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Home My WebLink About600-030-018 DWCG1 - Review Appraisal 04-10-19Appraisal Review DWCG1, LLC Ownership Northeast corner of Dune Palms Road and Highway 111 La Quinta, California APN 600-030-018 Appraised by: Kiley Company 2151 Michelson Drive, Suite 205 Irvine, California 92612 Client: Overland, Pacific & Cutler, LLC Attn: John M. Cutler 2280 Market Street, Suite 200 Riverside, California 92501 Appraisal Reviewed by: Sharon A. Hennessey, MAI, SR/WA, AI-GRS Hennessey & Hennessey LLC 17602 17th Street, Suite 102-246 Tustin, California 92780-7915 Date of the Appraisal Review April 8, 2019 STATE OF CALIFORNIA • DEPARTMENT OF TRANSPORTATION EXHIBIT REVIEW APPRAISER CERTIFICATE 7-EX-24D (NEW 10/2005) (Form #)Page 1 of 2 REG/DIST 8 CO Riv RTE KP P.M. EXP AUTH AR# 1. I “ have “X have not personally viewed the subject parcel(s), the comparable sales and the listings contained in the report. I am satisfied with the relative comparability noted. 2. The highest and best use of the property(ies), as shown in the report is reasonable and proper. 3. Gross income multipliers “are supported with factual data “X are not applicable 4. The cost approach “is supported with data from recognized sources “X is not applicable 5. The income approach “including the capitalization rate, is supported by data from the market “X is not applicable 6. Damages “X are correct and supported in accordance with existing instructions “are not applicable 7. Benefits “X are correct and supported in accordance with existing instructions “are not applicable 8. Construction contract work “is correct and supported in accordance with existing instructions “X is not applicable 9. The amount listed for each parcel in the certificate is the market value amount approved or recommended for approval to govern negotiation and settlement. 10. I understand that the approved value may be used in connection with a Federal highway project. 11. I have no direct or indirect, present or contemplated future personal interest in such property or in any benefit from the acquisition of such property appraised. 12. The report has been made in conformity with the appropriate Federal and State laws, regulations, and policies and procedures applicable to the appraisal of right of way. EXHIBIT REVIEW APPRAISER CERTIFICATE (Cont.)7-EX-24D (NEW 10/2005) (Form #)Page 2 of 2 13. That to the best of my knowledge no portion of the value assigned to each property contained in the report consists of items, which are noncompensable under established laws of the State of California. 14. That my salary/compensation is not contingent upon developing or reporting predetermined results. 15. That I believe the information contained in the appraisal report is accurate, but I assume no responsibility for its accuracy. 16. That the amount approved or recommended for approval for each parcel is not a direct amount, but was arrived at fairly without coercion and is based on appraisals and other factual data of record. 17. That any typographical, grammatical, or minor mathematical errors remaining in the report were not considered to either materially affect the concluded value or to mislead the reader in understanding the report and the conclusions contained therein. 18. That the requirements of the Right of Way Manual have been met as evidenced by the Appraisal Checklist, which is attached hereto. 19. That the values expressed in the appraisal report “X were not changed in any manner “were changed as specified in the attached Review Appraiser Report As the Region/District Review Appraiser, I hereby “ approve “X recommend for approval the following parcels for acquisition use: PARCEL NO.APPRAISED VALUE $222,000 Sharon A. Hennessey, MAI, SR/WA, AI-GRS Review Appraiser Right of Way Division Region/District _____ Date April 8, 2019 Signature H E N N E S S E Y & H E N N E S S E Y L L C A California Limited Liability Company Real Estate Appraisers 17602 17th Street, Suite 102-246 • Tustin, California 92780-7915 (714) 730-0744 • fax (714) 730-0221 e-mail: hhllc@ca.rr.com Joseph A. Hennessey, SR/WA Sharon A. Hennessey, MAI, SR/WA, AI-GRS Senior Member, International Right of Way Association Certified General Real Estate Appraiser (1928-2016)MAI Designated Member of the Appraisal Institute AI-GRS Designated Member of the Appraisal Institute Senior Member, International Right of Way Association April 8, 2019 Attn: John M. Cutler, Sr. Project Manager c/o Overland, Pacific & Cutler, LLC 2280 Market Street, Suite 200 Riverside, California 92501 RE: DWCG1, LLC Ownership Northeast corner of Dune Palms Road and Highway 111 La Quinta, California Assessor’s Parcel No. 600-030-018 Dear Mr. Cutler: In accordance with your request and authorization, I have completed a technical review of the appraisal report prepared by Kiley Company dated April 8, 2019. The date of value is November 6, 2018. City of La Quinta is considering acquiring a portion of the subject property under review. The date of this appraisal review report is April 8, 2019. In connection with this technical appraisal review assignment, I have: 1. Reviewed the larger parcel and the part to be acquired descriptions, the highest and best use analysis, and the valuation methodology set forth in the appraisal report, and 2. Reviewed the supporting market data employed in the appraisal report. A field inspection of the subject property and the comparable sales was not conducted in connection with this appraisal review assignment. The appraisal review did not include personal verification of the market data, nor did it involve development of my own opinion of value. Per the Caltrans Right of Way Manual, §7.01.15.00, the purpose of an appraisal review is to: 1. Ensure that the appraiser’s documentation, including valuation data and the analysis of that data, demonstrates the soundness of the appraiser’s opinion of value and that the appraisal report conforms to the requirements of this Chapter and established appraisal practices. 2. Ensure that the appraised amount is equitable and represents a proper amount for the offer of just compensation in accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (49 CFR 24) and Government Code §7260, et seq. The intended use of this appraisal review is to assist OPC in determining the overall reliability of the final indication of value set forth in the appraisal report. Our client is Overland, Pacific & Cutler, LLC (OPC). The intended users are Overland, Pacific & Cutler, LLC (OPC); the City of La Quinta; Bengal Engineering; and the California Department of Transportation (Caltrans). As a result of my review, I have reached the following conclusions: • The appraisal report was completed in accordance with the Caltrans appraisal standards and the Uniform Standards of Professional Appraisal Practice. • The subject appraisal report follows accepted appraisal principles and techniques in the valuation of the real property in accordance with state law. • The appraisal report is internally consistent. • There are no material errors of fact that undermine the appraisal’s conclusions; there may be some minor errors that have no impact on the appraisal report’s reliability. The reader is referred to the following review. Upon completing the review of the appraisal, it is the review appraiser’s opinion that the $222,000 estimate of just compensation is reasonable and supported given the data and analyses presented in the appraisal report dated April 8, 2019. The appraisal report is deemed “recommended for approval” (as the basis for the establishment of just compensation). This letter and the attachments are subject to the assumptions and limiting conditions set forth in this appraisal review report. Please contact the undersigned if you require additional information. Very truly yours, HENNESSEY & HENNESSEY LLC by Sharon A. Hennessey, MAI, SR/WA, AI-GRS State of California License No. AG003323 DWCG1, LLC - NEC of Dune Palms Rd. and Hwy 111, La Quinta - Dune Palms Road Bridge Project - Kiley (4-10-19).wpd Technical Review Defined The Caltrans Right of Way Manual, §7.01.15 defines technical review as follows: Review performed for the purpose of forming an opinion as to whether the analyses, opinions and conclusions in the appraisal report under review are appropriate and reasonable and that the appraisal complies with the Uniform Act, Government Code 7260 et seq., the requirements of this Chapter, and established appraisal practices. The following report is a technical review. This review is intended to comply with the following reporting requirements: • Standards 3 and 4 of the Uniform Standards of Professional Appraisal Practice (USPAP) • Caltrans Right of Way Manual, §7.01.15 •Uniform Relocation Assistance and Real Property Acquisition Policies Act and its implementing regulations, 49 CFR §24.104 In this technical review the review appraiser’s examination was limited to the information presented in the report. The market data was not independently confirmed. The report was reviewed to ensure that the documentation, data, and valuation analysis and conclusions in the report are appropriately supported and reasonable, and conform to the requirements of the Caltrans Right of Way Manual, USPAP, and established appraisal practices. Appraisal Report Reviewed The information in this section is taken from the Kiley Company report. Appraisal Report Prepared By Kiley Company Assessor’s Parcel Number 600-030-018 Location Northeast corner of Dune Palms Road and Highway 111 La Quinta, California Owners Apparent DWCG1, LLC Appraisal Review 1 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Appraiser Elizabeth M. Kiley, MAI, AI-GRS Meredith McDonald Kiley Company Real Estate Appraisers 2151 Michelson Drive, Suite 205 Irvine, California 92612 Client Overland, Pacific & Cutler, LLC (OPC) Purpose of Appraisal To provide an opinion of the fair market value for the larger parcel and compensation for the proposed acquisitions. Intended Use of Appraisal This appraisal will be used in negotiations with the property owner for the possible partial acquisition of the larger parcel. Intended Users of Appraisal Overland, Pacific & Cutler, LLC, the City of La Quinta, Bengal Engineering and the California Department of Transportation Date of Appraisal Report April 8, 2019 Effective Date of Appraisal (Date of Value) November 6, 2018 Property Rights Appraised Fee simple rights for the larger parcel land value and easement rights for the proposed easement acquisitions Site Size Subject Larger Parcel - 8.92 acres, or 388,555 square feet Roadway and Public Utilities Easement 9,926 sf Permanent Slope Easement 2,848 sf Temporary Construction Easement 1,536 sf Site Shape Essentially square Appraisal Review 2 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Zoning CR, Regional Commercial Improvements The site is currently vacant. Project The City of La Quinta proposes to construct an all-weather crossing and remove the existing low-water crossing of Dune Palms Road at the Coachella Valley Storm Water Channel. The crossing will consist of a 480-foot long by 86-foot wide, four-span bridge. The bridge’s typical section consists of six-foot sidewalks on both sides of the bridge, two (2) eight-foot outside shoulders also serving as bike/golf cart lanes, a 10-foot wide raised median, two (2) eleven- foot travel lanes and two (2) twelve-foot travel lanes. Additional project features include reconstruction of the north and south bridge approaches to accommodate the raised profile of the roadway to meet the bridge elevation, installation of a concrete slope protection at the northwest and southeast corners of the bridge, relocation of overhead electrical distribution lines and relocation of sewer lines at the northern bridge abutment. Roadway and Public Utilities Easement - The proposed permanent roadway and public utilities easement is approximately 9,926 square feet. It is essentially a long and narrow easement located along the western property line. It is approximately 24.30 feet wide at the northern edge, narrowing to 19.00 feet at the southern edge, and runs for 502.28 feet along the western property line. Permanent Slope Easement - The proposed permanent slope easement is approximately 2,848 square feet in size and located along the northwestern portion of the larger parcel. It is essentially triangular in shape, approximately 31.26 feet wide at the northern edge, narrowing to a point approximately 270.15 feet to the south. The proposed permanent easements (roadway and public utilities and permanent slope) will directly impact the property and the areas will no longer be usable for development by the property owner; they are similar to a partial fee acquisition. Temporary Construction Easement - The proposed temporary construction easement is approximately 1,536 square feet. It is located along the northwestern portion of the property. It is approximately 5.03 feet wide at the northern edge and 10.00 feet wide at the southern edge, running for approximately 268.61 feet along the northwestern portion of the larger parcel. The temporary construction easement will be acquired for a 48-month duration. Highest and Best Use Before Condition: As if vacant: Hold for speculative investment After Condition: As if vacant: Unchanged Appraisal Review 3 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Severance Damages No damages are indicated. Damages Value of the Remainder as Part of the Whole $ 6,393,119 Value of the Remainder - After Acquisition $ 6,393,119 Total Damages $ 0 Benefits The possibility of benefits to the property due to the proposed project was investigated. Qualitative benefits to the general community in the “after” condition include the upgrading of street improvements as well as increased roadway capacity. Benefits only serve to offset damages. There are no damages due to the proposed acquisition. Appraisal Conclusion As of November 6, 2018, the opinion of compensation for the proposed acquisitions is as follows: Appraisal Conclusion Value Opinion Property Rights Compensation Value of the Larger Parcel “As Is” $ 6,605,435 Permanent Acquisition(s) Roadway & Public Utilities Easement - 9,926 sf $ 168,742 Permanent Slope Easement - 2,848 sf $ 43,574 Site Improvements - Not Applicable $ 0 Total Permanent Acquisitions $ 212,316 Damages Value of Remainder as Part of the Whole $ 6,393,119 Value of the Remainder After Acquisition $ 6,393,119 Total Damages $ 0 $ 0 Benefits $ 0 Total Benefits $ 0 Total Property Rights Compensation $ 212,316 Temporary Acquisition Temporary Construction Easement - 1,536 sf $ 9,408 Improvements in TCE Area - Not Applicable $ 0 Temporary Impacts $ 0 Total Compensation for TCE Rights $ 9,408 Total Compensation $ 221,724 Rounded $ 222,000 *Minor differences due to rounding Appraisal Review 4 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Extraordinary Assumptions USPAP defines an Extraordinary Assumption to be “an assumption directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinion or conclusions.” The use of extraordinary assumptions may have an effect on the assignment results. This appraisal has the following extraordinary assumptions. Section 1263.330 of the California Code of Civil Procedure requires the appraisers to not consider any effect on value of the project, the eminent domain proceeding, or any preliminary actions of the acquiring agency. The appraisers investigated the real estate market for any influence these issues may have had in the market data selected and analyzed and could not find any. Therefore, we have prepared the appraisal analysis of the larger parcel in the “before” condition under the extraordinary assumption that these activities have no effect on the value conclusions stated in this appraisal report. Legal descriptions showing the area of the proposed acquisitions have been included herein. This appraisal is based on the information provided by the client that has been relied on in this appraisal report and is assumed to be accurate. Information regarding the temporary construction easement period indicates an estimated construction period of 48 months. This appraisal report is based on the assumption that the stated temporary construction easement duration is accurate. Should the information furnished by others vary, the assignment results could be affected. Hypothetical Conditions USPAP defines a hypothetical condition as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.” This appraisal report includes the following hypothetical condition. Use of this hypothetical condition may have had an effect on the appraisal results. The analysis of the “after” condition of the larger parcel has been prepared using the hypothetical condition that the project has been completed per the descriptions, plans and specifications presented in this appraisal report. The reader is advised that the value conclusions may be affected if there are changes in the size, location or design of the acquisition or project. Appraisal Review 5 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Appraisal Review Reviewer Sharon A. Hennessey, MAI, SR/WA, AI-GRS Hennessey & Hennessey LLC 17602 17th Street, Suite 102-246 Tustin, CA 92780-7915 Date of Appraisal Review Report April 8, 2019 Reviewer’s Client Overland, Pacific & Cutler, LLC Intended Use and Users of Review The intended use of this appraisal review is to assist OPC in determining the overall reliability of the final indication of value set forth in the appraisal report. Overland, Pacific & Cutler, LLC, the City of La Quinta, Bengal Engineering and the California Department of Transportation Purpose of the Appraisal Review The purpose of the appraisal review is to ensure that the estimate of value is reasonably supported by an acceptable appraisal methodology and conforms to the requirements of USPAP and the State of California standards. The appraisal review does not include the development of the reviewer’s own opinion of value. Scope of the Review The scope of this appraisal review – i.e., the nature, extent, and process undertaken in review of the subject appraisal report – included a technical review. However, the appraisal review did not include personal verification of the market data. The review did not involve development of the review appraiser’s own opinion of value. A copy of the original appraisal report was received and utilized as the only narrative subject material in this review. Additionally several documents, including the “Code of Professional Ethics” and the “Standards of Professional Appraisal Practice” of the Appraisal Institute effective January 1, 2015, the 2018-2019 edition of the Uniform Standards of Professional Appraisal Practice published by The Appraisal Foundation, the Caltrans Right of Way Manual, and 49 CFR §24.104 were consulted. The extent of this review included judging the appropriateness of the methodology utilized by the appraiser inclusive of the market data, its conformance to USPAP, and its overall reasonableness, not only in the analysis undertaken, but in its presentation to the reader. Any questions regarding the appraisal and/or the appraisal report were discussed with the appraiser whose work was under review. Appraisal Review 6 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company This review was performed in light of the real estate market that existed as of the date of value used in the appraisal report under review. The approach to this review was to analyze each section of the subject appraisal report using the checklist that follows. Additional comments are included as footnotes in the checklist when necessary. Appraisal Review 7 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company STATE OF CALIFORNIA • DEPARTMENT OF TRANSPORTATION EXHIBIT APPRAISAL REVIEW CHECKLIST 17-EX-6A (6/2002) (Form #) Page 1 of 3 USPAP ITEMS Identifications, Statements, Inclusions, and Certification (USPAP-Standards 1&2) G Type of Report: GT Appraisal Report, G Restricted Appraisal Report GT Client and other users of report GT Intended use of appraisal GT Purpose of appraisal GT Definition of market value and source: (Sec. 1263.320, C.C.P.) GT Effective date of value and date of report GT Real estate involved and relevant physical and economic characteristics GT Real property interest appraised GT Scope of work used to develop appraisal GT All assumptions, hypothetical conditions, and limiting conditions affecting report substance GT Information analyzed, appraisal procedures, reasoning supporting substance and conclusions GT Existing use; support and rationale for concluded highest and best use GT Effect on use and value of existing land use regulations; reasonable probability of regulation changes GT Economic demand affecting subject; market trends; physical adaptability of the real estate GT In a sales comparison approach, analysis of data to indicate a value conclusion G In using an income approach: G estimate economic rent from available rental comps G estimate operating expenses from available comps G estimate cap. rate(s) and/or discount rates from available comps G base future rent and expenses on reasonably clear and appropriate evidence G In using a cost approach: G value site by appropriate method or technique G estimate Replacement Cost New from available comps G estimate accrued depreciation from available comps GT Analysis of effect on value of public or private improvements, on or off site G Effect on value of any of the following on subject, but not included in the appraisal: G any personal property G improvements pertaining to the realty G trade fixtures G intangible items GT Analysis of any current Agreement of Sale, option or listing of subject (or portion) GT Analyze any sales of subject in the last 5 years (CFR 49 24.103) preceding effective date G Any permitted departures from Standard 1; basis for excluding any of usual valuation approaches GT Reconcile the quality and quantity of data available and in the approaches used GT Reconcile the applicability or suitability of the approaches used GT Signed certification complying with Rule 2-3 REQUIRED FORMS AND ENTRIES - (CALTRANS) GT Right of Way Parcel Diary (RW 7-1): include when Notice of Decision to Appraise, Acquisition brochure, and Title VI questionnaire are mailed GT Copy of Notice of Decision to Appraise letter GT Parcel Occupancy Data form (RW 7-2): names and addresses of owners and tenants GT Appraisal (RW 7-9): page for subject parcel(s) G Summary of Outdoor Advertising Structures (RW 7-8) or equivalent: Parcel Owner; Sign Company Appraisal Review 8 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company EXHIBIT APPRAISAL REVIEW CHECKLIST 17-EX-6A (6/2002) (Form #)Page 2 of 3 APPRAISAL REPORT General GT Parcel number GT Photographs - identified GT Parcel inspection date(s) GT Property owner/representative present for inspection GT Rights/interest being appraised GT Names of owners of each interest valued GT General description of the public project GT Significant area, city and neighborhood data Property Data GT Location GT Plat GT Total and subparcel areas GT Property description G Unusual features GT Site description and significant characteristics including easements GT Utilities GT Alquist-Priolo zone G Improvement description and significant characteristics GT Zoning/General Plan - subject and vicinity GT Present use G Known environmental conditions/hazardous waste and materials affecting subject’s value - if known; property appraised both as if free and clear (and if known, as affected) (Market’s view) GT Highest and best use of property before; justification if different from present use GT Highest and best use after, if partial acquisition; justification if different from before G Realty/improvements pertaining to the realty (1263.205 et seq.)/personalty, identified and valued as appropriate; items to be acquired and parties claiming them identified G Description of outdoor advertising signs, sign company owners, measurements, photographs; signs valued with property unless excluded from assignment by client G RAP information identifying number of tenants, owners, and giving residential value if appropriate Valuation GT Property and area valued conforms with appraisal map GT All approaches used - if not, need explanation: GT Sales comparison - comparison to subject showing each adjustment; reasoning; indication G Income - income, vacancy and loss, operating expenses, capitalization and discount rates, and economic rent supported G Cost - data sources used; all causes of depreciation - basis for estimates and total G Machinery and Equipment appraisal (secured by real estate appraiser) included - items, and valued as to Replacement Cost New, in-place value, relocation cost and salvage value; data sources cited; value conclusions reviewed/adjusted, reconciled with improvements; remaining economic life and real estate valuation, and adopted by real estate appraiser; tenant claimed improvements grouped GT Reconciliation - with reasoning supporting conclusion of value GT Calculations and rounding correct Appraisal Review 9 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company EXHIBIT APPRAISAL REVIEW CHECKLIST 17-EX-6A (6/2002) (Form #)Page 3 of 3 Comparable Sales and Other Market Data GT Comparable location map; subject indicated GT Comparable sales detail sheets GT Assessor’s parcel maps GT Photographs showing principal features GT Comparable number GT Total area GT Location G Type and size of improvements GT Zoning GT Date of Sale (lease, etc.) GT Buyer and Seller named GT Party(ies) confirming sale and date(s) GT Amount and manner paid GT Conditions of sale GT Use and condition at sale G Unusual features GT Inspection date G If available: what was included in sale; income/expense/lease data at sale; motivations *** Partial Acquisitions GT Highest and best use after explained/supported GT California before and after method used; includes relevant comparables and market data, income approach GT Only benefits and compensable severance damages under California law; damage analysis format used; amounts supported from market and/or reasoning; cost to cure less than related severance and supported G Remainder is indicated uneconomic in the market, or uneconomic remnants to the owner G Request by the property owner for the convenience of the property owner (tenant claim noted, if any) GT Final valuation conclusion is supported; allocated to Part Taken, Severance Damages, and Benefits (with proper offsetting) GT Calculations and rounding correct Appraisal Review 10 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Reviewer’s Comments Rating A = Acceptable N = Not Acceptable U = Unnecessary O = Other Format and Presentation 1. Appearance and arrangement A 2. Letter of transmittal A 3. Table of contents A 4. Summary of important facts A 5. Photographs of area and subject property A 6. Vicinity maps, plats, etc. A 7. Supporting reports of technical specialists U 8. Certification of appraiser included A 9. Limiting conditions and assumptions A 10. California Code of Civil Procedure definition of “Fair Market Value”A Delineation of Assignment 11. Purpose/use/users of appraisal A 12. Identification of property A Analysis and Technique A. General Data 13. Appropriate environs description A B. Property Data 14. Ownership A 15. Title/ownership history A 16. Current listings, options, or pending contract A 17. Site description a. Location A b. Land area A c. Topography A d. Availability of utilities A e. Street improvement description U f. Assessed value and annual real estate taxes A g. Zoning A h. Present use A 18. Improvements a. Age and condition U b. Structural and construction detail U 19. Photographic coverage and exhibits A C. Analysis of Highest and Best Use 20. Discussion and analysis A 21. Reasonableness of conclusion A Appraisal Review 11 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Reviewer’s Comments Rating A = Acceptable N = Not Acceptable U = Unnecessary O = Other D. Land Valuation by the Sales Comparison Approach 22. Adequacy of sales A 23. Analysis of and comparison with subject property adequately supported A 24. Reasonableness of indicated value(s) A E. Cost Approach 25. Reproduction or replacement cost estimates used U 26. Indirect costs accounted for U 27. Entrepreneurial profit accounted for U 28. Estimate of accrued depreciation U 29. Estimate of rehabilitation cost U 30. Contributory value of other improvements U 31. Reasonableness of indicated value(s) U F. Income Capitalization Approach 32. Rental comparables included U 33. Photographs of comparable rentals U 34. Current rent roll and income history provided U 35. Rental analysis U 36. Vacancy and credit loss estimate U 37. Operating expenses U 38. Reserves for replacements U 39. Net operating income U 40. Method of capitalization U 41. Capitalization rate supported U 42. Reasonableness of indicated value(s) U G. Sales Comparison Approach - Improved 43. Adequacy of sales U 44. Analysis of and comparison with subject property adequately supported U 45. Reasonableness of conclusions U 46. Reasonableness of indicated value(s) U Conclusion of Value 47. Reconciliation of indicated value(s) A 48. Reconciled value conclusion A Part Acquired 49. Part(s) acquired adequately described A 50. Map(s) of the part acquired A 51. Legal description(s) of the part acquired A 52. Valuation of the land within the part acquired A 53. Valuation of the improvements within the part acquired U Appraisal Review 12 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Reviewer’s Comments Rating A = Acceptable N = Not Acceptable U = Unnecessary O = Other 54. Remainder as part of the whole calculated A 55. Value of the remainder in the after condition discussed and calculated A 56. Cost to cure U 57. Severance damages discussed and/or valued A 58. Benefits discussed and/or valued A 59. Temporary construction easement valued A 60. Estimate of just compensation provided A Market Data 61. Sales data sheets a. Land description A b. Improvement description U c. Grantor/grantee documentation A d. Confirmation of sale price and terms A e. Market data map A f. Photograph of each comparable sale A g. Data inspection information A Additional Comments C The client, purpose, intended use, and intended users of the appraisal report were described. The larger parcel is unimproved land. • The appraisal report thoroughly described the subject larger parcel. The report provided the name of the owner, the five-year ownership history, the location, size, shape, access, zoning, and current use of the subject property. The highest and best use of the subject larger parcel was discussed and concluded to be to hold for speculative investment. The highest and best use in the after condition is unchanged. • The Sales Comparison Approach was used to value the subject larger parcel. The Cost Approach and the Income Capitalization Approach were not used, because the site is vacant land. The subject appraisal report follows accepted appraisal principles and techniques. • Six comparable sales were used in the valuation of the subject property by the Sales Comparison Approach. The number, location, and time period of the sales used are considered acceptable. Each sale was discussed and analyzed in terms of its financing and other elements of comparison. The similarities and differences of each sale compared to the subject were shown on a land sales adjustment grid. After the sales were adjusted for the elements of comparison, a price per square foot of land was concluded. The concluded land value was used in the valuation of the subject larger parcel, the parts to be acquired and the remainder. The concluded unit value was also the basis for the TCE’s land value. Appraisal Review 13 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company • The report explained the proposed project. The proposed acquisitions were described. The project as proposed includes two permanent easement acquisitions and one temporary construction easement. Severance damages were not found. No quantifiable benefits were found in the analysis presented. • An individual sales data sheet was provided for each comparable sale, which included such information as the names of the grantor and grantee, recording date and document number, sale price, financing terms, and land size. The sources of the sale confirmations were also cited. All of the sales were confirmed by a party involved in the sale. All were confirmed by grant deeds. • The report included the effective date of the valuation (date of value) and the date of the appraisal, was signed by the appraisers, and included a certification signed by the appraisers. • The valuation analysis was logically presented and demonstrated sound reasoning. Proper appraisal techniques were employed. For the most part, the appraisal conforms to the requirements of Standard 1 of USPAP. • The scope of work described and carried out in the appraisal is appropriate to the appraisal problem under analysis and conforms to the “Scope of Work Rule” of USPAP. • The appraisal report conforms to the requirements of Standard 2 of USPAP, including 2-2(a), which governs Appraisal Reports. • The appraisal report was completed in accordance with the Caltrans appraisal standards, the Uniform Standards of Professional Appraisal Practice , and the Uniform Relocation Assistance and Real Property Acquisition Policies Act. • The report is internally consistent. • There are no errors of consequence that undermine the appraisal’s conclusions; there may be some minor errors that have no impact on its reliability. Based on the foregoing review analysis, the Kiley Company appraisal report and its conclusions are considered to be reasonable, credible, and supported given the data and analyses presented in the appraisal report. As a result, the appraisal is deemed “recommended” as the basis for the establishment of just compensation for the proposed acquisition as of the November 6, 2018 date of value. Assessor’s Parcel No. 600-030-018 Total compensation $222,000 Appraisal Review 14 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Review Certification 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 the work under review and no personal interest with respect to the parties involved. • I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of the work under review within the three-year period immediately preceding acceptance of this assignment. • I have no bias with respect to the property that is the subject of the work under review or to the parties involved with this assignment. • my engagement in this assignment was not contingent upon developing or reporting predetermined results. • my compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in this review or from its use. • my compensation for completing this assignment is not contingent upon the development or reporting of predetermined assignment results or assignment results that favors the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal review. • my analyses, opinions, and conclusions were developed and this review report was prepared in conformity with the Uniform Standards of Professional Appraisal Practice . • I have not made a personal inspection of the subject of the work under review. • no one provided significant appraisal or appraisal review assistance to the person signing this certification. • the reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute. • the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. • as of the date of this report, Sharon A. Hennessey has completed the continuing education program for Designated Members of the Appraisal Institute. Reviewer: April 8, 2019 Sharon A. Hennessey, MAI, SR/WA, AI-GRS date Certified General Real Estate Appraiser State of California License No. AG003323 Appraisal Review 15 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company General Assumptions and Limiting Conditions The appraisal review report is based on the following Assumptions and Limiting Condition. This appraisal review report is made for the exclusive use of the client as indicated as the addressee on the letter of transmittal. 1. This appraisal review report is intended to comply with Standards 3 and 4 (Rules 3-1 through 3-3 and 4-1 through 4-4) of the Uniform Standards of Professional Appraisal Practice for an appraisal review assignment. Supporting documentation concerning the data, reasoning, and analyses used in this appraisal review is retained in our work file. The information contained in this review report is specific to the needs of the client and for the intended use stated herein. Hennessey & Hennessey LLC is not responsible for the unauthorized use of this document. 2. The factual information presented in this appraisal review report has been furnished by or obtained from sources that are considered reliable. While the data is believed to be correct, it cannot be guaranteed. 3. It is assumed that the legal description and the title are good and that the easements and encumbrances detailed in the title report, if provided by the client, are the only ones of record. 4. A land survey was not made by the reviewer. The dimensions and areas shown and/or referred to in the report under review are assumed to be correct; property boundaries and locations of any improvements as indicated on exhibits in the report are not to be construed as being based upon a survey for which the reviewer is responsible. 5. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the appraisal report. 6. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. 7. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal report. 8. The liability of Hennessey & Hennessey LLC is limited to the amount of the appraisal review fee. The firm and the appraiser preparing the report are not responsible for erroneous information provided by others. There is no accountability or liability to a third party. 9. Testimony or attendance in court is not required by reason of this appraisal review, with reference to the property in question, without a prior arrangement as to compensation and scheduling. 10. Indemnification - The reviewer is not a necessary party in any inquiry or judicial proceedings. She will not be called upon to testify in any litigation or other proceeding arising out of her duties in this matter. If she is compelled to incur court costs, attorneys’ fees, or other out-of- pocket expenses in connection with court proceedings, such costs or expenses, together with the reviewer’s usual hourly per diem applicable for her professional services for study, preparation, testimony or travel, will be paid by the party (or parties who acts to bring any suit requiring a judicial proceeding. Appraisal Review 16 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company H E N N E S S E Y & H E N N E S S E Y L L C A California Limited Liability Company Real Estate Appraisers 17602 17th Street, Suite 102-246 • Tustin, California 92780-7915 (714) 730-0744 • fax (714) 730-0221 e-mail: hhllc@ca.rr.com Sharon A. Hennessey, MAI, SR/WA, AI-GRS Certified General Real Estate Appraiser MAI Designated Member of the Appraisal Institute Joseph A. Hennessey, SR/WA (1928-2016) AI-GRS Designated Member of the Appraisal Institute Senior Member, International Right of Way Association Senior Member, International Right of Way Association Qualifications of Sharon A. Hennessey, MAI, SR/WA, AI-GRS Experience 1984 to Hennessey & Hennessey LLC, Independent Fee Appraiser - Appraise vacant land, present commercial, industrial, residential, rights of way, and special purpose properties for governmental agencies, corporations, law firms, and private parties. License Certified General Real Estate Appraiser, State of California License No. AG 003323 Expert Witness Qualified as an expert witness in the Orange County Superior Court Professional Affiliations MAI Designated Member of the Appraisal Institute, Certificate No. 11108 AI-GRS Designated Member of the Appraisal Institute Senior Member of the International Right of Way Association, Registration Number 3975 President of Chapter 67 International Right of Way Association, 1990 International Director of Chapter 67, International Right of Way Association, 1991 Membership Chairman, International Right of Way Association, 1992 and 1993 Hospitality Chairman, Southern California Chapter Appraisal Institute, 1993 and 1994, 1995, 1996, and 1997 Co-Education Chairman, Southern California Chapter Appraisal Institute, 1998, 1999, 2000, 2001 Education Bachelor of Arts - University of California, Berkeley Partial List of Continuing Education: Appraisal Institute USPAP - 1986, 1993, 2000, 2004, 2006, 2008, 2012, 2010, 2014 Business Practice and Ethics - 2011, 2015 Federal and California Statutory and Regulatory Law - 2015 Review Theory - General - 2014 Complex Litigation Case Studies - 2013 Litigation Appraising: Specialized Topics and Applications - 2013 The Appraiser as an Expert Witness - 2000, 2013 Valuation of Detrimental Conditions - 2011 Appraisal Curriculum Overview - 2010 Hotel/Motel Valuation - 1997 Highest & Best Use and Market Analysis - 1996 Advanced Applications - 1996 The Appraisers Complete Review - 1996 Advanced Income Capitalization - 1993 Report Writing and Valuation Analysis - 1989 Case Studies in Real Estate Valuation - 1988 Capitalization Theory & Techniques, Parts A and B - 1987 Real Estate Appraisal Principles - 1985 Basic Valuation Procedures - 1985 International Right of Way Association 403 Easement Valuation - 1990, 2013 104 Standards of Practice for the Right of Way Professional - 2012 103 Ethics and the Right of Way Profession - 1992, 2004, 2008 206 Presentation Skills - 1992 203 Communications in RE Acquisition - 1991 214 Skills of Expert Testimony - 1990 101 Principles of Real Estate Acquisition - 1989 401 Appraisal of Partial Acquisitions - 1988 901 Interpreting Engineering Drawings - 1986 902 Property Descriptions - 1986 801 Land Titles - 1986 Appraisal Review 17 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company Sharon A. Hennessey Qualifications page 2 Representative Clients - Partial Listing Attorneys and Law Firms Best Best & Krieger LLP Bowie, Arneson, Kadi & Dixon Dreyfuss, Ryan, Weifenbach Durst & Landeros Fullerton, Lemann, Schaefer & Dominick Jones & Mayer Kindel & Anderson Lillick, McHose & Charles Lozano Smith Meserve, Mumper & Hughes Marjorie Mize Le Gaye, Esq. Nichols, Stead, Boileau & Kostoff Oliver, Vose, Sandifer, Murphy & Lee Palmieri, Tyler, Wiener, Wilhelm & Waldron Parker & Covert Redwine & Sherrill Richard L. Riemer, Law Offices of Rutan & Tucker Sheppard, Muller, Ricter & Hampton Wilson, Elser, Moskowitz, Edelman & Dicker Woodruff, Spradlin & Smart Corporate Clients Brother International California Property Specialists Inc. Continental Develop- ment Corp. Cutler & Associates DGA Consultants Diocese of Orange Hoag Foundation Hughes Aircraft Company Kaiser Foundation Health Plan, Inc. Metzger & Associates, Inc. NBS/Lowry Engineers Overland, Pacific & Cutler, LLC Overland Resources Pacific Bell (SBC) Pacific Relocation Cons. Paragon Partners Poseidon Resources Psomas Robert Bein, William Frost & Associates Rockwell International Sisters of the Sacred Heart Southern California Edison Tetra Tech, Inc. Universal Field Services Western Industrial Properties, Inc. Willdan Associates Individual Clients Leo Beus Carl Brandstetter Candace Campbell Samuel B. Corliss, Jr. Thomas W. Cosgrove Harbor Pine Creek Homeowners Assoc. John Iloulian Genji Kawamura Kawamura Family Trust William E. Kibbie Paul Kiely Sang Moon Kim James Kindel Jr. Dorothy E. Lamb Andrea Lombard Rita M. Loosemore Kim Vu Nguyen Steven H. Price Constance C. Quarré Jean L. Roane E.O. Rodeffer Larry L. Root Dwight C. Schroeder John P. Sheffield Yoram S. Shily Carl Stevens Katherine E. Thompson Tustin Village Community Association Charles E. Wheeler Erv Yoder Public Entities California High-Speed Rail Authority County of Orange City of Anaheim City of Corona City of Costa Mesa City of Fullerton City of Garden Grove City of Glendale City of Huntington Beach City of Laguna Niguel City of Lake Forest City of Mission Viejo City of Ontario City of Pasadena City of Riverside City of Santa Ana City of Torrance City of Upland Charter Oak Unified School District Chino Unified School District Corona-Norco Unified School District Covina-Valley Unified School District Cucamonga School District Eastern Municipal Water District Fullerton Joint Union High School District Magnolia School District Orange Unified School District Pajaro Valley Unified School District Tustin Unified School District Walnut Valley Unified School District Mesa Consolidated Water District Murrieta County Water District Trabuco Canyon Water District Caltrans Eastern Transportation Corridor Orange County Transportation Authority Riverside Transit Agency Riverside County Flood Control and Water Conservation District Riverside County Transportation Commission Appraisal Review 18 DWCG1, LLC Ownership (Northeast corner of Dune Palms Road and Highway 111) Appraised by Kiley Company