Land-_Appraisal_Report.pdf

LAND (TWO ASSESSOR PARCELS)

PALM DESERT VACANT LAND

44215 SAN PASCUAL AVE

PALM DESERT, CALIFORNIA 92260

APPRISE FILE # | 25.WC.23676.CA

Please direct inquires to

STEVEN EVANS, MAI, CCIM, MRICS

stevans@apprise.us | 702-355-5713

APPRISE BY WALKER & DUNLOP | 2010 MAIN STREET, SUITE 1100 IRVINE, CA 92614

A Real Property Prepared For

APPRAISAL REPORT CITY OF PALM DESERT

November 10, 2025

Chris Escobedo | City Manager

City of Palm Desert

73-510 Fred Waring

Palm Desert, CA 92260-2578

An Appraisal Report of Palm Desert Vacant Land

Located at

44215 San Pascual Ave

Palm Desert, Riverside County, California 92260

Apprise File No: 25.WC.23676.CA

City of Palm Desert File No: Contract No. A50060

Dear Mr. Escobedo:

Per the request and authorization of our above-mentioned client, Apprise has prepared the following appraisal report outlining the findings, conclusions, and market value estimates of the referenced property. The following report and addenda detail our findings, analyses, and pertinent supporting documentation. Maps, charts, photographs, and other visuals that are considered material to report conclusions are dispersed herein. Assumptions, Conditions, and Certification are located at the back of this document.

It is our intent to comply with the Uniform Standards of Professional Appraisal Practice (USPAP); the Code of Professional

Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. The undersigned have experience appraising similar properties in the market area, and therefore comply with the competency rule as mandated in USPAP. This report is the sole property of Apprise and the intended user(s) stipulated herein. Apprise is not liable for recipient’s disbursement to any third parties and/or use for any purposes other than the specified intended use.

The subject of this report consists of a vacant parcel of land that contains 42,253 SF or 0.97 acres of land. The subject is comprised of two assessor parcels (13,939 SF to 28,314 SF) or a total of 42,253 SF. The subject was improved with a residential use that has since been demolished and the gated entry remains facing San Pascual Avenue. The subject is located in an established residential area with frontage along San Pascual Avenue in Palm Desert and as all utilities to the site. The subject is zoned R-2, which according to the city zoning, allows for 3 to 10 units per acre. We have been asked to estimate the as is market value of both assessor parcels as one entity.

The purpose of this appraisal is to develop an opinion of the As-Is Market Value (Fee Simple Interest). The following table conveys the final opinion of value that is developed in this appraisal:

Apprise.us

EXTRAORDINARY ASSUMPTIONS

The use of an extraordinary assumption(s) may have impacted the results of the assignment. The subject property is vacant land with no specific plans for development. A variety of uses and densities are possible. Based on our conversations with

Anna Dan of the city of Palm Desert, a density of 3 to 10 units per acre is permitted. Our analysis is based on the extraordinary assumption that a prospective buyer would maximize density.

HYPOTHETICAL CONDITIONS

No Hypothetical Conditions were made for this assignment.

If you have any questions or concerns regarding the Appraisal Report contained herein, please reach out to the person(s) below.

STEVEN EVANS, MAI, CCIM, MRICS | SENIOR DIRECTOR

State Certified General Real Estate Appraiser AG006318 stevans@apprise.us

702-355-5713

CASEY MERRILL, MAI, ASA, FRICS | REGIONAL MANAGING

DIRECTOR

State Certified General Real Estate Appraiser AG 003330 cmerrill@apprise.us

760-848-7899

CONTENTS

25.WC.23676.CA Palm Desert Vacant Land

Executive Summary

Photographs

Introduction

Neighborhood

Taxes

Highest and Best Use

As Vacant Analysis

Approaches to Value

Site Valuation

Reconciliation

Certification

Qualifications of Appraiser

Land Sale Comparable Data Sheets

EXECUTIVE SUMMARY

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PROPERTY IDENTIFICATION

SITE DESCRIPTION

QUALITATIVE ANALYSIS

HIGHEST & BEST USE

EXPOSURE & MARKETING TIME

AERIAL PHOTOGRAPH

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SUBJECT PROPERTY PHOTOGRAPHS

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Subject Property

Subject Property View From San Pascal Avenue

San Pascual Avenue Looking South; Subject on Right

INTRODUCTION

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THE PROPERTY

The subject of this report consists of a vacant parcel of land that contains 42,253 SF or 0.97 acres of land. The subject is comprised of two assessor parcels (13,939 SF to 28,314 SF) or a total of 42,253 SF. The subject was improved with a residential use that has since been demolished and the gated entry remains facing San Pascual Avenue. The subject is located in an established residential area with frontage along San Pascual Avenue in Palm Desert and as all utilities to the site. The subject is zoned R-2, which according to the city zoning, allows for 3 to 10 units per acre. We have been asked to estimate the as is market value of both assessor parcels as one entity.

IDENTIFICATION

• Physical Address: 44215 San Pascual Ave, Palm Desert, Riverside County, California 92260

• The assessor parcel Numbers are: 627-102-025, 627-102-017.

OWNERSHIP HISTORY

Current Owner

The subject property is currently under the ownership of City of Palm Desert, according to the Riverside County records.

Three-Year Sales History

According to county records there has been no transfer of ownership for the subject property in the past three years nor has it been listed for sale in the last 12 months. Based on conversations with the City of Palm Desert, the subject is not currently listed for sale.

CLIENT IDENTIFICATION

The client of this specific assignment is City of Palm Desert.

INTENDED USER

City of Palm Desert is the only intended user of this report.

INTENDED USE

The intended use of this appraisal is to assist the client in making internal business decisions related to this asset.

PURPOSE

The purpose of this appraisal is to develop an opinion of the As-Is Market Value (Fee Simple Interest).

FF&E

No personal property or intangible items are included in this valuation.

MARKETING TIME & EXPOSURE PERIOD

TYPE AND DEFINITION OF VALUE

The type of value analyzed in this appraisal is market value at highest and best use. Market Value means: the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this

INTRODUCTION (CONTINUED)

25.WC.23676.CA Palm Desert Vacant Land p. 5 definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

• Buyer and seller are typically motivated;

• Both parties are well informed or well advised, and acting in what they consider their own best interests;

• A reasonable time is allowed for exposure in the open market;

• Payment is made in terms of cash in US dollars or in terms of financial arrangements comparable thereto; and

• The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

INTEREST APPRAISED

The property rights appraised constitute the fee simple interest.

Fee Simple Interest

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat.1

VALUE SCENARIOS

As-Is Market Value

The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.2

SCOPE OF WORK

In order to develop the opinion of value, the Apprise employed the relevant and commonly accepted appraisal methods and principles to derive a credible value conclusion. The appraisers thoroughly performed an appraisal process, as set forth in

Standard 1 by the Uniform Standards of Appraisal Practice. The scope of the assignment relates to the manner and extent to which research is conducted, data is accumulated, and analysis is conducted. In preparing this appraisal, the appraisers did the following:

• Analyzed the national, regional and local area economic trends as appropriate, including but not limited demographic, employment and real estate trends. The local area was analyzed and the immediate market area was observed to consider potential influences on the subject.

• Interviewed market participants, some of which could include local property owners, property managers and others familiar with competitive area real estate

• Obtained various information from surrounding jurisdictions and reporting entities regarding comparable data, demographics, zoning, property taxes, deed history, flood zones, utilities, transit, planned developments, income and expense data, etc.

• Estimated the market value using the Land Sales Comparison Approach. The inclusion or exclusion of approaches to value was determined by solely by the appraiser and not the intended user

• The appraisal includes a multifamily market analysis for the Inland Empire market and Palm Springs submarket using vacancy, absorption, supply and rent data. Conclusions were drawn for the subject’s competitive position given its physical and locational features, current market conditions and external influences.

• The appraisal includes a Highest and Best Use analysis and conclusions have been completed for the highest and best use of the subject property As Vacant and As Improved. Subject is vacant land and most probable use is multifamily.

The analysis considered legal, locational, physical and financial feasibility characteristics of the subject site and existing improvements.

Please refer to the assignment conditions section for the basic and extraordinary assumptions, as well as the limiting and hypothetical conditions upon which our value conclusions are made.

1 The Dictionary of Real Estate Appraisal, Seventh Edition, Appraisal Institute, Chicago, Illinois, 2022

2 The Dictionary of Real Estate Appraisal, Seventh Edition, Appraisal Institute, Chicago, Illinois, 2022

INTRODUCTION (CONTINUED)

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SOURCES OF INFORMATION

The following sources were contacted to obtain relevant information:

SUBJECT PROPERTY INSPECTION

REGION

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ECONOMIC & DEMOGRAPHIC PROFILE

The following profile of the greater region was provided by Moody’s Analytics, whose core assets of proprietary editorial and research content as well as economic and financial databases are a source of information on national and regional economies, industries, financial markets, and demographics.

Moody’s Analytics approach to the analysis of the U.S. economy consists of building a large-scale, simultaneous-equation econometric model, which they simulate and adjust with local market information, creating a model of the U.S.

macro economy that is both top-down and bottom-up. In this model, those variables that are national in nature are modeled nationally while those that are regional in nature are modeled regionally. Interest rates, prices, and business investment are modeled as national variables; key sectors such as labor markets (employment, labor force), demographics (population, households, and migration), and construction activity (housing starts and sales) are modeled regionally and then aggregated to national totals. This approach allows local information to influence the macroeconomic outlook. Therefore, changes in fiscal policy at the national level (changes in tax rates, for example) are translated into their corresponding effects on state economies. At the same time, the growth patterns of large states, such as California, New York, and Texas, play a major role in shaping the national outlook. In addition, on a regional basis, the modeling system is explicitly linked to other states through migration flows and unemployment rates. Moody’s Analytics model structure also takes into account migration between states.

REGION (CONTINUED)

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NEIGHBORHOOD

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NEIGHBORHOOD (CONTINUED)

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LOCATION

The subject property is located in the Palm Desert area of the Coachella Valley submarket. The immediate area of the subject is characterized by industrial uses with residential and commercial uses in the surrounding area.

The following map presents the city boundary. The subject is located in the south central section of the city limits.

Demographics

The following information reflects the demographics for the subject’s area.

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Population

The estimate provided by ESRI for the current 2025 population within the subject neighborhood’s 3 mile radius is 41,817 representing a (0.77%) change since 2020. ESRI’s 2020 population estimate for the subject’s 5 mile radius is 75,774, which represents a 1.91% change since 2020.

Looking forward, ESRI estimates that the population within the subject neighborhood’s 3 mile radius is forecasted to change to 41,962 by the year 2030. As for the broader area, ESRI forecasts that the population within the subject’s 5 mile radius will change to 78,155 over the next five years. The population estimates for the next five years within the subject’s 5 mile radius represents a 3.14% change as well as a (0.92%) change within the subject’s 1 mile radius for the same period.

Households

The estimates provided by ESRI indicate that the number of households within the subject neighborhood’s 3 mile radius is

20,759, which is a 1.06% change since 2020. Within the subject’s broader 5 mile radius, ESRI estimates that the number of households is 37,472, a 3.45% change over the same period of time.

By the year 2030, the estimates provided by ESRI indicate that the number of households within the subject neighborhood’s

3 mile radius will change by 1.50% to 21,070 households. Additionally, ESRI’s estimate for total households over the next five years within the subject’s broader 5 mile radius indicates an expected change of 3.95% which will result in a total household estimate of 38,952.

Looking back, the number of households in the subject neighborhood’s 3 mile radius changed (0.07%) during the ten-year period of 2010 to 2020. Since then it has changed by 1.06%.

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Income

Income estimates provided by ESRI for the subject neighborhood’s 3 mile radius indicates that the median household income is $87,686 and that the average household income is $140,523. Further, the estimates provided by ESRI indicate that, for the subject’s broader 5 mile radius the median household income is $93,889, and the average household income is $147,314.

Given that there are reportedly 37,472 households in the subject’s 5 mile radius, it is estimated that the local effective buying income is around $5,520,150,208.

CONCLUSION

Based on our observation and the data provided by ESRI, it is perceived that the income and population demographics for the subject neighborhood exhibit above average characteristics in terms of reported population growth and income levels. As previously mentioned, the population growth for the subject’s 3 mile radius has increased (0.77%) since 2020 and based on the projections provided by ESRI, it is expected to continue to increase another 0.35% during the next 5 years. Lastly, we perceive that, since average household incomes are above the national average ($140,523, for the subject’s 3 mile radius) and given that the area is well-populated (20,759 households in a 3 mile radius), developments like the subject should be adequately supported.

SURROUNDING LAND USES

The following tables and maps highlight the development in and around the subject.

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The land use in the subject’s immediate neighborhood consists of a significant amount of commercial property, comprising of a mix of many property types. Commercial uses in the area include the Regional malls and many other larger-sized multitenant retail centers, medium-sized retail/industrial/distribution-type properties, small- to- medium sized freestanding office and retail properties, as well as service-related uses, restaurants, gas stations/convenience stores and banks. The following chart illustrates the high concentration of multifamily and retail compared to industrial and office properties.

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Proposed

The following table details our findings:

ECONOMIC INFLUENCES

The local area economic status is important to recognize as the measurement of income levels provides an indication of the ability of the area population to buy, rent and maintain property. The economic status of an area also provides an indication of the population’s appetite for goods and services. Relevant economic information includes income levels, property ownership

vs. rent, property rent levels, rent level trends, property vacancy and new construction.

The vast majority of the housing units within the area are owner occupied, which contrasts with relative similarity to other parts of Palm Desert.

GOVERNMENT INFLUENCE

Governmental considerations relate to zoning, building codes, regulations, flood plain restrictions, special assessment, property tax and empowerment zones.

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Zoning in the area is mixed, including commercial, residential and industrial designations. Zoning code is enforced by the municipality and enforcement in all areas of City of Palm Desert is considered to be strong. Rezoning is typically discouraged and requires public input in all municipalities. Building codes are in force and require a certain standard of construction quality and design. This is a typical influence on properties similar to the subject and falls in line with the zoning classification.

Property taxes in the area are established by Riverside County and are assessed based on valuation. Considering broad authority of the county administration, the assessments in the neighborhood are similar to other neighborhoods in the metropolitan area. There are no known special assessments that affect property in the neighborhood.

ACCESS/PUBLIC TRANSPORTATION

The streets within the neighborhood are laid out in a grid pattern with major streets generally along the section and ½ section lines. The major north/south streets in the neighborhood include Portola Avenue and San Pablo Avenue. The major east/west streets include Fred Waring Drive and Magnesia Falls Drive. With the existing transportation system, most areas of metropolitan

Palm Desert are accessible from the subject neighborhood and access is considered for the metropolitan area. Public bus service is available throughout the area. Overall, access within the neighborhood is average for the metropolitan area.

ENVIRONMENTAL INFLUENCES

The subject area is considered to be a typical neighborhood with average building size and density. There are no extraordinary topographical features, nuisances of hazards. Public utilities are available in most all areas in quantities from public and private sources. The area has both public and private schools in adequate supply and quality.

LOCAL AREA SUMMARY

The subject property is well located in a residential area with good proximity to shopping, area amenities and local transportation corridors. The local market benefits from a diverse blend of residential, commercial, and community uses and close proximity to many recreational activities. Over the past year the local area economy has performed moderately well, with some decline in tourism. Over the long term the area is expected to perform well and continue to be a popular tourist destination.

SITE

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OVERVIEW

The subject of this report consists of two assessor parcels with sizes ranging from 0.32 to .65 acres in size (13,939 SF to

28,314 SF). Both parcels are level sites. The subject, as one entity, has access to San Pascual Avenue. The sites are located in a R-2 zone area that permits medium density residential (which is reported to be a range of 3 to 10 units per acre).

Address 44215 San Pascual Ave, Palm Desert, California.

Census Tract 06-065-045127

Adjacent Uses

North Residential and Retail/Office

South Care Facilities

East Vacant Land

West Residential

Flood Plain Zone X (Shaded). This is referenced by Panel Number 06065C2207H, dated April 19, 2017.

Zone X (shaded) is a moderate and minimal risk area. Areas of moderate or minimal hazard are studied based upon the principal source of flood in the area. However, buildings in these zones could be flooded by severe, concentrated rainfall coupled with inadequate local drainage systems. Local storm water drainage systems are not normally considered in a community’s flood insurance study. The failure of a local drainage system can create areas of high flood risk within these zones. Flood insurance is available in participating communities, but is not required by regulation in these zones. Nearly 25% of all flood claims filed are for structures located within these zones. Moderate risk areas within the 0.2%

SITE (CONTINUED)

25.WC.23676.CA Palm Desert Vacant Land p. 23 annual chance floodplain, areas of 1% annual chance flooding where average depths are less than 1 foot, areas of 1% annual chance flooding where the contributing drainage area is less than 1 square mile, and areas protected from the 1% annual chance flood by a levee.

No BFEs or base flood depths are shown within these zones. (Zone X (shaded) is used on new and revised maps in place of Zone B.)

Seismic The subject is in a low risk area.

INGRESS | EGRESS

SOILS

A detailed soils analysis was not available for review. Based on the development of the subject, it appears the soils are stable and suitable for the existing improvements.

ENVIRONMENTAL HAZARDS

We have not conducted an independent investigation to determine the presence or absence of toxins on the subject property.

If questions arise, the reader is strongly cautioned to seek qualified professional assistance in this matter. Please see the

Assumptions and Limiting Conditions for a full disclaimer.

We were not provided with a copy of the Phase I Environmental Assessment for review.

EASEMENTS | ENCROACHMENTS

A preliminary title report was not available for review. During the property inspection, no adverse easements or encumbrances were noted. This appraisal assumes that there are no adverse easements present. If questions arise, further research is advised.

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ZONING

ZONING CONCLUSION

The subject property is vacant land and is located in a zone designation that is permitted for residential use based on the current zoning guidelines. The R-2 zoning permits 3 to 10 units per acre and based on the subject size it appears that a potential of nine units would be feasible in this zone. No zoning change is believed to be imminent. Based on our conversations with Anna Dan of the Palm Desert planning department, the subject property is zoned R-2, which permits a variety of residential uses, including for rent and for sale housing. Multifamily is permitted with a density that could range from 3 to 10 units. Our analysis is based on an estimated density in the upper end of the range.

ZONING MAP

The following exhibit presents the subject zoning map.

CONCLUSION

In the final analysis of the site, no significant detriments were discovered which would be inhibit development accordingly with its highest and best use. The site displays adequate accessibility and locational features for multi-family development.

The site’s physical and legal characteristics appear to be supportive of and suitable for the subject’s potential future use as a multifamily development.

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TAXES

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In California, Proposition 13 establishes that annual increases of assessed value of real property should not exceed 2% per year except in cases of a change in ownership, completion of new construction, and/or in the case of a value restoration due to a prior year decline in value (Proposition 8) assessment.

Real property in Riverside County in the State of California is re-assessed every year. Real estate taxes are due March 31st of each year. However, if taxes are paid by November 30th, a property owner can realize a 4% discount in the total liability. The discount is reduced by 1% each month after November 30th until the full liability is due in March. Our analysis assumes a prudent investor would take advantage of this discount.

County Assessor’s offices tend to be more conservative in terms of increasing assessments despite ongoing improvements in the multifamily sector. This is attributed to limited staff and cost of defending tax appeals and the change in 2009 from the

Assessor having the Presumption of Correctness to the Preponderance of Evidence, requiring the assessor to have a much greater burden to support assessments if contested. Assessment levels are impacted by the following primary factors:

• Re-assessment without a transaction

MARKET PARTICIPANTS

We discussed expectation of increases in the real estate tax assessment, and thus, real estate tax liability, with investors and brokers active in the marketplace. It was reported that they are generally anticipating increases in assessment levels to 70%

- 85% of the contract price, depending on the asset and location. Additionally, these increases are typically reflected in the in-place capitalization rates reported by market participants.

CURRENT TAXATION & ASSESSMENT

The subject is owned by a public entity, which is exempt from property taxes.

CONCLUSION

In our conclusion, we considered the re-assessment process within the State of California as well as investor and market participant expectations. The subject is owned by a public entity, which is exempt from property taxes. We note that the impact of re-assessment can vary somewhat significantly depending on the timing of acquisition, County re-set of the assessment the following year and future increases in the assessment level over the holding period. If the property were to sell to the public, annual property taxes would apply.

MARKET ANALYSIS

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PALM SPRINGS (COACHELLA VALLEY) SUBMARKET OVERVIEW

The subject is a vacant parcel of land zoned for high density residential development. We have provided an overview of the multifamily residential market trends in the Coachella Valley (which is a submarket of the greater Inland Empire market).

Absorption in Palm Springs is increasing, boosted by the lease-up on new supply. Vacancy remains elevated following occupancy loss in 2022-23 and supply growth more recently. Including properties in the lease-up, vacancy measures 7.9% as of the fourth quarter of 2025. Recent vacancy expansion had been more dramatic across all other submarkets across the

Inland Empire, but vacancy in Palm Springs rose later due to a later development cycle. Stabilized vacancy, unaffected by new inventory, has trended slightly higher in recent years, recently exceeding 5%.

Palm Springs is a high-end resort community, although workforce housing also exists in the city, Palm Desert, Indio, and

Coachella. Due to stronger demand, rent growth has historically exceeded the market average, as it has in the post-pandemic era. However, due to elevated vacancy, rent growth was weak from 2023-24, and now rents register an annual change of -

0.3%.

MARKET ANALYSIS (CONTINUED)

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VACANCY

Demand for apartments in Palm Springs finally turned positive in the first quarter of 2024, following ten consecutive quarters of contraction, and demand ramped up in 2025. Affordability is improving as wages catch up to elevated rent costs, and absorption has been recently boosted by renters moving into new supply. Vacancy still measures an elevated 7.9% as of the fourth quarter of 2025 due to supply additions.

Palm Springs has the highest concentration of older residents in the metro, with a median age of over 40. The area remains a haven for retirees and second-home owners fleeing cold weather. Population growth will likely be concentrated among older residents rather than prime renter-age cohorts.

Renters have several options in Palm Springs, from single-family homes to affordable apartments and mobile homes. The submarket is diverse demographically, with affordable areas primarily located in Indio and Coachella and luxurious residences in Palm Springs and Palm Desert. Palm Springs restricted short-term rentals to 20% of neighborhood supply in late 2022, which likely prompted some single-family homeowners to rent their houses annually, thereby increasing options for resident renters.

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MARKET RENT

Apartment affordability in Palm Springs was stretched following a 13% increase in rents in 2021 and a 7% increase in 2022.

In response to renter outflows and rising vacancy, rent levels nearly stabilized in 2023-23 with growth moderating to 1% annually. Rents now register an annual change of -0.3% as of the fourth quarter of 2025.

Apartment rents average $1,810/unit, well below the Inland Empire market average of $2,110/unit. High-end 4 & 5 Star inventory currently commands $2,600/unit compared to $1,840/unit for 3 Star units and only $1,310/unit for 1 & 2 Star units.

The submarket caters to lower-income renters who work in service industries. Limited supply additions and historically low vacancies typically provide landlords with leverage in Palm Springs. Rent growth could improve in the upcoming year as new properties gain occupancy. Growing leisure and hospitality employment should generate interested renters, but affordability issues and alternative rental options are biting into demand.

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CONSTRUCTION

Following a decade of inactivity, market-rate apartment development activity ramped up recently, with developers initiating several projects over the past three years. Although construction loan rates are higher, projects are more feasible following the pandemic-era boost in rent potential. As of the fourth quarter of 2025, 78 units are under construction in the submarket.

Millennium Apartments, a 330‑unit complex at 74699 Technology Dr in Palm Desert, developed by Western National Property

Management, was completed in Q4 2024. It offered one month free on select units and a $500 look‑and‑lease; average rents are: studio $2,160, 1BR $2,350, 2BR $2,650, and 3BR $3,500. In Coachella, the 108‑unit Covalda Apartments at 51392 Cesar

Chavez St finished construction in 2025. Shopoff and Argosy Real Estate completed SolTerra, a 31-unit single-family build-to-

25.WC.23676.CA Palm Desert Vacant Land p. 31 rent community in La Quinta in the third quarter of 2023. The 3 and 4- bedroom units at the complex command effective rents of nearly $3,300/unit and $4,100/unit after move-in concessions, although rental rates at the property have declined in recent quarters. The property is surrounded by La Quinta Resort & Club, the Rancho La Quinta Golf Club, and Lake La Quinta, and also features a commercial space and a hotel.

There is a proposal to build a 242-unit complex called Coachella Village adjacent to Rancho Las Flores Park and Event Venue, which holds multiple soccer fields for recreational use.

The first-ever Storyliving by Disney community, a residential for-sale development key to continued economic growth in the area, is under construction in Rancho Mirage in the Coachella Valley. Designed by Disney Imagineers and DMB Development, home sales at the 618-acre mixed-use development are underway, and the project is scheduled to be completed by 2040.

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MARKET INTERVIEWS

As part of this analysis, recent transactions and trends were discussed with knowledgeable local brokers, agents, and owners.

Of the participants that were interviewed, the majority pointed to a bottoming in pricing in the residential and the commercial markets in the immediate area and was optimistic of new activity and recently completed transactions.

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CONCLUSION

Overall, the Coachella Valley is performing moderately well. Vacancy is reported below eight percent and average rental rates are $1,800 per month per unit and limited new construction planned for the local area. The Coachella Valley economy continues to perform moderately well with average levels of tourism projected for the near term. Most investors view the greater Inland

Empire favorably and the submarket of the Coachella Valley as a popular tourist destination. Overall, near term market conditions are forecast to remain stable with moderate upward performance.

HIGHEST AND BEST USE

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The highest and best use is the ultimate authority upon which opinions of property value are based. All four criteria must be met sequentially in order to derive a property’s highest and best use:

ANALYSES

The two types of highest and best use analyses are of the site as [though] vacant and of the property as improved. The highest and best use of an undeveloped site assumes that the parcel is vacant or can feasibly be made vacant by demolishing improvements thereon.

The highest and best use of an improved property is determined under the consideration of its existing improvements. It can either remain unchanged as is, or be renovated, added onto, or razed for either a different type or intensity of use. So long as there is positive return on invested capital and the subsequent value created therefrom is over and above that of any alternative use, the improvements should, in theory and at a minimum, not be razed.

The subject is vacant land. This section develops the highest and best use of the subject property As-Vacant and As Improved.

The subject is vacant land, with no improvements and no specific approved plans for development.

AS VACANT ANALYSIS

In this section the highest and best use of the subject as vacant is concluded after taking into consideration financial feasibility, maximal productivity, marketability, legal, and physical factors.

Legally Permissible

Private restrictions, zoning, building codes, historic district controls, and environmental regulations are considered, if applicable to the subject site. The legal factors influencing the highest and best use of the subject site are primarily government regulations such as zoning ordinances. Permitted uses of the subject’s Residential-2 (R-2) include permitted uses within this district include 1-3 story residential uses. projects. Zoning change is not likely; therefore, uses outside of those permitted by the R-2 zoning are not considered moving forward in the as-vacant analysis.

Physical Possible

The test of what is physically possible for the subject site considers physical and locational characteristics that influence its highest and best use. In terms of physical features, the subject site totals 0.9700-acres (42,253 SF), it is rectangular in shape and has a level topography. The site has average exposure and average overall access. There are no physical limitations that would prohibit development of any of the by-right uses on the site.

Financial Feasibility

Based on the analysis of the subject’s market, apartment rental rate trends, and an examination of multifamily development costs, a newly constructed multifamily building or for sale residential, would likely have a value supported by current rent or sale levels; however, a speculative build is not prudent and the site should only be developed for an identified property type, market segmentation and ultimate use and density. A full market feasibility study is beyond the scope of this report.

Maximum Productivity

There is only one use that creates value and at the same time conforms to the requirements of the first three tests. Financial feasibility, maximal productivity, marketability, legal, and physical factors have been considered and the highest and best use of the subject site as-vacant concluded to be multi-family.

MOST PROBABLE BUYER

Based on the type of property to be developed and the income generating potential of the subject vacant site with development, it is our opinion that the most probable buyer for the subject would be local or regional developer or investor.

APPROACHES TO VALUE

25.WC.23676.CA Palm Desert Vacant Land p. 35

In traditional valuation theory, the three approaches to estimating the value of an asset are the cost approach, sales comparison approach, and income capitalization approach. Each approach assumes valuation of the property at the property’s highest and best use. From the indications of these analyses, an opinion of value is reached based upon expert judgment within the outline of the appraisal process.

SALES COMPARISON APPROACH

The sales comparison approach estimates value based on what other purchasers and sellers in the market have agreed to as price for comparable properties. This approach is based upon the principle of substitution, which states that the limits of prices, rents, and rates tend to be set by the prevailing prices, rents, and rates of equally desirable substitutes. In conducting the sales comparison approach, we gather data on reasonably substitutable properties and make adjustments for transactional and property characteristics. The resulting adjusted prices lead to an estimate of the price one might expect to realize upon sale of the property.

The sales comparison is utilized for land comparable analysis.

INCOME CAPITALIZATION APPROACH

The income capitalization approach (“income approach”) simulates the reasoning of an investor who views the cash flows that would result from the anticipated revenue and expense on a property throughout its lifetime. The net income developed in our analysis is the balance of potential income remaining after vacancy and collection loss, and operating expenses. This net income is then capitalized at an appropriate rate to derive an estimate of value or discounted by an appropriate yield rate over a typical projection period in a discounted cash flow analysis. Thus, two key steps are involved: (1) estimating the net income applicable to the subject and (2) choosing appropriate capitalization rates and discount rates. The appropriate rates are ones that will provide both a return on the investment and a return of the investment over the life of the particular property.

The Income Approach is not a scope requirement for this assignment. The subject property type is not typically analyzed on an income basis by buyers and sellers, reducing the applicability of this valuation technique. Therefore, the Income Approach is not developed. 0

SITE VALUATION

The site value is a specific scope requirement of this assignment. Considering the subject property's underlying redevelopment potential and noting the advanced age of the improvements, the inclusion of estimate of vacant land value is deemed appropriate. Therefore, a valuation of the subject site has been provided herein.

COST APPROACH

The cost approach considers the cost to replace the proposed improvements (subject is vacant land, therefore not applicable), less accrued depreciation, plus the market value of the land. The cost approach is based on the understanding that market participants relate value to cost. The value of the property is derived by adding the estimated value of the land to the current cost of constructing a reproduction or replacement for the improvements and then subtracting the amount of depreciation in the structure from all causes. Profit for coordination by the entrepreneur is included in the value indication.

The Cost Approach is not a specific scope requirement of this assignment. Characteristics specific to the subject property do not warrant that this valuation technique is developed. Based on the preceding information, the Cost Approach will not be presented.

APPROACHES USED

Based on the agreed upon scope with the client, the subject’s specific characteristics and the interest appraised, this appraisal developed Land Sales Comparison Approach. The values presented represent the As-Is Market Value (Fee Simple Interest)

This appraisal does not develop the Cost and Income Approaches, the impact of which is addressed in the reconciliation section.

SITE VALUATION

25.WC.23676.CA Palm Desert Vacant Land p. 36

UNIT OF COMPARISON

The most relevant unit of comparison for competing land is the $/SF. All of the comparable sales presented in this section were reported on this basis.

ADJUSTMENTS

Adjustments to the comparable sales were considered and made when warranted for expenditures after purchase, property rights transferred, conditions of sale, financing terms, and market conditions.

• Property Rights - All of the sales comparables were fee simple sales reflecting the property rights appraised herein per the agreed upon scope of work.

• Financing - The sales all reflected typical cash equivalent, lender-financed transactions and no adjustments were required for financing terms.

• Sale Conditions - None of the comparables required a condition of sale adjustment, as all were confirmed to be arm’s length transactions.

• Expenditures After Sale - Expenses that the buyer incurs after purchase (demolition, cleanup costs, etc.). No adjustments are warranted based on review of the land sales.

• Market Conditions (Time) - Based on the analysis performed, which includes research and interpretation of value trends of the comparable land sales presented herein, a market conditions adjustment of 0% is applied on an annual basis reflecting the relatively consistent appreciation that occurred between the oldest comparable sale date up through the effective valuation date. Over the past five years the local Coachella Valley market has varied in appreciate rates. We did not find compelling evidence to support a market conditions adjustment.

QUANTITATIVE ADJUSTMENT PROCESS

Quantitative percentage adjustments are also made for location and physical characteristics such as size, location quality, access, exposure, as well as other applicable elements of comparison. Where possible the adjustments applied are based on paired data or other statistical analysis.

COMPARABLE SELECTION

A thorough search was made for similar land sales in the area. The parameters of the survey were highest and best use, zoning, proximity to the subject, size, and date of sale. In selecting comparables, emphasis was placed on confirming recent sales of sites that are similar to the subject property in terms of location and physical characteristics. Overall, the sales used represent the best comparables available for this analysis.

SITE VALUATION (CONTINUED)

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MAP OF COMPARABLE LAND SALES

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LAND SALE EXHIBITS

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LAND SALES ADJUSTMENT ANALYSIS

The adjustment process is described below.

Land Sale (Listing) 1 ($23.63/SF Adjusted) –

This comparable is a current listing and was adjusted down for the listing status. The property is smaller and was adjusted down for size. In addition, the property is not well located as compared to the subject and was adjusted upward for the inferior location. This property has superior site utility for potential development and was adjusted down for this factor.

Land Sale 2 ($22.31/SF Adjusted) –

This comparable sold with a portion of the site work completed and was adjusted down for this factor. In addition, the site is larger in size and was adjusted upward for this factor. This property also has superior site utility for potential development and was adjusted down for this factor.

Land Sale 3 ($14.51/SF Adjusted) –

This comparable is larger in size and was adjusted upward for this factor. In addition, this property is not well located as compared to the subject and was adjusted upward for the inferior location. This property also has inferior site utility for potential development and was adjusted upward for this factor.

Land Sale 4 ($18.04/SF Adjusted) –

This comparable is smaller and was also adjusted down for size for the reasons noted above. This property also has inferior site utility for potential development and was adjusted upward for this factor.

Land Sale 5 ($24.06/SF Adjusted) –

This comparable is larger in size and was adjusted upward for this factor. This property is rated superior in terms of location and access and was adjusted down for these factors. This property has superior site utility for potential development and was adjusted down for this factor.

Land Sale 6 ($16.53/SF Adjusted) –

This comparable is smaller and was also adjusted down for size for the reasons noted above.

Land Sale 7 ($21.81/SF Adjusted) –

This comparable is smaller and was also adjusted down for size for the reasons noted above.

Land Sale 8 ($22.32/SF Adjusted) –

This comparable is smaller and was also adjusted down for size for the reasons noted above. This property is rated superior in terms of location and potential density and was adjusted down for these factors.

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LAND VALUE CONCLUSION

One current listing and seven sales were identified for analysis. The comparable data range from $12.09 to $31.89 per square foot prior to adjustments. The sales indicate a wide range that reflects differences in location, size, density, zoning, site utility and proposed use. Following adjustments the sales range from $14.51 to $24.06 per square foot with an average of $20.40 per square foot. Based on the subject location, size and R2 zoning, with medium density, we concluded below the overall adjusted average or $19.00 per square foot or $800,000 on a rounded basis.

As a test of reasonableness and an additional check of the land sales utilized in the sales comparison approach conclusion above, we also analyzed MLS data of single family home pricing, townhome pricing and with Costar an analysis of investment sales of multifamily developments in the local area. The owner of the property has not submitted specific development plans as to the density, market orientation or proposed unit pricing or number of units proposed. In the absence of specific plans, the number of units allowed under the current zoning designation for the subject site is also considered for potential density of the subject site or nine units. The test of reasonable is based on the methods used by residential developers or the ratio of land price to home price ratio. Home prices in the immediate area for new construction or recently renovated homes, based on the MLS data, range from $550,000 to over $650,000 per unit or per home. When purchasing land, developers often employ a ratio of land price to home price and this ratio range for feasibility and profitability can range from 15 to 40 percent (varying with the proposed home segment of entry level or upper level pricing, site improvement costs, etc.). We have concluded at

$800,000 for the as is market value of the subject site, indicating approximately $90,000 per unit with a density of nine units

(the allowable density in the current zone) for the subject site. The estimate of $90,000 per unit represents approximately 15 percent of the average residential home price of $600,000 and therefore appears within the range of feasibility.

RECONCILIATION OF VALUE CONCLUSIONS

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The Reconciliation of Value Conclusions is the final step in the appraisal process and involves the weighing of the individual valuation techniques in relationship to their substantiation by market data, and the reliability and applicability of each valuation technique to the subject property. Understanding the profiles of potential buyers and their typical reliance on each approach to value strongly influences the weighting process.

Based on the quality of the data and analyses, and decision-making process of the typical investor of the subject asset (vacant land), the Sales Comparison approach warranted primary and sole emphasis in developing our final opinion of market. The

Income Capitalization and the Cost Approach are not applicable for vacant land and were not presented.

CERTIFICATION

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We certify that, to the best of our knowledge and belief:

• The statements of fact contained in this report are true and correct.

• The reported analyses, opinions, and conclusions of the signers are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions.

• The signers of this report has no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved.

• Steven Evans, MAI, CCIM, MRICS has performed services, specifically as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. A prior report was provided to the City of Palm Desert.

• Casey Merrill, MAI, ASA, FRICS has performed services, specifically as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. A prior report was provided to the City of Palm Desert.

• The signers are not biased with respect to the property that is the subject of this report or to…