HomeMy WebLinkAbout0016_9_CFD2006-1- Exhibit G - Supplement to Appraisal
SUPPLEMENT TO APPRAISAL REPORT
COMMUNITY FACILITIES DISTRICT NO. 2006-1 IA “FF”
OF THE
CITY OF LAKE ELSINORE
City of Lake Elsinore, Riverside County, California
(Appraisers’ File No. 2016-1136S)
Prepared For
City of Lake Elsinore
130 S. Main Street
Lake Elsinore, CA 92530
Prepared By
Kitty Siino & Associates, Inc.
115 East Second Street, Suite 100
Tustin, California 92780
Supplement to Appraisal Report – Lake Elsinore CFD No. 2006-1 IA FF
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KITTY SIINO & ASSOCIATES, INC.
REAL ESTATE APPRAISERS & CONSULTANTS
October 17, 2016
Mr. Jason Simpson, Assistant City Manager
City of Lake Elsinore
130 S. Main Street
Lake Elsinore, CA 92530
Reference: Supplement to Appraisal Report
Community Facilities District No. 2006-1 IA “FF”
of the City of Lake Elsinore
(Units 12, 13 and 16 of Summerly)
SWQ Mission Trail and Hidden Trail,
City of Lake Elsinore, California
Dear Mr. Simpson:
At the request and authorization of the City of Lake Elsinore (“Client”), we have completed
a Supplement to the Appraisal Report for the City of Lake Elsinore Community Facilities
District No. 2006-1 Improvement Area “FF” (“Lake Elsinore CFD No. 2006-1 IA FF”). This
Supplement is to be used in conjunction with the original Appraisal Report for the above
referenced property dated October 4, 2016 with a date of value of August 15, 2016 which
encompasses three neighborhoods under development (Sunrise Springs II, Claiborne
and BlueWater) within the master planned community of Summerly (“Original Report”).
In lieu of updating the entire appraisal, the purpose of this Supplement is to bring forward
the date of value to October 10, 2016 and conclude with a not less than value. It should
be noted that this report may not be understood properly on its own but rather should be
used only in conjunction with the Original Report.
The purpose of this Supplement to Original Report (“Supplement”) is to ascertain and
discuss changes in the subject property along with any changes which occurred in the
housing market between August 15, 2016 (date of value of Original Report) and October
10, 2016.
INTENDED USE OF APPRAISAL - It is the appraiser’s understanding that the client, the
City of Lake Elsinore, will utilize this Supplement in disclosure documents related to the
sale of the Special Tax Bonds of Lake Elsinore CFD No. 2006-1 IA FF. This Supplement
along with the Original Report may be included in the Official Statement or similar
document to be distributed in connection with the marketing and offering of the bonds. It
is the appraiser’s understanding that there are no other intended uses of this report.
SUBJECT PROPERTY - The subject property consists of 187 single family lots known
as Lots 1-70 of Tract 31920-12, Lots 1-64 of Tract 31920-13 and Lots 1-53 of Tract 31920-
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16, all in the master planned community of Summerly, within the City of Lake Elsinore,
County of Riverside, State of California. Tract 31920-12 is being built out by CalAtlantic
Homes into Sunrise Springs II. Tract 31920-13 is being developed into Claiborne by Van
Daele Homes and Tract 31920-16 is being developed into BlueWater by Sea Country
Homes. Please refer to the Addenda of this Supplement to view a table showing the
ownership and condition by lot for both August 15, 2016 (from Original Report) and as of
October 10, 2016.
OWNER OF RECORD as of October 10, 2016 –
Sunrise Springs II - Lots 1-21, 23-28, 55-64 and 66-70 of Tract 31920-12 are owned by
individuals while Lots 22, 29-54 and 65 of Tract 31920-12 are owned by Ryland Homes
(a related entity of CalAtlantic Homes). There are 19 homes in escrow and one under
reservation at this time.
Claiborne by Van Daele Homes - Lots 1-64 of Tract 31920-13 are owned by Summerly
Unit 13, a related entity to McMillin Summerly the master developer. Van Daele is a fee
builder and as new homes are completed, they will be transferred to VanDaele and then
to the new home buyer. There are five homes in escrow at this time.
BlueWater by Sea Country Homes - Lots 1-53 of Tract 31920-16 are owned by Summerly
Unit 16, a related entity to McMillin Summerly, the master developer. Sea Country is a
fee builder and as new homes are completed, they will be transferred to Sea Country and
then to the new home buyer. There are 10 homes in escrow at this time.
PROPERTY RIGHTS APPRAISED - The property rights being appraised are of a fee
simple estate interest, subject to easements of record and subject to Lake Elsinore CFD
No. 2006-1 IA FF. The definition of fee simple estate is included in the Original Appraisal.
DEFINITIONS -
The term “Market Value” as used in this report is defined as:
"The most probable price which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, the buyer and seller
each acting prudently, knowledgeably and assuming the price is not
affected by undue stimulus. Implicit in this definition is the consummation
of a sale as of a specified date and the passing of title from seller to buyer
under conditions whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and each acting in what
he or she considers his or her own best interest;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
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5. the price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted
by anyone associated with the sale.”1
For all other definitions please refer to Original Report.
DATE OF VALUE – October 10, 2016
DATE OF SUPPLEMENT – October 17, 2016
SCOPE OF WORK – The following items were completed in the scope of work for this
assignment.
• Identify additional builder home sales and closings within the subject properties
and ascertain if the sales prices have increased, stayed the same or decreased.
• Inspected subject properties to ascertain condition of lots and houses.
• Identify additional construction on the subject property and report additional
expenditures resulting in less remaining costs to complete.
• Review and report on the subject real estate market conditions and identify any
changes since the Original Appraisal.
• Determine if the value is not less than the value conclusion in Original Report.
DISCUSSION – Between October 10, 2016 and October 14, 2016 inspections of the
subject property were made by the appraiser. In addition, sales offices were contacted
and reviews of current information were conducted. This information included additional
construction, closings and sales within Sunrise Springs II along with additional
construction and sales within Claiborne and BlueWater. We observed the following
changes in the subject properties between August 15, 2016 (date of Original Report date
of value) and October 10, 2016.
1. Closings - An additional eight homes within Sunrise Springs II have closed escrow to
individual homebuyers. As of the Original Report there were 34 homes closed and as
of October 10, 2016 there were 42 homes closed.
2. Sales – An additional 21 homes were sold within the three projects. As of the Original
Report there were 56 homes sold and as of October 10, 2016 there were 77 homes
sold. Note that sold homes include closed homes and homes that are under
construction and under contract. Within Sunrise Springs II (Tract 31920-12) an
additional 12 homes were sold; within Claiborne (Tract 31920-13) an additional two
homes were sold; and, within BlueWater an additional seven homes were sold.
3. An additional 24 homes began construction. As of the Original Report there were 116
finished lots within all three projects and as of October 10, 2016 there were 92 finished
lots. Within Sunrise Springs II an additional 17 homes began construction and within
BlueWater an additional seven homes began construction. Claiborne is anticipating
pulling permits in the next couple weeks for their next phase of construction.
1 The Appraisal of Real Estate, 13th Edition
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4. An additional $378,242 has been spent on land development costs. Within Sunrise
Springs II an additional 17 building permits were pulled at which time the Development
Impact Fees were paid and an additional eight occupancy permits were obtained at
which time the EVMWD Fees and TUMF Fees were paid. Within BlueWater an
additional seven building permits were pulled with Development Impact Fees paid.
5. Within Sunrise Springs II base pricing has either stayed the same or increased up to
one percent. Within Claiborne and BlueWater base prices have essentially stayed the
same. We have compared the eight new closings within Sunrise Springs II with the
19 current escrows and one reservation. The eight homes that closed between
August 15, 2016 and October 10, 2016 generally had sales dated in April and May of
2016 with an average sales price of $321,092. The 19 current escrows and one
reservation which were generally sold in June, August and September have an
average sales price of $343,321. It should be noted that the reported sales prices
include options, upgrades and premiums along with concessions and incentives so
when comparing older to newer sales, there may be differences in the amount of
options, upgrades, premiums and concessions which would increase or decrease the
prices. As we do not have information on what options, premiums, upgrades or
concessions are included within each sale, this information is more of an additional
look to see if prices are generally changing up or down within the project. In summary,
within Sunrise Springs II sales prices appear to have increased.
6. We have reviewed land sales within the subject market. As of August 15, 2016 one
tract within Summerly was in escrow (Unit 11). CalAtlantic Homes closed on the tract
of 59 lots on September 2, 2016. The price is retained in our files due to confidentiality
purposes. There have been no additional land sales within Summerly. Per the master
developer, the next land sale is anticipated to be in first quarter 2017. Thus, land
sales are still occurring.
SUBJECT REAL ESTATE MARKET - The subject real estate market has seen minimal
changes since August 15, 2016. There has been a slight decrease in sales both in the
overall Southern California market and in the Riverside market. Sales prices have been
mixed over the past two months in various counties with Los Angeles County remaining
the same, Orange, San Bernardino and Ventura declining slightly (under 1.5 percent) and
Riverside and San Diego showing slight increases (up to 1.6 percent). The slight
decrease in sales is considered to be typical for the fall home-buying season as compared
to the spring/summer home-buying season.
We have reviewed Metrostudy’s Southern California Residential Survey for the week
ending August 14, 2016 and the week ending October 2, 2016, the closest available
information to the two dates of value. Our review included 20 projects that Metrostudy
follows in the Jurupa Valley, Eastvale and Ontario Ranch area. Out of 20 projects, 17
had additional sales ranging from one up to 14 sales with an average per the 20 projects
of 5.05 sales during the six week period. Within the subject three projects, 21 additional
homes were sold suggesting an average sale of 7.0 sales per project during the 6-week
period.
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We have also reviewed CoreLogic’s monthly update on Southern California which
includes the number of sales and median price within each County. For the Original
Report the latest information was through June 2016. We now have information as of
August 2016 (latest available). In overall Southern California sales were up on a year
over year in basis in August and prices were up 6.2 percent. On a month over month
basis in overall Southern California August sales were up 8.0 percent and prices were flat
with no change (comparing July 2016 to August 2016). In Riverside County, sales were
up on a year over year basis by 14.2 percent and prices were up 7.1 percent on a year
over year. On a month over month basis in Riverside County sales were up 11.2 percent
and prices were up 0.7 percent (comparing July 2016 to August 2016). The information
available has a month time lag however it is important as it shows a trend of both sales
and prices within all of Southern California and in Riverside County generally rising.
As a final review, we have looked at the Improved Residential Sales Market Data which
was used in the Original Report (please refer to Addenda of Original Report). We re-
surveyed the projects and reviewed asking pricing as of October 10, 2016. Overall, it
appears pricing either stayed the same or increased slightly. While there are some plans
within a project that had a price reduction, other plans price increases out-number the
decreases showing a trend of prices either staying the same or increasing. The subject
project has continued its good absorption rate of over 4 homes per month. The review of
the subject real estate market suggests that the market is still in an upward cycle for new
homes in the subject’s market area.
CONCLUSION – This Supplement is intended to be used in conjunction with the Original
Appraisal Report prepared with an August 15, 2016 date of value. This Supplement is to
ascertain whether the value that was concluded as of August 15, 2016 is still valid. While
we have not concluded at a new value, it is evident that further construction has occurred,
additional development costs have been spent, additional homes have closed, additional
homes have been completed and more homes are in escrow all suggesting the subject’s
value has not decreased. An additional land sale within the master planned community
closed. In addition it has been determined that the subject real estate market has not
experienced any negative material changes since August 15, 2016. Based upon our
investigation, we have determined that the current market value is not less than the
concluded value as of August 15, 2016.
This Supplement is to be used in conjunction with the Original Report and subject to the
attached Assumptions and Limiting Conditions and the Appraiser’s Certification.
Respectfully submitted,
KITTY SIINO & ASSOCIATES, INC.
Kitty S. Siino, MAI
California State Certified General
Real Estate Appraiser (AG004793)
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ASSUMPTIONS AND LIMITING CONDITIONS
1. This report might not include full discussions of the data, reasoning and analyses that
were used in the appraisal process to develop the appraiser’s opinion of value. Some
supporting documentation concerning the data, reasoning and analyses may be
retained in the appraiser’s files. The information contained in this report is specific
to the needs of the client and for the intended use stated in this report. The appraiser
is not responsible for unauthorized use of this report.
2. No responsibility is assumed for legal or title considerations. Title to the property is
assumed to be good and marketable unless otherwise stated in this report.
3. It is assumed that the subject property is subject to the special tax lien of Lake
Elsinore CFD No. 2006-1 IA FF.
4. Responsible ownership and competent property management are assumed unless
otherwise stated in this report.
5. The information furnished by others is believed to be reliable; however, no warranty
is given for its accuracy.
6. All engineering is assumed to be correct. Any plot plans and illustrative material
used in this report are included only to assist the reader in visualizing the property
and may not be to scale.
7. It is assumed that there are no hidden or unapparent conditions of either property,
subsoil or structures that would render them more or less valuable. No responsibility
is assumed for such conditions or for arranging for engineering studies that may be
required to discover them.
8. It is assumed that there is full compliance with all applicable federal, state and local
environmental regulations and laws unless otherwise stated in this report.
9. It is assumed that all applicable zoning and use regulations and restrictions have
been complied with, unless nonconformity has been stated, defined and considered
in this appraisal report.
10. It is assumed that all required licenses, certificates of occupancy or other legislative
or administrative authority from any local, state or national governmental or private
entity or organization have been or can be obtained or renewed for any use on which
the value estimates contained in this report are based.
11. Any sketch or photograph included in this report may show approximate dimensions
and is included only to assist the reader in visualizing the properties. Maps,
photographs and exhibits found in this report are provided for reader reference
purposes only. No guarantee regarding accuracy is expressed or implied unless
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otherwise stated in this report. No survey has been made for the purpose of this
report.
12. It is assumed that the utilization of the land and improvements (if any) are within the
boundaries or property lines of the property described and that there is no
encroachment or trespass unless otherwise stated in this report.
13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any
comment by the appraiser that might suggest the possibility of the presence of such
substances should not be taken as confirmation of the presence of hazardous waste
and/or toxic materials. Such determination would require investigation by a qualified
expert relating to asbestos, urea-formaldehyde foam insulation or other potentially
hazardous materials that may affect the value of the property. The appraiser’s value
estimate is predicated on the assumption that there is no such material on or in the
property that would cause a loss in value unless otherwise stated in this report. No
responsibility is assumed for any environmental conditions or for any expertise or
engineering knowledge required to discover them. The appraiser’s descriptions and
resulting comments are the result of the routine observations made during the
appraisal process.
14. Proposed improvements, if any, are assumed to be completed in a good
workmanlike manner in accordance with the submitted plans and specifications.
15. The distribution, if any, of the total valuation in this report between land and
improvements applies only under the stated program of utilization. The separate
allocations for land and buildings, if any, must not be used in conjunction with any
other appraisal and are invalid if so used.
16. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992
and have been updated several times since then. The appraiser has made no
specific compliance survey and analysis of the property to determine whether they
conform to the various detailed requirements of the ADA, nor is the appraiser a
qualified expert regarding the requirements of the ADA. It is possible that a
compliance survey of the property, together with a detailed analysis of the
requirements of the ADA, could reveal that the property is not in compliance with
one or more of the requirements of the ADA. If so, this fact could have a negative
effect upon the value of the property. Since the appraiser has no direct evidence
relating to this issue, a possible noncompliance with requirements of the ADA in
estimating the value has not been considered.
17. It is assumed there are no environmental concerns that would slow or thwart
development of the subject properties and that the soils are adequate to support the
highest and best use conclusions.
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18. It is assumed that the sales information provided by the builders is true and accurate.
We have reviewed and analyzed the sales along with checking samples on various
public record documents and the information appears to be correct.
19. Possession of this report, or a copy thereof, does not carry with it the right of
publication. It may not be used for any purpose by any person other than the party
to whom it is addressed without the written consent of the appraiser, and in any
event, only with proper qualification and only in its entirety. Permission is given for
this appraisal to be published as a part of the Official Statement or similar document
for the Lake Elsinore CFD No. 2006-1 IA FF Special Tax Bonds.
HYPOTHETICAL CONDITION
1. It is assumed that all improvements and benefits to the subject properties, which are
to be funded by the Lake Elsinore CFD No. 2006-1 IA FF Special Tax Bond proceeds
are completed and in place.
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APPRAISER’S CERTIFICATION
The appraiser certifies that to the best of his knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions and conclusions are limited only by the reported
assumptions and limiting conditions, and are my personal, unbiased, professional
analyses, opinions and conclusions.
3. The appraiser has no present or prospective interest in the property that is the subject of
this report, and no personal interest or bias with respect to the parties involved.
4. The appraiser’s compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the amount of the value
estimate, the attainment of a stipulated result or the occurrence of a subsequent event.
5. This appraisal was not based on a requested minimum valuation, a specific valuation or
the approval of a loan.
6. The analyses, opinions and conclusions were developed, and this report was prepared, in
conformity with the Uniform Standards of Professional Appraisal Practice.
7. Kitty Siino has made a personal inspection of the property that is the subject of this report.
8. Kitty Siino has performed appraisal services on the subject property in the past three
years. As described within this Supplement, an Original Appraisal of the property was
completed with a date of value of August 15, 2016. This Supplement should only be used
in conjunction with the Original Report.
9. No other appraisers have provided significant professional assistance to the persons
signing this report.
10. The reported analyses, opinions and conclusions were developed, and this report was
prepared, in conformity with the requirements of the Appraisal Institute’s Code of
Professional Ethics and Standards of Professional Appraisal Practice, which include the
Uniform Standards of Professional Appraisal Practice.
11. The use of this report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.
12. As of the date of this report, Kitty Siino has completed the requirements of the continuing
education program of the Appraisal Institute.
Kitty S. Siino, MAI
State Certified General
Real Estate Appraiser (AG004793)
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ADDENDA
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Subject Property as of August 15, 2016 (from Original Report)
Description
No.
Lots
Ownership
Condition/Status
Tract 31920-12 – Sunrise Springs II
Lots 1-20, 55-61, 63-64, 66-70 34 Individuals Completed Houses / Closed
Lots 21-28, 62 and 65 10 Ryland Homes Homes over 95% Complete (7 in
escrow)
Lots 46-54 9 Ryland Homes Homes Under Construction (9 in
escrow)
Lots 29-45 17 Ryland Homes Finished Lots
Subtotal – Tract 31920-12 70
Tract 31920-13 - Claiborne
Lots 5-7 3 Summerly Unit 13 Model Homes Complete
Lots 39-41 and 51-53 6 Summerly Unit 13 Homes Under Construction (3 In
escrow)
Lots 1-4, 8-38, 42-50 and 54-64 55 Summerly Unit 13 Nearly Finished Lots
Subtotal – Tract 31920-13 64
Tract 31920-16 - BlueWater
Lots 38 & 39 2 Summerly Unit 16 Model Homes – 95% Complete
Lots 1-5 and 28-29 7 Summerly Unit 16 Homes Under Construction
Lots 6-27 and 30-37, 40-53 44 Summerly Unit 16 Nearly Finished Lots
Subtotal – Tract 31920-16 53
TOTAL 187
It should be noted that the escrows reported are through July 14, 2016. CalAtlantic Homes was unable to
give us more current information.
Subject Property as of October 10, 2016
Description
No.
Lots
Ownership
Condition/Status
Tract 31920-12 – Sunrise Springs II
Lots 1-21, 23-28, 55-64, 66-70 42 Individuals Completed Houses / Closed
Lots 22 and 65 2 Ryland Homes Homes over 95% Complete (1 in
escrow and 1 reserved)
Lots 29-54 26 Ryland Homes Homes Under Construction (18
in escrow)
Subtotal – Tract 31920-12 70
Tract 31920-13 - Claiborne
Lots 5-7 3 Summerly Unit 13 Model Homes Complete
Lots 39-41 and 51-53 6 Summerly Unit 13 Homes Under Construction (5 In
escrow)
Lots 1-4, 8-38, 42-50 and 54-64 55 Summerly Unit 13 Nearly Finished Lots
Subtotal – Tract 31920-13 64
Tract 31920-16 - BlueWater
Lots 38 & 39 2 Summerly Unit 16 Model Homes – 95% Complete
Lots 1-9 and 25-29 14 Summerly Unit 16 Homes Under Construction (10
in escrow)
Lots 10-24 and 30-37, 40-53 37 Summerly Unit 16 Nearly Finished Lots
Subtotal – Tract 31920-16 53
TOTAL 187