winds, sun orientation and topography. As previously discussed and identified in the Extraordinary Assumptions, the appraisal assumes that the area appraised is a separately saleable property. Based upon discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would be approved. The density restrictions on the property would thereby be changed to reflect the densities allowed under a residential designation.



DEMOGRAPHIC ANALYSIS In order to further describe the subject’s immediate neighborhood, statistical information was obtained from the online Site To Do Business (STDB). A demographic survey was performed within 1, 3 and 5-mile radii rings around the property appraised. The following is a presentation of the map and defined areas and a brief discussion of the relevant neighborhood statistics. The most recent statistical information provided by STDB is as of 2015.

Population Growth. Within a 1-mile radius, the survey indicates a population of 15,054 people as of 2015. By 2020, the population within 1-mile of the subject is expected to grow by 1.7%, or 0.34% per year. Within 3 miles of the subject, the projected population growth between 2015 and 2020 is the same as the 1-mile expected growth (1.8%). This is slightly less than the 5-mile radius ring over the same time frame.

Historical and Projected Population Growth

Population 1-Mile Radius 3-Mile Radius 5-Mile Radius

2020 Projection 15,310 114,615 252,117 2015 Estimate 15,054 112,659 247,517 2010 Population 14,954 111,796 245,319 2000 Population 15,774 109,315 236,474 Growth 2015-2020 1.7% 1.7% 1.9% Growth 2000-2015 -4.6% 3.1% 4.7%



Employment. The largest employment industry within 1, 3 and 5 miles of the subject is the Service Industry at about 35-45% of the employment base. A distant second and third is the Retail Trade and the Constructing Industry.

2015 Estimate of Employment

Business Description

1-Mile Radius 3-Mile Radius 5-Mile Radius

Total Employees

Percent of Total

Total Employees

Percent of Total

Total Employees

Percent of Total

Agriculture/Mining 310 7.2% 1,848 4.8% 3,269 3.5% Construction 563 13.1% 3,696 9.6% 7,098 7.6% Manufacturing 516 12.0% 4,736 12.3% 10,928 11.7% Wholesale Trade 125 2.9% 1,540 4.0% 3,549 3.8% Retail Trade 688 16.0% 5,313 13.8% 13,449 14.4% Transportation/Utilities 275 6.4% 2,464 6.4% 5,137 5.5% Information 34 0.8% 462 1.2% 1,121 1.2% Finance/Insurance/Real Estate 159 3.7% 1,348 3.5% 3,362 3.6%

Services 1,574 36.6% 15,902 41.3% 42,029 45.0% Public Administration 52 1.2% 1,232 3.2% 3,362 3.6% Total 4,300 100% 38,503 100% 93,398 100% Source: STDB Data



Household Income. As of 2015, STDB estimates average household incomes within 1-mile of the property appraised is $33,640. By 2020, the average household income is expected to increase by approximately 10.8%. The average household income within a 3-mile radius is estimated at $49,747, which is projected to increase 11.9% by 2020. It is noted that the subject neighborhood has one of the lowest average household income in the city.

Household Income Distribution within a 1-Mile Radius

Income Cohort 2015 2020


<$15,000 1,083 27.1% 1,138 28.0% $15,000 - $24,999 879 22.0% 723 17.8% $25,000 - $34,999 568 14.2% 516 12.7% $35,000 - $49,999 644 16.1% 675 16.6% $50,000 - $74,999 532 13.3% 610 15.0% $75,000 - $99,999 200 5.0% 276 6.8% $100,000 - $149,999 72 1.8% 98 2.4% $150,000 - $199,999 12 0.3% 20 0.5% $200,000+ 12 0.3% 12 0.3%

Total 3,997 100% 4,064 100% Avg. Household Income $33,640 $37,275

Est. Median Household Income $25,472 $27,686

Household Income Distribution within a 3-Mile Radius

Income Cohort 2015 2020


<$15,000 6,313 18.8% 6,351 18.6% $15,000 - $24,999 5,037 15.0% 4,063 11.9% $25,000 - $34,999 4,567 13.6% 4,029 11.8% $35,000 - $49,999 5,373 16.0% 5,361 15.7% $50,000 - $74,999 5,608 16.7% 5,942 17.4% $75,000 - $99,999 3,022 9.0% 3,995 11.7% $100,000 - $149,999 2,619 7.8% 3,005 8.8% $150,000 - $199,999 705 2.1% 922 2.7% $200,000+ 336 1.0% 444 1.3%

Total 33,580 100% 34,147 100% Avg. Household Income $49,747 $55,703 Est. Median Household Income $36,845 $41,058



Estimated Housing Values. The subject’s immediate area is largely characterized as being an older single-family development. As can be seen from the following table, 86% of homes within 1-mile of the subject’s area have estimated values below $200,000. The homes are in average to fair condition, with an average sale price of $128,224 over the past year in a one-mile radius of the subject property.

2015 Estimate of Owner-Occupied Housing Values

Value 1-Mile Radius 3-Mile Radius 5-Mile Radius

Number Percentage Number Percentage Number Percentage <$50,000 85 5.8% 442 2.7% 592 1.4%

$50,000 - $99,999 398 27.3% 2,766 16.9% 4,863 11.5% $100,000 - $149,999 497 34.1% 4,516 27.6% 9,093 21.5% $150,000 - $199,999 203 13.9% 4,206 25.7% 12,307 29.1% $200,000 - $249,999 71 4.9% 2,127 13.0% 7,232 17.1% $250,000 - $299,999 42 2.9% 916 5.6% 3,426 8.1% $300,000 - $399,999 70 4.8% 687 4.2% 2,664 6.3% $400,000 - $499,999 31 2.1% 278 1.7% 888 2.1% $500,000 - $749,999 29 2.0% 213 1.3% 507 1.2% $750,000 - $999,999 15 1.0% 82 0.5% 169 0.4%

$1,000,000 + 19 1.3% 131 0.8% 550 1.3% Total 1,458 100% 16,364 100% 42,291 100% Source: STDB Data

CONCLUSION The subject is located the City of Modesto. Further, the property appraised is within the Tuolumne River Comprehensive Planning District Area. The immediate area has moderately low income levels and the housing stock is some of the oldest in the city. The neighborhood benefits from proximity to the river, parks, the Dryden golf course to the south and Downtown, with proximity to commercial amenities. The site has adequate access along a primary thoroughfare. Projected growth coupled with strong demographics should assist in maintaining and generating new demand for new home construction.



IV. RESIDENTIAL MARKET OVERVIEW Given that the property appraised is slated for residential use, a discussion of the residential market is merited. Data was obtained from multiple sources including The Gregory Group and Standard & Poors. The following is a discussion of the national housing trends, as well as the trends observed in the North-Central Valley market areas specifically. NATIONAL HOME VALUE TRENDS The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States and the US as a whole. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. The following is a summary of National housing information and trends contained in the latest S&P Press Release, dated November 24, 2015.

The chart above depicts the annual returns of the U.S. National, 10-City and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index covers all nine U.S. census divisions. Over the last 12 months, prices rose 5.0% and 5.5% as measured by the 10 and 20 City Composites respectively in March 2015.



“Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength. With unemployment at 5% and hints of higher inflation in the CPI, most analysts expect the Federal Reserve to raise its Fed Funds target range to 25 to 50 basis points, the first increase since 2006. While this will make news, it is not likely to push mortgage rates far above the recent level of 4% on 30 year conventional loans. In the last year, mortgage rates have moved in a narrow range as home prices have risen; it will take much more from the Fed to slow home price gains. “The strength seen in home prices since the bottom in 2012 led some to wonder if we’re entering a new bubble. While bubbles can only be reliably identified in hindsight, one useful measure compares the increase in home prices to the change in rents. The first chart below shows the year-over-year change in the S&P/Case-Shiller National Home Price Index and the year-overyear change in the rent of primary residence series reported as part of the Consumer Price Index. Home prices are far more volatile. At the same time, the most recent data do not show a huge spread between the two series.”

The chart above shows the index levels for the U.S. National, 10-City and 20-City Composite Indices. As of September 2015, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 11-13%. The recovery from the March 2012 lows is 35.1% and 36.4% for the 10-City and 20-City Composites.



NORTHERN CENTRAL VALLEY REGION HOUSING MARKET ANALYSIS The following sections discuss in more detail building permits, new home sales, new home pricing and new home inventory in the Northern Central Valley, the subject’s market area. The Northern-Central Valley market area is comprised of San Joaquin and Stanislaus Counties. The following information was published by the Gregory Group and details statistics as of the end of 3rd Quarter 2015, the most recent information available as of this writing. The cities discussed in this Northern Central Valley Market Area are; Escalon, Lathrop, Lodi, Manteca, Mountain House, Stockton, Tracy, Modesto, Oakdale, Patterson and Turlock. Building Permits. A total of 992 building permits for single-family residential construction were issued in the first 9 months of 2015, compared to 1,231 units permitted during the first 9 months of 2014. As such, the first 3 Quarters 2015 is set slower than the first 3 quarters of 2014. Since the peak in 2004, building permit issuance declined dramatically on an annual basis until 2011. In general, 2012 demonstrated positive trends in building permit issuance. However, the number of permits issued in 2015 was nearly 31% lower than the previous year. The following table is presented detailing the historical residential building permit activity in the region:

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD Year % ChangeSingle-Family Permits

2005 2,585 2,577 2,345 1,603 9,110 -39.18%2006 1,648 1,789 1,047 1,057 5,541 -40.68%2007 1,141 1,057 637 452 3,287 -63.25%2008 342 393 286 187 1,208 -17.96%2009 140 341 279 231 991 -4.04%2010 239 261 259 192 951 -10.62%2011 195 255 234 166 850 35.88%2012 181 359 296 319 1,155 12.12%2013 392 435 235 233 1,295 19.31%2014 327 578 326 314 1,545 -30.93%

2015 Est. 311 297 384 75 1,067 1,067 --Percent Change -4.89%

North Central Valley Region- Single Family Building Permits

Source: State of Cities Data System (SOCDS)



NEW HOME HOUSING TRENDS In the following sections we will further detail housing trends for new construction subdivisions in the North Central Valley based on data provided by The Gregory Group. The most recent data (3rd Quarter 2015) is summarized on the following table for the North Central Valley Region.

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr Qtr % Year Ago % Change 2014 2015 Change

Average Price $403,254 $407,475 $406,330 $409,256 $400,782 $411,192 $423,444 3.0% 4.2% Median Price $395,880 $400,495 $398,490 $398,490 $399,990 $401,990 $414,990 3.2% 4.1% Average Home Size 2,408 2,481 2,470 2,477 2,434 2,447 2,477 1.2% 0.3% Average Pr/Sq Ft $171.04 $166.89 $167.10 $167.88 $167.63 $170.92 $173.47 1.5% 3.8% Ttl Wkly Sales Rate 0.80 0.96 0.83 0.81 0.87 1.06 1.20 13.2% 44.6% Quarter Sold 243 253 346 281 432 545 390 -28.4% 12.7% Qtr Wkly Sales Rate 0.75 0.78 0.74 0.60 0.95 1.27 0.77 -39.4% 4.1% Unsold Inventory 171 222 327 215 432 298 275 -7.7% -15.9% Weeks of Inventory 9 9 11 7 6 9 6 -33.3% -45.5%

Source: The Gregory Group New Home Sales (Absorption) Data. Based on the Gregory Group data, home sales have fluctuated on a quarterly basis over the course of the last year and a half. From the first quarter of 2014 to the third quarter of 2014, sales activity was steadily increasing. In the 4th Quarter of 2014, new home sales declined somewhat relative to the prior quarter, but still overall strong relative to the 4th Quarter of 2013 at 163 new homes sold. The 1st Quarter of 2015 observed a significant spike in new home sales with reportedly 432 units sold in that quarter. This rise continued through the second quarter of 2015, which saw another spike at 545 new homes sold during that time. The third quarter in2015 saw a decrease in new homes sold, however, the overall trend throughout the last two years has been a positive climb. As of the third quarter in 2015 the new homes sold equates to an average weekly sales rate of 1.20 homes or about 4.8 units per month. New Home Base Pricing. The average detached new-home price in the two-county North-Central Valley Region was at $423,444 at the end of 3rd Quarter 2015, which equated to an increase of 4.21% from the prior year and an increase of 2.49% from the prior quarter. Most of the actively marketing subdivisions in the Fresno/Clovis area experienced increases of base pricing over the course of the 2013 and 2014 year. More recent surveys of the 2015 year indicate that absorption of product has been increasing which has prompted additional base price increases. The base pricing does not reflect buyer incentives, which are prevalent in this market area. Incentives ranging from $0-$15,000 range are common in this market. The price increases are often offset by incentives in order to entice buyers and increase absorption. New-Home Inventory. At the end of the 3rd Quarter 2015 the total unsold new-home inventory for the North-Central Valley Region was 275 units. Given current absorption rates, this results in 6 weeks of available inventory, representing a decrease from 9 weeks of unsold inventory remaining at the end of 2nd Quarter 2015.



MODESTO NEW HOME RESIDENTIAL MARKET CONDITIONS The property appraised is located in the City of Modesto. As such, a brief overview of the current new home prices and other statistics within the City of Modesto is merited. As of the beginning of the 4th quarter of 2015 the Gregory Group surveyed that there were no subdivisions actively selling homes. Discussions with the City of Modesto’s building department has illustrated that there was a strong decline in building permits which is one factor that affects the soft residential market. It is noted that the number of permits issued in 2015 more than tripled that of 2014, but is still significantly lower than historical data.

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SF

Building Permits

398 261 289 139 42 16 13 20 11 12

38

According to discussions with market participants and City officials, there were many tentative maps issued and approved pre-recession, however, some of those products were never built due to economic conditions. As of currently, those previously approved tentative maps are being moved to final status. These lots approved pre-recession were reported to be 505 lots. Recently submitted and approved maps contribute 173 additional lots, 29 of which are currently heading towards construction, meaning that there is a total of 649 vacant and approved lots that would need to be absorbed before new product would be needed in the market. Given this supply, it will likely be some number of years before demand, and new home price points, spur additional development of paper lots and raw residential land. DISCUSSIONS WITH MARKET-PARTICIPANTS Prior to the downturn in the markets observed in the 2006 through 2008 years, the City of Modesto was rapidly expanding with regard to residential development. Development was spurred by spillover demand created from business people and families who commuted to the Bay Area for employment. At that time, price points of homes in the Bay Area were significantly higher than those in the Central Valley and the cost savings for home ownership made economic sense despite extensive commute times. However, as of the 2008 year, demand for new homes in the Modesto

050

100150200250300350400450

1 2 3 4 5 6 7 8 9 10

SF Building Permits

SF Building Permits



area declined significantly with the collapse of the residential markets. As time progressed, bank owned resale product saturated the market and price points for homes fell given lack of demand. Gradually, however, resale product was absorbed with the stabilization of the markets. More recently, price points of homes in the Bay Area have been increasing, most significantly during the course of the 2012 through 2014 years. Consequently, as of the 2014/2015 years, markets closer to the Bay Area such as Manteca have begun to see market conditions shift positively toward new home sales activity given increased demand once again spurred from relatively high housing prices in the Bay Area. This demand has not yet spread to the Modesto market. Information provided the City Planning Department revealed an increasing trend in single family building permits being pulled. By December of 2015, it was reported that a total of 38 permits were pulled, which is the highest number of permits since 2009 but still significantly lower than pre-recession levels. Discussions with residential land brokers with PMZ Real Estate, who are actively marketing land in the Modesto and surrounding markets, indicate little to no demand being received from residential developers in the Modesto area. One reason indicated was the difficulties and protracted timeline for processing and obtaining entitlements through the city. Another reason indicated was that there was no demand currently from the commuter market, as there are adequate affordable and more desirable locations currently developing, which are much closer to the Bay Area. There is also a substantial amount of land that is available for residential development, which is currently not listed and being held for improvement in the market. The limited number of land sales in the area confirm this lack of current demand. Land located in areas currently developing, such as west of Manteca are selling for $150,000 to $200,000 per acre for land with entitlements. Speculative land sales with protracted development timelines as seen in the valuation section are selling from $24,000 to $50,000 per acre with the highest prices being attained for properties with shorter holding periods. Conclusion. The subject property consists of a 53 acre municipal golf course located within the City of Modesto with long term speculative residential development potential. Residential market conditions have been strengthening over the course of the last several years which in turn has been applying upward pressure on prices of transitional land similar to the property appraised. However there is a significant amount of potential residential lots further along in the development process available on the market which exacerbates the timeline for development of properties similar to the subject. There are several other potential development sites with no entitlements that would likely be considered for development before the subject. Based on the supply of lots further along the entitlement process and the demand present in the market development of the subject as a subdivision is at least 5 to 10 years based on current on market conditions.



V. PROPERTY DESCRIPTION GENERAL The property appraised consists of a portion of city-owned property totaling 53± net acres of residential zoned land. The property fronts Tuolumne Boulevard, a four lane thoroughfare just west of Highway 99 and the Tuolumne River. The land is adjacent to single family residential neighborhoods to the north and west, with additional residences, the John Thurman Baseball Park and the Dryden Golf Course to the south. Homes in the immediate neighborhood are identified by the city as the oldest housing stock in the city at 60+ years old. The homes are in average to fair condition, with an average sale price of $128,224 over the past year in a one-mile radius of the property. The river and highway are located to the east. The site is located just south of Downtown Modesto and has municipal utilities proximate to the site. The site has good access, with several street frontages on the north, southwest, east and western boundaries of the property. Municipal utilities are readily available to the property. SITE ATTRIBUTES

APN: Portion of 102-012-001 Size: 53± acres based on an appraisal exhibit provided by

the city identifying the boundaries of the property to be appraised.

Census Tract: Census Tract No.: 22.03 Zoning: R-1, Low Density Residential. The R-1 zoning

designation is a low density single family residential designation with a minimum lot size of 5,000 square feet.

General Plan: OS – (Open Space) – City of Modesto. Based upon discussions with the City Planner the property would require a General Plan amendment to change the open space designation to a residential designation; we assume that this amendment would be approved.

Surrounding Land Uses: The immediate surrounding properties consist of

older residential properties to the north, south and west, the river and Highway 99 are to the east and at the southeast corner is the Fairway Park and John Therman Baseball Field.



ASSESSOR’S PARCEL MAP (the appraised portion of the highlighted parcel excludes the Baseball Park portion)

Shape: The subject property is irregular in shape but

functional for residential development. Frontage/Access: The property appraised has frontage along Tuolumne

Boulevard at the northern boundary, Neece Drive along the eastern boundary, South Avenue at the southwest boundary and Roselawn Avenue along the western boundary of the property. Access to the property is provided by a curb cut along Tuolumne Boulevard. Tuolumne Boulevard is a four-lane, east/west primary arterial, Neece Drive, South Avenue and Roselawn Avenue are two-lane, minimally improved residential roadways.



Exposure: The property has localized exposure along all the previously described street frontages.

Topography: The golf course is at street grade, mostly level with

some gently rolling topography. The topography of the site does not appear to inhibit future development.

Soil Conditions: No specific soil or subsoil survey was provided to the

appraiser for the subject property. There are no known major problems with building structures due to the soil conditions.

Utilities: Municipal utilities are located within close proximity

to the property appraised.

Flood Zone: The property is located in Flood Zone X (unshaded) Federal Emergency Management Agency (FEMA) flood insurance rate maps, Community Panel No. 06099C0325E, dated September 25, 2008.

Site Improvements: The subject property is improved as a municipal golf

course and has a small accessory structure and parking area onsite. The site consists primarily of manicured grass, trees, concrete and asphalt paved walkways, concrete sidewalks, curb and gutter along Tuolumne Boulevard and concrete curbing with gutter along Neece Drive and Roselawn Avenue. The golf course is bordered by wooden bollards and steel cable fencing around the perimeter. As per the appraisal assignment requested by the client, this appraisal is of the underlying land only.

Current Entitlement Status: None Estimated Timeline to Development: The unentitled land will require a general plan update

and map approvals prior to developing. The market is not currently exhibiting high demand for new single family residential homes. There are several other prospective single family residential development properties farther along the entitlement path and there will likely be public opposition to the change of use to the property from a golf course to speculative development, all of which results in the timeline for development of the subject being protracted. There is not sufficient demand in the



market at this time for speculative development and it is estimated that development of the subject would not be realized for at least 5 but more likely 10 years.

OTHER PROPERTY MATTERS

Easements: A preliminary title report was not provided for this

analysis. This report assumes that there are no significant easements present that could have a negative impact on value.

Seismic Information: The subject property is not within an Alquist-Priolo

Special Studies Zone. Cultural, Recreational, Historical Significance: The property is currently a developed golf course

adjacent to residential subdivisions. The golf course adds appeal to the surrounding homes given the desirable views provided to the homes fronting the golf course. The recreational use of the property is also appealing to the nearby residences.

Property Tax Data: The subject is owned by the City of Modesto and

therefore is exempt from property taxes. Overall Comments: The subject property consists of 53± net acres of

residential zoned land within the city of Modesto and has good access, with several street frontages on each side of the property. Municipal utilities are readily available to the property. The surrounding residential neighborhoods are of average quality and in average to fair condition.

The subject property has several positive features

and amenities for the potential development of the property to residential development as it is located within city limits, is adjacent to the river, has good street frontages and access, has proximity to municipal utilities and is located along a busy primary thoroughfare.

Negative attributes of the property and market

include the fact that the property is an infill site in a low income area surrounded by older homes in average to fair condition; the market is exhibiting little to no demand for speculative development land;



the property would require a General Plan amendment allowing residential development; the conversion of the property from a golf course to speculative development land could potentially receive significant opposition from neighboring owners, causing an even longer timeline to development. Current market conditions coupled with a current oversupply of entitled land contribute to lengthening the timeline of such development. The estimated development timeline is long term being at least 5 but more likely 10 years before realization.



VI. HIGHEST AND BEST USE ANALYSIS Highest and best use may be defined as the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value5. There are four criteria used in the highest and best use analysis process. These are:

1. Legally Permissible Use. What uses are permitted legally under existing zoning, building codes, historic district controls, environmental regulations, deed (private) restrictions, and long-term lease provisions on the site in question?

2. Physically Possible Use. What uses of the site are physically possible, given its size, shape, area, terrain, soils composition, accessibility, assembly potential, and risk potential from natural disasters?

3. Financially Feasible Use. Which possible and permissible uses will produce a positive net return to the owner of the property?

4. Maximally Productive Use. Among the feasible uses, which use will produce the highest residual land value consistent with the rate of return warranted by the market for that use?

HIGHEST AND BEST USE OF THE SITE, AS VACANT Legally Permissible Uses. Possible uses are constrained by legal restrictions on a property both private and public. The subject of this appraisal is zoned R-1, a residential zoning designation. However, the City of Modesto general plan designation is for open space. Discussions with the City indicate that a residential use would likely be approved for the subject, with a general plan update taking 3 to 6 months to complete. If the property was not under City ownership a residential use would be legally permitted once the general plan was amended. Physically Possible Uses. The size, topography, and location of the subject are important factors in determining the use of the property. The size of the site can significantly affect the type of development that is possible, as the “economies of scale” notion often comes into play. The site area appraised is considered sufficient to support the legally permitted use for future residential development. The subject property is irregular in shape and is mostly level and at street grade with some gently rolling topography in some areas of the property. A single-family residential development of the subject would be in conformance with the surrounding residential uses. Based upon surrounding developments, the soil appears to adequately support residential development. Municipal utilities are in reasonably close proximity to the site. Discussions with the planning department indicated that a residential use is physically possible and would be allowed after a General Plan amendment from an open space designation to residential. Development of a single family residential use of the site appraised is considered to be physically possible.

5 The Appraisal of Real Estate (Twelfth Edition), Appraisal Institute, Chicago, Illinois, 2001, P. 275.



Financially Feasible Uses. A proposed property improvement must be able to deliver an income return that, in turn, generates a market value sufficient to pay for the developmental costs, the undertaking of the risks involved, and a profit appropriate for the development. Discussions with brokers in the market area and representatives of the City of Modesto indicate that demand for new residential product is relatively low, with only 38 residential building permits issued last year. Observations of the subject’s market area indicates that the demand for new construction is relatively low. This coupled with the supply of residential development sites closer to development than the subject further inhibit development, making it unfeasible at this time. Considering the current and anticipated demand and the supply of potential lots the timeline for development of the subject property is at least 5 but more likely 10 years out. Maximally Productive Use - Conclusion. Considering the preceding factors, the maximally productive use for the subject property, as vacant, is to hold for future development of a residential subdivision at such a time as it is warranted by market conditions. It is noted that, based upon the development momentum associated with nearby parcels the property appraised would be viewed by a typical buyer as mid to long term development land with a timeline to development at least 5 to 10 years out. Highest and Best Use of the Site As If Vacant. Considering all the preceding factors, it is my conclusion that the highest and best use of this site is to hold for residential development until market conditions dictate development is feasible, estimated to be at least 5 to 10 years out. HIGHEST AND BEST USE OF THE PROPERTY, AS IMPROVED As per the appraisal assignment requested by the client, this appraisal is of the underlying land only therefore no consideration is given to the improvements of the property.



VII. VALUATION ANALYSIS VALUATION METHOD AND CONSIDERATIONS The appraisal assignment involves the valuation of the subject property land only. The initial stages of the appraisal process include the investigation, organization, and analysis of relevant market data and other information that relate to the market value of the subject property. Factors discussed previously that influence value include the Modesto region demographics and economic conditions, neighborhood characteristics and features, the market for residential land, and subject property attributes. All of these need to be considered when rendering the highest and best use conclusion. After a highest and best use conclusion has been made, the possibilities for the property have been sufficiently narrowed so that a proper valuation process can be pursued. This section of the report contains the comparable data, the interpretation, analysis, and processing of these data and the conclusions reached about the property’s market value. An appraisal of an improved property typically utilizes up to three valuation approaches:

• The Cost Approach to value.

• The Sales Comparison Approach to value.

• The Income Capitalization Approach to value. The Cost Approach to value usually involves estimation of the land value through the sales comparison approach. Then, we estimate the replacement cost of the improvements as if they were new, less a deduction for depreciation, which is computed after analyzing the deficiencies or disadvantages of the existing building compared to a new building. This approach can be a reliable indicator of value when the improvements are new or relatively new and are proper improvements for the site, and estimated depreciation is not an issue. The subject consists primarily of raw residential land, therefore the Cost Approach is not applicable to this analysis. The Sales Comparison Approach to value involves the accumulation of sales data of comparable properties, the analysis of each sale, and the adjustment to each sale for conditions such as favorable seller financing, changes in market conditions, and dissimilar physical or other characteristics. Several relevant land sales were identified and considered. This approach is applicable to this assignment. The Income Approach to value is based on the assumption that there is a relationship between the amount of income a property will produce and its value. Usually, we estimate the annual net income the property will earn and convert it into value by a capitalization process. This process is accomplished by dividing the net income, before payment of debt service, by a capitalization rate determined from the market. This rate will vary as a result of such factors as risk, time, interest or capital investment, and recapture of the depreciating asset. Although a discounted cash flow analysis can be relevant to the analysis of subdivisions, in this case, given the current condition of the site and uncertainty of the development configuration, analysis of the property appraised using a DCF is not considered to provide a credible opinion of value.



For this assignment, the analysis will use a direct comparison of other residential development land purchases to value the subject land. SALES COMPARISON APPROACH The Sales Comparison Approach involves direct comparison of the appraised property with other properties that have sold or have been offered for sale in the open, competitive market. This approach is based upon the principle that a prudent investor would pay no more for real property than the cost of acquiring an equally desirable substitute property of similar utility. While buyers of income-producing properties typically focus on a property’s economic characteristics, sales of similar properties are analyzed from a physical viewpoint (i.e., based on price per acre or per lot) can indicate value patterns and trends in the market. The Sales Comparison Approach requires several steps. They include:

• Researching the market for information on sales transactions, listings, and offers to purchase or sell involving properties that are similar to the subject property.

• Verifying the information by confirming that the data are factually accurate and that the transactions reflect arm’s-length, market considerations.

• Selecting the relevant units of comparison and develop a comparative analysis for each.

• Comparing sale properties with the subject property using the elements of comparison and adjust the price of each relative to the subject property.

• Reconciling the various value indications produced from the analysis of comparables into a single value indication or a range of values.

Analysis of the market revealed limited sales occurring in the Region during the course of the last several years. Of the sales observed, the most relevant comparables were selected for analysis. Some of the land sales have agricultural zoning, but are still considered applicable given that they are located within the path of growth and were purchased for speculative future development. Data on these land sales have been obtained for this analysis and are summarized in the table on the following page. The relevant unit of comparison is the price per acre, which is consistent with the market.



COMPARABLE RESIDENTIAL SPECULATIVE DEVELOPMENT LAND SALES TABLE

Sale # BRI #

Location APN

Sale Date Doc. No. Zoning

Total Sale Price

Parcel Size

(Acres)

Est. Timeline to

Development Price/AC

LS-1 976

673 Walnut Avenue Patterson, CA APN: 047-031-047

08/14/15 64669

MDR $1,231,500 30.78± acres

Near to Midterm $40,010

LS-2 602

3340 E Whitmore Avenue Ceres, CA APN: 069-017-008

08/01/14 49980

A-2-10 $950,000 19.7± acres Midterm $48,223

LS-3 603

Bloss Road Hilmar-Irwin, CA APN: 017-110-050

04/15/14 11140

R-1 $459,000 13.6± acres Midterm $33,750

LS-4 934

Frazine Road, Gomes Road, Santa Fe Avenue Modesto, CA APNs: 009-001-011, 014-037-010 and -012

12/12/13 0102061

A-2-40 $2,175,000 89.0± acres Long term $24,410

LS-5 604

4424 Santa Fe Street Riverbank, CA APNs: 062-020-010, -019, -025

12/24/12 116444

R-1 $375,000 23.73± acres

Long term $15,803

Subject

718 Tuolumne Boulevard & 601 Neece Drive Modesto, CA Portion of APN: 102-012-001

----- R-1 ----- 53± acres Mid to Long

term

-----



COMPARABLE RESIDENTIAL SPECULATIVE DEVELOPMENT LAND SALES MAP

Land Sale Discussion / Comparison to Subject Property. The subject consists of a 53± acre, irregular shaped infill site within the City Limits of Modesto. The site is surrounded by older residential properties in average to fair condition and is determined to have a highest and best use for future residential development. The subject property has several positive features and amenities for the potential development of the property to residential development as it is located within city limits, is adjacent to the river, has good street frontages and access, has proximity to municipal utilities and is located along a busy primary thoroughfare. Negative attributes of the property and market include the fact that the property is an infill site in a low income area surrounded by older homes in average to fair condition; the market is exhibiting little to no demand for speculative development land; the property would require a General Plan amendment allowing residential development; the conversion of the property from a golf course to speculative development land could potentially receive significant opposition from neighboring owners, causing an even longer timeline to development. Current market conditions coupled with a current oversupply of entitled land contribute to lengthening the timeline of such development. The estimated development timeline is long term being at least 5 but more likely 10 years before realization. Comparison to the sales is considered for property rights transferred, market conditions, additional buyer expenditures, financing, conditions of sale, zoning and the physical characteristics and locale of each comparable. In addition, it is noted that several of the comparables sold with tentatively approved subdivision maps in place. The contributory value of these entitlements is considered in the final valuation analysis. The sales consist of fee simple transfers, no significant adjustments are merited for this category. The comparables vary with regard to date of sale from the 2012 thru the 2015 years.



There was no market evidence to suggest that property size was a driving factor for value, but rather the timeline to development that influenced prices. Given the current market and required General Plan amendment needed for development the timeline is considered mid to long term speculative development. Discussions with market participants and analysis of the data indicate that market conditions for transitional land in the subject’s market area are very soft with many projects that started the entitlement process before the recession resuming the process with previous approvals. Consideration for changes in market conditions since the date of the comparable sales is given in the final valuation analysis. Further, unless otherwise noted, there were no significant issues observed with financing or conditions of sale that merit further adjustments or special consideration. Additional adjustment considerations are discussed with the individual sale write-ups on the following pages.

Comparable No. 1. This is the sale of 30.78 acres of land located north of Walnut Avenue in Patterson, California. The property sold in August of 2015 for $1,231,500 or $40,010 per acre. This parcel is located in a newly developing area of Patterson, in the Villages of Patterson Master Development Plan Area. The parcel is zoned and planned for medium density residential development. The property is mostly L-shaped with frontage on Walnut Avenue and Hartley Street. The lot is

adjacent to the recently constructed Stanislaus Office of Education and the Walnut Grove Elementary School. Municipal utilities are available nearby. The topography is level and none of the property is located in a flood plain. The site is located in close proximity to existing and planned residential development and is in the path of growth. According to the city planner, there is one home builder that is submitting plans for development and plans to start construction this year within the plan area. This comparable is considered to be superior with regard to future potential use as residential land given the shorter timeline (near to midterm) to development and restricted supply of entitled land in the Patterson area. The property is located in a slightly superior neighborhood with greater appeal for residential development. Overall, this sale is considered superior to the subject property.



Comparable No. 2. This is the sale of 19.7 acres of land located south of East Whitmore Avenue and east of Moore Road in Ceres. The property sold in August of 2014 for $950,000 or $48,223 per acre. At the time of sale the property owner was in the process of getting the property annexed into the City, the incoming buyer purchased it mid process. The sale involved seller financing, however the terms were reported to be at market and the listing agent commented that the seller financing had no impact on the sales price. The listing agent commented that the developers were planning on medium density residential with a mixed use commercial element integrated into the design. The sale included a use planning map for this design which contributed value. The site is located in close proximity to existing and planned residential development and is in the path of growth. It is noted this property appears in commercial data sources to have sold in October of 2014 to the City of Ceres. A primary party to this transaction indicated that this was not a transfer of the entire property, but only a small sliver of the property fronting East Whitmore Avenue dedicated to the City for offsite improvements as part of the development process. This property is considered to have midterm development potential, superior to the subject, and is superior in shape. This sale is generally level and not located in a flood zone, similar to the subject. Ceres is an inferior area relative to the city of Modesto, however the immediate residential neighborhood is in average to good condition with higher average home values compared to the subject neighborhood which is superior. East Whitmore Avenue is a primary thoroughfare providing access for the existing residential neighborhoods to the north and is planned for expansion to four lanes. The location on a busy thoroughfare is similar to the subject. Overall this sale is superior to the subject property and indicates a value well below $48,223 per acre.

Comparable No. 3. This is the sale of 13.6 acres of land located south of Bloss Road in Hilmar. The property sold in April of 2014 for $459,000 or $33,750 per acre. The sale included an approved tentative map from before the recession which contributed some value, though the incoming buyers were reportedly planning on changing some of the design elements. The property did have a single family residence located on the eastern border, but the structure was planned to be demolished



pending subdivision development. The listing agent indicated the buyers were developers and were seeking to develop in the near term, as such the single family residence had relatively minor contributing value. The adjacent property to the west has an approved tentative map for 92 residential lots. Municipal services were reported to be available nearby. The site is located in close proximity to existing and planned residential development and is in the path of growth. This property subsequently sold in September 2015 through a trustee’s deed upon sale after the property went into default, in the amount of $534,824. This is not determined to be a market transaction. This property is significantly farther along in the development process compared to the subject. This sale is generally level and not located in a flood zone, similar to the subject. Hilmar is an inferior area relative to the subject for residential development. Overall this sale is considered slightly superior to the subject property, primarily due to the timeline to development.

Comparable No. 4. This is the sale of an 89 acre agricultural zoned property located in Modesto. The property is situated over three seperate parcels, all located at the eastern border of the city of Modesto. Two of the parcels have frontage on Frazine Road, the third parcel is located off of Gomes Road, and only has access to the street on one corner of the land. The property is located in the approved Johansen Comprehensive Planning District in the City of Modesto’s sphere of influence and has a general plan designation for village residential. Sewer and water have been extended to this plan area and some of the major infrastructure has been completed. A high school and elementary school were recently constructed in anticipation for the future growth. At the time of sale the property had two peach orchards and two single family residences which were in disrepair. The residences were to be removed and the owner was going to continue farming the peaches as an interim use until development

became more eminent. The property was purchased in December of 2013 for $2,175,500, or $24,410 per acre.



This sale is generally level and not located in a flood zone, similar to the subject. This comparable is the closest in proximity to the subject, being just east of the city limits of Modesto. Utilities are similar. The timeline for development is long term for this property due to the annexation required and lack of zoning. The property also has inferior access. Market conditions at the time of this transaction were also slightly inferior. Overall, this comparable is considered inferior. Comparable No. 5. This is the sale of 23.73 acres of land located south of Santa Fe Street in Riverbank. The property sold in December of 2012 for $375,000 or 15,803 per acre. This sale was a bank owned sale, however it was openly marketed for four months before selling with multiple price reductions. The sale is of three parcels one of which is nonconsecutive. The property is located within city limits and has traditionally been used for agricultural uses, but carries an R-1 zoning. The property previously had an approved map, however it was expired at the time of sale. The site is located in close proximity to existing large lot residential developments. The parcels are located within the North Bruinville Master Plan area and at the time of sale the sewer and water lines had not yet been extended to the area for development. This sale is generally level and not located in a flood zone, similar to the subject. The availability and proximity of utilities are inferior. Market conditions have improved for residential development since 2012 and overall this comparable is considered an inferior indicator of value for the subject property. Land Value Conclusion. The sales comparables present an overall range from $15,803 to $48,223 per acre and based on the discussion just presented, the range is narrowed from $24,410 to $33,750 per acre as follows:

Sale # Subject Value

Less Than/ Greater Than

Sale Price

Sale Date

Parcel Size (Acres) Price/Acre

LS-2 < $950,000 Aug-14 19.7± $ 48,223 LS-1 < $1,231,500 Aug-15 30.78± $ 40,010 LS-3 < $459,000 Apr-14 13.6± $ 33,750

Indicated Value Range for the Subject Property $24,410 to $33,750 per acre

LS-4 > $2,175,000 Dec-13 89.0± $ 24,410 LS-5 > $375,000 Dec-12 23.7± $ 15,803



Sales 1, 2 and 3 set the high end of the range indicating $33,750 to $48,223 per acre and are superior to the subject property, being farther along in the development process and timeline. Sales 4 and 5 ranging from $15,803 to $24,410 per acre are inferior and set the lower end of the subject range. Sale 4 is the closest to the subject but transacted during slightly inferior market conditions and has inferior access to a portion of the property and a longer timeline to development given the annexation requirements. Giving consideration to the subject’s mid to long term timeframe for speculative development, but also considering the frontage along a busy thoroughfare, a value slightly above the middle of the range is concluded at $30,000 per acre.

53± acres X $30,000/per acre = $1,590,000

Rounded $1,600,000

This concludes the report.



VIII. APPRAISER'S CERTIFICATION

I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The analyses, opinions, and conclusions are limited only by the reported

assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

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

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

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

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

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

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 & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

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, I have completed the continuing education program of the Appraisal Institute.

11. I have made a personal inspection of the property that is the subject of this report. 12. I have not revealed the findings and results of this appraisal to anyone other than

the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

13. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

14. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California.



15. My opinion of the total market value of the appraised property identified in this report was derived without collusion, coercion or direction as to value.

16. We have not provided any services on this property within the last three years. __________________________ David B. Wraa, MAI, ARA California Certified General Real Estate Appraiser Certificate No. AG023713



APPRAISER'S CERTIFICATION

I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct.

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

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

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

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

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

6. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

9. As of the date of this report, I have completed the continuing education program of the Appraisal Institute.

10. I have made a personal inspection of the property that is the subject of this report. 11. I have not revealed the findings and results of this appraisal to anyone other than

the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

12. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

13. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California.



14. My opinion of the total market value of the appraised property identified in this report was derived without collusion, coercion or direction as to value.

15. We have not provided any services on this property within the last three years. __________________________ Amy J. Woodward California Certified General Real Estate Appraiser Certificate No. AG044210


BRI 15-193 ______________________________ BENDER ROSENTHAL, INC. ____________________________

ADDENDA



ITEM 1

PROFESSIONAL QUALIFICATIONS



PROFESSIONAL QUALIFICATIONS OF DAVID B. WRAA, MAI, ARA

(Principal in the firm of Bender Rosenthal, Inc.)

PROFESSIONAL EXPERIENCE David B. Wraa, MAI, ARA has been involved in real estate appraising and consulting since 1989. His professional experience in real estate appraisal encompasses a broad range of property types that include industrial, office, retail, multi-family, mobile home parks, self-storage facilities, elderly housing, condemnation, right-of-way, residential subdivisions, theaters, schools, marinas, and various agricultural/rural residential property types. He is a member of the Appraisal Institute with the MAI designation, a member of the American Society of Farm Managers and Rural Appraiser, Inc. with the designation of ARA, a Certified General Real Estate Appraiser in the State of California, and a member of the Sacramento Estate Planning Council. Mr. Wraa is the President of the Sacramento-Sierra Chapter of the Appraisal Institute, current Regional Representative, as well as the past Vice President, Education Chair and Secretary Treasurer for the chapter. Prior to his career in real estate, Mr. Wraa attended UC Davis, majoring in Agricultural Science and Management (Bachelor of Science degree). Upon graduation, he immediately entered the appraisal field with a specialty in wineries and vineyards (1989-1995). Mr. Wraa also has a diverse commercial background appraising various property types throughout the Bay Area and Sacramento regions since 1995. REPRESENTATIVE VALUATIONS INCLUDE

Industrial - Existing and proposed industrial properties including distribution warehouses, storage warehouses, light industrial/manufacturing and research and development properties. Office - Existing and proposed office developments for lending institutions and owners. Retail - Proposed and existing shopping centers, free standing buildings, mixed-use buildings, and restaurants. Multi-Family Residential - Existing and proposed apartment complexes, condominiums, and loft projects in the Sacramento Metropolitan Area and Bay Area. Medical - Existing and proposed medical clinics and dental offices. Elderly Housing - Existing and proposed congregate care and residential care facilities throughout the Bay Area and Central Valley. Residential Developments - Proposed and existing residential subdivisions throughout the Bay Area and Central Valley. Agricultural - Vineyards, wineries, orchards, field/row crop land, and rural residential properties. Special Use Properties - Special use properties include theaters throughout Northern California, schools in the Bay Area and Sacramento regions, marinas in the Sacramento MSA and Delta region. Land - Various types of land appraised such as commercial land, retail pad sites, residential land, transitional land, and agricultural/rural residential land. Eminent Domain - Improved and unimproved properties involving full and partial takings for municipalities, quasi-public companies, developers, and property owners. Litigation - Valuations performed on various property types for eminent domain, arbitration, and divorce cases.

PROFESSIONAL AFFILIATIONS Appraisal Institute (MAI, #11903), Current Member, Past President of Sacramento-Sierra Chapter Sacramento Estate Planning Council, Current Member American Society of Farm Managers and Rural Appraisers (ASFMRA), Current Member



PROFESSIONAL QUALIFICATIONS OF AMY J. WOODWARD

Certified General Real Estate Appraiser CL# AG044210

PROFESSIONAL EXPERIENCE Amy J. Woodward has been involved in real estate appraising and consulting since 2004. Her professional experience in real estate appraisal encompasses a broad range of property types. REPRESENTATIVE VALUATIONS INCLUDE Industrial – Existing and proposed industrial properties including distribution warehouses, storage warehouses, light industrial/manufacturing and research and development properties. Office - Existing and proposed office developments for lending institutions and owners. Medical - Existing and proposed medical, dental, and veterinary clinics. Retail - Proposed and existing shopping centers, free standing buildings, mixed-use buildings, and restaurants. Residential Developments - Proposed and existing residential subdivisions. Multi-Family Residential - Existing and proposed apartment complexes, condominiums, and mobile home parks. Agricultural – Vineyards, orchards, field/row crop land, and rural residential properties. Land - Various types of land appraised such as commercial land, retail pad sites, residential land, transitional land, and agricultural/rural residential land. Special Use- Alternative energy/Solar land leases, schools, churches, railroad corridors Mobile Homes - Existing mobile home parks. Eminent Domain - Improved and unimproved properties of partial takings representing municipalities, conservancies, and property owners. REAL ESTATE APPRAISAL EXPERIENCE Bender Rosenthal, Inc., Sacramento, CA 11/2004-Present Certified General Real Estate Appraiser EDUCATION Appraisal Institute Courses Condemnation Appraising; Basic Income Capitalization; General Report Writing & Case Studies; General Applications, Business Practice and Ethics; Analyzing Operating Expenses; Feasibility, Market Value, Investment Timing: Option Value; Advanced Highest & Best Use; USPAP International Right of Way Course Valuation of Partial Acquisitions

Documents

APPRAISAL REPORT OF: MODESTO MUNICIPAL GOLF COURSE …