HomeMy WebLinkAboutRoripaugh Official Statement 2 of 3
Construction Activity The following table shows a five year history of construction activity in the City. CITY OF TEMECULA BUILDING PERMITS AND VALUATIONS 2000 -2004 Total 2000 2001
2002 2003 2004 Valuation: Residential Non-residential Total Residential Units: Single family Multiple family $156,787,850 $127,823,375 $100,516,115 $194,699,509 $185,041,089 58.320.736
39.602.913 43.487.229 36.087.001 56.658.233 $215.108.586 $167.426.288 $144.003.344 $230.786.510 $241.699.322 1,142 944 650 1,271 888 244 0 0 _142 408 944 650 1.413 Source: Construction
Industry Research Board. A-2
The following table shows historical commercial and residential construction and property values. CITY OF TEMECULA COMMERCIAL AND RESIDENTIAL CONSTRUCTION AND PROPERTY VALUES Fiscal
Years ending June 30,1992 -2005 Property Values'2' Commercial Residential Commercial Construction'1' Residential Construction'1' Fiscal Year (ending June 30) 1992 1993 1994 1995 1996
1997 1998 1999 2000 2001 2002 2003 2004 2005 Number of Units 158 150 130 162 136 202 203 337 437 265 252 304 277 116 Value $ 902 6,316 10,639 29,221 23,572 32,863 66,226 159,286 52,497
39,511 51,686 41,402 61,823 79,578 Number of Units 337 802 1,186 968 987 857 835 1,384 1,179 1,606 938 1,162 1,472 918 Value $ 10,605 50,347 113,002 85,410 93,674 85,257 105,527 180,840
148,660 169,687 97,773 145,387 179,071 241,322 $1,078,926 1,473,713 1,526,353 1,466,641 1,478,230 1,347,000 1,321,044 1,378,364 1,524,091 1,935,537 2,183,862 2,633,661 2,711,397 2,835,143
$1,542,280 1,454,943 1,489,077 1,539,257 1,677,720 1,856,203 1,958,706 2,067,549 2,303,303 2,627,716 3,017,148 4,127,318 4,808,116 5,488,914 Values in thousands of dollars. Source: (1)
CityofTemecula, Building and Safety Department. (2) County Land Use Statistical Recap Report. Economic Condition Temecula's economic base is anchored by a number of firms specializing
inbiomedical technology and supplies, high technology controllers and semi-conductors, among others. The City's retail base is also experiencing growth and is home to several auto dealers
including Honda, Toyota and Nissan. The following tables set forth major manufacturing and non-manufacturing employers: A-3
Employer CITY OF TEMECULA MAJOR MANUFACTURING EMPLOYERS (As of November, 2005) Approximate No. of Employees Guidant Corporation International Rectifier/Hexfet Channell Commercial Corp.
Milgard Manufacturing Bianchi International Opto 22 Inc. Chemicon International Plant Equipment, Inc. Magnecomp Corporation Solid State Stamping Tension Envelope Molding International
& Engineering 2,354 700 344 325 225 205 201 200 118 110 110 102 Type of Business Medical equipment Power semi-conductors Cable enclosures Custom windows Leather goods Electric/automation
controls Medical products Telephone equipment Manufacture computer disks Manufacture electronic contacts Envelope manufacturer Manufacturer Employer Temecula Valley Unified School District
(TVUSD) Manpower of Temecula Professional Hospital Supply Albertsons Costco Wholesale City of Temecula JC Penney Corp. The Scotts Company Paradise Chevrolet/Cadillac Temecula Creek Inn
Macy's Southwest Traders FFF Enterprise, Inc. CITY OF TEMECULA MAJOR NON-MANUFACTURING EMPLOYERS (As of November, 2005) Approximate No. of Employees 2,608 1,871 850 604 400 315 209 190
184 180 172 170 142 Type of Business Public school system Business services Wholesaler distributor Supermarket Wholesale warehouse City government Retail Distributor Automobile dealer
Hospitality Retail Wholesale Distributor Wholesale Distributor Source: City of Temecula Finance Department. Sales Tax Revenues Industrial and business parks offering clean industries
and convenient office space provide growing employment opportunities. The retail community is expanding rapidly with excellent shopping venues A-4
including the regional Promenade Mall, a unique Historic Old Town area and neighborhood strip centers. A wide selection of restaurants allows diners to choose between nationally recognized
chains or intimate dining bistros. CITY OF TEMECULA SALES TAX HISTORY Year 1989-90 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 "Budget Estimate. Amount $632,153
$9,186,547 $10,652,400 $14,009,322 $16,321,929 $19,237,317 $21,572,199 $25,392,314 $27,802,830 $29,200,000* Source: City ofTemecula Finance Department. CITY OF TEMECULA PRINCIPAL SECURED
PROPERTY OWNERS FOR THE YEAR ENDED JUNE 30, 2005 Taxpayer Advanced Cardiovascular System Inc. International Rectifier Corporation Temecula Towne Center Associates Lakha-Aldenwood Properties
LLC Kimco Palm Plaza Limited Partnership Portofino Development Starwood Wasserman Temecula STCA California Acacia Limited Partnership Solana Ridge LLC 2005 Assessed Valuation Type of
Business (in thousands) Manufacturing $152,155 Manufacturing 128,471 Real Estate Development 98,285 Real Estate Development 47,500 Real Estate Development 41,738 Real Estate Development
30,428 Property Management 29,692 Manufacturing 29,233 Real Estate Development 27,264 Real Estate Development 25.544 $610,313 Percent of Total Assessed (Valuation) 2.05% 1.73% 1.33%
0.64% 0.56% 0.41% 0.40% 0.39% 0.37% 0.34% 8.24% Source: Riverside County Assessor's Office and City ofTemecula Finance Department. A-5
Fiscal Year Taxes 1997 1998 1999 2000 2001 2002 2003 2004 2005 Total Secured and Unsecured $3,203,187 $3,279,750 $3,445,913 $3,827,394 $4,563,253 $5,201,010 $6,201,896 $6,931,291 $7,794,688
CITY OF TEMECULA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY FOR THE FISCAL YEARS ENDED JUNE 30,1997 THROUGH 2005 (Values in Thousands) Exemptions Net Net Total Estimated
Veteran Assessed Exemptions Assessed Actual Church, etc. Value Homeowners Value Value $(22,276) $3,180,911 $(53,023) $3,127,888 $3,127,888 $(24,100) $3,255,651 $(56,665) $3,198,986 $3,198,986
$(24,216) $3,421,696 $(60,119) $3,361,578 $3,361,578 $(25,597) $3,801,797 $(61,464) $3,740,333 $3,740,333 $(29,666) $4,533,587 $(64,372) $4,469,215 $4,469,215 $(33,360) $5,167,650 $(68,938)
$5,098,712 $5,098,712 $(30,010) $6,171,886 $(82,926) $6,088,960 $6,088,960 $(43,142) $6,888,149 $(92,362) $6,795,787 $6,795,787 $(53,240) $7,741,448 $(94,237) $7,647,211 $7,647,211 Source:
Riverside County Assessor's Office. General Information Industrial Real Estate. In June 2004, the City had 12.5 million square feet of manufacturing space in existence or under construction.
This was an increase from 9.0 million square feet in 2002. The City's supply represents 4.0% of the Inland Empire's total of 313 million square feet In June 2004, the City's industrial
vacancy rate was approximately 5.0%. The City industrial vacancy rate was well below the 8.6% average for the inland regions' 12 major submarkets. Office Real Estate. In 2003, the region's
net space absorption was 1.23 million square feet. For the four quarters ended June 2004, a net of 731,551 square feet was taken off the market. The vacancy rate has dropped from 25%
in 1997 to 9.2% in the third quarter of 2004. Agriculture. The climate and soil in the City are particularly favorable for growing avocado, grape and citrus crops. There are currently
several agricultural management firms in the Temecula area which manage agricultural production of thousands of acres of land owned by individual investors, partnerships partnerships
and corporations. The agricultural managers apply economies of scale, by combining many small and medium sized parcels of land as if these parcels were one large ranch. In addition,
a substantial wine industry has been developed in the City and the surrounding area. As of May, 2005, there were twenty (20) wineries which produce wine with locally grown grapes. Climate.
Temecula Valley enjoys a mild Mediterranean climate with year-round temperatures averaging in the mid 70's. The weather is comparable to the Napa Valley, as evidenced by a thriving wine
industry, with warm, dry days and cool evenings. Summer-time temperatures, which can average in the mid 80's or the mid 90's during the day, are often cooled by afternoon ocean breezes
blowing into the valley through gaps in the Santa Ana foothills to the west. Although separated from the Pacific by the Santa Rosa range of mountains, the Rainbow Gap funnels the mild
beach climate into the valley. Mild winter temperatures average in the mid 60's. Yearly average rainfall in Temecula is approximately 14 inches, as compiled by the Rancho California
Water District.A-6
Thequality ofair in the Temecula Valley is consistently better than that of surrounding communities. Ocean breezes flow through the Rainbow Gap almost every day, sweeping away smog.
In the summer, Pacific winds yield temperatures up to 10 degrees lower than in towns just a few miles away. Education. The City is served by Temecula Valley Unified School District,
one of the fastest growing school districts in the State, with 4 high schools (including acontinuation school), 5 middle schools, 2 charter schools, 1 home-schooling program, and 15
elementary schools. In addition, there are 9 private schools and several pre-schools. The general boundaries extend north to Jean Nicholas Road in French Valley, south to the Riverside
County line, east to Vail Lake, and west to the Temecula city limit. The District covers approximately 150 square miles. As of May, 2005, approximately 25,653 students (Grades K-12)
are enrolled in the District. The University of California, Riverside has opened an extension center in the City and Mt. San Jacinto Community College operates a campus ten miles north
of the City to serve the growing population. Temecula began the 1990s with a well-educated population, and its population trends and school performance figures have allowed it to maintain
that position. Transportation. Interstate 15 and its connecting arterials provide convenient links to San Diego and Riverside, Los Angeles (Interstate 10), Orange County (Highway 91)
and San Bernardino (Interstate 215). The French Valley Airport, 4 miles north of Interstate 15 on Winchester Road, accommodates business jets and commuter airlines. Housing. Temecula
is unique in that its residents are about equidistant from both San Diego and Orange County via the Interstate 15 freeway. As a result, it is receiving growth impulses from the south
as well as the north, as families spill into the Inland Empire from Southern California's more congested coastal counties. Temecula's rapid population growth represents a relatively
new phenomenon in Southern California. A large number of the City's new residents have migrated north from San Diego County along the Interstate 15 freeway. Normally, a Southern California
community undergoes rapid growth only when population spills from Orange or Los Angeles counties. The latest population data shows Temecula with 81,397 residents as of January 1, 2005,
which includes the annexation of the Vail Ranch area in July, 2001 and the March, 2004 annexation of the community of Redhawk, which became official June 30, 2005. A-7
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX B RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH)
[THIS PAGE INTENTIONALLY LEFT BLANK]
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) A Special Tax shall be levied and collected
on all Taxable Property located within the boundaries of CFD No. 03-02 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) ("CFD No. 03-02").
The amount of Special Tax to be levied in each Fiscal Year on a Parcel in CFD No. 03-02, commencing with Fiscal Year 2005 -2006, shall be determined by the CFD Administrator through
the application of the procedures described below. All of the real property in CFD No. 03-02, unless exempted by law or the provisions herein, shall be taxed for the purposes, to the
extent and in the manner herein provided. A. DEFINITIONS In addition to the capitalized terms set forth in the preceding paragraph, capitalized terms used in this Section A shall have
the following meanings: "Acre" means 43,560 square feet of land. The Acres for a Parcel means the land area of the Parcel as shown on or determined from the applicable Assessor's Parcel
Map. Notwithstanding the foregoing, the Acres attributable to each Parcel of Residential Property that is (i) located in a Final Map and (ii) an individual single-family home lot or
Condominium shall be computed by the CFD Administrator by dividing the sum of the land area for all such Parcels of Residential Property in the Final Map by the number of such Parcels.
The Acres for any leasehold or possessory interest shall be the Acres for the Parcel which corresponds to such leasehold or possessory interest. "Acreage Special Tax" means the special
tax set forth in Section C.2 below. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of
the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 03-02, including but not limited to
the following: (i) the costs of computing the Special Taxes and of preparing the annual Special Tax collection schedules (whether by the CFD Administrator or designee thereof, or both);
(ii) the costs of collecting the Special Taxes (whether by the Authority, County, City, or otherwise); (iii) the costs of remitting the Special Taxes to the fiscal agent or trustee for
any Bonds; (iv) the costs of commencing and pursuing to completion any foreclosure action arising from delinquent Special Taxes; (v) the costs of the fiscal agent or trustee (including
its legal counsel) in the discharge of the duties required of it under any Indenture; (vi) the costs of the Authority, City, or designee of complying with arbitrage rebate and disclosure
requirements of applicable federal and State of California securities laws, the Act, and the California Government Code, including property owner or Bond owner inquiries regarding the
Special CFD No. 03-02 Page 1 of 12 January 5, 2005
Taxes; (vii) the costs associated with the release of funds from any escrow account; (viii) the costs of the Authority, City, or designee related to any appeal of a Special Tax; and
(ix) an allocable share of the salaries of the City staff and City overhead expense directly relating to the foregoing. Administrative Expenses shall also include amounts advanced by
the City or the Authority for any administrative purposes of CFD No. 03-02. "Assessor" means the County Assessor of the County of Riverside. "Assessor's Parcel Map" means an official
map of the Assessor designating parcels of land or Condominium units by number. "Authority" means the Temecula Public Financing Authority. "Board of Directors" means Board of Directors
of the Authority, acting as the legislative body of CFD No. 03-02. "Bonds" means any bonds or other indebtedness (as defined in the Act), whether in one or more series, the repayment
of which is secured by the levy of Special Taxes on Parcels within CFD No. 03-02. "CFD Administrator" means the Finance Director of the City, or designee thereof, responsible for determining
the Special Tax Requirement and providing for the levy and collection of Special Taxes. "City" means the City of Temecula, California. "Condominium" means a residential dwelling unit
meeting the statutory definition of a condominium contained in the California Civil Code, Section 1351, and for which a condominium plan has been recorded pursuant to California Civil
Code, Section 1352. "County" means the County of Riverside, California. "Developed Property" means all Parcels of Taxable Property, for which a Final Map was recorded as of the January
1 and a building permit for new construction was issued as of the April 1 preceding the Fiscal Year in which the Special Tax is being levied, exclusive of Property Owner's Association
Property and Public Property. "Dwelling Unit Special Tax" means the special tax set forth in Section C.I below. "Exempt Property" means any Parcel located within the boundaries of CFD
No. 03-02 which is is exempt from the Special Tax pursuant to law or Section E below. "Final Map " means a subdivision of property by recordation of a (i) final map or parcel map approved
by the City pursuant to the Subdivision Map Act (California Government Code CFD No. 03-02 Page 2 of 12 January 5, 2005
Section 66410 et seq.), (ii) lot line adjustment approved by the City, or (iii) condominium plan pursuant to California Civil Code 1352. "Fiscal Year" means the period starting on each
July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued,
as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use " means the land use set forth in the Land Use Plan. "Land
Use Plan" means the approved land use plan for the Specific Plan. "Lot" means (i) any lot within a Final Map that is located at least partially within the boundaries of CFD No. 03-02
or (ii) any land within the boundaries of CFD No. 03-02 that is conveyed, dedicated, or otherwise acquired by or irrevocably offered to the federal government, the State of California,
the County, the City, or any local government or other governmental agency. "Maximum Special Tax" means the maximum special tax, determined in accordance with Section C, that can be
levied in any Fiscal Year on any Parcel. "Non-Residential Property" means all Parcels of Taxable Property which are not classified as Residential Property, Property Owner's Association
Property, or Public Property. "Parcel" means a parcel (i) which is located at least partially within the boundaries of CFD No. 03-02 and (ii) to which an Assessor's parcel number is
assigned as shown on an Assessor's Parcel Map. "Planning Area" means those planning areas designated by number on the Land Use Plan. "Property Owner's Association Property" means (i)
any Parcel for which the owner of record, as determined from the County Assessor's secured tax roll for the Fiscal Year in which the Special Tax is being levied, is a property owner's
association, including any master or sub-association, (ii) any Lot located in a Final Map that was recorded as of the January 1 preceding the Fiscal Year in which the Special Tax is
being levied and which, as determined from such Final Map, is or will be open space, a private park or recreation facility, or a private street owned by a property owner's association,
(iii) any Lot within a Final Map that is located within the boundaries of CFD No. 03-02 and was recorded as of the January 1 preceding the Fiscal Year in which the Special Tax is being
levied and for which the Land Use is private mini park or private recreation center, or (iv) any Lot or Parcel which, as of the April 1 preceding the Fiscal Year for which the Special
Tax is being levied, has been conveyed, irrevocably dedicated, or irrevocably offered to a property owner's association, including any master or sub-association, provided such conveyance,
dedication, or offer is CFD No. 03-02 Page 3 of 12 January 5,2005
submitted to the CFD Administrator prior to the May 1 preceding the Fiscal Year for which the Special Tax is being levied. " Proportionately" means that with respect to a given classification
of property the ratio of the Special Tax to the Dwelling Unit Special Tax or Acreage Special Tax, as applicable, is the same for all Parcels assigned to such classification. For example,
levying the Special Tax Proportionately on Parcels of Developed Residential Property means that for all such Parcels the ratio of the Special Tax to the Dwelling Unit Special Tax is
the same. "Public Property" means (i) any Parcel for which the owner of record, as determined from the County Assessor's secured tax roll for the Fiscal Year in which the Special Tax
is being levied, is the federal government, the State of California, the County, the City, or any local government or other governmental agency, (ii) any property within a Final Map
that is located within the boundaries of CFD No. 03-02 and was recorded as of the January 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined
from such Final Map, is or will be a public street, (iii) any Lot within a Final Map that is located within the boundaries of CFD No. 03-02 and was recorded as of the January 1 preceding
the Fiscal Year in which the Special Tax is being levied and for which the Land Use is neighborhood park, sports park, educational, public institutional, habitat, flood control, or landscape
slope, unless such Lot has an underlying residential land use and the applicable public entity has provided notice to the City that it will not acquire or otherwise take ownership of
the Lot, or (iv) any Lot or Parcel which, as of the April 1 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed, irrevocably dedicated to, or irrevocably
offered to the federal government, the State of California, the County, the City, or any local government or other governmental agency, provided such conveyance, dedication, or offer
is is submitted to the CFD Administrator prior to the May 1 preceding the Fiscal Year for which the Special Tax is being levied. "Residential Floor Area" means all of the square footage
within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area as determined from the applicable building
permit(s) issued for such structure as of the April 1 preceding the Fiscal Year in which the Special Tax is being levied. Such determination shall be final following the final inspection
or certification of occupancy for the dwelling unit(s). "Residential Property" means all Parcels of Taxable Property, exclusive of Property Owner's Association Property and Public Property,
designated with a residential Land Use. "Special Tax" means the Special Tax levied in each Fiscal Year on each Parcel. "Special Tax Requirement" means (a) that amount with respect to
CFD No. 03-02 required in any Fiscal Year to pay (i) for annual debt service on all outstanding Bonds due in the calendar year which commences in such Fiscal Year; (ii) periodic costs
on the Bonds, including, but not limited to, the costs of remarketing, credit enhancement, and liquidity facility fees (including such fees for instruments that serve as the basis of
a reserve fund in CFD No. 03-02 Page 4 of 12 January 5, 2005
lieu of cash related to any such Bonds) and rebate payments; (iii) the Administrative Expenses; (iv) any reasonably anticipated delinquent Special Taxes based on the delinquency rate
for Special Taxes levied in the previous Fiscal Year or otherwise reasonably expected; (v) any amounts required to establish or replenish any reserve funds established for the Bonds,
and less (b) available funds as directed under the Indenture. "Specific Plan" means the Roripaugh Ranch Specific Plan (City of Temecula Resolution 02-112, Ordinance 02-13), as amended.
"Taxable Property" means all Parcels which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner's Association Property" means all Parcels of
Property Owner's Association Property which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Public Property" means all Parcels of Public Property which
are not exempt from the Special Tax pursuant to law or Section E below. "Undeveloped Property" means all Parcels of Taxable Property which are not classified as Developed Property, exclusive
of Property Owner's Association Property and Public Property. B. ASSIGNMENT TO LAND USE CATEGORY Each Fiscal Year, commencing with Fiscal Year 2005-2006, all Parcels shall be classified
as either Taxable Property or Exempt Property. Taxable Property shall be further classified as Residential Property, Non-Residential Property, Taxable Property Owner's Association Property,
or Taxable Public Property. Residential Property and Non-Residential Property shall be further classified as Developed Property and Undeveloped Property (hereinafter referred to as "Developed
Residential Property," "Developed Non-Residential Property," "Undeveloped Residential Property," or "Undeveloped Non-Residential Property"). For purposes of determining the applicable
Dwelling Unit Special Tax, Developed Residential Property shall be assigned to classifications one through fifteen in Table 1 below based on Residential Floor Area. If a Parcel consists
of two or more Lots located in a Final Map that was recorded as of the January 1 preceding the Fiscal Year for which the Special Tax is being levied, each such Lot shall be treated as
a Parcel and classified independently of the other; however, the aggregate Special Tax for the Lots will be levied on the Parcel. C. MAXIMUM SPECIAL TAX RATE The Maximum Special Tax
for each Parcel of Developed Residential Property shall be the greater of the applicable Dwelling Unit Special Tax or Acreage Special Tax. If there are two or more residential dwelling
units located on a Parcel, the applicable Dwelling Unit Special CFD No. 03-02 Page 5 of 12 January 5, 2005
Tax for such Parcel shall be the sum of the Dwelling Unit Special Tax for each such residential dwelling unit. The Maximum Special Tax for each Parcel of Undeveloped Residential Property,
Non-Residential Property, Taxable Property Owner's Association Property, and Taxable Public Property shall be the applicable Acreage Special Tax. 1. Dwelling Unit Special Tax The Dwelling
Unit Special Tax rates are shown in Table 1 below. TABLE 1 DWELLING UNIT SPECIAL TAX MATES FOR DEVELOPED RESIDENTIAL PROPERTY SPECIAL TAX CLASSIFICATION 1 Residential 2 Residential 3
Residential 4 Residential 5 Residential 6 Residential 7 Residential 8 Residential 9 Residential 10 Residential 1 1 Residential 12 Residential 13 Residential 14 Residential 15 Residential
RESIDENTIAL FLOOR AREA >5,000 >4,400 and <=5,000 >4,200 and <=4,400 >4,000 and <=4,200 >3,800 and <=4,000 >3,600 and <=3,800 >3,400 and <=3,600 >3,200 and <=3,400 >3,000 and <=3,200
>2,800 and <=3,000 >2,600 and <=2,800 >2,400 and <=2,600 >2,200 and <=2,400 >2,000 and <=2,200 2,200 <=2,000 DWELLING UNIT SPECIAL TAX' ' $4,23 O1 $3,995' $3,520' $3,356' $3,192' $3,028'
$2,865' $2,701' $2,537' $2,374' $2,210' $2,046' $1,883' $1,719' $1,586' 'Per residential dwelling unit CFD No. 03-02 Page 6 of 12 January 5,2005
2. Acreage Special Tax The Acreage Special Tax rates are shown in Table 2 below. TABLE 2 ACRIAGI SPECIAL TAX RATES PROPERTY CLASSIFICATION/LAND USE Developed and Undeveloped Residential
Property Low Density (L) or Low -Estate Density (L-E) Low Medium Density (LM) Medium Density Standard (Ml) Medium Density Clustered (M2) Developed and Undeveloped Non-Residential Property
(NC) Taxable Property Owner's Association Property Taxable Public Property ACREAGE SPECIAL TAX , $5,620 Per Acre $17,665 Per Acre $17,665 Per Acre $17,665 Per Acre $8,247 Per Acre $17,665
Per Acre $17,665 Per Acre D. Notwithstanding the above, if the Land Use Plan is amended or the zoning of the Planning Areas is otherwise amended resulting in a Land Use which is not
shown in Table 2 above, then the Acreage Special Tax rate applicable to each Parcel to which the new Land Use applies shall be $ 17,665. In addition, if at any time subsequent to the
issuance of Bonds the Land Use Plan is amended or the zoning or configuration of the Planning Areas is otherwise amended, the CFD Administrator shall determine if the Acreage Special
Taxes that may thereafter be levied are less than the sum of estimated Administrative Expenses and one hundred ten percent (110%) of the maximum annual debt service for outstanding Bonds.
If the amended Land Use Plan, zoning, and/or Planning Area configuration has resulted in such a reduction, then the Acreage Special Tax for each Parcel to which such amendments apply
shall be computed using the Acreage Special Tax rate(s) previously applicable to such Parcel. If the previous Land Use for any portion of a Parcel to which the amended Land Use Plan,
zoning, and/or Planning Area configuration applies was not low density (L), low-estate density (L-E), low medium density (LM), medium density standard (Ml), medium density clustered
(M2), or neighborhood commercial (NC) then the applicable Acreage Special Tax rate shall be $17,665. METHOD OF APPORTIONMENT OF THE
SPECIAL TAX Commencing with Fiscal Year 2005-2006 and for each following Fiscal Year, the CFD Administrator shall levy the Special Tax on all Taxable Property to fund the Special Tax
Requirement as follows: CFD No. 03-02 Page 7 of 12 January 5, 2005
First; The Special Tax shall be levied Proportionately on each Parcel of Developed Property, up to 100% of the applicable Dwelling Unit Special Tax in the case of Developed Residential
Property and up to 100% of the applicable Acreage Special Tax in the case of Developed Non-Residential Property; Second: If additional Special Taxes are needed after the first step,
the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property, up to 100% of the applicable Acreage Special Tax; Third: If additional Special Taxes are needed
after the second step, the Special Tax for Parcels of Developed Property for which the Maximum Special Tax is derived from the applicable Acreage Special Tax shall be increased equally,
measured on a percentage basis, from the amounts levied under the preceding Step 1 up to 100% of the applicable Acreage Special Tax (i.e., the percentage increase shall be equal for
all applicable Parcels, until the Maximum Special Tax is reached); and Fourth: If additional Special Taxes are needed after the third step, the Special Tax shall be levied Proportionately
on each Parcel of Taxable Property Owner's Association Property and Taxable Public Property up to the applicable Maximum Special Tax. Notwithstanding the above, under no circumstances
will the Special Taxes levied against any Parcel used as a private residence be increased as a consequence of delinquency or default by the owner of any other Parcel or Parcels within
CFD No. 03-02 by more than ten percent (10%) per Fiscal Year, hi addition, under no circumstances will the Acreage Special Tax be levied against Parcels of Developed Residential Property
if the Special Taxes which maybe levied pursuant to the first and second steps above are equal to or greater than sum of estimated Administrative Expenses and one hundred ten percent
(110%) of the then maximum annual debt service for outstanding Bonds. E. EXEMPTIONS The Board of Directors shall not levy a Special Tax on up to 511.11 Acres of Property Owner's Association
Property and Public Property. If the total number of Acres of Property Owner's Association Property and Public Property exceeds 511.11, the chronological order in which such property
is classified will determine which Parcels are classified as Exempt Property and which are classified as Taxable Property. If a Lot or Parcel is no longer classified as Property Owner's
Association Property or Public Property, its status as Exempt Property will be revoked. The following property shall be classified as Property Owner's Association Property or Public
Property, as applicable, at the time CFD No. 03-02 is established and shall count toward the limitation of 511.11 Acres of Property Owner's Association Property and Public Property set
forth in the preceding paragraph: CFD No. 03-02 Page 8 of 12 January 5, 2005
• Property Owner's Association Property and Public Property: Lots A and B (portion of Murrieta Hot Springs Road), Lot 2 (private mini park), Lot 5 (private recreation center), and Lot
8 (open space) of Tract 29353-1; Lots H and 5 (open space), Lots A through G and M through O (streets), Lots I, J, and K (flood control), Lot L (equestrian trail), Lots 2 and 9 (parks),
Lots 10 and 11 (school sites), and Lot 12 (fire station) of Tract 29353-2; and the property described in and conveyed to the City pursuant to a grant deed dated May 21, 2003 and recorded
with the County as Document Number 2003-371374. Subject to Section 53317.5 of the Act, if a Lot or Parcel classified as Developed Residential Property is acquired by a public entity
by any means, including by negotiated transaction, gift, devise, or foreclosure, such Lot or Parcel will notwithstanding anything else herein be subject to the Special Tax in accordance
with the terms for Developed Residential Property. In addition, if a Parcel of Public Property is is leased to a non-governmental entity, then the leasehold or possessory interest, in
accordance with Section 53340.1 of the Act, shall be subject to the applicable Acreage Special Tax. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and
at the same time as ordinary ad valorem property taxes and shall be subject to the same penalties, the same procedure, sale and lien priority in the case of delinquency; provided, however,
that the Special Tax may be billed directly and/or may be collected at a different time or in a different manner if necessary or convenient to meet the financial obligations of CFD No.
03-02, or as otherwise determined by the CFD Administrator. The foreclosure remedies provided for in the Indenture shall apply upon the nonpayment of the Special Tax. G. REVIEW AND APPEALS
Any taxpayer may file a written appeal of the Special Tax levied on his/her property with the CFD Administrator, provided that the appellant is current in his/her payments of Special
Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the
reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise
the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the
appellant's property. No refunds of previously paid Special Taxes shall be made. H. PREPAYMENT OF SPECIAL TAX 1. Full Prepayment-Developed Residential Property, Non-Residential Property,
and Taxable Property Owner's Association Property CFD No. 03-02 Page 9 of 12 January 5, 2005
The Maximum Special Tax for any Parcel of Developed Residential Property, Non-Residential Property, or Taxable Property Owner's Association Property may be prepaid and permanently satisfied
as described herein, provided that a prepayment may be made only if at the time of the prepayment there are no delinquent Special Taxes with respect to such Parcel and all other Parcels
which are under the same ownership and located within CFD No. 03-02. An owner of a Parcel intending to prepay the Maximum Special Tax shall provide the CFD Administrator with written
notice of intent to prepay, and within 10 business days of receipt of such written notice, the CFD Administrator shall notify such owner of the non-refundable deposit determined to cover
the cost to be incurred by the CFD No. 03-02 in calculating the prepayment amount. Within 10 business days of receipt of such non-refundable deposit, the CFD Administrator shall notify
such owner of the prepayment amount. Prepayment must be made not less than 60 days prior to to any redemption date, unless otherwise authorized by the CFD Administrator, for any Bonds
to be redeemed with the prepayment proceeds. The "Full Prepayment Amount" means an amount equal to the sum of (1) Bond Redemption Amount, (2) Redemption Premium, (3) Defeasance Amount,
and (4) Fees, less the Reserve Fund Credit, where the terms "Bond Redemption Amount," "Redemption Premium," "Defeasance Amount," "Fees," and "Reserve Fund Credit" have the following
meanings: "Bond Redemption Amount" means the principal amount of Bonds to be redeemed and equals the greater of (a) the quotient derived by dividing (i) the applicable Dwelling Unit
Special Tax, in the case of Residential Property, or Acreage Special Tax, in the case of Non-Residential Property or Taxable Property Owner's Association Property by (ii) the sum of
the aggregate Dwelling Unit Special Taxes (for Residential Property) and Acreage Special Taxes (for Non-Residential Property) for CFD No. 03-02 (and excluding from (ii) any Special Taxes
which have been prepaid) or (b) the quotient derived by dividing (iii) the applicable Acreage Special Tax by (iv) the sum of the aggregate Acreage Special Taxes (for Residential Property
and Non-Residential Property) for CFD No. 03-02 (and excluding from (iv) any Special Taxes which have been prepaid) in each case multiplied by the principal amount of outstanding Bonds
rounded up to the nearest $5,000. The aggregate special taxes under (a) and (b) above means the aggregate special taxes upon completion of the development of CFD No. 03-02. Prior to
the completion of the development of CFD No. 03-02, the aggregate special taxes under (a) and (b) above shall be as projected by the CFD Administrator. "Redemption Premium" means the
Bond Redemption Amount multiplied by the applicable redemption premium, if any, for the Bonds to be redeemed. "Defeasance Amount" means the amount needed to pay interest on the CFD No.
03-02 Page 10 of 12 January 5, 2005
Bond Redemption Amount until the earliest redemption date for the outstanding Bonds. Credit shall be given for any portion of the Special Tax heretofore paid by the Parcel for which
the Full Prepayment Amount is being calculated and which will be, but has not yet been, utilized to pay interest and principal on the Bonds. "Fees" equal the fees and expenses of CFD
No. 03-02 related to the Full Prepayment Amount, including, but not limited to, the costs of computing the Full Prepayment Amount, the costs of redeeming Bonds, and the costs of recording
any notices to evidence that the Maximum Special Tax has been prepaid. "Reserve Fund Credit" shall equal the lesser of (i) the reduction in the applicable "Reserve Requirement," as such
term is defined in the Indenture, if any, following the redemption of Bonds from proceeds of the Prepayment Amount or (ii) the amount derived by subtracting the new Reserve Requirement
in effect after the redemption of Bonds from proceeds of the Full Prepayment Amount from the balance in the "Reserve Fund," as such term is defined in the Indenture, on the prepayment
date, but in no event shall such amount be less than zero. The CFD Administrator shall remove any portion of the Special Tax which has been enrolled but not paid. With respect to any
Parcel that has prepaid the Maximum Special Tax, the Board of Directors shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Maximum
Special Tax and the release of the Special Tax lien on such Parcel, and the obligation of such Parcel to pay the Special Tax shall cease. 2. Partial Prepayment -Developed Property, Non-Residential
Property, and Taxable Property Owner's Association Property The Maximum Special Tax for any Parcel of Developed Residential Property, Non-Residential Property, or Taxable Property Owner's
Association Property may be prepaid in part as described herein, provided that (i) the Bond Redemption Amount must be an integral multiple of $5,000 and (ii) at the time of the prepayment
there are no delinquent Special Taxes with respect to such Parcel and all other Parcels which are under the same ownership and located within CFD No. 03-02. The "Partial Prepayment Amount"
shall be computed using the methodology in Section H. 1 and substituting the portion of the Maximum Special Tax to be prepaid by the Parcel for its Dwelling Unit Special Tax and Acreage
Special Tax when determining the Bond Redemption Amount. The owner intending to prepay a portion of the Maximum Special Tax shall notify the CFD Administrator in writing of (i) such
owner's intent to partially prepay the Maximum Special Tax, (ii) the percentage by which the Maximum Special Tax shall CFD No. 03-02 Page 11 of 12 January 5, 2005
be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable, and within 10 business days of receipt of such written notice, the CFD Administrator
shall notify such owner of the non-refundable deposit determined to cover the cost to be incurred by CFD No. 03-02 in calculating the amount of the partial prepayment. Within 10 business
days of receipt of such non-refundable deposit, the CFD Administrator shall notify such owner of the Partial Prepayment Amount. Prepayment must be made not less than 60 days prior to
any redemption date, unless authorized by the CFD Administrator, for any Bonds to be redeemed with the prepayment proceeds. With respect to any Parcel that has prepaid a portion of the
Maximum Special Tax, the CFD Administrator shall indicate in the records of CFD No. 03-02 that there has been a partial prepayment of the Maximum Special Tax, the amount of the Maximum
Special Tax which has been prepaid, and the amount of the Maximum Special Tax which continue to be levied on such Parcel. The Bond Redemption Amount, Redemption Premium, Defeasance Amount,
and Reserve Fund Credit shall be used to pay interest on and redeem Bonds in accordance with the Indenture. Notwithstanding the foregoing, no prepayment shall be allowed unless the amount
of Maximum Special Taxes that maybe levied in CFD No. 03-02 after the proposed prepayment is at least the sum of (i) the estimated Administrative Expenses and (ii) one hundred ten percent
(110%) of the annual debt service on the Bonds, taking into account the amount of Bonds to remain outstanding after such prepayment. I. TERM The Maximum Special Tax shall be levied for
a period not to exceed 50 Fiscal Years, commencing with Fiscal Year 2005-2006. C:\Home\temecula\Roripaugh Ranch\RMA\CFD 2003-2 RMA 11 REVISED FINAL (Clean).doc CFD No. 03-02 Page 12
of 12 January 5, 2005
APPENDIX C SUMMARY APPRAISAL REPORT
[THIS PAGE INTENTIONALLY LEFT BLANK]
SUMMARY APPRAISAL REPORT COVERING Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) DATE OF VALUE: SUBMITTED TO: January 15, 2006 Temecula
Public Financing Authority 43200 Business Park Dr. Temecula, CA 92590 Attn: Genie Roberts Director of Finance DATE OF REPORT: SUBMITTED BY: February 10, 2006 Stephen G. White, MAI 1370
N. Brea Blvd., Suite 205 Fullerton, CA 92835
Stephen G. White, MAI : MAI s BeaJ Estate Appraiser I37O N. BREA BLVD., SUITE eOS • FUtLERTON, CALIFORNIA 9ZB3B-AIKB 730-1595 • FAX (7 I*) 738-437! Febraary 10, 2006 Genie Roberts, Director
of Finance Temecula Public Financing Authority 43200 Business Park Dr. Temecula, CA 92590 Re: Community Facilities District No. 03-02 (Roripaugh Ranch) Dear Ms. Roberts: In accordance
with your request and the City's authorization, I have prepared a Complete Appraisal of the taxable properties within the above-referenced Community Facilities District (CFD). The taxable
properties include the residential and commercial land that comprises the master-planned community of Roripaugh Ranch. The land in the first phase or "panhandle" area consists of lots
in semi-finished condition, and the land in the future phases or the "pan" area consists of land which is currently being graded. The "panhandle" area comprises a total of 515 single-family
lots in 5 different tracts, which are owned by or under contract to three different merchant builders. The "pan" area is planned for a total of 1,230 dwelling units, with lot sizes ranging
from ±2,600 s.f. to over an acre, plus a 10.7-acre commercial site, and all of the residential lots are under option to a merchant builder. The purpose of this appraisal is to estimate
the aggregate market value of the as is condition of the property in each of the 5 separate tracts in the "panhandle" area, plus the remaining ownership of the master developer comprising
the "pan" area. This appraisal also reflects the proposed public bond financing, as well as the tax rates of ±1.6-1.7%, including special taxes, to the future homeowners. Based on the
inspections of the properties and analysis of matters pertinent to value, the following conclusions of market value have been arrived at, subject to the Assumptions and Limiting Conditions,
and as of January 15, 2006: "Panhandle" Area; Builder (Tract Name) DR Horton-Continental Homes (Castillo) Davidson Communities (n/a) Tanamera Homes (Madison) Tanamera Homes ((Shutters)
Tanamera Homes (Hamptons) Sub-total "Pan" Area: Owner Ashby USA, LLC Market Value $ 17,280,000 $ 18,070,000 $ 17,700,000 $ 18,260,000 $ 18.340.000 $ 89,650,000 $ 74.480.000 $164,130,000
(ONE HUNDRED SIXTY-FOUR MILLION ONE HUNDRED THIRTY THOUSAND DOLLARS) (Note: These values are based on the assumption that the master developer will complete the infrastructure in a timely
manner such that building permits will be available for development to occur as projected in the absorption conclusions by Empire Economics.)
MS. GENIE ROBERTS FEBRUARY 10, 2006 PAGE 2 The following is the balance of this 67-page Summary Appraisal Report which includes the Certification, Assumptions and Limiting Conditions,
definitions, property data, exhibits, valuation and market data from which the value conclusions were derived. Sincerely, Stephen G. White, MAI (State Certified General Real Estate Appraiser
No. AG 013311) SGW:sw Ref: 05062
TABLE OF CONTENTS PAGES Certification 5 Assumptions and Limiting Conditions 6-7 Purpose and Use of the Appraisal, Scope of the Appraisal, Date of Value, Property Rights Appraised, Definitions
8-9 GENERAL PROPERTY DATA Location, General Area Description, Description of Roripaugh Ranch 10-17 DR HORTON-CONTINENTAL HOMES (CASTILLO) 18-24 DAVIDSON COMMUNITIES (N/A) 25-28 TANAMERA
HOMES (MADISON) 2932 TANAMERA HOMES (SHUTTERS) 33-36 TANAMERA HOMES (HAMPTONS) 37-40 ASHBY USA, LLC OWNERSHIP 41-59 ADDENDA Tabulation of Residential Land Sales 60-61 Tabulation of Commercial
Land Sales 62 Empire Economics-Estimated Absorption Schedules 63 Roripaugh Completion Cost-As of 1-15-06 64 Qualifications of Appraiser 65-67
CERTIFICATION I certify that, to the best of my knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The 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. 3. I have
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. 4. I have no bias with respect to
the property that is the subject of this report or to the parties involved with this assignment. 5. My engagement in this assignment was not contingent upon developing or reporting predetermined
results. 6. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of
the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7.
The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics & Standards of Professional Appraisal
Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice. 8. I have made a personal inspection of the property that is the subject
of this report. 9. No one provided significant professional assistance to the person signing this report, other than data research by my associate, Kirsten Patterson. 10. 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, I have completed the requirements
of the continuing education program of the Appraisal Institute. Stephen G. White, MAI (State Certified General Real Estate Appraiser No. AG013311)
ASSUMPTIONS AND LIMITING CONDITIONS This appraisal has been based upon the following assumptions and limiting conditions: 1. No responsibility is assumed for the legal description provided
or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. The property is appraised free and
clear of any or all liens or encumbrances unless otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed
to be reliable, but no warranty is given for its accuracy. 5. All engineering studies, if applicable, are assumed to be correct. Any plot plans or other illustrative material in this
report are included only to help the reader visualize the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render
it more or less valuable. No responsibility is assumed for such conditions or for obtaining obtaining the engineering studies that may be required to discover them. 7. It is assumed
that the property is in full compliance with all applicable federal, state and local environmental regulations and laws unless the lack of compliance is stated, described and considered
in the appraisal report. 8. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless a nonconformity has been identified, described
and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents and other legislative or administrative authority from any local,
state or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in the report is based. 10. It
is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless
noted in the report. 11. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser.
However, the appraiser is not qualified to detect such substances. The presence of such substances may affect the value of the property, but the value estimated in this
ASSUMPTIONS AND LIMITING CONDITIONS. Continuing appraisal is based on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility
is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The client should retain an expert in this field, if desired. 12. Possession of
this report, or a copy thereof, does not carry with it the right of publication, unless otherwise authorized. It is understood and agreed that this report will be utilized in the Official
Statement, as required for the bond issuance. 13. The appraiser, by reason of this appraisal, is not required to give further consultation or testimony or to be in attendance in court
with reference to the property in question unless arrangements have previously been made. SPECIAL ASSUMPTIONS AND LIMITING CONDITIONS 1. Estimates of the remaining costs and fees to
get the five tracts and the remaining raw land from their as is condition to finished single-family residential lots or mass graded superpads (including costs for all appropriate infrastructure,
common area improvements, in-tract improvements, etc.) have been obtained from the property owners/builders and from the master developer. These costs are integral to the analysis of
the value of the as is condition of the land, and have been relied upon in this appraisal as being reasonably accurate. 2. The Market Absorption Study dated February 1, 2006 by Empire
Economics has been relied upon and utilized in this appraisal. 3. The valuation has assumed that the CFD bond proceeds will be available to fund ±$44,865,000 in public facilities and
will fund the prepayment of Assessment District No. 161 in the amount of ±$539,000. 4. The valuation has assumed that the master developer will complete the necessary infrastructure
in a timely manner such that building permits will be available for development to occur as projected in the absorption conclusions by Empire Economics.
PURPOSE AND USE OF THE APPRAISAL The purpose of this appraisal is to estimate the aggregate market value of all of the taxable property located within Community Facilities District No.
03-02 (Roripaugh Ranch) of the City of Temecula, reflecting the proposed public bond financing. This Summary Appraisal Report is to be used as required in the bond issuance. SCOPE OF
THE APPRAISAL It is the intent of this Complete Appraisal that all appropriate data considered pertinent in the valuation of the subject properties be collected, confirmed and reported
in a Summary Appraisal Report, in conformance with the Uniform Standards of Professional Appraisal Practice and the guidelines of the California Debt and Investment Advisory Commission.
This has included an inspection of the subject properties and the surroundings; review of various maps and documents relating to the properties and the developments which are planned
or currently underway; obtaining of pertinent property data on the subject properties; obtaining of comparable land sales from a variety of sources; and analysis of all of the data to
the value conclusions.DATE OF VALUE The date of value for this appraisal is January 15, 2006. PROPERTY RIGHTS APPRAISED This appraisal is of the fee simple interest in the subject properties,
subject to the special tax and assessment liens. DEFINITION OF MARKET VALUE The most probable price, as of a specified date, in cash or in terms equivalent to cash, or in other precisely
revealed terms for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to fair sale, with the buyer and seller
each acting prudently, knowledgeably and for self-interest, and assuming that neither is under undue duress. DEFINITION OF FINISHED LOT This term describes the condition of residential
lots in a single-family subdivision for detached homes in which the lots are fully improved and ready for homes to be built. This reflects that the lots have all development entitlements,
entitlements, infrastructure improvements completed, finish grading completed, all in-tract utilities extended to the property line of each lot, street improvements completed, common
area improvements/landscaping (associated with the tract) completed, resource agency permits (if necessary), and all development fees paid, exclusive of building permit fees, in accordance
with the conditions of approval of the specific tract map.
DEFINITION OF BLUE-TOP LOT This term describes residential lots in a single-family subdivision for detached homes in which the lots and streets have been rough graded, and the offsite
infrastructure of streets and utilities is completed to the tract, but not within the tract. DEFINITION OF MASS GRADED SUPERPAD Also referred to as a sheet graded site or a superpad,
it is a parcel of land for detached or attached residential development which has been rough graded to a fairly flat condition, with the infrastructure of streets and utilities completed
to and along the site. This is similar to a blue-top lot but it typically refers to a larger acreage parcel. DEFINITION OF RAW LAND In this case, the land is entitled for development,
but it has not been graded from its raw condition, and still lacks the necessary infrastructure of streets, utilities, etc. 9
LOCATION MAP 10
GENERAL PROPERTY DATA LOCATION The community of Roripaugh Ranch is located along Murrieta Hot Springs Rd. and along the future northerly extension of Butterfield Stage Rd., about \l/i
miles east of Winchester Rd., in the City of Temecula. GENERAL AREA DESCRIPTION The community of Roripaugh Ranch is located at the far north end of Temecula, surrounded by unincorporated
Riverside County area to the north, northwest and east, and nearby to the east of the City of Murrieta. This is a partially developed, semi-rural area, with nearby surroundings including
low density estate-type residential area, newer residential tracts, and much undeveloped land. In addition, the French Valley Airport is located about a mile to the northwest, and the
Lake Skinner Recreation Area is located within 2 miles to the northeast. In the area to the north of the "panhandle" area is the relatively new master-planned community of Rancho Bella
Vista. This overall community comprises ±800 acres, and is planned for close to 2,000 dwelling units. The first phase comprising the tracts of homes on the north side of Murrieta Hot
Springs Rd. and nearest to the subject community were completed several years
ago, and there are now five tracts of homes under construction in the center and north part of the community. In addition, this community includes much open space, including areas at
the southwest and southeast ends that are adjacent to the subject community. To the north and northeast of the "pan" area is a large area of undeveloped land that is within unincorporated
County area. To the east, southeast and south of the "pan" area is a semi-rural residential area, also within unincorporated County area, and subdivided into lots of ±2 to 20 acres in
size. Some of the lots are improved with custom homes and various lots are still vacant. To the southwest and west of the "pan" area, extending north to just south of the "panhandle"
area is more of the low density, semi-rural residential area, within the City of Temecula. This area also consists of custom homes on large lots, and much undeveloped land. Adjacent
to the west of the "panhandle" area is a new 79-lot tract of homes called Valdemosa that are currently being built by KB Home. Farther west are various neighborhoods of homes that have
been completed in the past ±5 years. In summary, the community of Roripaugh Ranch is located in newly developing area at the north end of Temecula, adjacent to much unincorporated County
area. 11
IfS III !l IIS I 1 9 | g II *" ''"* rn !"*3
DESCRIPTION OF RORIPAUGH RANCH Overview Roripaugh Ranch is a master planned community that is being developed by Ashby USA, LLC. It consists of a total of ±805 acres that are planned
to be developed with a total of 1,745 single-family detached homes, and a 10.7-acre commercial site that is planned for a neighborhood retail center. In addition, there will be two private
recreation centers of 5.2 and 4.0 acres, a 5-acre neighborhood park, a 20-acre sports park, a 12-acre elementary school, a 20-acre middle school, a 2-acre fire station, and 263 acres
of open space (habitat, flood control and landscape slope). The planned residential development consists of 515 lots in Phase 1, which is referred to as the "panhandle" area, and 1,230
lots in Phase 2, which is referred to as the "pan" area. The 515 lots in the "panhandle" area are allocated into 5 separate tracts, 4 of which are owned by merchant builders and the
fifth which is under contract to a merchant builder. These lots are all ±5,000 s.f. minimum, and currently range from partially finished to near finished condition. The 1,230 lots in
the "pan" area are allocated into 15 Planning Areas, all of which is currently being graded. The various Planning Areas or tracts include lot sizes of ±2,600 s.f. minimum (cluster-type
product), 3,150 s.f. minimum, 4,000 s.f. minimum, 5,000 s.f. minimum, 6,000 s.f. minimum, and tracts with ±1/i acre and 1+ acre lots. The "panhandle" area will be guard-gated at the
main entrance from Murrieta Hot Springs Rd. on Roripaugh Meadows Dr., with secondary gated entrances at the west end in Planning Area 1 and at the east end between Planning Areas 4A
and 4B. The "pan" area will be guard-gated on North Loop St. just east of the second school site and on South Loop St. just east of the fire station. Planning Areas 10, 12, 14, 15, 16
and 33 are outside of these guard gates and will be separately gated with remote or card access. One of the private recreation centers is a 5.2-acre site that is located in the center
of the "panhandle" area, and construction is nearing completion on this facility. The other center consists of a 4-acre site that is located in the center of the "pan" area. Both centers
will include clubhouses, pools, tennis courts, play areas, other landscaped areas and parking areas. The community sports park will include Little League baseball fields, soccer fields,
play areas and parking areas. The 21.2 acres of landscape slope area are located along the west and south edges of the "panhandle" area. The 202.7 acres habitat area comprise the bulk
of the north end of the "pan" area plus the northeast part of the "panhandle" area. The 39.1 acres of flood control mostly consists of the Long Valley Channel that runs east-west through
the southerly part of the "pan" area, plus a small portion of the Santa Gertrudis Creek that runs northeasterly into the center of the "pan" area at the west side, and then into the
habitat area. 13
DESCRIPTION OF RORIPAUGH RANCH, Continuing Streets and Access The primary access points to Roripaugh Ranch will be by Murrieta Hot Springs Rd. and Butterfield Stage Rd. Murrieta Hot
Springs Rd. comes from the west, extends along the north side of the "panhandle" area, and will terminate at Butterfield Stage Rd. at the north center part of the community. It is currently
a paved road from the west on the land adjacent to the north of Roripaugh Ranch, or along approximately two-thirds of the "panhandle" area, and becomes a graded dirt road where it turns
southerly into the subject community, but is to be paved by March 2006. Butterfield Stage Rd. comes from the south and will extend northerly along the west side of the south portion
of the "pan" area, and then will curve northeasterly and northerly through the north portion of the "pan." It is currently paved up to a point southerly of the subject community, and
is in the process of being graded along with the grading of the "pan" area. Paving is due to be completed in September 2006. There will also be a loop road through the "pan" area, with
North Loop Road being an easterly extension of Nicolas Rd. (west of Butterfield Stage Rd.) and South Loop Road being an easterly extension of Calle Chapos (west of Butterfield Stage
Rd.). This loop road will provide access to all of the tracts in the "pan" area, including the recreation center and school sites. This road is also in process of being graded along
with the grading of the "pan" area, and is due to be paved by the end of the year. Utilities All utilities are available to the community, and have been or will be installed in the major
streets and in-tract streets as part of the development of the community. The utilities are provided as follows: Water: Eastern Municipal Water District or Rancho California Water District
Sewer: Eastern Municipal Water District Electric: Southern California Edison Company Gas: Southern California Gas Company Telephone: Verizon Zoning/General Plan/Approvals The overall
community of Roripaugh Ranch has specific plan approval by SP-11. For the subject land, the zoning and general plan designations are per the Land Use designations on the Specific Plan,
and include Low Density Residential (L), Low Medium Density Residential (LM), Medium Density Residential (Ml & M2), and Neighborhood Commercial (NC). Specific approvals for the five
tracts in the "panhandle" area include the recorded tract maps for Tract Nos. 29661-2, 29661-3 and 29661-4, the approved but not yet 14
DESCRIPTION OF RORIPAUGH RANCH, Continuing recorded final tract maps for Tract Nos. 29661 (Tanamera) and 29661-1 (DR Morton-Continental), and Tentative Tract No. 32004 for the additional
6 lots in the DR Morton-Continental tract which is expected to be approved by April 2006. The more specific approvals for the "pan" area are by the recorded "A" tract map (Tract No.
29353-2) for Planning Areas 10, 12, 14, 15 and 33 and "A" tract map (Tract No. 29353) for Planning Areas 16, 17, 18, 19, 20, 21, 22, 23, 24 and 31 which is due to record in March 2006.
Five of the ten Tentative Tract Maps have been submitted to the City for approval, and the other five are anticipated to be submitted by early March 2006. Drainage/Flood Hazard Drainage
is and will be within master-planned facilities throughout the community, and within each of the individual tracts. The northerly part of the overall community gradually slopes and terraces
down to the south and west, and the southerly part of the "pan" area slopes down to the north, toward Long Valley Channel. Drainage is ultimately into the Santa Gertrudis Creek channel
and the Long Valley channel. Per FEMA Flood Insurance Rate Map No. 060245 2765B dated 11/20/96, all of the Roripaugh Ranch community is located in Zone C, which is outside of the 100-year
floodplain. Furthermore, all of the developable area is above the Santa Gertrudis Creek and Long Valley channels, and improvements to these channels as well as construction of various
detention basins throughout the community will handle the projected storm flows. Soil/Geologic Conditions This appraisal has assumed that all necessary grading and compacting has been
or will be properly completed by the master developer; that there are no abnormal soil or geologic conditions that would affect the development of the land as planned; and that all necessary
costs to complete the grading and any required mitigation have been spent or are properly reflected in the remaining land development costs as discussed later. It is also noted that
the tentative tract maps for all of the developable land in the "pan" area indicate that special hazard areas (earthquake, subsidence and liquefaction) do not exist on the subject property.
Environmental Conditions It has been assumed that all necessary environmental permits and approvals have been obtained for development of the land as planned, and that the Pechanga Cultural
Resources has approved the required mitigation. Thus, this appraisal has assumed that all necessary costs to complete any necessary mitigation have been spent or are properly reflected
in the remaining land development costs, as discussed later, and that there are no other environmental conditions, including endangered 15
DESCRIPTION OF RORIPAUGH RANCH, Continuing species or significant habitat, watercourses or wetlands that would have a negative effect on the planned development. Timing of Development
Release of building permits by the City is contingent upon various items, including funding of the CFD and completion of certain infrastructure. Upon funding of the CFD (projected for
late March 2006) there will be sufficient infrastructure improvements completed for the City to release 107 building permits. Of these 107, 54 will be allocated to Davidson Communities
for Tract No. 29661-2 in the "panhandle" area and 53 will be allocated to Tanamera Homes of which 27 will be utilized for Planning Area 3 and 26 will be utilized for Planning Area 4A.
Thus, it is anticipated that construction can be underway on three of the tracts in the "panhandle" by April 2006. The necessary infrastructure improvements that are tied to the release
of up to the 515th building permit are projected to be completed by September 2006. Thus, all remaining building permits for the tracts in the "panhandle" are projected to be available
in September 2006, which would provide for construction to begin at that time on the remaining two tracts (Planning Areas 1 and 4B), and for all remaining buildings permits to be available
for the other three tracts. It is currently estimated that the lots in the "pan" area will be completed to a blue-top condition from approximately July through October 2006. However,
the necessary infrastructure to provide for the release of the 516th through 1,745th building permits will not be completed by that point in time. The master developer projects that
the infrastructure will be completed by January 2007, but the City projects that the timeframe between March 2007 and September 2007 is more realistic for assumption of completion of
the necessary infrastructure. Thus, the absorption study by Empire Economics, and therefore also this appraisal, have assumed that all building permits for the "pan" area will be available
by September 2007. At this point, the escrow to KB Home on Planning Area 12 and the option to KB Home on the balance of the Planning Areas in the "pan" provide for closings of land sales.
Work could then get underway to complete the lots to a finished condition and begin construction of homes. Highest and Best Use The term highest and best use is defined as that reasonable
and probable use that will support the highest present value as defined, as of the effective date of the appraisal. Alternatively, it is that use from among reasonable, probable and
legal alternative uses, found to be physically possible, legally permissible, appropriately supported, financially feasible, and which results in the highest land value. 16
DESCRIPTION OF RORIPAUGH RANCH, Continuing The planned development of Roripaugh Ranch, as discussed on previous and following pages, is physically possible with the completion of the
grading and infrastructure; it is legally permissible based on the City approvals; and it is financially feasible as supported by the Market Absorption Study prepared by Empire Economics,
Inc., dated February 1, 2006. Based also on my investigation of recent residential land sales in the general Temecula and Murrieta areas, there would be good demand for available residential
land in the subject community. This is due to the limited supply of available and buildable land; due to the continuing demand for new homes in this area; and due to the desirability
of the subject community by reason of its location and amenities. Thus, I have concluded that the planned development for the subject land is representative of the highest and best use.
(Note: The conclusion of highest and best use reflects the assumption, that the master developer will complete the necessary infrastructure in a timely manner such that building permits
will be available for development to occur as previously discussed and as projected in the absorption conclusions by Empire Economics, Inc.) 17
00 TRACT NO. 29661-1 adkan S4S/S OF S£AffMGS ao»H o2oo 55 H>r1 EOgHOJ o
DR HORTON-CONTINENTAL HOMES (CASTILLO) PROPERTY DATA Location This tract is located on the south side of Murrieta Hot Springs Rd., ±1,100' west of Roripaugh Meadows Rd. (opposite Pourray
Rd.). Record Owner/Ownership History The current owner is Ashby USA, LLC. They acquired this land over 5 years ago as part of the overall acquisition of the land for the Roripaugh Ranch
community. This site is under contract to be sold to Continental Residential, Inc., known by the merchant builder name of DR Horton-Continental Homes, and the sale is anticipated to
close in October 2006 after building permits are available to this tract (projected for September 2006 as previously discussed). The sale price for 98 of the lots is $6,046,262 or $61,697
per lot as negotiated in April 2001, and the sale price for the other 6 lots is $99,000 per lot as negotiated in October 2003. These prices reflect the lots in blue-top condition, and
then an additional reimbursement will be made by Continental Residential, Inc. to Ashby USA, LLC for additional work completed over and above blue-top condition to install some of the
in-tract utilities. Legal Description The 98 lots are described as Lots 1 to 5, 7, 8, and 10 to 100 of Tract No. 29661-1 (final map approved but not yet recorded), and the 6 lots are
described as Lots 1 to 6 of Tentative Tract No. 32004 (anticipated to be approved by April 2006). Assessor Data (2005/06) The tract is currently identified as Assessor Parcel No. 957-340-048
and a portion of 957-340-055. The current assessed value for parcel 048 is $527,357 for land and $0 for improvements, which does not reflect the value enhancement by the subdivision
and land development work that has taken place thus far. An allocation of the assessed value for parcel 055 is not available. The tax rate area is 13-117, with a base tax rate of 1.03817%,
but the projected total tax rate to future homeowners is ±1.6-1.7% including the special taxes for this CFD and other overlapping debt. No. of Lots/Lot Sizes The tract consists of 104
lots. lots. The lots are ±5,000 s.f. minimum size (±50' x 100'), and the average size is ±6,000 s.f. 19
PROPERTY DATA, Continuing Planned Development/Current Status The lots are planned to be developed by DR Horton-Continental Homes with a tract of homes called Castillo. There will be
four floor plans, with sizes of 1,949 s.f., 2,478 s.f., 2,791 s.f. and 2,949 s.f. The most recent projected pricing by the builder is $410,000 for Plan 1, $430,000 for Plan 2, $460,000
for Plan 3 and $480,000 for Plan 4, or a weighted average of ±$453,000. As of the January 15, 2006 date of value, the lots were graded to a blue-top condition, and about 65% of the in-tract
sewer and water had been installed. This tract is above grade of the land to the south, resulting in minor territorial view potential to lots along the south end of the tract. As previously
indicated, building permits will not be available to be pulled for this tract until September 2006 and the builder anticipates closing their purchase on these lots in October 2006. Thus,
construction of homes would not start until October 2006 or thereafter. Title Report A preliminary report by Orange Coast Title Builder Services, dated March 3, 2004, has been reviewed.
This report notes the following: several Assessment Districts by the County of Riverside and Improvement Districts of Eastern Municipal Water District; easements for sewer facilities,
monuments, landscaping and street; the development agreement and subdivision agreements with the City of Temecula; provisions of the environmental constraint note on the subdivision
map; location within the Murrieta Creek/Santa Gertrudis Valley Area Drainage Plan adopted by the County that requires certain fees to be paid; no access rights to Murrieta Hot Springs
Rd.; and perpetual air or flight easement/avigation rights to airspace above portions of the land; CC&R's for Roripaugh Ranch. This appraisal has assumed that none of these items have
a negative effect on the development of the property as planned, and either have no effect on the valuation or are appropriately reflected in the valuation in terms of a cost factor.
VALUATION Method of Analysis The Sales Comparison Approach is used to estimate the value of the subject lots, as if in a finished lot condition. This approach considers recent sales
of residential land or bulk single-family residential lots from the general area in comparison to the subject property. Then, a deduction is made for the estimated remaining costs and
fees to get the lots from as is condition to finished lot condition. 20
VALUATION, Continuing Analysis of Finished Lot Value A search was made in this general area for recent sales of similar residential land or bulk single-family residential lots. The pertinent
units or measures of comparison to the subject property are on the basis of price per finished lot and/or on the basis of a finished lot ratio (ratio of finished lot cost to average
projected home price). A detailed tabulation of the pertinent data is in the Addenda section of this report identified as Tabulation of Residential Land Sales. The pertinent sales for
this subject property are Nos. 1 through 15, and the following discussion and analysis references these data items from the tabulation. Sale Nos. 1 through 3 are the recent closed sales
of the three subject Tanamera Homes tracts (Planning Areas 4A, 3 and 4B, respectively) which are discussed later. These sales closed in June 2005, November 2005 and January 2006 at prices
reflecting $203,696 to $207,150 per finished lot. Effectively, these purchases were from Griffin Communities, Shea Homes and Meeker Development by Tanamera Homes, an entity that has
affiliated ownership with the master developer ownership (Ashby USA, LLC), in order to avoid litigation that could have delayed development of Roripaugh Ranch. However, the prices were
considered to be at market value, and also reflected that building permits might not have been available until June or September 2006. The planned homes on these tracts are fairly similar
to slightly larger in size to the planned homes on the subject lots, and the projected pricing is about 5-10% higher. Overall, these three sales support close indications to close upper
limits for the subject DR Horton-Continental Homes (Castillo) tract at $203,696 to $207,150 per finished lot. Sale No. 4 is located adjacent to the west of the subject "panhandle", and
was a sale of 79 lots to KB Home, 6,800 s.f. minimum size, that was negotiated in mid 2004 and closed in September 2004 at the price reflecting $210,000 per finished lot. Homes are currently
under construction, ranging in size from 2,675 s.f. to 3,586 s.f., with base pricing from ±$539,000 to $610,000. Considering an upward time adjustment of 15-20% since the sale was negotiated
about ll/2 years ago, a current indication is at ±$247,000 per finished lot. In comparison to the subject, the lots are much larger but this is partially offset by the slightly inferior
location due to lacking the identity and amenities of the master-planned community, though the tax rate is similar. However, the homes being built on this sale are much larger and higherpriced
than those planned for the subject lots. Overall, the indication at $247,000 per finished lot supports a far upper limit for the subject. Sale No. 5 is located in the French Valley area
to the north of the subject, in the Crown Valley Village community. This is a pending sale of 140 lots, 7,200 s.f. minimum size, which was negotiated in March/April 2005 and will close
upon formation of the CFD (±April 2006) at a price reflecting $225,000 per finished lot. The projected home pricing was a general range of $450,000 to $550,000. In 21
VALUATION, Continuing comparison to the subject, these are much larger lots which is far more than offsetting to the slightly inferior location, though the tax rate will be fairly similar.
Thus, the indication at $225,000 per finished lot supports a firm upper limit for the subject. Sale No. 6 is located toward the north end of Murrieta, to the northwest of the subject,
and was the sale of 95 lots, 6,000 s.f. minimum size, that was negotiated in September 2004 and closed in December 2004 at the price reflecting $220,000 per finished lot. The buyer planned
homes of 2,070 s.f. to 3,518 s.f. with pricing of $475,000 to $575,000, with sales to commence in the Spring of 2006. Considering an upward time adjustment of ±15%, a current indication
is at $253,000 per finished lot. This supports a far upper limit for the subject considering the larger lots which are planned for much higher-priced homes, though the tax rate is similar.
Sale No. 7 is located in Phase 2B of the master-planned community of Harveston, which which is about 21A miles southwest of the subject. This sale consisted of 106 lots at 3,100 s.f.
minimum size and 92 lots at 4,250 s.f. minimum size. It was negotiated in October 2004 and closed in November 2004 at the blended price indicating $201,000 per finished lot. The buyer
planned homes of 1,780 s.f. to 2,181 s.f. on the smaller lots and 2,358 s.f. to 2,790 s.f. on the larger lots, and the Phase 1 pricing is ±$430,000 to $470,000 for the smaller product
and ±$490,000 to $520,000 for the larger product. In comparison to the subject, these are smaller lots, the tax rate is similar, but the location is considered to be similar to slightly
superior. This results in homes on the smaller lots that are smaller and slightly lower-priced than projected for the subject and homes on the larger lots that are larger and higher-priced
than projected for the subject. Considering an upward time adjustment of ±10-15%, a current indication is at ±$226,000 per lot which supports a firm upper limit for the subject. Sale
Sale Nos. 8, 9 and 10 are located in Phase 3 of Harveston, and were part of a bulk sale that also included a site for 64 attached units. The sale was negotiated in September/October
2005 and closed in November 2005. Sale No. 8 consisted of 76 lots, 2,700 s.f. minimum, that sold at a price reflecting $174,000 per finished lot, Sale No. 9 consisted of 130 lots, 4,950
s.f. minimum, that sold at a price reflecting $201,000 per finished lot, and Sale No. 10 consisted of 112 lots, 5,850 s.f. minimum, that sold at a price reflecting $221,000 per finished
lot. The location is outside of and considered to be inferior to the area within the main loop portion of Harveston that includes Phase 2B, but is considered to be similar to slightly
superior to the subject. In addition, the tax rate is similar to the subject. Sale No. 8 supports a far lower limit for the subject at $174,000 per finished lot due to the much smaller
lots. Sale No. 9 supports a close indication at $201,000 per finished lot due to the similar lot size at 4,950 s.f., though planned for slightly larger 22
VALUATION, Continuing and higher-priced homes. Sale No. 9 supports a firm upper limit at $221,000 per finished lot due to the larger lots at 5,850 s.f. minimum that are planned for much
larger and higher-priced homes than the subject. Sale No. 11 is located in the master-planned community of Wolf Creek, which is toward the southerly end of Temecula, about 6 miles southerly
of the subject. This was a sale of 6,000 s.f. minimum lots that closed in December 2005 from the master developer to Lennar Homes at a price reflecting $270,000 per finished lot. Lennar
plans to build homes ranging in size from 3,000 s.f. to 3,600 s.f., with projected pricing in the high $500,000's to the low $600,000's. In comparison to the subject, the tax rate is
similar but these are larger lots that are planned for much larger and higher-priced homes, thus supporting a far upper limit for the subject at $270,000 per finished lot. Sale Nos.
12,13 and 14 are located in Phase 2 of the master-planned community of Morgan Hill, which is adjacent to the south end of Temecula, about 6 miles south/southeast of the subject. These
sales were negotiated in August 2004 and closed in December reflecting prices of $220,453 per finished lot for the 6,000 s.f. minimum lots, $227,743 per finished lot for the 7,000 s.f.
minimum lots and $246,393 per finished lot for the 8,000 s.f. minimum lots. These sales are superior to the subject due to the larger lot sizes, as reflected by the larger and higher-priced
homes than are planned than on the subject lots, as well as having some view potential. These factors are more than offsetting to an upward time adjustment, resulting in firm to far
upper limits for the subject from ±$220,000 to $246,000 per finished lot. Sale No. 15 is located in the master-planned community of Canyon Hills which is at the east side of Lake Elsinore,
several miles east of the 1-15 Freeway. This was a sale of 131 lots, 4,900 s.f. minimum, which closed in July 2005 at a price reflecting $192,500 per finished lot. The buyer planned
homes of 1,947-2,303 s.f. with projected pricing of $416,000 to $440,000. In comparison to the subject, the lots are fairly similar in size, the tax rate is similar, but the location
is considered to be inferior which is evidenced by the smaller and lower-priced homes that are planned. Thus, this sale supports a firm lower limit for the subject at $192,500 per finished
lot. In summary, on the basis of price per finished lot, the sales data supports a far lower limit at $174,000, a closer but firm lower limit at $192,500 per finished lot, close indications
to close upper limits from $201,000 to $207,150, and firm to far upper limits from ±$220,000 to $270,000. On the basis of a finished lot ratio, these sales as discussed indicate the
overall range from 39% to 45%. Considering the desirable amenities of the subject community, I have concluded that the upper mid-portion of the range is most supportable, or a 23
VALUATION, Continuing range of 43-44%. Based on the projected home pricing at an average of ±$451,000 for the subject, the following indication results: $451,000 x .43-.44 = $193,930
to $198,440/finished lot Lastly, as previously discussed, the subject property has the limiting factor of not being able to pull building permits until September 2006, or not for approximately
8 months from the date of value. It is noted that on many sales of residential land, the buyer/builder closes on the purchase a number of months prior to the eventual start of construction
of the homes, even if the purchase was of lots in blue-top or nearfinished lots. However, in the case of the subject lots this is not a matter of choice but a firm limitation and thus
the subject tract will trail three other tracts in the "panhandle" by about 6 months. Based on the foregoing, I have concluded on a value of $195,000 per finished lot for the subject
tract. Deduction for Costs to get to Finished Lots Information provided by the property owner is that the remaining costs and fees to get from the as is condition to finished lots is
approximately $3,000,000 ($28,846 per lot), excluding the TUMF (Transportation
Uniform Mitigation Fee) that is to be credited by the City for infrastructure work that will be funded by the CFD bond proceeds. Conclusion of Value Based on the foregoing, the value
indication of the as is condition is calculated as follows:If finished lot condition: 104 lots @$195,000/lot = $20,280,000 Less remaining costs/fees to get to finished lots: -3.000.000
$17,280,000 Thus, as the result of this analysis, I have arrived at the following conclusion of market value for the subject Continental Homes (Castillo) tract, subject to the Assumptions
and Limiting Conditions, and as of January 15, 2006: $17,280,000 (SEVENTEEN MILLION TWO HUNDRED EIGHTY THOUSAND DOLLARS) 24
DAVIDSON COMMUNITIES (N/A) 25
DAVIDSON COMMUNITIES (N/A) PROPERTY DATA Location This tract is located on the south side of Murrieta Hot Springs Rd., ±550' west of Roripaugh Meadows Rd. (opposite Pourray Rd.). Record
Owner/Ownership History The current owner is Davidson Roripaugh Ranch 122 LLC, and they are known by the merchant builder name of Davidson Communities. They acquired this land from Ashby
USA, LLC by deed recorded May 30, 2003, Document No. 391651. The sale price was $8,266,717 or $83,502 per lot, and this was negotiated in February 2003. Terms included 64% of the price
carried by the seller in two notes, but these have now been paid off. Legal Description The tract is described as Lots 1 to 88 and 90 to 100 of Tract No. 29661-2, recorded April 28,
2004. Assessor Data (2005/06) The 99 lots comprise Assessor Parcel Nos. 957-710-001 through 012, 957-711-001 through 044, 957-712-001 through 014, 957-713-001 through 013, 957-720-001
through 003, 957-722-001, 003 through 013 and 957-723-001. The assessed values are $79,488 per lot lot for land and $0 for improvements, or a total assessed value of $7,869,312 for the
overall tract. The tax rate area is 13-117, with a base tax rate of 1.03817%, but the projected total tax rate to future homeowners is ±1.6-1.7% including the special taxes for this
CFD and other overlapping debt. No. of Lots/Lot Sizes The tract consists of a total of 99 lots. The lots are ±5,000 s.f. minimum size (±50' x 100'), and the average size is closer to
6,000 s.f. Planned Development/Current Status The lots are planned to be developed with a tract of homes that as yet does not have a project name. It is planned that there will be three
floor plans, with sizes of 2,960 s.f., 3,178 s.f. and 3,357 s.f. The original proforma pricing was $335,000 to $375,000, but the most recent projected pricing by the builder is $538,000
to $558,000. As of the January 15, 2006 date of value, the lots were in a partially finished condition with the in-tract utilities installed and the in-tract streets paved. 26
PROPERTY DATA, Continuing This tract is above grade of the land to the south, resulting in minor territorial view potential to lots along the south end of the tract. As to the timing
of development, it was previously discussed that upon funding of the CFD (projected for late March 2006), 54 building permits are to be available to this tract. The remaining 45 building
permits are projected to be available in September 2006. Title Report A preliminary report by Orange Coast Title Builder Services, dated September 13, 2004, has been reviewed. This report
notes the items as mentioned for the previous subject tract. In addition, it notes easements for public utilities, storm drain purposes, open space/paseo purposes, landscape/irrigation
purposes that affect one or more lots in the tract, and the subdivision improvement agreement with the City. However, the easements are along the side or the rear of a lot, or within
common areas of the tract, and do not impact the development of any of the lots. This appraisal has assumed that none of these items have a negative effect on the development of the
property as planned, and either have no effect on the valuation or are appropriately reflected in the valuation in terms of a cost factor. VALUATION Method of Analysis This is the same
as previously discussed for DR Horton-Continental Homes (Castillo). Analysis of Finished Lot Value The discussion and analysis is similar to that for the previous DR Horton-Continental
Homes (Castillo) tract. However, while these are similar lots in terms of the location and the minimum size of 5,000 s.f., they are targeted by Davidson Communities to be developed with
significantly larger and higher-priced homes than for the previous subject tract or than the other three tracts in the "panhandle" as discussed later. The result is that this tract will
have the niche of the higher-priced homes in the "panhandle" reflecting the segmentation in product, though all tracts have 5,000 s.f. minimum lots. Thus, for the subject property the
sales data would support a far lower limit at $192,500 per finished lot, closer but firm lower limits from $201,000 to $207,150 per finished lot, a close indication to close upper limit
at $221,000 per finished lot, and far upper limits at $247,000+ per finished lot. In terms of a finished lot ratio, a 27
VALUATION, Continuing range of 41-42% is considered to be appropriate to reflect the much higher-priced homes but competing with much other product on similar 5,000 s.f. minimum lots.
Based on average pricing of ±$548,000, the indication is as follows: $548,000 x .41-.42 = $224,680 to $230,160/finished lot It is also noted that this tract has the desirable factors
of the lots being in a near finished condition and with building permits to be available within ±3 months from the date of value. Overall, I have concluded that the most supportable
range for the subject tract is well over $207,150 per finished lot and closer to but under $221,000 per finished lot, and the conclusion is at $218,000 per finished lot. Deduction for
Costs to get to Finished Lots Information provided by the property owner is that the remaining costs and fees to get from the as is condition to finished lots is $3,512,058 ($35,475
per lot), excluding the TUMF (Transportation Uniform Mitigation Fee) that is to be credited by the City for for infrastructure work that will be funded by the CFD bond proceeds. Conclusion
of Value Based on the foregoing, the value indication of the as is condition is calculated as follows:If finished lot condition: 99 lots @$218,000/lot = $21,582,000 Less remaining costs/fees
to get to finished lots: -3.512.058 $18,069,942 Thus, as the result of this analysis, I have arrived at the following conclusion of value for the subject Davidson Communities tract,
subject to the Assumptions and Limiting Conditions, and as of January 15, 2006: $18,070,000 (EIGHTEEN MILLION SEVENTY THOUSAND DOLLARS) 28
_^ KW •c5!!_!liii Scale ?" = 300' Wf 0?y OF cotmrf OF «ne«e annr or 77MC7 AfO. 21966/-3 ItWjU r-tufr. MiMNt rt«K « MsfY*tlis'^ iI*^s///&J—9***s*, »»^J»/«M&^H-» 8^«»t«,"Si Ij&i «»«« m'
mH 3p~ii& we* jws»-». H * SUWMSON V LOTS 4 MO S OF mCT NO, 293S3-1. 4S SHOW* HUP on nt£ JN SBC* J0» OF *«*s; m:£$ *f »«*«» 24, KEEOTOS or «a®^ar COUOTX. -««•* w ^»>»-us B'/ts ->t .9*
"9 IM.S. mn n«» ^ \'«x" -. " '(i **»*"*-»«»-»^"«% j-v,\^«' 4 H'ft ^-.-™, -j»--p--IT -~--; 5ffl OC/5
TANAMERA HOMES (MADISON) PROPERTY DATA Location This tract is located at the southwest corner of Murrieta Hot Springs Rd. and Roripaugh Meadows Rd. (opposite Pourray Rd.). Record Owner/Ownership
History The current owner is Tanamera/Roripaugh II, LLC, known by the builder name of Tanamera Homes. They acquired these lots from Shea Homes Limited Partnership by deed recorded November
1, 2005, Document No. 904748, at a price of $18,340,000 or $185,253 per lot. The deal went into escrow in July 2005, and the price reflected the lots in a near finished condition and
with finished lots estimated at $206,153 per lot. Shea Homes Limited Partnership had acquired these lots from Ashby USA, LLC in May 2003 at a price of $8,169,356 or $82,519 per lot for
the lots in a blue-top condition. Legal Description The lots are described as Lots 1 to 44, 46 to 59 and 61 to 101 of Tract No. 29661-3, recorded April 28, 2004. Assessor Data (2004/05)
The 99 lots comprise Assessor Parcel Nos. 957-720-004 through 014, 957-721-001 through 022, 957-722-014 through 024 & 026 through 030, 957-723-002 through 010 & 012 through 029, 957-730-001
through 007, 957-732-001 through 010 and 957-733-001 through 006. The assessed values are $78,469 per lot for land and $0 for improvements, or a total assessed value of $7,768,431 for
the overall tract. The tax rate area is 13-117, with a base tax rate of 1.03817%, but the projected total tax rate to future homeowners is ±1.6-1.7% including the special taxes for this
CFD and other overlapping debt. No. of Lots/Lot Sizes The tract consists of a total of 99 lots. The lots are ±5,000 s.f. minimum size (±50' x 100'), and the average size is closer to
6,000 s.f. Planned Development/Current Status The lots are planned to be developed with a tract of homes that will be called Madison. It is planned that there will be four floor plans,
with sizes of 1,974 s.f., 2,334 s.f., 2,437 s.f., 2,699 s.f. The current projected pricing by Tanamera Homes is 30
PROPERTY DATA, Continuing $459,990, $489,990, $499,990 and $519,990 or a weighted average of ±$498,000. As of the January 15, 2006 date of value, the lots were in a partially finished
condition with wet utilities installed, and street improvements of paving, curb and gutter completed. Remaining items include dry utilities, minor street improvements, landscaping and
development impact fees. This tract is above grade of the land to the south, resulting in minor territorial view potential to lots along the south end of the tract. As to the timing
of development, it was previously discussed that upon funding of the CFD (projected for late March 2006), 27 building permits are to be available to this tract. The remaining 72 building
permits are projected to be available in September 2006. Title Report A preliminary report by Fidelity National Title Company, dated October 14, 2005, has been reviewed. This report
notes the items as mentioned for the previous subject tracts, and the discussion is the same as for the the Davidson Communities tract. Thus, this appraisal has assumed that none of
these items have a negative effect on the development of the property as planned, and either have no effect on the valuation or are appropriately reflected in the valuation in terms
of a cost factor. VALUATION Method of Analysis This is the same as discussed for the two previous subject tracts. Analysis of Finished Lot Value The discussion and analysis is similar
to that for the previous two subject tracts, though this tract is targeted for homes that are larger and higher-priced than the subject DR Horton-Continental (Castillo) tract but are
smaller and much lowerpriced than the subject Davidson Communities tract. However, this subject tract also has the desirable factors of the lots being in a near finished condition and
with building permits to be available within about 3 months from the date of value. It is noted that the sale of this subject property that was negotiated in June/July 2005 and closed
in November 2005 was at a price that reflected $206,153 per finished lot, and the other data would support a firm lower limit at $201,000 per finished lot but a firm upper limit at $221,000
and above per finished lot. Considering a finished lot ratio of 43-44% and the projected average base pricing of $498,000, the following indication results: $498,000 x .42-.43 = $214,140
to $219,120/finished lot 31
VALUATION, Continuing The value conclusion for this subject tract is based on $210,000 per finished lot. Deduction for Costs to get to Finished Lots Information provided by the property
owner is that the remaining costs to get the lots from the as is condition to finished lots are a total of $31,224 per lot, which indicates the following: 99 lots @$31,224/lot = $3,091,176
Conclusion of Value Based on the foregoing, the value indication of the as is condition is calculated as follows:If finished lot condition: 99 lots @$210,000/lot = $20,790,000 Less remaining
costs/fees to get to finished lots: -3.091.176 $17,698,824 Thus, as the result of this analysis, I have arrived at the following conclusion of value for the subject Tanamera Homes (Madison)
tract, subject to the Assumptions and Limiting Conditions, and as of January 15, 2006: $17,700,000 (SEVENTEEN MILLION SEVEN HUNDRED THOUSAND DOLLARS) 32
TANAMERA HOMES (SHUTTERS) 33
TANAMERA HOMES (SHUTTERS) PROPERTY DATA Location This tract is located at the southeast corner of Murrieta Hot Springs Rd. and Roripaugh Meadows Rd. (opposite Pourray Rd.). Record Owner/Ownership
History The current owner is Tanamera/Roripaugh, LLC, also known by the builder name of Tanamera Homes. They acquired these lots from Roripaugh Ranch 100, L.P. (Griffin Communities)
by deed recorded June 29, 2005, Document No. 514872, and the sale had been negotiated in April 2005. The sale price was $18,625,000 or $186,250 per lot for 100 lots in near finished
condition, with finished lots estimated at $207,150. Roripaugh Ranch 100, L.P. had acquired the lots from Ashby USA, LLC in May 2003 at a price of $7,715,135 or $77,151 per lot for the
lots in a bluetop condition, and the sale had been negotiated in October 2002. Legal Description The lots are described as Lots 1 to 82 and 84 to 101 of Tract No. 29661-4, recorded April
28, 2004. Assessor Data (2005/06) The 100 lots comprise Assessor Parcel Nos. 957-730-008 through Oil, 957-731-001 through 013, 957-732-011 through 020, 957-733-007 through 016 & 018
through 028, 957-740-001 through Oil, 957-741-001 through 022, 957-742-001 through 012, and 957-743-001 through 007. The assessed values are $72,984 per lot for land and $0 for improvements,
or a total assessed value of $7,289,400 for the overall tract. The tax rate area is 13-117, with a base tax rate of 1.03817%, but the projected total tax rate to future homeowners is
±1.6-1.7% including the special taxes for this CFD and other overlapping debt. No. of Lots/Lot Sizes The tract consists of a total of 100 lots. The lots are ±5,000 s.f. minimum size
(±50' x 100'), and the average size is closer to 6,300 s.f. Planned Development/Current Status The lots are planned to be developed with a tract of homes to be called Shutters. It is
planned that there will be four floor plans, with sizes of 2,007 s.f., 2,896 s.f., 3,088 s.f., and 3,246 s.f. Current projected pricing is $459,990, $524,990, $529,990 and 34
PROPERTY DATA, Continuing $539,990, or a weighted average of ±$522,000. As of the January 15, 2006 date of value, the lots were in a partially finished condition with wet utilities installed,
and street improvements of paving, curb and gutter completed. Remaining items include dry utilities, minor street improvements, landscaping and development impact fees. This tract is
above grade of the land to the south, resulting in minor territorial view potential to lots along the south end of the tract. As to the timing of development, it was previously discussed
that upon funding of the CFD (projected for late March 2006), 26 building permits are to be available to this tract. The remaining 74 building permits are projected to be available in
September 2006. Title Report A preliminary report by Orange Coast Title Company dated December 29, 2005 has been reviewed. This report essentially notes the same items as mentioned for
the previous subject tracts, and the discussion is the same as for the Davidson Communities Communities tract. Thus, this appraisal has assumed that none of these items have a negative
effect on the development of the property as planned, and either have no effect on the valuation or are appropriately reflected in the valuation in terms of a cost factor. VALUATION
Method of Analysis This is the same as discussed for the three previous subject tracts. Analysis of Finished Lot Value The discussion and analysis is similar to that for the previous
three subject tracts, and it is noted that this tract is targeted for homes that are slightly larger and higherpriced than for the Tanamera Homes (Madison) tract but smaller and lower-priced
homes than for the Davidson Communities tract. This tract is similar to the previous two subject tracts with the desirable factors of the lots being in a near finished condition and
with building permits to be available within about 3 months from the date of value. It is also noted that the sale of this subject property in June 2005 was at a price that reflected
$207,150 207,150 per finished lot, and the other data would support a far lower limit at $201,000 per finished lot and a close upper limit at $221,000 per finished lot. Considering a
lower finished lot ratio of 41-42% to reflect the relatively higher pricing for homes on 5,000 s.f. minimum lots (similar to the analysis of the Davidson 35
VALUATION, Continuing Communities tract), and the projected average base pricing of $522,000, the following indication results: $522,000 x .41-.42 = $214,020 to $219,240/finished lot
The value conclusion for this subject tract is based on $214,000 per finished lot. Deduction for Costs to get to Finished Lots Information provided by the property owner is that the
remaining costs to get the lots from the as is condition to finished lots are a total of $31,376 per lot. Thus, this results in the following cost deduction from the estimated finished
lot value: 100 lots @$31,376Aot = $3,137,600 Conclusion of Value Based on the foregoing, the value indication of the as is condition is calculated as follows:If finished lot condition:
100 lots @$214,000/lot = $21,400,000 Less remaining costs/fees to get to finished lots: -3.137.600 $18,262,400 Thus, as the result of this analysis, I have arrived at the following conclusion
of value for the subject Tanamera Homes (Shutters) tract, subject to the Assumptions and Limiting Conditions, and as of January 15, 2006: $18,260,000 (EIGHTEEN MILLION TWO HUNDRED SIXTY
THOUSAND DOLLARS) 36
TANAMERA HOMES (HAMPTONS) rm-nt rrrs .ifLLUJ lij ! i > 11111 i 1 1 u 37
TANAMERA HOMES (HAMPTONS) PROPERTY DATA Location This tract is located on the south side of Murrieta Hot Springs Rd., ±1,200' east of Roripaugh Meadows Rd. (opposite Pourray Rd.). Record
Owner/Ownership History The current owner is Traditions at Roripaugh, LLC, known by the builder name of Tanamera Homes. They acquired these lots from Roripaugh Ranch I, L.P. by deed
recorded January 6, 2006, Document No. 14387, at a price of $18,876,516 or $167,049 per lot. The deal was negotiated in August/September 2005 and the price reflected the lots in a blue-top
condition with a minor amount of street improvements completed including sewer and water, and with finished lots estimated at $203,696 per lot. Roripaugh Ranch I, LP (known by the merchant
builder name of Meeker Companies) had acquired these lots from Ashby USA, LLC in June 2003 at a price of $7,553,000 or $66,841 per lot, and this was negotiated in May 2003. Legal Description
The lots are described as Lots 1 to 113 of Tract No. 29661, for which the final map has been approved but is not yet recorded. Assessor Data (2005/06) This tract is currently identified
as Assessor Parcel No. 957-340-054. The current assessed value is $7,026,530 for land and $0 for improvements. The tax rate area is 13-117, with a base tax rate of 1.03817%, but the
projected total tax rate to future homeowners is ±1.6-1.7% including the special taxes for this CFD and other overlapping debt. No. of Lots/Lot Sizes The tract consists of a total of
113 lots. The lots are ±5,000 s.f. minimum size (±50' x 100'), and the average size is closer to 6,000 s.f. Planned Development/Current Status The lots are planned to be developed with
a tract of homes to be called Hamptons. It is planned that there will be four floor plans, with sizes of 2,346 s.f., 2,589 s.f., 2,715 s.f. and 2,951 s.f. Current projected pricing is
$489,990, $509,990, $519,990 and $529,990, or a weighted average of ±$517,000. As of the January 15, 2006 date of value, the lots were in a graded blue-top condition. In addition, Rimrock
Rimrock Ranch Rd. 38
PROPERTY DATA, Continuing along the west side of the tract had been completed and paved including installation of sewer and water, as part of the land development work completed on the
Tanamera Homes (Shutters) tract adjacent to the west. This tract is above grade of the land to the south, resulting in minor territorial view potential to lots along the south end of
the tract. As to the timing of development, it was previously discussed that building permits will not be available to this tract until September 2006, and all building permits are projected
to be available at that time. Title Report A preliminary report by Orange Coast Title Company, dated December 29, 2005, has been reviewed. This report essentially notes the same items
as mentioned for the previous subject tracts, and the discussion is the same as for the Davidson Communities tract. Thus, this appraisal has assumed that none of these items have a negative
effect on the development of the property as planned, and either have no effect on the valuation or are appropriately reflected in the valuation in terms of a cost factor. VALUATION
Method of Analysis This is the same as discussed for the four previous subject tracts. Analysis of Finished Lot Value The discussion and analysis is similar to that for the previous
four subject tracts, and it is noted that this tract is targeted for homes that are fairly similar in size and pricing to the Tanamera Homes (Shutters) tract. However, this subject tract
has the less desirable factors of the final tract map not yet recorded, the land development work not yet completed to a near finished lot condition, and building permits not being available
until September 2006. Thus, I have concluded that the value of these lots is below the Tanamera Homes (Shutters) tract, but still well above the value of the DR Horton-Continental Homes
(Castillo) tract due to being targeted for much larger and higher-priced homes than that tract. It is also noted that the sale of this subject tract was negotiated in August/September
2005 and recently closed at the price reflecting $203,696 per finished lot. In summary, I have concluded on a value of $205,000 per finished lot for this tract. 39
VALUATION, Continuing Deduction for Costs to get to Finished Lots Information provided by the property owner is that the remaining costs to get the lots from the as is condition to finished
lots are estimated at $42,705 per lot. Thus, this results in the following cost deduction from the estimated finished lot value: 113 lots @$42,705/lot = $4,825,665 Conclusion of Value
Based on the foregoing, the value indication of the as is condition is calculated as follows:If finished lot condition: 113 lots @$205,000/lot = $23,165,000 Less remaining costs/fees
to get to finished lots: -4.825.665 $18,339,335 Thus, as the result of this analysis, I have arrived at the following conclusion of value for the subject Tanamera Homes (Hamptons) tract,
subject to the Assumptions and Limiting Conditions, and as of January 15, 2006: $18,340,000 (EIGHTEEN MILLION THREE HUNDRED FORTY THOUSAND DOLLARS) 40
MAP OF ASHBY USA, LLC OWNERSHIP 41
ASHBY USA, LLC OWNERSHIP PROPERTY DATA Location This ownership comprises all of the land in the "pan" area, located on Murrieta Hot Springs Rd., Butterfield Stage Rd., Nicolas Rd., North
Loop Rd. and South Loop Rd. Record Owner/Ownership History All of this land is owned by Ashby USA, LLC. They acquired the land in this "pan" area by deed recorded in October 2001 from
Roripaugh Ranches, Inc., as part of the bulk purchase of all of the land for the community of Roripaugh Ranch. However, it is noted that KB Home is in escrow to purchase Planning Area
12, and they also have a separate option to purchase all or a large portion of the remaining residential lots in the "pan" area. For Planning Area 12, the deal was negotiated in August
2003 at a price of $85,000 per lot and the sale will close when the lots are completed to blue-top condition and when building permits are available to these lots (516th building permit
threshold), which is projected to be by September 2007. For the option on the other lots, KB Home has posted a $39,000,000 letter of credit that will be converted to cash when the lots
are completed by Ashby USA, LLC in a blue-top condition, and when building permits are available for these lots which is projected to be by September 2007. At that time, KB Home may
elect to purchase either the 412 lots comprising Planning Areas 16, 23, 24 and 31 in a single takedown or the 1,118 lots comprising all of the remaining "pan" area (excepting the 112
lots in Planning Area 12) in multiple takedowns over a period of years. If the option of 412 lots is selected, the sale would close within 45 days, or there can be an 8-month extension.
If the option of all of the lots is selected, these would be taken down over a period of ±5 years as home construction takes place. The prices for the lots in each Planning Area have
been set, ranging from $164,000 to $490,111 per lot for the bluetop condition, and the prices will not escalate as future takedowns would occur. Legal Description The various Planning
Areas have been or are being mapped first by an "A" tract map into one large lot, and then the residential Planning Areas will be subdivided into individual single-family lots by a "B"
tract map. Tract No. 29353-2 recorded in September 2003 and it is the "A" map for the west portion of the "pan" area, and Tract No. 29353 is the "A" map for the balance of the "pan"
area and it is due to record in March 2006. The separate tentative tract maps for each Planning Area (the "B" maps) have been prepared and five of the 10 maps have been submitted to
the City for approval, with the remaining five maps to be submitted by early March 2006. 42
PROPERTY DATA, Continuing The description of each Planning Area is as follows: Plan. ("A" Map) ("B"Map) Area Lot Tract Tent. Tr. No. 10 11 12 14 15 16 17 18 19 20 21 22 23 24 31 33 134781243
11 10 7896 5,6 29353-2 29353-2 29353-2 29353-2 29353-2 29353 29353 29353 29353 29353 29353 29353 29353 29353 29353 29353-2 30766 n/a 32355 32356 32356 29368 29368 29368 29367 29366-2
29366-1 32358 30768 30768 32357 30767 Assessor Data (2005/06) The Planning Areas noted on the previous page comprise all or portions of Assessor Parcel Nos. 958-260-013, 014, 019 & 022
and 958-810-006, 007, 008, 010, Oil, 012, 013 & 015. The current assessed values for these parcels are a total of $6,193,442 for land and $0 for improvements. The tax rate areas are
13-016 and 13-116, with a base tax rate of 1.03817%, but the projected total tax rate to future homeowners is ±1.6-1.7% including the special taxes for this CFD and other overlapping
debt. No. Lots/Lot Sizes/Planned Product The following product mix information was obtained from the master developer, Ashby USA, LLC. It reflects what has been approved by the Planning
Commission in general, and also reflects what is shown on the tentative tract maps for each Planning Area. However, as previously noted, the tentative tract maps are not yet approved,
but some have been submitted to the City for processing of approvals. It is also noted that this product mix information is consistent with the updated Market Absorption Study dated
February 1, 2006 by Empire Economics, Inc., and the product size and pricing for each Planning Area is as shown in the Market Absorption Study. The table on the following page shows
the allocation of the lots by Planning Area, and also shows the minimum or typical lot sizes, as well as the planned product by size and projected pricing. It is noted that Planning
Area 11 is not shown on the table since it is the commercial site. The site contains 10.7 acres of net usable area, and is planned for future development with a neighborhood retail center.
43
PROPERTY DATA, Continuing Plan. No. Area Lots Lot Size 10 14 10,000 s.f.min.; 14,000 s.f. avg.; 8,075 s.f. min. pad 12 112 3,150 s.f. min. (45x70) 14 92 3,150 s.f. min. (45 x 70); ±4,000
s.f. avg. 15 104 3,150 s.f. min. (45x70); ±4,000 s.f. avg. 16 121 5,000 s.f. min. (50 x 100); 6,700 s.f. avg. 17 147 6,000 s.f. min. (60 x 100); 8,500 s.f. avg. 18 121 6,000 s.f. min.
(60 x 100); 8,500 s.f. avg. 19 25 17 @20,000 s.f. min.; 16,100 s.f. min. pad 8 @1 acre min.; 22,000 s.f. min. pad 20 35 25 @20,000 s.f. min.; 11,600 s.f. min. pad 10 @1 acre min.; 14,400
s.f. min. pad 21 24 14 @20,000 s.f. min.; 15,300 s.f. min. pad 10 @1 acre min.; 22,000 s.f. min. pad 22 130 Cluster (±2,600 s.f. min.) 23 47 4,000 s.f. min. (50 x
80) 24 75 4,000 s.f. min. (50 x 80) 31 169 Cluster (±2,600 s.f. min.) 33 14 8 @20,000 s.f. min. 6 @1 acre min. 1,230 Product Size/Pricing 4,001-5,187 s.f.; $779,990-$909,990 2,050-2,300
s.f.; $405,9904430,990 2,050-2,300 s.f.; $405,990-$430,990 2,050-2,300 s.f.; $405,9904430,990 2,500-3,787 s.f.; $450,9904510,990 2,969-3,711 s.f.; $510,9904545,990 2,969-3,711 s.f.;
$510,9904545,990 4,001-5,187 s.f.; $779,9904909,990 3,676-5,318 s.f.; $787,9904909,990 4,001-5,187 s.f.; $779,9904909,990 3,676-5,318 s.f.; $787,9904909,990 4,001-5,187 s.f.; $779,9904909,990
3,676-5,318 s.f.; $787,9904909,990 1,809-2,300 s.f.; $370,0004415,990 2,029-2,707 s.f.; $415,9904445,990 2,029-2,707 s.f.; $415,9904445,990 1,809-2,300 s.f.; $370,0004415,990 4,001-5,187
s.f.; $779,9904909,990 3,676-5,318 s.f.; $787,9904909,990 Status of Development All of this land is currently in the process of being graded and it is estimated that the various Planning
Areas will be completed to a blue-top condition during the time frame of July through October 2006. Title Report Preliminary reports by Orange Coast Title Builder Services, dated September
13, 2004, have been reviewed. These reports note similar items as mentioned for the previous subject tracts, as well as various other easements to the Metropolitan Water District of
Southern California, Southern California Edison Company, GTE California Inc., General Telephone Company, Rancho California Water District and Verizon California, Inc. Similar to the
previous discussion for other subject tracts, this appraisal has assumed that none of these items have a negative effect on the development of the property as planned, and either have
no effect on the valuation or are appropriately reflected in the valuation in terms of a cost factor. 44
VALUATION Method of Analysis Due to the size of this ownership at 1,230 lots, and since the lots could potentially be sold off over the next 4 to 5 years, I have concluded that the appropriate
method of analysis is the subdivision or developmental approach. This method uses a discounted cash flow analysis which involves the discounting of the projected net proceeds from assumed
sales of the land over the appropriate period of time. The sales of land represent the gross proceeds, less deductions for the remaining land development costs, costs of overhead and
marketing, holding costs, and profit to the master developer. The estimated net proceeds over time are then discounted to a present value indication. The first step is to estimate the
appropriate retail land values for the 16 individual Planning Areas, including the commercial site, reflecting the condition at which the land will be delivered by the master developer,
which is blue-top lots for the residential land and mass graded superpad for the commercial site. The second step is to estimate the timing in which the sales of the Planning Areas would
be projected to occur. The third step is to estimate the appropriate expenses to be deducted over time for the remaining land development costs to get the land from as is condition to
the deliverable condition, together with overhead and marketing costs, holding costs, and profit. The last step is to estimate an appropriate discount rate or internal rate of return
at which to discount the projected net cash flows into a present value indication. This present value indication represents the as is condition of the land as of the date of value. Analysis
of Residential Land Values Planning Areas 22 & 31: These Planning Areas are to be developed with a clustertype detached product that will have lot sizes of ±2,600 s.f. minimum, with
projected product pricing of $370,000 to $415,990 or an average of ±$395,000. Based on the previous discussion for the subject DR Horton-Continental Homes (Castillo) tract, Sale No.
8 supports a close indication at $174,000 per finished lot due to being similar lots of 2,700 s.f. minimum and which are planned for homes of fairly similar size and pricing. Sale Nos.
1 through 3 would support far upper limits at $203,696 to $207,150 per finished lot due to being much larger lots, which are planned for much larger and higher-priced homes. Considering
a finished lot ratio of 43-44% (as discussed for the DR Horton-Continental Homes tract in the "panhandle") and the average projected home price of ±$395,000, the following indication
results: $395,000 x .43-.44 = $169,850 to $173,800/fm. lot 45
VALUATION, Continuing Lastly, it is noted that the purchase prices in the KB Home option to purchase from Ashby USA, LLC reflect $209,547 per finished lot for Planning Area 22 and $211,053
per finished lot for Planning Area 31. However, it is noted that while these are recently negotiated prices, the initial takedowns by KB Home would not occur until building permits are
available (assumed to be September 2007), and future takedowns could extend thereafter, all with no price escalation. I have concluded on a value of $170,000 per finished lot for Planning
Areas 22 and 31. Planning Area 12, 14 & 15: These Planning Areas consists of 3,150 s.f. minimum lots and are targeted for homes in the price range of $405,990 to $430,990, or an average
of ±$418,000. The sales data would support a firm lower limit at $174,000 per finished lot but a firm upper limit at ±$200,000 per finished lot. Considering a finished lot ratio of 43-44%
and the projected average home pricing of $418,000, the following indication results: $$418,000 x .4S-.44 = $179,740 to $183,920/fin. lot It is noted that the purchase price for the
lots in Planning Areas 14 and 15 in the option to KB Home reflects $219,555 per finished lot. However, similar to previous discussion, this appears to represent a "future" price, and
greater weight is given to the current sales data. Thus, I have concluded on a value of $180,000 per finished lot for Planning Areas 12, 14 and 15. Planning Areas 23 & 24: These Planning
Areas consist of 4,000 s.f. minimum lots that are targeted for homes in the price range of $415,990 to $445,990, or an average of ±$429,000. The sales data supports a far lower limit
at $174,000 per finished lot, a closer indication near the range of ±$200,000 per finished lot, and far upper limits at ±$220,000 per finished lot and above. Based on a finished lot
ratio of 43-44%, the following indication results: $429,000 x .4S-.44 = $184,470 to $188,760/fin. lot It is noted that the purchase price for both of these Planning Areas in the option
to KB Home reflects $234,174 per finished lot, but limited weight is given to this indication. The conclusion for the Planning Areas 23 and 24 is based on $185,000 per finished lot.
Planning Area 16: This Planning Area consists of 5,000 s.f. minimum lots with an average size of ±6,700 s.f., that are targeted for homes in the price range of $450,990 to $510,990,
or an average of ±$481,000. These lots are similar in size to the five tracts in the "panhandle", though it is noted that while the homes are planned to be relatively large in size,
the projected pricing is lower than four of the tracts and higher than only the DR Horton-Continental Homes (Castillo) tract. Thus, the 46
VALUATION, Continuing valuation of the DR-Horton-Continental Homes (Castillo) tract supports a lower limit at $195,000 per finished lot but the valuation of the Tanamera Homes (Madison)
tract at $210,000 per finished lot supports a close upper limit. Based on a finished lot ratio of 43-44%, the following indication results: $481,000 x .4S-.44 = $206,830 to $211,640/fm.
lot It is noted that the purchase price for this Planning Area in the option to KB Home reflects $283,778 per finished lot. However, similar to previous discussion, less weight is given
to this than to the current sales data together with the current projected home pricing and a supportable finished lot ratio. Thus, the conclusion of value is $210,000 per finished lot
for Planning Area 16. Planning Areas 17 & 18: These Planning Areas consist of 6,000 s.f. minimum lots, with an average size of ±8,500 s.f., that are targeted for homes in the price range
of $510,990 to $545,990, or an average of ±$527,000. Sale Nos. 1, 2 and 3 support firm lower lower limits at $203,696 to $207,150 per finished lot due to being smaller lots and planned
for smaller and lower-priced homes. Sale No. 4 supports a firm upper limit at the time-adjusted indication of $247,000 per finished lot due to being larger lots with larger and higher-priced
homes being built. Sale No. 10 supports a close indication at $221,000 per finished lot due to being fairly similar size lots with the planned homes also being fairly similar in size
and pricing. Based on a finished lot ratio of 43-44%, the following indication results: $527,000 x .4S-.44 = $226,610 to $231,880/fin. lot It is noted that the purchase price for these
Planning Areas in the option to KB Home reflects $344,402 per finished lot, though this is considered to be far above current market value. In summary, I have concluded on a value of
$230,000 per finished lot for Planning Areas 17 and 18. Planning Area 10: This Planning Area consists of 10,000 s.f. minimum lots, with an average size of 14,000 s.f. and a minimum pad
size of 8,075 s.f. The targeted home pricing is a range of $779,990 to $909,990 or an average of ±$846,000. However, it is also noted that a similar home size and pricing is planned
for Planning Areas 19, 20, 21 & 33 but on much larger lots of 20,000 s.f. (±l/2 acre) minimum size. Initially, the analysis of the 6,000 s.f. lots and the conclusion of $230,000 per
finished lot supports a far lower limit for these 10,000 s.f. minimum lots. In addition, Sale No. 11 at a price of $270,000 per finished lot for 6,000 s.f. minimum lots supports a far
lower limit for the subject due to the much smaller lot size. Sale Nos. 16 through 21 from the Tabulation of Residential Land Sales consist of relatively larger lots, and are discussed
in the following paragraphs. 47
VALUATION, Continuing Sale No. 16 is located along Santiago Rd. between Margarita Rd. and Ynez Rd., in a hilly area of large estate homes on large lots. The land sold in raw condition
with an approved tentative tract map and an approved parcel map for a total of 15 lots, 1-acre minimum size, up to 2.02 acres, and with an average pad size of ±23,000 s.f. The sale was
negotiated in September 2003 and closed in December 2004 at a price reflecting $394,000 per finished lot. The buyer planned homes of 4,490 to 5,689 s.f., with projected pricing to average
±$1,100,000, but current projected pricing is not known. Considering an upward time adjustment of 30-35% since the price was set in September 2003, a current indication is at ±$520,000
per finished lot. This supports a significantly far upper limit for the subject due to the much larger lots with potential for much higher-priced homes as well as the much lower tax
rate. Sale No. 17 is located in the master-planned community of Morgan Hill, in unincorporated Riverside County area but adjacent to the southerly end of Temecula. The buyer had purchased
similar Vfe-acre minimum lots in Phase 1 in September 2003 at a price of $215,000 per finished lot, and this sale reflected the price of $285,000 per finished lot for 22 lots in Phase
2. The price was negotiated in August 2004, with the first takedown of 7 lots closing in October 2004 and the second takedown of 13 lots closing in December 2004. The homes range in
size from 3,902 s.f. to 4,559 s.f., and the projected pricing as of September 2004 was ±$900,000 to $1,000,000, and current pricing is from the low $1,000,000's. Considering an upward
time adjustment of 15-20%, a current indication is at ±$335,000 per finished lot. In comparison to the subject, the location is fairly similar, the tax rate is similar, but the lots
are much larger in size and the home pricing is slightly higher than projected for the subject. Overall, the indication at $335,000 per finished lot supports a firm upper limit for the
subject. Sale No. 18 is located east of Mockingbird Canyon Rd. and south of Van Buren Blvd. in the unincorporated Woodcrest area nearby to the south of Riverside. This is a low density,
residential estate area with several other tracts of new homes under construction in the nearby area. This was a sale of vacant land in rough graded condition and with a final tract
map ready to record for 65 lots, 1-acre minimum size. The sale was negotiated in February 2005, with 9 of the lots closing in April and the other 56 lots closing in September at a price
reflecting $300,000 per finished lot. The buyer, KB Home, planned homes of 3,758 s.f. to 5,262 s.f. with average pricing of $808,000. Some of the homes will have territorial views, and
the tax rate to the homebuyers will likely be near 1.65%. In comparison to the subject, the location is considered to be fairly similar but the lots are much larger, and the result is
that the planned homes are slightly larger but lower in price than the homes targeted for the subject. In addition, the tax rate will likely be slightly lower than the subject. Overall,
considering also that the sale was negotiated about a year ago, the indication at $300,000 per finished lot supports a firm lower limit for the subject. 48
VALUATION, Continuing Sale No. 19 is a pending purchase by KB Home of ±l-acre minimum lots that are located nearby to the west of Sale No. 18. The sale was negotiated in September 2005
and is due to close in early 2006 at a price reflecting $330,000 to $340,000 per finished lot. KB Home plans to build two product lines, one being an extension of the Alicante tract
of homes that are being built on Sale No. 18. The projected average home size is 5,000 s.f., but specific pricing was not available. The comparison to the subject is similar to Sale
No. 18, except that this is a more current transaction, resulting in a firm upper limit for the subject at $330,000 to $340,000 per finished lot. Sale No. 20 is located adjacent to the
north of Sale No. 18, and was land in raw and hilly condition with an approved tentative tract map for 64 lots, typically 30,000 s.f. to 1 acre in size. The buyer, Keystone Communities,
planned homes of 2,800 s.f. to 4,550 s.f., with projected pricing in the wide range from $600,000 to $800,000. Some of the lots will have good territorial views, and there will be a
CFD with an estimated tax rate of 1.75%. The sale was negotiated in March 2005 and closed in July 2005 at the price reflecting $319,000 per finished lot. The comparison to the subject
is also similar to Sale Nos. 18 and 19, though the planned homes are smaller and lower-priced. Overall, the indication at $319,000 per finished lot supports a close indication for the
subject. Sale No. 21 is located in a low density/estate residential area south of Overlook Pkwy. and east of Washington St. in the east part of Riverside. This is raw and hilly land
on which the buyer, Pulte Homes, planned to process a tentative tract map for 87 lots, Vi-acre minimum size but with typical and average sizes being over an acre and up to 3.7 acres.
They planned homes of 2,835 s.f. to 4,027 s.f., with proforma pricing of $670,000 to $755,000 as of the land sale negotiation in August 2004. The sale closed in June 2005 at a price
reflecting $300,000 per finished lot. Again, the comparison to the subject is similar to Sale Nos. 18, 19 and 20, with the location being fairly similar to the subject, the lots being
much larger though planned for smaller and lower-priced homes than the subject, but the tax rate being much lower with no CFD. Considering also that the sale was negotiated nearly IVi
years ago, the indication at $300,000 per finished lot is a firm lower limit for the subject. On the basis of a finished lot ratio, the sales data for these larger lots indicates the
range of 30% to 46%, but more typically the range of 36-42%. The lower range of finished lot ratios than previously discussed for the other sales data reflects the greater risk and slower
anticipated absorption for this higher-priced product. I have concluded on a range of 37-38% for the subject, and based on the average projected price of $846,000 this indicates the
following: $846,000 x .37-38 = $313,020 to $321,480/fin. lot 49
VALUATION, Continuing It is also noted that the purchase price for this Planning Area in the option to KB Home reflects $494,556 per finished lot, but it is lumped in with the half-acre
lots of Planning Areas 19, 20, 21 and 33 and it also appears to represent a future price. I have concluded that the range of ±$330,000 to $340,000 per finished lot is supportable for
the Planning Areas with the 20,000 s.f. minimum lots, but have concluded on a lower value of $315,000 per finished lot for Planning Area 10. Planning Areas 19, 20, 21 & 33: These Planning
Areas consist of a mix of 20,000 s.f. minimum lots and 1-acre minimum lots. The 20,000 s.f. lots are targeted for the same home pricing as Planning Area 10, or a range of $779,990 to
$909,990, or an average of ±$846,000. The 1-acre minimum lots are targeted for home pricing of $787,990 to $909,990, or an average of ±$845,000, which is nearly the same as for the 20,000
s.f. minimum lots. Based on the discussion for Planning Area 10 as well as consideration of the sales data, I have concluded on an average value for Planning Areas 19, 20, 21 & 33 at
$335,000 per finished lot. Analysis of Commercial Land This is Planning Area 11 which comprises the 10.7 net acre site that is planned for a future neighborhood retail center. A search
was made for recent sales of commercial land in the general Temecula and Murrieta areas. The pertinent data is shown on the Tabulation of Commercial Land Sales in the Addenda section
of this report, and are briefly discussed and analyzed in the following paragraphs. Data No. 1 was a closed sale in June 2005 on a 43-acre (net) site at a price of $8.49 per s.f. This
site is located on the east side of Winchester Rd., between Auld Rd. at the north and Calle Andras Rd. at the south, at the entrance to the French Valley Airport. This is a large vacant
site that was purchased for development of a Wal-Mart store. The location is considered to be superior to the subject, and the lower tax rate is superior, but the size is substantially
larger and the raw condition with gently undulating topography is inferior. Overall, the indication at $8.49 per s.f. supports a far lower limit for the subject. Data No. 2 was a closed
sale in February 2005 on a 7.15-acre site at a price of $10.92 per s.f. It is located at the corner of Winchester Rd. and Willows Ave. in Temecula, near a fairly new neighborhood retail
center and near the Four Seasons project by K. Hovnanian. The site has good frontage along Winchester Rd., plus frontage on two other streets that provide good access. The buyer plans
to develop a commercial center that will include office, retail and medical space. In comparison to the subject, the location is considered to be slightly superior, the size is smaller
and the tax rate is lower, but these factors are approximately offset by an upward time adjustment. Thus, the indication at $10.92 per s.f. supports a close indication for the subject.
Data No. 3 was a closed sale in March 2005 on a 3.71-acre site at a price of $11.70 per s.f. It is located along Hwy. 79 South at the corner with La Paz Rd., nearby to the east of the
15 Freeway. This site has good traffic exposure and good commercial potential, but it is restricted from retail and restaurant uses. The buyer needed to resolve some access issues, and
then planned to develop medical office condos. In comparison to the subject, this is a 50
VALUATION, Continuing much smaller site, the location is considered to be superior and the tax rate is lower. These factors are slightly more than offsetting to the zoning restrictions,
access issues and an upward time adjustment. Thus, the indication at $11.70 per s.f. supports a close upper limit for the subject. Data No. 4 was a closed sale in May 2005 on a 4.2-acre
site at a price of $12.50 per s.f. The site is located at Jefferson St. and Elm St. in Murrieta, in an area of much new commercial development along Jefferson St. The buyer plans to
develop retail stores along the front of the site and industrial space at the rear. In comparison to the subject, the location is considered to be fairly similar, but the size is much
smaller and the tax rate is lower, and these factors are more than offsetting to an upward time adjustment, resulting in a firm upper limit for the subject at $12.50 per s.f. Data No.
5 was a closed sale in September 2005 on a 6.19-acre site at a price of $17.06 per s.f. This was a vacant and finished site that is at the southerly end of Murrieta Plaza, a 400,000
s.f. retail center on 45 acres that has exposure from the 215 Freeway and is anchored by a Sam's Club. The buyer plans to build two retail buildings of 40,000 s.f. and 25,000 s.f. In
comparison to the subject, the location is far superior, the size is smaller and the tax rate is lower. Thus, the indication at $17.06 per s.f. supports a far upper limit for the subject.
Data No. 6 was a closed sale in November 2004 on a 6.08-acre site at a price of $8.68 per s.f. The site is located on Madison Ave. nearby to the south of Murrieta Hot Springs Rd. in
Murrieta, in a good retail area. The site was in raw condition and gently undulating, thus requiring grading. The buyer is a retail and hotel developer, but plans for the site were not
known. The cost to get the site to finished condition is unknown, but likely at least $2.00 to $3.00 per s.f., resulting in an effective price of $10.68 to $11.68 per s.f. for a finished
site. In comparison to the subject, the location is superior, the size is smaller and the tax rate is lower, but these factors are approximately offset by an upward time adjustment.
Thus, this sale supports a close indication to close upper limit for the subject at $10.68 to $11.68 per s.f. Data No. 7 was a closed sale in March 2005 on a 4.2-acre site at a price
of ±$17.76 per s.f. This sale consists of four contiguous ±l-acre parcels on a cul-de-sac, with frontage along the 15 Freeway, and nearby to the south of a large retail center with a
Target store and multi-plex theaters. In comparison to the subject, this sale is far superior in terms of the location, the much smaller size, as well as being subdivided into smaller
parcels, and the lower tax rate. These superior factors are far more than offsetting to an upward time adjustment, resulting in a far upper limit for the subject at ±$17.76 per s.f.
Data No. 8 was a closed sale in April 2005 on a 3.55-acre site at a price of $13.48 per s.f. This site is located at the corner of Madison Ave. and Juniper St. in Murrieta, nearby to
the southwest of the 15 Freeway, and in an area of much new commercial development. The buyer planned to develop the site with retail and restaurant uses. In comparison to the subject,
the location is far superior, the size is substantially smaller and the tax rate is lower. These factors are more than offsetting to an upward time adjustment, thus resulting in a far
upper limit for the subject at $13.48 per s.f. In summary, the data supports a far lower limit at $8.49 per s.f., a close indication at $10.92 per s.f., close indication to close upper
limit at $10.68 to $11.68 per s.f., a close upper limit at $11.70 per s.f., and firm to far upper limits from $12.50 to $17.76 per s.f. The value conclusion reflects current value, but
also is based on the assumption of significant surrounding residential development, since an assumed sale of the subject commercial site in the cash flow does not occur for several years,
51
VALUATION, Continuing as discussed later. I have concluded on a supportable value for the subject property of $11.00 per s.f. This results in the following: 10.7 acres or 466,092 s.f.
@$11.00/s.f. = $5,127,000 Deductions to Blue-Top Condition from Finished Lots Next, a deduction is made to reflect that the residential lots will be delivered by the master developer
in a blue-top condition, and the previous analyses were of the land as if finished lots. Thus, the deduction is for the costs to get from blue-top condition to finished lots, since the
revenues in the discounted cash flow analysis are based on the blue-top condition. No deduction is made for the commercial site, since the value was of the mass graded superpad condition,
and this is the condition at which it will be delivered by the master developer. Estimated cost deductions were provided by the master developer. These costs include development costs
(streets, utilities, etc.) as well as fees. The deductions, shown as Builder's Costs/Lot, plus the the resulting value of the lots in a blue-top condition are shown in the following
table: Plan. Area 10 12 14 15 16 17 18 19 20 21 22 23 Est. Value/Fin. Lot $315,000 $180,000 $180,000 $180,000 $210,000 $230,000 $230,000 $335,000 $335,000 $335,000 $170,000 $185,000
Builder's Costs/Lot $110,899 $44,943 $44,943 $44,943 $51,778 $62,402 $62,402 $110,899 $110,899 $110,899 $45,547 $50,174 Value/BIue-Top Lot $204,101 $135,057 $135,057 $135,057 $158,222
$167,598 $167,598 $224,101 $224,101 $224,101 $124,453 $134,826 No. of Lots 14 112 92 104 121 147 121 25 35 24 130 47 Total Value In Blue-Top Condition $2,857,414 $15,126,384 $12,425,244
$14,045,928 $19,144,862 $24,636,906 $20,279,358 $5,602,525 $7,843,535 $5,378,424 $16,178,890 $6,336,822 52
VALUATION, Continuing Plan. Area 24 31 33 $185,000 $50,174 $170,000 $45,547 $335,000 $110,899 'alue/Blue-Top Lot $134,826 $124,453 $224,101 No. of Lots 75 169 14 Value In Blue-Top Condition
$10,111,950 $21,032,557 $3,137,414 Absorption/Rate of Land Sales Residential Land: For purposes of this valuation, the discounted cash flow analysis considers land sales as they would
be projected to occur over time, on a quarterly basis. The projected timing of the land sales is based on the estimated absorption by Empire Economics which reflects closed home sales,
and these are projected to start in the first half of 2008 (Jan-June 2008) for each product type in the "pan" area. This is shown on the "Estimated Absorption Schedules for CFD No. 03-02
(Roripaugh Ranch)" from the Empire Economics study, a copy of which is in the Addenda section of this report. As previously discussed, this is based on the assumption that building permits
will not be available to the "pan" area until September 2007. Typically, there is at least a 9 to 12-month or more period of time from the closing of the land sale to a builder until
the first closed sales of production homes in that tract. At a minimum, this reflects the time necessary to develop the lots from blue-top to finished condition and complete construction
of first the model homes and then the production homes. There usually is also some lag time from when the builder closes on the land sale until the land development work commences. I
have estimated that the land sale to a builder would occur approximately 9 months or in the third quarter prior to the projected first closed sale of a production home, based on the
Empire Economics study. It is noted that the first sales would not close until September 2007 (third quarter of 2007) when building permits would be available. Based on the foregoing,
the projected absorption or land sale for each of the planning areas is shown on the following page: 53
VALUATION, Continuing Plan. No. of Timing of Area Lots Land Sale 10 14 3rd qtr '07 12 112 3rd qtr'07 14 92 4th qtr '08 15 104 2nd qtr'10 16 121 3rd qtr '07 17 147 3rd qtr '07 18 121
4th qtr '09 19 25 3rd qtr '07 20 35 3rd qtr '08 21 24 2nd qtr '09 22 130 2nd qtr '09 23 47 3rd qtr '07 24 75 4th qtr '07 31 169 3rd qtr'07 33 14 2nd qtr'10 Commercial Land: Based on
the Empire Economics study, the absorption of the commercial space would occur in 2008. It is noted that this reflects absorption of completed commercial space, or occupancy of completed
buildings. Similar to the residential land sales, and considering the relatively large size of this potential commercial development, the sale of the commercial land would take place
well before the completed space was available for occupancy. Construction would likely take at least a year or more, and there would likely be additional lag time from the close of the
land sale until construction commences. Thus, I have concluded that the land sale would occur at the earliest possible time which is the third quarter of 2007. Deductions for Costs to
get to Blue-Top Condition A deduction is made for the remaining costs to the master developer to get the land from as is condition to blue-top lots for the residential land and mass
graded superpad condition for the commercial site. These costs include items of engineering, grading, construction of streets, utilities, walls, entries, recreation facilities, landscaping,
fees, contingency, etc. The remaining estimated costs to complete, as provided by the master developer, are a total of $68,564,433 as of January 15, 2006. The breakdown of these costs
is shown on the table included in the Addenda section of this report which is titled Roripaugh Completion Cost As of 1-15-06. As indicated on the table, the remaining costs include CFD
and Non-CFD items, and it also indicates that the total expenditures will be $19,153,479 for the first quarter of 2006 (excluding the amounts spent up to January 15, 2006), $24,328,104
for the second quarter of 2006, $20,785,673 for the third quarter of 2006, $3,897,177 for the fourth quarter of 2006, $100,000 for the first quarter of 2007 and a total of $300,000 thereafter
and through 2010. 54
VALUATION, Continuing For the cost items that are shown as CFD Improvements, 6 of these items are on the Priority A list that are to be funded by the current CFD bond proceeds, including
Murrieta Hot Springs Rd., Butterfield Stage Rd., Long Valley Channel, Santa Gertrudis Creek, Fire Station Grading and Roripaugh Valley Rd. In addition, the current CFD bond proceeds
will fund the item noted as Payoff AD 161. The total cost of the 6 items was estimated at $44,395,714 and the Payoff AD 161 is indicated to be an amount of $600,000. As indicated by
the table in the Addenda section, the remaining total cost amount for these 7 items as of January 15, 2006 is $24,954,951. The deduction for the costs to get to blue-top condition only
includes the items that will not be funded by the CFD bond proceeds. Thus, the revised cost amounts that are exclusive of the remaining costs for the 7 items noted above, and allocating
the last $300,000 into the last three quarters of 2007, are shown in the following table: Quarter Cost Amount 1st qtr '06 $13,029,638 2nd qtr '06 $14,828,104 3rd qtr'06 $11,454,563 4th
qtr '06 $3,897,177 1st qtr'07 $100,000 2nd qtr '07 $100,000 3rd qtr '07 $100,000 4th qtr '07 $100,000 Total $43,609,482 A second cost factor in the discounted cash flow analysis is Overhead/Marketing
, and this reflects the master developer costs of overhead, administration, marketing, sales, etc. This amount is based on 5% of gross revenues from the land sales, and then distributed
evenly over the 18 quarters in the cash flow. Discount Rate/Internal Rate of Return This rate is inclusive of developer's profit, and also reflects the factors of the time value of money,
and the risk of the projected cash flows inherent in this type of overall project. In my experience, this rate typically ranges from just under 20% up to nearer 30%, depending on the
size and status of the project, the length of the projected build-out, the location, the perceived risk, etc. The Korpacz Real Estate Investor Survey for the fourth quarter of 2005 indicates
a range of rates from 12.0% to 25.0% or an average of 18.15%, inclusive of developer's profit. However, this includes all types of development, and primarily much smaller projects than
the subject such as a single tract of homes. The subject property, comprising the "pan" area, has the positive factors of the Temecula location, with much nearby development that has
been very successful, 55
VALUATION, Continuing including the recent and ongoing development in the communities of Rancho Bella Vista and Central Park. In addition, there are 3 major builders that are committed
to the development of the tracts of homes in the "panhandle" area, with construction to start soon on three of the tracts, plus the commitment of KB Home to all or a large portion of
the "pan" area. There are also the desirable factors of the recreational amenities to be provided, the gated neighborhoods, the parks and schools within the community, and the significant
amount of surrounding open space. However, there are also the risk factors that the land development is not yet complete, though a large part of the grading operation has been completed
and part of the infrastructure has been completed. There is also the risk factor that timing of building permits being available is tied to completion of certain infrastructure items.
However, this has already been reflected by the conservative projection that building permits will not be available until September 2007, which is the outside date of the range of March
through September 2007 as estimated by the City. It is also noted that home sales have not yet commenced to provide a known amount of market acceptance, but the projected pricing is
considered to be reasonable. It is also significant that while the subject property is fairly sizable at 1,230 residential lots plus the commercial site, the length of the absorption
for the land sales is only 4¥i years or 18 quarters. This is based on the absorption study completed by Empire Economics, in which the annual home sales for the "pan" area were projected
to range from 134 to 328 for the years 2008 through 2012. Lastly, it is noted that the land values are based on current market values, and they are not appreciated or adjusted up for
time over the 41/2-year period. Based on the significant land value appreciation over the past several years, which has been at a much higher rate than the increases in land development
costs, a lower discount rate could be appropriate to reflect the likely future land value increases. Based on the foregoing, I have concluded on a discount rate at just below the midportion
of the overall range of 20-30%, or a rate of 24%. Conclusion of Value The discounted cash flow analysis is shown on the following page, which incorporates the foregoing factors. As indicated,
this analysis results in a present value indication of $74,479,439. 56
DISCOUNTED CASH FLOW ANALYSIS Quarterly REVENUES (Land Sales) Planning Area 10 Planning Area 12 Planning Area 14 Planning Area 15 Planning Area 16 Planning Area 17 Planning Area 18 Planning
Area 19 Planning Area 20 Planning Area 21 Planning Area 22 Planning Area 23 Planning Area 24 Planning Area 31 Planning Area 33 Commercial Land Total PROJECT COSTS Land Development Overhead/Marketing
5% Total NET CASH FLOWS DISCOUNT FACTOR 24% PV OF CASH FLOWS PRESENT VALUE 1Q-2006 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,029,638 $525,737 $13,555,375 -$13,555,375 0.943396
-$12,788,089 $74,479,439 2Q-2006 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $14,828,104 $525,737 $15,353,841 -$15,353,841 0.892857 -$13,708,786 3Q-2006 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $11,454,563 $525,737 $11,980,300 -$11,980,300 0.847458 -$10,152,796 4Q-2006$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,897,177 $525,737 $4,422,914
-$4,422,914 0.806452 -$3,566,866 1Q-2007$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $$0 $0 $0 $0 $0 $100,000 $525,737 $625,737 -$625,737 0.769231 -$481,336 2Q-2007$0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $100,000 $525,737 $625,737 -$625,737 0.735294 -$460,101 3Q-2007 $2,857,414 $15,126,384 $0 $0 $19,144,862 $24,636,906 $0 $5,602,525 $0 $0 $0 $6,336,822 $0 $21,032,557
$0 $5,127,000 $99,864,470 $100,000 $525,737 $625,737 $99,238,733 0.704225 $69,886,432 4Q-2007$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,111,950 $0 $0 $0 $10,111,950 $100,000 $525,737 $625,737
$9,486,213 0.675676 $6,409,604 1Q-2008$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $525,737 $525,737 -$525,737 0.649351 -$341,387 2Q-2008$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $525,737 $525,737 -$525,737 0.625000 -$328,585
DISCOUNTED CASH FLOW ANALYSIS, Continuing 3Q-2008 $0 $0 $0 $0 $0 $0 $0 $0 $7,843,535 $0 $0 $0 $0 $0 $0 $0 $7,843,535 $0 $525,737 $525,737 $7,317,798 0.602410 4Q-2008 $0 $0 $12,425,244
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $12,425,244 $0 $525,737 $525,737 $11,899,507 0.581395 1Q-2009 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $525,737 $525,737 -$525,737
0.561798 2Q-2009 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,378,424 $16,178,890 $0 $0 $0 $0 $0 $21,557,314 $0 $525,737 $525,737 $21,031,577 0.543478 3Q-2009 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $525,737 $525,737 -$525,737 0.526316 4Q-2009 $0 $0 $0 $0 $0 $0 $20,279,358 $0 $0 $0 $0 $0 $0 $0 $0 $20,279,358 $0 $525,737 $525,737 $19,753,621 0.510204 1Q-2010 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $525,737 $525,737 -$525,737 0.495050 2Q-2010 $0 $0 $0 $14,045,928 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,137,414 $0 $17,183,342 $0 $525,737 $525,737
$16,657,605 0.480769 Total $2,857,414 $15,126,384 $12,425,244 $14,045,928 $19,144,862 $24,636,906 $20,279,358 $5,602,525 $7,843,535 $5,378,424 $16,178,890 $6,336,822 $10,111,950 $21,032,557
$3,137,414 $5,127,000 $189,265,213 $43,609,482 $9,463,266 $53,072,743 $136,192,470 $4,408,312 $6,918,318 -$295,358 $11,430,205 -$276,704 $10,078,378 -$260,266 $8,008,464
VALUATION, Continuing Thus, as the result of this analysis, I have arrived at the following conclusion of market value for the subject Ashby USA, LLC ownership, subject to the Assumptions
and Limiting Conditions, and as of January 15, 2006: $74,480,000 (SEVENTY-FOUR MILLION FOUR HUNDRED EIGHTY THOUSAND DOLLARS) 59
ADDENDA
TABULATION OF RESIDENTIAL LAND SALES No. Location/Project Name 1 SEC Murrieta Hot Springs Rd. & Roripaugh Meadows Rd., Temecula (Shutters) 2 SWC Murrieta Hot Springs Rd. & Roripaugh
Meadows Rd., Temecula (Madison) 3 S/S Murrieta Hot Springs Rd., ± 1,200' E/O Roripaugh Meadows Rd., Temecula (Hamptons) 4 S/S Murrieta Hot Springs Rd. at Chandler Dr., Temecula (Valdemosa)
5 SWC Auld Rd. & Pourray Rd., French Valley (n/a) 6 SWC Keller Rd. & Meadowlark Rd., Murrieta (Lantana) 7 W'ly side Harveston Dr. from Charleston Ln. to Dalton Rd., Temecula (Charleston
& Aberdeen) 8 NE/S Ynez Rd. at Waverly Ln., Temecula (n/a) 9 N'ly corner Date St. & Ynez Rd., Temecula (n/a) 10 ±115' NW/O Date St. and ±560' NE/O Ynez Rd., Temecula (n/a) 11 NE/S Wolf
Creek Dr. South, .4 mile SE/O Wolf Valley Rd., Temecula (n/a) 12 N'ly corner Butterfield Stage Rd. & Morgan Hill Dr., Temecula area (Montevina) Rec. Seller/Buyer Date Roripaugh Ranch
1 00, L.P. 6/05 Tanamera/Roripaugh, LLC Shea Homes Ltd. Ptnshp. 1 1/05 Tanamera/Roripaugh II, LLC LLC Roripaugh Ranch I, L.P. 1/06 Traditions at Roripaugh, LLC CRV Temecula Estates 9/04
KB Home Coastal, Inc. Warm Springs Investments Escrow n/a Murrieta 15, G.P. 12/04 YCH Murrieta, LP Harveston, LLC 11/04 Acacia Credit Fund 9-A LLC Harveston, LLC 1 1/05 MW Housing Partners
III, L.P. Harveston, LLC 11/05 MW Housing Partners III, L.P. Harveston, LLC 11/05 MW Housing Partners III, L.P. Wolf Creek Dev., LLC 12/05 Lennar Homes McMillin Morgan Hill 1 2/04 McMillin
Montevina, LLC No. Lots 100 99 113 79 140 95 106 92 198 76 130 112 112 146 Min. Lot Size 5,000 5,000 5,000 6,800 7,200 6,000 3,100 4,250 2,700 4,950 5,850 6,000 6,000 Product 1,942-2,699
s.f. $437,9904512,990 2,007-3,246 s.f. $447,9904537,990 2,346-2,951 s.f. $489,9904529,990 2,675-3586 s.f. n/a n/a ±$450,0004550,000 2,070-3,5 18 s.f. $475,0004575,000 1,780-2,757 s.f.
±$430,0004523,000 1,950 s.f. avg. $391,550 avg. 3,092 s.f. avg. $5 19,675 avg. 3,129 s.f. avg. $538, 125 avg. 3,000-3,600 s.f. High $500,000's to Low $600,000's 2,494-3,239 s.f. $465,9904528,990
Price/Lot Finished Lot $186,250 $207,150 $185,253 $206,153 $167,049 $203,696 $160,601 $210,000 n/a $225,000 $73,685 $220,000 $182,685 $201,000 $150,026 $174,000 $180,824 $203,000 $200,672
$221,000 $238,000 $270,000 $199,000 $220,453 Fin. Lot Ratio 44% 41% 39% n/a ±45% 42% n/a 44% 39% 41% 45% 44% Remarks Planning Area 4A of Roripaugh Ranch; delivered as near finished lots;
±1.9-2.0% tax rate Planning Area 3 of Roripaugh Ranch; delivered as near finished lots; ±1.9-2.0% tax rate Planning Area 4B of Roripaugh Ranch; delivered as blue-top lots plus minimal
sewer & water; ±1.9-2.0% tax rate Raw land with approved tentative tract map; price set in mid 2004; ±1.8% tax rate Crown Valley Village Phase III; blue-top lots with final tract map;
±1.9% tax rate Raw land with approved tentative tract map; has CFD with ±1.8% tax rate Phase 2B of Harveston; delivered as semi-finished lots; to be two product types; ±1.8-1.9% tax
rate Phase 3 of Harveston; delivered as semifinished lots with rec. tract map; ±1.8-1.9% 1.9% tax rate Phase 3 of Harveston; delivered as semifinished lots with rec. tract map; ±1.8-1.9%
tax rate Phase 3 of Harveston; delivered as semifinished lots with rec. tract map; ±1.8-1.9% tax rate Southerly portion of Wolf Creek; delivered as blue-top lots with approved tract
map; ±1.9% tax rate Phase 2, PA 11 of Morgan Hill; delivered as blue-top lots with app'd final map; some views; ±1.8% tax rate
TABULATION OF RESIDENTIAL LAND SALES, Continuing No. Location/Project Name 13 E' ly corner Biitterfield Stage Rd. & Morgan Hill Dr., Temecula area (Ruffino) 14 S'ly side Morgan Hill
Dr., 2nd tract E'ly of Butterfield Stage Rd., Temecula area (Blackstone) 15 NE/O Canyon Hills Rd., ±!/2 mile SE/O Railroad Canyon Rd., Lake Elsinore (Weatherly) 16 N/S Santiago Rd.,
E/S and W/S Cresta Verde Ct, Temecula (Gallery Reserve) 17 NE/O Butterfield Stage Rd., 2M tract S/O Morgan Hill Dr., Unincorp./Temecula area (Ventana) 18 W/S Washington St. at Nandina
Ave., Unincorp./Woodcrest area (Alicante) 19 NE/S Mockingbird Cyn. Rd. at Mariposa Ave., Unincorp./Woodcrest area (Alicante & other) 20 W/S Washington St., ±350' N/O Nandina Ave., Unincorp./Woodcrest
area (n/a) 21 1A mi. S/O Overlook Pkwy, '/a mi. E/O Washington St., Riverside (n/a) Seller/Buyer McMillin Morgan Hill McMillin Ruffino, LLC McMillin Morgan Hill McMillin Blackstone,
LLC Pardee Home Construction Pulte Home Corp. Woodbridge Inland Estates Gallery Reserve Partners LLC McMillin Morgan Hill Ventana Morgan II Young California Riverside KB Home Coastal
Scott Lissoy KB Home Coastal Riverside 67 Group, LLC Keystone Riverside 64 LLC Estate of John A. Kunny Pulte Home Corp. Rec. Date 12/04 12/04 7/05 12/04 10/04 12/04 4/05 9/05 Escrow
7/05 6/05 No. Lots 131 59 131 15 7 13 20 9 54 65 131 64 87 Min. Lot Size Product 7,000 2,774-3,6 14 s.f. $497,9904557,990 8,000 3, 100-3,949 s.f. $570,9904589,990 4,900 1,947-2,303 s.f.
$416,0004440,000 ±1 acre 4,490-5,689 s.f. $1,1 00,000 avg. 22,000 3,902-4,559 s.f. $900,000-$ 1,000,000 1 acre 3,758-5,262 s.f. $808,000 avg. 1 acre 5,000 s.f. avg. n/a 30,000 2,800-4,550
s.f. $600,0004800,000 >/2 acre 2,835-4,027 s.f. $670,0004755,000 Price/.Lot Finished Lot $205,250 $227,743 $223,000 $246,393 $135,916 $192,500 $216,667 $394,000 n/a $285,000 $209,231
$300,000 n/a $330,000-$340,000 n/a $319,000 n/a $300,000 Fin. Lot Ratio 43% 43% 45% 36% 30% 37% n/a 46% 42% Remarks Phase 2, PA 10 of Morgan Hill; delivered as blue-top lots with app'd
final map; some views; ±1.8% tax rate Phase 2, PA 15 of Morgan Hill; delivered as blue-top lots with app'd final map; some views; ±1.8% tax rate Canyon Hills community; delivered as
blue-top lots with approved tent, tract map; ±1.9% tax rate Purchased in raw condition with app'd tent, tract & parcel maps; 23,000 sf avg. pad size; no CFD/±1.1% tax rate Morgan Hill
community; purchased 12 lots in 9/03 at $215,000/fin. lot; 1.9% tax rate Land in rough graded condition with final tract map ready to record; 1.65% tax rate Land in raw/hilly condition
with rec. tract map; to be two products; to close early 2006; planning to form CFD Land in raw/hilly condition with approved tentative tract map; est. 1.75% tax rate Land in raw/hilly
condition; buyer processing tentative tract map approvals; no CFD Note: Home pricing is original proforma or earliest available
TABULATION OF COMMERCIAL LAND SALES No. Location 1 SEC Winchester Rd. & Auld Rd., Unincorp. County area Seller/Buyer French Valley Properties LLC Wal-Mart Stores, Inc. Rec. Date 6/05
Net Acres 43.0 Price/S.F. Remarks $8.49 Vacant, gently undulating site; buyer plans to build a Wal-Mart store 2 NEC Winchester Rd. & Willows Ave., Murrieta 3 NWC Hwy. 79 South & La Paz
Rd., Temecula Bungalow Investments LLC 2/05 7.15 $10.92 TransCan Temecula LLC Temecula Bedford Court Inv. 3/05 3.71 $11.70 Michael H. Hedayat Vacant, fairly level site; irregular shape
but much street frontage; planned for Winchester Commercial Center with office, retail & medical Vacant, fairly level site; buyer to resolve access issues; planned for medical office
condos 4 W'ly corner Jefferson Ave. & Elm St., Murrieta Daleo Properties #1, LLC Elm Street Investors, LP 5/05 4.2 $12.50 Vacant, fairly level site; buyer plans retail space along front
and industrial space at rear 5 NW/S Jackson Ave., ±.4 mile S/O Murrieta Hot Springs Rd., Murrieta 6 SW/S Madison Ave., ±820' SE/O Murrieta Hot Springs Rd., Murrieta 7 Both sides of Calex
Ct. @Juniper St., Murrieta CMS Murrieta Plaza, LLC 9/05 6.19 $17.06 Alesco Development Co., LLC Pacific Makai Prop. Mgmt. 11/04 6.08 Advance Management & Inv. Pom S.Kim 3/05 4.2 ±$17.76
Murrieta 15 Investors, LLC Vacant, fairly level site; part of 400,000 s.f. retail center anchored by Sam's Club; buyer plans retail buildings of 40,000 s.f. and 25,000 s.f. Vacant, gently
undulating, below street grade; zoned for commercial/retail; buyer is retail & hotel developer Vacant, fairly flat; 4 subdivided lots; near Target & theaters; freeway visibility; buyers
plans unknown 8 E'ly comer Madison Ave. & Juniper St., Arizona Tile Supply, Inc. Murrieta Juniper Street Land Partners 4/05 3.55 $13.48 Vacant, fairly flat site; near freeway; buyer
plans retail/restaurant uses
ESTIMATED ABSORPTION SCHEBULSS FOR CFO NO, 03-02 (RORIPAOGH RANCH) EMPIRE ECONOMICS — FEBRUARY 1, 2006; SUBJECT TO REVISION CRITICAL ASSUMPTION: ASHBY USA LLC COMPLETES THE CONDITIONS
OF DEVELOPMENT IN A TIMELY MANNER Jfc*£J*J _PA_U__ P* 11 .K«UBL. -JS3S. ^^^"y e ISS^SSJll^^SSJi^llMS^^™ Empire Economics 41 Release Date; February-1,2006
ii ig* Sff RJ JSBI m H* ^ "S 3 I 2eIsSs
QUALIFICATIONS OF STEPHEN G. WHITE, MAI PROFESSIONAL EXPERIENCE Real Estate Appraiser since 1976. 1983 through current date: Self-employed; office located at 1370 N. Brea Blvd., Suite
205, Fullerton, CA 92835 (Phone: 714-738-1595) 1976-1982: Employed by Cedric A. White, Jr., MAI, independent appraiser located in Anaheim. Real estate appraisals have been completed
on most types of properties for purposes of fair market value, leased fee value, leasehold value, easement value, partial acquisitions and severance damages. PROFESSIONAL ORGANIZATIONS
Member, Appraisal Institute; MAI designation obtained 1985 Affiliate Member, Pacific West Association of Realtors LICENSES Licensed by the State of California as a Certified General
Real Estate Appraiser; OREA ID No. AG013311; valid through September 22, 2006. EDUCATION B.A. Economics & Business, Westmont College, Santa Barbara (1976) Appraisal Institute Courses:
Basic Appraisal Principles, Methods and Techniques Capitalization Theory and Techniques Urban Properties Litigation Valuation Standards of Professional Appraisal Practice Numerous seminars
and continuing education on various appraisal subjects, including valuation of easements and leased fee interests, litigation, the money market and its impact on real estate, and standards
of professional appraisal practice. COURT/TESTIMONY EXPERIENCE Qualified as an expert witness in the Superior Courts of Orange, Los Angeles, Riverside and San Bernardino Counties; also
before the Assessment Appeals Board of Orange and Los Angeles Counties. TYPES OF PROPERTY APPRAISED Residential: vacant lots, acreage and subdivisions; single family residences, condominiums,
townhomes and apartment complexes. Commercial: vacant lots/acreage; office buildings, retail stores, shopping centers, restaurants, hotels and motels. 65
QUALIFICATIONS, Page 2 Industrial: vacant lots and acreage; warehouses, manufacturing buildings, R&D buildings, industrial parks, mini-warehouses. Special Purpose: mobilehome parks,
churches, automobile agencies, medical buildings, convalescent hospitals, easements, leased fee and leasehold interests. CLIENT LIST Corporations: Aera Energy British Pacific Properties
BSI Consultants Crown Central Petroleum Eastman Kodak Company Firestone Building Materials Foodmaker Realty Corp. Greyhound Lines Holiday Rambler Corp. International Baking Co. Johnson
Controls Kampgrounds of America La Habra Products, Inc. Developers: Brighton Homes Citation Builders Davison-Ferguson Investment Devel. D.T. Smith Homes Irvine Company Kathryn Thompson
Developers Mark Taylor, Inc. Law Firms: Baldikoski, Klotz & Dragonette Best, Best & Krieger Bowie, Arneson, Kadi, Wiles & Giannone Bradshaw, John Bye, Hatcher & Piggott Callahan, McCune
& Willis Cooksey, Coleman & Howard Hamilton & Samuels Horgan, Rosen, Beckham & Coren Kent, John Kirkland & Ellis Lathan & Watkins McKee, Charles C. Mosich, Nicholas J. Long, David M.
MCP Foods Merrill Lynch Relocation Orangeland RV Park Pacific Scientific Penhall International Pic 'N Save Stores Sargent-Fletcher Co. Shell-Western E&P Southern Distributors Corp. Southern
California Edison The Home Depot Tooley and Company Wastewater Disposal Co. Mission Viejo Co. Premier Homes Presley Homes Rockefeller & Associates Taylor Woodrow Homes Unocal Land &
Development Nossaman, Guthner, Knox & Elliott Oliver, Barr & Vose Ollestad, Freedman & Taylor Palmieri, Tyler, Wiener, Wilhelm & Waldron Paul, Hastings, Jonofsky & Walker Piggott, George
B. Pothier, Rose Rosenthal & Zimmerman Rutan & Tucker Sikora & Price, Inc. Smith & Politiski Williams, Gerold G. Woodruff, Spradlin & Smart Yates, Sealy M. 66
QUALIFICATIONS, Page 3 Financial Institutions: Barclays Bank Chino Valley Bank Continental Bank First Interstate Mortgage Security Pacific Bank Washington Square Capital Cities: San
Clemente Savings & Loan United Calif. Savings Bank National Credit Union Admin. First Wisconsin Bank Ahmanson Trust Company Sun west Bank City of Anaheim City of Bald win Park City of
Buena Park City of Cypress City of Duarte City of La Habra City of Laguna Beach City of Mission Viejo Counties:County of Orange Other Governmental: Agua Mansa Industrial Growth Association
El Toro Water District Federal Deposit Insurance Corporation (FDIC) Kern County Employees Retirement Association School Districts: Anaheim Union High School Dist. Banning Unified School
Dist. Capistrano Unified School Dist. Castaic Union School Dist. Cypress School Dist. Etiwanda School Dist. Fullerton School Dist. Garden Grove Unified School Dist. Irvine Unified School
Dist. Lake Elsinore Unified School Dist. Churches/Church Organizations: City of Orange City of of Placentia City of Riverside City of Santa Ana City of Santa Fe Springs City of Stanton
City of Tustin City of Yorba Linda County of Riverside Metropolitan Water District Orange County Water District Trabuco Canyon Water District U.S. Postal Service Moreno Valley Unified
School Dist. Newhall School Dist. Newport-Mesa Unified School Dist. Placentia-Yorba Linda Unified Dist. Poway Unified School Dist. Rialto Unified School Dist. Saddleback Unified School
Dist. Santa Ana Unified School Dist. So. Org. Cnty Comm. College Dist. Temple City School Dist. Calvary Church, Santa Ana First Church of the Nazarene Central Baptist Church, Pomona
Lutheran Church, Missouri Synod Christian & Missionary Alliance Church, Santa Ana Presbytery of Los Rancho Christian Church Foundation St. Mark's Lutheran Church, Hac. Hts. Congregational
Church, Fullerton Vineyard Christian Fellowship Other: Biola University Cedars-Sinai Medical Center Garden Grove Boys' Club The Sheepfold 67
APPENDIX D MARKET ABSORPTION STUDY
[THIS PAGE INTENTIONALLY LEFT BLANK]
MARKET ABSORPTION STUDY SUMMARY AND CONCLUSIONS CITY OF TEMECULA COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) CITY OF TEMECULA RIVERSIDE COUNTY, CALIFORNIA BY EMPIRE ECONOMICS,
INC. MARKET STUDY UPDATE: FEBRUARY 2, 2006 (ORIGINAL STUDY: JULY 13, 2004) Empire Economics Release Date: February 2, 2006
CERTIFICATION OF INDEPENDENCE The Securities & Exchange Commission has recently taken action against Wall Street firms that have utilized their research analysts to promote companies
that they conduct business with, citing this as a potential conflict of interest. Accordingly, Empire Economics (Empire), in order to ensure that its clients are not placed in a situation
that could cause such conflicts of interest, provides a Certification of Independence. Specifically, the Certificate states that Empire performs consulting services for public entities
only in order to avoid potential conflicts of interest that could occur if it also provided consulting services for developers/builders. For example, if a research firm for a specific
Community Facilities District or Assessment District, were to provide consulting services to both the public entity as well as the property owner/developer/builders, then a potential
conflict of interest could be created, given the different objectives of the public entity versus the property owner/developer. Accordingly, Empire Economics certifies that the Market
Absorption Study for CFD No. 03-02 of the City of Temecula was performed in an independent professional manner, as represented by the following statements: >• Empire was retained to
perform the Market Absorption Study by the City of Temecula, not the District's property owner/developer, Ashby USA, LLC or the various builders. > Empire has not performed any consulting
services for the District's property owner nor the developer/builders during at least the past five years. > Empire will not perform any consulting services for the District's property
owner nor the developer/builders during at least the next three years. Empire's compensation for performing the Market Absorption Study for the District is not contingent upon the issuance
of Bonds; Empire's fees are paid on a non-contingency basis. Therefore, based upon the statements set-forth above, Empire hereby certifies that the Market Absorption Study for CFD No.
03-02 of the City of Temecula was performed in an independent professional manner. Empire Economics, Inc. Joseph T. Janczyk, President Empire Economics 2 Release Date: February 2, 2006
INTRODUCTION TO THE BOND FINANCING PROGRAM Roripaugh Ranch, a Planned Community of single-family homes and also a commercial-retail center that is being developed by Ashby USA, LLC,
is located in the northeasterly portion of the City of Temecula, southerly of Murrieta Hot Springs Road and easterly/westerly of Butterfield Stage Road. Roripaugh Ranch is expected to
have some 1,745 single-family detached homes; this consists of 515 homes in Phase I, also referred to as the "panhandle" area, and another 1,230 homes in Phase II, also referred to as
the "pan" area. With regards to Phase I, 515 homes have already been approved, based upon a recommendation from the Planning Commission. With regards to Phase II, 1,230 have already
been approved by the Planning Commission. Accordingly, for purposes of the Market Absorption Study, Empire Economics is utilizing 1,745 single-family homes. The City of Temecula along
with the Property Owner, Ashby USA, LLC, have formed Community Facilities District No. 03-02 to assist with the financing of the infrastructure that is required to support the development
of residential and commercial-retail products in the District, hereafter referred to as CFD No. 03-02. Specifically, the Bond Issue would be utilized to provide funds for various items,
including roadway, drainage, park, water and sewer improvements. The specific size of the Bond Issue and the particular improvements included will depend upon various factors which will
be finalized when these bonds are sold. The purpose of the Market Absorption Study for the City of Temecula's Bond Financing for CFD No. 03-02 is to provide an estimate of the probable
absorption schedules for the forthcoming residential properties. Specifically, from the viewpoint of prospective Bond Purchasers, the particular components of the infrastructure should
be time-phased and location-phased in a manner that approximately coincides with the expected marketability/absorption of the projects in CFD No. 03-02. Otherwise, to the extent that
the infrastructure is not appropriately phased, then the following types of market inefficiencies may occur: On the one hand, if certain projects do not have the infrastructure that
is required to support their development in a timely manner, then they would not be able to respond to the demand in the marketplace, resulting in a market shortage. On the other hand,
if too much infrastructure is built, then projects for which there is not presently a market demand would incur high carrying costs due to the market surplus, and this could adversely
impact their financial feasibility.
Thus, the Market Absorption Study formulates guidelines on the appropriate or optimal time-phasing and location-phasing of the infrastructure for the properties located in the City of
Temecula's CFD No. 03-02, as a means of providing the bond purchasers with a reasonable amount of security from a market absorption perspective. Furthermore, the absorption schedules
for CFD No.03-02 are based upon Ashby USA, LLC delivering the parcels to the various builders according to the time schedule that was provided to Empire Economics by Ashby USA, LLC,
based upon their fulfillment of numerous and complex conditions of development in a timely manner. Empire Economics 3 Release Date: February 2, 2006
Empire Economics Release Date: February 2, 2006
Empire Economics Release Date: February 2, 2006
CHARACTERISTICS OF THE EXPECTED PRODUCT MIX FOR THE PROJECTS/PRODUCTS IN CFD NO. 03-02 For purposes of the Market Absorption Study for the CFD No. 03-02 Mello-Roos Bond Financing, Empire
Economics has performed a review of the planning approvals that Roripaugh Ranch has received as well as the development strategy of Ashby USA, LLC, the developer. CFD No. 03-02 (Roripaugh
Ranch) is expected to have 1,745 single-family detached homes in two separate phases. The expected number of housing units as well as their characteristics, such as prices and sizes
of living area, are as follows: * Phase I is expected to have a total of 515 single-family detached housing units, 29.5% of the total, that are priced at some $507,302 for some 2,783
sq.ft. of living area, on the average, and these are spread among five Planning Areas with three builders; accordingly, their characteristics are as follows: * Planning Area # 2: Davidson
is expected to have 99 homes on lots of some 6,265 sq.ft. that are priced at some $538,000 to $$558,000 for some 2,960 to 3,357 sq.ft. of living area. * Planning Area # 1: D.R. Horton
is expected to have 104 homes on lots of some 6,285 sq.ft. that are priced at some $410,000 to $480,000 for some 1,949 to 2,949 sq.ft. of living area. * Planning Area # 3: Tanamera is
expected to have 99 homes on lots of some 6,000 sq.ft. that are priced at some $459,990 to $519,990 for some 1,974 to 2,699 sq.ft. of living area. * Planning Area # 4A: Tanamera is expected
to have 100 homes on lots of some 6,310 sq.ft. that are priced at some $459,990 to $539,990 for some 2,007 to 3,246 sq.ft. of living area. * Planning Area # 4B: Tanamera is expected
to have 113 homes on lots of some 6,580 sq.ft. that are priced at some $489,990 to $529,990 for some 2,346 to 2,951 sq.ft. of living area. * Phase II is expected to have a total of 1,230
single-family homes, 70.5% of the total, that are priced at some $510,671 for some 2,864 sq.ft. of living area, on the average, and these are spread among fifteen Planning Areas with
the only builder being KB Home; accordingly, their characteristics by market segments and planning areas are as follows: * Market Segment #1 is expected to have 607 homes in five projects
with homes priced at some $370,000-$430,990 for some 1,809-2,300 sq.ft. of living area, and their characteristics are as follows: Empire Economics 6 Release Date: February 2, 2006
Planning Areas: 31. 22,12. 14 & 15 * Planning Area # 31: 169 homes on lots of some 3,150 sq.ft. that are priced at some $370,000 -$415,990 for some 1,809 to 2,300 sq.ft. of living area.
* Planning Area # 22: 130 homes on lots of some 3,150 sq.ft. that are priced at some $370,000 -$415,990 for some 1,809 to 2,300 sq.ft. of living area. * Planning Area #12: 112 homes
on lots of some 6,120 sq.ft. that are priced at some $405,990 -$430,990 for some 2,050 to 2,300 sq.ft. of living area. * Planning Area # 14: 92 homes on lots of some 3,880 sq.ft. that
are priced at some $405,990 -$430,990 for some 2,050 to 2,300 sq.ft. of living area. * Planning Area # 15: 104 homes on lots of some 3,880 sq.ft. that are priced at some $405,990 -$430,990
for some 2,050 to 2,300 sq.ft. of living area. * Market Segment #2 is expected to have 511 homes in five projects with homes priced at some $415,990-$545,990 for some 2,029-3,711 sq.ft.
of living area, on the average and their characteristics are as follows: Planning Areas: 23,24,16.17 & 18 * Planning Area # 23: 47 homes on lots of some 5,313 sq.ft. that are priced
at some $415,990 -$445,990 for some 2,029 to 2,707 sq.ft. of living area. * Planning Area # 24: 75 homes on lots of some 5,313 sq.ft. that are priced at some $415,990 -$445,990 for some
2,029 to 2,707 sq.ft. of living area. * Planning Area #16: 121 homes on lots of some 6,696 sq.ft. that are priced at some $450,990 -$510,990 for some 2,500 to 3,787 sq.ft. of living
area. * Planning Area # 17: 147 homes on lots of some 8,703 sq.ft. that are priced at some $510,990 -$545,990 for some 2,969 to 3,711 sq.ft. of living area. * Planning Area # 18: 121
homes on lots of some 8,703 sq.ft. that are priced at some $510,990 -$545,990 for some 2,969 to 3,711 sq.ft. of living area. * Market Segment #3 is expected to have 112 homes in five
projects with homes priced at some $779,990 to $909,990 for some 3,676 to 5,318 sq.ft. of living area, and their characteristics are as follows: Planning Areas: 10.19. 20. 21 & 33 *
Half-Acre Lots: 76 homes on lots of some 20,000 sq.ft. that are priced at some $779,990 to $909,990 for some 4,001 to 5,187 sq.ft. of living area. * Acres Lots: 36 homes on lots of some
42,298 sq.ft. that are priced at some $787,990 -$909,990 for some 3,676 to 5,318 sq.ft. of living area. Therefore, CFD No. 03-02 is partitioned into two phases and each of these have
single-family detached homes with a broad price range, from $370,000 to $909,990 and so the product mix is regarded as being diversified. CFD No. 03-02 is also expected to have some
15.4 acres for commercial-retail projects that are expected to be oriented towards the households in CFD No. 03-02. For additional information on the expected characteristics of the
forthcoming residential products in CFD No. 03-02, please refer to the following graphs. Empire Economics 7 Release Date: February 2, 2006