HomeMy WebLinkAbout; 6.16 Acres NW Quad of Tamarack Ave & Cay Dr; 6.16 Acres NW Quad of Tamarack Ave & Cay Dr; 1999-08-31COMPLETE SELF-CONTAINED
APPRAISAL
REPORT
6.16 ACRES VACANT LAND
VILLAGE L-2
NORTHWEST QUADRANT OF
TAMARACK AVENUE AND CAY DRIVE
CARLSBAD, CALIFORNIA
APPRAISED FOR
Randy Klaahsen, P.E.
Carlsbad Municipal Water District
8950 El Camino Real
Carlsbad, CA 92008-8893
DATE OF VALUATION
October 1,1999
DATE OF REPORT
August 31, 1999
APPRAISED BY
Anderson & Brabant, Inc.
353 West Ninth Avenue
Escondido, California 92025-5032
File No. 99-089
ANDERSON 8 BR.ABANT. INC.
ANDERSON 8 BRABANT, INC.
REAL ESTATE APPRAISERS AND CONSULTANTS
353 W. NINTH AVENUE
ESCONDIDO, CALIFORNIA 92O25-5O32
TELEPHONE (76O) 741-4146
FAX (76O) 74 I -I O49
Novembers, 1999
Mr. Randy Klaahsen, P.E.
Associate Civil Engineer
Carlsbad Municipal Water District
5950 El Camino Real
Carlsbad, California 92008-8893
RE: Village L-2, 6.16 Acres Vacant Land
NE Quadrant Tamarack Avenue & Cay Drive
Carlsbad, California
Dear Mr. Klaahsen
At your request, we have completed an appraisal of the 6.16 acres of vacant land
referenced above. The purpose of our appraisal was to estimate the market value of the
fee simple interest in the appraised property. The conclusion of value for the subject
property, based upon the study and examination made, is shown below. The indicated
"As Is" Value is based on a date of value of October 1,1999.
Based upon the study and examination made, it is our opinion that the market value of the
subject property is as follows:
"As Is" Value $630,000
This letter is intended to be a part of the appraisal report to which it is attached and the
value conclusion summarized above should not be relied on or utilized in any manner by
anyone without first reading the complete appraisal report.
As part of the assignment, we have estimated the exposure period for the subject
property. The exposure period is the length of time the property would have been
exposed for sale in the open market had it sold at the estimated market value concluded
in the analysis as of the date of valuation. Based on market conditions as denoted during
our investigation, it is our opinion that the exposure time for the property in its "As Is"
condition Is up to one year.
Mr. Randy Klaahsen, P.E.
CARLSBAD MUNICIPAL WATER DISTRICT
Novembers, 1999
Page 2
Our appraisal report conforms to the Code of Professional Ethics and Standards of
Professional Practice set forth by the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice (USPAP) adopted by the Appraisal Foundation.
This is recognized as a "complete appraisal" process under USPAP. The written report
has been prepared in a "self-contained" format. As such, it is intended to comply with the
reporting requirements for self-contained reports set forth under Standards Rule 2-2(a) of
USPAP.
The preceding opinions of value are subject to certain assumptions and limiting conditions
as set forth in the attached report. A major assumption of this report was based on the
client's direction and it was that the legal use of the property is as a fifteen-lot subdivision.
A description of the subject property and discussions of the data and analyses that
support the value conclusions are also included in the report that follows.
Respectfully submitted,
ANDERSON & BRABANT, INC.
Gilbert F. Kunkel, MAI
State Certification No. AG 002101
TABLE OF CONTENTS
EXECUTIVE SUMMARY 1
ASSUMPTIONS AND LIMITING CONDITIONS 2
APPRAISERS'CERTIFICATE 5
INTRODUCTION
Identification of the Property 6
Purpose of the Appraisal 6
Intended Use 7
Property Rights Appraised • 7
Valuation Premises and Dates of Value 7
USPAP Competency Provision 8
Appraisal Development and Reporting Process 8
Sales History of the Subject Property 9
Location Map 11
Location Description 12
SUBJECT PROPERTY DESCRIPTION
Subject Property Photographs 18
Plat Map 22
Land Description 23
Project Development 27
Assessed Valuation and Taxes 28
Market Overview 28
VALUATION
Highest and Best Use 32
Methodology 33
Sales Comparison Approach 34
Land Sales Map 35
Developmental Analysis 48
fll Estimated Exposure and Marketing Periods 50
Addenda
g| Appraisal Instructions
Cost Estimates
Developmental Analysis Summaries
, Statement of Qualifications
ANDERSON 8 BRABANT. INC.-
Property Location:
Assessor's Parcel No.:
Thos. Bros. Map Code:
Census Tract:
Owner of Record:
Land Description/Use:
Proposed
Improvements:
Interest Appraised:
Flood Hazard:
Seismic Hazard:
Highest and Best Use:
Appraisal Instructions:
Date of Value:
Date of Report:
Appraised Value:
EXECUTIVE SUMMARY
Northwest quadrant of Tamarack Avenue and Cay Drive,
Carlsbad, California
168-280-49
1107-B3
198.01
Calavera Hills II LLC, A California Limited Liability Company.
6.16 acres of undeveloped land in the Calavera Hills Master
Plan area of north Carlsbad. The site is adjacent on two
sides to land subdivided and improved for single-family
development. The site partially wraps around an above
ground water storage reservoir. The legal use of the
property, per the "Appraisal Instructions" (see comments
below) is a fifteen lot residential subdivision.
None
Fee simple estate
Zone X, an area outside of 500-year flood plain.
None known
As If Vacant: Single family residential development
Instructions were provided to the appraiser and a copy of
those instructions is included in the Addenda. Significant
factors included as instructions were date of value and the
legally permissible use.
October 1, 1999
August 31, 1999
$630,000
Estimated Exposure Time: Up to one year.
• ANDERSON 8 BRABANT. INC.-
ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal is subject to the following special assumptions and
limiting conditions:
1. This is a Self-Contained Appraisal Report that is intended to comply with the
reporting requirements set forth under Standards Rule 2-2(a) of the Uniform
Standards of Professional Appraisal Practice for a Self-Contained Appraisal
Report. As such, it presents full information and in-depth discussion regarding
the data, reasoning, and analyses that were used in the appraisal process to
develop the appraisers' opinions of value. The information contained in this
report is specific to the needs of the client and for the intended use stated in this
report. Anderson & Brabant, Inc. is not responsible for unauthorized use of this
report.
2. To develop the opinions of value reported herein, we have performed a Complete
Appraisal process, as defined by the Uniform Standards of Professional
Appraisal Practice (USPAP).
3. The opinion of value developed in this report is based on directions provided to
the appraiser by the client. The "Appraisal Instructions" are included in the
Addenda and they direct the appraiser as to general issues and the specific legal
use of the property. The appraiser developed no independent conclusion as to
legal use.it
This appraisal is subject to the following general assumptions and
limiting conditions:
1. It is assumed that information furnished to us by our client, including maps, cost
estimates, and legal descriptions, is substantially correct.
2. No responsibility is assumed for matters legal in character, nor do we render an
opinion as to title, which is assumed to be held in fee simple interest as of the
date of valuation unless otherwise specified.
3. It is assumed that the property is readily marketable, free of all liens and
encumbrances except any specifically discussed herein, and under responsible
ownership and management.
4. Photographs, plat, and maps furnished in this appraisal are to assist the reader in
a visualizing the property. No survey of the property has been made and no
* responsibility has been assumed in this matter.
5. It is assumed that there are no legitimate environmental or ecological reasons
M that would prevent orderly development of the land to its highest and best use
under economically feasible conditions.
6. We were not provided with a soils engineering study relating to the subject
property. It is therefore assumed that there are no hidden or unapparent
conditions of the property such as hazardous or toxic waste and/or other subsoil
ANDERSON 6 BR.ABANT. INC.-
conditions that would render it more or less valuable. No responsibility is
assumed for such conditions or for engineering that might be required to discover
such factors.
7. The appraisers are not qualified to detect hazardous waste and/or toxic
materials. Any comment by the appraiser that might suggest the possibility of the
presence of such substances should not be taken as confirmation of the
presence of hazardous waste and/or toxic materials. Such determination would
require investigation by a qualified expert in the field of environmental
assessment. The presence of substances such as asbestos, urea-formaldehyde
foam insulation, or other potentially hazardous materials may affect the value of
the property. The appraisers' value opinions are predicated on the assumption
that there is no such material on or in the property that would cause a loss in
value unless otherwise stated in this report. No responsibility is assumed for any
environmental conditions, or for any expertise or engineering knowledge required
to discover them. The appraiser's descriptions and resulting comments are the
result of the routine observations made during the appraisal process.
8. Possession of this report, or a copy thereof, does not carry with it the right of
publication. It may not be used for any purpose by any person other than the
party to whom it is addressed without the written consent of Anderson & Brabant,
Inc., and in any event, only with proper written qualification and only in its
entirety.
9. Disclosure of the contents of this appraisal report is governed by the by-laws and
regulations of the Appraisal Institute. Neither all nor any part of the contents of
this report (especially reference to the Appraisal Institute or the MAI designation)
shall be disseminated to the public through advertising media, public relations
media, news media, sales media, or any other public means of communication
without prior written consent and approval of Anderson & Brabant, Inc.
10. The submission of this report constitutes completion of the services authorized.
It is submitted on the condition that the client will provide Anderson & Brabant,
Inc. customary compensation relating to any subsequent required depositions,
conferences, additional preparation or testimony.
11. The valuation opinion is of surface rights only and the mineral rights, if any, have
been disregarded.
12. No warranty is made as to the seismic stability of the subject property.
13. It is assumed that all applicable zoning and land use regulations and restrictions
have been or will be complied with, unless a nonconformity has been stated,
defined, and considered in this appraisal report.
14. It is assumed that all required licenses, certificates of occupancy, or other
legislative or administrative authority from any local, state, or national
governmental or private entity or organization have been or can be obtained or
renewed for any use on which the value opinions contained in this report are
based.
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ANDERSON 6 BRABANT. INC.-
15. As part of the analysis, we have estimated reasonable exposure and marketing
periods for the subject. The reported marketing period is based on the
assumption that the property is marketed competently at a price that reflects
market value. It is possible that market conditions could change during the
marketing period if offered for sale today, and those changing conditions could
affect both market value and marketing period.
17. We were provided with a breakdown of the projected site development costs for
the subject land. These costs appear to be in line for a project of this size and
type. We have assumed these costs to be reasonably accurate, and they have
been relied upon when estimating the "As Is" value for the subject. If it is later
found that the costs as provided are inaccurate, this could result in a change or
changes in our final value conclusions.
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ANDERSON 6 BR.ABANT. INC.-
APPRAISERS' CERTIFICATE
I do hereby certify that, to the best of my knowledge and belief,...
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions, and are my personal, unbiased professional analyses, opinions and
conclusions.
3. I have no present or prospective future interest in the property that is the subject of this report,
and I have no personal interest or bias with respect to the parties involved.
4. My compensation is not contingent upon the reporting of a predetermined 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.
5. The appraiser did not base, either partially or completely, the analysis and/or the opinion of value
on the race, color, religion, familial status, health, or national origin of either the present or
prospective owners, occupants, or users of the subject property or the present or prospective
owners, occupants, or users of the properties in the vicinity of the subject property.
6. My analyses, opinions, and conclusions were developed, and this report has been prepared in
conformity with the requirements the Uniform Standards of Professional Appraisal Practice
(USPAP), and the Code of Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
7. I have made a personal inspection of the property that is the subject of this report.
8. No one provided significant professional assistance to the person signing this report.
9. The appraisal assignment was not based on a requested minimum valuation, a specific
valuation, or the approval of a loan.
10. The use of this report is subject to the requirements of the Appraisal Institute relating to review
by its duly authorized representatives.
11. As of the date of this report, I, Gilbert F. Kunkel, MAI have completed the requirements under the
continuing education program of the Appraisal Institute.
August 31. 1999_
'Gilbert F. Kunkel, MAI Date
Certified General Real Estate Appraiser
OREA Appraiser No. AG002101
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ANDERSON 6 BRABANT. INC.-
IDENTIFICATION OF THE PROPERTY
The subject of this appraisal report is a 6.16 acre parcel of undeveloped,
residential zoned land located at the north west quadrant of Tamarack Avenue and Cay
Drive, Carlsbad, California. The property is referenced as Village L-2 in the Calavera
Hills Master Plan.
Legal Description
The property is legally described as the "Remainder Parcel" which lies northerly
of Tamarack Avenue as shown on Carlsbad tract No. 83-32, Calavera Hills Village Q,
according to map thereof No. 12950, filed in the office of the county recorder of the
County of San Diego, State of California. The property may also be identified as
Assessor Parcel Number 168-280-49.
Ownership
Title to the subject property is vested as follows: Calavera Hills II, a California
Limited Liability Company.
PURPOSE OF THE APPRAISAL
The purpose of this appraisal is to provide an opinion of market value of the fee
simple interest in the subject property. As used in this report, Market Value is defined
as follows:
MARKET VALUE is 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 each acting in
what they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in United States, dollars or in
terms of financial arrangements comparable thereto; and
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ANDERSON 6 BRABANT. INC.-
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.1
The opinion of market value for the subject property is intended to correlate with
the opinion of exposure time. Exposure time can be defined as the estimated length of
time the property interest being appraised would have been offered for sale on the
market prior to the hypothetical consummation of a sale at the estimated market value
as of the effective date of the appraisal. This is discussed further in a later section of
this report entitled Estimated Exposure and Marketing Periods.
INTENDED USE
It is understood that the appraisal report will be used in the process agreed to by
the Carlsbad Municipal Water District and the property owner to establish the purchase
price of the subject property. The client and the property owner may rely on and use
this appraisal. There are no other intended users.
PROPERTY RIGHTS APPRAISED
The property rights appraised represent the fee simple interest or estate. As
found on page 137 of the 11th Edition of The Appraisal of Real Estate, Appraisal
Institute, 1996, fee simple estate is defined as follows:
"Absolute ownership unencumbered by any other interest or estate,
subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power, and escheat.
VALUATION PREMISES AND DATES OF VALUE
The following valuation premises are discussed in this report.
"As-ls" Value means an opinion of the market value of the property in the
condition observed upon inspection and as it physically and legally exists,
without hypothetical conditions, assumptions, or qualifications as of the
date the appraisal is prepared.2
Finished Lot Value reflects the value of a parcel "which has legal
development entitlements created by a recorded subdivision map and a
physical condition which includes fine graded, level building pads with an
'DEPARTMENT OF THE TREASURY. Office of Thrift Supervision; 12 CFR Pact 34, Docket No. 90-16, Real Estate Appraisals (Action: Final Rule)
2 Appraisal Policies and Practices of Insured Institutions and Service Corporations. Federal Home Loan Bank Board. "Final Rule" 12
CFR Parts 563 and 571, December 21,1987.
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• ANDER.SON 8 BR.ABANT. INC.-
in-tract infrastructure abutting the individual lot consisting of asphalt paved
right-of-way with concrete curb, gutter, sidewalks and street lighting in
addition to necessary wet and dry utilities. With the exception of building
permit and plan check fees, the finished lot condition also assumes
prepayment of all applicable development fees including school and
development impact fees."3
The "As Is" Market Value of the subject land reflects its physical and legal status
as of the directed upon date of value of October 1, 1999. The Finished Lot Value
assumes that the land is in a completely finished condition and ready for new home.
This value was used as an interim step in the appraisal analysis. Opinions of value are
included in this report for the following value scenarios.
• "As Is" Value of the subject 6.16 acre site.
USPAP COMPETENCY PROVISION
We, the offices of Anderson & Brabant, Inc., and specifically Gilbert F. Kunkel,
MAI, have the knowledge and experience to complete this appraisal assignment and
have appraised this property type before. Please refer to the appraisers' experience
data included in the Addenda to this report for additional information.
APPRAISAL DEVELOPMENT AND REPORTING PROCESS
The appraisal development process reflected in this report is intended to follow
the "Complete Appraisal" guidelines as defined by USPAP. A Complete Appraisal is the
act or process of estimating value where the Departure Provision is not invoked. This is
a "Self-Contained" appraisal report as defined by USPAP. It is a written report prepared
in accordance with Standards Rule 2-2(a) relating to a Complete Appraisal performed
under Standard 1.
The scope of this appraisal required collecting primary and secondary data,
relative to the subject property. The depth of the analysis was intended to be
appropriate in relation to the significance of the appraisal problem. These data have
been analyzed and confirmed, leading to the value conclusions set forth in this report.
The valuation process involved the utilization of all techniques and procedures
considered appropriate to the assignment.
3 Bank of America Group Appraisal Requirements. 1/95, Page 7
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ANDERSON 6 BR.ABANT. INC.-
The first step in the analysis was to conduct a preliminary survey of the subject
property and surrounding area in order to more accurately define the appraisal problem
and identify the methods and techniques necessary to accomplish the objective of this
appraisal report. Interviews were held with officials at the City of Carlsbad to determine
the legal land uses that apply to the subject and surrounding neighborhood, including
any proposed land use changes that might affect the use of the appraised property.
The general area was inspected for the purpose of identifying those specific
boundaries within which market data that could be considered relevant to this analysis
would most likely be located. The intent of this inspection was also to identify physical
conditions, neighborhood development rends, and other factors that affect real property
value. We have examined the general economy of the region and community to
determine trends in population, housing, employment, financing, and market conditions
that influence the real estate environment. The subject property was inspected to
ascertain its physical features such as topography, access, drainage, street
improvements, utilities, etc.
The primary valuation techniques utilized to develop opinions of the market value
of the subject were the Sales Comparison Approach and a Developmental Analysis.
Sales of single-family homes and land planned for subdivision development were
assembled from identified competitive market areas. These data were then analyzed
on the basis of their overall degree of comparability to the appraised property. The data
were confirmed with principals, their representatives, or agents. Sources of data
included the County Recorder's office, various market data services, published reports,
and personal contacts. Relevant market factors were weighted and their influence on
the subject was considered in both approaches to value. The data generated from
these investigations were then analyzed for the purpose of estimating the market value
of the subject under various scenarios as described in this report. The final step
entailed the organization and drafting of the appraised report.
SALES HISTORY OF THE SUBJECT PROPERTY
The appraised property was acquired by Calavera Hills II LLC in December 1997
in a transaction involving the subject and other subdivision land totaling approximately
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ANDERSON 6 BR.ABANT. INC. —-
480 acres. The total reported purchase price was $16,600,000. Portions of the
acquired property can be developed independently. An allocation of the total purchase
price was not provided to the appraiser. There have been no other known transfers of
the appraised property during the five years preceding the date of value.
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ANDERSON 8 BRABANT. INC.-
LOCATION MAP
««,// ^? r/ ; „ -fe^ N^^feh_ «°frf^S4}<-1lMA«mE COUPS / 1^
'-I HCAOOUAHTERS A-i
I ftl/r ciMUIorncN'V'KW UKf MM MARCOS ^*i «t* SMIT £LAKE SMI MMICOS /•££. fouxnr au« •/>• n»««<tosj
nor KACM ory mot,
SOLANA BEACH
11
ANDERSON 6 BRABANT. INC.-
LOCATION DESCRIPTION
Region
The subject property is located in the City of Carlsbad in the northwesterly part of
the County of San Diego. The County is in the extreme southwesterly corner of the
United States and is bordered by the Pacific Ocean to the west, the California/Mexico
border to the south, Orange and Riverside Counties to the north, and Imperial County to
the east. San Diego County is the second largest county in the State of California, based
on population. It includes the State's second most populous city; and offers such
geographic features as mountainous regions of the Cleveland National Forest, the Anza
Borrego Desert, the International Border with Mexico, and over 50 miles of Pacific Ocean
coast line. These features, and the area's temperate year-round climate, are among the
county's major attractions. Most of the county's population is located along the coastal
region, inland valleys, and foothills, within approximately 25 to 30 miles of the ocean. The
mountains and deserts are only sparsely developed and populated.
Once primarily thought of as a Navy town, San Diego now has a very diverse
economy with expanding service and retail sectors. These two employment sectors
accounted for over 60 percent of the civilian work force in San Diego county as of mid-
1998, versus less than 41 percent in 1970, and slightly less than 50 percent in 1985.
Manufacturing has declined as a source of employment over the past 25 years, with this
sector providing approximately 17 percent of civilian employment in 1970, approximately
14 percent in 1985, and less than 11 percent as of mid-1998. In the early 1970's, non-
military government employment in the county was approximately 25 percent of the
civilian work force; this declined to 16 percent in 1985, and has stabilized around 18
percent over the past five years.
Although the economy has become more diversified in the county, military
employment is still one of the most significant contributors to the county financial well
being. Local military employment totals nearly 128,000 and defense sector of the
economy contributes $13.5 Billion annually. This is second only to the $15.0 Billion
contribution by manufacturing and is well above the $5.0 Billion derived from tourism. In
addition, San Diego is expected to benefit from ongoing military base closures and re-
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ANDER.SON 8 BR.ABANT. INC. — —
alignment as new commands and ships are assigned to the area. The expansion and re-
alignment of the military presence in the county is scheduled to continue until 2005.
The San Diego region has enjoyed steady population growth as evidenced by the
data presented in the table below. Between 1985 and 1990, the population increased
19.21 percent. This increase slowed dramatically between 1990 and 1995 to only 9.71
percent. Annual population growth rates between 1981 and 1990 were in the range of
2.0 to 3.8 percent annually while between 1991 and 1998, annual growth rates dropped
to within a range of 1.2 to 2.9 percent.
ANNUAL POPUtA
Date
January 1, 1981
January 1 , 1 982
January 1, 1983
January 1 , 1 984
January 1, 1985
January 1, 1986
January 1, 1987
January 1, 1988
January 1, 1989
January 1, 1990
January 1 , 1 991
January 1, 1992
January 1, 1993
January 1, 1994
"January 1, 1995
"January 1, 1996
"January 1, 1997
*January 1, 1998
"January 1, 1999
Total Population
1,902,671
1,940,542
1,982,000
2,033,600
2,080,343
2,148,907
2,223,649
2,300,758
2,388,707
2,480,072
2,551,759
2,604,546
2,646,816
2,687,811
2,658,600
2,690,000
2,724,400
2,795,800
2,853,300
N DIEGO REGION
Percent Increase
2.2%
2.0%
2.1%
2.6%
2.3%
3.3%
3.5%
3.5%
3.8%
3.8%
2.9%
2.1%
1.6%
1.5%
N/A
1.2%
1.3%
2.6%
2.1%
'Population estimates for 1995 through 1999 reflect a revised procedure and population for these
years cannot be compared to previous years.
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ANDERSON 8 BRABANT. INC.-
The slowdown in the population growth corresponded to San Diego's difficult
economic times and significant loss in employment opportunities during the early 1990's.
Between May 1990 and May 1995, there was a net loss of 19,000 jobs in San Diego;
however, based on statistics from the California Employment Development Department,
there was a net gain in employment in San Diego between May 1995 and April, of over
156,000 jobs. The public unemployment figures for San Diego as of April 1999 indicate a
civilian unemployment rate of 3.1 percent. This compares to a statewide unemployment
rate of 5.5 percent and a national unemployment rate of 4.1 percent. Unemployment
rates for the San Diego area have decreased moderately during the twelve months prior
to April 1999, while the size of the work force has expanded and the total number
employed has increased.
While the past twelve months was a good year for employment and economic
expansion in San Diego, it was a year that was impacted by economic problems overseas
and nationally. The University of San Diego publishes an Index of Leading Economic
Indicators for the San Diego area economy and the index had posted over forty months of
increases until September of 1998. Since that time, the index reported four consecutive
months of decline. However, the index recovered slightly in January, registered no
change in February, and slight increases in March and April. The declines are generally
attributable to declines in local stock prices, consumer confidence and help wanted
advertising. The University has also published a 1999 Economic Forecast that projects
job growth for the year of nearly 20,000 and an increase in residential development.
Although a year of positive economic growth is projected, the report indicates that the
growth will occur in the first half of 1999, with a slow down in the economic expansion in
the second half of the year.
The outlook for the San Diego economy, and the real estate component of the
economy, is generally positive. The county's Gross Regional Product (GRP) in 1998 has
been estimated at $87.1 Billion, a 6.3 percent increase from the previous year, according
to the Greater San Diego Chamber of Commerce. The Chamber estimate for the 1999
GRP is $91.6 Billion, a 5.2 percent increase above the 1998 level. In real terms after
adjustments for inflation, GRP increases are 4.5 and 3.7 percent respectively for 1998
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— ANDERSON 6 BRABANT. INC. —
and 1999. To put the area's economy in perspective, in a ranking of national economies,
the economy of the State of California would be ranked 6th among the world's nations
and the County of San Diego would be 37th. In relative terms, the San Diego economy
has outperformed the state and the nation. In 1984, the San Diego GRP comprised 7.49
percent of the California economy and 0.923 percent of the U. S. economy. These
percentages have recorded a nearly uninterrupted increase and were at 8.17 percent and
1.024 percent respectively in 1998.
Although the economic outlook for the San Diego area is generally positive, some
economists have expressed concern over the impact locally due to Asian economic
problems. The San Diego economy is somewhat dependent on the Asian markets for
exports and that could create some problems locally. Nevertheless, the outlook for San
Diego, the state, and the nation as a whole, is positive and this bodes well for the area
real estate market in general.
Community Description
The appraised property is located in the city of Carlsbad in northern San Diego
County. The City is located in the northwestern portion of the County, along the Pacific
Ocean. It is immediately south of and adjacent to the city of Oceanside and
approximately 35 miles north of the city of San Diego. The city limits presently
encompass approximately 40 square miles.
Major freeways in the area include Interstate 5 and state Highway 78. Interstate
5 extends North from San Diego to Los Angeles and beyond; and Highway 78 generally
runs in an East/West direction and connects Interstate 5 in the coastal city of Oceanside
with Interstate 15 in the inland city of Escondido. Highway 78 is considered to be the
major traffic link between North County coastal communities and inland areas of the
County. Other sources of transportation in the area include Amtrak, bus companies,
commuter bus service to San Diego, the Coaster (a commuter train), and various air
services at Palomar.
In 1952, Carlsbad had a population of approximately 7,000. Since then, the city
has grown rapidly to a current (January 1997) population of approximately 65,000.
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ANDER.SON & BRABANT. INC.-
Carlsbad's population has nearly doubled since 1980 and substantial gains are
projected until the turn-of-the-century, and beyond.
Retail facilities serving Carlsbad are located at Highway 78 and El Camino Real.
This interchange is one of North County's major retail commercial centers. There is
currently in excess of two million square feet of retail space at this location, including
Plaza Camino Real, a regional mall with five major department stores and about 134
specialty stores.
Major industrial development in Carlsbad is focused along Palomar Airport Road,
in the vicinity of Palomar Airport and the intersection of El Camino Real, about three
miles east of Interstate 5, and a short distance north of the subject. Industrial
development started in this area in 1975 on land near the Palomar airport and was
originally oriented to general warehousing. The development of the area was
interrupted originally by a Carlsbad sewer moratorium and later by poor economic
conditions. However, by the early to mid-1980s, development in the area was
progressing rapidly and the area continues to be a focal point for industrial development
in the County today.
Major development is proposed, or currently underway, in the area to the west of
Palomar airport. These development projects include the Lego Land theme park and
the head quarter facilities for the Gemological Institute of America. The Institute
buildings are currently in place and Lego Land opened this past spring (1999).
Residential development and new home sales in Carlsbad during the past two
years has been at a record pace. This is generally true of the coastal area from Del Mar
to Oceanside. During the later part of 1997and through much of 1998, the North County
Coastal area accounted for nearly thirty percent of all new home sales in the county.
Much of the new home sales activity took place in the south Carlsbad areas near, or
within, the planned community of Aviara. This development, with its golf course focal
point, has offered quality homes selling in the $400,000 to $500,000, and above, price
range. Nearby south Carlsbad projects have also experienced rapid development and
sales. The La Costa community is the location of several successful new housing
projects.
16
ANDER.SON & BRABANT. INC.—
The South Carlsbad neighborhood is strongly influenced by the neighboring city
of Encinitas, a community of over 57,000, and city limits that encompass over 26 square
miles. Of primary significance to the subject neighborhood is the expanding commercial
development along El Camino Real, between Olivenhain Road and Encinitas
Boulevard. Much of the commercial development began in this area in the 1980's.
Most major retailers are in the area that currently offers well over 1,000,000 square feet
of space. Represented in the area are Home Depot, Ross Dress For Less, Borders,
Sports Authority, Target, Office Depot, and a variety of markets and drug stores.
The immediate subject neighborhood is part of the planned development of
Calavera Hills, which is planned for approximately 480 homes on over 480 acres, much
of which will be left as open space. The development of this planned community will
include new school sites and neighborhood parks. The project developers include
McMillin Communities and Brookfield Homes, both of which have product currently for
sale at Calavera Hills. McMillin is selling homes in the $335,000 to $375,000 range
($118 to $123 per SF for 2,726 to 3,190 SF homes). The Brookfield product is priced at
$286,000 to $292,000 and ranges in size from 1,957 to 2,287 square feet. Both
projects have reported good sales rates to date. A third builder is also currently active
in the neighborhood. Heritage Home Builders acquired a 35-lot site that was not part of
the bulk purchase by McMillin/Brookfield. This builder is selling homes ranging in size
from 1,553 to 1,964 square feet with view lot pricing of $280,000 to $300,000 projected
for the next release. The first release of sixteen units in this project sold out in
approximately sixty days.
As previously stated, the San Diego economy is currently enjoying a period of
steady and impressive growth. One of the areas of the county that might be considered
as the focal point of that growth is the north coastal part of the county. Carlsbad is well
positioned to benefit significantly during this period. Residential projects have been
extremely well received by the market and this has spurred commercial development.
Industrial development in the Palomar Airport area has been leading the way for the
county for several years now.
17
ANDERSON 8 BR.ABANT. INC.-
SUBJECT PROPERTY PHOTOGRAPHS
This photo was taken from Cay Drive. The view is westerly across the
subject property.
The photo below was taken from the same location as indicated above.
The view is in a more southwesterly direction. The water reservoir visible
in the photo is not a part of the appraised property.
18
ANDERSON 6 BRABANT. INC.-
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SUBJECT PROPERTY PHOTOGRAPHS
The above photo was taken from a point near the westerly corner of the
subject site, near Lot 117, Tract No. 83-32. The view is easterly.
This photo was taken from the same location as the above photo. The
view is in a northeasterly direction across the westerly portion of the
subject site.
19
ANDERSON 6 BRABANT. INC.-
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SUBJECT PROPERTY PHOTOGRAPHS
The photo above was taken from a point along the subject's northerly
property line, near Lot 131, Tract No. 83-32. The view is southeasterly.
This photo was taken from the same location as the previous photo. The
view is in a more southerly direction.
20
ANDERSON & BRABANT. INC.-
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SUBJECT PROPERTY PHOTOGRAPHS
The photo above was taken from a point on Bluff Court, looking easterly
toward the reservoir adjacent to the subject site.
This photo was taken from the east end of Bluff Court. The view is
easterly. The subject site actually wraps around the reservoir site and a
small section, shown in the photo, fronts on Bluff Court.
21
ANDER.SON 6 BRABANT. INC.
PLAT MAP
zO
n
168—28
SHT 1 OF 3
Subject
SUBJECT PROPERTY DESCRIPTION
LAND DESCRIPTION
Size and Shape
The subject site is comprised of a land area of 6.16 acres, according to the San
Diego County Assessor's records. The subject property wraps around a Carlsbad
Municipal Water District reservoir site and the property is very irregular in shape. The
property boundaries are outlined on the plat map on the facing page.
Topography/Drainaqe/Views
The subject site has an elevation range from approximately 440 feet to 410 feet
above sea level. The higher elevation corresponds to the subject property line that
surrounds the reservoir site. The topography of the site downward as one moves from
the reservoir to the north, east and south. There are no significant drainage features or
eroded areas of the site.
The site is generally at an elevation above the surrounding property to the west
and north. Development of the site will create several lots with excellent westerly views
as well as several lots with rooftop views to the north. Specific view features will be
discussed under the Project Development section of the report.
Flood Zone Designation
According to the National Flood Insurance Program (NFIP), Map No.
06073C0766 F, dated June 19, 1997, the subject site is within Flood Zone X, an area
determining to be outside of the 500-year flood plain.
Soil Conditions and Toxic Hazards
In this appraisal it was assumed that no geotechnical or hazardous conditions
exist that would preclude development, or increase the cost of development, of the
subject property. No reports or studies were provided to the appraisers regarding these
matters. Furthermore, the value conclusions are predicated on the development of the
subject property in a manner consistent with its highest and best use, as concluded in
this report, and does not reflect any value attributable to minerals or material extraction.
23
ANDERSON 6 BRABANT. INC.-
Seismic Hazard
The subject is not in an "Earthquake Fault Zone" as designated by the California
State Division of Mines and Geology. However, the property is located in an area prone
to seismic events, a condition that it shares with other properties located in the general
Southern California area.
Natural. Cultural. Recreational, and Scientific Conditions
There are no known natural, cultural, recreational, or scientific conditions
affecting the subject property, with the exception noted below. The subject is not
located within or adjacent to any natural landmarks, natural wilderness areas, or other
areas identified by the U.S. Fish and Wildlife Service as "Critical Habitats." In addition,
the property does not exhibit any cultural or historical value and the site is not known to
have any archaeological or scientific value. The exception to this is the fact that
approximately two acres of the appraised property are impacted by coastal sage scrub,
a protected resource. Development of the subject site will require offsite mitigation of
this condition. With probable mitigation at a ratio of two to one, offsite mitigation will
require acquisition of 4 acres at an estimated cost of $18,000 per acre, or a total cost of
$72,000.
Utilities
All public utilities necessary for residential development are available to the
subject property. These include water, sewer, natural gas, electrical service, cable
television, and telephone.
Street Improvements
There are no completed street improvements currently in place within the
boundaries of the subject site. The site is bordered on the south by Tamarack Avenue
and on the east by Cay Drive. Both of these streets are fully improved, with the
exception of sidewalks. Primary access roads into the neighborhood include College
Boulevard, Tamarack Avenue and Carlsbad Village Drive, and each of these
thoroughfares can be easily reached from the subject site.
24
ANDER.SON 6 BRABANT. INC.-
Easements and Encumbrances
A title report dated March 22, 1999, issued by First American Title Insurance
Company, was reviewed. The subject property is encumbered with numerous
easements, including those for above and below ground utility improvements, pipelines
and drainage. Other title exceptions include financial obligations; covenants and
conditions; special tax liens; community facility district notice; and others. In this
analysis, it is assumed that these encumbrances will not preclude development of the
property to its highest and best use.
Land Use
The subject property is located within, and is a part of, the Calavera Hills Master
Plan Community. The land use designation for the property is Residential Low Medium
Density, a designation that will allow development at a density up to 4.0 dwelling units
per acre. A Master Plan amendment is currently under development by the property
owner and a "scoping meeting" between the developer and the city is scheduled for
September 16,1999. However, the amendment as currently proposed does not provide
for any change in the land use designation for the subject.
This appraisal is to be completed per the "Appraisal Instructions" included in the
Addenda. As outlined in those instructions, the subject is to be appraised based on the
assumption that the "The legally permissible use of the property is for development of
15 single-family residential lots". A land use plan and Preliminary Land Use Study,
based on a fifteen-lot development, has been prepared by O'Day Consultants and the
property has been appraised based on a use consistent with that plan.
Reservoir Site
The subject is adjacent to a site owned by the Carlsbad Municipal Water District.
That property is developed with a six million gallon, concrete, above ground reservoir
that was constructed in 1960. The floor elevation of the reservoir is 446 above sea
level. The exterior is a sand color that will be changed to a blue or green shade at the
next painting. The reservoir rises above the subject site and is visible from any point on
the subject.
25
ANDER.SON 6 BR.ABANT. INC.
Property Development Costs
Property development cost estimates have been provided by the property owner.
Construction cost estimates were prepared by O'Day Consultants, Incorporated. These
cost estimates have been amended pursuant to a review conducted by Alliance Land
Planning and Engineering, Incorporated. In addition, McMillin Land Development
prepared a "Development Planning Cost & Fee Summary" estimate. Finally, Paul
Klukas of Planning Associates, a land planning consultant for McMillin, was interviewed
and his opinions regarding the cost of a required supplemental EIR study has been
included in the cost estimate. The provided cost estimates are included in the Addenda.
The following table summarizes development planning and construction cost estimates.
"l\ ' " 'I 7p\ JJT; 7 ' ,' ', "" yw^D«y0fopm«nl C<>st Estimate
Site Preparation and Grading
Sanitary Sewer
Water Distribution
Roadway/Street Improvements
Utilities
Amenities and Special Construction
Consultant Fees & Services
Contingencies
Total Construction Costs
Professional Services to Final Map
Professional Services to Development
Plan Check Fees
Final Map Fees
Building Permit Fees
Bonds
Sewer Inspection Fees
Sewer Fees (3} Building Permit
Water Fees for Development Support
Water Fees @ Building Permit
Utility-Nonrefundable
Miscellaneous
Total Planning Costs & Fees
Environmental Mitigation
Total Land Development Cost
$428,900(1)
$21500
$42,650
$55,665
$15,850
$6,900
$31,400(1)
$58,447
$82,465
$4,740
$42,627
$32,405
$114,435(2)
$8,368
$0
$42,600
$27,442
$60,975
$12,000
$8,721
$661,312
$436,778
$72,000 (3)
$1,170,090
(1) O'Day estimate modified per Alliance review
(2) McMillin estimate adjusted to delete building permit and plan check fees
(3) Appraiser's estimate of environmental off-site mitigation, or equivalent.
26
ANDERSON 6 BRABANT. INC.-
Total development costs equate to $78,006 per lot for the assumed 15-lot
development. Cost estimates have been provided by McMillin Land Development and
have generally been relied on, except as noted. Specifically, the McMillin estimate of
building permit fees included fees typically paid at building permit, including actual
building permit ($16,320) and plan check ($8,310) fees. These cost are not included in
lot cost for the comparables and have been deleted from this cost estimate. In addition,
the provided cost estimate did not include an allowance for offsite mitigation costs. The
appraiser has estimated this cost at $72,000, the cost to acquire the required four acres
of mitigation land. It is noted that McMillin provided a memo dated June 30, 1999 from
Brian J. Curry, MAI, the appraiser for McMillin, in which Mr. Curry summarized his
revised cost estimate for the subject. Mr. Curry increased the cost estimate for an EIR
supplement from $8,400 to $60,000 pursuant to information provided to him by Paul
Klukas of Planning Systems. Based on my interview with Mr. Klukas, I have made no
change in this cost category. The final cost estimate does not include holding costs,
such as financing, taxes and overhead expenses, that will be incurred during the
planing and development process. In addition, the costs do not include any allowance
for entrepreneurial profit.
PROJECT DEVELOPMENT
The subject property has been appraised in a manner that conforms to the
"Appraisal Instructions" provided to the appraisers. A copy of those instructions is
included in the Addenda. A land use plan and Preliminary Land Use Study, based on a
fifteen-lot development, has been prepared by O'Day Consultants and the property has
been appraised based on a use consistent with that plan. Specifically, the plan
represents a proposed development of 15 single-family lots with minimum pad
dimensions of 40 feet by 100 feet, with estimated lot sizes of 4,200 square feet to
12,000 square feet. The lots will be located along a short cul-de-sac street and a copy
of the proposed lot lay out is included in the Addenda. Pad elevations will be at 411 to
427 feet above sea level and the lots at the west end of the site will have good westerly
views. The lots along the north side of the site will have obstructed or partially
27
—— — ANDERSON 6 BRABANT. INC. ____
obstructed northerly view orientation. The lots located at the southeast comer of the
developable area of the property will have no views.
All of the potential lots will have exposure to the above ground water storage
reservoir on the adjacent property. This tank rises approximately 30 feet above ground,
has a capacity of six million gallons and has light sand colored exterior finish. The tank
is very prominent and is visible from a distance in many directions. The tank will be
highly visible from all potential lots on the subject site and will be within 60 to 220 feet of
the lots. The tank is at an elevation of approximately 450 feet above sea level, at the
base, and rises above the planned subject lots.
The developable area of the subject is at the north end of the site. The southerly
area of the property will remain in a natural condition to preserve habitat, or off-site
mitigation land will be required. In addition, manufactured slopes will be constructed
along the perimeter of much of the site and adjacent to most lots.
ASSESSED VALUATION AND TAXES
The subject is identified as Assessor's Parcel Number 168-280-49. Upon
recordation of the subdivision map, new parcel numbers and assessed values will be
assigned to each of the 15 home sites and any related open space parcels. The
assessed values will again change upon development of the sites with new residential
structures, and the values will reflect the ultimate sale prices to individual buyers.
The base 1998/99 ad valorem tax rate for the subject tax rate area (09-013) is
1.632 percent applied to the assessed value. For the 1998/99 tax year, assessed value
for the subject was $27,000 and taxes were $4,407.12. The assessed value and taxes
reflect reassessment resulting from the December 1997 sale of property of which the
subject was a part.
MARKET OVERVIEW
According to Residential New Home Trends, a publication of Market Profiles,
sales of detached homes in San Diego County reached a ten-year high in the first
quarter of 1998 with 2,374 units sold. However, sales decreased to 1,963 units in the
second quarter and to 1,501 in the third quarter. First quarter 1998 sales averaged
28
ANDERSON & BRABANT. INC.
$286,594 per detached unit. This increased to $320,823 in the second quarter and fell
back to $309,751 in the third quarter. The fourth quarter of the year reflected total net
detached unit sales in the county of 1,257 and an average sale price of $309,347. This
average is impacted by the strong sales results for the north county coastal area with its
many high priced developments (297 units sold at an average sale price in the fourth
quarter of $465,763). Sales in 1999 have continued at a strong pace as reflected in first
quarter sales of 1,862 detached units and second quarter sales of 2,202 units. The
average sale price in the second quarter was $329,455 for a typical 2,422 square foot
home. The subject is located in the North County Coastal area, which is one of the
most active areas in the county and has been for several quarters. Sales of detached
product in this area totaled 683 units in the second quarter of 1999, at an average price
of $443,426. The typical unit size was 2,769 square feet and the sales reflect an
average price per square foot of $160.11. The decrease in the number of sales in the
third and fourth quarters was partially attributable to the decrease in available
inventories of finished homes. Many projects in the market area are selling homes that
will not be completed for six to nine months.
The three projects in the subject's immediate neighborhood offer some of the
lowest priced product in the north county coastal region, outside of Oceanside. McMillin
Companies opened Capistrano in April 1999. Product is priced from $344,900 to
$374,900 with unit sizes ranging from 2,726 to 3,190 square feet. Minimum lot size is
4,000 square feet. Brookfield began sales at Barrington in May 1999. This product is
1,957 to 2,287 square feet in size, is priced at $270,900 to $287,900 and minimum lot
size is 4,000 square feet. Finally, Heritage Home Builders open the Cliffs in June of this
year. This development includes product ranging in size from 1,553 to 1,964 square
feet and is priced at $235,900 to $259,900 with minimum lot size of 3,500 square feet.
The value of residential subdivision land is dependent upon the market for new
detached housing. There is plenty of evidence that the housing market in San Diego
County has improved significantly over the past 18 to 24 month period. At the same
time, the supply of buildable subdivision sites available for purchase is being depleted.
Two large projects along the coast, Encinitas Ranch and La Costa Valley, are currently
29
ANDERSON 6 BRABANT. INC.-
under development and selling houses. These two projects will provide large
inventories of lots in those two locations. Both of these projects began marketing
product in 1998 and will have inventory for sale for the next two to three years.
However, developers and merchant builders have acquired the total inventory of
buildable lots in these projects. In addition, because of the superior coastal location of
these projects, they will be developed with product that will be priced higher than
product in the subject location
Rancho Carillo is an east Carlsbad development on the south side of Palomar
Airport Road, and just west of the City of San Marcos, that is currently selling new
homes. Ultimately, this 680-acre property will be built out with 1,800 units ranging from
affordable housing apartments to homes priced in excess of $600,000. Continental
Homes is the developer for this project and builders, other than Continental, include
Shea Homes, UDC Homes, The Toll Brothers and Monarch Communities. Projects at
Rancho Carillo will be potential competition for the subject.
Future Supply and Demand
In the second quarter of 1999, there were 189 projects in San Diego County
selling detached housing product. Those projects reported a total of 2,202 sales during
the quarter, with 1,228 units available for sale and 4,936 lots remaining for
development. The total of units for sale and lots remaining for development is 6,164, or
approximately 2.80 quarters of remaining inventory based on the second quarter sales
rate. In the North County Coastal sub-market, the total of unsold and remaining for
development units is 1,622, (347 unsold and 1,275 remaining). Based on 683 sales in
the second quarter of the year, remaining inventory is nearly 2.37 quarters. This
remaining inventory is based on currently selling projects and does not include projects
that may come on line in the future. However, the remaining inventory in existing
projects provides an indication of potential supply of new homes in the near future.
In the process of surveying competing projects in the north county market area, it
was determined that most of the projects currently selling new homes have virtually no
standing inventory of completed homes. Most of the developments are selling homes
30
ANDERSON 8 BRABANT. INC.-
for delivery as far out as six to nine months. The inability to deliver homes more quickly
has an impact on sales rates and will limit the absorption of the remaining inventory.
As previously discussed, job growth in the county has been steady at over
30,000 new jobs per year for the past four years, with new job growth projected for 1999
at 20,000. Economists recognize the direct relationship between job growth and
housing demand and San Diego's expanding economy bodes well for the future of new
home sales. According to a recent E & Y Kenneth Leventhal Real Estate Group report,
absorption of 7,000 new homes is projected for 1999 and 2000. Given the rate of job
growth, it would appear that new home sales might not keep up with the total need for
new housing units. The Leventhal report also shows a drop in the affordability index
from 37 percent in 1998 to 35 percent by 2000. This index is a measure of the
relationship of income, home prices and financing costs and as the number decreases,
fewer people can afford new homes.
Summary
We have completed an investigation of the marketplace and have ascertained
actual sale prices, absorption rates, product quality, and other factors that can affect
price in order to develop opinions of value. Overall, we found that consumer confidence
is high and that new home sales rates are strong. To some degree, the increase in
consumer confidence parallels the rate of improvement pertaining to economic
conditions for the area and region. In addition, interest rates are relatively competitive
and should remain near current levels, or slightly lower, for the near term. There are
only a few projects in the market area that would be considered truly competitive with
the subject. Also, there is a limited amount of pipeline inventory that can be delivered to
potential buyers, and the market should continue to improve, at least into the
foreseeable future. With an active marketing and advertising program and a
competitive pricing schedule, homes on the subject site should sell at a rate conducive
to generating an acceptable profit margin. Due to the subject's location and price
range, we have estimated that the subject can achieve sales of approximately five
finished homes per month.
31
ANDERSON & BR.ABANT. INC.
HIGHEST AND BEST USE
Highest and Best Use is an important concept in real estate valuation as it
represents the premise upon which value is based. As used in this report, Highest and
Best Use is defined as follows:
"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 value."4
The conclusion of highest and best use is determined by social, economic,
governmental, and physical forces. The concept addresses the question of legally
allowable, physically possible, economically feasible, and maximally productive uses.
Potential alternative uses of the property must be considered in the highest and best
use analysis.
Once the legally allowable and physically possible uses have been identified, the
economic viability of the various uses must be determined. The use is financially
feasible if it provides a positive return to the land. The highest and best use is that use
that provides the highest overall return. The concept of highest and best use addresses
the land as though unimproved and then as if developed as proposed.
As Vacant Land
Legally Permissible: This appraisal is predicated on the conclusion that the
legally permissible use of the subject property is for development of 15 single-family
residential lots.
Physically Possible: The subject land is currently in an un-graded condition. It
is in an area of on going lot development and is adjacent to improved city streets. All
utilities are adjacent to the site and available to serve the property. It is assumed that
soils are adequate to allow development at the estimated cost.
Financially Feasible: Site development cost estimates indicate a per lot
development cost of approximately $80,646, before consideration of holding costs and
profit. Finished lot values exceed costs and are sufficient to allow for entrepreneurial
AThe Appraisal of Real Estate, 11th ed. (Chicago: Appraisal Institute, 1996), p.297
32
ANDERSON t> BRABANT. INC.
characteristics of the local detached residential housing marketplace. These issues
have been addressed in the Market Overview section of this report. We discovered that
there is a limited supply of competitive existing inventory in the subject market area.
Most developments are selling homes prior to completion of construction and this is true
of competing projects in the immediate subject neighborhood.
As discussed in the Market Overview section, sales rates are high and builders
are having difficulty keeping up with buyer demand. Job expansion in the county has
been strong for the past three years and further increases in total jobs in the county are
projected. Historically, there is a direct correlation between new job creation and
demand for housing units. Much of the housing demand in the past year has been
focused on the north county coastal properties; however, as prices continue to increase
and affordability indexes decline, more affordable inland areas, such as the subject
market area, should benefit.
In order for a project to be financially feasible, a proposed use must be profitable.
Profitability is typically measured as the difference between gross revenues and total
project cost. Based on this analysis, we have concluded that the project is feasible
under the proposed program of site utilization.
Maximally Productive: The maximally productive use of a site can be viewed as
that use that generates the highest overall rate of return. We have concluded that the
maximally productive use of the subject property is a residential detached subdivision
and that the proposed development is consistent with the maximally productive use of
the property. However, we have not completed an analysis of alternative unit mixes and
product design that might return higher profit margins. We have only concluded that the
subdivision of the subject has a profit potential that is consistent with profit targets in
today's market.
METHODOLOGY
The appraisal process is an orderly program in which the data used to develop
opinions of value are acquired, classified, analyzed, and presented. The preceding
sections of this report provide a description of the subject property as well as a
discussion of current market conditions. The following sections include descriptions and
33
ANDERSON 6 BRABANT. INC.-
analyses of the data used in the valuation process. We have utilized the Sales
Comparison Approach to develop an opinion of value for the lots as if in a finished site
condition and sold in bulk to a builder. The estimated development costs were
deducted from the bulk finished lot value to arrive at an "As Is" value for the subject. A
Developmental Analysis, based on a cash flow model, was also utilized to develop an
opinion of the as is value of the property.
SALES COMPARSION APPROACH
We have relied upon the Sales Comparison Approach to value the subject land in
a finished lot condition. To complete this analysis, we have compared the subject with
recent sales of similar properties and isolated pertinent elements of comparison in order
to evaluate dissimilar physical and legal characteristics of the market data and the
property being appraised. The typical unit of comparison utilized in the valuation of
residential subdivision land is the price paid per residential home site in a finished lot
condition.
A sales search was conducted in which we investigated published reports, and
contacted and interviewed various local brokers and developers. We reviewed
available data and our investigation resulted in the analysis of six sales of subdivision
parcels that could be utilized for comparison purposes. The following is a summary of
pertinent data relative to each comparable. A sales location map precedes the summary,
and additional information on each transaction can be found on the pages immediately
following the summary of market data.
34
ANDERSON 6 BRABANT. INC.-
LOCATION MAP - LAND SALE
DATA
i I I I
I ! I ! I 1 I 1 I 1 I I '
ii I i ii ft i t i i I I t i i lift i
2y
3
CD
05
CD
>
2
2
tXf^yh _W> 4^*S^K^^^i|^KM"?^'vfe,
•COMP
NO
1
2
3
4
5
6
jsssSSSSssssSssSBSSHH
LOCATION
l^&:£:i&
'APN
SWCCorintia Stand
XanaVfey,
Carlsbad
223X121-18
SS B Carrino Real
East of Tamarack
Carlsbad
208040-06 to 10
SECBordenRd&
Carrino Magnifica,
San Marcos
218011-43/212012-
NVVC Harwich D-.&
EdgevvareWay
Carlsbad
167-55401,02,03
SEC Hdden Valley Rd
& Rum Tree Ln
Carlsbad
214-544-04
NECPoinsettial_n&
BsckRailRd.
Carlsbad
215080-31
:S««SS?8£
SALE
DATE
Apr-99
Sep-98
Aug-98
Jan-98
Dec-97
Escrow,
to dose
1/00
£||S3g|gH|j««csg?£jj |
Kj^Q^^V^^QSJJiffSwijyroi
SALE
PRICE
$1,900,000
$2,900,000
$11,185,500
$2,310,000
$3,650,000
$1,950,000
^H^P^^^gKgffi!|^Q^lPi^BH9^Dl
LAND
AREA
4.36
8.77
44.39
6.27
7.51
12.00
ZONE
SFD
SFD
SFD
SFD
RR2
RR2
gj^jOfHi;;;
iiii?iil
MAP
STATUS
TM
TM
TM
TM
TM
TM
[yfflgf^BMj
i»^^^
TOTAL
UMTS
28
35
152
35
48
28
gBHJHBE^^^^m!
MJUMIll
DENSITY
6.42
3.99
3.42
5.58
6.39
2.33
sSSjjBHSSBSSssfiSSs !
TYRCAL
LOT SIZE
4,294
5,000
5,000
3,500
3,500
10,000
HI1
jgjgssgggggj
PRICE/
LOT
$67,857
$82,857
$73,589
$66,000
$76,042
$69,643
DB/
COST/LOT
$62,504
$67,143
$27,911
$43,000
$57,000
$107,000
iiliiiiiiliii^gjjgajgggsjjti
FIN LOT
COST
$130,361
$150,000
$101,500
$109,000
$133,042
$176,643
36
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
MARKET DATA
Land Datum No. 1
None
Brookfield Meadows
SWC Corintia Street and Xana Way, Carlsbad
1128A5
223-021-18
Residential
Gross Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
Average Lot Size:
4.36 acres
Level
On and off site improvements required
All to site
None
None
Approved TM
28
6.42 DU/Ac
3,500
5,000
Grant Deed -
Recorded: NA
To Escrow in April 1999 (See comments)
$1,900,000
Cash to seller
Price Per Lot: $67,857
Development Costs: $62,504
Finished Lot Cost: $130,361
Fruitjuicee Inc.
Keystone Properties
John Blair and John Kelting
Proposed units: 1 @ 1,947 SF, $294,900 base price; and 1 @
2,289 SF, $315,900 base price. Four units with inclusionary
housing units, 2,682 SF, priced at $330,900. Direct construction
costs at $40/SF, total premiums of $175,000, including models.
Price agreement was approximately March 1,1999, the property
was in escrow as of mid April and dosing is scheduled for the end
of May. There is a wastewater treatment facility located just to the
south of the sale property.
37
ANDERSON 6 BRABANT. INC.-
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
MARKET DATA
Land Datum No. 2
None
NA
SS El Camino Real, East of Tamarack, Carlsbad
1107A6
208-040-06 to 10
Residential
Gross Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
Average Lot Size:
Grant Deed -
Recorded:
Doc. No.:
$2,900,000
Cash to seller
Price Per Lot:
Development Costs:
Finished Lot Cost:
8.77 acres
Level to moderate slope
On and off site improvements required
All to site
None
None
Approved TM
35
3.99 DU/Ac
5,000
NA
9/11/98
578363
$82,857
$67,143
$150,000
Athalon Properties, Inc.
Carlsbad 35 LLC (Pinnacle Communities)
Kent Grover at Pinnacle Communities
Proposed product will be 2,300 to 2,900 square feet in size, priced
at $350,000 to $410,000. The acreage of the site is the net usable
area. A portion of the property is encumbered with an overhead
utility line and is excluded from the calculation of usable land area.
This sale appears to be low in relationship to other transactions in
the Carlsbad market area.
38
ANDERSON 6 BR.ABANT. INC.
MARKET DATA
Land Datum No. 3
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
Paloma
None
SEC Borden Rd. and Camino Magnifica, San Marcos
1108F5
218-012-23 & 218-011-43
SPA
Gross Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
Average Lot Size:
Grant Deed -
Recorded:
Doc. No.:
$11,185,500
Cash to seller
Price Per Lot:
Development Costs:
Finished Lot Cost:
44.39 acres
Level to moderate slope
On and off site improvements required
All to site
$1,464/year
None
Approved TM
152
3.42 DU/Ac
5,000
NA
8/19/98
527474
$73,589
$28,411
$102,000, excluding assessments
Marlin Development
AHF Property Holdings, LLC (Beazer Homes)
Jackie McQuision @ Beazer Homes
This property is in the Paloma neighborhood of San Marcos.
Paloma has had a great deal of negative publicity in the past due to
very high public facility fees and financial problems encountered by
the master developer. This transaction recorded at about the same
time that Kaufman and Broad closed on the first phase of a 780-lot
purchase in the same location. The K & B sale has been
characterized as a transaction at a much lower per lot price.
39
ANDERSON 6 BR.ABANT. INC.-
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
MARKET DATA
Land Datum No. 4
Calavera Hills
Calavera Hills Village
NWC Harwich Dr. & Edgeware Way, Carlsbad
1107-A4
167-554-01, 02 & 03
PC
Gross Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
6.27 acres
Level pad, west 1/3 slopes down.
Improved street frontage
All to site
Mello-Roos for schools
None
Final Map
35
5.58 DU/Ac
3,500
3,500Average Lot Size:
Grant Deed -
Recorded: 1/2/98
Doc. No.: 00203
$2,310,000
$651,181 Down, Conventional loan for the balance
Price Per Lot: $66,000
Development Costs: $43,000
Finished Lot Cost: $109,000
Clurman Company, Inc.
Heritage Builders LLC
Phil Jones at Heritage Builders
The project will include five units at 1,330 SF to be sold as low
income units at $140,000; 16 units of 1,523 SF at $230,000; and 14
units of 1,910 SF at $256,000. The project construction will start
8/98 and sales are projected at five per month.
40
ANDERSON 6 BRABANT. INC.-
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
MARKET DATA
Land Datum No. 5
None
NA
SEC Hidden Valley Rd. and Plum Tree Lane, Carlsbad
1127-A4
214-544-04
SPA
Gross Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
Average Lot Size:
Grant Deed -
Recorded:
Doc. No.:
$3,650,000
All Cash
7.511 Acres
Graded level pad
Full perimeter streets in place.
All at site.
Mello-Roos @ $717 per lot
None
Tentative Map
48
6.39 DU/Ac
3,500
3,500
12/24/97
0656073
Price Per Lot:
Development Costs:
Finished Lot Cost:
$76,042
$46,958
$133,000 (Excl. Assessment)
Sambi Seaside Heights
DMB/AEW Land Holdings Two LLC (UDC Homes)
Rick Schroeder of UDC Homes
The site was approved and mapped for 58 duplex homes. The
buyer will remap the site for 48 detached SFR units. Approvals
were not in place at the time of sale but city and neighborhood
representatives were supportive and the buyer anticipated no
problems in securing approval of a lower density project. Product
will be 1,700 to 2,300 SF priced at $250,000 to the low $300,000
range.
41
ANDERSON & BRABANT. INC.
MARKET DATA
Land Datum No. 6
MASTER PLAN:
PROJECT NAME:
LOCATION:
TBMC:
APN/Tract:
ZONING:
SITE DATA:
TRANSACTION:
SALE PRICE:
TERMS:
UNIT PRICES:
SELLER:
BUYER:
SOURCE:
COMMENTS:
None
NA
NEC Poinsettia Lane and Black Rail Road, Carlsbad
1127-C4
215-080-31
SPA
Gross Land Area:
Net Land Area:
Topography:
Street Improvements:
Utilities:
Assessments:
Existing Improvements:
Entitlements:
No. Lots:
Density:
Minimum Lot Size:
Average Pad Size:
Grant Deed -
Recorded:
Doc. No.:
$1,950,000
All Cash
Price Per Lot:
Development Costs:
Finished Lot Cost:
Arie DeJong Properties
Standard Pacific
32.9 Acres
12.0 Acres
Sloping to steep terrain
Perimeter street partially in place
All at site.
Mello-Roos @ $717 per lot
None
Tentative Map
28
2.33 DU/Net Ac
8,000
8,000
To record 1/10/00
NA
$69,643
$107,000
$176,643
Dave Shibley @ Arie DeJong and Greg @ Standard Pacific
The site has an approved TM for 28 lots. There will be
approximately 20 acres of open space. An overhead transmission
line crosses through the site and approximately 10 lots will abut the
transmission line right-of-way. Also, two above ground reservoirs
are located south of and are visible from the subject site. .
42
ANDERSON b BRABANT. INC.
Elements of Comparison/Analysis of Data: The above data are
representative of current market activity and provide a reasonable basis for
estimating the value of the subject property on both an "As Is" basis and as if
finished lots. The data include sales of subdivision sites in San Marcos and
Carlsbad. In the sales comparison process, consideration was given to current
market conditions, the high demand for residential subdivision properties and the
relative lack of supply of sites available for purchase.
In this analysis, we first estimated the value of the subject land assuming a
finished site condition (as previously defined), ready for construction of new single
family homes. The development costs to finish the lots with associated impact fees
are then deducted to arrive at the "As Is" property value.
In analyzing and adjusting the preceding comparables, several elements of
comparison were considered as to their relative effect on prices. These elements of
comparison include property rights conveyed, conditions of sale, financing terms,
market conditions, special assessments, location, and other physical characteristics.
The unit of comparison is the price per residential home site.
Property Rights Conveyed: All transactions involved the sale of the
fee simple estate, with no adjustments needed.
Conditions of Sale: There were no unusual conditions of sale that
were considered to impact the prices paid for any of the comparable
data. Therefore, no adjustments were made in this category.
Financing Terms: All of the sales involved all cash or cash equivalent
transactions, with no financing adjustments required.
Market Conditions: Market conditions, or changes in value over time,
warrant adjustments in this market. The general consensus among
brokers and others active in the market is that lot values increased at a
steady rate during 1997, perhaps at five to six percent annually, and
then increased very substantially during 1998. Values have increased
at a more gradual rate during 1999. It was difficult to find sales that
would allow an isolation of a time adjustment; however, prices within
new housing projects have increased ten to fifteen percent in the past
year. The increase in home prices will eventually be reflected in land
values. Furthermore, there is currently a limited inventory of new
subdivision land available for sale in the San Diego area and some
developers are bidding prices up based on projections of future
43
ANDERSON 6 BRABANT. INC.-
increases in new home sale prices. Based on the available data, an
upward adjustment of twelve percent annually was applied to the 1998
sales and five percent annually to the 1999 sales.
Location/Physical Characteristics: We have considered adjustments
to the comparable sales for the following location and physical
attributes:
• Location
• Lot Premiums
• Lot Size
• Project Size
With the exception of Sale No. 3, all of the comparables are located in
Carlsbad. A comparison of Sale 3 with Nos. 2 and 4 provides an
indication of significant location differences. An upward adjustment of
15% was applied to Sale 3. The data also indicate location differences
in Carlsbad. Specifically, Sale Nos. 4 and 5 illustrate value differences
between the Calavera Hills location and the Zone 20 planning area.
Sale 1 is adjusted due to adjacent uses. Adjustments have been
applied accordingly.
Lot premiums typically account for differences in site size and view
potential. Proforma premiums are typically the first thing to be
eliminated in a soft market with protracted absorption periods;
however, these premiums are prevalent in strong markets. The current
market in the region can be characterized as strong as evidenced by
increasing demand for and limited availability of land, and because
absorption rates relating to new home sales have increased
substantially. The subject development will offer several lots with
westerly. At the bulk lot level, developers will typically discount lot
premiums to about 25 percent of the retail price and that has been
considered in this analysis.
Regarding lot size, consumers are typically willing to pay premium
prices for larger lots. Because of this, developers will also pay more
on a per lot basis for larger lots than for smaller sites. The minimum lot
size in the subject development is 4,000 square feet The adjustments
in this category are somewhat self-explanatory as upward adjustments
were made to those comparables with smaller minimum lot sizes and
downward adjustments were applied in those cases where the
comparable offers larger minimum lot sizes.
Special Assessments: Some of the comparable data are burdened
by special assessments which are passed on to the buyers of the
finished homes and paid bi-annually when real property taxes are due.
These special assessments are typically the result of the developer
financing a portion of the infrastructure costs and/or to compensate for
school fees. These special assessments lessen the site development
44
ANDERSON 8 BR.ABANT. INC.-
cost to the developer by passing the costs to the ultimate consumer in
the form of special assessment taxes. Homebuyers are aware of
these types of special assessments, and the assessment is a
consideration to both the developer and the ultimate consumer.
Theoretically, the cost of the additional assessments is reflected in the
retail home prices that the merchant builder can achieve for his
product. Assuming all factors being equal, home and finished lot
prices in special assessment districts should be lower than those in
non-assessment districts. The value differential could be reflected on
the basis of the present worth, or lump sum value, of additional annual
housing costs to the potential homebuyer over a projected holding
period. The adjustments to the data are made on this basis. The cost
of special assessments for the subject is included in estimated site
development costs.
Water Reservoir: The subject is adjacent to a six million gallon, above
ground water reservoir and the O'Day lot study depicts a plan with two
lots adjacent to the reservoir site and six lots with frontage oriented
toward the site. The reservoir will be visible from all lots in the
development. The Barrington development. By Brookfield Homes, is
adjacent to this same reservoir site. Barrington has not released for
sale the lots adjacent, or in close proximity, to the reservoir. As with
the subject, many of the Barrington lots close to the reservoir will have
good views. According to Robin Biltucci, the Barrington sales agent,
prospective buyers have expressed an interest in the view lots and
they have also expressed concern about the proximity of the reservoir.
McMillin's Willows project in Scripps Ranch has lots adjacent to an
above ground reservoir. Susan Bourget, sales agent at the Willows,
was interviewed. She stated that there was no buyer resistance to the
lots adjacent to the reservoir. She attributed that to the high demand
for the Willows product and the Scripps Ranch location. It was her
opinion that buyers might be more sensitive to the reservoir issue if
buyer demand was not as strong. Based on this study, I have
concluded that a downward adjust is appropriate to reflect the negative
impact on the subject's finished lot values due to the reservoir. The
adjustment applied is three percent and this results in a total downward
adjustment in retail value of approximately $62,000 (3% X $137,000 X
15 Lots = $61,650). Because of the residual nature of the land value
analysis, this adjustment also results in a similar decrease in the as is
land value.
Sale No. 6 is located in close proximity to above ground water storage
reservoirs. In addition, overhead electrical transmission lines cross the
site. A downward adjustment was applied for the combined impact of
these factors.
45
• ANDERSON 3 DP AbANT. INC.-
Land Sale No. 1 is the best overall indicator of value for the subject. It is
comparable as to typical lot size, it is a current sale and it will be developed with a
product similar to that suitable for the subject site. This sale property has some view
opportunities, but not as significant as those available form the subject site. The
location of the sale property is judged to be inferior to the subject location, based on
the price range of existing and currently selling product in both locations and the
adjacent wastewater treatment plant.
Sale No. 2 is generally superior to the subject due to location, lot size and
premiums. Less weight was given to this transaction due to date of sale and the
accumulated differences. Land Sale No. 3 was included to support a lower limit of
value for the subject. This property is inferior in most resects to the subject, but
primarily due to location. Minimal weight was given to this sale.
Land Sale No. 4 is one of the better indicators of value for the subject. This
shares the subjects location characteristics, includes similar lot sizes and view
potential. The validity of the sale as an indicator is weakened by the date of sale.
Sale No. 5 is similar to the subject as to lot size but is superior as to location
and was given less weight due to date of sale. Sale No. 6 is a current transaction
and was considered for that reason. However, the property is superior to the subject
in most respects and was given little weight in the overall analysis.
There are a limited number of current sales of residential subdivision
properties in the inland north county area. The above transactions are the best of
the known transactions as to comparability to the subject development. It is known
that there are some pending transactions; however, details of these transactions are
limited. San Elijo Ranch is a major planned community in southwest San Marcos
that is currently in the mass grading stage. It is reported from secondary sources
that 5,000 square foot-lots in that project are attracting buyers in the $130,000
range, while 10,000 square foot lots are attracting prices over $200,000. This
development is similar to the subject as to location and there are no consummated
transactions within the project; however, the information available about this
development is indicative of subdivision land activity.
46
ANDERSON 6 BR.ABANT. INC.-
Conclusion - Finished Site Value: The following land sale adjustment grid
indicates the adjustments made to each item of market data for the elements of
comparison previously discussed. The grid shows adjusted unit values ranging from
a low of approximately $128,000 to a high of $141,000 per lot. Sale Nos. 1 and 4
have been given the greatest weight while the least weight was given to Sale Nos. 3
and 5. The bulk of the data, excluding Sale No. 5, indicate adjusted values grouped
around $137,000 per lot. The following adjustment grid summarizes the analysis of
the data.
LAND SALE ADJUSTMENT GRID
Sale No.
Sale Date
Finished Lot Cost
Cond/Terms
Market Conditions
Adjusted Value
Location
Reservoir/Power Lines
Lot Premiums
Minimum Lot Size
Project Size
Special Assessments
Net Adjustment
Indicated Value
1
Apr-99
130,361
0.0%
2.0%
132,968
5.0%
-3.0%
2.5%
0.0%
0.0%
0.0%
4.5%
138,952
2
Sep-98
150,000
0.0%
7.0%
160,500
-2.5%
-3.0%
-7.5%
-5.0%
0.0%
0.0%
-18.0%
131,610
3
Aug-98
101,500
0.0%
8.0%
109,620
15.0%
-3.0%
5.0%
-5.0%
0.0%
10.0%
22.0%
133,736
4
Jan-98
109,000
0.0%
15.0%
125,350
0.0%
-3.0%
0.0%
5.0%
0.0%
0.0%
2.0%
127,857
5
Dec-97
133,042
0.0%
15.0%
152,998
-20.0%
-3.0%
0.0%
5.0%
10.0%
0.0%
-8.0%
140,758
6
Escrow
176,643
0.0%
0.0%
176,643
-20.0%
10.0%
0.0%
-15.0%
0.0%
0.0%
-25.0%
132,482
Based on the above analysis, the concluded value of the subject site is
$137,000 average lot value for the potential fifteen lots yielded by the property. This
is based on a finished lot value with all site development complete and all fees paid,
except building permits. The total finished site value is $2,055,000 (15 Lots X
$137,000). The "As Is Value of the property can be estimated by deducting all
estimated costs to bring the property to a finished condition. The construction, map
preparation and fee costs were summarized in an earlier section of the report. An
additional allowance of $7,500 has been included for taxes incurred during the
47
•- ANDERSON & BR.ABANT. INC.-
approximate year required to complete mapping and construction. Also included is
an allowance for profit, risk and overhead. This allowance is twelve percent of the
total estimated retail value and has been included because the subject is in an
unmapped condition whereas the comparables all had tentative map approval at the
time of sale. In that respect, the subject is inferior and the buyer of this property
assumes greater risk and required effort to bring the subject site to the finished lot
condition.
The calculated value of the subject property is summarized as follows.
Total Finished Lot Value $2,055,000
Site Development & Mapping Costs $1,170,090
Taxes $7,500
Profit and Overhead Allowance $246,600
Indicated "As Is" Land Value (Rounded) $631,000
DEVELOPMENAT ANALYSIS
In addition to the analysis based on direct sales comparison, "As Is" land
value was estimated based on a land residual developmental analysis. This
analysis is predicated on a model that represents the processing of the subject
property from its current condition through the map approval and site development
stages. At the end of the site development, the property is sold in bulk to a builder
who would in turn build and sell individual homes.
The Developmental Analysis provides a cash flow model that projects
expenses for development, over a period of approximately one year, and the income
from the bulk lot sale at the end of the twelve month development period. The
following is a summary of the assumptions on which the analysis is based and the
value conclusions.
48
ANDERSON 8 BRABANT. INC.-
Months Per Period
First Unit Completion Period 12
Presales
Absorption (units per month)NA
Total Units 15
Average Finished Lot Value $137,000
Annual Appreciation 5%
Marketing and Advertising % of Sales Revenue NA
Sales Cost % of Sales Revenue 2.0%
General & Administrative % of Sales 3.0%
Assessments None
HOA Fee per Month per Unit None
Direct and Indirect Construction $1,170,090
Model Upgrade Cost None
Model Premiums None
Annual Cost Inflation 2%
Interest Rate/Points No loan
Loan To Value NA
Discount Rate 20%
A complete summary of the developmental analysis cash flow projection is
included in the addenda. The cash flows have been discounted using a single rate
of 20 percent, which is intended to represent developer internal rate of return
requirements. The discount rate was selected based on developer input from
various sources. These sources include interviews with developer representatives
from ColRich and William Lyon Homes and resent seminar presentations by
49
ANDERSON 8 BRABANT. INC.-
representatives of Standard Pacific, Institutional Housing Partners, and Brookfield
Homes. Internal rate of return requirements are typically in the 20 percent range for
unleveraged projects and in the 20 to 25 percent, or higher range, for leveraged
deals. A rate at the low end of the range was selected because of the small project
size, relative certainty of land use and strong residential lot market.
Summary Value Conciusion
Two types of analyses were developed to provide an indication of the value of
the subject land in its current or "As Is" condition. Both are based on an average
finished lot value of $137,000 and this was based on comparable subdivision land
sales for which information was available on finished lot costs. The first value
indication was based on a static analysis of the finished lot value from which
development cost and profit were deducted. The second value was based on a
cash flow projection over time. This reflects the same process as the static analysis,
but incorporates the impact of increases in value and costs as well as the impact on
value due to income and expenses occurring over time. The static analysis resulted
in an indicated value for the subject of $631,000 while the developmental analysis
resulted in an indicated value of $630,000. This represents a value range of less
than one percent and the two approaches are supportive of a final value conclusion
as follows.
As Is Value of 6.16 Acres $630,000
ESTIMATED EXPOSURE AND MARKETING PERIODS
As part of this assignment, we have provided estimates of exposure and
marketing periods for the subject property under all valuation premises except for the
aggregate retail value. The exposure time is the estimated length of time the property
interest being appraised would have been offered for sale on the market prior to the
hypothetical consummation of a sale at the estimated market value on the effective date
of the appraisal. It is a retrospective estimate based upon an analysis of past events
assuming a competitive and open market. The reasonable exposure period is a
function of price, time, and property use. The estimated marketing period is the amount
50
ANDER.SON 8 BR.ABANT. INC.-
of time it would probably take to sell the subject property if exposed to the market
beginning on the date of valuation.
The marketing period for a particular property is a function of many things,
including the physical and location attributes of the property, the environment in which it
is competing, its price, and marketing efforts. The local housing market has been
discussed throughout this report, and it can be described as one that is very strong.
Our discussions with developers and other market participants provided insight that
these conditions are likely to continue during the remainder of 1999 and into 2000.
Based upon our analysis of the market, we have projected that the subject could be
marketed to a single buyer, in its current condition within a one-year time period.
51
ANDERSON li BRABANT. INC.-
I"y
0
0
I
•
m
i ANDERSON & BRABANT. INC.
1
Calavera Hills Village L-2 Water Tank Site Acquisition
Appraisal Instructions
Pagel of 2
APPRAISAL INSTRUCTIONS
Because the Purchase Price is to be determined by an Appraisal Process, it is important
that each appraiser be provided the same instructions/assumptions as to the "Property"
they are appraising. For example, the date of value should be the same or reasonably
close, and the condition of the property at delivery should also be the same.
The following Appraisal Instructions will be utilized in the engagement of any appraisal
assignment by either party
1. General Appraisal Methodology. A self-contained appraisal report is to be
prepared in conformance with Standards Rule 2-2(a) of the Uniform Standards
of Professional Appraisal Practice (USPAP). The report should also be
prepared in conformance with the Code of Professional Etliics and Standards
of Professional Practice of the Appraisal Institute. The appraisal report should
describe all of the data collection and analysis leading to the valuation
conclusion. Neither the report nor the analysis should be limited in scope.
2. Definition of Market Value. The Market Value relied upon must be derived
from the Uniform Standards of Professional Appraisal Practice (USPAP).
3. Property Rights. The property rights considered in the appraisal will include
the Fee Simple Estate.
4. Effective Date of Value. The Effective Date of Value should be the date the
sale is to take place. For example if the District requires the site immediately,
then typically the date of the appraiser's most recent property inspection will
be appropriate. If the District will not be taking ownership for a period of
time, then a "Future Date of Value" may be required. An agreement as to the
Date of Value is critical to the process. Each of the respective appraisers'
effective dates of value should be as close as possible, therefore each party
I should be cognizant of this and attempt to coordinate engagement
appropriately. The District indicates it expects to acquire the Property
m between July 1, 1999 and the end of the year, or December 31, 1999.
"I Therefore, a Date of Value of October 1, 1999, or the approximate mid-point,
m j will be used as the Date of Value for each Appraisal.
*
"I 5. Property Appraised. The Property Appraised is Village "L-2" of the
^ J Calavera Hills Master Plan in the City of Carlsbad, consisting of approximately
Ht 6.16 acres. The underlying zoning is for residential lots, which is consistent
"I with the Calavera Hills Master Plan. Therefore, a residual valuation analysis
^..1 would likely be performed by the Appraisers requiring a land use study and
* cost analysis. Previous land use studies and a Cost Estimate (see Highest and
1
-i
-i
-1
M
"I
Calavera Hills Village L-2 Water Tank Site Acquisition
Appraisal Instructions
Page 2 of2
Best Use below) will be made available to the Appraisers, and an independent
third party engineer will perform a review of the cost analysis.
6. Purpose of the Appraisal. The purpose of the appraisal is to estimate the
Market Value of the fee simple interest of the property, in its current condition,
as of the Date of Value.
E. Highest and Best Use. A critical issue to the Appraisal is agreement as to the Highest
and Best Use of the property, and the criteria for "legal permissibility" is the critical
determination in the analysis of the Highest and Best Use. The Calavera Hills Master
Plan identifies Village L-2 as 20.10 gross acres in size with 119 allowable units.
However, subsequent planning by civil engineers, Hunsaker and Associates, to amend
the boundaries between Village K and Village L-2 has resulted in additional units
allocable to Village K and fewer units to Village L-2. A Preliminary Land Use Study
prepared by O'Day Consultants indicates fifteen lots with minimum pad dimensions of
40'x 100'. The legally permissible use of the property is for development of 15
single-family residential lots consistent with the land use plan drafted by O'Day
Consultants.
- ALLIANCEWNDPUNNrNG4ENGiNEERlNGiNC. CIVIL ENGINEERING • LAND PLANNING • HILLSIDE DESIGN • SURVEYING
June 16, 1999
Mr. Jeff Brazel
McMillin Land Development
2727 Hoover Avenue
National City, CA 91950
Re: Calavera Hills - Village "L-2"
Dear Jeff:
Per your request, we have reviewed the items you have forwarded regarding this
site and have the following comments:
Item 1 - Preliminary Site Plan
The site plan generally appears feasible to generate fifteen (15) 40' x 100' pads.
The third lot westerly from Cay Drive on the south side of the street is
questionable though. This pad at an elevation of 415.1 is at the toe of a 35' high,
2:1 slope. Given a slope setback requirement of H/2 or 15' max. would require
15' from the toe of slope to any structure. The plan does not appear to allow for
this. A bench may also be required in the slope since it is greater than thirty (30)
feet high. A more detailed grading plan of this lot and slope may resolve this
issue (i.e. use of retaining wall at toe of slope or shifting of lots easterly).
Item 2 - Construction Cost Estimate
A. Grading -Estimate shows 39,000 cy of cut and no export. Our calculations
show 55,000 cy of cut and 18,000 cy of fill for a 37,000 cy export condition.
Good soil may also have to be imported to fi!! the overexcavated areas. A
soils analysis addressing grading in this area was not provided.
B. Wet Utilities - Unit prices for mains may need to be increased since
trenching would be in hard and rocky soil. Storm drain is not included and
may be necessary to pick-up runoff prior to Cay Street intersection.
C. Landscaping - cost for slope planting and irrigation of $0.45/sf seems a bit
low.
5962 LA PLACE COURT, SUITE 130 • CARLSBAD, CA 92008 • TEL: (760) 431-9896 • FAX: (760) 431-8802
Item 3 - Fee Estimate
A. Professional Services - Allowance of only $240 is given for geotechnical
grading observation which seems too low.
B. Sewer Fees - No fee for sewer connection is shown. $2,500/unit per City ofCarlsbad.
C. Park Fee - No park fees are shown.
Limitations
This analysis has been performed as a review of information provided to us by
McMillin Land Development. The scope of our work is limited to a general third-
party review of the feasibility of the site plan and related costs provided to us.
Alliance Land Planning and Engineering Inc. is not the Civil Engineer of record
for this tract and makes no representation or warranty as to the information
provided us, title or easements within the site, or governmental processing and
approvals which may be required.
Please do not hesitate to contact me should you have any questions regarding
our analysis. The opportunity to be of service is greatly appreciated.
Sincerely,
Craig M. Whitteker, P.E.
. Pasteur Court, Suite 100
-7^ Sbad' CA 920°8
760-931-7700 (Fax) 760-931-8680
**** noT»T PRELIMINARY
OPINION OF PROBABLE CONSTUCTION COSTS *-*
Job: L40
VILLAGE L-2 (40' PADS)
Cost estimates do not include the
Civo.1 Engineering Coats
Utilities Fees
Inspection Fees
Date: 29 April 1999
By:
***SITE PREPARATION & GRADING *'
Quantity unit Co««i- T*j unit uost item Total
Rough Grading;
Over Excavation.
Cut .....
-
Finish Gradingei ^, .
***SANITARY SEWERS
Mains:
8" PVC Pipe.
19000 CY
39000 CY 4.80
4.80
1.50
Rough Grading Subtotal.-
91,200.00 c
187,200.00 c
87,000.00 c
... ,,- <^^°i 70000 SF
15 EA 0.45
1,200.00 31, 500. 00
18,000.00 c
c
SITE PREPARATION « GRADING Subtotal -
SITE PREPARATIO, ft
49,500.00
, 900.00
41,490.00
456,390.00
450 LF 20.00
Mains Subtotal:
9,000.00 c
9,000.00
Page 1 of 5
Opinion of Probable Constuction Costs -L40
ROADWAY/STREET IMPROVEMENTS **•
Quantity Unit Cost
Pavements:
4" AC Pavement 20300 SF
6" Curb & Gutter 1020 LF
4" PCC Sidewalk 5100 SF
Driveway Apron 15 EA
0.80
8.50
1.60
225.00
Pavement Base:
6" Aggregate Base....
Subgrade Preparation.
Pavements Subtotal:
0.50
0.30
Miscellaneous:
Street Monument.
Pavement Base Subtotal:
3 EA 300.00
Miscellaneous Subtotal:
ROADWAY/STREET IMPROVEMENTS Subtotal:
Contingencies:
ROADWAY/STREET IMPROVEMENTS Total:
***UTILITIES ***
Underground Systems.-
Joint Trench...
Miscellaneous:
Street Lights.
450 LF 25.00
Underground Systems Subtotal:
2 EA 2,300.00
Miscellaneous Subtotal:
UTILITIES Subtotal:
Contingencies:
UTILITIES Total:
item Total
16,240.00 c
8,670.00 c
8,160.00 c
3,375.00 c
36,445.00
11,450.00 c
6,870.00 c
18,320.00
900.00 c
900.00
55,665.00
5,566.50
61,231.50
11,250.00 c
11,
4,
4,
15,
1,
17,
,250,
600.
600.
850.
585.
435.
,00
00 c
00
00
00
00
Page 3 of 5
Opinion of Probable Constuction Costs - L40
Quantity Unit Cost Item Total
*** AMENITIES & SPECIAL CONSTRUCTION ***
Common Area Improvements:
Landscape / Irrigation 4600 SF 1.50 6,900.00 c
Common Area Improvements Subtotal: 6,900.00
AMENITIES 6 SPECIAL CONSTRUCTION Subtotal: 6,900.00
Contingencies: 690.00
AMENITIES & SPECIAL CONSTRUCTION Total: 7,590.00
*** CONSULTANT FEES & SERVICES ***
Civil Engineering Design:
Rough Grading Surveying LS 12,000.00 c
Surveying LS 15,000.00 c
Civil Engineering Design Subtotal: 27,000.00
CONSULTANT FEES & SERVICES Subtotal: 27,000.00
Contingencies: 2,700.00
CONSULTANT FEES 4 SERVICES Total: 29,700.00
*** MAJOR CATEGORY TOTALS (Does Not Include Contingency Costs):
' J SITE PREPARATION & GRADING: 414,900.00
SANITARY SEWERS: 21,500.00
• WATER DISTRIBUTION: 42,650.00
J ROADWAY/STREET IMPROVEMENTS: 55,665.00
•t UTILITIES: 15,850.00
AMENITIES & SPECIAL CONSTRUCTION: 6,900.00
MI! CONSULTANT FEES & SERVICES: 27,000.00J
— TOTAL COST WITHOUT CONTINGENCIES: 584,465.00
^ *** SUMMARY (Including Contingency Costs):
*-
TOTAL OF COSTS SUBJECT TO CONTINGENCY: 584,465.00
CONTINGENCIES @ 10%: 58,446.50
TOTAL OF COSTS NOT SUBJECT TO CONTINGENCY: 0.00
TOTAL PROBABLE CONSTRUCTION COST: 642,911.50
if
Page 4 of 5
Opinion of Probable Constuction Costs - L40
. , NOTE:
i£ Ml _ THESE ESTIMATES ARE BASED UPON PRELIMINARY PLANS WHICH HAVE NOT RECEIVED
FINAL APPROVAL. UNIT COSTS, IN SOME CASES, HAVE BEEN PROVIDED BY OTHERS.
m IJ J THE ENGINEER MAKES NO REPRESENTATION CONCERNING THE ESTIMATED QUANTITIES.
* COST FIGURES ARE ESTIMATES ONLY AND THE ENGINEER SHALL NOT BE RESPONSIBLE
FOR FLUCTUATIONS IN COST FACTORS OR CHANGES DUE TO FINAL DESIGN. THESE
tf
I ESTIMATES ARE FOR PRELIMINARY INFORMATION ONLY.
-1*
-j
THIS PROJECT MAY REQUIRE REMEDIAL GRADING OPERATIONS AND THE QUANTITIES
REQUIRED FOR REMEDIAL GRADING ARE UNCERTAIN UNTIL FURTHER SOILS TESTS
ARE MADE ( FREQUENTLY DURING CONSTRUCTION. ) CONSULT THE PROJECT SOILS
ENGINEER FOR FURTHER INFORMATION.
Page 5 of 5
']
-J
CALAVERA HILLS - PHASE 2
Village "L-2" - SFD - 40' Pad
Development Planning Cost & Fees Summary
Job Number:
Page Cost Code Description Total«r
*1m
Vj
;]
«n]
y-1
"]
""
Mi
•It
J
1
_ 1
2
2
2
3
3
3
3
3
3
3
3
201 0000
204 0100
204 0200
207 0100
207 0200
207 0300
215 0000
227 0100
227 0200
233 0100
233 0200
260 0000
270 0000
Technical Project Studies
Professional Services to Final Map
Professional Services for Development Supt.
City. County, State, Federal Plan Check Fees
City. County. State, Federal Fees to Final Map
City, County, State, Federal Building Permit Fees
Bonds
Sewer Inspection Fees
Sewer Fees @ Building Permit
Water Fees for Development Support
Water Fees @ Building Permit
Utility - Nonrefundable
Miscellaneous
Total Development Costs:
Updated:
SO Number of Lots:
Cost per Lot:
82.465 Prepared by:
4,740
42,627
32,405
139,065
8,368
0
42,600
27,442
60.975
12,000
8,721
$461,408 ,
Approved by: /"S VL_L/fli/ yy-fcW
05/03/99
15
530,761
K. Hearn
NOTES:
This estimate includes costs for T.M. Design. It also assumes an average home
size of 2134 SF based on the Barrington Models.
Code Description
CALAVERA HILLS - PHASE 2
Village "L-2" - SFD - 40' Pad
Cost Estimate
Subtotal
Quantity Unit Cost Estimate
H:VDATA\eNGNRING\ENGCF\CAU-EST«.-JSPECI_Wm
Job No.
vl1Jjj
ii
1 J
ifl
1 -»•,]., ( ¥»
•J
t
-.}
t
;3
" J
tf
-J•
-Ji
. J-: V
'JA1
201 TECHNICAL PROJECT STUDIES
Site Plans x
Phase 1 Environmental Site Assmt. x
Aerial Photography x
Other x
TOTAL
204- PROFESSIONAL SERVICES
0100 PROFESSIONAL SERVICES to FINAL MAPS
Attorney - CCR. Easements... x
Civil Engineering-Final Maps 39.240 x
-Grading Plans 39.240 x
-Improvement Plans 39.240 x
Civil Engineering-Final Maps 1 x
Geotech - Soils Reports 1 x
-Soils Testing x
Landscape - Irrigation and Planting 1 x
Landscape - Wall & Fence Plans 1 x
Traffic Consultant - Striping x
-Signal Design x
Utility Consutant - Design 15 x
-Applicant Design 1 x
Other x
Other x
Other x
LS
LS
LS
LS
LS
0.2 LS
0.3 LS
0.5 LS
10000 LS
5000 LS
LS
14200 LS
7400 LS
LS
LS
75 EA
5500 LS
LS
LS
LS
SO
SO
$0
$0
$0
$0
$7.848
$11.772
$19.620
$10.000
$5.000
$0
$14.200
$7,400
SO
$0
$1.125
$5.500
$0
SO
$0J
TOTAL $82.465
Page 1
-1,J
Code Description
CALAVERA HILLS - PHASE 2
Village "L-2" - SFD - 40' Pad
Cost Estimate
Subtotal
Quantity Unit Cost Estimate
H:VDATAt£NCNRINGtENGCF\CALl-EST\L-2SI>ECl_WK4
Job No.
"7 204- PROFESSIONAL SERVICES (continued)
0200 PROFESSIONAL SERVICES for DEVELOPMENT SUPPORT
Civil Engrg • Const Administration x LS
-Partial Releases x LS
.a
n
-I
Geotech - Grading Observation
-Trenching & Backfill
Envir. Mitigation Monitor
Other
Other
Other
3,000 x 0.08 CY
450 x 10 LF
LS
LS
LS
LS
TOTAL
207- CITY, COUNTY, STATE, FEDERAL FEES
J>
i
j
•ml
*
-J
so
so
$240
$4.500
SO
SO
SO
SO
$4,740
0100 PLAN CHECK & INSPECTION FEES
Grading Plan Check Fee
Improvement Plan Check
Map Check Fee
Tentative Tract Map Fee
Water Check Fee
Impmt & Grdg Inspections
Hillside Development Fee
St Light Fee
Landscape Plan Check Fee
Landscape Inspection
Public Facilities Fee
TOTAL
0200 CITY, COUNTY, STATE, FEDERAL FEES to
Bridge & Thouroghfare District
EIR Supplement
Encrochment Permit
Rezone
Development Construction Permit
Drainage Deposit
Drainage Fee
DRE Report Fees
Erosion Control Deposit
Excavation Permit
Geologic Soils & Lab Fees
Grading Permit
Lot Staking & Mnmts
Misc. Permits
Park Fees at Map
State Water Res - SWPPP
TOTAL
1 X
1 X
1 X
1 x
1 x
1 x
1 X
2 x
1 X
1 X
X
X
FINAL MAP
x
1 X
X
X
X
X
7 x
X
1
X
1 X
X
X
X
X
1700 LS
17175 EA
4501.5 EA
6000 EA
1500 EA
7000 EA
1207.5 EA
78 EA
2257.2 EA
1130 EA
EA
EA
EA
8400 EA
EA
EA
EA
EA
3478 EA
EA
EA
EA
EA
800 EA
EA
EA
EA
250 EA
EA
EA
EA
EA
$1,700
$17,175
$4,502
$6.000
$1.500
$7.000
$1.208
$156
$2.257
$1,130
$0
$0
$42,627
$0
$8.400
SO
$0
$0
$0
$22.955
$0
$0
$0
$0
$800
$0
SO
$0
$250
$0
$0
$0
$0
$32,405
Page 2
— Code Description
CALAVERA HILLS - PHASE 2
Village "L-2"-SFD-40'Pad
Cost Estimate
Subtotal
Quantity Unit Costs Estimate
H:\DATA\ENGNRINGVENGCnCAl_3.ESTM..:SPECL.WK<
Job No.
i:
m
m
207-
—
215
227
233
260
270
CITY, COUNTY, STATE, FEDERAL FEES
0300 BUILDING PERMIT FEES
Public Facilities Fee
Communities Facilities District *1
Housing Impact Fee
Sewer Capacity Fee
Water Connection Fee
Plan Check Fee
Building Permit
Traffic Signal Participation
Traffic Impact Fee
TOTAL
BONDS
Common Area Guarantees
Grading Bonds
HOA Assessment
Improvement Bonds
Landscaping Bonds
LOCFee
Monumentation Bonds
Park Fees
Water Bonds
TOTAL
SEWER FEES
0100 INSPECTION FEES
Sewer Inspection Fees
TOTAL
0200 BUILDING PERMIT FEES
Sewer Connection Fees
Sewer Reimbursement
Area/Capacity Charge
Sewer Administration Fees
Sewer Benefit Fee
TOTAL
WATER FEES
0100 FEES for DEVELOPMENT SUPPORT
Irrigation Meters - 2"
CWA Fees • r
TOTAL
0200 BUILDING PERMIT FEES
Domestic Meters Connection Fee - 5/8"
Capacity Fees - 5/8'
TOTAL
UTILITY - NONREFUNDABLE
SDG4E
TOTAL
MISCELLANEOUS
Blueprints & Messengers
TOTAL
(continued)
15 X
15 x
X
X
X
15 x
15 x
x
15 x
x
X
X
1.671.800 x
x
x
1.875 x
x
X
X
X
X
X
X
X
X
X
X
15 x
X
15 x
X
1 X
X
X
1 X
X
X
15 x
15 x
X
1 X
X
X
87,205 x
x
X
X
3414 EA
3665 EA
EA
EA
EA
554 EA
1088 EA
EA
550 EA
LS
LS
LS
0.005 LS
LS
LS
0.005 EA
LS
LS
LS
LS
LS
LS
LS
LS
LS
LS
LS
1854 EA
LS
986 EA
LS
19200 EA
EA
EA
8242 EA
EA
EA
2400 EA
1665 EA
EA
12000 LS
LS
LS
0.1 LS
LS
LS
LS
$51.210
$54,975
SO
SO
SO
J8.310
$16.320
SO
S8.250
$139,065
sososo
$8,359
$0
SO
$9
$0
SO
$0
$0
SO
$0
$1,368
$0
SO
$0
$0
SOso
$27.810
SO
$14,790
$0
$42.600
$19.200
$0
SO
$8.242
$0
$0
$27,442
$36,000
$24.975
$0
$60,975
$12.000
$0
SO
$12,000
$8,721 10% Of 204
$0
$0
$0
$8,721
Page 3
I
I
I
I
I
I
I
I
8
y
f1
y
DEVELOPMENTAL APPROACH
Village L-2
Month
Units Sold
Total Units Sold
Remaining Inventory
Average Sale Price
Model Premiums
Gross Sales Revenue
Site Development Costs
Vertical Construction Costs
Model Upgrade
Real Estate Taxes
Homeowner's Association
Sales Costs
Marketing & Advertising
General & Administrative
Costs Excluding Financing & Profit
Cash Flow Before Financing & Profit
Loan Draw
Loan Payback (Calculations Below)
IRR/Cash Flow Before Profit
Developer's Profit
Net Cash Flow
Discount Factor
Discounted Cash Flow
PV of Remaining Cash Flows
Loan Calculations
Loan Draw
Mortgage Balance (Beg. of Period)
Interest Accrued
Loan Payback
TABLE 1
AS IS LAND VALUE
Months Per Period
First Unit Completions Period
Presales
Absorption (Units/Month)
Total Units
Average Sale Price
Annual Appreciation
Beginning Period
Marketing & Advertising
Sales Costs
General & Administrative
Tax Rate
Additional Assesmts./Unit/Yr.
HOA Fee (Per unit/mo.)
Average Units/Phase
Site Development Costs
Vertical Construction Costs
Model Upgrade Costs
Model Premiums
Annual Cost Inflation
Beginning Period
Maximum Loan (% Cost)
Loan Interest Rate
Points
Maximum Loan to Value
Loan Payback Rate
Developer's Profit
Discount Rate
Value For Tax Assessment
Real Estate Tax/Unit/Period
Loan Amount
Payback Per Unit
Project Cost/Unit
0
0
0
15
$38 /unit/period
0 /unit/period
2.00%
0.00%
3.00%
20.00% ($631,860)
0.00%
1.00000
631.860
i
0
0
15
$0
$0
$0
$23,402
$0
$0
$574
$0
$0
$0
$0
$23.976
-$23,976
$0
$0
-$23,976
$0
-$23.976
0.98361
-23,583
666,367
2
0
0
15
$0
$0
$0
$23.441
$0
$0
$574
$0
$0
$0
$0
$24.015
-$24.015
$0
$0
-$24.015
$0
-$24.015
0.96748
-23.234
701.488
3
0
0
15
$0
$0
$0
$23.480
$0
$0
$574
$0
$0
$0
$0
$24.054
-$24.054
$0
$0
-$24.054
$0
-$24.054
0.95162
-22.891
737.234
4
0
0
15
$0
$0
$0
$23,519
$0
$0
$574
$0
$0
$0
$0
$24,093
-$24.093
$0
$0
-$24,093
$0
-$24.093
0.93602
-22.552
773,615
5
0
0
15
$0
$0
$0
$23.558
$0
$0
$586
$0
$0
$0
$0
$24,144
-$24.144
$0
$0
-$24.144
$0
-$24,144
0.92068
-22,229
810,652
6
0
0
15
$0
$0
$0
$23,597
$0
$0
$586
$0
$0
$0
$0
$24.183
-$24.183
$0
$0
-$24,183
$0
-$24.183
0.90558
-21.900
848.346
7
0
0
15
$0
$0
$0
$23.637
$0
$0
$586
$0
$0
$0
$0
$24.223
-$24.223
$0
$0
-$24.223
$0
-$24.223
0.89074
-21,576
886,708
o
0
0
15
$0
$0
$0
$23.676
$0
$0
$586
$0
$0
$0
$0
$24,262
-$24.262
$0
$0
-$24.262
$0
-$24.262
0.87614
-21.257
925.749
9
0
0
15
$0
$0
$0
$23.716
$0
$0
$597
$0
$0
$0
$0
$24.313
-$24.313
$0
$0
-$24.313
$0
-$24.313
0.86177
-20,952
965.491
10
0
0
15
$0
$0
$0
$23.755
$0
$0
$574
$0
$0
$0
$0
$24.330
-$24.330
$0
$0
-$24.330
$0
-$24,330
0.84765
-20.623
1.005.912
11
0
0
15
$0
$0
$0
$237.948
$0
$0
$574
$0
$0
$0
$0
$238.522
-$238.522
$0
$0
-$238.522
$0
-$238.522
0.83375
-198.868
1.261,199
12
0
0
15
$0
$0
$0
$357.516
$0
$0
$574
$0
$0
$0
$0
$358.091
-$358.091
$0
$0
-$358.091
$0
-$358.091
0.82008
-293.664
1.640,310
13
0
0
15
$0
$0
$0
$358.112
$0
$0
$574
$0
$0
$0
$0
$358.687
-$358.687
$0
$0
-$358.687
$0
-$358.687
0.80664
-289.330
2.026.335
14
15
15
0
$144.609
$0
$2.169.138
$0
$0
$0
$574
$0
$43.383
$0
$65.074
$109.031
$2.060.107
$0
$0
$2.060.107
$0
$2.060.107
0.79341
1.634.518
0
15
0
15
0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
0.78041
0
0
Total
15
$0
$0
$2.169.138
$1.189.357
$0
$0
$8.110^
$0
$43.383
$0
$65.074
$1.305.924
$863.214
$0
$0
$863.214
$0
$863.214
631.860
42.124
per lot
0 0
0 0
0 0
0 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
DEVELOPMENTAL ANALYSIS VILLAGE L-2
1
14
15
15.0
15
$137.000
5.00%
2
0.00%
2.00%
3.00%
1.094000%
$0
SO
N/A
$1.170.090
$0
$0
$0
2.00%
2
100.00%
9.00%
1.25%
0.00%
120.00%
0.00%
20.00%
$630.000
Development Costs Per Period
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
Site
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
2.00%
20.00%
30.00%
30.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
100.0%
Vertical
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.0%
$38 Concluded Value (R) $630.000
$0 Concluded ValueAJnit(R) $42.100
$0
$78.006 IRR at Concluded Value 20.0%
QUALIFICATIONS OF THE APPRAISER
*
1d
:
Gilbert F. Kunkel. MAI
I. Resident of San Diego County since 1946
II. Educational Background:
A. Graduated from the University of California at Riverside with a degree in Economics in 1968
B. Professional Education Completed:
1. Appraisal Institute
a. Single Family Appraisal — Course VIII, 1974
b. Investment Analysis — Course VI, 1975
c. Case Studies in Real Estate Valuation — Course 2-2, 1983
d. Valuation and Report Writing, 1984
e. Standards of Professional Practice, 1985
f. Standards of Professional Practice, Part B, 1993
2. Society of Real Estate Appraisers:
a. Real Estate Appraisal — Course 101, 1974
b. Real Estate Appraisal — Course 201, 1974
3. Seminars (Partial List):
Valuation of Lease Interests — Part I, 2/89
Investment Analysis, 2/89
Subdivision Analysis, 2/89
Lotus 1-2-3 Templates, 9/89
Apartment Seminar, 4/90
Standards of Professional Practice Update, 6/90
Litigation Seminar, 12/90, 11/93, 11/95
Appraisal Regulation, 5/91
Condemnation Valuation, 11/92
Discounted Cash Flow Analysis, 3/93
Apartment Appraisal, 9/93
Subdivision Analysis, 9/93
Real Estate Forecast, 9/93
Accrued Depreciation, 1 1 /93
Understanding Limited Appraisals, 7/94
Fair Lending and the Appraiser, 7/94
Partial Acquisition Appraisal, 9/94
Easement Valuation, 3/95
Federal Laws & Regulations, 3/96
Changing Markets and new Research Methods, 7/96
III. Professional Affiliations:
A. Member, Appraisal Institute, MAI
B. Member, International Right Of Way Association
C. State of California Community College, Limited Service Credential
D. Member, Appraisal Institute Admissions Committee
E. Member, Appraisal Institute Review and Counseling Committee
F. Certified General Real Estate Appraiser (AG002101)
Office of Real Estate Appraisers, State of California
ANDERSON & BRABANT, INC.
Qualifications of the Appraiser — Gilbert F. Kunkel, MAI
Page Two
IV.
V.
VI.
VII.
Teaching Experience:
Palomar College, San Marcos, California — "Real Estate Appraisal"
Appraisal Experience:
Owner — Anderson & Brabant, Inc., Since 1990
Associate — Anderson & Brabant, Inc., 1979 -1990
Vice President and Appraisal Manager — Financial Appraisals, Inc., 1977 -1979
Staff Appraiser — Financial Appraisals, Inc., 1972 -1977
Assistant Right Of Way Agent, California Division of Highways, 1968 -1971
Expert Witness:
Superior Court, San Diego County
Bankruptcy Court of U.S. District Court, Southern District
Types of Appraisals:
Residential: Single-Family, Residential Subdivision, Condominiums, Apartments, Mobile
Home Parks, Existing and Proposed Properties
Commercial: Office Buildings, Shopping Centers, Medical Offices, Existing and Proposed
Industrial: Existing and Proposed
Vacant Land: Industrial, Commercial, Residential, and Rural
Agricultural: Avocado and Citrus Groves
Other: Leaseholds, Fractional Interests, Easements, Partial Acquisitions
VIII.Partial List of Appraisal Clients:
Government Agencies and Municipalities
California Department of Transportation
City of Carlsbad
City of Chula Vista
City of Escondido
City of Oceanside
City of Vista
County of San Diego
Escondido Elementary School District
Escondido Union High School District
Metropolitan Transit Development Board
North County Transit District
Olivenhain Municipal Water District
Poway Unified School Districts
Rincon Del Diablo Mun. Water District
United States Postal Service
Valley Center Municipal Water District
Law Firms
David Boss
Cariyle & McDonough
Daley & Heft
Best, Best and Kreiger
McDougal & Associates
Pillsbury, Madison
Singer & Crawford
White & Bright
ANDERSON & BRABANT, INC.
Qualifications of the Appraiser — Gilbert F. Kunkel, MAI
Page Three
Banks/Savings & Loans
Bank of America
Bank of San Diego
Bank of the West
California Commerce Bank
Citicorp
City National Bank
Continental Bank
First International Bank
First Interstate Bank
Great Western Savings & Loan
Grossmont Bank
Independence Bank
Palomar Savings & Loan
San Diego Trust & Savings Bank
Union Bank
Wells Fargo Bank
Others
Argonaut Realty (General Motors)
Chicago Title
Caltras Company
First American Title Insurance Company
Fluidmaster Corporation
Fraser Engineering
Pactel Cellular
St. Paul Title Insurance Company
Republic Realty Mortgage Corporation
ANDERSON & BRABANT, INC.