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PARK DEDICATION FEES 2007
1,11111111 lill 11111111111111111111 1111111 lill III *NEW FILE* PARK DEDICATION FEES 2007 City of Newport Beach City Council Minutes February 27, 2007 Council Member Gardner took exception to Mayor Rosansky's characterization that a positive decision on this matter was "politically expedient" Councif Member Daigle asked if any consideration would be given to changing the phasing so the parkiriglot would be built first. The substitute motiailed by the following roll call vote: Ayes: Mayor Rosansky, Council Member Webb, Council Member Daigle Noes: Council Member Henn, CouncilrMember Curry, Mayor Pro Tem Selich, Council Member Gardner The motion carried by the following roll call vote: Ayes: Council Member Henn, Council Member Curry, Mayor Pro Tem Selich, Council Member Webb, Council Member Gardner Noes: Mayor Rosansky, Council Member Daigle The Council recessed the meeting a m^eting at midnight and reconvened at 12:10 a.m. With all members present. K. PUBLIC HEARING �� 21. IN -LIEU PARK DEDICATION FEE ADJUSTMENT - APPRAISAL O TR 7 AND BOB HENRY PARK [100-20071. Dr. Jan Vandersloot felt the City should get part of the money from the park in -lieu fees and felt it was perfectly reasonable for the City to increase the fees paid by the homebuilders. Motion by Council Member Webb to continue this item. The motion carried by the following roll call vote: Ayes: Council Member Henn, Council Member Curry, Mayor Pro Tem Selich, Mayor Rosansky, Council Member Webb, Council Member Daigle, Council Member Gardner M" a •ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES - None N. PLANNING C 22. PLANi report Q [100-20071- No oral CURRENT BUSINESS 526. COMMUNITY PROGRAMMING EQUIPMENT; BUDGET AMENDMENT 1100-20071. Assistant City Manager Kiff reported that this is a recommendation that the City invest in cameras and editing equipment to continue the City's programming efforts. Time -Warner has contributed $400,000; Cox $600,000, and Time -Warner will provide 10-year ongoing support for $90,000 to $100,000 per year. - Volume 58 - Page 67 City of Newport Beach City Council Minutes February 27, 2007 Motion bYOouncil Motnber Daigle to authorize the City Manager to use a portion of the PEG Capital Grant from Time Warner Cable to purchase cable -casting and community programming equipment substantially similar to the attached Equipment List in an amount not to exceed $100,000. The motion carried by the following roll call vote: Ayes: Council Member Henn, Council Member Curry, Mayor Pro Tem Selich, Mayor Rosansky, Council Member Webb, Council Member Daigle, Council Member Gardner Q. MQTION F-QR R- CONSIDERATION - None R. ADJOURNMENT - At 12:30 a.m. in memory of Bernice Borchard Heffernan and Edward H. Selich The agenda for the Regular Meeting was posted on February 22, 2007, at 10:45 a.m. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. The supplemental agenda for the Regular Meeting was posted on February 27, 2007, at 2:30 p.m, on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. City Clerk Recording Secretary Volume 58 - Page 68 -4 O O'MELVENY & MYERS LLP BEIJING 400 South Hope Street NEWYORK BRUSSELS Los Angeles, California 90071-2899 SAN FRANCISCO CENTURY CITY TELEPHONE (213) 43o.6000 MIANGHAI HONG KONG FACSIMILE (213) 43o-6407 SILICON VALLEY LONDON W W W.Omm. COm TOKYO NEWPORT BEACH WASHINGTON, D.C. OUR NUMBER May 2, 2007 rl71,,z9 4 8.004 VIA E-MAIL WRITER'S DIRECT DIAL hbludau@city.newport-beach.ca.us (213) 43o-6510 Homer Bludau, City Manager WRITER'S E•MAILADDRESS City of Newport Beach tmuller@omm.com 3300 Newport Boulevard Newport Beach, California 92663 Re: Fees In Lieu of Parkland Dedicafion Dear Mr. Bludau: As I think you know, we represent Conexant, a Newport Beach property owner contemplating redevelopment of its property in the near future, and thus a landowner that would be severely impacted if the recently proposed massive increase in park fees were to be imposed. We know you have received helpful input on the park fees issue from the Building Industry Association and its appraiser, Mike Waldron of Waldron & Associates. We have reviewed the City's appraiser's two reports and Waldron's two critiques of those reports, and we appreciate that you and other members of the City's staff have made yourselves available to discuss this matter with industry and property owner representatives. While it is difficult to argue with Waldron's criticisms of the Fontes reports, we want to call to your attention a much more fundamental flaw in the City's approach. As the Fontes reports note several times in bold type (almost as a disclaimer, appropriately), Fontes simply followed the City's instructions to appraise two long -existing City parks, but to assume that they were entitled for development at ten units per acre. They are not, of course, entitled for ten units per acre, or anything else except open space. The City's direction to its appraiser, then, was to appraise two imaginary parcels of land, whose attributes were arbitrarily dictated without reason, explanation or any relationship to the acquisition of actual parkland, based on a practice the City apparently followed in the 1980s. M O'MELVENY & MYERS LLP Homer Bludau , May 2, 2007 -Page 2 While neither the Quimby Act, the Newport Beach Code, nor the cases that have interpreted the Quimby Act' state exactly what land is to be valued in setting fees in lieu of dedication for parkland, it would clearly violate constitutional requirements of due process to allow local governments to simply manufacture hypothetical land valuations to use in setting in -lieu fees. There are only two logical and defensible comparables for the determination of in -lieu park fees: (a) the value of the land that will actually be acquired for parks to serve the assessed projects, and/or (b) the value of the land that is actually being dedicated for park purposes in the assessed projects. (a) Comparable Values of Land Actually Acquired for Parks We understand that it is unlikely that the City will actually acquire any significant amounts of additional parkland in the next five years, as there is apparently little remaining land within City limits that would be suitable for parks. Presumably, any in -lieu fees collected are intended for improvements to existing parklands. This does not make the cost of parkland an irrelevant comparable for purposes of setting in -lieu fees, however. As Mike Waldron noted in his first critique of the City's appraisals, the City has in recent times acquired several parcels for park use. Notably, and not surprisingly, none of these parcels were entitled for residential development at ten units per acre, or anything close to it. Indeed, it is virtually unheard of for Newport Beach or any other city to acquire land entitled for high -density development to use as parkland. That would be ridiculously economically inefficient. Typically, parkland is land that is either not suitable for development for topological, environmental, locational or other reasons, or it is land that is dedicated by developers pursuant to the Quimby Act, and thus is by definition unentitled because it must be restricted to open space in order to permit entitlement of the remainder of the developer's land. Based on what the City actually does when it acquires parkland, not on a hypothetical, Waldron found that the three most recent parkland acquisitions by Newport Beach were purchased at an average price of $434,026 per acre, which is about the same as the average price of the seven most recent Orange County parkland acquisitions, $486,892 per acre. (b) Comparable Values of Land Actually to be Dedicated The primary goal of the Quimby Act is to cause developers to dedicate land to be used for parks on their development sites. The in -lieu fee issue arises only because it is sometimes impractical for developers to do so, or because the developer's land does not work well with the city's plans 1 See Narsco Enterprises v. City of Fremont, 54 Cal.App.3d 488, 499, 126 CaLRptr. 659, 665 (1976); Associated Homebuilders v. City of Walnut Creek, 4 Cal.3d 633, 484 P.2d 606, 94 Cal.Rptr. 630 (1971). O'MELVLNY & MYERS LLP Homer Bludau , May 2, 2007 -Page 3 for parks, hi the case of our client, Conexant, the recently -adopted General Plan Update requires a certain amount of parkland to be dedicated on -site. As noted in one of the Quimby Act cases,2 the value of the land actually to be dedicated for parks is an excellent, and supremely logical, comparable for the calculation of in -lieu fees. It would clearly be anomalous to require a developer to dedicate, say, two acres of its unentitled development site, worth $1.3MM per acre, for parkland, and then require that developer to complete its parkland requirements by paying in -lieu fees based on a land value of, say, $2.5MM per acre. Not so incidentally, the foregoing $1.3MM is believed to be the approximate current as -is value of Conexant's land, based on recently -received arm's length offers, and, of course, the $2.5MM is the current Fontes estimate, based on the hypothetical comparable and the flawed methodology criticized by Waldron. Conclusion We urge the City to re -approach this issue in a way that is fair, logical and consistent with appropriately -selected comparables and rationally related to real -world acquisition of parkland, based on good and commonly accepted appraisal techniques. F. Thomas Muller Jr. FM:hs cc: Robin Clauson, Esq., City Attorney(rclauson@city.newport-beach.ca.us) David Lepo, Planning Director (dlWo@city newj2ort-beach.ca.us) Bryan Starr, BIA Jake Cisneros LA3:1132523.1 2 See Norsco, id, at 499( 665). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 FEBRUARY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MARCH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 26 29 30 31 CITY OF NEWPORT BEACH 3300 Newport Boulevard 9 Post Office Box 1768 9 Newport Beach, California 92658-8915 www.city.newport-beach.ca.us 5 6 7 8 9 10 11 e r �y- �,( �y ��i_- •{��j R.�'J,r_V!/yi�- __ _�_ _ 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31__- SEPTEMBER 2 3 4 5 6 7 8 9 10 11 12 13 14 15 -� 16 17 18 19 20 21 22 ���r vv�' •� I�+gs--.-. GO"~�� �N IQPc( �.___._� 23 24 25 26 27 28 29 ~ so OCTOBER 1 2 3 4 5 6 7 8 9 10 11 12 V 14 15 16 17 18 19 2( 21 22 23 24 25 26 21 28 29 30 31 4 5 6 7 8 9 10 t \ 11 1213 14 15 16 17 1 �� Mej L r 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 �-b;L,___ti_-� 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2C 21 22 23 24 25 26 27 28 29 30 31 1 4 5 6 7 8 9 11 12 13 14 15 16 18 19 20 21 22 23 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 JUNE 3 4 5 6 7 8 9 10 11 12 13 14 15 1E 17 18 19 20 21 22 22 24 25 26 27 28 29 3C CITY OF NEWPORT BEACH 3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92658-8915 www.city.newport-beach.ca.us I L4 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 5 6 7 8 9 10 11 12 13 14 15 16 17 16 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1E 16 17 18 19 20 21 7 23 24 25 26 27 28 2E 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 4,t.,Zgp� Cc;�,vt yLJS �� 4F-ac" -. 4thorized to Publish Advertisements of all kinds including public notices by Decree of the Superior Court of Orange County, California, Number A-6214, September 29, 1961, and A-24831 June 11, 1963 PROOF OF PUBLICATION STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE ) I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested. in the below entitled. matter. I am a principal clerk of the NEWPORT BEACH - COSTA MESA DAILY PILOT, a newspaper of general circulation, printed and published in the City of Costa Mesa, County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published on the following dates: FEBRUARY 17,2007 I declare, under penalty of perjury, that the foregoing is true and correct. Executed on FEBRUARY 17,2007 at Costa Mesa, California. — Signature PUBLIC HEARING NOTICE In -Lieu Park Dedication Fee The Newport Beach City Council will hold a public hearing to consider adoption of a resolution to update the In -Lieu Park Dedication Fee pursuant to Section 19.50.070 of the Newport Beach Municipal Code. If adopted, the resolution would establish a new per -acre land value to be used in computing in -Lieu Park Dedication Fees. The proposed per- acre land value, established by recent appraisal, would Increase the per -unit In -Lieu Park Fee for new subdivisions. The public hearing will be held on Februant 27. 2007 in the City Council Chambers at 3300 Newport Boulevard, Newport Beach at 7M p.m. This action has been reviewed and it has been determined that the proposed action is not a project subject to review under the California Environmental Quality Act (CEQA Section 15378). If you challenge this project in court, you may be limited to raising only those Issues you or someone else raised at the public hearing described in this notice or in written correspon- dence delivered to the City at, or prior to, the public hearing. For additional inlbrmation call (949) 644-3219. LaVonne M. Harkless, City Clerk City of Newport Beach Jam Free Printing www.averycom �' AVERY® 51600 Use Avery® TEMPLATE 51604D 1.800-GO-AVERY Barry Saywitz Sergio Avila 4740 Von Karman, Ste 100 9 Honors Drive Newport Beach, CA 92660 1 Newport Beach, CA 92660 1 i.! Brent Morehouse " Studio Del Mar 332 Evening Canyon Road 2855 E. Coast Highway #234 Corona del Mar, CA 92625 Corona del Mar, CA 92625 Scott Meserve 1.1 Mark Rosene The Koll Company Lennar Homes 4343 Von Karman Ave Newport Beach, CA 92660 25 Enterprise, Ste. 250 �Aliso Viejo, CA 92656 i )If If I 1,1 I I'I I' I'I I I Andrew Patterson 421 31st St. #B Newport Beach, CA 92663 I Edward and Kristine Gates 441 Seville Newport Beach, CA 92663 Rick Julian 23792 Rockfield Blvd, Suite 100 , Lake Forest, CA 92630 Y�1I �11 9 OHS ®AZl3AV Q aa3A1r-O9- /G� wwanemnnMMnn � ®0969 31tl1dW31 ekeny esn BupU}y MA wer APPRAISAL REPORT The appraisal of a multi -tenant Office Building located at 2025 W. Balboa Boulevard Newport Beach, California 92663 Our File # 06-155 Prepared for Dan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 Prepared by Steven R. Fontes, MAI, CCIM Vice President REINIIART-FONTES ASSOCIATES, INC. Real Estate Appraisal Consultants 2285 Business Way Riverside, California 92501 (951) 656-6036 Copyright November 2006 Report Preparation Date: 11/30/2006 Effective Date of As Is Appraisal: 11/07/2006 11 11 REINHART-FONTES ASSOCIATES, INC. Real Estate Appraisal Consultants November 30, 2006 Dan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 Sableet ofAppraisal. The appraisal of a multi -tenant office building located at 2025 W. Balboa Boulevard, Newport Beach, California 92663. The subject property may also be referred to as Orange County Assessor's Parcel Number 047-152-14. Dear Mr. Trimble, Pursuant to your request and authorization, I have conducted the investigations and analyses necessary to form an independent opinion of the Fair Market Value for the fee simple estate of the above -referenced property. This appraisal has been prepared for my client in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation. This is a Summary narrative appraisal report. Based upon the investigations conducted, analyses made, and my experience as a real estate appraiser, I have formed the following opinion, as of the date of November 7, 2006. This opinion is subject to the Assumptions and Limiting Conditions set forth in the Addenda. The estimated Fair Market Value of the fee simple estate of the subject real estate is as follows: Estimated Fee Simple Fair Market Value of the subject property as of November 7, 2006 ONE MILLION FIVE HUNDRED FIFTY THOUSAND U.S. DOLLARS $1,550,000 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement and without regard to any leases that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no leases in place. Since no leases were presented for my review, only a fee simple value could be reported. Leases may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. This value reported above is for the real estate only. I am not an expert in the field of hazardous waste. My valuation assumes that the subject site is clean of any environmentally hazardous materials or conditions and any associated stigma. 2285 Business Way • Riverside, California 92501 Corporate Office (951) 274-0140 • Bill Reinhart Direct (951) 522-0744 • Steven Fontes Direct (951) 656-6036 Dan Trimble November 30, 2006 Based on my later analysis, my estimate of Reasonable Exposure Time for the value opinion rendered is approximately 2 months. Reasonable Marketing Time is estimated to be on par with reasonable exposure time. These estimates are considered to be approximations that should not be construed as absolutes. This appraisal has not included the impact, if any, on the subject property value relative to the Federal Regulation known as the Americans with Disabilities Act. Please be advised that the valuation is subject to downward adjustment should it be determined by a duly qualified entity that the subject improvements must be modified in some manner to comply with the Americans with Disabilities Act. The appraisal report which follows sets forth the results of the investigation of the property, analyses, pertinent appraisal facts about the area, comparable data, and the reasoning leading to the conclusion stated. The value opinion presented represents real estate only and excludes all inventory, personal property, FF&E and goodwill. This transmittal letter is the first part of a report that contains 32 pages, plus Addenda. It should not be read out of context from the total report nor removed. No copyright of the contents of this report is granted beyond the original copies of the report delivered to the client. Publication and distribution of this report, and particularly public publications of the results of this report or the name of the appraiser or firm preparing the report, are prohibited as detailed in the General Assumptions and Limiting Condi- tions section found in the report Addenda. The valuation of the subject property is intended to be a reasonable professional estimate of value as of the stated date of appraisal. It is not intended to represent a guarantee of future resale value or a guarantee of specific cash flow. The future value of the subject property by real estate's nature can be expected to remain stable or fluctuate due to varied, not fully predictable, real estate -related investment factors. These include but are not limited to; general tax law changes, leasing program, maintenance, changes in competition, general area employment base changes, population changes, changes in land use patterns, changes in real estate -related interest rates affecting purchasing power, management, inflation or deflation, etc. To have an authorized copy of this report, the report must be signed in original ink. Your attention is invited to the following report body and Addenda. The narrative report, that follows, sets forth the data and analyses upon which my opinion of value is predicated. Respectfully, Reinhart-Fontes ssociates, Inc. Federal Taxp ID o.: 33-0634277 Steven R. F n es, MAI, CCIM Vice President CA Certified General Real Estate Appraiser No.: AG001644, Expiring 3/21/2008 2 MNHAU-FONTES ASSOCIATES, INC. TABLE OF CONTENTS TITLE PAGE LETTER OF TRANSMITTAL......................................................................................................I TABLEOF CONTENTS...............................................................................................................................................3 SUMMARYOF OPINION AND SALIENT FACTS...................................................................................................5 INTRODUCTION......................................................................................................................................................... 6 Purposeof the Appraisal...........................................................................................................................................6 Functionof the Appraisal..........................................................................................................................................6 Scope of the Report/Appraisal Development and Reporting Process.......................................................................6 Dateof Value............................................................................................................................................................7 Definitions................................................................................................................................................................7 InterestAppraised.....................................................................................................................................................9 PropertyIdentification..............................................................................................................................................9 LegalDescription......................................................................................................................................................9 Ownerof Record.......................................................................................................................................................9 RecentProperty History ............................................................................................................................................9 AssessedValuation and Taxes..................................................................................................................................9 REGIONAL DESCRIPTION CITY DESCRIPTION NEIGHBORHOOD DESCRIPTION 11 13 16 MARKETOVERVIEW..............................................................................................................................................17 ImprovedProperty Sales.........................................................................................................................................17 Analysis of Reasonable Exposure Time & Reasonable Marketing Time...............................................................17 Market Overview Conclusions................................................................................................................................17 SUBJECTLAND DATA............................................................................................................................................19 Sizeand Shape........................................................................................................................................................19 Topographyand Drainage.......................................................................................................................................19 SoilConditions.......................................................................................................................................................19 Zoning.....................................................................................................................................................................19 Easementsand Encroachments...............................................................................................................................19 Access.....................................................................................................................................................................19 SiteWork................................................................................................................................................................19 SiteAnalysis Conclusions.......................................................................................................................................19 DESCRIPTION OF EXISTING BUILDING IMPROVEMENTS..............................................................................21 HIGHESTAND BEST USE ANALYSIS...................................................................................................................23 ' Highest and Best Use as Though Vacant................................................................................................................23 Conclusion of Highest and Best Use "As" Vacant..................................................................................................23 Highestand Best Use As Improved........................................................................................................................24 Conclusions of Highest And Best Use as Improved...............................................................................................24 I L__l I I I I I L I VALUATION METHODOLOGY..............................................................................................................................25 TheValuation Process............................................................................................................................................25 Description of The Cost Approach to Value...........................................................................................................25 Description of The Sales Comparison Approach to Value......................................................................................25 Description of The Income Capitalization Approach to Value...............................................................................25 Description of The Reconciliation Process.............................................................................................................25 SALES COMPARISON APPROACH........................................................................................................................26 Discussion of Adjustments Made to Comparable Sales..........................................................................................31 Sales Comparison Approach Conclusions..............................................................................................................31 RECONCILIATION....................................................................................................................................................32 Sales Comparison Approach to Value....................................................................................................................32 ADDENDA GENERAL ASSUMPTIONS AND LIMITING CONDITIONS CERTIFICATION PROFESSIONAL APPRAISAL QUALIFICATIONS CONTRACT LETTER REALQUEST PROPERTY DETAIL REPORT ZONING DOCUMENTATION REGIONAL OVERVIEW BUILDING SALE PHOTOS SUBJECT PHOTOS I SUMMARY OF OPINIONAND SALIENT FACTS Property Name: Address: Thomas Bros. Map Ref.: Interest Appraised: Property Type: Gross Building Area: Net Rentable Area: Year Built: Construction Quality: Land Area: Zoning: Highest and Best Use... As Vacant As Improved Current Occupancy: Reasonable Exposure Time: Reasonable Marketing Time: None 2025 W. Balboa Boulevard Newport Beach, California 92663 Orange County, Page 918, Grid HI Fee Simple (See comment in Transmittal Letter) Multi -tenant office building Approximately 3,264sf Approximately 2,895sf 1963 Good Approximately 7,380sf or 0.17 acres SP6, Specific Plan Village #6 Cannery Village/McFadden Square Develop office As existing Exact occupancy unknown, but appears full (See comments in Transmittal Letter) 2 months 2 months Fair Market Value Conclusion -As ofNovember 7, 2006 Cost Approach Excluded Sales Comparison Approach $1,550,000 Income Approach By Direct Capitalization $ Excluded Reconciled As Is Fair market value $1,550,000 Date of Report: Date of Value: November 30, 2006 November 7, 2006 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement and without regard to any leases that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no leases in place. Since no leases were presented for my review, only a fee simple value could be reported. Leases may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. I 1 INTRODUCTION Purpose of the Appraisal The purpose of this appraisal report is to estimate the Fair Market Value for the subject property as of November 7, 2006. Function of the Appraisal I understand that this appraisal has been ordered for the purpose of assisting in establishing a baseline value which the client will use for the purpose of establishing regulatory fees. Scope of the Report/Appraisal Development and Reporting Process I completed the following due diligence during the course of this appraisal assignment. • Personally inspected the subject property from the exterior only. • Reviewed the architecturally prepared floor plans on file on microfiche at the City. • Photographed the subject property from the exterior only. • Interviewed personnel at the City Planning & Building Departments. • Consulted public records for the subject property. • Reviewed portions of the zoning ordinance. • Obtained demographic information. • Reviewed the Assessor Plat Map. • Reviewed published investment data relating to office properties. • Gathered, photographed & verified, if possible, building sales & rental data. • Interviewed brokers who specialize in retail projects. In this appraisal assignment, a traditional method of valuation was employed, the Sales Comparison Approach. A Cost Approach was not employed because this type of property is not traded on a cost basis and because current comparable land sales were almost non-existent due to the built up nature of the area. An Income Approach was attempted, but not completed since most office buildings of this size sell to owner users. As a result, little to no cap rate data was available from the market. In addition, while I did gather some rent comps from the area, they were not plentiful either. Lastly, since the client requested a fee simple valuation, and since the client did not allow me to make contact with the property owner, I was not privy to property specific operating expenses. These are all items necessary to conduct a proper Income Approach to Value.This is a Summary narrative appraisal report. Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement, without the ability to confirm who the FF&E belonged to and without regard to, any lease that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no lease in place. Since no lease was presented for my review, only a fee simple value could be reported. A lease may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. Date of Value The opinion of value expressed is as of November 7, 2006. This opinion is intended to represent the general purchasing power of the U.S. dollar in the immediate locale, in terms of real estate, as of the stated effective date of appraisal, subject to the definition of Fair Market Value. The effective date of appraisal was chosen as it coincides with the appraiser's field inspection date. Definitions Fair Market Valuer The term fair market valuez is defined as follows: The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy under no particular necessity for so doing, each dealing with each other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. The fair market value of the property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable. ' The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: ' (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. ' 1 Federal Register, Vol. 55, No. 164 August 23, 1990 Rules and Regulations, Section 564.2 Definitions. 2Chapter 1275, Title 7, Part 3 of the California Code of Civil Procedures, entitled: Eminent Domain Law t U II Leased Fee Estate3 An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the leased fee are specified by contract terms contained within the lease. Fee Simple Estate Absolute ownership unencumbered by any special interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Appraisals The act or process of estimating value. Reasonable Exposure Time6 The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at fair market value on the effective date of the appraisal. Reasonable Marketing Timer The amount of time it might take to sell a property interest in real estate at the estimated fair market value level during the period immediately after the effective date of appraisal. Americans With Disabilities Act of 19908 A civil rights act passed by Congress guaranteeing individuals with disabilities equal opportunity in public accommodations, employment, transportation, government services, and telecommunications. Statutory deadlines become effective on various dates between 1990 and 1997. 3 The Dictionary ofReal Estate Appraisal, Third Edition, Appraisal Institute, p. 204. 4lbid, p. 140. S Uniform Standards of Professional Appraisal Practice, 1996Edition, p. 9, The Appraisal Foundation. 61bid, p. 75. Ibid, p. 103. 8 The Dictionary ofReal EslateAppraisal, Third Edition, p. 13, Appraisal Institute. 1 I Interest Appraised The interest appraised is the 100% fee simple ownership position. The valuation presented is based on, and assumes a total transfer of the fee simple interest of the real estate rights described sold as a combined single entity. A fractional transfer of this interest would not necessarily be a direct multiple in value of the fraction transferred. Property Identification The subject property is an existing two story multi -tenant office building. According to the City of Newport Beach, construction was reportedly completed on May 1, 1963. The address for the subject property is 2025 W. Balboa Boulevard, Newport Beach, California 92663. The property is also referred to by Orange County Assessor Parcel Number 047-152-14 . The site area is approximately 7,380sf or 0.17 acres. The subject property is occupied by office tenants. While the exact occupancy is unknown, the building appears to be full. Legal Description I was not provided with a copy of a title report. An abbreviated legal description is included in the Addenda on the RealQuest Property Detail Report. Owner of Record The RealQuest Property Detail Report shows current ownership vesting in: Russell E. Fluter Recent Property History No sales involving the subject property within the last 3 years appear in the public record and none were reported to me to have occurred within this time frame. Assessed Valuation and Taxes Real property taxes in California are limited to 1% of the assessed value of a property as of a specified base year. The base year valuation is the 1975 assessor's fair market value estimate or the fair market value based on reappraisal. Re -appraisal can result from sale, further improvement or long term leasing. If there is no reappraisal, taxes are limited to a 2% annual increase of the assessor's fair market value estimate, plus voter approved bond debt or special assessments. Assessed value and tax information is included in the Addenda on the RealQuest Property Detail Reports. 10 39 _ wo w_. 73 REGIONAL DESCRIPTION The Los Angeles County Economic Development Corporation has compiled an excellent overview of the Orange County market. It is included in the Addenda. 11 V H J VI b of tN\ESL/LPL Q LIDO MARINA �J PAeK NEWPDRP �' ✓' a ISLAND �'P.� a, AGE SOUTH SHORE �6�a f YACHT CLUB PARK ",'O ;.yl 3�N W GATEWAY 1 ANZA ST . PARK 2 3 BEACH DR BOLIVAR ST 3, �5� , SBTW MARINA a �� qy o VILLAGE A CH FS O VIA q MALAGA [106, ro Q LIDO VlP $J PARK � r ST ST r�� NE'I TOO WPORT ENTNSULARESORT �x zyBAY I .Z aao0 C LIDO MHP Bj"�S, �t �1 \2 �z = 1 BOLIVAR ST $ 2 CABRILLO ST 3 DRAKE ST 4 EL PASEO ST 5 FREMONT ST 6 NOMAD ST u ^f'N9LIirlL ULE)TV PIER ®l SEA a 4, BAY AY NEWPORT AMERICAN LEGION b L MARINA YACHT CLUB PL MP VETERANS BAY PARK 1600 LAS ~ q LA71 N®I Al/ 02003 Thomas Bros. Maps ®I CITYDESCRIPTION The following information was obtained from the Newport Beach Chamber of Commerce. Tourism is an integral part of commerce in Newport Beach. The mild climate and beautiful beaches draw millions of visitors to Newport Beach each year. With an abundance of water activities to offer, Newport Beach is home to one of the largest pleasure -boat harbors in the world. Newport Beach is located 50 miles south of Los Angeles Newport Beach is approximately 40 square miles, of whit officially incorporated into Newport Beach include Corona Coast, San Joaquin Hills, and Balboa Peninsula. POPULATION: Permanent Population Summer Population and 85 miles north of San Diego. h 22 square miles is water. Areas del Mar, Balboa Island, Newport 72,600 100,000 Daytime temperatures_ average 80 degrees during the summer, and only dip to the mid-60s in winter. Evening temperatures seldom fall below 50 degrees year-round. About 10 inches of winter rain falls annually. Business Climate Newport Beach features several bustling areas of business. Each area —or "village" —has its own distinct ambiance and character. From a day of shopping along Pacific Coast Highway to a night of fine dining on the Harbor, each village is as unique as its businesses. With over 14,000 businesses actively licensed in the city, the diversity of our city's retail, restaurant and hotel offerings is sure to satisfy even the most distinguishing tastes. Newport Center Sprawling over 600 acres in the heart of Newport Beach, Newport Center is known for its elegant buildings and panoramic views of the Pacific Ocean. Its world -class outdoor shopping destination —Fashion Island —features more than 200 stores, 40 restaurants and two cinema complexes. In addition to these amenities, 24 office buildings, ranging from low-rise to premier high-rise offices, house national corporate headquarters, financial conglomerates and medical service centers. This combination of "business and pleasure" has made Newport Center one of the most sought-after destinations in Newport Beach. Corona del Mar Village' Along East Pacific Coast Highway, restaurants, boutiques and professional businesses combine to form the Corona del Mar Village. The unique relationship between residents and business owners creates a passion for the village that is infections. Located blocks from the beach, visitors and residents enjoy exploring one -of -a -kind retail shops, shopping for groceries at the Farmer's 13 Market and admiring spectacular ocean views. Corona del Mar —meaning "Crown of the Sea" — is as distinctive and beautiful as its name. Balboa Island Upon crossing a small half -mile bridge at the end of Jamboree Road you will discover Balboa Island. Home to charming retail shops and quaint beach cottages, the island, measuring 2.5 miles around, is a favorite destination in Newport Beach. Balboa Island is most often defined by Main Street, a tree -lined walkway where many small businesses and restaurants reside. The landmark Balboa Island Ferry, in operation since the 1920s, shuttles people in cars, on bikes and on foot for a quarter -mile ride across the harbor to the Balboa Peninsula. Balboa Villaee Home to the landmark Balboa Pavilion, the Balboa Village is situated between Newport Harbor and the Pacific Ocean. The lighted Fun Zone ferris wheel, which can be seen from a distance at both day and night, welcomes visitors to explore this seaside business area. The Balboa Village offers more waterfront recreational activities per square inch than any other area of Orange County. In addition, retail shops and restaurants cater to the beach crowds that flock to this area year-round. Cannery Village Artists, restaurateurs and antique dealers have settled in the historic Cannery Village to create an eclectic mix of charming shops and cafes. Encompassing eight square blocks, local artists regularly display their works in outdoor art shows and in the many village galleries. Nearby McFadden Square, site of the city's first port, is surrounded by several retail shops and restaurants bustling with beach goers seeking some of the best surf in town. Mariners Mile The famous nautical community, Mariners Mile, is located along West Pacific Coast Highway. Boasting several yacht bxokers and charter services, "everything nautical" can be found in this part of town. Numerous fine -dining restaurants, often specializing in fresh seafood, line either side of the highway with those nearest to Newport Harbor boasting spectacular views. Charter companies offering everything from elegant dining cruises to romantic gondola rides can be found in the Mariners Mile Marina. Airport Area Orange County's only commercial service airport, John Wayne Airport, has given rise to several surrounding businesses in the Airport Area. A vast number of high-rise buildings encircle the airport, housing everything from financial institutions to hotels to technology -based businesses. The Airport Area is centrally located near the 405 and 73 freeways, and its location complements larger businesses that have the potential for growth and expansion. 14 West Newport Before crossing the city's boundaries and entering Huntington Beach, a string of businesses lines Pacific Coast Highway forming West Newport. Located blocks from the beach, both locals and visitors enjoy "passing the time" at the many retail shops and eateries. This beach side area is popular with tourists, and is bustling with activity during peak summer months. I NEIGHBORHOOD DESCRIPTION I 1 I 11 I I I I I I 11 The 12te Edition of The Appraisal of Real Estate defines a neighborhood as a group of complimentary land uses. The subject's neighborhood boundaries are considered to be Newport Boulevard/Balboa Boulevard between Via Lido and 12a' Street. The neighborhood is 98%+ built up and exhibits average to good levels of maintenance. Access into the subject neighborhood is excellent. Newport Boulevard turns into Balboa Boulevard from the northwest and is the main thoroughfare into the area. The subject lies on a very well traveled section of this road and is proximate to the beach. In fact, it is within walking distance to the Newport Pier. The subject neighborhood is characterized by specialty retail, restaurant, office and residential uses. The area is highly sought after for all of these uses. 16 L 11 MARAET OVERVIEW Improved Property Sales I gathered five sales from the local region. These sales were all small office buildings. These sales sold from between $394.02/sf to $519.80/sf, unadjusted. My Sales Comparison Approach result is $475.00/sf or $1,550,000 (rounded). Please refer to the Sales Comparison Approach section for additional discussion and analysis. Analysis of Reasonable Exposure Time & Reasonable Marketing Time Reasonable Exposure Time is defined in the Uniform Standards of Professional Appraisal Practice as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at fair market value on the effective date of the appraisal. Reasonable Marketing Time is defined in the Uniform Standards of Professional Appraisal Practice as an estimate of the amount of time it might take to sell a property interest in real estate at the estimated fair market value level during the period immediately after the effective date of appraisal. Reasonable Exposure Time precedes the effective date of appraisal and Reasonable Marketing Time follows it. Reasonable Exposure Time is supported by recent exposure periods of similar properties in the region. The following chart illustrates this information. Property ID Sale Date Exposure Time Sale 1 April 2006 2 months Based on this information, recent historical exposure periods for comparable properties appear to be 2 months. Reasonable Marketing Time would logically be similar to Reasonable Exposure Time if market conditions in the foreseeable near future were expected to be similar to the recent past. Based on discussions I have bad with several brokers and market participants, market conditions for the near foreseeable future may remain similar to the recent past. Therefore, my estimate of a Reasonable Marketing Time for the subject property, as of the effective date of appraisal, is 2 months. These estimates are considered to be reasonable approximations only which should not be construed as absolutes. Market Overview Conclusions The subject is an multi -tenant office building. Market evidence suggests that Reasonable Exposure Time and Reasonable Marketing Time are on par at approximately 2 months. 17 1 I 4e1Bae MARCH /949 12 NEWPORr REACH SEG A, AEWPORr REACH ISr AM rO NEWPORr BEACH MRCEL MAP 30 \ M.Y. 3-AS M.M 1-EI M. M. S-E7 PM 79-54 I/-R! BOULEVARD NOr£ - ASSESSOR'S BLOCRR MRM MMMM SHOWN /N CIRCLES a7-15 ASSESSOR'S MAP ROOK 47 MBE /S O COWrY OF ORANGE m m � r m m m m i m � m m m m � m m m I II I, SUBJECT LAND DATA Size and Shape The public record suggests that the subject parcels total 10,685sf or 0.25 acres in size. The shape of the combined subject site is irregular. Topography and Drainage The site slopes down from north to south toward Pacific Coast highway. Drainage did not appear to be a problem. It is a contingency of this report that drainage was not an issue. Soil Conditions I was not supplied with a soil report. My analysis assumes that the soil is capable of supporting the improvements over the remaining economic life of the improvements. Zoning The subject is zoned SP6, Specific Plan Village #6, Cannery Village/McFadden Square. A copy of the allowable used and development standards is included in the Addenda. Easements and Encroachments A title policy was not provided for my review. My valuation assumes no unusual easements and no encroachments exist. Access The subject has access from West Balboa Boulevard. Site Work The parking lot is asphalt paved. There are a few shrubs and trees. Site Analysis Conclusions The subject site is well located. There are no reported building moratoria in effect as of the date of appraisal. No changes to zoning are reported pending at this time. The existing zoning is in compliance with the General Plan. Subject photographs are included in the Addenda. 19 SKETCH/AREA TABLE ADDENDUM Boulevard Appraiser Name S1eVen R. Fonts*, MAI, CCIM APPrAddress 2255 Buslnosa Way Rlversldo, CA.92501 27.0' 27.0' CO Lower Level 42.01 AREA CALCULA Code Doacdp0on GM Firat floor Second Floor OTH Down Rastrooms Down Hall Storage/Electrical Op Restrooms Op Hall let Floor Office 2ed Floor Orfice Net O O LO LO SUMMARY flat Elaa Wro49s 1732.0 1512.0 3264.0 105.3 61.3 64.0 55.6 52.0 1521.3 1374.4 3264.0 1 2 3 4 Hell Women Men Upper Level BUILDING AREA Breakdown First Floor 27.0 x 56.0 16.0 x 16.0 Second Floor 27.0 x 56.0 3264 3lteme 1512.0 240.0 2512.0 3264 v M"Awodat^n APrXSOMARE0Wt % Ar IDO-WIV DESCRIPTION OFEMSTINGBUILDINGIMPROVEMENTS The subject property improvements are described in the following outline format. Property Name: None Address: 2025 West Balboa Boulevard Newport Beach, California 92663 Thomas Bros. Map Ref.: Orange County, Page 918, Grid HI Interest Appraised: Fee Simple (See comment in Transmittal Letter) Property Type: Multi -tenant office Gross Building Area: Approximately 3,264sf Net Rentable Area: Approximately 2,895sf Year Built: 1963 Construction Quality: Good Land Area: Approximately 7,380sf or 0.17 acres Zoning: SP6, Specific Plan Village #6 Cannery Village/McFadden Square Highest and Best Use... As Vacant Develop office building As Improved As existing Current Occupancy: Exact occupancy unknown, but appears full (See comments in Transmittal Letter) Construction Class Class D, wood frame stucco construction based on external inspection only Current Year 2006 Actual Age 43 years Estimated Effective Age 20 years Estimated Physical Life New 45 years, per Marshall Valuation Publication 21 Remaining Economic Life Number of Levels Parking Lot Surface Landscaping Roof Material Ceiling Lighting Flooring HVAC Restrooms Depreciation 25 years Two Asphalt paved Minimal trees and shrubs Not inspected Not inspected Not inspected Not inspected Not inspected Not inspected, but appear to be two sets of bathrooms One upstairs and one downstairs based on review of plans Depreciation can exist in many forms such as physical, functional and external. Physical incurable depreciation is not considered to exist considering the construction date of 2001. Functional obsolescence was not noted. External obsolescence does not exist. A floor plan sketch was not available from the City. The City would only allow me to view the plans on microfiche. I took the building dimensions from these documents and have relied on them as accurate in this valuation. The floor plans sketch provided on a prior page is based on these dimensions. 22 I HIGHESTAND BEST USE ANALYSIS ' Highest and Best Use9 is an appraisal concept that has been defined as follows. ' The reasonably probable and legal use of vacant land or an improved property that is physically possible appropriately supported, financially feasible, and that results in the highest value. ' Highest and Best Use as Though Vacant Highest and best use of land or a site as though vacant is defined as: Among all reasonable, ' alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assum?tions that the parcel of land is vacant or can be made vacant by demolishing any improvements. ° ' Legally Permissible: The subject site is zoned SP6, Specific Plan Village #6, Cannery Village/McFadden Square. This zone allows for the construction of several types of commercial tproperty (see Addenda for list). Physically Possible: The subject parcel will accommodate a variety of commercial uses. No soil ' report was provided for my review, but a variety of commercial uses have been constructed on - site and in the area around the subject site. This analysis presumes that the soil is capable of supporting the potential improvements over their economic life. tFinancially Feasible/Maximal Productivity: A use is considered financially feasible if it produces a positive net return. A variety of uses may be potentially financially feasible for the ' subject site. The subject is on a busy street that gets much visibility and traffic. There are other offices in the immediate vicinity. An office use is considered financially feasible. ' Conclusion of Highest and Best Use "As" Vacant Immediate development with an office like the subject property is considered the Highest & Best ' Use as vacant. ' 9 TheAppraisal ofReal Estate, 10th Edition, Appraisal Institute, p. 275. 101bid 23 Highest and Best Use As Improved Physically Possible The subject was completed construction in 1963 and as such is physically possible. Legally Permitted The improvements are reportedly legal conforming. Financially Feasible/Maximally Productive Use For purposes of this analysis I assume financial feasibility since the valuation is based on similar size and quality office product from the region selling at a price similar to my value conclusion per square foot for the subject building. Conclusions of fthestAnd Best Use as Improved For these reasons, the highest and best use of the subject as improved is the existing use. VALUATION METHODOLOGY The Valuation Process The preceding report sections form the foundation and a framework that the balance of the appraisal report will draw from. Within each approach to value, market data is presented and analyzed in relation to the subject property. Conclusions regarding the subject's value are drawn from the analysis of each approach employed. The following represents a brief description of the theory behind each approach employed, in the order they are presented. Description of The Cost Approach to Value A Cost Approach to value was not conducted for reasons previously discussed. Description of The Sales Comparison Approach to Value A major premise of this approach is that the fair market value of a property is directly related to the prices of comparable, competing properties. In this approach, recent sales and listings, if available, of comparable properties, are analyzed in relation to the subject property. Various elements of comparison are tested to determine whether they affect value. Adjustments are only made for those differences that the market indicates as having an affect on value. After making the appropriate adjustments, an indication of value for the subject property is derived from the sales comparables. Description of The Income Capitalization Approach to Value An income Approach to value was not conducted for reasons previously discussed. Description of The Reconciliation Process The Sales Comparison to value is utilized in this analysis. The reconciliation process immediately follows the approaches to value. This is a process by which the inherent advantages and disadvantages of the approach to value are analyzed. The quantity and quality of data pre- sented in each approach is also considered, This process results in a reasoned selection of final value estimate for the subject property. 25 SALES COMPARISONAPPROACH The Sales Comparison Approach to Value is the process by which a fair market value estimate is derived by analyzing the market for similar properties that have sold recently and comparing those properties to the subject property. Improved building sales were searched for throughout the region. Each improved project sale was initially verified by telephone with the buyer, seller or broker. A final confirmation of each sale was made by consulting public records. Each sale was externally inspected and photographed. This section is organized into the following outline format: 1. Comparable Sale Location Map. 2. Summary of Comparable Sales. 3. Comparable Sale Adjustment Grid. 4. Comparable Sales Adjustment Discussion. 5. Conclusions of Sales Comparison Approach. 1 1 26 1 i.-JGA ` C7 4 IFAL.MW gA pj•4� ' ` F $ q 156 r.WaS4� !°4F°tiW.4?u°�p W*EL Vl u\ PD y',f' Y �r 3 44 ��r p jt $ aAve" T,J ♦D q QCµ yP' i `��ts�F > pp o� q�LRn'J5 r fNrFr � 4 C O'"Q° +I ILAVIA y E IA .z ,p ♦y ,x rA 3� IV `l .trt; � � (YPwrrlA iu.0 PRES mul" ,CµLE Z /p 4 ^`. a, pt y o ° NID O i ''44 JEU ,EMp 1AME `'1111p 9 cEr a W V / SAV CIEMENTE W�LI °Pty,¢IDp Y/yTA � 9 $\ k E Po PADC �VEROE'.,� d Y/i IICJ LE .J F �'10 n qa:A . 4Y0 caerrA�D£ pf <F41 4 3' CI � �p eI �rN MLA: `iI �A.q S mF Cµ "'.,. ME H415Q4 � fPr TP ' 3 ..-x ,h'Ae0 0 S�ti4 _ BENh CLIM C4�%<s, BXrtpldr¢�E°�' ^ f p�aX'. M ` FrS`O�J z'CALE NAL ENA tK<F Iat `E yrt W 4 B!E W ♦rn. yr`b '�' 4Fl3 XrrrtO'b .,r< F F< } tx v y y � �<F9A o yS C` AYEN\°P F 25 if, S tp. L. J p r INDA Portal. `�♦�0'7YENl0 �° 4.11� YW Ya. .pyols!11 " ,xA ,: ♦ 'ter y!�� 4 j t%A,\N\°p •,Avenid s4 cx GYLi ` aS1PVI5 r� \19� A�,eN °CMA°/' 'iX, °e P\0P.M iramar G, arA u JNAI�aO "a 11 t�0,°p -Jp-t��a�% ��'t e:2 riwevn � , .A♦ i♦7j ! <<r �'� aWJ` y6P, Q •oouy � $ fJ,P E Ipr s° J A4f,�Y1 Afl � sA `Nu '&01 i-p gyp° p IG. f4'X AY[N`J AVE*"Vp♦\° �t°♦ kui- 5 �� 001N 15NpFOA [N 1`Jx ,J4 atrt+X O°sp, PACIFIC Oct-AE-- �\ 15° N wFN ♦�.E.} nt_'�T MAVICfPN. ♦ P'�Vtgl [?p17 y ,y ( /� tP`p �'b PIER �"ot t� �<,<,G " pt°Ey I� / ✓ l' �d 99 P u4� Xt u:e i;w 1 MO MlN[FN r o A �i li F t1M ®1 a F G H J TONNE sr IT IxrFLD z zuv /`� : u rneAF t• � DR : _ is � e AWAN nL ! J C y N _I IN(A r, Sr MA' A T ill JAPES Sf P DR ! JT 4 6 BAI050 awMLaAll .An `Merz�o ii'�-Qvr M4W elkLY [!AA DP el .A nFWA 4, V rorc el! w N WAR a'.. um sr m aAns t. V, I�' FARM Sr II ti TrNENWLL �bY' W p1� sr _ —� w,.+t-r4 F ram, y w 18TN \ I6 3 PROMT10N Pt Y r�, 'qb{'4 JT 5 r Newport V r AIPt%YNro [T [r nua n 8 A' A BVdI i .! �< / y�.• <i �? Truro cr rArzurr n �4� ! �, [�'9 F'OSPfiK, •. RD �,�,Sd. /^ AT A 4 � i � 6 NAro CI 4,2 4 4 R u © IdP p�1MP .Yi- .„-,., PtS� P�� PPh�,,♦�6 O�S i 4 S $UPS', a�`` [, l �°' NENPDU ru HA990R NS 6 cull F ENYLMYPEN,X \� w6PP e S u H0A6 1l �6r 4 J ry MATURE A hs �S �fl a"��S von %Nr A�Bar rra carm PO g,a AT4.(i?, �Gp.�i yPL ANES rM1". fi a56 �`AMr[ n cares a °y.n ��' JY `jY;, >8 J> ''CASE x •inur wnx ara 1 00... T�■` ,p -5l uAo e is 4„ ,b c�nw' f AVA sr tnxcs ro @..=1 if tLl!! RINGS RD y rtwa � P. HALBOA u[srrip _! 409 sr > sr 3 o '�4 $� `LIB 61 Sr idr Ti��\. E \S 3 53SshJ'A`�ggr�' 'sae t, 6 \ ;2$t arr!41 APa ucuonvr aev i SS Lafayette: ° spa° °j+��, at`'`�' •Idd Av �.p41, ;' . ,•�= N� b� ''a r°�9e FzPo f c"ILLsr Y [ACffIO ST �5(g 4 EL PA n �� LIM ISLE tqy Yi os� M1 ,LyVD % , 4 q. w. AaW11 ABl[AI ieua` runt CLUB 1 e AUW sr M1yn Q` ♦ T Vtm r.Vll.lJ 1 VIA ano V x Ifla.VS z mAw cmv Y MCA, CIA Av A sav�. ,rrrt f PAgyr r - ,k—_ B �Bp .$ q r"I' BL 1�11 PACIFIC OCEAN 2 2 ©2003 Thomas Bros. Maps A B M M M M � M M M M M M M r M M r M M � Comparable Office Building Sales Dam Na Addtm Amen Puml Nu 2BOmu COMB Map PaB< Y veNe. balenam Loren Paled Onenam Imbvmml/ miime ltrmalSW BW Mm g vyer SeDm Pm W Lb Appmz P. R Appnz Yev BviLL PUMvy Co UvmJBJe COVNBam Ihnmd MJvmavm potmtW Cwnlewme V.uveF6 G/wgovl.ea Lgallre Croy lvmme LtlwiMEvpe"^- NJ Ivwmr NNN RmUSp/Mv lvdbbd OmnGB••• UmdJmW B/CtwBF luw.mpm Bm CIm Ckmn O&Apr-o6 N. Vdb APN M39404 45 6a 426pal.O FGA:992N4 Feb06 W,m Bmmp Good WA VmfiodwM Wilhemnodq Bmkv 024N NorrymblmmdblewvB�Bvoz (619)2968020 2.ft Cmxhb SJin S]25,000 Fw Bmgl<mmup: pvdune 1,840 19V NottpmW dJmcdmmvlmamc Nvihmmemmpmvwfmma6ob WA 53 W 2 500WNmpMlbJewd NcaprtBra&Ck WW 2Slan{K Ilmlvd Mm80 APN 42F291-10 90 Pnhp.WAbptlWpdm TGA:888i16 RLOS ILJaMmv Gwd WA Vm6� Qovk,Bwkb M61 NO rryadedwmW dempdvme 00)TE l= WA - Cbhb Bella S1,34&009 Fm&Mplemvbmcpoc5ue &488 WA NOtrymkddfbMmtlnlwwen Nolememnpme mtremmen WA 551150 3 409-4133tv5 Newport Besk CA.926M 2L 05 lb/y FVJBhvµ LLC APH N79 143 M Svpvem,20Epa I,OOOII WK8883P/ mg8 Mwbfm AVwaev WA V.Eww . 868851 NOtryonedtwmWzaleweNhmz mdPmhcAwmd+ WA CUL mBtlla $I'm,= WA 2,475 1954 Norepovcdde(nwdmemiwavpz Noivwmemmprnmiefmmavm WA MU55 / 11 Homo Bm ciCl. lq9E632 o)-3 DLmmarGmmRE,fm APN,o58ATLu 28 MA 4pw,135pm I,D/Otp 14 WA NenMumsPmmm;L1.0 Gmd N/A V.fiw V 5MA0 Newpoticdmvml Wemv3Nmv MlxJ�Co81m andPubLVAwmdr WA Cnhb SJlw Si,35O,OW WA lyn WA NOtrymmddefmcdmaiv----- Newmmcwemmeivfvmvum WA 512188 1 Iv A4ms NewpW7Be A9I663 N Bcac 06WA :eOB lsfrymePtggty llG APN Ot3A23O6 WA IS tpacm, 299 per 1,006sf pGR888M NIA Wmmmlc i.mve Gmd WA VmFicd 43M98 NotrycdNmvW alvweLvmx mdPobLCAmw& dx MAWA Gshb6Jln 52.62f,000 WA 3,050 1P19 Nonporzddetmedmamimvca Nobromemwpmemfmmmm WA S51980 M M M � � Data Property Sub-Ta Item $/PSF Rights $/PSI 1 $394.02 0.00% $394.0 2 $511.90 0.00% $511.9 3 $454.55 0.00% $454.5 4 $421.88 0.00% $421.2 5 $519.80 0.00% $5191 Discussion ofAdjustments Made to Comparable Sales Property Rights Each sale was of the fee simple interest or was unknown. No adjustments were required for property rights. Financing All sales sold for all cash to seller warranting no adjustment. Conditions of Sale No adjustments were needed for this aspect. Market Conditions No adjustments were necessary. Location I adjusted sales 1 and 4 upward as they lacked a Newport Beach address. Age/Condition I adjusted sales 3 and 4 as they differed with respect to age/condition from the subject. Parking I adjusted sale 4 as it had inferior parking to the subject. Sales Comparison Approach Conclusions Having made the preceding adjustments I show an adjusted range from $433.42/sf to $519.80/sf. I selected $475.00/sf as reasonable considering all sales. This per unit selections yields the following result. Subject Square Footage (GBA) 3,264sf Selection Per Unit $475.00 Indicated Value $1,550,400 Rounded To $1,550,000 31 RECONCILLITION Fair Market Value Conclusion - As of November 7. 2006 Cost Approach Excluded Sales Comparison Approach $1,550,000 Income Approach By Direct Capitalization Excluded Reconciled As Is Fair market value $1,550,000 Date of Report: Date of Value: November 30, 2006 November 7, 2006 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement and without regard to any leases that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no leases in place. Since no leases were presented for my review, only a fee simple value could be reported. Leases may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. Sales Comparison Approach to Value Several comparable sales were gathered for comparison to the subject property. The sales gathered were fairly recent comparables. The Sales Comparison Approach was considered reliable since 3 of the five sales were in Newport Beach, all were from Coastal communities, they were fairly recent and comparably sized to the subject. 32 ADDENDA I GENERAL ASSUMPTIONS AND LIMITING CONDITIONS The certification of the appraiser and opinion of value appearing in the appraisal report are contingent upon the following premises, limiting conditions, and exclusions. The appraiser has inspected the subject property with the due diligence expected of professional real estate appraisers. He is 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 petrochemical contamination, asbestos, PCB's, urea - formaldehyde foam insulation, radon, or other potentially hazardous materials/conditions may affect the value of the property. My value estimate is predicated on the assumption and contingency that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. My descriptions and resulting comments are the result of the routine observations made during the appraisal process. 1 I assume no responsibility for matters legal in character. I do not render any opinion as to title, which is assumed to be good and marketable. The real estate is appraised as if free and clear of all deeds of trust, leases, options to buy or lease, use restrictions and 1 reservations, covenants, conditions, easements, encroachments, cases or actions pending, tax or mechanic's liens and bonded indebtedness (unless otherwise specified) and that the property is under responsible ownership and competent management. 1 No legal or engineering survey analysis of this property has been made by the appraiser. It is assumed that the legal description and area computations famished to the appraiser 1 are reasonably accurate and that no encroachments exist. However, at the user's discretion, it is recommended that such an analysis be made for exact verifications through appropriate professionals before demising, hypothecating, selling, purchasing or lending occurs, or any decision is made requiring exact survey, legal or engineering analysis. I assume no responsibility for any hidden unapparent, or non -reported, conditions not readily observable from an appraisal related customary inspection of the site which might affect the valuation, excepting those items specifically mentioned in this report. I reserve the right to change the valuation, if so warranted, when supplied with further information, 1 if that information in my opinion dictates a change. 1 1 1 Any sketch or identified illustration/plan of the property included in this report is only for the purpose of assisting the reader to visualize the property and is not intended to represent a formal survey, unless so identified. This report assumes the condition of the property unchanged since the date of the last field inspection. Illustrations, maps, graphics, etc. are included for appraisal purposes only and are not intended to be relied upon for any other use. I will not be required to give testimony, attend court or any other governmental or private hearing by reason of this appraisal unless arrangements have previously been made. In the event I am subpoenaed for a deposition, judicial or administrative proceeding, and are ordered to produce the appraisal report and files, I will immediately notify the client. I will appear at the deposition, judicial or administrative hearing with the appraisal report and files, and will answer all questions, unless the client provides me with legal counsel who then instructs me not to appear, not to produce certain documents or instructs me not to answer certain questions. These instructions will be overridden by proper court order that I will follow, if legally required to do so. It shall be the responsibility of the client to obtain a protective order. Oil, gas, water, mineral and sub -surface rights (including any slant drilling rights) were not considered in making this appraisal, unless otherwise stated and are not part of the appraisal, if any exist. The same exclusion applies to aviation rights or restrictions ( if any). I make no warrant as to soil or sub- surface utility or soundness. It is assumed for purposes of this valuation as a contingent assumption of the valuation that the land will support identified highest and best use or proposed use, unless otherwise noted. It is suggested that an independent soils engineering specialist be consulted at the discretion of the value estimate user, prior to lending, transferring or accepting any real estate rights, in order to confirm this contingent assumption. I am not a licensed soil engineer or civil engineer. This valuation is based upon the expressed assumption that proposed, existing and modified soil after grading, will reasonably support present highest and best usage. The interest appraised was the 100% collective leased fee ownership position. This valuation is based on, and explicitly assumes a total transfer of the real estate rights described and not a fractional position transfer. If a 100% transfer of the property rights collectively could not be affected, the valuation could be substantially less. The sum of any fractional ownership interest held, if sold individually, may or may not equal the whole and likely would not due to market discount for such fractional interest currently being experienced. Separate valuations contained within this report which are used to form an opinion of the total, if removed from this report, may or may not be reflective of those individual portion values considered as separate part from the economic total. I [1 I I 11 I u I I No opinion in this regard is intended to be expressed regarding matters that require legal expertise, specialized investigation or knowledge beyond that customarily employed by real estate appraisers as of this point in time. Information contained in this report has been gathered from sources that are believed to be reliable, and where feasible, have been verified. No responsibility is assumed for the accuracy of information supplied by others beyond reasonable verification. The signatory of this appraisal report is a member of the Appraisal Institute. The By Laws and regulations of the Institute require each member to control the uses and distribution of each appraisal report signed by such member. Therefore, except as herein after provided, the party for whom this appraisal report or evaluation was prepared may distribute copies of this appraisal or evaluation report in its entirety to such third parties as may be selected by the party for whom this appraisal report was prepared. However, selected portions of this appraisal report shall not be given to third parties without the prior written consent of the signatory. Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser's or fnm's client, through advertising, solicitation materials, public relations, news, sales, or other media without the written consent and approval of the authors, particularly as to valuation conclusions, the identity. of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or the MAI designation. Further, the appraiser or firm assumes no obligation, liability, or accountability to any third party. If this report is placed in the hands of anyone but the client, client shall make such parry aware of all the assumptions and limiting conditions of the assignment. It is a contingency of the value opinion that the subject site is not impacted by any endangered or potentially endangered flora or fauna. No environmental report was furnished me in this regard. It is suggested that the report user verify that these are not concerns prior to relying on this appraisal by consulting a qualified expert in this regard at the report user's discretion. I CERTIFICATION I the undersigned, do hereby certify that during the completion of the assignment I have personally inspected the property that is the subject of this report and that, except as specifically noted: I certify that, to the best of my knowledge and belief: • the statements of fact contained in this report are true and correct. • the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • my engagement in this assignment was not contingent upon developing or reporting predetermined results. • my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. no one provided significant business appraisal assistance to the person signing this certification. The appraiser is competent to complete this report in accordance with the competency provision in the Uniform Standards of Professional Appraisal Practice. Please refer to my professional qualifications that are included in the Addenda. I' 11 It is my intention that this appraisal report complies with all statutes, rules, and regulations prohibiting discrimination on the basis of race, color, religion, sex, national origin, and marital status. The By-laws and Regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. In furtherance of the aims of the Institute to develop higher standards of professional performance by its members, I may be required to submit to authorized committees of said Institute copies of this report and any subsequent changes or modifications thereof. As of the date of this report, Steven R. Fontes, MAI has completed the requirements of the continuing education program of the Appraisal Institute and is presently certified under that program. Respectfully, Reinhart-Fontes Associates, Inc. Date of Value: November 7, 2006 Steven Wontes, MAI, CCIM Vice President CA Certified General Real Estate Appraiser No.: AGO01644 Expiration Date of State Certification: March 21, 2008 u PROFESSIONAL APPRAISAL QUALIFICATIONS 11 Professional Real Estate Qualifications Steven R. Fontes, MAI, CCIM Reinhart-Fontes Associates, Inc. Real Estate Agpraisal Consultants 2285 Business Way • Riverside, California 92501-2246 0!;"� (951) 656-6036 1 " \ (951) 656-5747 Cellular (951) 640-5616 sfontes@ccim.net 11 • Mr. Ponies has served as Vice President with Reinhart-Fontes Associates, Inc. since November 1994. Responsibilities include valuation and consultation, appraisalreview, business development, staff management and software training. • Mr. Ponta served as Vice President with Reinhart & Associates in Riverside, CA from January 1991 to October 1994. Responsibilities included valuation and consultation, business development &software training. • Mr. Ponta served as Assistant Vice President of Interstate Appraisal Corporation - Riverside Division from July 1985 to December 1990. Responsibilities during first 1.5 years consisted of data compilation and research. Later responsibilities consisted of commercial & industrial appraisal work with a heavy emphasis on proposed subdivision appraisal and analysis. • Mr. Ponta is actively involved in the saleofcommercialrealestate,includingvacantlandparcelsthroughoutSouthernCalifornia. 1- u,: -, psiME= • Mr. Pontes is a Member of the Appraisal Institute. He has held the MAI designation since October 27, 1993. His member number is 30123. To (earn more aboutthe MAW designation visitjittp//wvnv annraicalinsNtute.ora • Mr. Ponta is aMember of the CCIMInstitute. He has held the CCIMdesignation sinceNovember 8, 2000. His member number is 9481. By virtue of holding the CCIM designation, Mr. Pontes is also an affiliate member of the National Association of Realtors. To learn more aboutthe CCIM designation visit hUpWwwwaim.com vim, MIMMOF97, Mr. Pontes is a Certified General Real Estate Appraiser and is certified with the State of Cal fornia Office of Real Estate Appraisers (OREA). He has been state certified since January 16, 1932. His license requires renewal by March 21, 2008. His OREAID#isAG001644. To learn more about OREA visit httn://www.orea.ca.vav • Mr. Fontes is a Licensed Real Estate Broker and is licensed with the California Department of Real Estate (DRE). He has been licensed sinceJanuary 8, 2003. His license requires renewal by January 7, 2007. His Identification Number is 01364229. To learn more about the DRE visit h9p,//www.dre.ea.oav University of California, Riverside (UCR) -Bachelor's Degree in Computer Science,1387 Served on the UCR Planned Giving Advisory Board, October 2001 through February 2003 Vested Rights, Property Development Agreements, UCRFxtension Course, November 1988 Commercial and Industrial Real Estate, UCR Extension Course, March 1989 GIS (GeographicInformation Systems) in Real Estate, UCR Extension Seminar, August1996 • Real Estate Appraisal Principles March1997 • Basic Valuation Procedures, November 1987 • Standards of Professional Appraisal Practice June1988 • Capitalization Theory 6 Techniques, PartA,June 1989 • Capitalization Theory& Techniques, PartB, September 1989 • Case Studies in Real Estate Valuation,July 1990 • ReportWriting&Valuation Analysis, August1990 • Standards ofProfrssionalAppraisaIPractice, PartA,Jun a1991 • Standards ofPrafessionalAppraisalPractice, PartC, October1998 • Standards of Professional Appraisal Practice,7-HourUpdateCourseJune2003andMarch2005 • Business Practices and Ethics, August2003 • FinancialAnalysisforCommercial lnveshnentRealEstate (CI.101),January2000 • User Decision Analysisfor Commercial InvestmentReal Estate (CI-103), April 2000 • InvestmentAnalysisfor Commercial lnvestmentRealEmate(CI-104), May 2000 • MarketAnalysiafor Commercial Investment Real Estate,(CI-102), September 2000 • Core Concepts Review, (CCR), November 2000 • Real Estate Practice, Allied Business Schools, August2002 • LegalAspects of Real Estate Allied Business Schools, August2002 • Real Estate Finance, Allied Business Schools, August2002 • Real Estate Economics, Allied Business Schools,Augus42002 • Property Management, Allied Business Schools, August 2002 • Escrow PtinciplesandPractices, Allied Business Schools, August 2002 • Real Estate OfFceAdministration, Allied Business Schools, August 2002 AppraisalInstitute Involvement (Southern CaYfi2rnia Ch ter) • Wdlserveonthe Board ofDirectorsasSecretaryfrrtheyear2007. • Served on the Board ofDirectarsasEducationCoordinator in2001 • Served on the Finance Committee in 2001 • Served on the Nominating Committee in 2001 • Served on theBoardofDirators as Secreta7jii7rtheyear2000 • Served on the Board of Directors as aDirectorfrom1997-1999 • Served as an Admissions Committee Memberfrom 1994-1996 • Developed the Inland Empire Market Trends Seminar in1998 • Chaired the Inland Empire MarketTrends Seminar from 1998-2005 • Chaired the 1999Summer Conference program, co-chaired in1998and 2000 • Chaired the 15r"-17°"Annual Gol Tournamentfrom 1994-1996 • Served as a member of the Candidate Guidance Committeefrom 1989-1990 • Served in the capacity of Regional Representativefor the Southern California Chapterfom 2000-2001 • Served as a Regional Representative to the Southern California Chapter, 1997-1998 • Served on the GeneralAppraiser Council, Admissions Committee in 2000 • Served on the Leadership Development&Advisory Council(LDAC)from 1997-2001• •LDAC participants mectannuailyin Washington, DC to d nussiuues impactingtheRealFsWeIndustry and to lebbythe U.S. Congress on behalf of the Appraisal Instdute to enact proarwl estate and pro -consumer legislation. A final report is dehvrred once a year to the Appraisal Institutes National Board of Directors. Mr. Fontssattended meetings in Washington, DC andparticipatedin lobbymgefforts on CapitolHiU on thruteparateoccasiom. Real Estate Related Articles •Appmising in the Inland Empire. TheBusiness Press,January1998 • RaUentialSt4bdivision7)evelopmen.TheBusinwPress,February1999 ExpertWitness Eawerunce • Testifiedatdepositionand trial inRiverside County Superior Court Case #347484,October 2002 • Testified atdeposition in San Diego County Superior Court Case#773979,January 2004 • Testified atdeposition in San Bernardino County Superior Court Case#082769, March 2004 • Testified ateleposition in Riverside County Superior Court Case #372935, August2005 • Testified aideposition in Riverside County Superior CourtCase#081705, October2005 Real Estate Related Public Speakin • Provide,4ARGUS lease analysissoftware training, Les &Associates (Riverside) brokers, August2001 andApri12002 • Spoke on Real Estate Appraisal to the Inland Empire Community Foundation,April&May2002 • Moderated apaneldiscussion onCharitable Gift Giving inRealEstate, Omni Hotel, LosAngeks, April 2001 • Presented an Office Market Overview to the Inland EmpireBOMA Chapter,July2000 • Moderated the Appraisallnstitute's Inland Empire Market Trends Seminar at the Ontario Convention Center, 1998-2005 • Presented an overview ofMcUo-Roos Bond Financing to Chapters of the AppraisalInstitute, October 1988 • Presented an overview of Vested RightsMevelopmentAgreements to Chapter of the AppraisalInstitute, October 1989 11 1 Real Estate Related Seminars Attended Mr. Fontes has attended over 70 real estate relatedseminarssince 1991. Please referto separate liskk details. PropMXVeE eeriencelnvolvingAppraisal• & Consulting Assignments • Auto Dealerships&Auto Service Projects • Bank Branch Buildings • Board& rare Facilities - • College Campuses • ConvalescentHomes • Conventional, Bond Financed, Section 8&LIHTCApartmentProjects • EminentDomain Related Valuation • ExpertWitness Testimony (Forensic Valuations) • Fast Food Restaurants&Single TenantNNNLeased Investments • Food Plant/Cold Storage Facilities,Proposed&Existing) • Gas Station/Mini-Mart Facilities • Highest&Best Use/FeasibilityAnalysesfor Vacant Land Parcels • Hotels&Motels • IndustrialBuildings/Projects(Single&Multi-Tenant) • IndustrialMasterPlannedProjuts(Including CID/Mello-RoosBond Financed) • Land (Commercial/Industrlai, Multl-Family, Residential, Sped Plan, Open Space, Park, Conservation/Habitat) • Lease Dispute Resolution • Leasehold&Sandwich Ground Leased Miwd Use Projects • Lumberyards • Mobile Home Parks • office &MedicalOffieeBuddings (Proposed & Existing, Single&Multi-Tenant) • Proposed & Existing, Anchored &Non -Anchored Retail Shopping Centers • Proposed Condominium &PlannedUnit DevelapmentProjcdt • PublicAgency Valuation &Consultation • RedevetopmentAgency Valuation &Consultation • Residential Master Planned Communities (Including CID/Mello-Roos&A.D. Bond Financed) • Schools (Preschools, Elementary Schools, Middle Schools&High Schools),Existing&Proposed Construction • Self -Storage Facilities (Single&Multi-Level) • Single -Family Residential Subdivisions (Proposed &ExistingEntry-level to High -End Custom) • SiugleFamily Homa(Prop osed, Exis ti ng & Mo dels) • SpecializedMarketRescarch&Analyses • Truck Terminals • Uniquely Constructed&SpecialPurposeProperties PrimM Cameo,"hic Service Areas — All pf Southern Cal' rnia • Riverside County (Including the LowerDesert/Palm Springs/Coachella Valley area) • San Bernardino County(Includingthe Upper DesertNictorville/Vutor Valley area) • Orange, Los Angeles, San Diego, Kern and Ventura Counties 1I 11 11 Steven R. Fontes, AW, CCIM Real Estate Related Seminars Attended From 1991 to Present 1991 • Appraisal Regulations of the Federal Banking Agencies, February 1991 • Title Insurance Workshop, April 1991 1992 • Valuation of Leased Fee Interests, June 1992 • The Subdivision Seminar,July1992 1993 • Appraiser's Complete Review Seminar,January1993 • The Operating Expenses Seminar, April 1993 • The Construction Costs Workshop, August 1993 1994 • Pending Regulatory and Governmental Changes, January 1994 • Appraisal BusinessManagement,May 1994 • Defensive Appraising, May 1994 • Critical Building Inspections, May 1994 • Summary, Restricted and Evaluation Appraisal Reports, August 1994 • EVerienceReview TrainingProgram,September 1994 • The Partial Acquisition Seminar, September 1994 1995 • Appraising Land in Southern Cal fnrnia Seminar, March 1995 • California's Appraisal Licensing Law- A.B. 527 and FIRREA, September 1995 • The Appraiser in Cyberspace - Using the Internet, October 1995 1996 • The Southern California Market Trends Seminar, January 1996 • Fourth Annual Right of Way Valuation Conference (MWA), March 1996 • The OperatingEzpensesSeminar, August 1996 • The 29' Annual Litigation Seminar, November 1996 i t 1997 • The SouthernCalforniaMarketTrendsSeminar,January1997 • Lass Prevention- Error and Omissions Insurance Update, April1997 • Litigation Skill for the Appraiser: An Overview, May 1997 • Feasibility of Residential Development Projects, August 1997 • Appraisal of Fast Food Franchises, August 1997 • Small Hotel/Motel Valuation Seminar, October 1997 1998 • The Southern California Market Trends Seminar,January1998 • Inland Empire Market Trends Seminar,June1998 • The Appraiser's Role in the Redevelopment Process, August1998 • The Wall Street Connection —Trends in RealEstate Debt &EquityMarkets, August 1998 • The Technical Inspection of Residential Real Estate, August1998 • CCIWs-Your Valuation Advantage, August1998 1999 • Inland Empire Market Trends Seminar,Jane1999 • Single -Tenant Net Leased Properties, August 1999 • TheAppraisal of SkiffedNursingFacilities, August1999 • Attacking and Defendingan Appraisal in Litigation, August 1999 • CalffrnWs Appraisal L censingLaw -A.B. 527 and FIRREA, September 1999 2000 • The Southern California Market Trends Seminar, January 2000 • Inland Empire Market Trends Seminar, June 2000 • The Psychology of Expert Testimony, September 2000 • Recent Trends in Master -Planned Communities, September 2000 2001 • CCLMInternet Site toDoBusiness Seminar (Web-basedGIS& Demographics), January 2001 • The Operating Expense Seminar, February 2001 • Bridging the Gap: Marketability DucountsforReal Estate Interests, May 2001 • Inland Empire Planned GivingRoundtable,The Planned Giving Audit May 2001 • Western Regional Planned Giving Conference, Jun a 2001 The ABCs ofPlanncd Giving Uncovering Yo ur Don oi s Forgotten Real Estate The State of the Estate Tas • Inland Empire Market Trends Seminar,June2001 • Graham -Leach Bliley Act(InformationPrivacySeminar),September2001 • TheInternet & Technology Issues and the Appraiser, November 2001 2002 • Case Studies in Limited Partnership and Common Tenancy Valuation, May 2002 • Inland Empire Market Trends Seminar, June 2002 • Currentlssues in Land Development, October 2002 • Taw Wise Exit Strategies in a Hot Real Estate Market, October 2002 • Litigation Seminar, November 2002 2003 • Economic Outlook 2003, Hosted by The Private Bank atBank of America, January 2003 • Invited participant in the strategic planning meetingforthe newlyf rmedCenterforSustainable Suburban Growth at the University of Calforn4 Riverside, University Extension Center, January 2003 • Inland Empire Market Trends Seminar,June2003 • Appraisal of Local Retail Properties, October 2003 • Expanding Your Range of Services, October2003 2004 • 1031 Exchange Seminar, Inland Valley Association qfRealtorsjanuaty 2004 • Market Value Implications of theMulti-Species Habitat Conservation Plan, March 2004 • Inland &mpireMarketTrends Seminar,June2004 • CCIMFacilitating the Transaction Conference, October2004 Challenges &Opportunitus ofNcw"kmg RetailMarketing &PropertyExchange From Opportunity to Listing to Sale Investor Analysis Techniques 2005 • Planned Transportation Improvementsforthe Inland Empire, March 2005 • Inland Empire Market Trends Seminar, June2005 • Contemporary Approaches to Land Seminar,June2005 • Real Estate Finance Value& Investment Performance Seminar, August2005 • ne Valuation of Leases, Leaseholds and Leased Fee Estates, September 2005 2006 0 Scope of Work: ExpandingYour Range of Services, July 2006 rorim"7royAst"A i PROFESSIONAL SERVICES AGREEMENT WITH REINHART-FONTES ASSOCIATES, INC. FOR APPRAISAL SERVICES THIS AGREEMENT is made and entered into as of this 24th day of October, 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and Reinhart — Fontes Associates, Inc. a California Corporation whose address is 2285 Business Way, Riverside, California, 92501 ("Consultant"), and is made with reference to the following: RECITALS. A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to value certain parcels in the City of Newport Beach for the purpose of establishing regulatory fees. C. City desires to engage Consultant to appraise 2 commercial and 2 park properties consistent with the attached scope of services. ("Project"). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project, shall be Steven Fontes, MAI, CCIM. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on the 23rd day of October, 2007, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The 1 City may elect to delete certain tasks of the Scope of Services at its sole discretion. 3. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included in Exhibit A. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand -delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for the services on a time and expense not -to -exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit A and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Twenty Four Thousand and Five Hundred Dollars and no/100 ($24,500) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit monthly invoices to City describing the work performed the preceding month. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and/or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing 2 11 in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. B. Approved reproduction charges C. Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit A. 5. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Steven Fontes, MAI, CCIM to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 6. ADMINISTRATION This Agreement will be administered by the Planning Department. Daniel Trimble shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. I I ' 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: A. Provide access to, and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. ' 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's ' supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall ' be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. ' 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force in effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice Its profession. 'IoGopsa S*' 9? 8.3 Consultant shall not be responsible for delay, nor shall Consultant be t responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or agencies. governmental ' 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, ' volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes ' ICI, 4 of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work negligently performed or services provided under this Agreement (including, without limitation, defects in workmanship or materials and/or design defects [if the design originated with Consultant]) or Consultant's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the• performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and/or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. nsurer o m co eon i 5 •f • R��'21Z . 6 s.�. N.'z�y . C. Acceotabfe Insurers. All insurance po . ies shall be issued by an insurance company currently authorize y the Insurance Commissioner to transact business of insurance i the State of California, with an assigned policyholders' Rating of (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Reaufrements. CONSa>h�nrr 15 A ?kr4c-1PkL of: As cOR rA*r1DN. A5 Sc*., o hnv oV' ;ompensation Coverage. Consultant shall maintai Compensation Insurance and Employers Li "ity or his or her employees in accordance with laws of Ne 1�rk$ cVAM1--7 the State ot`E I��fO or V40N �-S ��19�'SRT101' subcontractor to *NS�RAK rhRn�ltkYw! Insurance and Err In addition, Consultant require each arly maintain Vet1ers Compensation cot4;4 L.14W vr1t-1- 09 "OD 5012 the laws of the State of ns,lr-ance in accordance with for all of the subcontractor's Q*f,nr employees. Any noti of canes Of4{eL-r-Ats AQfVE„1¢sr. Workers' Compe ion policies must or non -renewal of all :rived by City at least s, F. thirty (30) ndar days (10 calendar days wr notice pay of premium) prior to such change. The insure ; waive all rights of subrogation against City, its officers, of non - II agree 1.1 Ior pe orme ' H. General Liability Coverage. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage,, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for ' each occurrence. IV. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ' ($1,000,000). ' E. Endorsements. Each general liability and automobile liability insurance shall be endorsed with the following specific language: policy I. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. h, ii.A/ S� s ape' voluRteei:s as Fespeets-t&� g *FevW944e-G4y. Any insurance maintained by City, including any ' self -insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with ' respect to the limits of liability of the insuring company. iv. ec e '1 11 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. A. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except after thirty (30) calendar days (10 calendar days written notice of non-payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultant's performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint -venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50%) or more of the voting power, or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint -venture. 16. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. 17. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents"), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further H t compensation to Consultant or any other party. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents ' for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received ' from Consultant written consent for such changes. 18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept tconfidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY ' The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright ' infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. ' 20. RECORDS ' Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum ' period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. ' 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction ' of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant 1 9 ' shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and/or ' restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. ' 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS ' City reserves the right to employ other Consultants in connection with the Project. ' 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's ' violation of this Section. ' 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served ' when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Daniel Trimble ' Planning Department City of Newport Beach 3300 Newport Boulevard 10 Newport Beach, CA, 92663 Phone: 949-644-3230 Fax: 949-644-3229 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Steven Fontes, MAI, CCIM Reinhart-Fontes, Inc. 2285 Business Way Riverside, CA 92501 Phone: 951.656.6036 Fax: 951.656.5747 26. TERMINATION In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature, of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 27, COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. I 11 1 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are -any contUcts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, Illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. I 12 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: Aaron . Harp, Assistant City Attorney for the City of Newport Beac � . ATTEST: B*Laonnetrklec ss, City Clerk I F 1 I I CITY OF NEWPORT BEACH, A Municipal Corporation By; -<. City Manager for the City of Newport Beach CONSULTANT: By: Corporate Off c Title: v+cE Psesoenrr A SecfeTW Print Name: Steven Fontes By: GAi� Corporate Q fficer Title: �✓/L?S Print Name: I 13 I I Attachments: Exhibit A — Scope of Services and Billing Rates F:\users\cat\shared\Ag\P RofServlces\FinaIVersion05-19-06.doc t 14 Scope of Services and Billing Rates October 31, 2006 Dan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 Re: Two Park Sites and Two Commercial Properties Both park sites are located in the City Limits of Newport Beach. Both parks will be appraised in fee simple. The park sites are identified as follows: APN 440-161-01 13.87 acres Located at 2555 Vista Del Oro APN 117-801-15 4.80 acres Located at the SEC of Dover Drive & Castaways Lane The following assumptions would be included in the park site appraisals. * A residential density of 10 units per acre would be allowed. * That no future lots on the site would have view potential. * That the sites were nearly level. * That the property was vacant (i.e. devoid of all improvements) * That all utilities were available to serve the property. * That entitlements to develop the site had already been granted or were readily available. The fee to appraise each park site under these assumptions are as follows. APN 440-161-01 $7,500 13.87 acre park site APN 117-801-15 $6,500 4.80 acre park site In addition, you need two commercial properties valued. We will not have the benefit of interior inspection and/or lease document review. Each of these properties will be valued as if held in fee simple. Both commercial properties are located in the City Limits of Newport Beach. The commercial properties are identified as follows: APN 459-186-16,17 Baja Fresh fast food located at 3040-3050 W. Coast Highway APN 047-171-14 A real estate office located at the SEC of Newport & McFadden Our fee to appraise each commercial property are as follows. APN 459-186-16,17 $5,000 Fast food building and parking lot valued in bulk APN 047-171-14 $5,500 Real estate office It II No FF&E (furniture fixtures or equipment) will be valued. We will value the real estate only. No business value or going concern value will be considered. No inventory will be considered. Per your instructions, a fair market value definition will be used as if for eminent domain, although eminent domain is not involved with respect to any of these properties. We could deliver all reports within 45 days from the point of engagement. Payment of our fees will be due within 30 days of report delivery. The purpose of the reports is to establish a baseline value for residential land and commercial property which you will use for the purpose of establishing regulatory fees. No other use or users are intended by the appraiser. We will value the real estate only. No business value, going concern, FF&E (furniture, fixtures or equipment) or inventory will be considered in the analyses. The existing leases will be ignored for purposes of this analysis. Our appraisal would be written as if no environmental contaminationtstigma existed on the property. This contingency would be in the appraisal report. Our fee does not include any subsequent meetings, arbitration, court -related proceeding, testimony or depositions relating to our appraisal work. If these services are requested at a later date or if we are subpoenaed to testify, the client shall be responsible for payment to us for our time. Our hourly billing rate for such services is $250 per hour with a $1,000 per day minimum regardless of how much time per day is spent in actual meetings. In addition, if it is necessary for us to prepare for any related meetings (in person or by phone), at our sole discretion, we shall do so, and you will be billed for preparation time at $250 per hour on a time -spent basis. Payment for these services shall be due no later than 1 week after the conclusion of any such meeting(s). You will not be responsible for payment if telephone contact is made to our office for routine follow up questions requiring clarification of the contents of our appraisal reports. We will bear no responsibility for any sort of disclosure to a subsequent buyer or interested party. In no event shall the appraisal be relied upon for building, mechanical, electrical, structural, pest or hazardous condition(s) disclosure to you, the prospective owner(s) or any other third party(s). Any subsequent buyer shall procure and complete their own property due diligence at their own discretion. The appraisal report shall not be used for this purpose. 2 REALQUESTPROPERTYDETAIL REPORT 1 Property Detail Report For Property Located At Realaues xom 2025 W BALBOA BLVD, NEWPORT BEACH CA 92663.4300 Owner Information: Owner Name: FLUTER RUSSELL E Mailing Address: 2025 W BALBOA BLVD, NEWPORT BEACH CA 92663.4300 C008 Phone Number: Vesting Codes: MM I / Location information: Legal Description: NEWPORT BEACH SEC A LOT 8 BILK 120 AND LOT 9 BLK 120 TR 614 County: ORANGE, CA APN: 047-152.14 Census Tract / Block: 635.00 / 6 Alternate APN: Township -Range -Sect: Subdivision: NEWPORT BEACH SEC A Legal Book/Page: Map Reference: 31-C6 / 918-H1 Legal Lot: 8 Tract #: 514 Legal Block: 120 School District: NEWPORT MESA UNIF Market Area: Munic/Township: Neighbor Code: Owner Transfer Information: Recording/Sale Date: 07/18/2001 / 0612612001 Deed Type: GRANT DEED Sale Price: 1st Mtg Document #: Document #: 483834 Last Market Sale Information: Recording/Sale Date: 051051200010412712000 1st Mtg Amountfrype: $690,0001 CONV Sale Price: 1st Mtg Int. Rate/Type: / Sale Type: N I st Mtg Document#: 235455 Document #: 235454 2nd Mtg AmountlType: / Deed Type: INTERFAMILY DEED 2nd Mtg Int. RatelType: 1 Transfer Document #: Price Per SgFt: New Construction: MUIO/SPllt Sale: Title Company: FIRST AMERICAN TITLE INSURANCE Lender: CITY NAT'L BK Seller Name: FLUTER LEEANN Prior Sale Information: Prior Rec/Sale Date: 01/03/1990 / 1211989 Prior Sale Price: $1,000,000 Prior Doc Number: 3716 Prior Deed Type: GRANT DEED Property Characteristics: Gross Area: 3,270 Parking Type: Living Area: 3,270 Garage Area: Tot Ad) Area: Above Grade: Total Rooms: Bedrooms: Bath(F/H): Year Built / Eff: Fireplace: # of Stories: Other Improvements: Site Information: Zoning: Flood Zone: Flood Panel: Flood Panel Date: Land Use: Tax Information: Total Value: Land Value: Improvement Value: Garage Capacity: Parking Spaces: Basement Area: Finish Bsmnt Area: /6 Basement Type: 1962 / 1963 Roof Type: / Foundation: 2.00 Roof Material: Pdor. Lender. CITY NAT'L BK Pdor 1 at Mtg Amtfrype: $500,0001 CONV Prior 1st Mtg Rate/Type: / PAVED Construction: Heat Type: HEATED Exterior wall: CONCRETE BLOCK CONCRETE TILE C1 Acres: 0.17 X500 Lot Area: 7,380 0602270381H Lot Width/Depth: x 02118/2004 Res/Comm Units: 5/5 COMMERCIAL (NEC) $1,346,290 Assessed Year: 2006 $1,191,471 Improve %: 011% $154,819 Tax Year. 2006 Porch Type: Patio Type: Pool: Air Cond: Style: Quality: Condition: County Use: COMMERCIAL State Use: Site Influence: Sewer Type: Water Type: Property Tax: $14,236.80 Tax Area: 7001 Tax Exemption: 7nNTAW AnCTTA4177.7VTA TT07V Page 20.43-1 Specific Plan District #6 Cannery Village/McFadden Square CHAPTER 20.43 SPECIFiC PLAN DISTRICT #6 CANNERY VILLAGE/MCFADDEN SQUARE Sections: 20.43.010 Establishment of Specific Plan District (Cannery Village/McFadden Square) 20.43.020 Purpose 20.43.030 General Controls 20.43.040 Commercial Land Use Regulations 20.43.050 Commercial Property Development Regulations 20.43.060 Residential Land Use Regulations 20.43.070 Residential Property Development Regulations 20.43.080 Public Improvement Component 20.43.090 Review of Plans 20.43.010 Establishment of Specific Plan District (Cannery Village/McFadden Square) The provisions of this chapter shall apply to all parcels within the boundaries of Specific Plan District #6, Cannery Village/McFadden Square, established by Ordinance 86-7 and shown on Districting Map Nos. 3, 8, and 9. 20.43.020 Purpose This specific plan establishes policies to guide the orderly development and improvement of the Cannery Village/McFadden Square area. Development standards are included in this specific plan to set minimum standards for public and private improvements. This specific plan ensures consistency between the stated goals and policies of the Land Use Element of the General Plan and the Local Coastal Program, Land Use Plan. This will be achieved through the equitable application of the provisions of this plan. The Land Use Plan Map, as incorporated herein, and the accompanying design guidelines and development standards provide for the orderly development of property within the Cannery Village/McFadden Square Specific Plan District, consistent with the stated goals, policies and objectives of the City's General Plan and Local Coastal Program, Land Use Plan. All of the waterfront area within the Cannery Village and the McFadden Square Bayfront is designated for "Recreation and Marine Commercial" uses. This designation encourages a continuation of marine -oriented uses, maintains the marine theme and character of the area, and encourages public physical and visual access to the bay. The marine -oriented and coastal -dependent uses on 05/26/05 I I I I Page 20.43-2 Specific Plan District #6 Cannery Village/McFadden Square the bayfront are encouraged by establishing a system of incentives to properly owners to maintain these uses. The Cannery Village area is intended to serve as an active pedestrian -oriented specialty retail area with a wide range of visitor -serving, neighborhood commercial, and marine -related uses permitted. The focus of the area is the establishment of a specialty retail district in the area bounded by 32nd Street, Villa Way, 29th Street, and Newport Boulevard. This Specialty Retail (SR) District is intended to be served by a central public parking facility on 30th Street. Residential uses are permitted on the second floor or above so long as a permitted use is established on the ground floor. Surrounding this retail core area is the Retail and Service Commercial (RSC) District. This area is intended to provide for retail sales, personal and professional uses that offer direct services to the public, and marine -related light industrial uses. All of the uses permitted within the Specialty Retail and Recreational and Marine Commercial districts are permitted within this designation. This designation will provide a wide range of uses and services accommodating both residents and visitors, the boating industry, and will also provide continuity between districts and increase the potential for "shared sales" from pedestrians. The McFadden Square area is designated for "Retail and Service Commercial' uses. This will provide for a broad range of coastal -related and visitor -serving commercial uses, and when the recommended public improvements are implemented, encourage higher quality uses which will serve to upgrade the area. All property designated for residential use shall be preserved as such. 20.43.030 General Controls The provisions of this section shall apply to all property in the Cannery Village/McFadden Square Specific Plan District. A. Construction of Buildings Regulated. No building, structure, or sign shall be erected, reconstructed or structurally altered in any manner nor shall any building or land be used for any purpose, other than as permitted by, and in conformance with this Plan and all other ordinances, laws and maps referred to herein. Where other sections of the Municipal Code conflict with any provision of this Plan, the provisions of this Specific Plan shall take precedence. B. Design and Development Guidelines. These design and development guidelines are intended to provide criteria for all new development, and to assist the City staff and Planning Commission in approving a site plan review or use permit for developments on the water. The objectives of the design guidelines are to improve the image of the specific plan area and to establish a clear identity for the two key destination areas --Cannery Village and McFadden Square. 05/26/05 I 1 I I Page 20.43-3 Specific Plan District #6 Cannery Village/McFadden Square Cannery Village Theme. A cannery theme is recommended for the Cannery Village area. The cannery theme is reminiscent of the previous use of the area, and can provide a continuity throughout the area while preserving the variety and individuality of uses that give the area its charm. The cannery theme should be expanded to include other nautical and marine elements as appropriate. Elements of a cannery theme that may be applied to structures include: a. Use of corrugated metal shed -type buildings or siding where appropriate, with a higher level of finish than would normally be associated with such structures. b. Attractive expression of mechanical equipment and systems by incorporation into the design of structures within the height limit. C. Use of nautical devices in signs, architectural details and deco- ration, such as heavy rope, pilings, timbers, brass fixtures, etc. 2. McFadden Square Theme. The McFadden Square area has an entirely different feel than the Cannery Village area. Here, historic 2-story architecture predominates. This historic theme should be encouraged and enhanced by recreating the image of a tum-of-the-century resort center following the lead of the Doryman's Inn. Elements of "turn -of -the -century" architecture include: a. Use of materials reflecting and image of permanence, stability and strength, and quality. Materials such as ceramic tile, stone, brick and brass fit this image. b. Use of architectural styles and details reminiscent of the turn of the century era in which the area was constructed. Structures in this style in general have a strong architectural emphasis on both vertical and horizontal structural members, a regular rhythm of vertical windows, and a restrained use of ornament. 20.43.040 Commercial Land Use Regulations A. Land Use Designations. tions. The following commercial land use designations are established: 1. Specialty Retail, SP-6 (SR) District. This designation establishes a strong specialty retail core for the Cannery Village area by encouraging mutually 05/26/05 Page 20A3-4 Specific Plan District #6 Cannery Village/McFadden Square supportive businesses, establishing a continuity of shopping and pedestrian orientation, and provides a high level of pedestrian interest, comfort and amenity. 2. Recreational and Marine Commercial, SP-6 (RMC) District. This designation establishes a priority system to guide development on sites on the bay by encouraging a continuation of marine oriented uses, maintaining the marine theme and character of the area, and encouraging public physical and visual access to the bay. 3. Retail and Service Commercial, SP-6 (RSC) District. This designation provides retail sales, personal service, commercial, and professional uses that offer direct services to the public, and light marine industrial uses. 4. SP-6 (R-1) District. 5. SP-6 (R-2) District. 6. SP-6 (NOR) District. The designations, locations and boundaries of these uses are delineated upon the map entitled "Cannery Village/McFadden Square Specific Plan District, Land Use Plan Map", which map and all information and notations thereon are made a part of this section by reference. B. The following schedule establishes the land uses defined in Chapter 20.05 as permitted or conditionally permitted in Cannery Village/McFadden Square Specific Plan District, and includes special requirements, if any, applicable to specific uses. The letter "P" designates use classifications permitted in Cannery Village/McFadden Square Specific Plan District. The letter "L" designates use classifications subject to certain limitations prescribed under the "Additional Use Regulations" which follows. The letters "UP" designate use classifications permitted on approval of a use permit, as provided in Chapter 20.91. The letters "PD/U" designate use classifications permitted on approval of a use permit issued by the Planning Director, as provided in Chapter 20.91. The letters "P/UP" designate use classifications which are permitted when located on the site of another permitted use, but which require a use permit when located on the site of a conditional use. Letters in parentheses in the "Additional Regulations" column refer to "Additional Use Regulations" following the schedule. Where letters in parentheses are opposite a use classification heading, referenced regulations shall apply to all use classifications under the heading. 05/26/05 II II Page 20.43-5 Specific Plan District #6 Cannery Village/McFadden Square Cannery Village/McFadden Square Specific Plan District: Commercial Land Use Regulations P = Permitted UP = Usepennit PD/U = Use permit issued by the Planning Dueetor L = Limited (see Additional Use Regulations) — =Not Permitted SR RMC RSC Additional Regulations RESIDENTIAL (A), (B), (C), (D), m SINGLE FAMILY RESIDENTIAL L-1 L-1 L-1 MULTI -FAMILY RESIDENTIAL. L-1 L-1 L-1 TWO-FAMILY RESIDENTIAL L-1 L-1 L-I PUBLICAAD SEMI-PUBLIC (A), (B), (C), (I) CLUBS AND LODGES Tip UP UP (E), CULTURAL INSTITUTIONS UP L-5 UP (M) DAY CARE, GENERAL --- --- UP GOVERNMENT OFFICES --- U' UP MARINAS -- P -- (E) RELIGIOUS ASSEMBLY --- --- UP UTILITIES, MINOR P P P COMMERCIAL USES (A)' (B), (C)' (1) ANIMAL SALES AND SERVICES -ANIMAL GROOMING -- UP UP -ANIMAL HOSPITALS --- UP UP -ANIMAL RETAIL. SALES --- UP UP (J) ARTISTS' STUDIOS P --- --- BANKS/SAVINGS AND LOANS P Lr7 P CATERING SERVICES P P P COMMERCIAL RECREATION AND ENTERTAINMENT -- UP UP (I), (M) EATING AND DRINKING ESTABLISHMENTS UP UP UP -FULL SERVICE, HIGH TURNOVER UP UP UP (F), (J), (M) -FULL SERVICE, LOW TURNOVER UP Tip UP (F), (J), (Ln -FULL SERVICE, SMALL SCALE PD/U PD/U PD/U (F), (J), (NI) -TAKE-OUT SERVICE UP UP UP (F), (J), (� -TAKE-OUT SERVICE, LIMITED PD/U PD/U PD/U (F), (J), (Nn -ACCESSORY P P P (F), -BARS AND COCKTAIL LOUNGES UP Tip UP (M) FOOD AND BEVERAGE SALES — P (M) 05/26/05 Cannery Village/McFadden Square Specific Plan District: Commercial Land Use Regulations P = Permitted UP = Use permit PD/U = Use permit issued by the Planning Director L = Limited(see Additional Use Remlationsl — =Not Permitted MARINE SALES AND SERVICES -BOAT CHARTER, RENTAL, AND SALES -BOAT STORAGE -BOAT YARDS -MARINE SERVICE STATION -RETAIL MARINE SALES OFFICES, BUSINESS AND PROFESSIONAL PERSONAL IMPROVEMENT SERVICES PERSONAL SERVICES -DRY CLEANERS -LIMITED -SELF SERVICE LAUNDRIES RETAIL SALES TRAVEL SERVICES VISITOR ACCOMMODATIONS -BED AND BREAKFAST INNS -HOTELS, MOTELS AND TIME-SHARES INDUSTRIAL INDUSTRY, CUSTOM INDUSTRY, LIMITED INDUSTRY, MARII-T&RELATED ACCESSORY USES ACCESSORY STRUCTURES AND USES TEMPORARY USES ANIMAL SHOWS CHRISTMAS TREE/PUMPKIN SALES CIRCUSES AND CARNIVALS COMMERCIAL FILMING, LIMITED FAIRS AND FESTIVALS HELIPORTS, TEMPORARY Page 20.43-6 Specific Plan District #6 Cannery Village/McFadden Square SR RMC RSC Additional P --- (E), (I) P --- (E), W P --- (E), (I) --- UP — (E) P L-2 L4 L-2 UP L-5 UP (I) L-7 P (G) --- --- UP P L-7 P --- --- UP L-3 P P P L-6 P PD/U PD/U PD/U UP UP UP (K) (A), (B), (C), (n --- L-7 - - L-7 - -- UP UP (E) (A), (B), (C) P/UP P/UP P/UP (A), (B), (C) P P P (H) L-8 L-8 L-8 (B) P P P (H) P P P (H) P P P (H) L-8 L-8 L-8 (L) 0526/05 Page 20.43-7 Specific Plan District #6 Cannery Village/McFadden Square Cannery VMage/McFadden Square Specific Plan District: Commercial Land Use Regulations P = Permitted UP = Use permit PDN =Use permit issued by the Planning Director L =Limited(see Additional Use Regulations) — =Not Permitted SR RMC RSC Additional Regulations OUTDOOR STORAGE & DISPLAY, TEMPORARY P -- P (I) REAL ESTATE OFFICES, TEMPORARY L-8 L-8 L-8 (B) RECREATION AND ENTERTAINMENT EVENTS P P P (H) TRADE FAIRS P P P (H) Cannery Village/McFadden Square Specific Plan District: Additional Commercial Land Use Regulations L-1 Limited to above the first floor, where the first floor is occupied by a permitted use or use permitted.with a use permit. L-2 Business and professional offices not providing services to the general public or not ancillary to an otherwise permitted use, such as corporate offices, shall be permitted only above the first floor. L-3 Limited to businesses retailing in goods generally oriented to the casual pedestrian shopper, including antiques, books, clothing, hand crafted items, hobby materials, jewelry, stationary, and works of art. All other uses are subject to the approval of the Planning Director for compatibility with the objectives of this district. L-4 Marine -related facilities permitted as an incentive use; other facilities in this use classification permitted when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine Incentive Uses. L-5 Marine -related facilities permitted with a use permit as an incentive use; other facilities in this use classification permitted with a use permit when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine Incentive Uses. L-6 Permitted when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine Incentive Uses. L-7 Permitted with a use permit when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine Incentive Uses. 05126105 Page 20.43-8 Specific Plan District #6 Cannery Village/McFadden Square L-8 Subject to the approval of the Planning Director. (A) See Section 20.60.025: Relocatable Buildings. (B) See Section 20.60.015: Temporary Structures and Uses. (C) See Section 20.60.050: Outdoor Lighting (D) In areas designated for commercial or retail uses and subject to a variable floor area ratio, residential uses are permitted on the second floor or above only. No residential uses shall be permitted in the commercial area subject to a fixed floor area ratio, specifically the shopping center located immediately southwesterly of the intersection of Newport Boulevard and 32nd Street on Parcels 1, 2, and 3 of Record of Survey 35-25 filed with the Orange County Recorder. (E) See Section 20.60.070: Waterfront Development Regulations and Section 20.60.080: Marine Incentive Uses. (F) See Chapter 20.72: Eating and Drinking Establishments. (G) Independent massage establishments not permitted (See Chapter 20.87: Massage Establishments). (H) Special event permit required, see Chapter 5.10 of the Municipal Code. (1) See Section 20.60.105: Outdoor Storage & Display. (J) See Section 20.60.085: Uses Requiring City Manager Approval. (K) See Chapter 20.84: Time Share Developments. (L) See Section 20.60.055: Heliports and Helistops. (M) See Chapter 20.89: Alcoholic Beverage Outlets. ' 20.43.050 . Commercial Property Development Regulations The following schedule prescribes development regulations for the Cannery Village/McFadden Square Specific Plan District. The columns prescribe basic requirements for permitted and conditional uses. Letters in parentheses in the "Additional Regulations" column reference regulations following the schedule or located elsewhere in this code. 05/26/05 11 Page 20A3-9 Specific Plan District #6 Cannery Village/McFadden Square Cannery Village/McFadden Square Specific Plan District: Commercial Property Development Regulations SR RSC RMC Additional Regulations Minimum Yards: Front (ft.) 5 5 5 (A), (B), (C) Side (ft.) --- --- --- (A), (B), (D) -Abutting a residential district (ft.) — 5 -- (A), (B), (D) Rear --- --- --- (A), (B), (B) -Abutting an alley (ft.) 10 10 10 (A), (B), (E) Bulkhead/FloorElevations 9 9 9 (B),(F) Maximum Height (ft.) 26 26 26 (G), (H) Maximum Floor Area Limit 0.50 0.50 0.50 (1) Landscaping m Off -Street Parking and Loading (K), (L), (M) Signs (N) Residential Uses in Commercial Districts (0) Cannery Village/McFadden Square Specific Plan District: Additional Commercial Property Development Regulations (A) See Section 20.60.030: Extensions Into Yards. (B) See Section 20.60.070: Waterfront Development Regulations. (C) Those through lots on the Newport Boulevard "islands" shall maintain a front setback of 2.5 feet on each frontage. For commercial properties on West Ocean Front, no front setback shall be required. (D) No side yard setback area shall be required on properties in non-residential districts except as may be required by the Planning Commission in approving a site plan review or in granting a use permit, or as necessary to meet public access requirements. (E) A rear yard setback area of 10 feet shall be required on the second floor for residential uses in a mixed use development. 05/26/05 Page 20.43-10 Specific Plan District #6 Cannery Village/McFadden Square t(F) Finished floor elevation for all new structures or addition to an existing structure other than floor area used for parking, shall be 9 feet above mean low water level(8.67 NAVD ' 88). (G) See Chapter 20.65: Height Limits. (H) The height limit for all buildings and other structures on a site within the SP-6 (SR), SP-6 (RMC) and SP-6 (RSC) districts shall be 26 feet. For structures constructed with the ground floor at or above 9 feet above mean low water(8.67 NAVD 88), the height limit shall be the greater of 26 feet above the high water line or 26 feet above the site elevation. This height limit may be exceeded, up to a maximum height of 35 feet, with a use permit, provided that the Planning Commission, in granting such use permit, finds that all the following criteria are met: The development will provide for both public physical and visual access to the bay within the limits that public safety is ensured and private property protected. 2. The increased building height would result in more public visual open space and views than would result from compliance with the basic height limit. Particular attention shall be given to the location and orientation of the structure on the lot, the percentage of ground coverage, and the treatment of all setback and open areas. 3. The increased building height would result in a more desirable architectural treatment of the building and a stronger and more appealing visual character of the area within the general theme of a marine environment. 4. The increased building height would not result in undesirable or abrupt scale relationships being created between the structure and existing developments or public spaces. Particular attention shall be given to the total bulk of the structure including both horizontal and vertical dimensions. S. The increase in height shall not result in floor area exceeding the floor area otherwise permitted. 6. The maximum height in all districts shall be measured in accordance with the definitions contained in Section 20.65.030. (I) See Chapter 20.63: Floor Area Ratios and Building Bulk. (.i) A minimum of 5 percent of any exterior paved parking area and a minimum of 50 percent of the area of the required front yard setback shall be devoted to planting areas. W26io5 Page 20.43-11 ' Specific Plan District#6 Cannery Village/McFadden Square ' (K) See Chapter 20.66: Off -Street Parking and Loading. (L) Industrial uses shall provide one parking space for each 2,000 square feet of gross floor area and one loading space for each 10,000 square feet of gross floor area, no minimum number of spaces required. (M) Visitor accommodations shall provide one parking space for each guest unit. The Planning Commission may, based upon the operational characteristics of a hotel or motel, require additional off-street parking for ancillary uses such as restaurants, meeting rooms, retail uses, and other commercial uses as provided in this section. (1) All signs within the Cannery Village/McFadden Square Specific Plan District shall comply with the provisions of the Balboa Sign Overlay adopted by Ordinance 2000-22 on November 14, 2000. (0) The following standards apply to second floor residential units above commercial or retail uses: 1. A minimum of 2,375 square feet of land area is required for each dwelling unit. 2. The total gross floor area and building bulk in all structures on any site shall be specified in Chapter 20.63. 3. The commercial or retail portion shall be limited to a floor area ratio between 0.25 and 0.50. 4. The residential portion of the structure shall be limited to a maximum floor area ratio of 0.75. 5. Parking for the residential use shall be provided on -site with no exceptions. 05/26/05 I 1 20.43.060 Residential Land Use Regulations A. Land Use Designations. established: 1. SP-6 (R-1) District. 2. SP-6 (R-2) District. Page 20.43-12 Specific Plan District ##6 Cannery Village/McFadden Square The following residential land use designations are 3. SP-6 (MFR) District. These designations preserve the existing residential districts within the Cannery Village/McFadden Square Specific Plan District, and maintain the development standards that have guided the orderly development of these districts. The designations, locations and boundaries of these uses are delineated upon the map entitled "Cannery Village/McFadden Square Specific Plan District, Land Use Plan Map", which map and all information and notations thereon are made a part of this section by reference. B. In the following schedule, the letter "P" designates use classifications permitted in the Cannery Village/McFadden Square Specific Plan District residential areas. The letter "L" designates use classifications subject to certain limitations prescribed under the "Additional Use Regulations" which follows. The letters "UP" designate use classifications permitted on approval of a use permit, as provided in Chapter 20.91. The letters "P/UP" designate use classifications which are permitted when located on the site of another permitted use, but which require a use permit when located on the site of a conditional use. Letters in parentheses in the "Additional Regulations" column refer to "Additional Use Regulations" following the schedule. Where letters in parentheses are opposite a use classification heading, referenced regulations shall apply to all use classifications under the heading. Cannery Village/McFadden Square Specific Plan District: Residential Land Use Regulations R-1 R-2 MFR Additional Regulations RESIDENTIAL (A), (13), (C), SINGLE FAMILY RESIDENTIAL MULTI -FAMILY RESIDENTIAL TWO-FAMILY RESIDENTIAL COMMERCIAL r --- (A), (E), (C) 05/26/05 Page 20.43-13 Specific Plan District #6 Cannery Village/McFadden Square Cannery Village/McFadden Square Specific Plan District: Residential Land Use Regulations R-1 R-2 MFR Additional Regulations 1 VEHICLE/EQUIPMENT SALES AND SERVICES -COMMERCIAL PARKING FACILITY UP UP UP ACCESSORY USES (A), (B), (C) ACCESSORY STRUCTURES AND USES P/UP P/UP P/UP 1 Cannery Village/McFadden Square Specific Plan District: 1 Additional Residential Land Use Regulations (A) See Section 20.60.025: Relocatable Buildings. 1 (B) See Section 20.60.015: Temporary Structures and Uses. (C) See Section 20.60.050: Outdoor Lighting. ' 20.43.070 Residential Property Development Regulations 1 The following schedule prescribes development regulations for the Cannery Village/McFadden Square Specific Plan District. The columns prescribe basic requirements for permitted and 1 conditional uses. Letters in parentheses in the "Additional Regulations" column reference regulations following the schedule or located elsewhere in this code. 1 Cannery VMage/McFadden Square Specific Plan District: Residential Property Development Regulations R-1 R-2 MFR Additional Regulations Minimum Yards: Front (ft.) 5 5 5 (A), (B), (C), (D), (E) ' Side (ft.) 3;4 3;4 3;4 (A), (B), (C), (D), (E) Rear --- -- --- (A), (B), (C), (D), (E) -Abutting an alley (il.) 5 5 5 (A), (B), (C), (D), (E) Other property development regulations (F) 1 1 05126/05 I 1 Page 20.43-14 Specific Plan District #6 Cannery Village/McFadden Square Cannery Village/McFadden Square Specific Plan District: Additional Residential Property Development Regulations (A) R-1 and R-2 Districts. Each side yard shall be not less than 3 feet wide on development sites 40 feet wide or less, or 4 feet on lots wider than 40 feet; provided, that the side yard on the rear 20 feet of the street side of a corner lot, where there is reversed frontage, shall not be less than the front yard required or existing on the adjacent reversed frontage. MFR District. Each side yard shall not be less than 3 feet wide on sites 40 feet wide or less; 4 feet wide on lots wider than 40 feet and narrower than 50 feet; and shall be equal in width to 8 percent of the average lot width for lots 50 feet or greater in width; provided that in no event shall a side yard wider than 25 feet be required; and provided further that the side yard on the rear 20 feet of the street side of a comer lot, where there is reversed frontage, shall not be less than the front yard required or existing on the adjacent reversed frontage. (B) See Section 20.60.030: Extensions Into Yards. (C) See Section 20.60.020: Accessory Structures and Mechanical Equipment. (D) [Reserved]. (E) See Section 20.60.070: Waterfront Development Regulations. (F) Development in the SP-6 (R-1), SP-6 (R-2), and SP-6 (MFR) Districts shall meet all other development standards for their corresponding base districts specified in Chapter 20.10: Residential Districts. 1 20.43.060 Public Improvement Component The following are the public and private improvement projects for the Cannery Village and McFadden Square areas. Projects are listed by priority, with a general description of each project and proposed funding sources. The City's ability to fund its share of each project, where applicable, is based upon the allocation of limited financial resources throughout the City. Each year during the preparation of the City's annual budget, the City Council will determine which projects or portion thereof are to be funded by the City, their costs, and specific schedule for implementation. For those projects using gas taxes or other sources of revenue for a portion of the funding, the specific projects to be funded must also be determined annually, based upon the availability of funds and demand from other projects throughout the City. 05/26/05 Page 20.43-15 Specific Plan District 46 Cannery Village/McFadden Square Certain projects are to be funded in whole or in part, through the formation of Assessment Districts. Prior to implementing any project for which an Assessment District must be formed to secure funding, all benefitting property owners shall be provided with all pertinent details of the project including a total cost and the individual assessment for each property owner. All benefitting property owners will vote on the project, the formation of the Assessment District, and the individual dollar amount of the assessment. A majority of the benefitting property owners must approve the entire program prior to implementation, as set forth in state law. A. PRIORITY I: IMMEDIATE IMPLEMENTATION 1. CANNERY VILLAGE PARKING FACILITY. This project includes the acquisition of land and construction of a parking facility to serve approximately 165 cars in the core of the Cannery Village area. It is proposed that approximately 66 percent of the funds for this project will come from the General Fund; 10 percent from the Off Street Parking Fund; and 24 percent from an Assessment District. 2. INSTALLATION OF CURBS, GUTTERS, AND SIDEWALKS IN CANNERY VILLAGE. Approximately 1,200 feet of basic curb, gutter and sidewalk construction is needed where it was never provided in the Cannery Village area. Improvements are needed on various sections of Villa Way, 31st Street, 30th Street, 29th Street and 28th Street. Because this project will provide these facilities where none exist, the entire cost will be paid through an Assessment District comprised of the benefitting property owners. RESTROOM RELOCATION - MCFADDEN SQUARE. This project includes demolition of the existing restrooms at the base of the Newport Pier and construction in a new location which does not block the view to the pier or create an unattractive view from McFadden Square plaza. This project will be funded by the City's Restroom Replacement Program. 4. PARKING MANAGEMENT PLAN. A Parking Management Plan shall be developed that at a minimum includes significant increases in lieu fees and long-term parking fees during peak use periods; increased fines for parking violations; and aggressive towing of illegally parked vehicles. There may be an initial cost associated with development of this parking management plan which shall be home by the City. However, this parking management plan will ultimately result in a revenue source for the City. 05/26/05 I.1 Page 20.43-16 Specific Plan District #6 Cannery Village/McFadden Square PRIORITY II: IMPLEMENTATION WITHIN TWO YEARS 1. CANNERY VILLAGE STREETSCAPE. Streetscape improvements include installation of street trees in the public right-of-way or easements on private property, special paving treatment at pedestrian crossings, planters at key pedestrian crossings, installation of benches, litter receptacles and other pedestrian improvements. The level of improvements on each street segment depends on the available right-of-way for improvements and level of improvements proposed. Funding for this project will come entirely from an Assessment District formed for this purpose. 2. NEWPORT BOULEVARDBALBOA BOULEVARD REALIGNMENT. This project includes the elimination of the "mixmaster" intersection by development of a single intersection of Balboa Boulevard and Newport Boulevard at approximately 26th Street. Intersection improvements include basic realignment, relocation of traffic signals, streetscape improvements including special paving at pedestrian crossings, planters and other landscaping and street light relocation or installation. This project shall be implemented within the existing city -owned right-of-way only. It is proposed that approximately 66 percent of the funds for this project will come from the General Fund; 25 percent form Gas Tax funds; and 9 percent from the formation of an Assessment District. MCFADDEN SQUARE PLAZA. This project involves the development of an attractive pedestrian activity plaza as a visual and functional focus for McFadden Square. The plaza would provide a visual landmark for the square and would be a center of pedestrian activities. The plaza could be heavily landscaped and decorated with flags and banners, lights, etc. Funding for this project will come entirely from an Assessment District formed for this purpose. 4. MCFADDEN SQUARE PROMENADE. This project is a companion to the McFadden Square Plaza project and will help carry the high quality pedestrian image along McFadden Place and Balboa Boulevard to 23rd Street. Funding for this project will come entirely from an Assessment District formed for this purpose. 5. MCFADDEN SQUARE STREETSCAPES. Streetscape improvements are recommended for 22nd Street and 23rd Street to improve the pedestrian environment and tie these streets into the overall image of 05/26/05 21 Page 20.43-17 Specific Plan District #6 Cannery Village/McFadden Square the McFadden Square area. Because of the narrow parkway on these streets, landscaping and street trees could be installed on existing private property where sites are available. Funding for this project will come entirely from an Assessment District formed for this purpose. RESTRIPE NEWPORT BOULEVARD BETWEEN 30th STREET AND 32nd STREET. The City's Master Plan of Streets and Highways calls for the ultimate widening of Newport Boulevard between 32nd Street and Coast Highway (Phase I) and between 30th Street and 32nd Street (Phase II). Construction on Phase I is anticipated to commence in 1988-89 with completion in 2 years. Phase II is scheduled for implementation at some time after the completion of Phase I. (See Item D-1). The restriping of Newport Boulevard between 30th Street and 32nd Street is suggested as either an interim program prior to the widening of this segment of Newport Boulevard, or as an alternative to the widening project. This project involves the restriping of Newport Boulevard outbound between 30th Street and 32nd Street to provide a third outbound travel lane during peak periods. This would require the restriping of the roadway to provide three lanes, one of which would be a parking/bike lane except during peak summer hours when parking would be restricted. It may be necessary to acquire sufficient land at the southeast comer of Newport Boulevard and 32nd Street to provide a flare in order to have the proper alignment of the lanes on either side of 32nd Street. Implementation of this plan would result in the permanent loss of some on -street parking and the temporary loss of others during peak periods. Funding for this project should come entirely from the City's General Fund. RESTRIPE NEWPORT BOULEVARD BETWEEN 26th STREET AND 30th STREET. This project also involves the restriping of Newport Boulevard outbound to provide three travel lanes, one of which would be a combination parking/bike lane, except during peak summer periods when parking would be restricted. Implementation of this project should be concurrent with either the restriping of Newport Boulevard between 30th and 32nd Street or the widening of that section of the roadway. Funding for this project should come entirely from the City's General Fund. 06l26/05 Page 20.43-18 Specific Plan District #6 Cannery Village/McFadden Square 8. RESTRIPE NEWPORT BOULEVARD BETWEEN 19th STREET AND 26th STREET. II' Should the realignment of the Newport Boulevard/Balboa Boulevard intersection be determined to be infeasible, it is possible to restripe this section of outbound Newport Boulevard to provide a third travel lane which would also be a parking/bike lane except during peak summer hours when parking would be restricted. Implementation of this project would result in the permanent loss of some on -street metered parking spaces and the temporary loss during peak hours of other spaces. This project shall be implemented within the existing city -owned right-of-way only. The funds for this project would be divided equally between the General Fund and Gas Tax funds. C. PRIORITY III: IMPLEMENTATION BETWEEN TWO AND FIVE YEARS. UNDERGROUND UTILITIES IN CANNERY VILLAGE. Undergrounding of all existing overhead utilities including electric power, telephone and cable television are recommended to improve the visual quality of the streetscape and to eliminate the need to prune street trees away from power lines. Undergrounding includes provision of underground utilities to the property line, where a connection would be made to existing service above ground. Funding for this project will come from an Assessment District, formed for this purpose. 2. REPAIR EXISTING DETERIORATED CURBS, GUTTERS, STREETS, AND SIDEWALKS IN CANNERY VILLAGE. This project involves the repair of the existing curbs, gutters, streets and sidewalks in the Cannery Village area. This project will be funded entirely by the City's General Fund as a part of its on -going street maintenance and repair program. 3. RECONSTRUCT SEWERS IN CANNERY VILLAGE. This project involves the repair of portions of the existing sewer system in Cannery Village in conjunction with the repair of the streets in that area. This project will be funded entirely by the City's General Fund. OS@6105 Page20.43-19 Specific Plan District #6 Cannery Village/McFadden Square D. PRIORITY IV: IMPLEMENTATION WITHIN FIVE TO TEN YEARS. 1. WIDEN NEWPORT BOULEVARD BETWEEN 30th STREET AND 32nd STREET. This is Phase II of the proposed widening of Newport Boulevard between 30th Street and Coast Highway. This project requires the acquisition of land and reconstruction of buildings along the easterly side of outbound Newport Boulevard to create a third travel lane. Implementation of this project can not occur until after Newport Boulevard is widened between 32nd Street and Coast Highway. It is proposed that approximately 34 percent of the funding for this project will come from the City's General Fund; 33 percent from Gas Tax revenues; and 33 percent from A.H.F.P. funds. 2. WIDEN VILLA WAY. The widening of Villa Way includes the acquisition of one additional parcel along the west side of Villa Way from 32nd Street to 29th Street to provide a 60 foot right-of-way. The street itself would be widened to provide two travel lanes with parking on each side. Parkway landscaping would be installed to provide a pleasant pedestrian environment. Plantings,street furniture, and special paving treatment at pedestrian crossings would be included in the project. Funding for this project will come from an Assessment District formed for this project. MCFADDEN SQUARE PARKING FACILITY. This project involves the acquisition of land and the construction of a parking facility to serve approximately 250 cars in McFadden Square. It is proposed that approximately 25 percent of the funds for this project will come from the City's General Fund; 8 percent from the City's Off -Street Parking Fund; and 66 percent from an Assessment District formed for this purpose. 20.43.090 Review of Plans SP-6 (RMC) District Site Plan Review Required. Unless otherwise specified herein, all development in the Recreational and Marine Commercial District shall be subject to site plan review as set forth in Chapter 20.92. osn61o5 II Page 20.43-20 Specific Plan District #6 Cannery Village/McFadden Square II II I1 I1 I 1 I 1 II II I 1 II II I 1 II 06/26/05 II REGIONAL OVERVIEW ORANGE COUNTY PROFILE r ` Orange County (Orange County PMSA) covers 948 square miles, and has a July 1, 7make population of 3,061,100, an increase of 649,100 persons since 1990. This would the County larger than the St. Louis MO-11, MSA. A quick demographic profile of Orange County indicates that: 51.3% of the population is white non -Hispanic; 30.8% is Hispanic; 13.8% is Asian -Pacific Islander; Economic Vitality, and 1.5% is black. 80% of the population have a high school diploma or more, while Trade & Jobs 31 % have a bachelor's degree or more. (2000 Census) • There is a diverse economic base in Orange County (based on the concept of "export" of goods or services) using 2005 average employment as a measure. The leading industries were: 1.) tourism with 132,100 jobs; 2.) technology with 112,200; 3.) business & professional services with 59,600; 4.) wholesale trade & logistics with 53,400; and 5.) health servicesibio-medicine with 46,300. • Technology is a vital force in the Orange County economy, with several "clusters" f activity, including Irvine (around both the Spectrum and UC Irvine), and in the mid - county area. Areas of emphasis include computer software, semiconductors and bio-med applications. • Orange County is also a major manufacturing center, with 182,700 workers in 444 S. Flower St. 2005. This puts the County just behind Dallas (197,800) and ahead of Atlanta (177,400). 34�Floor The largest components are: computer & electronic products with 42,500 jobs; fabricated metal products with 22,800; transportation equipment with 17,000; textile mill products Los Angeles, cn & apparel with 12,600; and machinery with 11,000. 90071 . Orange County businesses have been very aggressive in international trade, and utilize the ports of Long Beach and Los Angeles, as well as Los Angeles International t: 213.622.4300 Airport, Ontario International Airport, and other support activities. F. 213.622.7100 The higher educational assets of Orange County are extensive, including the www.faedc.org University of California Irvine (including a medical school), California State University Fullerton, Chapman University, and the Southern California College of Optometry. There are also several well -regarded community colleges. • Transportation service in Orange County is well developed. Besides the freeway system, there is rail mass transit with service by Amtrak and Metrolink, and bus service offered by the Orange County Transit Authority. Commercial air service is offered at Orange County -John Wayne Airport. • Quality of life is a strong point for the County, with nearly 40 miles of coast line with three small craft harbors. The mountains on the east side of the county offer outdoor recreational opportunities. There is also an array of fine and performing arts opportunities at the Orange County Performing Arts Center in Costa Mesa, plus professional baseball and ice hockey. And the modern theme park was born at Disneyland in Anaheim, which now includes a second park called California Adventure that's geared toward a more mature audience. There is also the Knotes Berry Farm and its sibling, Soak City USA. May 2006 We=T" nCw� Assgg6TtoN 350 South Figueroa Se, Suite 172 One Wodd Trade Cents, Suite 295 1osANe -Love Bum Lot A„ge1u. Callfmia 90071 USA Lang B3 eh, Gilromia 90931 USA • c 213.6801688 F 213.6130.1878 t. 662.495.7070 a 562.495,7071 infola@wtatretotg infoth®wtmel.org BUILDING SALE PHOTOS I I SALE PHOTOGRAPHS I I i I I I I Sal, I I I I I I I I Sale 2 I I I I 1 SALE PHOTOGRAPHS 1 1 1 1 1 1 1 Sdc 3 1 1 1 1 1 1 i 1 1 1 SALE PHOTOGRAPHS �,. SUBJECT PHOTOS d SUBJECT PHOTOGRAPHS I I I V1 Ill tc uttiC1 nn ri:'lit 1 I I t t White office on right 1 I 1 1 1 1 1 1 SUBJECT PHOTOGRAPHS It ea Alley to south, subject on right I SUBJECT PHOTOGRAPHS I I I I NN'. Balboa Boulevard looking east, subject to right I I I I Looking toward Newport Pier from Balboa Blvd., subject to left II I SUBJECT PHOTOGRAPHS I I 1 Subycl 1 1 1 Subjcct 1 EI I 1 ' ONT ESTA POOL AND 4 3 LOTS IUT ON THE ' .AGEREAL 673 3777 1 1 1 1 1 I I SUBJL(I P110.10GRAMIS Close up of building Subject 1 APPRAISAL REPORT The appraisal of the Baja Fresh Fast Food Restaurant 3050 E. Coast Highway Newport Beach, California 92625 Our File # 06-154 Prepared for Dan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 Prepared by Steven R. Fontes, MAI, CCIM Vice President REINHARMONTES ASSOCIATES, INC. Real Estate Appraisal Consultants 2295 Business Way Riverside, California 92501 (951) 656-6036 Copyright November 2006 Report Preparation Date: 11/30/2006 Effective Date of As Is Appraisal: 11/07/2006 ' REINHART-FONTES ASSOCIATES, INC. Real Estate Appraisal Consultants November 30, 2006 tDan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 I I u I t1 I k I 11 I I I Subko ofAvoralsak The appraisal of the Baja Fresh Fast Food Restaurant located at 3050 East Coast Highway, Newport Beach, California 92625. The subject property may also be referred to as Orange County Assessor's Parcel Number 459-186-16, 17. Dear Mr. Trimble, Pursuant to your request and authorization, I have conducted the investigations and analyses necessary to form an independent opinion of the Fair Market Value for the fee simple estate of the above -referenced property. This appraisal has been prepared for my client in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation. This is a Summary narrative appraisal report. Based upon the investigations conducted, analyses made, and my experience as a real estate appraiser, I have formed the following opinion, as of the date of November 7, 2006. This opinion is subject to the Assumptions and Limiting Conditions set forth in the Addenda. The estimated Fair Market Value of the fee simple estate of the subject real estate is as follows: Estimated Fee Simple Fair Market Value of the subject property as of November 7, 2006 ONE MILLION NINE HUNDRED THIRTY FIVE THOUSAND U.S. DOLLARS $1,935,000 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement, without the ability to confirm who the FF&E belonged to and without regard to any lease that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no lease in place. Since no lease was presented for my review, only a fee simple value could be reported. A lease may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. This value reported above is for the real estate only. As noted above, I was not able to confirm who the FF&E reportedly belonged to. I am not an expert in the field of hazardous waste. My valuation assumes that the subject site is clean of any environmentally hazardous materials or conditions and any associated stigma. 2285 Business Way • Riverside, California 92501 Corporate Office (951) 274-0140 • Bill Reinhart Direct (951) 522-0744 • Steven Fontes Direct (951) 656-6036 Dan Trimble November 30, 2006 Based on my later analysis, my estimate of Reasonable Exposure Time for the value opinion rendered is approximately 1 month. Reasonable Marketing Time is estimated to be on par with reasonable exposure time. These estimates are considered to be approximations that should not be construed as absolutes. This appraisal has not included the impact, if any, on the subject property value relative to the Federal Regulation known as the Americans with Disabilities Act. Please be advised that the valuation is subject to downward adjustment should it be determined by a duly qualified entity that the subject improvements must be modified in some manner to comply with the Americans with Disabilities Act. The appraisal report which follows sets forth the results of the investigation of the property, analyses, pertinent appraisal facts about the area, comparable data, and the reasoning leading to the conclusion stated. The value opinion presented represents real estate only and excludes all inventory, personal property, FF&E and goodwill. This transmittal letter is the first part of a report that contains 40 pages, plus Addenda. It should not be read out of context from the total report nor removed. No copyright of the contents of this report is granted beyond the original copies of the report delivered to the client. Publication and distribution of this report, and particularly public publications of the results of this report or the name of the appraiser or furn preparing the report, are prohibited as detailed in the General Assumptions and Limiting Condi- tions section found in the report Addenda. The valuation of the subject property is intended to be a reasonable professional estimate of value as of the stated date of appraisal. It is not intended to represent a guarantee of future resale value or a guarantee of specific cash flow. The future value of the subject property by real estate's nature can be expected to remain stable or fluctuate due to varied, not fully predictable, real estate -related investment factors. These include but are not limited to; general tax law changes, leasing program, maintenance, changes in competition, general area employment base changes, population changes, changes in land use patterns, changes in real estate -related interest rates affecting purchasing power, management, inflation or deflation, etc. To have an authorized copy of this report, the report must be signed in original ink. Your attention is invited to the following report body and Addenda. The narrative report, that follows, sets forth the data and analyses upon which my opinion of value is predicated. Respectfully, Reinhart-Fontes sociates, Inc. Federal Taxpa D o.: 33-0634277 Steven R. Fgfes, MAI, CCIM Vice President CA Certified General Real Estate Appraiser No.: AG001644, Expiring 3/21/2008 REINHART-FONTES ASSOCIATES, INC. TABLE OF CONTENTS TITLE PAGE LETTEROF TRANSMITTAL......................................................................................................I TABLEOF CONTENTS...............................................................................................................................................3 SUMMARY OF OPINION AND SALIENT FACTS...................................................................................................5 INTRODUCTION......................................................................................................................................................... 6 Purposeof the Appraisal...........................................................................................................................................6 Functionof the Appraisal..........................................................................................................................................6 Scope of the ReporVAppraisal Development and Reporting Process.......................................................................6 Dateof Value............................................................................................................................................................7 Definitions................................................................................................................................................................7 InterestAppraised.....................................................................................................................................................9 PropertyIdentification..............................................................................................................................................9 LegalDescription......................................................................................................................................................9 Ownerof Record................................................................................................................................a.....................9 RecentProperty History ............................................................................................................................................9 AssessedValuation and Taxes..................................................................................................................................9 REGIONAL DESCRIPTION CITY DESCRIPTION NEIGHBORHOOD DESCRIPTION 11 13 16 MARKETOVERVIEW..............................................................................................................................................17 RentalRates............................................................................................................................................................17 ImprovedProperty Sales.........................................................................................................................................17 OverallRates...........................................................................................................................................................17 Vacancy & Collection Loss Estimate......................................................................................................................17 Analysis of Reasonable Exposure Time & Reasonable Marketing Time...............................................................18 MarketOverview Conclusions................................................................................................................................18 SUBJECTLAND DATA............................................................................................................................................20 Sizeand Shape........................................................................................................................................................20 Topographyand Drainage.......................................................................................................................................20 SoilConditions.......................................................................................................................................................20 Zoning..................................................................................................................................................................... 20 Easements and Encroachments...............................................................................................................................20 Access.....................................................................................................................................................................20 SiteWork................................................................................................................................................................20 SiteAnalysis Conclusions.......................................................................................................................................20 DESCRIPTION OF EXISTING BUILDING IMPROVEMENTS..............................................................................22 HIGHEST AND BEST USE ANALYSIS...................................................................................................................24 Highest and Best Use as Though Vacant................................................................................................................24 Conclusion of Highest and Best Use "As" Vacant..................................................................................................24 Highestand Best Use As Improved........................................................................................................................24 Conclusions of Highest And Best Use as Improved...............................................................................................25 1 VALUATION METHODOLOGY..............................................................................................................................26 TheValuation Process............................................................................................................................................26 Description of The Cost Approach to Value...........................................................................................................26 Description of The Sales Comparison Approach to Value......................................................................................26 Description of The Income Capitalization Approach to Value...............................................................................26 Description of The Reconciliation Process.............................................................................................................27 SALES COMPARISON APPROACH........................................................................................................................28 Discussion of Adjustments Made to Comparable Sales..........................................................................................32 Sales Comparison Approach Conclusions..............................................................................................................32 INCOME CAPITALIZATION APPROACH..............................................................................................................33 Income History of the Subject Property..................................................................................................................34 Review and Summary of Existing Leases & Lease Basis.......................................................................................34 Estimate of Current Market Rent............................................................................................................................34 Discussion of Adjustments Made to Rent Comparables.........................................................................................38 Conclusionof Market Rent.....................................................................................................................................38 Vacancy and Collection Loss..................................................................................................................................38 OperatingExpenses................................................................................................................................................38 Overall Capitalization Rate Selection.....................................................................................................................38 IncomeApproach Summary ....................................................................................................................................39 RECONCILIATION....................................................................................................................................................40 Sales Comparison Approach to Value....................................................................................................................40 IncomeApproach to Value.....................................................................................................................................40 ADDENDA GENERAL ASSUMPTIONS AND LIMITING CONDITIONS CERTIFICATION PROFESSIONAL APPRAISAL QUALIFICATIONS CONTRACTLETTER REALQUEST PROPERTY DETAIL REPORT ZONING DOCUMENTATION REGIONAL OVERVIEW BUILDING SALE PHOTOS RENTALPHOTOS SUBIECTPHOTOS SUMMARY OF OPINIONAND SALIENT FACTS Property Name: Address: Thomas Bros. Map Ref.: Interest Appraised: Property Type: Gross Building Area: Net Rentable Area: Year Built: Construction Quality: Land Area: Zoning: Highest and Best Use... As Vacant As Improved Current Occupancy: Reasonable Exposure Time: Reasonable Marketing Time: Baja Fresh 3050 East Coast Highway Newport Beach, California 92625 Orange County, Page 919, Grid F2 Fee Simple (See comment in Transmittal Letter) Fast food restaurant Approximately 2,218sf Approximately 2,218sf 2001 Good Approximately 10,685sf or 0.25 acres RSC, Retail and Service Commercial Develop fast food facility As existing 100% occupied by Baja Fresh (See comments in Transmittal Letter) 1 month 1 month Fair Market Value Conclusion -As ofNovember 7, 2006 Cost Approach Excluded Sales Comparison Approach $1,940,000 Income Approach By Direct Capitalization $1,935,000 Reconciled As Is Fair market value $1,935,000 Date of Report: Date of Value: November 30, 2006 November 7, 2006 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement, without the ability to confirm who the FF&E belonged to and without regard to any lease that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no lease in place. Since no lease was presented for my review, only a fee simple value could be reported. A lease may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. �I I If r t INTRODUCTION Purpose of the Appraisal The purpose of this appraisal report is to estimate the Fair Market Value for the subject property as of November 7, 2006. Function of the Appraisal I understand that this appraisal has been ordered for the purpose of assisting in establishing baseline value which the client will use for the purpose of establishing regulatory fees. Scope of the Report/Appraisal Development and Reporting Process I completed the following due diligence during the course of this appraisal assignment. • Personally inspected the subject property from the exterior only. • Reviewed the architecturally prepared site plan. • Photographed the subject property from the exterior only. • Interviewed personnel at the City Planning & Building Departments. • Consulted public records for the subject property. • Reviewed portions of the zoning ordinance. • Obtained demographic information. • Reviewed the Assessor Plat Map. • Reviewed published investment data relating to retail properties. • Gathered, photographed & verified, if possible, building sales & rental data. • Interviewed brokers who specialize in retail projects. In this appraisal assignment, traditional methods of valuation are employed, the Sales Comparison and the Income Approach to value. A Cost Approach was not employed because this type of property is not traded on a cost basis and because current comparable land sales were almost non-existent due to the built up nature of the area. This is a Summary narrative appraisal report. Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement, without the ability to confirm who the FF&E belonged to and without regard to any lease that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no lease in place. Since no lease was presented for my review, only a fee simple value could be reported. A lease may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. �' I Date of Value The opinion of value expressed is as of November 7, 2006. This opinion is intended to represent the general purchasing power of the U.S, dollar in the immediate locale, in terms of real estate, as of the stated effective date of appraisal, subject to the definition of Fair Market Value. The effective date of appraisal was chosen as it coincides with the appraiser's field inspection date. Definitions Terms requiring definition used in this report, are defined as follows: Fair Market Value' The term fair market value2 is defined as follows: The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy under no particular necessity for so doing, each dealing with each other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. The fair market value of the property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable. The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: (a) The project for which the property is taken. (b) The eminent domain proceeding in which the property is taken. (c) Any preliminary actions of the plaintiff relating to the taking of the property. t Federal Register, Vol. 55, No. 164 August 23, 1990 Rules and Regulations, Section 564.2 Definitions. CChapter 1275, Title 7, Part 3 of the California Code of Civil Procedures, entitled: Eminent Domain Law I I I Leased Fee Estate3 An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leasedfee owner) and the leased fee are specified by contract terms contained within the lease. Fee Simple Estate° Absolute ownership unencumbered by any special interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Appraisals The act or process of estimating value. Reasonable Exposure Time6 The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at fair market value on the effective date of the appraisal. Reasonable Marketing Time The amount of time it might take to sell a property interest in real estate at the estimated fair market value level during the period immediately after the effective date of appraisal. Americans With Disabilities Act of 19908 A civil rights act passed by Congress guaranteeing individuals with disabilities equal opportunity in public accommodations, employment, transportation, government services, and telecommunications. Statutory deadlines become effective on various dates between 1990 and 1997. 3 The Dictionary of Real Estate Appraisal, Third Edition, Appraisal Institute, p. 204. 4Ibid, p. 140. 5 Uniform Standards ofProfessional Appraisal Practice, 1996Edition, p. 9, The Appraisal Foundation. 6lbid, p. 75. 7Ibid, p.103. 8 The Dictionary of Real Estate Appraisal, Third Edition, p. 13, Appraisal Institute. If I! Interest Appraised The interest appraised is the 100% fee simple ownership position. The valuation presented is based on, and assumes a total transfer of the fee simple interest of the real estate rights described sold as a combined single entity. A fractional transfer of this interest would not necessarily be a direct multiple in value of the fraction transferred. Property Identification The subject property is an existing Baja Fresh fast food restaurant. According to the City of Newport Beach, construction was reportedly completed on August 16, 2001. The address for the subject property is 3050 East Coast Highway, Newport Beach, California 92625. The property is also referred to by Orange County Assessor Parcel Numbers 459-186-16, 17. The site area is approximately 10,685sf or 0.25 acres. The subject property is 100% occupied by Baja Fresh. Legal Description I was not provided with a copy of a title report. An abbreviated legal description is included in the Addenda on the RealQuest Property Detail Report. Owner of Record The RealQuest Property Detail Report shows current ownership vesting in: Kimberly Carson/Village Inc. Recent Property History No sales involving the subject property within the last 3 years appear in the public record and none were reported to me to have occurred within this time frame. Assessed Valuation and Taxes Real property taxes in California are limited to 1% of the assessed value of a property as of a specked base year. The base year valuation is the 1975 assessor's fair market value estimate or the fair market value based on reappraisal. Re -appraisal can result from sale, further improvement or long term leasing. If there is no reappraisal, taxes are limited to a 2% annual increase of the assessor's fair market value estimate, plus voter approved bond debt or special assessments. Assessed value and tax information is included in the Addenda on the RealQuest Property Detail Reports. t REGIONAL DESCRIPTION The Los Angeles County Economic Development Corporation has compiled an excellent overview of the Orange County market. It is included in the Addenda. 11 B. — h HO]'ETT nm'EL o�EAN NEWPORT Bf'ACN i z 7 COUNTRY CLUB CLUBHOUSE a° CdNRW o SWI,kF yy�q�, a Pp 0 sioF .u5`y J.^q pFOp gyp¢ BF�.1 OL IRVINE .. `pPSiw RE %/T ,,WERE L 6MfR AV F HARBAMP �ANSTER ���r.—• GUARD YNEW RW? O P LEauv ix YJATICY E JWRTE CIR o yr %,s`` WAnfRE 0e PARK y IDS DAR ' BIG As rAAfvnAf l \ A LINCOLN �tESERVOLR 1 4 •�"�. BAY r�kr ��4 P ��e"(�/ ci Fj,�. CC P YE�C �/j v— `�'PPj m cPXK t�P�`o • -r P Q ` SRO 4 IT CTR E 1 Lg P S4Y �P �EPAS �F /gy0 J s �j 1NITEMAIERW TER et ✓o a : '� � yJ � � rr ru JETT Y5 FROM VIEWY i �� �Q�1���o FS PO '44 '°a +e%�q r PARR B.QiC �91V' SJS [a<Oy&,.9TN JEFgq° iEP P 3 WEST JETTY CORONA DEL NAk STATE BEACH b° RMKFO.QR� 'Wqi '�"p INfPIFhllCfl m - S � NF POMP � + W 0.Q P( OQT FQ FAR JFTn' /1-/,Ep/I3°e P" V-gROXe'gegW ��i+' IC OCEAN ARCH ROCK A1I ■ VA CRI'STAL ©2003 Thomas Bros. Map: G H CITYDESCRIPTION The following information was obtained from the Newport Beach Chamber of Commerce. ' Tourism is an integral part of commerce in Newport Beach. The mild climate and beautiful beaches draw millions of visitors to Newport Beach each year. With an abundance of water activities to offer, Newport Beach is home to one of the largest pleasure -boat harbors in the ■ world. Newport Beach is located 50 miles south of Los Angeles and 85 miles north of San Diego. Newport Beach is approximately 40 square miles, of which 22 square miles is water. Areas officially incorporated into Newport Beach include Corona del Mar, Balboa Island, Newport Coast, San Joaquin Hills, and Balboa Peninsula. POPULATION: Permanent Population — 72,600 ■ Summer Population — 100,000 Daytime temperatures average 80 degrees during the summer, and only dip to the mid-60s in winter. Evening temperatures seldom fall below 50 degrees year-round. About 10 inches of winter rain falls annually. Business Climate Newport Beach features several bustling areas of business. Each area --or "village" —has its own distinct ambiance and character. From a day of shopping along Pacific Coast Highway to a night ' of fine dining on the Harbor, each village is as unique as its businesses. With over 14,000 businesses actively licensed in the city, the diversity of our city's retail, restaurant and hotel offerings is sure to satisfy even the most distinguishing tastes. Newport Center Sprawling over 600 acres in the heart of Newport Beach, Newport Center is known for its elegant buildings and panoramic views of the Pacific Ocean. Its world -class outdoor shopping destination —Fashion Island —features more than 200 stores, 40 restaurants and two cinema complexes. In addition to these amenities, 24 office buildings, ranging from low-rise to premier high-rise offices, house national corporate headquarters, financial conglomerates and medical service centers. This combination of "business and pleasure" has made Newport Center one of the most sought-after destinations in Newport Beach. Corona del Mar Village Along East Pacific Coast Highway, restaurants, boutiques and professional businesses combine to form the Corona del Mar Village. The unique relationship between residents and business owners creates a passion for the village that is infections. Located blocks from the beach, visitors and residents enjoy exploring one -of -a -kind retail shops, shopping for groceries at the Farmer's ■ 13 1 1 Market and admiring spectacular ocean views. Corona del Mar —meaning "Crown of the Sea" — is as distinctive and beautiful as its name. Balboa Island Upon crossing a small half -mile bridge at the end of Jamboree Road you will discover Balboa Island. Home to charming retail shops and quaint beach cottages, the island, measuring 2.5 miles around, is a favorite destination in Newport Beach. Balboa Island is most often defined by Main Street, a tree -lined walkway where many small businesses and restaurants reside. The landmark Balboa Island Ferry, in operation since the 1920s, shuttles people in cars, on bikes and on foot for a quarter -mile ride across the harbor to the Balboa Peninsula. Balboa Village Home to the landmark Balboa Pavilion, the Balboa Village is situated between Newport Harbor and the Pacific Ocean. The lighted Fun Zone ferns wheel, which can be seen from a distance at both day and night, welcomes visitors to explore this seaside business area. The Balboa Village offers more waterfront recreational activities per square inch than any other area of Orange County. In addition, retail shops and restaurants cater to the beach crowds that flock to this area year-round. Cannery Village Artists, restaurateurs and antique dealers have settled in the historic Cannery Village to create an eclectic mix of charming shops and cafes. Encompassing eight square blocks, local artists regularly display their works in outdoor art shows and in the many village galleries. Nearby McFadden Square, site of the city's first port, is surrounded by several retail shops and restaurants bustling with beach goers seeking some of the best surf in town. Mariners Mile The famous nautical community, Mariners Mile, is located along West Pacific Coast Highway. Boasting several yacht brokers and charter services, "everything nautical" can be found in this part of town. Numerous fine -dining restaurants, often specializing in fresh seafood, line either side of the highway with those nearest to Newport Harbor boasting spectacular views. Charter companies offering everything from elegant dining cruises to romantic gondola rides can be found in the Mariners Mile Marina. Airport Area ' Orange County's only commercial service airport, John Wayne Airport, has given rise to several surrounding businesses in the Airport Area. A vast number of high-rise buildings encircle the airport, housing everything from financial institutions to hotels to technology -based businesses. The Airport Area is centrally located near the 405 and 73 freeways, and its location complements larger businesses that have the potential for growth and expansion. 14 1 West Newport Before crossing the city's boundaries and entering Huntington Beach, a string of businesses lines Pacific Coast Highway forming West Newport. Located blocks from the beach, both locals and visitors enjoy "passing the time" at the many retail shops and eateries. This beach side area is popular with tourists, and is bustling with activity during peak summer months. 15 NEIGHBORHOOD DESCRIPTION The 12`s Edition of The Appraisal of Real Estate defines a neighborhood as a group of complimentary land uses. The subject's neighborhood boundaries are considered to be Pacific Coast Highway between MacArthur Boulevard and Marguerite Avenue. The neighborhood is 95%+ built up and exhibits average to good levels of maintenance. Access into the subject neighborhood is excellent. Pacific Coast Highway (PCH) is a major highway connecting south Orange County with Los Angeles County. The subject lies on a very well traveled section of PCH and is proximate to the beach. MacArthur Boulevard is a major north south thoroughfare which also provides access into the immediate subject neighborhood. The subject neighborhood is characterized by specialty retail, restaurant, office, art galleries and residential uses. The area is highly sought after for all of these uses. 16 MARKET OVERVIEW Rental Rates Later in the valuation section of the report, I conducted a rental survey of comparable properties. This survey revealed an unadjusted rental range from $3.48/sf/mo to $4.53/sf/mo NNN. Improved Property Sales I gathered four sales from the local region. These sales were all fast food facilities leased to single tenants on long-term NNN leases. These sales sold from between $759.49/sf to $950.00/sf, unadjusted. My Sales Comparison Approach result is $875.00/sf or $1,940,000 (rounded). The Sales Comparison Approach supports the Income Approach result. Please refer to the Sales Comparison Approach section for additional discussion and analysis. Overall Rates The following chart summarizes overall rate information obtained from the sales and listing comparables used later in the report. Each of these sales were leased on a long-term NNN basis. Sale # Franchise NOI Sale Price OAR I Jack in the Box $122,864 $2,395,000 5.13% 2 ElPolloLoco $125,000 $2,185,000 5.72% 3 Jack in the Box $ 72,600 $1,320,000 5.50% 4-Listing Starbucks $ 92,637 $1,765,000 5.25% Based on the data above, there is strong support from both closed sales and current listings that the predominant cap rate range is in the 5-6% range. I was asked to provide a fee simple value opinion which presupposes a market derived rental rate. All of the sales were considered to be at market. A cap rate of 5.50% was chosen for the subject as reasonable considering the market rent estimate used. Vacancy & Collection Loss Estimate The following chart summarizes vacancy & collection loss information obtained from the sales comparables. Sale # Vacancy at Sale Collection Loss Problems? 1 0% None 2 0% None 3 0% None 4 0% None Long-term single tenant NNN leased properties typically sell with no vacancy factored into the purchase price. Therefore, zero (0) vacancy was used in this analysis. This is consistent with the manner in which all of the sales comparables sold. 17 Analysis of Reasonable Exposure Time & Reasonable Marketing Time Reasonable Exposure Time is defined in the Uniform Standards of Professional Appraisal Practice as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at fair market value on the effective date of the appraisal. Reasonable Marketing Time is defined in the Uniform Standards of Professional Appraisal Practice as an estimate of the amount of time it might take to sell a property interest in real estate at the estimated fair market value level during the period immediately after the effective date of appraisal. Reasonable Exposure Time precedes the effective date of appraisal and Reasonable Marketing Time follows it. Reasonable Exposure Time is supported by recent exposure periods of similar properties in the region. The following chart illustrates this information. Property ID Franchise Sale Date Exposure Time Sale 2 El Pollo Loco May 2006 1 month Sale 3 Jack in the Box October 2005 3 months Based on this information, recent historical exposure periods for comparable properties appear to be 1 month. Reasonable Marketing Time would logically be similar to Reasonable Exposure Time if market conditions in the foreseeable near future were expected to be similar to the recent past. Based on discussions I have had with several brokers and market participants, market conditions for the near foreseeable future may remain similar to the recent past. Therefore, my estimate of a Reasonable Marketing Time for the subject property, as of the effective date of appraisal, is 1 month. These estimates are considered to be reasonable approximations only which should not be construed as absolutes. Market Overview Conclusions The subject is an existing fast food project that is 100% occupied to a single -tenant franchisee on a long-term (20-year) NNN lease. Overall rate information suggests that an appropriate overall rate for the subject is about 5.90%. Vacancy & collection loss information suggests that an appropriate vacancy & collection loss factor for the subject is zero. Market evidence suggests that Reasonable Exposure Time and Reasonable Marketing Time are on par at approximately 1 month. 18 iI 'I IN/5 MAP WS PREPARED FW MA CL TY ASSESS WPF. N]rt05ES MY. THE ASSESS M ES A0 O AMR'E A5 rO rrS W"Wr " 155RLCS MY LTARlf rrY FOr 0/MR MSES. W' TO M REFNQ LD. 4L R/LRIS IFVE . OC YR"r WM E TY A55E55m 2M MARCH 1983 17 (NM AW..) ZA al=c AVENE ~ • i $ i I I �l.:1 4 WHO- + CORaVA DEL MAR M. M. 3-42 TRACT H0. 323 M. M. 14-40.41 PARCEL AUP P.M. 57-20. 177-24.213-25 P.M 280-28.275-49.339-3I >o t i Lo 0 19 NOW - ASSESSOR'S BLOCK d ASSESSOR'S MAP PARCEL NUMBERS BOOK 459 PAGE 18 SHOW IN CIRCLES COUNTY OF ORANGE L.NM AKJ AVDM4 459-1 8 u m i m m r m r m I m m m m � m m m SUBJECT LAND DATA Size and Shape The public record suggests that the subject parcels total 10,685sf or 0.25 acres in size. The shape of the combined subject site is irregular. Topography and Drainage The site slopes down from north to south toward Pacific Coast Highway. Drainage did not appear to be a problem. It is a contingency of this report that drainage was not an issue. Soil Conditions I was not supplied with a soil report. My analysis assumes that the soil is capable of supporting the improvements over the remaining economic life of the improvements. zoning The subject is zoned RSC, Retail and Service Commercial. A copy of the allowable used and development standards is included in the Addenda. Easements and Encroachments A title policy was not provided for my review. My valuation assumes no unusual easements and no encroachments exist. Access The subject has access from Pacific Coast Highway and from Jasmine Avenue. Site Work The parking lot is asphalt paved and striped. There are shrubs, trees and groundcover. Site Analysis Conclusions The subject site is well located. There are no reported building moratoria in effect as of the date of appraisal. No changes to zoning are reported pending at this time. The existing zoning is in compliance with the General Plan. Subject photographs are included in the Addenda. 20 t� 1 +r� 1 rd gRJA WW EAST COAST MMWAY CORONA DEL MAR, CA =W.S PROJECT LOCATION PROJECT DATA YDER OF DRAVAHM I �� ♦ !'�' ww �Ati�♦ i V/�J%/�J�• 1 n C4M Va6i Y1Mt i • : �/ / a��/���A.W •G nMw. WV , • /\ IYCRM Mw.\� ~ ` J� 'I _ _ ____ Y7> 1� TQP.h174r PV_I- IJ I� ��^' .�wJ/�{iaaJM..M wGwro.� p 11 • V ' •rYCYA� wYw O��� _ - o �� +�-.+.�+ �•..�-.-.. N_ Iw �n.uJ�.�—�— ww•w. as�w. ..a....—�� � _ 1_.... — _ Y-—w..+..�a��asw.rt+•��.��. •I�Wyns ..�n.�srwawauw� T �R.1}I� RG�1i w n.w.aa.1 n ss��mnYvs im.eYvs n LintM.YrlY r�csw YSYnY Y .nw YsmW u wnrn:a�wramYa Y inl[Y Y wv.ncaslowrsrYs 1� Y w�It1.n� Y wYYbyaYY+Y q �JYRY\i1W d nb�r+twswY w)Y)11415 W YO�1t YIY1 Y �YSiYTn� � Y{ i1WLm Rlf • [RYl1il01� It EMI. i'ILiflYllw Clw in moneswri asw�m+u r m�rmwrra m�wrnuuu vsxx nY _�C'?�� YY�IbnlYllYlMfM nY _:t��'JS �.. ��fy. O OfIIY _ b 0�19[YOtY _ m � m m m � m m m m m m DESCRIPTION OF EXISTING BUILDEW IMPR0VEMENTS The subject property improvements are described in the following outline format. Property Name: Baja Fresh Address: 3050 East Coast Highway Newport Beach, California 92625 Thomas Bros. Map Ref.: Orange County, Page 919, Grid F2 Interest Appraised: Fee Simple (See comment in Transmittal Letter) Property Type: Fast food restaurant Gross Building Area: Approximately 2,218sf Net Rentable Area: Approximately 2,218sf Year Built: 2001 Construction Quality: Good Land Area: Approximately 10,685sf or 0.25 acres Zoning: RSC, Retail and Service Commercial Highest and Best Use... As Vacant Develop fast food facility As Improved As existing Current Occupancy: 100% occupied by Baja Fresh (See comment in Transmittal Letter) Construction Class Class D, wood frame stucco construction based on external inspection only Current Year 2006 Actual Age 5 years Estimated Effective Age 2-3 years Estimated Physical Life New 35 years, per Marshall Valuation Publication Remaining Economic Life 32-33 years 22 Number of Levels One Parking Lot Surface Asphalt paved Landscaping Trees, shrubs and ground cover Roof Material Not inspected Ceiling Not inspected Lighting Not inspected Flooring Not inspected 13VAC Not inspected Restrooms Not inspected Drive Thru No Exterior Patio Seating Yes Depreciation Depreciation can exist in many forms such as physical, functional and external. Physical incurable depreciation is not considered to exist considering the construction date of 2001. Functional obsolescence was not noted. External obsolescence does not exist. A floor plan sketch was not available from the City. The City would only release a copy of the site plan included on a prior page. I took the building square footage from this document and have relied on it as accurate in this valuation. 23 HIGHESTAND BEST USE ANALYSIS Highest and Best Use9 is an appraisal concept that has been defined as follows. The reasonably probable and legal use of vacant land or an improved property that is physically possible appropriately supported, financially feasible, and that results in the highest value. Highest and Best Use as Though Vacant Highest and best use of land or a site as though vacant is defined as: Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumptions that the parcel of land is vacant or can be made vacant by demolishing any improvements. Legally Permissible: The subject site is zoned RSC (Retail and Service Commercial). This zone allows for the construction of several types of commercial property (see Addenda for list). Physically Possible: The subject parcel will accommodate a variety of commercial uses. No soil report was provided for my review, but a variety of commercial uses have been constructed on - site and in the area around the subject site. This analysis presumes that the soil is capable of supporting the potential improvements over their economic life. Financially Feasible/Maximal Productivity: A use is considered financially feasible if it produces a positive net return. A variety of uses may be potentially financially feasible for the subject site. The subject is on a busy highway that gets much visibility and traffic. There are other restaurants in the immediate vicinity. A fast food use is considered financially feasible. Conclusion of Highest and Best Use "As" Vacant Immediate development with a fast food restaurant like the subject property is considered the Highest & Best Use as vacant. Highest and Best Use As Improved 9 The Appraisal of Real Estate, 10th Edition, Appraisal Institute, p. 275. 'Olbid . II II 24 'I Physically Possible The subject was completed construction in 2001 and as such is physically possible. Legally Permitted The improvements are reportedly legal conforming. Financially Feasible/Maximally Productive Use The subject property is achieving market rent (based on my analysis and projection assuming a fee simple condition). Because the subject is operating at peak occupancy and market rent it would not make sense to consider any alternative use. Conclusions ofllighestAndBest Use as Improved For these reasons, the highest and best use of the subject as improved is the existing use. 1 I I I VALUATION METHODOLOGY The Valuation Process The preceding report sections form the foundation and a framework that the balance of the appraisal report will draw from. Within each approach to value, market data is presented and analyzed in relation to the subject property. Conclusions regarding the subject's value are drawn from the analysis of each approach employed. The following represents a brief description of the theory behind each approach employed, in the order they are presented. Description of The Cost Approach to Value A Cost Approach to value was not conducted for reasons previously discussed. Description of The Sales Comparison Approach to Value A major premise of this approach is that the fair market value of a property is directly related to the prices of comparable, competing properties. In this approach, recent sales and listings, if available, of comparable properties, are analyzed in relation to the subject property. Various elements of comparison are tested to determine whether they affect value. Adjustments are only made for those differences that the market indicates as having an affect on value. After making the appropriate adjustments, an indication of value for the subject property is derived from the sales comparables. Description of The Income Capitalization Approach to Value Income producing property is typically purchased as an investment. From an investor's point of view, earning power is the critical element affecting property value. As a result, the basic principle behind this approach is the principle of anticipation (of earning power). This principle states that value is created by the anticipation of future benefits. This approach to value is often referred to as direct capitalization. This approach attempts to consider anticipated future benefits and estimate their present value. From an investors point of view, "future benefits" typically represent an anticipated income stream. The capitalization process is a process by which an anticipated income stream is converted into an estimate of present value. This approach to value addresses several components that relate to anticipated future income. These are: potential gross income, vacancy and collection loss, operating expenses and a capitalization rate. A capitalization rate is a market -derived rate that reflects the relationship between a property's estimated/anticipated net income and it's value/probable sales price. 26 �J 11 Each of these components are analyzed and summarized into an income and expense statement type format. The net operating income is then capitalized into a reconstructed operating type statement for the subject property. Description of The Reconciliation Process The Sales Comparison and Income Approaches to value are utilized in this analysis. The reconciliation process immediately follows the approaches to value. This is a process by which the inherent advantages and disadvantages of the approaches to value are analyzed. The quantity and quality of data presented in each approach is also considered. This process results in a reasoned selection of final value estimate for the subject property. 27 1 I SALES COMPAMSONAPPROACH The Sales Comparison Approach to Value is the process by which a fair market value estimate is derived by analyzing the market for similar properties that have sold recently and comparing those properties to the subject property. Improved building sales were searched for throughout the region. Each improved project sale was initially verified by telephone with the buyer, seller or broker. A final confirmation of each sale was made by consulting public records. Each sale was externally inspected and photographed. This section is organized into the following outline format: 1. Comparable Sale Location Map. 2. Summary of Comparable Sales. 3. Comparable Sale Adjustment Grid. 4. Comparable Sales Adjustment Discussion. 5. Conclusions of Sales Comparison Approach. 28 SRI i'o ' �.CHINO A& 1az Y� �li�� Sm i. �1�'►/�,'SERNARDINO NTY INN map nix. PM Clio 241 �.�, e ( ` EMT � �55 •J ,■� ■1`�1�. LOS BEACH ■\ R39" ►�zs,AMNGEL ■■, 1W rOUArT 40 f,� mu 73 405���W NEW 13 � '• BEAjT /: �,)2003 Thomas Bros. .. w■ w �w >tw w �w rw w w w w� wi �w ■w w� w� w w w� Comparable Retail Building Sales Data No. Property Name Address AssessorsParcel No. Thomas Guide Map Page Verifying Party/Phone No. Sale➢ate Close Data Inatrumentp Exposure Tlene Terms of Sale Sole Prks Buyer Seller Prepe RI is Approx. NRA Bldg. Sire (S.FL) Approx. Year Built Parking Exceas Land CondiHonat Saie Unmual Sale Coculkl m Deferred Maintenance Potm➢alGrosslnwme Vacancy &Collection Lau ERaative Gross Income Estimated Expenses Net Oerati letcoma RentfsBmo Indicated Overall Rats Unadjusted S/SF I Jack In the Bar Actual 2210HarborBoulavmd EDREotmproushic. Adequate puking. PGI $122,864 Anaheim, CA. 92802 Jmuary-06 No upon ca. land. Vacancy 0 APN. 233-044-07 14-Feb-06 HappysatfPropmtim,lnc Good EGI 5122,864 $334 TOR. 79814 100032 No reported unusual sale wndsliom Expense $0 CaStar&Pubhe Record N/A Cash $2,395,000 Leased Fee 2,894 1992 No reputed deferred mainteomce. NOI S14864 5.13% $827.57 2 El Poll. Low Actual 6041 La Palma Avenue Ldy Yeh invesMmt LLC Adequateparking PGI 5125,000 Bum Park, CA 90620 May-06 No reported access land. Vaemry M APN: 263-351-25 08-Jun-06 Eagelpmgd LLC Goad EGI 5125,000 5433 TGR: 7670 100032 No reported unusual sale codinom Expense S0. JcHConovar, Banker(949) 221-18M (month Cash $2,185,000 Leased Fw 2,300 1990 No reponed deferred maietenmea. NOI $125,000 5.72% 595000 3 Jack 1. the Box Actual 719N Bristol Suet OCI LLC Adequate parking PGI $72,600 Santa Am, CA. 92703 Ocobar-05 No mpcatd access land. Vacancy 30 APN:405-081-01,02 30-Nov05 The UCLA FoundaBon Goad EGI 572,600 53.48 TGR: 829 D2 958200 No reported unusual sale condaiom Expense $00. John Jemmga, Booker(858) 452-6500 3mondu Cash S020,000 Ieattd F. 1,738 1969 Norepodd deferred maintemnee. NOI 572,600 5.50% $75949 4 Storbucks Astucl 1248 E. 17th Siwet Admryateparking, PGI 592,697 Santa Ana, CA. 92701 No repurtdexcess land. Vacancy 30 APN:398-071-71 Owner es Dwtsm ProPedy MgmL God EGI $92,637 $365 TGR: 829G1 Asking NorcNtd unusual seta coda. m. Espemm L Asking PuToomry,Bmkc(949)725-8507 gsrrcnt usang Cash $1,765,000 Leased Fee, 2,115 2004 No reported defcaad msnamnee. NOI $92,637 525% $834.52 � � � M M !' M M M M M M � M M S M ! Retail Sales Adjustment Grid SIPSF Property Rights Sub -Total $/PSF Financing Adj. Sub -Total S/PSF Conditions of Sale Sub -Total S/PSF Market t:Ond.Adj Sub -Total S/PSF Location Lease Structure Bldg. Size Total Adj. Indicated $lPSF 1 $827.57 0.00% $827.57 0.00% $927.57 0.00% $927.57 0.00% $827.57 5.00% 0.00°% 0.00% 5.00% $868.95 2 $950.00 0.00% $950.00 0.00% $950.00 0.00% $950.00 0.00% $950.00 5.00% 0.00% 0.00% 5.00% $997.50 3 $759.49 0.00°/0 $759.49 0.00% $759.49 0.00% $759.49 0.00% $759.49 5.00% 0.00% 0.00% 5.00% $797.47 4 $834.52 0.00% $834.52 0.00% $834.52 0.00% $834.52 0.00% $834.52 5.00% 0.00% 0.00% 5.00% $876.24 Li I I I I I I L I Discussion of Adjustments Made to Comparable Sales Property Rights Each sale was of the leased fee interest. No adjustments were required for property rights since leased fee is considered to be on par with fee simple. Financing All sales sold for all cash to seller warranting no adjustment. Conditions of Sale No adjustments were needed for this aspect. Market Conditions No adjustments were necessary. Location I adjusted all sales upward as they lacked Pacific Coast Highway frontage. Building Size No adjustments were necessary. Sales Comparison Approach Conclusions Having made the preceding adjustments I show an adjusted range from $797.47/sf to $997.50/sf. I selected $875.00/sf as reasonable considering all sales. This per unit selections yields the following result. Subject Square Footage (NRA) 2,218sf Selection Per Unit $875.00 Indicated Value $1,940,750 Rounded To $1,940,000 32 I INCOME CAPITALIZATIONAPPROACH Income producing property is typically purchased as an investment, and from an investor's point of view earning power is the critical element affecting property value. One basic investment premise is that the higher earnings a property is capable of producing, the higher the value, and vice versa. An investor who purchases income producing real estate is essentially trading present dollars for the right to receive future income earnings. Therefore, the principle of anticipation is fundamental to this approach to value since, value is created by the expectation of benefits to be derived in the future. This approach to value attempts to formalize this investment premise (anticipation) into a value estimate. This formalized process is comprised of several variables. Each variable is directly related to an estimate of the property's income earning potential. These variables are a potential gross income estimate, a long-term vacancy and collection loss estimate, an annual operating expense estimate and the selection of a capitalization rate. Once a net operating income estimate is derived, it is divided by a capitalization rate. The division result is an estimate of property value for the subject property. The term "capitalization" in this approach simply means to convert income into value. This conversion process is summarized by the following direct capitalization formula, relating net operating income, a capitalization rate and a project's value. Net Operating Income Value = Overall Capitalization Rate This report section is organized into the following outline format: 1. Presentation of the subject property's income history. 2. Review and summary of existing leases. Net Operating Income Estimate Estimation of the current market rent for the subject. 4. Comparison of the rent comparables to the subject property. 5. Projection of the subject's future gross income potential. 6. Estimation of long term vacancy and collection loss allowance, if applicable. Presentation of subject's operating expense history. 33 Capitalization Rate Selection 8. Selection and support of an overall capitalization rate. Capitalize Net Operating Income Into a Value Estimate 9. Presentation of an outline of a reconstructed operating statement for the subject property that includes the following: a) Annual gross potential income b) Vacancy and collection loss, if applicable c) Effective gross income d) Expense estimate, if applicable e) Net operating income estimate f) Overall capitalization approach Income History of the Subject Property No income history was made available to the appraiser for review sine the client requested a fee simple valuation. Review and Summary of Existing Leases & Lease Basis Since the client requested a fee simple valuation and since the lease was not provided for my review, this information is not provided here. Estimate of Current Market Rent The following represents a rent survey. This survey represents the basis of the estimate of current achievable market rent for the subject property. This subsection is organized as follows. 1. Rental Comparable Location Map. 2. Rental Summary of Comparable Projects. 3. Adjustment Grid Summary. 4. Discussion of Rent Comparables. 5. Conclusions on Market Rent. Market rent selections are net of rental concession being offered in the market, if any. 34 .I d -� 142CHINO HILLS SRv NTY MW man L i 1 �605'�•�".:�� 57 rr90 91 fat 241 Mai % fill �WRIL55 22 vd 261 ANGELE ME URV ����� �♦ 73 40+►:�W� ",LAr ,` 13 � �• ALI" W, VIEJ I Bros.Pol Al Q2003 Thomas .. Fast Food Rent Survey Del. No. Properly Nvme Addy Thom. Guide Reference Verifying Party Yer Built DeteofUase Line Bub Suite9ype Lease G..r.alor Lexsor lessee Le.e Opdo. LeaseE.Ieflo. Approx. S.Re Sire (Sq.Fh) Real (SMIo) Le.e Term (M.) Free Rent 0103) ElBed. Rent (SMIo) 1 Jack in the Box 2210 Harbor Boulevard EDR Enterprises Inc Anaheim, CA. 92802 NUN Unknown TOR: 798A Freestanding Building Unknown Costar and Pubhc Records 1982 Unlmown Unknown Uolmown Z894 $3.54 N/A N/A 53.54 2 El Polio Loco 6041 La Palma Avenue Lily Ych Investment LLC Buena Park, CA. 90620 NNN Unknown TGR: 767 E3 FreesterdingBuilding Unlmown JefConoveg Broker(949) 221.1800 1990 Unknown Unknown Unknmm 2,300 5453 N/A N/A $453 3 Jack In the Box 719 N. Bnstol Street OCI, LLC SeemaAna, CA. 92703 NNN Unknown TGR: 809 D2 Freestanding Building Ummown John Jennings, Broker (858) 452-6500 1969 Unknown Unknown Unknown 1,738 S3 48 N/A N/A 53.48 4 Starbucks 1248 E 17th Street Damson Property Management SamaAna,CA.92701 NNN Starbucks Corporation TGR: 829G1 Freestanding Building One, 10-year ophon Pat Toomey, Broker(949) 725-8507 2004 2004 Corporate 12% increases every 5 years 2,115 53.65 132 N/A 53.65 � � � ! M M M M M M M M M M M M M M M Rent Comparables Adjustment Grid Data Item Rent PSF/Mo. Conditions of Lease Sub -Total Rent/SF/Mo. Market Conditions Sub -Total Rent/SF/MO. Location Suite Size Lease Guarantor Remaining Adjustments Indicated NNN Rent/SF/Mo. 1 $3.54 0.00% $3.54 0.00% $3.54 5.00% 0.00% 0.00% 5.00% $3.72 2 $4.53 0.00% $4.53 0.00% $4.53 5.00% 0.00% 0.00% 5.00% $4.76 3 $3A8 0.00% $3A8 0.00% $3.48 5.00% 0.00% 0.00% 5.00% $3.65 4 $3.65 0.00% $3.65 0.00% $3.65 5.00% 0.00% 0.00% 5.00% $3.83 Discussion of Adjustments Made to Rent Comparables I surveyed four properties. Various adjustments were made to the comparables as noted on the preceding adjustment grid. These adjustments are self-explanatory and were based on a combination of my discussions with market participants and my professional judgment. I adjusted all rentals up since they lacked frontage on Pacific Coast Highway. Conclusion of Market Rent The adjusted range is from $3.65/sf/mo NNN to $4.76/sf/mo NNN. My conclusion of market rent for the subject property is $4.00/sf/mo NNN. Vacancy and Collection Loss As was previously supported in the Market Overview section of the report, no vacancy is considered in this analysis. Operating Expenses Since the property is leased on a NNN basis, there are no operating expenses to the owner. Overall Capitalization Rate Selection A stabilized overall rate selection of 5.50% was previously supported in the Market Overview section. The following represents the Stabilized Income Approach Summary by direct capitalization. � � s M M � M � � � � M M M M M � M M INCOME CAPITALIZATION APPROACH Baja Fresh Newport Beach ml Gross Potential Rent Vacancy & Collection Loss: 0.00% Ave Gross Income: Annual %ofEGI Annual Cost PSF Total mated Stabilized Totals 0.00% $0.00 $0 Canesponding CAWlsf/Mo.—> $0.00 Estimated Lessor Expenses ted Net Operating Income (Before Debt Service): Capitalization Method: 5.50% Cap. Rate ated Stabilized Value By Income Approach: Tenant's Landlord's $0 $0 Rounded PriceiSF Using NRA $106,464 $106,464 SO $106,464 $1,935,709 $1,935,000 $872.41 RECONCILIATION Fair Market Value Conclusion - As of November 7, 2006 Cost Approach Excluded Sales Comparison Approach $1,940,000 Income Approach By Direct Capitalization $1,935,000 Reconciled As Is Fair market value $1,935,000 Date of Report: Date of Value: November 30, 2006 November 7, 2006 Per the client's instructions, I was to value the subject property without the benefit of an interior inspection, without the ability to confirm the building size by personal measurement, without the ability to confirm who the FF&E belonged to and without regard to any lease that may presently be impacting upon the property. As a result, the value reported above assumes no significant deferred maintenance, typical and good quality interior build out, accurate property size as reported by the City Building Department and no lease in place. Since no lease was presented for my review, only a fee simple value could be reported. A lease may presently be impacting upon the property. If so, the leased fee value of this real estate may be different from the fee simple value reported above. Sales Comparison Approach to Value Several comparable sales were gathered for comparison to the subject property. The sales gathered were fairly recent comparabies. The Sales Comparison Approach was considered secondary to the Income Capitalization Approach. Income Approach to Value This is typically the most valid approach to value when the subject property is an income producing property operating at a near stabilized occupancy condition. Any prospective property purchaser would purchase the property primarily for its income potential. The data presented in this section consisted of support for market rent based on comparable properties. Vacancy and overall rate information was reasonably supported as well. Since each component of this approach was reasonably well supported, this approach was considered to be the quite reliable. This approach was given the most weight in this analysis. 40 :_II_k "a 41 GENERAL ASSUMPTIONSAND LIMITING CONDITIONS The certification of the appraiser and opinion of value appearing in the appraisal report are contingent upon the following premises, limiting conditions, and exclusions. The appraiser has inspected the subject property with the due diligence expected of professional real estate appraisers. He is 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 petrochemical contamination, asbestos, PCB's, urea - formaldehyde foam insulation, radon, or other potentially hazardous materials/conditions may affect the value of the property. My value estimate is predicated on the assumption and contingency that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. My descriptions and resulting comments are the result of the routine observations made during the appraisal process. I assume no responsibility for matters legal in character. I do not render any opinion as to title, which is assumed to be good and marketable. The real estate is appraised as if free and clear of all deeds of trust, leases, options to buy or lease, use restrictions and reservations, covenants, conditions, easements, encroachments, cases or actions pending, tax or mechanic's liens and bonded indebtedness (unless otherwise specified) and that the property is under responsible ownership and competent management. No legal or engineering survey analysis of this property has been made by the appraiser. It is assumed that the legal description and area computations famished to the appraiser are reasonably accurate and that no encroachments exist. However, at the user's discretion, it is recommended that such an analysis be made for exact verifications through appropriate professionals before demising, hypothecating, selling, purchasing or lending occurs, or any decision is made requiring exact survey, legal or engineering analysis. I assume no responsibility for any hidden unapparent, or non -reported, conditions not readily observable from an appraisal related customary inspection of the site which might affect the valuation, excepting those items specifically mentioned in this report. I reserve the right to change the valuation, if so warranted, when supplied with further information, if that information in my opinion dictates a change. I I I Any sketch or identified illustration/plan of the property included in this report is only for the purpose of assisting the reader to visualize the property and is not intended to represent a formal survey, unless so identified. This report assumes the condition of the property unchanged since the date of the last field inspection. Illustrations, maps, graphics, etc. are included for appraisal purposes only and are not intended to be relied upon for any other use. I will not be required to give testimony, attend court or any other governmental or private hearing by reason of this appraisal unless arrangements have previously been made. In the event I am subpoenaed for a deposition, judicial or administrative proceeding, and are ordered to produce the appraisal report and files, I will immediately notify the client. I will appear at the deposition, judicial or administrative hearing with the appraisal report and files, and will answer all questions, unless the client provides me with legal counsel who then instructs me not to appear, not to produce certain documents or instructs me ' not to answer certain questions. These instructions will be overridden by proper court order that I will follow, if legally required to do so. It shall be the responsibility of the client to obtain a protective order. Oil, gas, water, mineral and sub -surface rights (including any slant drilling rights) were not considered in making this appraisal, unless otherwise stated and are not part of the appraisal, if any exist. The same exclusion applies to aviation rights or restrictions ( if any). ' I make no warrant as to soil or sub- surface utility or soundness. It is assumed for purposes of this valuation as a contingent assumption of the valuation that the land will support identified highest and best use or proposed use, unless otherwise noted. It is suggested that an independent soils engineering specialist be consulted at the discretion of the value estimate user, prior to lending, transferring or accepting any real estate rights, in order to confine this contingent assumption. I am not a licensed soil engineer or civil engineer. This valuation is based upon the expressed assumption that proposed, existing and modified soil after grading, will reasonably support present highest and best usage. The interest appraised was the 100% collective leased fee ownership position. This valuation is based on, and explicitly assumes a total transfer of the real estate rights described and not a fractional position transfer. If a 100% transfer of the property rights collectively could not be affected, the valuation could be substantially less. The sum of any fractional ownership interest held, if sold individually, may or may not equal the whole and likely would not due to market discount for such fractional interest currently being experienced. Separate valuations contained within this report which are used to form an opinion of the total, if removed from this report, may or may not be reflective of those individual portion values considered as separate part from the economic total. '1 I 1 I 1 No opinion in this regard is intended to be expressed regarding matters that require legal expertise, specialized investigation or knowledge beyond that customarily employed by real estate appraisers as of this point in time. Information contained in this report has been gathered from sources that are believed to be reliable, and where feasible, have been verified. No responsibility is assumed for the accuracy of information supplied by others beyond reasonable verification. The signatory of this appraisal report is a member of the Appraisal Institute. The By Laws and regulations of the Institute require each member to control the uses and distribution of each appraisal report signed by such member. Therefore, except as herein after provided, the party for whom this appraisal report or evaluation was prepared may distribute copies of this appraisal or evaluation report in its entirety to such third parties as may be selected by the party for whom this appraisal report was prepared. However, selected portions of this appraisal report shall not be given to third parties without the prior written consent of the signatory. Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser's or firm's client, through advertising, solicitation materials, public relations, news, sales, or other media without the written consent and approval of the authors, particularly as to valuation conclusions, the identity of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or the MAI designation. Further, the appraiser or firm assumes no obligation, liability, or accountability to any third party. If this report is placed in the hands of anyone but the client, client shall make such party aware of all the assumptions and limiting conditions of the assignment. It is a contingency of the value opinion that the subject site is not impacted by any endangered or potentially endangered flora or fauna. No environmental report was furnished me in this regard. It is suggested that the report user verify that these are not concerns prior to relying on this appraisal by consulting a qualified expert in this regard at the report user's discretion. CERTIFICATION I the undersigned, do hereby certify that during the completion of the assignment I have personally inspected the property that is the subject of this report and that, except as specifically noted: I certify that, to the best of my lmowledge and belief: • the statements of fact contained in this report are true and correct. • the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • my engagement in this assignment was not contingent upon developing or reporting predetermined results. • my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. no one provided significant business appraisal assistance to the person signing this certification. The appraiser is competent to complete this report in accordance with the competency provision in the Uniform Standards of Professional Appraisal Practice. Please refer to my professional qualifications that are included in the Addenda. I It is my intention that this appraisal report complies with all statutes, rules, and regulations prohibiting discrimination on the basis of race, color, religion, sex, national origin, and marital status. The By-laws and Regulations of the Appraisal Institute govern disclosure of the contents of this appraisal report. In furtherance of the aims of the Institute to develop higher standards of professional performance by its members, I may be required to submit to authorized committees of said Institute copies of this report and any subsequent changes or modifications thereof. As of the date of this report, Steven R. Fontes, MAI has completed the requirements of the continuing education program of the Appraisal Institute and is presently certified under that program. Respectfully, Reinhart-Fontes Associates, Inc. Date of Value: ovember 7, 2006 Steven RAontes, MAI, CCIM Vice President CA Certified General Real Estate Appraiser No.: AG001644 Expiration Date of State Certification: March 21, 2008 PROFESSIONAL APPRAISAL QUALIFICATIONS Professional Real Estate Qualifications Steven R. Fontes, MAI, CCIM Reinhart-Fontes Associates, Inc. Real Estate Appraisal Consultants 2285 Business Way • Riverside, California 92501-2246 ()i;lcr (951) 656-6036 hic (951) 656-5747 Cellulnr(951) 640-5616 sfontes@ccim.net � i u. ❑ I .'1 �.I: • Mr. Ponta has served as Vice President with Reinhart-Fontes Associates, Ina since November 1994. Responsibilities include valuation and consultation, appraisalrevim business development staff managementandsoftware training. • Mr. Ponta served as Via President with Reinhart & Associates in Riverside, CA. from January 1991 to October 1994. Responsibilities included valuation and consultation, business development &software training. • Mr. Ponta served as Assistant Vice President of Interstate Appraisal Corporation - Riverside Division from July 1985 to December 1990. Responsibilities duringfirst 1.5 years consisted of data compilation and research. Later responsibilities consisted of commercial & industrial appraisal work with a heavy emphasis on proposed subdivision appraisal and analysis. • Mr. Ponta is actively involved in the sale ofcommercialrealestate, including vacant land parcels throughoutSouthemCalsfarnia. I: EM,YI • J.� I i 11 v� I • Mr. Ponies is a Member of the Appraisal Institute. He has held the MAI designation since October 27, 1993. His member number is 10123. To learn more about the MAI designation visit sj_ttti, :11ww wad nraisaUmtltute.org • Mr.FontesisaMember of the CCIKInstitute. He has held the CCIM designation since November 8, 2000. Hismembernumber is 9481. By virtue of holding the CCIM designation, Mr. Ponta is also an affiliate member of the National Association of Realtors. TolearnmoreabouttheCCIMdaignationvWthtp,llw .aim.mm • Mr. Ponta is a CertifW General Real Estate Appraiser and is certified with the State of California Office of Real Estate Appraisers (OREA). He has been state cent fled since January 16, 1992. His liceme requiresrenewal by March 21, 2008. His OREAM#isAG001644. To learn more aboutOREAvisithttn://www.orea.ca.vov • Mr. Ponta is a Licensed Real Estate Broker and is licensed with the California Department of Real Estate (DRE). He has been licensed sinceJanuary 8, 2003. His license requires renewal by January 7, 2007. His Identification Number is 01364228. To learn more about the DRE visit httn:11www.dre.ca.vov • University ofCalform4 Riverside (UCR)-Bachelor's Degree in Computer Science, 1987 • Served on the UCR Planned Giving Advisory Board, October 2001 through February 2003 • Vested Rights, Property Development Agreements, UCR Extension Course, November 1988 • Commercial and Industrial Real Estate, UCRExtemion Course, March 1989 • GIS(Geographc Information Systems)in Real Estate, UCR Extension Seminar, August 1996 • RealBstateAppraisalPrinclples March 1987 • Basic Valuation Procedures, November 1987 • Standards of ProfessionalAppraisal Practue,June 1988 • Capitalization Theory 6 Techniques, PartA,June 1989 • Capitalization neory&Techniques, PartB,September 1989 • Case Studies in Real Estate Valuatlon,July 1990 • Report Writing& Valuation Analysis, August 1990 • Standards ofProfessana1Appraisal Practice,PartA,June1991 • Standards ofProfessonalAppraisalPractice,PartC October 1998 • Standards of Professional Appraisal Practice, 7-Hour Update Course, June 2003 and March 2005 • Business Practices andEthirs, August 2003 • Financial Analyskjor Commercial InvestmentRadEst4te(CI-101),January 2000 • User Decision Analysisfar Commercial lnvestmentRealEstate (CI-103), April 2000 • InvestmentAnalysisfor Commercial InvestmentRealEstate (CI-104), May 2000 • MarketAnalysisfor Commercial Investment Real Estate,(CI-102), September 2000 • Core Concepts Review, (CCR), November 2000 rem rm,J u 17,71 • Real Estate Practice, Allied Business School, August2002 • LegalAspects of Real Estate, Allied Business School, August2002 • Real Estate Finance, Allied Business School, August2002 • Real Estate Economics, Allied Business Schools, August, 2002 • Property Management, Allied Business School, August2002 • Escrow Principles and Practices, Allied Business Schools, August2002 • Real Estate Office Administration, Allied Business School, August2002 APpraisalInstitute Involvement (Southern Cai' rnia Ch ter) • Willserve on the EoardofDirators as Saretaryfortheywr2007. • Served on the Board of Directors as Education Coordinator in 2001 • Served on the Finance Committee in 2001 • Served on theNominating Committee in 2001 • Served on the Board of Directors as Secretaryfor the year 2000 • Served on the Board gfDirectors as a Directorfrom 1997-1999 • Served as an Admissions Committee Memberf om 1994-1996 • Developed the Inland Empire Market Trends Seminar to 1998 • Chaired the Inland Empire Market Trends Seminar from 1998 - 2005 • Chaired the 1999 Summer Conferenceprogram, co-chaired in 1998 and 2000 • Chaired the l5c"-17`^ Annual GolfTournamentfrom1994-1996 • Served as a member oftheCandidate GuidanceCommitteefrom1989-1990 • Served in the capacity of Regional Representativefor the Southern Calfornia Chapterfiom 2000-2001 • Served as aRegonalRepresentative to the Southern Calfiornia Chapter, 1997-1998 • Served on the General Appraiser Council, Admissions Committee in 2000 • Served on the Leadership Development&Advismy Council(LDAC)from 1997-2001" -1DACparticip4nts meat annually in Washington, DC to d scass roues impacRngtheRealEstate Industry and to lobby the U.S. Congress on behalf of the Appraisal Institute to enact pro -real estate and pro-cvmanur legislation. A final report is delivned one a year to the Appraisal Imtsucte's National Board of Director. Mr. Fortes attended meetings in Washington, DC andpanccspated in lobbying efforts on CapitolHillon threeseparate occasions. Real Estate Related Articles •Appmlsing in the Inland Empire. The BusinessPressfanuary 1998 • Residential Subdivision Development. TheBusinessPress,February1999 • Testified at deposition and trial in Riverside County Superior Court Case#347484, October 2002 • Testified at deposition in San Diego County Superior Court Case#773979january 2004 • Testified at deposition in San Bernardino County Superior Court Case#082769, March 2004 • Tatfied at deposition in Riverside County Superior Court Case #372935, August 2005 • Testified at deposition in Riverside County Superior Court Case#081705, October2005 • Provided ARGUS lease analysis software training, Lee &Associates(Riverside) brokers, August2001 and April 2002 • Spoke on Real Estate Appraisal to the Inland Empire Community Foundation,April&May2002 • Moderated apanel discussion on Charitable Gift Giving in RealEstau, Omni Hotel, LosAngew, Apra 2001 • Preuntedan Office Market Overview to the Inland Empire BOMA Chapter,fuly 2000 • Moderated the Appraisallnstitute'slnland EmpireMarketTrends Seminar atthe Ontario Convention Center, 1999-2005 • Presented an overview ofMeila-Roos Bond Financing to Chapter of the Appraisallnstitute, October 1988 0 PraentedanoveMmofVutedRightsIDevelapmentAgreementstoChapter5oftheAppraisalInstitute,October1989 Real Hstate Related Seminars Attended Mr. Pontes has attended over 70real estate related seminars since 1991. Please refer to separate listfordetails. Propff* XypEperience InwLiMgAppraisal &ComultingAssignments • Auto Dealerships&Auto Service Projects • Bank Branch Buildings • Board& Care Facilities • College Campuses • Convalescent Homes • Conventional, Bond Financed, Section 8& LIHTC Apartment Projects • EminentDomain Related Valuation • Expert Witness Testimony(Forensic Valuations) • FastFood Restaurants& Single TenantNNN Leased Investments • Food Plan t/Cold Storage Facilities, Proposed & Exis ting) • Gas Station/Mini.MartFaeilities • Highest&BatUse/FeasibilityAnalysesfor VacantLandParcels • Hotels&Motels • IndustrialBuildings/Projects(Single &Multi -Tenant) • IndusWalMasterPlanned,Projects(Including CFD/MeUo-Roos Bond Financed) • Land (Commercial/Industrial,Multi-Family,Residential, SpuificPlan, open Space,Park,Conservation/Habitat) • Lease Dispute Resolution • Leasehold&Sandwich Ground Leased Mixed Use Projects • Lumberyards • Mobile Home Parks • office&Medical office Buildings (Proposed & Existing, Single&Multi-Tenant) • Proposed &Existing, Anchored &Non -Anchored Retail Shopping Centers • Proposed Condominium&Planned Unit Development Projects • PubluAgencyValuation&Consultation • Redevelopment Agency Valuation & Consultation • ResidentialMasterPlanned Communities (including CFD/Mello-Roos&A.D. Bond Financed) • Schools (Preschools, Elementary Schools, Middle Schools&High Schools), Existing &Proposed Construction • Self -Storage Facilities (Single &Multi -Level) • Single -Family Residential Subdivisions (Proposed &Existing,Entry-level to High -find Custom) • Single Family Homes(Proposed, Existing&Models) • Specialized Market Research&Analyses • Truck Terminals • Uniquely Constructed& Special Purpose Properties Primary Geographic Service Areas — All pf Southern CaUfarnia • Riverside County (Including the Lower Desert/Palm Springs/Coachella Valley area) • San Bernardino County (Including the Upper Desert/Victorville/VutorValley area) • Orange, Los Angeles, San Diego, Kern and Ventura Counties Steven R. Fontes, MAI, CCIM ' Real Estate Related Seminars Attended From 1991 to Present ' 1991 • Appraisal Regulations of the Federal BankingAgencies, February 1991 • Title Insurance Workshop, April 1991 1992 ' • Valuation ofLeased Fee, Interests,June1992 • The Subdivision Seminar,July1992 ' 1993 • Appraiser's Complete Review Seminar,January1993 • The Operating Expenses Seminar, April 1993 • The Construction Costs Workshop, August 1993 1994 • PendingRegulatoryand Governmental Changes,January1994 • AppraisalBusinessManagement May 1994 • Defensive Appraising. May 1994 ' • Critical BuiidingInspections, May 1994 • Summary, Restricted and Evaluation Appraisal Reports, August 1994 • Experience Review Training Program, September 1994 • ThePartialAcquisition Seminar, September 1994 1995 • Appraising Land in Southern California Seminar, March 1995 • California's Appraisal Licensing Law -A.B.527and F11MEA,September 1995 • The Appraiser in Cyberspace- Using the Internet, October 1995 1996 • The Southern CalfnrniaMarketTrends Seminar,January1996 • Fourth AnnualRightof Way Valuation Conference (IRWA), March 1996 • The OperatmgFxpensesSeminar, August1996 • The 29" Annual Litigation Seminar, November 1996 I 1997 • The Southern California MarketTrends Seminar, January 1997 • Loss Prevention -Error and Omissions Insurance Update, April 1997 • Litigation Skil for the Appraiser. An Overview, May 1997 • Feasibility of Residential Development Projects, August 1997 • Appraisal of Fast Food Franchises, August 1997 • Small hotel/Motel Valuation Seminar, October 1997 1998 • The Southern CalijbrniaMarket Trends Seminar, January 1998 • Inland Empire Market Trends Seminar, June 1999 • no Appraiser's Role in the Redevelopment Process, August 1998 • The Wall Street Connection — Trends inReal Estate Debt & Equity Markets, August 1998 • The Technical Inspection of Residential Real Estate, August 1998 • CCBfs- Your Valuation Advantage, August 1998 1999 • Inland Empire Market TrendsSeminar, June 1999 • Single -Tenant Net Leased Properties, August 1999 • no Appraisal of Skilled Nursing Facilities, August 1999 • Attacking and Defending an Appraisal in Litigation, August 1999 • Calfornia'sAppraisal Licensing Law -A.B.527and PIMA, September 1999 2000 • The Southern CalforniaMarketTrends Seminar, January 2000 • Inland Empire Market Trends Seminar,June 2000 • The Psych ology of Expert Testimony, September 2000 • Recent Trends in Master -Planned Communities, September 2000 2001 • CCLMInternet Site to Do Business Seminar (Web -based GIS & Demographics), January 2001 • The Operating Expense Seminar, February 2001 • Bridging the Gap. Marketability Discounts forReal Estate Interests, May 2001 • Inland EmpirePiannedGivingRoundtable,ThePlannedGivingAudit,May2001 • Western RegwnalPlannedGiving Conference,June2001 ThcABC's of Planned Gsving UncovcringYour Dmor's Fnrgottcn Real &talc The Statc of the Estatc Tax I 1 • Inland Empire Market Trends Seminar,June2001 • Graham -Leach Bliley Act (Information Privacy Seminar), September 2001 • The Internet&TechnolagyIssuesandtheAppraiser,November2001 2002 • Case Studies in Limited Partnership and Common Tenancy Valuation, May 2002 • Inland Empire Market Trends Seminar, June 2002 • Current Issues in Land Development, October 2002 • Tax Wise FxitStrategiesinaHot Red Estate Market, October 2002 • Litigation Seminar, November 2002 ' 2003 • Economic Outlook 2003, Hosted byThe Private Bank atBankofAmerica ,January 2003 • Invitedparticipant in the strategicp1anning meetingfor the newlyformed Centerfor Sustainable Suburban Growth at ' the University of Calirnia, Riverside, University Extension Center, January 2003 • InlandEmpireMarket Trends Seminar,June2003 • Appraisal of Local Retail Properties,October2003 • Expanding Your Range of Services, October 2003 2004 • 1031 E=hange Seminar, Inland Valley Association ofRe-altors, January 2004 • MarketValueimplications oftheMulti-SpeciesHabitat Conservation Plan, March2004 • Inland Empire Market Trends Seminar,June2004 • CCIMPacilitatingthe Transaction Conference, October2004 Challenges &Opportunities of Networking Retail Marketing &Property Exchange From Opportunity to Listingto Saie InvaturAnalysis Techniques 2005 • Planned Transportation Improvementsforthe Inland Empire,March 2005 • Inland Empire Market Trends Seminar, June2005 • Contemporary Approaches to Land Seminar, June2005 • Real Estate Finance Value& InvestmentPerformanceSeminar, August 2005 • The Valuation of Leases, Leaseholds and Leased Fee Estates, September2005 2006 • Scope of WorLExpandingYourRapge of Services, July 2006 CONTRACT LETTER I PROFESSIONAL SERVICES AGREEMENT WITH REINHART-FONTES ASSOCIATES, INC. FOR APPRAISAL SERVICES THIS AGREEMENT is made and entered into as of this 24th day of October, 2006, by and between the CITY OF NEWPORT BEACH, a Municipal Corporation ("City"), and Reinhart — Fontes Associates, Inc. a California Corporation whose address is 2285 Business Way, Riverside, California, 92501 ("Consultant"), and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City is planning to value certain parcels in the City of Newport Beach for the purpose of establishing regulatory fees. C. City desires to engage Consultant to appraise 2 commercial and 2 park properties consistent with the attached scope of services. ('Project'). D. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the services described in this Agreement. E. The principal member of Consultant for purposes of Project, shall be Steven Fontes, MAI, CCIM. F. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the above written date, and shall terminate on the 23rd day of October, 2007, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of Services attached hereto as Exhibit A and incorporated herein by reference. The 1 11 City may elect to delete certain tasks of the Scope of Services at its sole discretion. TIME OF PERFORMANCE Time is of the essence in the performance of services under this Agreement and Consultant shall perform the services in accordance with the schedule included in Exhibit A. The failure by Consultant to strictly adhere to the schedule may result in termination of this Agreement by City. Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Consultant's reasonable control. However, in the case of any such delay in the services to be provided for the Project, each party hereby agrees to provide notice to the other party so that all delays can be addressed. 3.1 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that are beyond Consultant's control. 3.2 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by either telephone, fax, hand -delivery or mail. 4. COMPENSATION TO CONSULTANT City shall pay Consultant for the services on a time and expense -not-to-exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit A and incorporated herein by reference. Consultant's compensation for all work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed Twenty Four Thousand and Five Hundred Dollars and no/100 ($24,500) without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.1 Consultant shall submit monthly invoices to City describing the work performed the preceding month. Consultant's bills shall include the name of the person who performed the work, a brief description of the services performed and/or the specific task in the Scope of Services to which it relates, the date the services were performed, the number of hours spent on all work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) days after approval of the monthly invoice by City staff. 4.2 City shall reimburse Consultant only for those costs or expenses specifically approved in this Agreement, or specifically approved in writing 1 E 5. 19 in advance by City. Unless otherwise approved, such costs shall be limited and include nothing more than the following costs incurred by Consultant: A. The actual costs of subconsultants for performance of any of the services that Consultant agrees to render pursuant to this Agreement, which have been approved in advance by City and awarded in accordance with this Agreement. B. Approved reproduction charges. C. Actual costs and/or other costs and/or payments specifically authorized in advance in writing and incurred by Consultant in the performance of this Agreement. 4.3 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, "Extra Work" means any work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit A. PROJECT MANAGER Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Steven Fontes, MAI, CCIM to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. City's approval shall not be unreasonably withheld with respect to the removal or assignment of non -key personnel. Consultant, at the sole discretion of City, shall remove from the Project any of Its personnel assigned to the performance of services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. ADMINISTRATION This Agreement will be administered by the Planning Department. Daniel Trimble shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to the services to be rendered pursuant to this Agreement. 3 7. CITY'S RESPONSIBILITIES In order to assist Consultant in the execution of its responsibilities under this Agreement, City agrees to, where applicable: A. Provide access to, and upon request of Consultant, one copy of all ' existing relevant information on file at City. City will provide all such materials in a timely manner so as not to cause delays in Consultant's work schedule. B. Provide blueprinting and other services through City's reproduction company for bid documents. Consultant will be required to coordinate the ' required bid documents with City's reproduction company. All other reproduction will be the responsibility of Consultant and as defined above. C. Provide usable life of facilities criteria and information with regards to new facilities or facilities to be rehabilitated. 8. STANDARD OF CARE 8.1 All of the services shall be performed by Consultant or under Consultant's ' supervision. Consultant represents that it possesses the professional and technical personnel required to perform the services required by this Agreement, and that it will perform all services in a manner commensurate with community professional standards. All services shall be performed by qualified and experienced personnel who are not employed by City, nor have any contractual relationship with City. ' 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep In full force in effect during the term hereof, at its sole cost and ' expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that Is legally required of Consultant to practice Its profession. tasilfelit.VF- #1 % 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, or acts of God, or the failure of City to furnish timely information or to approve or disapprove Consultant's work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers and employees (collectively, the "Indemnified Parties) from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes 4 of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this Agreement, any work negligently performed or services provided under this Agreement (including, without limitation, defects in workmanship or materials and/or design defects [if the design originated with Consultant]) or Consultant's presence or activities conducted on the Project (including the negligent and/or willful acts, errors and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the active negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. -This iicidemnity shall appi 10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any of Consultant's employees or agents, to be the agents or employees of City. Consultant shall have the responsibility for and control over the means of performing the work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with City's designated Project Administrator and any other agencies that may have jurisdiction or interest in the work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with City's Project Administrator in advance of all critical decision points I t in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator and/or his/her duly authorized designee informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE Without limiting Consultant's indemnification of City, and prior to commencement of work. Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, a policy or policies of liability insurance of the type and amounts described below and in a form satisfactory to City. A. Certificates of Insurance. Consultant shall provide certificates of insurance with original endorsements to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City's Risk Manager prior to commencement of performance or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. B. surer o in cow ge on i C. Acceptable Insurers. All insurance po' ies shall be issued by an insurance company currently authorize y the Insurance Commissioner to transact business of insurance the State of California, with an i assigned policyholders' Rating of (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. D. Coverage Requirements. I. orkers' Compensation Coverage. Consultant shall me'mai cnNsuvr�,�vr �s A vwKGiWn• hers' Compensation Insurance and Employer's Li ity of a+5'1DN1 Insure for his or her employees in accordance with laws of ka HAS �'-`'� oP3EDO"` the State o lifornia. In addition, Consultant require each Of V40P.Vf"cf-S eomgeostinoo subcontractor to imilarly maintain ers' Compensation NS�kAc�� rM n�iek rur�. Insurance and Emplo Liability rance in accordance with oeNSJv-rvr vaiw- OE'res"'a the laws of the State of C is for all of the subcontractors t?A°,,,dt,�c3toas�W�rnresemployees. Any noti of can tion or non -renewal of all �NI� n1�s Agrr. Workers' Compe ion policies must be eived by City at least S, F, thirty (301,pWdar days (10 calendar days wrtt notice of non- IV. k . pay of premium) prior to such change. The insure all agree ,terwaive all rights of subrogation against City, its officers, a s, L E. s.gF. a-1417 - ii. General Liability Coveracle. Consultant shall maintain commercial general liability insurance in an amount not less than one million dollars ($1,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, contractual liability. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this Agreement, or the general aggregate limit shall be at least twice the required occurrence limit. iii. Automobile Liability Coverage. Consultant shall maintain automobile insurance covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit for each occurrence. IV. Professional Errors and Omissions Insurance. Consultant shall maintain professional errors and omissions insurance, which covers the services to be performed in connection with this Agreement in the minimum amount of one million dollars ($1,000,000). Endorsements. Each general liability and automobile liability insurance policy shall be endorsed with the following specific language: I. The City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as additional insureds with respect to liability arising out of work performed by or on behalf of the Consultant. S�Gity,' s liabilityand vQ1, sees, eF g .fevided-te-Gity. Any insurance maintained by City, including any self -insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. iii. This insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. iv. 7 15. 16. 17 V. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either parry except after thirty (30) calendar days (10 calendar days written notice of non-payment of premium) written notice has been received by City. F. Timely Notice of Claims. Consultant shall give City prompt and timely notice of claim made or suit instituted arising out of or resulting from Consultants performance under this Agreement. G. Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the work. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint -venture or syndicate or cotenancy, which shall result in changing the control of Consultant. Control means fifty percent (50%) or more of the voting power, or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint -venture. SUBCONTRACTING The parties recognize that a substantial inducement to City for entering into this Agreement is the professional reputation, experience and competence of Consultant. Assignments of any or all rights, duties or obligations of the Consultant under this Agreement will be permitted only with the express written consent of City. Consultant shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of City. OWNERSHIP OF DOCUMENTS Each and every report, draft, map, record, plan, document and other writing produced (hereinafter "Documents"), prepared or caused to be prepared by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further N t compensation to Consultant or any other parry. Consultant shall, at Consultant's expense, provide such Documents to City upon prior written request. Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from Consultant will be at City's sole risk and without liability to Consultant. Further, any and all liability arising out of changes made to Consultant's deliverables under this Agreement by City or persons other than Consultant is waived against Consultant and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 18. CONFIDENTIALITY 1 All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the services in this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY ' The Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement of any United States' letters patent, trademark, or copyright ' infringement, including costs, contained in Consultant's drawings and specifications provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the work to be ' performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. ' 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue work as a result of such withholding. Consultant g It shall have an immediate right to appeal to the City Manager or his/her designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the work accomplished by Consultant, the additional design, construction and/or restoration expense shall be borne by Consultant. Nothing in this paragraph is intended to limit City's rights under the law or any other sections of this Agreement. 23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS _. City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST The Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act"), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Consultant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from Consultant's violation of this Section. 25. NOTICES All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Daniel Trimble Planning Department City of Newport Beach 3300 Newport Boulevard 10 i Newport Beach, CA, 92663 Phone: 949-644-3230 Fax: 949-644-3229 9 All notices, demands, requests or approvals from CITY to Consultant shall be addressed to Consultant at: Attention: Steven Fontes, MAI, CCIM Reinhart-Fontes, Inc. I: 2285 Business Way Riverside, CA 92501 Phone: 951.656.6036 Fax: 951.656.5747 26. TERMINATION In the event that either party fails or refuses to perform any of the, provisions of this Agreement at the time and in the manner required, that party shall be deemed- in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after ['. receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by L giving to the defaulting party written notice thereof. Notwithstanding the above provisions, City shall have the right, at its sole discretion and without cause, of terminating this Agreement at any time by giving seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of 1 termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 1 27. COMPLIANCE WITH ALL LAWS Consultant shall at its own cost and expense comply with all statutes, 1 ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Consultant shall conform to applicable City, I county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 1 II 28. WAIVER A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29. INTEGRATED CONTRACT This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 30. CONFLICTS OR INCONSISTENCIES In the event there are any confUcts.or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 31. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 32. AMENDMENTS This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 33. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 34. CONTROLLING LAW AND VENUE The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 12 35. EQUAL OPPORTUNITY EMPLOYMENT Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first written above. APPROVED AS TO FORM: Aaron ZI Harp, , Assistant City Attorney for the City of Newport ATTEST. B4aonne Harkless, City Clerk 'I CITY OF NEWPORT BEACH, A Municipal CorpOra tion By:— City Manager for the City of Newport Beach CONSULTANT: By:_aa Corporate Ofift Title: vice Psesoenfr A sedoeTW Print Name: Steven Fontes By: ojlle� CorpTitle: ateQfficer jJ Title: Print Name: 1 13 Attachments: F:luserftafthared\A II II f=vhihif A — Cnnnc of 72cniiroe and Rillinn PnfPC Scope of Services and Billing Rates October 31, 2006 Dan Trimble City of Newport Beach Planning Department 330 Newport Boulevard Newport Beach, California 92663 Re: Two Park Sites and Two Commercial Properties Both park sites are located in the City Limits of Newport Beach. Both parks will be appraised in fee simple. The park sites are identified as follows: APN 440-161-01 13.87 acres Located at 2555 Vista Del Oro APN 117-801-15 4.80 acres Located at the SEC of Dover Drive & Castaways Lane The following assumptions would be included in the park site appraisals. * A residential density of 10 units per acre would be allowed. * That no future lots on the site would have view potential. * That the sites were nearly level. * That the property was vacant (i.e. devoid of all improvements) * That all utilities were available to serve the property. * That entitlements to develop the site had already been granted or were readily available. The fee to appraise each park site under these assumptions are as follows. APN 440-161-01 $7,500 13.87 acre park site APN 117-801-15 $6,500 4.80 acre park site In addition, you need two commercial properties valued. We will not have the benefit of interior inspection and/or lease document review. Each of these properties will be valued as if held in fee simple. Both commercial properties are located in the City Limits of Newport Beach. The commercial properties are identified as follows: APN 459-186-16, 17 Baja Fresh fast food located at 3040-3050 W. Coast Highway APN 047-171-14 A real estate office located at the SEC of Newport & McFadden Our fee to appraise each commercial property are as follows. APN 459-186-16,17 $5,000 Fast food building and parking lot valued in bulk APN 047-171-14 $5,500 Real estate office II II No FF&E (furniture fixtures or equipment) will be valued. We will value the real estate only. No business value or going concern value will be considered. No inventory will be considered. Per your instructions, a fair market value definition will be used as if for eminent domain, although eminent domain is not involved with respect to any of these properties. We could deliver all reports within 45 days from the point of engagement. Payment of our fees will be due within 30 days of report delivery. The purpose of the reports is to establish a baseline value for residential land and commercial property which you will use for the purpose of establishing regulatory fees. No other use or users are intended by the appraiser. We will value the real estate only. No business value, going concern, FF&E (furniture, fixtures or equipment) or inventory will be considered in the analyses. The existing leases will be ignored for purposes of this analysis. Our appraisal would be written as if no environmental contamination/stigma existed on the property. This contingency would be in the appraisal report. Our fee does not include any subsequent meetings, arbitration, court -related proceeding, testimony or depositions relating to our appraisal work. If these services are requested at a later date or if we are subpoenaed to testify, the client shall be responsible for payment to us for our time. Our hourly billing rate for such services is $250 per hour with a $1,000 per day minimum regardless of how much time per day is spent in actual meetings. In addition, if it is necessary for us to prepare for any related meetings (in person or by phone), at our sole discretion, we shall do so, and you will be billed for preparation time at $250 per hour on a time -spent basis. Payment for these services shall be due no later than 1 week after the conclusion of any such meeting(s). You will not be responsible for payment if telephone contact is made to our office for routine follow up questions requiring clarification of the contents of our appraisal reports. We will bear no responsibility for any sort of disclosure to a subsequent buyer or interested party. In no event shall the appraisal be relied upon for building, mechanical, electrical, structural, pest or hazardous condition(s) disclosure to you, the prospective owner(s) or any other third party(s). Any subsequent buyer shall procure and complete their own property due diligence at their own discretion. The appraisal report shall not be used for this purpose. 74 REALQUESTPROPERTYDETAIL REPORT 1 11 1 Property Detail Report For Property Located At RealQuest®com 3050 E COAST HWY, CORONA DEL MAR CA 92625.2209 Owner Information: Owner Name: CARSON KIMBERLYIVILLAGE INC Mailing Address: PO BOX 957, CORONA DEL MAR CA 92625.5957 B013 C/O BAJA FRESH WESTLAKE KC PROPERTIES JT Phone Number. Vesting Codes: // Location information: Legal Description: TR 323 LOT 6 BILK P ALL -E X HWY- County: ORANGE, CA APN: 459-186-16 Census Tract / Block: 627.0215 Alternate APN: Township -Range -Sect: Subdivision: 323 Legal Book/Page: Map Reference: 33-B1 / 919-F2 Legal Lot: 6 Tract #: 323 Legal Block: P School District: NEWPORT MESA UNIF Market Area: Neighbor Code: Owner Transfer Information: Recording/Sale.Date: 10/15/2003 / 08/28/2003 Sale Price: Document#: 1274914 Last Market Sale Information: Recording/Sale Date: 02109/2000 / Sale Price: Sale Type: FULL Document #: 74042 Deed Type: DEED OF DISTRIBUTION Transfer Document #: New Construction: Title Company: Lender: Seller Name: JTC JRC Prior Sale Information: Prior Rec/Sale Date: 03104119971 Prior Sale Pdce: Prior Doc Number: 96982 Prior Deed Type: QUIT CLAIM DEED Property Characteristics: Munlc/fownship: Deed Type: 1st Mtg Document #: 1st Mtg Amount/Type: 1st Mtg Int. Rate/Type: 1 st Mtg Document #: 2nd Mtg AmounUrype: 2nd Mtg Int. Rate/Type: Price Per SgFt: Multi/Split Sale: Prior Lender. Prior 1st Mtg AmUrype: Prior 1st Mtg Rate/Type: Gross Area: 2,383 Parking Type: Living Area: 2,383 Garage Area: Tot Adj Area: Garage Capacity: Above Grade: Parking Spaces: Total Rooms: Basement Area: Bedrooms: Finish Bsmnt Area: Sath(F/H): / Basement Type: Year Built / Eff: 1961 / Roof Type: Fireplace: / Foundation: # of Stories: 1.00 Roof Material: Other Improvements: Site Information: Zoning: Acres: 0.13 Flood Zone: X Lot Area: 5,744 Flood Panel: 0602270401H Lot Width/Depth: x Flood Panel Date: 02/18/2004 Res/Comm Units: / Land Use: COMMERCIAL BUILDING Tax Information: Total Value: $379,659 Assessed Year: 2006 Land Value: $143,466 Improve %: 062% Improvement Value: $236,194 Tax Year: 2006 Total Taxable Value: $379,659 GRANT DEED Construction: Heat Type: Exterior wall: Porch Type: Patio Type: Pool: Air Cond: Style: Quality: Condition: County Use: COMMERCIAL State Use: Site Influence: Sewer Type: Water Type Property Tax: $6,410.02 Tax Area: 7001 Tax Exemption: Property Detail Report For Property Located At RealauesE®com 3040 E COAST HWY, CORONA DEL MAR CA 92625-2209 Owner Information: Owner Name: CARSON KIMBERLYNILLAGE INC Mailing Address: PO BOX 957, CORONA DEL MAR CA 926255957 B013 C/O BAJA FRESH WESTLAKE KC PROPERTIES JT Phone Number: Vesting Codes: ll Location information: Legal Description: TR 323 LOT 5 BLK P ALL -E X HWY- County: ORANGE, CA APN: 459-186.17 Census Tract / Block: 627.02 / 5 Alternate APN: Township -Range -Sect: Subdivision: Legal Book/Page: Map Reference: 33-131 / 919-F2 Legal Lot: 5 Tract#: 323 Legal Block: P School District: NEWPORT MESA UNIF Market Area: Munic/Township: Neighbor Code: Owner Transfer Information: Recording/Sale Date: 10/15/2003 / 08/28/2003 Deed Type: Sale Price: 1st Mtg Document#: Document#! 1274914 Last Market Sale Information: Recording/Sale Date: / let Mtg Amount/Type: Sale Price: let Mtg Int. Rate/Type: Sale Type: 1st Mtg Document #: Document M 2nd Mtg Amount/rype: Deed Type: 2nd Mtg Int. Rate/Type: Transfer Document #: Price Per SgFt: New Construction: Muld/Split Sale: Title Company: Lender: Seller Name: Prior Sale Information: Prior ReclSale Date: / Prior Lender. Prior Sale Price: Prior let Mtg Amt/Type: Prior. Doc Number. Prior 1st Mtg Rate/Type: Prior Deed Type: Property Characteristics: Gross Area: Parking Type: Living Area: Garage Area: Tot Adj Area: Garage Capacity: Above Grade: Parking Spaces: Total Rooms: Basement Area: Bedrooms: Finish Bsmnt Area: Bath(F/H): / Basement Type: Year Built / Eff: 1961 / Roof Type: Fireplace: I Foundation: # of Stories: 1.00 Roof Material: Other Improvements: Site Information: Zoning: Acres: 0.11 Flood Zone: X Lot Area: 4,941 Flood Panel: 0602270401H Lot Width/Depth: x Flood Panel Date: 02/18/2004 Res/Comm Units: / Land Use: COMMERCIAL (NEC) Taxlnformation: Total Value: $98,600 Assessed Year. 2006 Land Value: $97,456 Improve %: 001% Improvement Value: $1,044 Tax Year: 2006 Total Taxable Value: $98,600 GRANT DEED Construction: Heat Type: Exterior wall: Porch Type: Patio Type: Pool: Air Cond: Style: Quality: Condition: County Use: COMMERCIAL State Use: Site Influence: Sewer Type: Water Type: Property Tax: $1,042.98 Tax Area: 7001 Tax Exemption: ZONINGDOCUMENTATION CHAPTER 20.15 COmwmAL DISTRICTS Sections: Page 20.15-1 Commercial Districts 20.15.010 Specific Purposes 20.15.020 Commercial Districts: Land Use Regulations 20.15.030 Commercial Districts: Property Development Regulations 20.15.040 Review of Plans 20.15.010 Specific Purposes ' The commercial districts regulations are intended to: ' A. Locate commercial development in areas which are consistent with the General Plan and provide office, retail commercial, and service commercial uses needed by residents of, and visitors to, the City and region. B. Strengthen the City's economic base, and provide employment opportunities close to home for residents of the City and surrounding communities. C. Create suitable environments for commercial uses consistent with the General Plan and protect them from the adverse effects of inharmonious uses. D. Minimize the impact of commercial development on adjacent residential districts. E. Ensure that the appearance and effects of commercial buildings and uses are harmonious with the character of the area in which they are located. F. Ensure the provision of adequate off-street parking and loading facilities. G. Provide sites for public and semipublic uses needed to complement commercial development or compatible with a commercial environment. Specific commercial districts are as follows: Retail and Service Commercial (RSC) District. Provides areas which are predominantly retail in character but which allow some service office uses. Recreational and Marine Commercial (RMC) District. Preserves and encourages uses with a marine commercial and visitor serving orientation in waterfront areas. Administrative Professional, and Financial (APF) District. Provides areas which are predominantly offices, but which also accommodate support retail and service uses. 11/20/01 Page20.15-2 Commercial Districts 20.15.020 Commercial Districts: Land Use Regulations The following schedule establishes the land uses defined in Chapter 20.05 as permitted or conditionally permitted in commercial districts, and includes special requirements, if any, applicable to specific uses. The letter ?" designates use classifications permitted in commercial districts. The letter "L" designates use classifications subject to certain limitations prescribed under the "Additional Use Regulations" which follows. The letters "UP" designate use classifications permitted on approval of a use permit, as provided in Chapter 20.91. The letters "PD/U" designate use classifications permitted on approval of a use permit issued by the Planning Director, as provided in Chapter 20.91. The letters "P/UP" designate use classifications which are permitted when located on the site of another permitted use, but which require a use permit when located on the site of a conditional use. Letters in parentheses in the "Additional Regulations" column refer to "Additional Use Regulations" following the schedule. Where letters in parentheses are opposite a use classification heading, referenced regulations shall apply to all use classifications under the heading. Commercial Districts: Land Use Regulations P - Permitted UP - Use permit PDM =Use pemtit ismedby the Plamning Director L - Limited(see Additional Use Regulations) — = Not Permitted RSC APF RMC Additional Regulations RESLDENTIAL (A), (B), (C), (D) DAY CARE, LIMITED P P P PUBLICANDSEMI -PUBLIC (A), (B), (C), (D) CLUBS AND LODGES UP UP Tip (P) -YACHT CLUB UP UP UP (I-), (F), (P) CONVALESCENT FACILITIES --- PD/U --- CULTURAL INSTITUTIONS UP UP UP (P) DAY CARE, GENERAL P L-1 L-3 EMERGENCY HEALTH CARE --- P GOVERNMENT OFFICES P P HELIPORTS UP UP UP (G) MARINAS P P P (E), (F) PARK AND RECREATION FACILITIES P P P PUBLIC SAFETY FACILITIES UP UP UP RELIGIOUS ASSEMBLY L-11 L-11 --- RESIDENTIAL CARE, GENERAL UP UP --- SCHOOLS, PUBLIC AND PRIVATE --- UP --- 11/20/01 I 11 I u l .d Commercial Districts: Land Use Regulations P = Permitted UP = Use permit PD/U -Use permit issuedby the Planning Director L = Limited (see Additional Use Regulations) — - Not Permitted UTILITIES, MINOR COMMERCIAL USES ADULT -ORIENTED BUSINESSES AMBULANCE SERVICES ANIMAL SALES AND SERVICES -ANIMAL GROOMING -ANIMAL HOSPITALS -ANIMAL RETAIL SALES ARTISTS' STUDIOS BANKS/SAVINGS AND LOANS -WITH DRIVE-THROUGH/DRIVE UP SERVICE BUILDING MATERIALS AND SERVICES CATERING SERVICES COMMERCIAL FILMING COMMERCIAL RECREATION AND ENTERTAINMENT COMMUNICATION FACILITIES EATING AND DRINKING ESTABLISHMENTS -FULL SERVICE, HIGH TURNOVER -FULL SERVICE, LOW TURNOVER -FULL SERVICE, SMALL SCALE -TAKE-OUT SERVICE -TAKE-OUT SERVICE, LIMITED -ACCESSORY -BARS AND COCKTAIL LOUNGES FOOD AND BEVERAGE SALES -CONVENIENCE MARKETS FUNERAL AND INTERNMENT SERVICES LABORATORIES MAINTENANCE AND REPAIR SERVICES MARINE SALES AND SERVICES -BOAT CHARTER, RENTAL, AND SALES -BOAT STORAGE -BOAT YARDS Page 20.15-3 Commercial Districts RSC APF RMC Additional JP UP UP P P P (A), (13), (C), (D) P --- P (H), (1) L-4 --- --- PD/U PD/U UP UP — PD/U --- --- P P P (I) P P L-3 UP UP L-3 P — — P P P UP uP UP (1) UP UP UP (1), (P) P P L-3 UP UP UP m, m, (P) UP UP UP (1),(1)>(P) PD/U PD/U PD/U (1), (J), (P) UP UP UP (n> (1), (P) PD/U PD/U PD/U (I), (J), (P) P P P (1), (1), (P) UP UP UP m>(I),(P) P --- --- (P) P L-1 P (P) UP UP L-3 P P L-3 P P L-3 (D) UP -- UP (D), (E), (F) P (D), (E), (F) --- --- L-6 (D), (E), (F) 11/20/01 1 Commercial Districts: Land Use Regulations P = Permitted UP = Use permit PD/U =Use permit issued by the Planning Director L = Limited (see Additional Use Regulational — = Not Permitted Page 20.15-4 Commercial Districts RSC APF RMC Additional -MARINE SERVICE STATION PD/U --- PD/U (E), (F) -RETAIL MARINE SALES P L-1 P (E), (F) NURSERIES P — OFFICES, BUSINESS AND PROFESSIONAL P P L-3 PAWN SHOPS P — --- m PERSONAL IMPROVEMENT SERVICES PD/U PD/U PD/U (I) -HEALTH/FITNESS CLUBS PD/U PD/U PD/U PERSONAL SERVICES P L•1 L-3 -DRY CLEANERS P L-1 L-3 -DRY CLEANERS (COLLECTION ONLY) P L-1 L-3 -FORTUNE TELLING P P L-3 -MASSAGE ESTABLISHMENTS L-7 L-7 L-8 -SELF SERVICE LAUNDRIES P --- L-3 POSTAL SERVICES P P L-3 PRINTING AND DUPLICATING SERVICES P P L-3 RESEARCH AND DEVELOPMENT SERVICES P P P RETAIL SALES P L-1 L-9 -LIMITED P L-1 L-9 -PHARMACIES AND MEDICAL SUPPLIES P L-1 L-3 SECOND HAND APPLIANCES/CLOTHING L-5 L-5 L-5 (n SWAP MEETS, RECURRING UP — (n TRAVEL SERVICES P P L-3 VEHICLE/EQUIPMENT SALES AND SERVICES -AUTOMOBILE WASHING UP L-12 L-12 -COMMERCIAL PARKING FACILITY PD/U PD/U PD/U -SERVICE STATIONS UP UP UP (K), (P) -VEHICLE/EQUIPMENT REPAIR UP L-12 --- -VEHICLE/EQUIP RENTALS (OFFICE ONLY) P P L-2 -VEHICLE/EQUIPMENT RENTALS UP L-12 L-3 -VEHICLE/EQUIPMENT SALES UP L-12 --- -LIMITED PD/U L-12 --- -VEHICLE STORAGE L-12 L-12 --- VISITOR ACCOMMODATIONS -BED AND BREAKFAST INNS PD/U PD/U PD/U 11/20/el Page 20.15-5 Commercial Districts Commercial Districts: Land Use Regulations P = Pemutted UP = Use permit PDM =Use pemdt issued by the Planning Director L = Limited (see Additional Use Re¢ulationsl — = NotPemdtted RSC APF RMC Additional Regulations -HOTELS, MOTELS AND TIME-SHARES UP UP UP (0) -RV PARKS UP — UP -SRO RESIDENTIAL HOTELS UP UP --- WAREHOUSING AND STORAGE, LIMITED --- UP — (L) WAREHOUSING AND STORAGE, SELF SERVICE --- UP (L) INDUSTRIAL (A), (B), (C), (D) INDUSTRY, CUSTOM -LIMITED UP --- --- INDUSTRY, LIMITED -SMALL-SCALE UP --- --- INDUSTRY, MARINE RELATED — — UP (E) STORAGE AND DISTRIBUTION --- PD/U --- (L) AGRICULTURAL AND EXTRACTIVE USES (A), (B), (C) MINING AND PROCESSING L-10 L-10 L-10 (M) ACCESSORY USES (A), (B), (C) ACCESSORY STRUCTURES AND USES P/UP P/UP P/UP TEMPORARY USES (A), (B), (C) ANIMAL SHOWS P P P (N) CHRISTMAS TREE/PUMPKIN SALES L-5 L15 L-5 (B) CIRCUSES AND CARNIVALS P P P (N) COMMERCIAL FILMING, LIMITED P P P (N) FAIRS AND FESTIVALS P P P (N) HELIPORTS, TEMPORARY L-5 L-5 L-5 (G) OUTDOOR STORAGE & DISPLAY, TEMPORARY P — P (D) REAL ESTATE OFFICES, TEMPORARY L-5 L-5 L-5 (B) RECREATION AND ENTERTAINMENT EVENTS P P P (N) TRADE FAIRS P P P (N) litiolol Page 20.15-6 Commercial DistrictsCommercial Districts: Additional Land Use Regulations L-1 Permitted as an accessory use and may be permitted as an ancillary use on a property separate from the principal use upon the finding by the Planning Director that the use remains subordinate to and serve the principal use pursuant to the definition contained in Chapter 20.03. L-2 Permitted when in conjunction with an incentive use under the provisions Section 20.60.080: Marine Incentive Uses. L-3 Permitted with a use permit when in conjunction with an incentive use under the of this Section 20.60.080: Marine Incentive Uses. provisions L-4 Use permit required if located within 1,000 feet of a R district or the boundaries of a site occupied by a Public or Private School or Park and Recreation Facility. Conditions may be imposed in approving such a permit to limit vehicle speeds and sirens. L-5 Subject to the approval of the Planning Director. L-6 Boat haul -out, boat repair, and dry boat storage permitted; boat building permitted with a use permit. L-7 See Chapter 20.87: Massage Establishments. ' L-8 See Chapter 20.87: Massage Establishments; permitted with a use permit when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine ' Incentive Uses. L-9 Hardware stores, shoe stores, specialty shops, and general retail sales permitted when in conjunction with an incentive use under the provisions of Section 20.60.080: Marine Incentive Uses. L-10 Limited to the removal of earthen material. No permit shall be required for normal grading or landscaping on lots of record. L-11 Limited to facilities occupying less than 5,000 square feet; use permit required. L-12 Permitted as an ancillary use with a use permit. (A) See Section 20.60.025: Relocatable Buildings. (B) See Section 20.60.015: Temporary Structures and Uses. (C) See Section 20.60.050: Outdoor Lighting. (D) See Section 20.60.105: Outdoor Storage & Display I 11/20/01 Page 20.15-7 Commercial Districts (E) See Section 20.60.080: Marine Incentive Uses. (F) See Section 20.60.070: Waterfront Development Regulations. (G) See Section 20.60.055: Heliports and Helistops (H) See Chapter 20.88: Adult -Oriented Businesses. (I) See Section 20.60.085: Uses Requiring City Manager Approval. (J) See Chapter 20.82: Eating and Drinking Establishments. (K) See Chapter 20.80: Automobile Service Stations. (L) Limited to areas specifically permitted by the General Plan. M See Chapter 20.81: Oil Wells. (l) Special event permit required, see Chapter 5.10 of the Municipal Code. (0) See Chapter 20.84: Time Share Developments. (P) See Chapter 20.89: Alcoholic Beverage Outlets. 20.15.030 Commercial Districts: Property Development Regulations The following schedule prescribes development regulations for commercial districts. The columns prescribe basic requirements for permitted and conditional uses. Letters in parentheses in the "Additional Regulations" column reference regulations following the schedule or located elsewhere in this code. Commercial Districts: Property Development Regulations RSC APF RMC Additional Regulations (A). (1) Minimum Lot Area (sq. ft.) 2,000 2,000 2,000 (B), (C) -Comer Lots (sq. ft.) Minimum Lot Width (fL) -Comer Lots (ft.) Minimum Yards: II 25 25 25 (B) 11/20/01 �1 Ii 1 1 1 Page 20.15-8 Commercial Districts Commercial Districts: Property Development Regulations RSC APF RMC Additional Regulations Side (ft.) -Abutting an R District (ft.) Rear (ft.) -Abutting an R District (ft.) -Abutting an alley (ft.) Bulkhead Setback ' Maximum Height (ft.) Maximum Floor Area Limit Off -Street Parking and Loading 15 — (C), (D), (F) (C), (D), (F) 5 5 5 (C), (D), (F) (C), (D) 5 5 5 (C), (D) 10 10 10 (C), (D) 10 10 10 (F) (G) (H) Commercial Districts: Additional Property Development Regulations (A) See Section 20.60.060: Plans and Drawings for Commercial and Industrial Districts. (B) See Chapter 19.68 in Title 19: Merger of Contiguous Lots. (C) See Section 20.60.065: Residential Uses in Commercial and Industrial Districts. (D) See Section 20.60.030: Extensions Into Yards. (E) APF District. A 15 foot front yard setback shall be maintained on all property located in the APF District, except where otherwise specified on the Districting Maps. (F) See Chapter 20.65: Height Limits. (G) See Chapter 20.63: Floor Area Ratios and Building Bulk. (H) See Chapter 20.66: Off -Street Parking and Loading. (1) For All Property Development Regulations: In addition to the lot area, width, and other requirements set forth preceding, subdivisions shall comply with the provisions of Title 19 (Subdivision Code), as amended. 20.15.040 Review of Plans 11RD/o1 U Page 20.15-9 Commercial Districts See Section 20.60.060: Plans and Drawings for Commercial and Industrial Districts. I 1 I 1 '1 u 7make ORANGE COUNTY PROFILE Orange County (Orange County PMSA) covers 948 square miles, and has a July 1, population of 3,061,100, an increase of 649,100 persons since 1990. Thiswould the County larger than the St. Louis MO -IL MSA. • A quick demographic profile of Orange County indicates that: 51.3% of the population is white non -Hispanic; 30.8% is Hispanic; 13.8% is Asian -Pacific Islander; Economic Vitality, and 1.5% is black. 80% of the population have a high school diploma or more, while Trade & jobs 31 % have a bachelor's degree or more. (2000 Census) • There is a diverse economic base in Orange County (based on the concept of "export" of goods or services) using 2005 average employment as a measure. The leading industries were: 1.) tourism with 132,100 jobs; 2.) technology with 112,200; 3.) business & professional services with 59,600; 4.) wholesale trade & logistics with 53,400; and 5.) health services/bio-medicine with 46,300. • Technology is a vital force in the Orange County economy, with several "clusters" of activity, including Irvine (around both the Spectrum and UC Irvine), and in the mid - county area. Areas of emphasis include computer software, semiconductors and bio-med applications. • Orange County is also a major manufacturing center, with 182,700 workers in 444s Ffowersr. 2005. This puts the County just behind Dallas (197,800) and ahead of Atlanta (177,400). 346Floor The largest components are: computer & electronic products with 42,500 jobs; fabricated metal products with 22,800; transportation equipment with 17,000; textile mill products Los Angeles, cn & apparel with 12,600; and machinery with 11,000. 90071 • Orange County businesses have been very aggressive in international trade, and utilize the ports of Long Beach and Los Angeles, as well as Los Angeles International t: 213.622.4300 Airport, Ontario International Airport, and other support activities. P. 213.622.7100 The higher educational assets of Orange County are extensive, including the mvw.laedc.org University of California Irvine (including a medical school), California State University Fullerton, Chapman University, and the Southern California College of Optometry. There are also several well -regarded community colleges. • Transportation service in Orange County is well developed. Besides the freeway system, there is rail mass transit with service by Amtrak and Metrolink, and bus service offered by the Orange County Transit Authority. Commercial air service is offered at Orange County -John Wayne Airport. • Quality of life is a strong point for the County, with nearly 40 miles of coast line with three small craft harbors. The mountains on the east side of the county offer outdoor recreational opportunities. There is also an array of fine and performing arts opportunities at the Orange County Performing Arts Center in Costa Mesa, plus professional baseball and ice hockey. And the modern theme park was born at Disneyland in Anaheim, which now includes a second park called California Adventure that's geared toward a more mature audience. There is also the Knott's Berry Farm and its sibling, Soak City USA. May 2006 WOO T¢noc CMMAssocu'm,ie 350 South Figueroa Sc. Swtc 172 Ong World Trade Center. Suite 295 LosAr+cei%p-�Loyc n¢neai W Angel", Callfomla 90g71 USA Long Each, California 90931 USA r: 213.680.1888 V. 213.680.1978 c 582.495.7070 n 562A96.7071 4da1a®w'ru+natwg Infolbor unnewrg SUILDINGSALEPHOTOS 0 Ipp �E -- Mgt I t t 1 RENTAL PHOTOS I� JaM to l0- r 4 *!' A Aw rhi_► i "� � - .�� it • �� .� .. - . T _��u� 4� i i ,. is r: - w It ter=-L I n SUBJECT PHOTOGRAPIIS 11 i 1 1 1 1 1 1 1 1 1 1 1 i 1 1 I �MFXICl�N•fllll. 1. a A& VIP