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HomeMy WebLinkAboutJames Free - 2016 AgreementAGREEMENT FOR SERVICES (For contracts over $5,000 — NON - DESIGN, NON - ENGINEERING TYPE CONTRACTOR) This AGREEMENT made this 6`h day of June, 2016, between: CITY: City of Gilroy, having a principal place of business at 7351 Rosanna Street, Gilroy, California and CONTRACTOR: James R. Free, MAI, SRA, CCIM, having a principal place of business at 1760 Mt. Vernon Dr. San Jose, CA 95125. ARTICLE 1. TERM OF AGREEMENT This Agreement will become effective on June 6, 2016 and will continue in effect through June 1, 2018 unless terminated in accordance with the provisions of Article 7 of this Agreement. Any lapse in insurance coverage as required by Article 5, Section D of this Agreement shall terminate this Agreement regardless of any other provision stated herein. Ini al ARTICLE 2. INDEPENDENT CONTRACTOR STATUS It is the express intention of the parties that CONTRACTOR is an independent contractor and not an employee, agent, joint venturer or partner of CITY. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between CITY and CONTRACTOR or any employee or agent of CONTRACTOR. Both parties acknowledge that CONTRACTOR is not an employee for state or federal tax purposes. CONTRACTOR shall not be entitled to any of the rights or benefits afforded to CITY'S employees, including, without limitation, disability or unemployment insurance, workers' compensation, medical insurance, sick leave, retirement benefits or any other employment benefits. CONTRACTOR shall retain the right to perform services for others during the term of this Agreement. ARTICLE 3. SERVICES TO BE PERFORMED BY CONTRACTOR A. Specific Services CONTRACTOR agrees to: Perform the services as outlined in Exhibit "A" ( "Specific Provisions ") and Exhibit "B" ( "Scope of Services "), within the time periods described in Exhibit "C" ( "Milestone Schedule "). B. Method of Performing Services CONTRACTOR shall determine the method, details and means of performing the above - described services. CITY shall have no right to, and shall not, control the manner or determine the method of accomplishing CONTRACTOR'S services. 4835- 2267- 0361v1 LAQ04706083 C. Employment of Assistants CONTRACTOR may, at the CONTRACTOR'S own expense, employ such assistants as CONTRACTOR deems necessary to perform the services required of CONTRACTOR by this Agreement, subject to the prohibition against assignment and subcontracting contained in Article 5 below. CITY may not control, direct, or supervise CONTRACTOR'S assistants in the performance of those services. CONTRACTOR assumes full and sole responsibility for the payment of all compensation and expenses of these assistants and for all state and federal income tax, unemployment insurance, Social Security, disability insurance and other applicable withholding. D. Place of Work CONTRACTOR shall perform the services required by this Agreement at any place or location and at such times as CONTRACTOR shall determine is necessary to properly and timely perform CONTRACTOR'S services. ARTICLE 4. COMPENSATION A. Consideration In consideration for the services to be performed by CONTRACTOR, CITY agrees to pay CONTRACTOR the amounts set forth in Exhibit "D" ( "Payment Schedule "). In no event however shall the total compensation paid to CONTRACTOR exceed 10,000. B. Invoices CONTRACTOR shall submit invoices for all services rendered. C. Payment Payment shall be due according to the payment schedule set forth in Exhibit "D ". No payment will be made unless CONTRACTOR has first provided City with a written receipt of invoice describing the work performed and any approved direct expenses (as provided for in Exhibit "A ", Section IV) incurred during the preceding period. If CITY objects to all or any portion of any invoice, CITY shall notify CONTRACTOR of the objection within thirty (30) days from receipt of the invoice, give reasons for the objection, and pay that portion of the invoice not in dispute. It shall not constitute a default or breach of this Agreement for CITY not to pay any invoiced amounts to which it has objected until the objection has been resolved by mutual agreement of the parties. D. Expenses CONTRACTOR shall be responsible for all costs and expenses incident to the performance of services for CITY, including but not limited to, all costs of equipment used or provided by CONTRACTOR, all fees, fines, licenses, bonds or taxes required of or imposed against CONTRACTOR and all other of CONTRACTOR'S costs of doing business. CITY shall not be 4835 - 2267- 0361v1 _2_ LAC104706083 responsible for any expenses incurred by CONTRACTOR in performing services for CITY, except for those expenses constituting "direct expenses" referenced on Exhibit "A." ARTICLE 5. OBLIGATIONS OF CONTRACTOR A. Tools and Instrumentalities CONTRACTOR shall supply all tools and instrumentalities required to perform the services under this Agreement at its sole cost and expense. CONTRACTOR is not required to purchase or rent any tools, equipment or services from CITY. B. Workers' Compensation CONTRACTOR agrees to provide workers' compensation insurance for CONTRACTOR'S employees and agents and agrees to hold harmless, defend with counsel acceptable to CITY and indemnify CITY, its officers, representatives, agents and employees from and against any and all claims, suits, damages, costs, fees, demands, causes of action, losses, liabilities and expenses, including without limitation reasonable attorneys' fees, arising out of any injury, disability, or death of any of CONTRACTOR'S employees. C. Indemnification of Liability, Duty to Defend As to all liability, to the fullest extent permitted by law, CONTRACTOR shall defend, through counsel approved by CITY (which approval shall not be unreasonably withheld), indemnify and hold harmless CITY, its officers, representatives, agents and employees against any and all suits, damages, costs, fees, claims, demands, causes of action, losses, liabilities and expenses, including without limitation attorneys' fees, arising or resulting directly or indirectly from any act or omission of CONTRACTOR or CONTRACTOR'S assistants, employees or agents, including all claims relating to the injury or death of any person or damage to any property. D. Insurance In addition to any other obligations under this Agreement, CONTRACTOR shall, at no cost to CITY, obtain and maintain throughout the term of this Agreement: (a) Commercial Liability Insurance on a per occurrence basis, including coverage for owned and non -owned automobiles, with a minimum combined single limit coverage of $1,000,000 per occurrence for all damages due to bodily injury, sickness or disease, or death to any person, and damage to property, including the loss of use thereof. As a condition precedent to CITY'S obligations under this Agreement, CONTRACTOR shall furnish written evidence of such coverage (naming CITY, its officers and employees as additional insureds on the Comprehensive Liability insurance policy referred to in (a) immediately above via a specific endorsement) and requiring thirty (30) days written notice of policy lapse or cancellation, or of a material change in policy terms. 4835 - 2267- 0361v1 -3- LAM04706083 E. Assignment Notwithstanding any other provision of this Agreement, neither this Agreement nor any duties or obligations of CONTRACTOR under this Agreement may be assigned or subcontracted by CONTRACTOR without the prior written consent of CITY, which CITY may withhold in its sole and absolute discretion. F. State and Federal Taxes As CONTRACTOR is not CITY'S employee, CONTRACTOR shall be responsible for paying all required state and federal taxes. Without limiting the foregoing, CONTRACTOR acknowledges and agrees that: • CITY will not withhold FICA (Social Security) from CONTRACTOR'S payments; • CITY will not make state or federal unemployment insurance contributions on CONTRACTOR'S behalf; • CITY will not withhold state or federal income tax from payment to CONTRACTOR; • CITY will not make disability insurance contributions on behalf of CONTRACTOR; • CITY will not obtain workers' compensation insurance on behalf of CONTRACTOR. ARTICLE 6. OBLIGATIONS OF CITY A. Cooperation of City CITY agrees to respond to all reasonable requests of CONTRACTOR and provide access, at reasonable times following receipt by CITY of reasonable notice, to all documents reasonably necessary to the performance of CONTRACTOR'S duties under this Agreement. B. Assignment CITY may assign this Agreement or any duties or obligations thereunder to a successor governmental entity without the consent of CONTRACTOR. Such assignment shall not release CONTRACTOR from any of CONTRACTOR'S duties or obligations under this Agreement. ARTICLE 7. TERMINATION OF AGREEMENT A. Sale of CONTRACTOR's Business/ Death of CONTRACTOR. CONTRACTOR shall notify CITY of the proposed sale of CONTRACTOR's business no later than thirty (30) days prior to any such sale. CITY shall have the option of terminating this Agreement within thirty (30) days after receiving such notice of sale. Any such CITY termination pursuant to this Article 7.A shall be in writing and sent to the address for notices to CONTRACTOR set forth in Exhibit A, Subsection V.H., no later than thirty (30) days after CITY' receipt of such notice of sale. 4835 - 2267 -03610 _4_ LAC104706083 If CONTRACTOR is an individual, this Agreement shall be deemed automatically terminated upon death of CONTRACTOR. B. Termination by City for Default of CONTRACTOR Should CONTRACTOR default in the performance of this Agreement or materially breach any of its provisions, CITY, at CITY'S option, may terminate this Agreement by giving written notification to CONTRACTOR. For the purposes of this section, material breach of this Agreement shall include, but not be limited to the following: CONTRACTOR'S failure to professionally and /or timely perform any of the services contemplated by this Agreement. 2. CONTRACTOR'S breach of any of its representations, warranties or covenants contained in this Agreement. CONTRACTOR shall be entitled to payment only for work completed in accordance with the terms of this Agreement through the date of the termination notice, as reasonably determined by CITY, provided that such payment shall not exceed the amounts set forth in this Agreement for the tasks described on Exhibit C" which have been fully, competently and timely rendered by CONTRACTOR. Notwithstanding the foregoing, if CITY terminates this Agreement due to CONTRACTOR'S default in the performance of this Agreement or material breach by CONTRACTOR of any of its provisions, then in addition to any other rights and remedies CITY may have, CONTRACTOR shall reimburse CITY, within ten (10) days after demand, for any and all costs and expenses incurred by CITY in order to complete the tasks constituting the scope of work as described in this Agreement, to the extent such costs and expenses exceed the amounts CITY would have been obligated to pay CONTRACTOR for the performance of that task pursuant to this Agreement. C. Termination for Failure to Make Agreed -Upon Payments Should CITY fail to pay CONTRACTOR all or any part of the compensation set forth in Article 4 of this Agreement on the date due, then if and only if such nonpayment constitutes a default under this Agreement, CONTRACTOR, at the CONTRACTOR'S option, may terminate this Agreement if such default is not remedied by CITY within thirty (30) days after demand for such payment is given by CONTRACTOR to CITY. D. Transition after Termination Upon termination, CONTRACTOR shall immediately stop work, unless cessation could potentially cause any damage or harm to person or property, in which case CONTRACTOR shall cease such work as soon as it is safe to do so. CONTRACTOR shall incur no further expenses in connection with this Agreement. CONTRACTOR shall promptly deliver to CITY all work done toward completion of the services required hereunder, and shall act in such a manner as to facilitate any the assumption of CONTRACTOR's duties by any new CONTRACTOR hired by the CITY to complete such services. 4835 - 2267- 0361v1 -5- LAC104706083 ARTICLE 8. GENERAL PROVISIONS A. Amendment & Modification No amendments, modifications, alterations or changes to the terms of this Agreement shall be effective unless and until made in a writing signed by both parties hereto. B. Americans with Disabilities Act of 1990 Throughout the term of this Agreement, the CONTRACTOR shall comply fully with all applicable provisions of the Americans with Disabilities Act of 1990 ( "the Act ") in its current form and as it may be amended from time to time. CONTRACTOR shall also require such compliance of all subcontractors performing work under this Agreement, subject to the prohibition against assignment and subcontracting contained in Article 5 above. The CONTRACTOR shall defend with counsel acceptable to CITY, indemnify and hold harmless the CITY OF GILROY, its officers, employees, agents and representatives from and against all suits, claims, demands, damages, costs, causes of action, losses, liabilities, expenses and fees, including without limitation reasonable attorneys' fees, that may arise out of any violations of the Act by the CONTRACTOR, its subcontractors, or the officers, employees, agents or representatives of either. C. Attorneys' Fees If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys' fees, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which that party may be entitled. D. Captions The captions and headings of the various sections, paragraphs and subparagraphs of the Agreement are for convenience only and shall not be considered nor referred to for resolving questions of interpretation. E. Compliance with Laws The CONTRACTOR shall keep itself informed of all State and National laws and all municipal ordinances and regulations of the CITY which in any manner affect those engaged or employed in the work, or the materials used in the work, or which in any way affect the conduct of the work, and of all such orders and decrees of bodies or tribunals having any jurisdiction or authority over the same. Without limiting the foregoing, CONTRACTOR agrees to observe the provisions of the Municipal Code of the CITY OF GILROY, obligating every contractor or subcontractor under a contract or subcontract to the CITY OF GILROY for public works or for goods or services to refrain from discriminatory employment or subcontracting practices on the basis of the race, color, sex, religious creed, national origin, ancestry of any employee, applicant for employment, or any potential subcontractor. 4835 - 2267 -0361 v1 LAC104706083 -6- F. Conflict of Interest CONTRACTOR certifies that to the best of its knowledge, no CITY employee or office of any public agency interested in this Agreement has any pecuniary interest in the business of CONTRACTOR and that no person associated with CONTRACTOR has any interest that would constitute a conflict of interest in any manner or degree as to the execution or performance of this Agreement. G. Entire Agreement This Agreement supersedes any and all prior agreements, whether oral or written, between the parties hereto with respect to the rendering of services by CONTRACTOR for CITY and contains all the covenants and agreements between the parties with respect to the rendering of such services in any manner whatsoever. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. No other agreements or conversation with any officer, agent or employee of CITY prior to execution of this Agreement shall affect or modify any of the terms or obligations contained in any documents comprising this Agreement. Such other agreements or conversations shall be considered as unofficial information and in no way binding upon CITY. H. Governing Law and Venue This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to the conflict of laws provisions of any jurisdiction. The exclusive jurisdiction and venue with respect to any and all disputes arising hereunder shall be in state and federal courts located in Santa Clara County, California. I. Notices Any notice to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid with return receipt requested. Mailed notices shall be addressed to the parties at the addresses appearing in Exhibit "A ", Section V.H. but each party may change the address by written notice in accordance with this paragraph. Notices delivered personally will be deemed delivered as of actual receipt; mailed notices will be deemed delivered as of three (3) days after mailing. J. Partial Invalidity If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way. K. Time of the Essence All dates and times referred to in this Agreement are of the essence. 4835 - 2267 -03610 LACk04706083 -7- L. Waiver CONTRACTOR agrees that waiver by CITY of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement. Executed at Gilroy, California, on the date and year first above written. CONTRACTOR: James R. Free, MAI, SRA, CCIM By: Name: 60 Mt. Vernon Dr. Title: San Jose, CA 95125 Social Security or Taxpayer Identification Number Approved as to Form City Attorney 4835 - 2267- 0361v1 LAC104706083 -8- CITY: CITY OF GILROY By: Name: Gabriel A. Gonzalez Title: City Administrator L. Waiver CONTRACTOR agrees that waiver by CITY of any one or more of the conditions of performance under this Agreement shall not be construed as waiver(s) of any other condition of performance under this Agreement. Executed at Gilroy, California, on the date and year first above written. CONTRACTOR: James R. Free, MAI, SRA, CCIM By:�.- r.s-- ^--- -- Name: 17190 Mt. Vernon D Title: San Jose, CA 95I25 Social Security or Taxpayer Identification Number Approved as to Form —tvil P--�C—ityAttorney 4835.2267,2610 _ L4C%G4166083 CITY: CITY OF GII,ROY By: _ Name: Title: Gabriel A. Gonzalez City Administrator ATTEST: City Clerk EXHIBIT "A" SPECIFIC PROVISIONS I. PROJECT MANAGER CONTRACTOR shall provide the services indicated on the attached Exhibit "B ", Scope of Services ( "Services "). (All exhibits referenced are incorporated herein by reference.) To accomplish that end, CONTRACTOR agrees to assign James R. Free, who will act in the capacity of Project Manager, and who will personally direct such Services. Except as may be specified elsewhere in this Agreement, CONTRACTOR shall furnish all technical and professional services including labor, material, equipment, transportation, supervision and expertise to perform all operations necessary and required to complete the Services in accordance with the terms of this Agreement. II. NOTICE TO PROCEED /COMPLETION OF SERVICE A. NOTICE TO PROCEED CONTRACTOR shall commence the Services upon delivery to CONTRACTOR of a written "Notice to Proceed ", which Notice to Proceed shall be in the form of a written communication from designated City contact person(s). Notice to Proceed may be in the form of e -mail, fax or letter authorizing commencement of the Services. For purposes of this Agreement, David Stubchaer shall be the designated City contact person(s). Notice to Proceed shall be deemed to have been delivered upon actual receipt by CONTRACTOR or if otherwise delivered as provided in the Section V.H. ( "Notices ") of this Exhibit "A ". B. COMPLETION OF SERVICES When CITY determines that CONTRACTOR has completed all of the Services in accordance with the terms of this Agreement, CITY shall give CONTRACTOR written Notice of Final Acceptance, and CONTRACTOR shall not incur any further costs hereunder. CONTRACTOR may request this determination of completion when, in its opinion, it has completed all of the Services as required by the terms of this Agreement and, if so requested, CITY shall make this determination within two (2) weeks of such request, or if CITY determines that CONTRACTOR has not completed all of such Services as required by this Agreement, CITY shall so inform CONTRACTOR within this two (2) week period. III. PROGRESS SCHEDULE The schedule for performance and completion of the Services will be as set forth in the attached Exhibit "C ". IV. PAYMENT OF FEES AND DIRECT EXPENSES Payments shall be made to CONTRACTOR as provided for in Article 4 of this Agreement. 4835- 2267- 0361v1 LACk04706083 Direct expenses are charges and fees not included in Exhibit "B". CITY shall be obligated to pay only for those direct expenses which have been previously approved in writing by CITY. CONTRACTOR shall obtain written approval from CITY prior to incurring or billing of direct expenses. Copies of pertinent financial records, including invoices, will be included with the submission of billing(s) for all direct expenses. V. OTHER PROVISIONS A. . STANDARD OF WORKMANSHIP CONTRACTOR represents and warrants that it has the qualifications, skills and licenses necessary to perform the Services, and its duties and obligations, expressed and implied, contained herein, and CITY expressly relies upon CONTRACTOR'S representations and warranties regarding its skills, qualifications and licenses. CONTRACTOR shall perform such Services and duties in conformance to and consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Any plans, designs, specifications, estimates, calculations, reports and other documents furnished under this Agreement shall be of a quality acceptable to CITY. The minimum criteria for acceptance shall be a product of neat appearance, well - organized, technically and grammatically correct, checked and having the maker and checker identified. The minimum standard of appearance, organization and content of the drawings shall be that used by CITY for similar purposes. B. RESPONSIBILITY OF CONTRACTOR CONTRACTOR shall be responsible for the professional quality, technical accuracy, and the coordination of the Services furnished by it under this Agreement. CONTRACTOR shall not be responsible for the accuracy of any project or technical information provided by the CITY. The CITY'S review, acceptance or payment for any of the Services shall not be construed to operate as a waiver of any rights under this Agreement or of any cause of action arising out of the performance of this Agreement, and CONTRACTOR shall be and remain liable to CITY in accordance with applicable law for all damages to CITY caused by CONTRACTOR'S negligent performance of any of the services furnished under this Agreement. C. RIGHT OF CITY TO INSPECT RECORDS OF CONTRACTOR CITY, through its authorized employees, representatives or agents, shall have the right, at any and all reasonable times, to audit the books and records (including, but not limited to, invoices, vouchers, canceled checks, time cards, etc.) of CONTRACTOR for the purpose of verifying any and all charges made by CONTRACTOR in connection with this Agreement. CONTRACTOR shall maintain for a minimum period of three (3) years (from the date of final payment to CONTRACTOR), or for any longer period required by law, sufficient books and records in accordance with standard California accounting practices to establish the correctness of all charges submitted to CITY by CONTRACTOR, all of which shall be made available to CITY at the CITY's offices within five (5) business days after CITY's request. 4835 - 2267 -0361A LAC104706083 -2- D. CONFIDENTIALITY OF MATERIAL All ideas, memoranda, specifications, plans, manufacturing procedures, data (including, but not limited to, computer data and source code), drawings, descriptions, documents, discussions or other information developed or received by or for CONTRACTOR and all other written and oral information developed or received by or for CONTRACTOR and all other written and oral information submitted to CONTRACTOR in connection with the performance of this Agreement shall be held confidential by CONTRACTOR and shall not, without the prior written consent of CITY, be used for any purposes other than the performance of the Services, nor be disclosed to an entity not connected with the performance of the such Services. Nothing furnished to CONTRACTOR which is otherwise known to CONTRACTOR or is or becomes generally known to the related industry (other than that which becomes generally known as the result of CONTRACTOR'S disclosure thereof) shall be deemed confidential. CONTRACTOR shall not use CITY'S name or insignia, or distribute publicity pertaining to the services rendered under this Agreement in any magazine, trade paper, newspaper or other medium without the express written consent of CITY. E. NO PLEDGING OF CITY'S CREDIT. Under no circumstances shall CONTRACTOR have the authority or power to pledge the credit of CITY or incur any obligation in the name of CITY. F. OWNERSHIP OF MATERIAL. All material including, but not limited to, computer information, data and source code, sketches, tracings, drawings, plans, diagrams, quantities, estimates, specifications, proposals, tests, maps, calculations, photographs, reports and other material developed, collected, prepared (or caused to be prepared) under this Agreement shall be the property of CITY, but CONTRACTOR may retain and use copies thereof subject to Section V.D of this Exhibit "A ". CITY shall not be limited in any way in its use of said material at any time for any work, whether or not associated with the City project for which the Services are performed. However, CONTRACTOR shall not be responsible for, and City shall indemnify CONTRACTOR from, damages resulting from the use of said material for work other than PROJECT, including, but not limited to, the release of this material to third parties for work other than on PROJECT. G. NO THIRD PARTY BENEFICIARY. This Agreement shall not be construed or deemed to be an agreement for the benefit of any third party or parties, and no third party or parties shall have any claim or right of action hereunder for any cause whatsoever. 4835 - 2267 -0361 v1 LAM04706083 -3- H. NOTICES. Notices are to be sent as follows: CITY: Rick Smelser, P.E. City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 CONTRACTOR: James R. Free, MAI, SRA, CCIM 1760 Mt. Vernon Dr. San Jose, CA 95125 L FEDERAL FUNDING REQUIREMENTS. ❑ If the box to the left of this sentence is checked, this Agreement involves federal funding and the requirements of this Section V.I. apply. ® If the box to the left of this sentence is checked, this Agreement does not involve federal funding and the requirements of this Section V.I. do not apply. DBE Program CONTRACTOR shall comply with the requirements of Title 49, Part 26, Code of Federal Regulations (49 CFR 26) and the City- adopted Disadvantaged Business Enterprise programs. 2. Cost Principles Federal Acquisition Regulations in Title 48, CFR 31, shall be used to determine the allowable cost for individual items. 3. Covenant against Contingent Fees The CONTRACTOR warrants that he /she has not employed or retained any company or person, other than a bona fide employee working for the CONTRACTOR, to solicit or secure this Agreement, and that he /she has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift or any other consideration, contingent upon or resulting from the award or formation of this Agreement. For breach or violation of this warranty, the Local Agency shall have the right to annul this Agreement without liability or, at its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift or contingent fee. 4835 - 2267- 0361v1 -4- LAM4706083 EXHIBIT "B" SCOPE OF SERVICES Appraisal services for fair market value of land and improvements for the properties located at: 251 Old Gilroy Street, Gilroy, CA 7491 RailRoad Street, Gilroy, CA 7360 Dowdy Street, Gilroy, CA for a price not to exceed $10,000 4835 - 2267 -03610 LAC104706083 Appraisal 4835 - 2267- 0361v1 LAC104706083 shall be completed EXHIBIT "C" MILESTONE SCHEDULE within 30 days of execution date of this agreement. EXHIBIT "D" PAYMENT SCHEDULE Invoices shall be due and payable monthly. 4835 - 2267 -0361 v1 LAQ04706083 JAMES R. FREE, AU, SRA June 9, 2016 Ms. LeeAnn McPhillips, MPA, SPHR, IPMA -SCP Human Resources Director /Risk Manager City of Gilroy Human Resources and Risk Management Department 7351 Rosanna Street Gilroy, CA 95020 To Whom it may Concern, I James R. Free assert that I have no employee's nor does the Fictitious Business Name that I operate under, James R. Free, R.E. Services have any, other than myself. As a result, Workmen's Comp. is not required under my Insurance Certificate. Thanks very much and please call if you have any further question in this regard. l James R. Free, Principal James R. Free, R.E. Services 1760 Mt. Vernon Dr., San Jose, Ca. 95125 408 - 370 -2200 1760 Mt. Vernon Dr. - San Jose, CA 95125 - 408 - 370 -2200 - Fax 408 -265 -0843 - Email: jamesf733 @yahoo.com CERTIFICATE OF LIABILITY INSURANCE DATE(MM /DD /YYYY) 166� 1 05/26/2016 PRODUCER THIS CERTIFICATION IS ISSUED AS A MATTER OF INFORMATION HEIDI LANHAM - STATE FARM INSURANCE ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE 2542 S. BASCOM AVENUE, SUITE 155 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR A ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. 408 - 371 -9700 INSURED FREE, JAMES 1760 MOUNT VERNON DR SAN JOSE CA 95125 -5552 COVERAGES INSURERS AFFORDING COVERAGE NAIC # INSURER A: State Farm General Insurance Company 25151 25151 INSURER B: State Farm Mutual Automobile Insurance Company 25178 25178 INSURER C: INSURER D: INSURER E: THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR (INSR ADD'L TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE (MMIDD/YYYY) POLICY EXPIRATION DATE (MM /DD(YYYY) LIMITS A X GENERAL LIABILITY 97- BT- V533 -3G 03/11/2016 04115/2017 EACH OCCURRENCE $ 1,000,000 Xx COMMERCIAL GENERAL LIABILITY PREMISES Ea occurrence $ CLAIMS MADE X OCCUR MED EXP (Any one person) $ 5,000 PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ 2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMP /OP AGG $ 2,000,000 POLICY PRO LOC JECT $ B X AUTOMOBILE LIABILITY ANY AUTO 360 4111- A28 -05J 01128/2016 07128/2016 COMBINED SINGLE LIMIT (Ea accident) $ BODILY INJURY (Per person) $ 100,000 ALL OWNED AUTOS SCHEDULED AUTOS BODILY INJURY (Per accident) $ 300,000 HIRED AUTOS NON -OWNED AUTOS PROPERTY DAMAGE (Per accident) $ 25,000 GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $ ANY AUTO OTHER THAN EA ACC $ $ AUTO ONLY: AGG EXCESS / UMBRELLA LIABILITY EACH OCCURRENCE $ OCCUR 17 CLAIMS MADE AGGREGATE $ $ DEDUCTIBLE $ RETENTION $ WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVEF7 WC STATU- OTH- TORY LIMITS ER E.L. EACH ACCIDENT $ OFFICER/MEMBER EXCLUDED? E.L. DISEASE - EA EMPLOYE $ ((Mandatory in NH) E.L. DISEASE - POLICY LIMIT $ ff yes, describe under OTHER DESCRIPTION OF OPERATIONS / LOCATIONS I VEHICLES / EXCLUSIONS ADDED BY ENDORSEMENT! SPECIAL PROVISIONS CITY OF GILROY, ITS OFFICERS AND EMPLOYEES AS ADDITIONAL INSURED 7351 ROSANNA ST GILROY CA 95020 GLK I IFIGA I t HULUEK GANGLLLA I JUN CITY OF GILROY, ITS OFFICERS AND EMPLOYEES 7351 ROSANNA ST GILROY CA 95020 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE HEIDI LANHAM ACORD 25 (2009/01) © 1988 -2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD 1001486 132849.3 04 -06 -2009 IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). DISCLAIMER This Certificate of Insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon. ACORD 25 (2009/01) CERTIFICATE OF LIABILITY INSURANCE DATE (MM /DD/YY �.� 05/26/2016 6 PRODUCER THIS CERTIFICATION IS ISSUED AS A MATTER OF INFORMATION HEIDI LANHAM - STATE FARM INSURANCE ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE 2542 S. BASCOM AVENUE, SUITE 155 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. ACAMPBELL, CA 95008 -5541 408 - 371 -9700 INSURED FREE, JAMES 1760 MOUNT VERNON DR SAN JOSE CA 95125 -5552 COVERAGES INSURERS AFFORDING COVERAGE I NAIC # INSURER A: State Farm General Insurance Company 25151 25151 INSURER B: INSURER C: INSURER D: INSURER E: THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR ADD'L INSR TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE MM/DD/YYYY) POLICY EXPIRATION DATE (MMIDD/YYYY) LIMITS A X GENERAL LIABILITY 97- BT- V533 -3 G 03/11/2016 04/15/2017 EACH OCCURRENCE $ 1,000,000 x COMMERCIAL GENERAL LIABILITY DAMAGET PREMISES Ea occurrence $ CLAIMS MADE � OCCUR MED EXP (Any one person) $ 5,000 PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ 2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMP /OP AGG $ 2,000,000 1 JO 17 POLICY RO PCT LOC $ AUTOMOBILE LIABILITY ANY AUTO COMBINED SINGLE LIMIT (Ea accident) $ BODILY INJURY (Per person) $ ALL OWNED AUTOS SCHEDULED AUTOS BODILY INJURY (Per accident) $ HIRED AUTOS NON -OWNED AUTOS PROPERTY DAMAGE (Per accident) $ GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $ OTHER THAN EA ACC $ ANY AUTO $ AUTO ONLY: AGG EXCESS I UMBRELLA LIABILITY EACH OCCURRENCE $ 1 OCCUR F-1 CLAIMS MADE AGGREGATE $ $ DEDUCTIBLE $ RETENTION $ WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVEF7 WC STATU- 0TH TORY LIMITS ER E.L. EACH ACCIDENT $ OFFICER /MEMBER EXCLUDED? E.L. DISEASE - EA EMPLOYE $ (Mandatory in NH) if yes, describe under SPECIAL PROVISIONS hPinw E.L. DISEASE -POLICY LIMIT 1 $ OTHER DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES I EXCLUSIONS ADDED BY ENDORSEMENT I SPECIAL PROVISIONS CITY OF GILROY, ITS OFFICERS AND EMPLOYEES AS ADDITIONAL INSURED 7351 ROSANNA ST GILROY CA 95020 CERTIFICATE HOLDER GANGELLATION CITY OF GILROY, ITS OFFICERS AND EMPLOYEES 7351 ROSANNA ST GILROY CA 95020 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE HEIDI LANHAM ACORD 25 (2009/01) ©1988 -2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD 1001486 132849.3 04 -06 -2009 IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). DISCLAIMER This Certificate of Insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon. ACORD 25 (2009/01) HHDU Policy No.: 97 BT- V533 -3 SECTION II ADDITIONAL INSURED ENDORSEMENT Policy No.: 97 BT- V533 -3 Named Insured: JAMES FREE Additional Insured (include address): CITY OF GILROY, ITS OFFICERS AND EMPLOYEES AS ADDITIONAL INSURED 7351 ROSANNA ST GILROY CA 95020 FE -6609 WHO IS AN INSURED, under SECTION II DESIGNATION OF INSURED, is amended to include as an insured the Additional Insured shown above, but only to the extent that liability is imposed on that Additional Insured solely because of your work performed for that Additional Insured shown above. Any insurance provided to the Additional Insured shall only apply with respect to a claim made or a suit brought for damages for which you are provided coverage. The Primary Insurance coverage below applies only when there is an "X" in the box. ❑ Primary Insurance. The insurance provided to the Additional Insured shown above shall be primary insurance. Any insurance carried by the Additional Insured shall be noncontributory with respect to coverage provided to you. All other policy provisions apply. FE -6609 Printed in U.S.A. A R CERTIFICATE OF LIABILITY INSURANCE DATE(MM /DD/YYYY) llh.� 1 05/26/2016 PRODUCER THIS CERTIFICATION IS ISSUED AS A MATTER OF INFORMATION HEIDI LANHAM - STATE FARM INSURANCE ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE 2542 S. BASCOM AVENUE, SUITE 155 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR A CAMPBELL, CA 95008 -5541 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. 408- 371 -9700 INSURERS AFFORDING COVERAGE NAIC # INSURED INSURER A State Farm General Insurance Company 25151 25151 FREE, JAMES INSURER B: 1760 MOUNT VERNON DR INSURER C: SAN JOSE CA 95125 -5552 INSURER D: INSURER E: COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR ADD'Q INSR TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE (MMIDD/YYYY) POLICY EXPIRATION DATE (MM/DD/YYYY) LIMITS A X GENERAL LIABILITY 97- BT- V533 -3 G 03/11/2016 04/15/2017 EACH OC CURRENCE $ 1,000,000 PREMISES Ea occurrence $ X COMMERCIAL GENERAL LIABILITY CLAIMS MADE X OCCUR MED EXP (Any one person) $ 5,000 PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ 2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS - COMPIOP AGG $ 2,000,000 POLICY PECOT LOC $ AUTOMOBILE LIABILITY ANY AUTO COMBINED SINGLE LIMIT (Ea accident) $ BODILY INJURY (Per person) $ ALL OWNED AUTOS SCHEDULED AUTOS BODILY INJURY (Per accident) $ HIRED AUTOS NON -0WNED AUTOS PROPERTY DAMAGE (Per accident) $ GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $ OTHER THAN EAACC $ ANY AUTO $ AUTO ONLY: AGG EXCESS I UMBRELLA LIABILITY EACH OCCURRENCE $ 1 OCCUR F-I CLAIMS MADE AGGREGATE $ $ DEDUCTIBLE $ RETENTION $ WORKERS COMPENSATION AND EMPLOYERS' LIABILITY ANY PROPRIETOR/PARTNER/EXECUTIVE � WC STATU- OTH- TORY LIMITS ER E.L. EACH ACCIDENT $ OFFICER/MEMBER EXCLUDED? E.L. DISEASE - EA EMPLOYE $ 4Mandatory in NH) f yes, describe under E.L. DISEASE - POLICY LIMIT 1 $ OTHER DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES I EXCLUSIONS ADDED BY ENDORSEMENT I SPECIAL PROVISIONS CITY OF GILROY, ITS OFFICERS AND EMPLOYEES AS ADDITIONAL INSURED 7351 ROSANNA ST GILROY CA 95020 l,tK I Irif A l t MULUtK UANULLLA I IUN CITY OF GILROY, ITS OFFICERS AND EMPLOYEES 7351 ROSANNA ST GILROY CA 95020 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR REPRESENTATIVES. AUTHORIZED REPRESENTATIVE HEIDI LANHAM ACORD 25 (2009/01) ©1988 -2009 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD 1001486 132849.3 04-06 -2009 IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). DISCLAIMER This Certificate of Insurance does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon. ACORD 25 (2009/01) HHDU Policy No.: 97 BT- V533 -3 SECTION II ADDITIONAL INSURED ENDORSEMENT Policy No.: 97 BT- V533 -3 Named Insured: JAMES FREE Additional Insured (include address): CITY OF GILROY, ITS OFFICERS AND EMPLOYEES AS ADDITIONAL INSURED 7351 ROSANNA ST GILROY CA 95020 FE -6609 WHO IS AN INSURED, under SECTION II DESIGNATION OF INSURED, is amended to include as an insured the Additional Insured shown above, but only to the extent that liability is imposed on that Additional Insured solely because of your work performed for that Additional Insured shown above. Any insurance provided to the Additional Insured shall only apply with respect to a claim made or a suit brought for damages for which you are provided coverage. The Primary Insurance coverage below applies only when there is an "X" in the box. ❑ Primary Insurance. The insurance provided to the Additional Insured shown above shall be primary insurance. Any insurance carried by the Additional Insured shall be noncontributory with respect to coverage provided to you. All other policy provisions apply. FE -6609 Printed in U.S.A. co 0 0 Staft&M STATE FARM® o 900 Old River Road Bakersfield CA 93311 -9501 32A AT1 02 000115 0093 CITY OF GILROY 7351 ROSANNA ST GILROY CA 95020 -6196 DATE OF NOTICE: JUN 17 2016 CODE: NOTE: PLEASE NOTIFY STATE FARM AT THE ADDRESS LISTED AT THE TOP, LEFT CORNER OF THIS PAGE REGARDING ANY CHANGE OF ADDRESS INFORMATION. ADDITIONAL INSUREDS NOTICE OF COVERAGE State Farm Mutual Automobile Insurance Company 2704 -FBOGA NAMED INSURED: POLICY NO: 3604111- A28 -05K COVERAGE: FREE, JAMES AND YR /MAKE /MODEL: 2001 MERCEDES 4DR BI AND PD LIABILITY MARAVILLA, LUCILLE VIN /CAMPER: WDBJF65J61 8238270 $100,000/$300,000 /$25,000 $1000 DED. COMP. 1760 MOUNT VERNON DR AGENT NAME: HEIDI LANHAM $1000 DED. COLL. SAN JOSE CA 95125 -5552 AGENT PHONE: (408)371 -9700 ENDORSEMENT NO: 6028BU POLICY EFFECTIVE JUN 09 2016 UNTIL TERMINATED POLICY MESSAGES: This policy shown above supersedes policy# 3604111-05J. The policy includes a loss payable clause protecting the additional insured's interest in the described car to the extent of the insurance provided and subject to all policy provisions. The additional insured will be given 20 days notice if the policy is terminated. Until such notice is provided, it shall be presumed that the required renewal premiums have been paid. The additional insured must notify us within 10 days any change of interest or ownership coming to their attention. Failure to do so will render this policy null and void. FRT JAMES R. FREE, MAI, SRA June 9, 2016 Ms. LeeAnn McPhillips, MPA, SPHR, IPMA -SCP Human Resources Director /Risk Manager City of Gilroy Human Resources and Risk Management Department 7351 Rosanna Street Gilroy, CA 95020 To Whom it may Concern, I James R. Free assert that I have no employee's nor does the Fictitious Business Name that I operate under, James R. Free, R.E. Services have any, other than myself. As a result, Workmen's Comp. is not required under my Insurance Certificate. Thanks very much and please call if you have any further question in this regard. James R. Free, Principal James R. Free, R.E. Services 1760 Mt. Vernon Dr., San Jose, Ca. 95125 408 - 370 -2200 1760 Mt. Vernon Dr. • San Jose, CA 95125 • 408 - 370 -2200 • Fax 408 - 265 -0843 • Email: jamesf733 @yahoo.com FJAMES R. FREE, MAI, SRA May 17, 2016 Mr. Rick Smelser Director of Public Works /City Engineer City of Gilroy 351 Rosanna Street Gilroy, CA 95020 -6197 Re: 251 Old Gilroy Street, Gilroy, Ca. 95020 (Update) Assessor's Parcel Number: 841 -08 -033 Dear Mr. Smelser In response to your authorization, I have conducted the required investigation, gathered the necessary data, and made certain analyses that have enabled me to form an opinion of the market value of the fee simple estate of the above referenced property. This valuation assumes a full take of the subject property. The property is currently improved with an existing corrugated metal building originally constructed in 1958 and containing approximately 1664 square feet according to the Santa Clara County Assessor's records. The purpose of this appraisal is to estimate the market value of the fee simple estate of the subject property. Some of the terms used in this report are in accordance with the definitions of those terms found in the body of this document. The report that follows sets forth the identification of the property, the assumptions and limiting conditions: pertinent facts about the subject property, comparable data and the results of the investigation, analyses and reasoning leading to the final conclusion(s) of value. Based on my investigation, judgment, experience, and inspection of the existing property, it is my opinion that as of May 11, 2016, the market value of the above property is as follows: Tso Hundred Fifty Thousand Dollars ($250,000) Following in this report are the descriptive and factual data upon which the above value estimates are predicated. Thank you for this assignment and please call if there are further questions inthis regard. Respectfully submitted, James R. Free, MAI, SRA rior 21760 Mt. Vernon Dr. - San Jose, CA 95125 - 408 - 370 -2200 - Fax 408 - 265 -0843 - Email: jamesf733Cyahoo.com JAMES R. FREE, IMAI, SRA 251 Old Gilroy Street, Gilroy, Ca. 95020 Assessor's Parcel Number: 841 -08 -033 Effective Date of the Appraisal: May 17, 2016 APPRAISED FOR: Mr. Rick Smelser Director of Public Works /City Engineer City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 -6197 APPRAISED BY: James R. Free, MAI, SRA 1760 Mt. Vernon Dr. San Jose, Ca. 95125 Phone: (408) 370 -2200 Fax: (408) 265 -0843 O.R.E.A. #: AGO01883 11760 Mt. Vernon Dr. • San Jose, CA 95125 • 408 - 370 -2200 - Fax 408 - 265 -0843 Email: jamesf733 @yahoo.com TABLE OF CONTENTS Part I. INTRODUCTION Summary of Salient Data Certification of Appraiser Definitions of Value & Terms Standard Limiting Conditions Specific Limiting Conditions of this Appraisal Ownership History Scope of the Appraisal. Purpose and Function Part II. ANALYSIS & VALUATION Highest & Best Use Analysis Valuation Methodology Sales Comparison Approach Property Valuation Reconciliation of Value Part III. ADDENDA Subject Property Photos Comparable Sales Subject Property Profile Qualifications ofAppraiser •: Page No. 20-22 23 24 -27 28-29 30 -31 5 6 7 -8 9 -14 15 16 17-18 Introduction ,. , 1. SUMMARY OF SALIENT FACTS, DATA AND CONCLUSIONS Location: Thomas Bros. Map Code: 978 -A3 The Property: APN: 841 -08 -033 Total Parcel Area: 12,384 s.f. The Improvements: Zoning: Improvements: Highest & Best Use: Valuation Date: pg. 5 1,664 s.f. Corrugated Metal Bldg. (R -2) Residential Typical on -site Improvements Corrugated metal building light industrial building Current Use as a Light Industrial /Commercial use May 17, 2016 Indicated Value of the Whole, (Fee Simple Interest Current Indicted Value of the subject property: $250,000 Severance Damages: $none Indicated Special Benefits: $none Indicated Value of the Subject Property (as is) $250,000 CERTIFICATION I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this report, and 1 have no personal interest or bias with respect to the parties involved. My 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. This appraisal assignment was not based on a requested minimum valuation, a specific valuation. or the approval of a loan. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. I have made a personal inspection of the property that is the subject of this report. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute, and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. I certify that 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, James R. Free, have completed the requirements underthe continuing education program of the Appraisal Institute. I have the knowledge and expertise to complete this appraisal assignment and have appraised this property type before. Please see appraiser's experience data included in the addenda of this report for additional information. DEFINITIONS OF TERMS The following terms are defined to assist the reader in understanding terminology. A. Market Value* The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing; nor obliged to sell, and a buyer being ready, willing and able to buy but under no particular necessity for so doing. each dealing with the other with the full knowledge of all the uses and purposes for which the property is reasonably abatable and available. The fair market value of the property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable. *(California Code of Civil Procedure: pp1263.320) 8. Special Purpose Property A property devoted to, or available for utilization for a special purpose, such as a clubhouse, a church property, a public museum, a public school, and so on. It also includes other buildings having value, such as hospitals, theaters. breweries, etc. , which cannot be converted to other uses without a large capital investment. C. Fee Simple Estate An absolute fee; a fee without limitations to any particular class of heirs or restrictions, but subject to the limitations of eminent domain, escheat , police power, and taxation. An inheritable estate. D. Leased Fee Estate An ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others; usually consists of the right to receive rent and the right to repossession at the termination of the lease. E. Reproduction Cost "The estimate to construct, at current prices, an exact duplicate, or replica of the building being appraised, using the same materials, construction standards design, layout. and quality of workmanship and embodying all the subject's deficiencies; super adequacies, and obsolescence of the subject building " (Real Estate Terminology Handbook, 2004). m: E. Replacement Cost The cost of construction at current prices of a building with utility equivalent to the building being appraised but built with modern materials and according to current standards, design and layout. The use of the replacement cost concept presumably eliminates all functional obsolescence, and the only depreciation to be measured is physical deterioration and economic obsolescence. (Real Estate Terminology Handbook, 2004) F. Leasehold Estate The right to use and occupy real estate for a stated term and under certain conditions conveyed by a lease. When market rent exceeds contract rent, the leasehold acquires value. G. Contract Rent The actual rental income specified in a lease. H. Market Rent The rental income that a property would most probably command in the open market; indicated by current rents paid and asked for comparable space, as of the date of the appraisal IL Property Rights Appraised: Fee Simple Estate •: STANDARD LIMITING CONDITIONS In accepting this appraisal assignment and in completing this appraisal report, it has been assumed by the appraisers that the appraisal process is necessarily guided by, and its results influenced by, the terms of the assignment and the assumptions upon which the appraisal is based. The following, together with the lesser assumptions embodied in the report, constitutes the framework of my analysis and conclusions. 1. Limit of Liability: The liability of James R. Free and subcontractors if any, is limited to the client only and to the fee actually received by the appraiser. Further, there is no accountability, obligation, or liability to any third party. If this report is placed in the hands of anyone other than client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraiser is in no way to be held responsible for any costs incurred to discover or correct any deficiencies of any type present in the property: physically, financially, and /or legally. In the case of limited partnerships or syndication offerings, or stock offerings in real estate. client agrees that if a legal action is initiated by any lender, partner, part-owner in any form of ownership, tenant, or any other party, the client will hold the appraiser completely harmless in any such action from any and all awards on settlements of any type, regardless of outcome. 2. Copies. Publication, Distribution. Use of Report: Possession of this report; or any copy thereof does not carry with it the right of publication, nor may it be used for other than its intended use the physical report(s) remain the property of the appraiser for the use of the client, the fee being for the analytical services only. The bylaws and regulations of the Appraisal Institute require each member and candidate to control the use and distribution of each appraisal report signed by such member or candidate. Except as hereinafter provided, the client may distribute copies of this appraisal report in its entirety to such third parties as he or she may select. Selected portions of this appraisal report shall not be given to third parties without the prior written consent of the signatories of this appraisal report. Neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations; news sales or other media for public communication without the prior written consent of the appraiser. 3. Confidentiality: This appraisal is to be used only in its entirety and no part is to be used without the whole report. All conclusions and opinions concerning the analysis as set forth in the report were prepared by the appraiser whose signature appears in this appraisal report; unless indicated as Review Appraiser. No change of any item in the report shall be made by anyone other than the appraiser. The appraiser and his firm shall have no responsibility if any such unauthorized change is made. The appraiser may notdivulge the material (evaluation) contents ofthe report, analytical findings or conclusions. or give a copy of the report to anyone other than the client or his designee as specified in writing except as may be required by the Appraisal Institute, as they may request in confidence, or by a court of lawor bodywith the power of subpoena. The written approval of the appraiser is required if any portion of this report is quoted or summarized in the registration statement or in a prospectus of any security offering , including private offerings. This is a regulation of the Securities Act of 1933, and the Securities Exchange Act of 1934. a: . 4. Information Used: No responsibility is assumed for accuracy of information furnished by work of others, the client; his designee, or public records. We are not liable for such information or the work of possible subcontractors. Be advised that any person associated with the appraiser and possibly signing the report, are independent contractors. The comparable data relied upon in this report has been confirmed with one or more parties familiar with the transaction or from affidavit or other source thought reasonable. All sources of confirmation considered appropriate for inclusion to the best of the appraiser's factual judgment and knowledge have been considered. An impractical and uneconomic expenditure of time would be required in attempting to furnish unimpeachable verification in all instances, particularly as to engineering and market - related information. It is suggested that the client consider independent verification as a prerequisite to any transaction involving sale; lease, or other significant commitment of funds for the subject property. Information provided by informed local sources, such as governmental agencies, financial institutions, Realtors, buyers, sellers and others was considered in light of the reliability of the source from which it was obtained and verified by a secondary means whenever possible. No responsibility is assumed for possible misinformation provided the appraiser. The assumptions and rationale set forth herein are based on published data, data contained in office files, and other available information obtained from sources is considered reliable and accurate. 3. Testimony, Consultation. Comoletion of Contract for Appraisal Services The contract for appraisal. consultation or analytical service isfulfilled and the total fee is payable upon completion of the report. The appraiser, orthose assisting in preparation of the report, will not be asked or required to give testimony in court or hearing because of having made the appraisal, in full or in part, nor engage in post appraisal consultation with the client or third parties except under separate and special arrangement and at additional fee. Iftestimony or deposition is required because of any subpoena,the client shall be responsible for any additional time. fees and charges, regardless of issuing party. 4. Exhibits: All sketches, maps, and photographs in this report are included to assist the reader in visualizing the property and are not necessarily to scale. Site plans are not surveys unless shown from separate surveyor. 5. Leaal, Enaineerina, Financial. Structural. or Mechanical Components: Soil Quality: No responsibility is assumed for matters legal in character or nature, nor of any architectural structural, mechanical. or engineering nature. No opinion is rendered as to the title, which is presumed to be good and merchantable. The property is appraised as if free and clear unless otherwise stated in the report. The legal description is assumed to be correct as used in this report or as furnished by the client.. his designee, or as derived by the appraiser. Please note that no advice is given regarding mechanical equipment or structural integrity or pg. 10 adequacy, soils and potential for settlement on drainage, matters concerning liens, title status, marketability and similar matters. The client should seek assistance from qualified architectural, engineering or legal professionals regarding such matters and should inspect the property before any disbursement of funds. Further, it is likely that the lender or owner may wish to require mechanical or structural inspections by a qualified and licensed contractor; civil or structural engineer, architect, or other expert. The appraiser has inspected as far as possible by observation,the land and the improvements however, itwas not possible to personally observe conditions beneath the soil, hidden structural or other components. I have not critically inspected mechanical components within the improvements and no representations are made herein as to these matters unless specifically stated and considered in the report. The value estimate assumes there are no such conditions that would cause a loss of value. The land or the soil of the area being appraised appears firm, however, subsidence in the area is unknown. The Appraiser does not warrant against this condition or the occurrence of problems arising from soil conditions. The client is advised to secure a professional investigation ofsuch matters should a definitive analysis and/or conclusion be desired. The appraisal is based on there being no hidden, unapparent, or apparent conditions of the property site, subsoil, or structures or toxic materials which would render it more or less valuable. No responsibility is assumed for any such condition or for any expertise or engineering to discover them. All mechanical components are assumed to be in operable condition and status standard for properties of the subject type. Conditions of heating, cooling, ventilating, electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. No judgment may be made by the appraiser as to adequacy of insulation, type of insulation, or energy efficiency of the improvements or equipment which is assumed standard for the subject property's age and t y p e. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos polychlorinated biphenyls, petroleum leakage, or agricultural chemicals or other environmental conditions may or may not be present on the property. However. it has been brought to this appraiser's attention that soils contamination on the subject property does exist The presence of substances such as asbestos. urea formaldehyde foam insulation or other hazardous substances or environmental conditions that may affect the value of the property have been addressed in this report. A Limiting Condition of this report concerning soils contamination on the subject has been addressed in this appraisal as a limiting condition (See page 15) As noted, the value estimate herein is predicated on the assumption that there is (no) such condition existing on the subiect property. That is, this appraisal assumes that the subject is free and clear of any such contamination. This appraiser assumes no responsibility for any such conditions or expertise. or enaineerina knowledge required to discover such conditions The appraiser has not been supplied with a termite inspection survey or occupancy permit. No responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representations or warranties are made concerning the above mentioned items. The appraiser assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. pg. 11 8. Legality of Use: The appraisal is based on the premise that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in the report, and that all applicable zoning building, use regulations and restrictions of all types have been complied with unless otherwise stated in the report. It is further assumed that all required licenses or consent, permits or other legislative or administrative approvals from all applicable local, state, federal and /or private authorities have been or can be obtained or renewed for any use considered in the value estimate 9. Component Values: The allocation of the total valuation in this report between land and improvements, if included in this report applies only to the use of the property which is assumed in this report. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. S. Auxiliary and Related Studies: No environmental or impact studies, special market study or analysis, special highest and best use study nor any feasibility study has been requested or made unless otherwise specified in an agreement for services, or inthe report. 10. Dollar Values, Purchasina Power: The market value estimated and the costs used are as of the day of the estimate of value. All dollar amounts are based on the purchasing power and value of the dollar as of the date of value estimate. 12. Factors Influencina Value / Alteration of the Value Estimate: The estimated market value, which is defined in this report is subject to change with market changes over time. Value is highly related to exposure, time, and promotional effort. terms, motivation, and market conditions. The value estimate considers the productivity and relative attractiveness of the property physically and economically in the marketplace as of the dateof value. In cases of appraisals involving the capitalization of income benefits, the estimate of market value or investment value or value in use. is a reflection of such benefits and the appraiser's interpretation of income, yields and other factors derived from general and specific client and market information. Such estimates are as of the date of the estimate of value and are subject to change as market conditions change. The "Estimate of Value" in this appraisal report is not based in whole or in part upon the race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. The appraisal report and value estimate herein, are subject to change if the physical or legal entity or financing are different than that envisioned in this report. 13. Inclusions: In some property types, business and real estate interests and values are combined. Except as specifically indicated and typically considered as a part of the real estate, furnishings, equipment, other personal property, or business operations have been disregarded with only the real estate being considered in the value estimate. pg. 12 Proposed developments, remodeling, renovation or rehabilitation projects are appraised based on completion in a timely manner and in accordance with the plans and specifications submitted by the client. The accompanying appraisal report has been prepared on the basis of information and assumptions set forth in the report. Although we believe the information and assumptions used constitute reasonable basis for the projections contained in the appraisal report, the achievement of any financial projection is dependent upon the occurrence of future events which cannot be assured. Therefore, the actual results achieved may vary from the projections. 14. Management of the Property: It is assumed that the subject property is under prudent and competent management that is neither inefficient nor super- efficient. 15. Fee: The fee for this appraisal or study is for the service rendered and not for the time spent on the physical property or the report itself. 16. Insulation and Toxic Materials: Unless otherwise stated in this report; the appraiser signing this report has no knowledge concerning the presence or absence of toxic materials and /or ureaformaldehyde foam insulation in existing improvements. If such is present, the value of the property may be adversely affected, and a re- appraisal at additional cost will be necessary to estimate the effects of such. 17. Changes, Modifications: The appraiser reserves the right to alter statements, analysis, conclusion or any value estimate in the appraisal if there becomes known to him facts pertinent to the appraisal process which were unknown when the report was completed. The terms of this assignment do not include any obligation to update this report or revise any data, analysis, projections or conclusions herein as a result of changes, events or transactions occurring subsequent to the date of this report. 18. Earthquake Effects: The effective date of valuation is subsequent to the major earthquake which struck the San Francisco Bay Area on October 17, 1989. It is not known if the subject property has been inspected or respected since that date. Unless otherwise noted in this report, no extraordinary adverse conditions or structural damage considered to be a result of the earthquake was observed by inspection or is known to the appraisers. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. This applies to possible physical damage as well as investor perception of earthquake risks in the San Francisco Bay Area which may influence overall property market ability and future value trends. It is, however, stipulated that, to the best of our knowledge and beliefs, all statements contained in this report are true and correct and no significant information has been knowingly withheld. pg. 13 19. Proposed Improvements. Conditional Value: Improvements proposed if any, on -site or off -site, as well as any repairs required are considered for purposes of this appraisal to be completed in a good and workmanlike manner and according to the information submitted. In cases of proposed construction, the appraisal is subject to change upon inspection of the property after construction is completed. This estimate of market value is as of the date shown or as proposed and as if completed and operating at levels shown. Proposed developments, remodeling, renovation or rehabilitation projects are appraised based on completion in a timely manner and in accordance with the plans and specifications submitted by the client. The accompanying appraisal report has been prepared on the basis of information and assumptions set forth in the report. Although we believe the information and assumptions used constitute reasonable basis for the projections contained in the appraisal report, the achievement of any financial projection is dependent upon the occurrence of future events which cannot be assured. Therefore, the actual results achieved may vary from the projections. 20. Americans with Disabilities Act (ADA): The Americans with Disabilities Act (ADA) became effective January 26; 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed 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 Act. If so; this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non - compliance with the requirements of ADA in estimating the value of the property. M Specific Limiting Conditions In addition to the aforementioned assumptions and limiting conditions, the appraiser has recognized the following conditions and limitations specific to this appraisal assignment. P4 In preparation of this appraisal report, the appraiser has not been provided a preliminary title report on the subject property for review. It is assumed that the subject site is encumbered by typical right of way and utility type easements and does not appear to be adversely impacted by any special assessments or encroachments. 8) There are known environmental hazards or conditions associated with this site. However, the appraiser is not qualified to determine specific conditions of the subject site or any previous land uses, subsurface conditions or latent problems due to adjacent or nearby land uses. A qualified environmental engineering assessment firm (Ceres Associates) has been retained by the City of Gilroy to address these issues regarding the soils contamination on the subject property and the estimated remediation costs of said contamination. This appraisal estimate assumes the subject property is free and clear of any soils contamination. q This appraiser has inspected the interior of the subject building per request. Interior and exterior photos have been taken. The square footage of the subject building was measured and is as stated in a previous appraisal report on this property. The overall condition of the improvements is considered average given the age, quality and design of the subject building. D) The subject property is currently zoned (R -2) indicating residential use. As the subject is currently being used and has been used for the past several years for light industrial /commercial use, i.e. a plumbing business, this appraisal will value the subject accordingly. pg. 15 OWNERSHIP HISTORY The subject property has been under the current ownership since May 15, 1997 according to Santa Clara county records. This deed reflects a selling price of the subject property of $100,000 and is recorded in Document #22569581 MARKETING TIME Based on the interviews we conducted with brokers and agents who work in this market area, our inspection and evaluation of the subject site and improvements, along with our investigation of sales activity in the subject's market area, we estimate the marketing time for the subject to be on the order of six to twelve months . We forecast that this is a reasonable time of exposure under current market conditions to sellthe subject atthe appraised value. The sales utilized in the Sales Comparison Approach section of this report had marketing times ranging for a minimum time period of nine months. Discussions with brokers active in the subject neighborhood were of the opinion that a marketing time of six to twelve months is appropriate for the subject property given its size, and location and current market conditions. It should be noted that the marketing period is a function of several factors including the property's physical and locational characteristics, the demand for that property type, the length and type of exposure to the market, the market strategy utilized and available financing for that property type. One of the most important factors is the asking price of the property. Please note that a property does not have one value, but rather a range of probable values as indicated by the Cost, Income Capitalization and Sales Comparison Approaches to value. Therefore, the estimated value(s) in this report should be used as a basis for pricing and negotiating but not as the absolute value. pg. 16 SCOPE OF APPRAISAL The scope of this appraisal is intended to provide the client with a summary of the investigative process in which data are collected, confirmed and reported. Essentially, it describes what the assignment entails, what resources were utilized and any special conditions placed on the appraisal. The purpose of this appraisal is to estimate the market value of the fee simple estate of the subject parcel as described above along with the fee value of the proposed take. The appraiser has been engaged by Mr. Rick Smelser, Director of Economic Development for the City of Gilroy. During the course of the appraisal assignment, the appraiser has conducted interviews with several individuals to include the representative- owners of the subject property, the City of Gilroy Planning Department, the County of Santa Clara County Assessor's Office and others. The appraiser has extensively relied upon several resources for this assignment, namely Metro Scan, the Santa Clara County Multiple Listing Service, Costar. Loopnet, the appraiser's in-office files, and the CCIM Institute Site to do Business. The appraiser has conducted a personal inspection of the subject property and subsequently viewed the comparable properties selected for comparison purposes. Consideration has also been given to the surrounding land uses of the subject and real estate market area trends in the general Gilroy market area that were felt to have an affect the subject. PURPOSE AND FUNCTION OF APPRAISAL The purpose of this appraisal is to estimate the as -is market value of the fee simple estate of the subject property as of May 11, 2016. The purpose of this report is to present the data and reasoning used to form the opinions of value for the subject property described herein. The function of this appraisal is for use by the clientfor evaluation and acquisition purposes. It should be noted that a qualified engineering firm (Ceres Associates) has been retained by the city of Gilroy to estimate the costs associated with the soils remediation on the subject property. It was requested that t consider these soils remediation cost estimates and how they relate to the indicated current market value of the subiect property. As the subiect property is assumed to be free and clear of any soils contamination in this report the current market value of the subiect presented in this report is stated accordingly. Therefore. the these soils remediation costs as they relate to the current market value of this report will be addressed separately. SUBJECT PROPERTY HISTORY The subject property is currently leased. The property is located in the central easterly side of the Downtown Historic District of the City of Gilroy on Old Gilroy Street. The subject has been under the current ownership since April 2, 1992 as recorded under document number (1129112) in the Santa Clara County records. LEGAL DESCRIPTION Please refer to the addenda of this report for a copy of the Deed on the subject parcel for a complete legal description. pg. 17 ZONING The subject property isgoverned and zoned (R -2) indicating residential use. FEMA FLOOD DATA The subject site located in an area classified as a "Zone D" which is designated as an area of undetermined but possible flood hazards. ME ANALYSIS & VALUATION Pb. 19 HIGHEST AND BEST USE This analysis will apply to the subject property both in the "before and the after" acquisition condition. It is felt that the value indications of both the before and after the take value conditions of the subject will remain the same in this analysis with no severance damages and /or special benefits incurred as a result of the take. It is also felt that the proposed take will alter the highest and best use of the subject parcel in its "as is" condition. The highest and best use analysis of the subject property involves a study of the present use of the property; surrounding property uses, the zoning designation and potential uses of the subject. Highest and best use may be defined as follows: a) The most reasonable and probable use that supports the highest present value of vacant land or improved property, as defined and as of the date of this appraisal b) The most reasonable, probable and legal use of land as though vacant, found to be physically possible, appropriately supported, financially feasible and that results in the highest present land value c) The most profitable use Implied inthese definitions is that the determination of highest and best usetakes intoaccount the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. It is recognized that in cases where a site has existing improvements located on the site, the highest and best use may be different than the current existing use. This existing use will continue however, unless and until the land alone in its highest and best use exceeds the total value of the land and current improvements thereon. (The Dictionary of Real Estate Appraisal) Generally, the highest and best use for a property is estimated after considering four factors. These factors are in sequence, (1) ) that use which is physically possible, (2) that use which is legally permissible.. (3) that use which is financially feasible, and (4) that use which is maximally productive. The appraiser will consider these items in sequence in the following discussion. Generally, with an existing property the highest and best use analysis is completed under two scenarios; (a) The first scenario considers the property as though vacant assuming that the site is available to be developed into its highest and best use and (b) The second scenario considers the property as improved. Under this premise, the appraiser considers the current improvements and utilization of the site and if any renovations, repairs, or conversions would enhance the overall value. If the value of the land is such that it exceeds the combined value of the improvements and the land together, it may be that converting to a different use of the property would be necessary thus reflecting a higher and better use of the property as a whole. Hiahest and Best Use As Though Vacant Physically Possible Use: I: 1 The first constraint imposed on the possible use of the property is dictated by the physical aspects of the site, such as size, shape, soil conditions and topography. The size and location within a given area are the most important determinants of value. Normally, the larger the site the greater its potential to achieve economies of scale, flexibility and development. The size and shape of the parcel have considerable influence on its ultimate development and use. One key determinant in developing a site is the permitted size of the project. The total number of square feet or land area allowed for a development tends to rise in proportion to the size of the lot. The area that can be developed is influenced by zoning, setback requirements and other legal restrictions. Setback requirements will generally render less available area of the parcel for development as the shape of the parcel becomes more irregular. The subject site contains a total of approximately 12,384 sf. according to the Santa Clara County Assessor. The current improvements are physically possible on this site. Legally Permissible Use: In considering the legal possibilities of the subject, the subject site is located in the city limits of the City of Gilroy. As stated above; the subject is zoned for commercial use. These uses generally include land provided several types of retail use in accordance with the overall plan of the Downtown Historic District. An abbreviated copy of this zoning code may be found in the addenda of this report. Legal restrictions, as they apply to the subject are private restrictions (deed restrictions) and public restrictions (zoning). I have not been made aware of any private restrictions that affect the title and assume no responsibility for such items of record not disclosed by my normal investigation. Therefore, the physical inspection revealed only common utility restrictions which are not detrimental and are not felt to be of any major consequence to any proposed or existing development of the site. Given the zoning of the subject property, the current use is considered a legal use. Financially Feasible Use: Those uses which are financially feasible, address that use which will provide the highest net return to the land. Therefore. the use considered a financially feasible use for the property provides for an acceptable net return to the land. As noted above: the current zoning of the subject is governed by the Gilroy zoning code. The uses in the immediate area of the subject property reflect different uses. The subject is bounded on the north and east side by the City of Gilroy's Forrest park and on the west by an alley -way running north and south between Old Gilroy street and Sixth street on the north. The area located east of the subject is improved primarily with single family homes. Given the overall Gilroy general plan and the current status of the property, the current use of the subject is felt to reflect a financially feasible use of the property. Hiahest and Best Use as though Vacant (Maximally Productive Use.) The maximum productivity of the site is analyzed with several market factors taken into account. Given the affirmation of the physically possible. legally permitted and financially feasible uses, the maximum productivity of a property essentially provides for that use which will return the highest net value to the property as a whole. This also considers the overall development costs of the subject in its "as is" condition. The current use is felt to provide a reasonable overall rate of return and value over the long term and therefore is felt to reflect that use which will provide the maximum productivity to the property as a whole. pg. 21 It is not felt that the proposed take will alter the highest & best use of the subject property, as this report considers a whole take of the subject. Therefore the highest and best use of the subject property in the before and after acquisition will change assuming the property is acquired by the City of Gilroy and become part of the existing City of Gilroy Forrest Park. The subject property being appraised consists of land and an older industrial building constructed in 1958 according to county records and will be valued accordingly. In this analysis it is felt that there will be no severance damages or special benefits to the property after the take. MIJ VALUATION METHODOLOGY APPROACHES TO VALUE In the valuation of the subject property, three traditional approaches have been considered. These approaches are the Sale Comparison, and Income Capitalization Approach and the Cost approach. In appraisal practice, an approach to value is either included or omitted based on its applicability to the property being valued and the quality of information available. The final estimate of a value considers the result of and the applicability of each approach. The following is provided as a brief introduction of each approach which summarizes each approach as so defined in The Dictionary of Real Estate Appraisal. To arrive at an estimate of market value for the subject,the appraiser has primarily considered the Sales Comparison Approach to value in this analysis. DIRECT SALES COMPARISON APPROACH A set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently in the area of the subject and applying appropriate units of comparison. This also includes making adjustments to the sales price of the comparable based on the necessary elements of comparison.The sales comparison approach may be used to value improved properties, vacant land or land being considered as though vacant. It is the most common and preferred method of land valuation when adequate comparable sales are available. This approach has been used in this report. The price per square foot of building area will be the prime unit of comparison in this appraisal. INCOME CAPITALIZATION APPROACH The appraisal text defines the income approach as a set of procedures through which an appraiser derives a value indication for an income - producing property by converting the anticipated future benefits (cash annual flows and reversion) into an indication of the property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at a market - derived capitalization rate or at a capitalization rate which reflects a specified income pattern, return on investment or a change in the value of the investment. Alternatively, the annual cash flows for a projected holding period and the reversion or sale of the property at the end of that projected holding period, can be discounted at a specified yield rate to arrive at a present value indication. The subject is being valued primarily as land and the current depreciated value of the improvements thereon. Given the current market in the area of the subject property, the income approach will not be used. Cost Aooroach The Cost Approach is a measure of the reproduction cost or the replacement cost of the current improvements on a property. The reproduction cost new or the replacement cost new and the calculated depreciated value of the improvements is added to the existing land value to arrive at a total indicated value under this approach. Due to the age of the subject building, the inherent depreciation in the building is difficult to estimate accurately. Therefore,the cost approach has not been used in this analysis. pg. 23 SALES COMPARISON APPROACH pg. 24 Sales Comparison Approach The Sales Comparison Approach to value is the methodology of choice when there are adequate sales which reasonably reflect the subject as vacant land or as improved. The appraiser has identified five comparable sales which are felt to provide a reasonable comparison of values that the subject could command under current market conditions. These sales are briefly discussed below and further identified as follows: Comparable Sale One the August 2014 sale of an average quality retail building located at 7320 Monterey Street in the downtown retail district of the City of Gilroy. This building on this property contains approximately 6,600 sf. of net rentable area and is located on a lot containing approximately 11,580 sf. This property was purchased for $345,000 reflecting a selling price of $52.27/sf. building area and reflects a floor area ratio of 57 %. The building is an average quality building originally constructed in 1900 and in average condition at the time of sale. The property was sold "as is" according to the purchaser. The only parking provided was on Monterey Street. Parking is provided on -site and on the street frontage. Overall the location of this property is considered to be average and is superior to the subject as a free standing building with good access and exposure. This was an all -cash transaction. Economic indicators are estimated based on market income and expense parameters at the time of sale. Comparable Sale Two is the March 2013 sale of an office building located at 7191 Monterey Street in Gilroy. This is a single tenant corrugated metal commercial building constructed in 1987. The building was previously occupied by a motorcycle dealer with 10 parking spaces provided on site according to the confirming source, Costar. The seller had added an approximate 3,000 sf. unpermitted structure to the rear of this property which is not included in the reported size. This property was sold with seller financing and it was reported that this factor did not affect the selling price of the property. Overall, this building is similar to the subject in overall quality, design with a superior location and sold for $475,000 reflecting $87.50/sf. with a floor area ratio of about 30 %. Comparable Sale Three is the April 2014 sales a freestanding retail property located at 381 15i Street in Gilroy. The building was approximately 4700 sf. and was built circa 1947. This is an average quality building in an average location with average exposure. The land area is 7,350 sf. reflecting a floor area ratio of about 64 %. On -site parking is provided primarily in front of the building and on First Street. This property sold for $350,000 and was financed with seller financing which reportedly did not affect the selling price of the property. The property was of reinforced concrete construction and was in average condition. The property is overall superior to the subject property in terms of overall quality, design and location. Comparable Sale Four is the December 2014 sale of a property located at 455 E. Luchessa Street. This property is located about one mile south of the subject property. This is an average quality corrugated metal building containing approximately 5,500 s.f. on an approximate 12,000 s.f. lot reflecting building to land ratio of about 46 %. The property is zoned (M -2) reflecting heavy industrial use. The property was purchased for $435,000 reflecting a selling price of $79.09 per s.f. of building area_ The proforma income of this property was based on a monthly rent of $.60 /s.f. /mo. at the time of sale. This property is overall superior to the subject in terms of the quality and design of the improvements in a superior location. Access and exposure of this property is also superior to the subject. The property was purchased by an owner /user and the listing broker confirmed that there was about 500 s.f. of office build -out in the building. pg. 25 pe --.A, qQ ST LOLASE 151-07 1 S —1�1 9Ct keYi VeMryAe K-V�' C, 3 Ma* Dry = 4 Mao Dr =s v 8 Homy Ct 7 Rl8 E) Vwwm Cr v leol Lono way tww,,.k 'Nay A"" W—mvidec', U ft=-1 a W8Y A. J� 1 4. ay' , W Xif Shallow T p 101 c c t t CL A;, \ r 't i N Aw, 357 PterreA, GPre��= on I Aij �Q 19 p a car 4 IORTAL v a Owu Dr <� EE San LE D�"� AC t,, P3rk 010 "I st S s6mm a 7 vwolli�� M�m, a: 1, 1, ANE (Aqi MF �X.H ��PaLk Fl �w,*kk y E-8 & F-S RM#owLr( COM -s', I I I r P,2 I musmitwo Atmat cAwq 2 3, Sr 3 4 r.2t irmm"Ve sn 3 4L t, It - -�j 11 PachecePass Pin" 101 G&muv % NIP ASC %LC;% Gilrov Crossing J, Hill P.. HS G-8 & G-9 Al i 2 EL Sr* 3 4 g; s P, COMP 4 i = E rNp M 12 , 13 14M15 i7 - 31 9N, �vlo N q 's, Y, I w4cl Z� The Valuation & Adjustment Process In utilizing the Sales Comparison Approach, it is generally accepted to first adjust for transactional differences if any. These include differences relative to preliminary or sales - related items and include property rights appraised, financing, conditions of the sale, costs incurred by the buyer immediately upon acquisition, and market conditions at the time of sale. After adjustment for the above differences, the physical elements of each sale are compared and adjusted. These adjustments are briefly summarized as follows. Property Rights Appraised In regard to the property rights appraised. the fee simple estate is being valued in this appraisal. All comparable sales used in this analysis were purchased by owner /users which is reflective of the current market for properties similar to the subject at this point in time. All comparable sales entailed the transfer of the fee simple interest in the property, therefore no adjustment is necessary. Financing This consideration relates to the financing of the sale. Often seller- provided financing, low down payments favorable interest rates, etc.. can influence the purchase price which is paid for a property. All of the comparable sales used in this analysis were cash or cash equivalent transactions. As a result, no adjustment is necessary for financing in this analysis. Conditions of Sale The third criteria of the transactional adjustments relate to conditions of sale. This pertains primarily to the premise under which the property sold, i.e. was this was an "arm's length" transaction or was there an unusual condition involved in the transaction. These factors could include considerations such as transfers to relatives, divorce, foreclosure, bankruptcy, exchanges: the absence of brokers commissions,etc. Given the current market inthe area of the subject,all of the comparables selected for comparison purposes all were considered market transactions with no unusual conditions which impacted the selling price. Therefore, no adjustment isnecessaryfor this item. Costs Incurred by The Buyer Immediately Upon Acquisition The fourth criterion relates to costs incurred by the buyer immediately upon acquisition. This consideration must be determined by direct interview with the buyer, seller, or broker in the transaction. Oftentimes, a buyer will immediately incur costs regarding improvements to the property after it has been acquired. However, this often relates to the preferences of the buyer as opposed to the immediate need for physical repairs regarding deferred maintenance or other major capital expenses. These are items which were directly discussed or considered in the negotiation process. Based upon the published data on the comparable sales and the appraisers knowledge of these transactions, none of these purchases were impacted by costs that were immediately incurred by the buyer upon acquisition. Market Conditions The last element of comparison relates to market conditions at the time of sale. This relates to the time the sale occurred and recognizes that market values change over time. These changes could be favorable or adverse and may impact the value of the comparable property therefore, requiring an adjustment. A primary consideration has to do with appreciation (or deprecation) over time since the comparable property sold. pg. 26 It should be further noted that all of the comparable sales were sold to owner /users or were purchased as an investment which reflected the current market for this type of property at the time of sale. It is also noted that commercial and industrial property in almost every category in the area of the subject has declined in value, although some signs of stabilization in value in this sector of the market is starting to be seen. Adjustments for depreciation or appreciation that has occurred since the date of sale of the comparable will be considered in this analysis. Zoning & Current Use The comparable sales are light industrial properties and /or property with some commercial - retail application. All of the comparables are located in light industrial areas with a similar use or overall locational characteristics. No adjustment has been made for zoning or the current use of the comparables compared to the subject. pg. 27 PROPERTY VALUATION Please refer to the following Land Sale Adjustment Grid which takes into consideration market factors that affect value and briefly discussed below. The Adiustment Grid and Adjustment Process In this analysis, Transactional adjustments are made for property rights conveyed. buyer and seller motivation, financing conditions and market conditions at time of sale. Locational adjustments are made for exposure and visibility and overall Locational appeal. Physical adjustments consider the size of the comparable property in relation to the subject, configuration, terrain and other site influences. Transactional Adiustments are made sequentially in the order presumed and are based on the relative importance of each as they influence the selling price. All sales were purchased on a fee simple basis and on an all -cash basis or on cash equivalent terms. Locational Adiustments are separated into elements that reflect the property's identity to potential tenants or buyers (exposure and visibility) and overall desirability of the property and neighborhood location. Zoning and use are also considered inthis portion of the analysis. Physical Adiustments consider elements that reflect the comparable property's size, soil condition and degree of on -site improvements. Generally, the larger the size of the comparable sale, the lower the selling price per unit of comparison that will be reflected primarily as a result of the economy of scale. If the comparable sale is smaller in size compared to the subject, a downward adjustment would normally be made to the comparable. Conversely if the comparable is larger than the subject, an upward adjustment would be made depending on market indications in the area. In this analysis, the price per square foot of building area is consideredthe primary market determinant. The above comparable improved sales reflect adjusted values ranging from $87.54/sf. of building area for comparable sale #1 to a high of $160.79/sf. for comparable sale #4. Please refer to the following Improved Sale Adjustment Grid which takes into consideration the above discussion. In the final analysis, the value of the subject is felt to be on the order of $150 /sf. and will be calculated as follows: *Subject Building Area: 1664 s.f. @150 1s.f. _ $249,600 Indicated Value Say: $250,000(Rnd) Please refer to the following Improved Sales Adjustment Grid which takes into consideration the above discussion. . S IMPROVED SALE ADJUSTMENT GRID I 251 OLD GILROY STREET Subject Property 251 Old Gilroy St., 1 7320 Monterey Street Gilroy, CA 2 7191 Monterey Street Gilroy, CA 3 381 First Street Gilroy, CA 4 455 E. Luchessa Ave. Gilroy, CA Close of Escrow N/A August, 2014 March, 2013 March, 2013 December, 2014 Sale Price N/A 5345,000 5437 „500 5350,000 5435,000 Building Size 1664 SF 6,000 SF 4,000 SF 4,700 SF 5 „500 SF Adjusted S /SF N/A 557.50 5109.38 574.47 $153.13 Time & Cash Equivalent Adjustments Property Rights Fee Simple Fee Simple -0- Fee Simple -0- Fee Simple Fee Simple -0- Stabilization Stabilization -0- Stabilization -0- Stabilization -0- Stabilization -0- Financing Assumees Conventional Conventional -ll- Conventional -0- Conventional -0- #N /A -0- Conditions of Sale N/A Conventional -0- Conventional -0- Conventional -0- Conventional -0- Cash Equivalent Price N/A 557.50 5109.38 $74.47 -0- 5153.13 Time Adjustment -0- Aug -14 +5.0% Mar -13 +15.0% Mar -13 +15.0% Dec -14 +5.0% Time Adjusted Value N/A $60.38 5125.78 585.64 5160.79 Additional Adjustments Location Average Sit. Superior -15% Sit. Superior -15'% SIMILAR -5% Superior -20% Age / Condition 1954 / Average 1941) / Average +10% 1987 / Average -0- 1947 / Average -0- 1979 / Average -0- Quality / Appeal Average Average -0- Average -0- Sit. Superior -10% Superior -20% Size 1664 SF 6,600 SF +20% 4,000 SF +20% 3,339 SF +20% 5,500 SF +20% Building; to Land Ratio 13% 91% +30% 28% +10% 71% +30% 46% +20% Total Adjustment +45% +15% +35% -0- Indicated Price /SF N/A $87.54 5144.65 5115.61 5160.79 RECONCILIATION OF VALUE pg. 30 G� •0 0 FTA •i The subject property has been valued in this report under its current use as a quasi -light industrial / commercial property. As a result, commercial and light industrial and commercial comparable sales in the Gilroy area were considered and utilized in the valuation process. Based on the above analysis, the current market value of the subject property is as follows: Indicated Value of the Whole, (Fee Simple Interest) Current Indicted Value of the subject property: $250,000 Severance Damages: Indicated Special Benefits: $none $none Indicated Value of the Subject Property (as is) $250,000 pg. 31 DA D pg. 31 SUBJECT PROPERTY PHOTOS VIEWS OF SUBJECT BUILDING REAR VIEW OF SUBJECT BUILDING VIEW OF SUBJECT PROPERTY INTERIOR VIEW OF SUBJECT BUILDING INTERIOR VIEW OF SUBJECT BUILDING INTERIOR VIEW OF SUBJECT VIEW OF FORREST PARK - SUBJECT ON LEFT COMPARABLE IMPROVED SALES -AM 7�1 4 now w. IL COMPARABLE IMPROVED SALE NUMBER 3 COMPARABLE IMPROVED SALE NUMBER 4 SUBJECT PROPERTY PROFILE * 1fOLD REPUBLIC TITLE Denise Simon San Jose Disclaimer This REiSource report is provided "as is" without warranty of any kind, either express or implied, including without limitations any warrantees of merchantability or fitness for a particular purpose. There is no representation of warranty that this information is complete or free from error, and the provider does not assume, and expressly disclaims, any liability to any person or entity for loss or damage caused by errors or omissions in this REiSource report without a title insurance policy. The information contained in the REiSource report is delivered from your Title Company, who reminds you that you have the right as a consumer to compare fees and serviced levels for Title, Escrow, and all other services associated with property ownership, and to select providers accordingly. Your home is the largest investment you will make in your lifetime and you should demand the very best. : OLD RF.PUBI, C MIS UIL IF'roperty Detailt Subject Property: 251 Old Gilroy St Gilroy CA 95020 Owner Information Own& Nam-je : Fellom Robert L (te) / Fellom Carol (te) fin,g dd lvlai A- I ' rt-:?sr, : Po Box 2326, Gilroy CA 95021-2326 Vesting Codes: Husband/wife / /Trustee Location Information County: Santa Clara, Co Census Tract / Blo,.k : 5126.03 / 3 Legal Lot 5 Legal Block 1 Owner Transfer Information Recording /Sale Dole 04/16/2014 / 04/08/2014 ,",o- - .1 1; - me ?it t 22569581 Last Market Sale Information Market Area: I APN: 841-08-033 School District: Gilroy munic[Township : Gilroy City Deed Type : Grant Deed R.--cording/Sale- Dcte: 05/15/1997 Document # : 13707167 Sale Plice. $100,000 -Deed Type : Grant Deed Sale Type Full Seller Warne Pavese Ernest L Jr & Barbara J Truste Property Characteristics Are,. 1,440 C' St:) ri e"s I Style: Rectangular Design ! Livir� Arco 1,440 Frame Quality 7 Average i'eoi B61- ;'Eif 1958 / 1958 Al, C.'- -irl None Condition : Average Property Information Sfr Pezil"Crrin-, r"h-vts: 1 t_C)4 Width./Depth : 86 X 144 Equipment Yard Lot Ac rr-%,- . 0.28 Stct= U�e: (A050a) C1 Lc! jze , 12,384 P'Cpar�d On OLD REPUBLIC TFTLE 2V? o Ccw ,Lcq'.c. Property Detail. Tax Information 'clod Vaiu t< : $135,501 Improve; %. 15% SCVWD SAFE Tax ! $132.74/0.00 Role Land Value . $115,183 Tax Year: 2015 CI EAN WATER $70.68/0.00 Tax / Rate : Improvemer= $20,318 Property Tax : $1,872.10 LIBRARY JPA CFD $14.82/0.00 Value : 2013 -1 Tax / Rate: Total Taxable $135,501 Too Rate Area: 02000 SCCO VECTOR $8.36/0.00 Value: CONTRO Tax Rate Assesse,l Ye�-ir : 2015 Wote, T -)x : SANTA CLARA MOSQUITO ASMT $226.60/0.00 CO IMPOR tt2 Tax / Rate jP, *.-p ;,.' :; roc Prt:,Bt dO.n. 05!3 ;21iG 'OLD REPUBLIC TITLE 1016 CoreLc;ic. J�i3 - iris PP Nivt:,; a E�u F--: ui LS - - - - - - - Ls3blo.4 L —0 / C-2 A; YT 7:— 13 30 N V X3"V9 a E�u F--: ui LS - - - - - - - Ls3blo.4 L —0 / C-2 Assessor Map A :A d- M-1 OLb RFPUBLIC MLE onLs;t�s�ry —4 A; YT Assessor Map A :A d- M-1 OLb RFPUBLIC MLE onLs;t�s�ry —4 13 30 N V X3"V9 it N ccl aI a VOW —I I v ad VI .03 Li Assessor Map A :A d- M-1 OLb RFPUBLIC MLE onLs;t�s�ry —4 ` .,. Transaction History Sales History Rec. Date . 04/16/2014 05/15/1997 04/18 /1990 Sale Date 04/08/2014 04/00/1990 Sale Price $100,000 Rec.Doc.No 22569581 13707167 L0325 -539 Doc, Type- GRANT DEED GRANT DEED QUIT CLAIM DEED Sale Price Type: FULL FULL FULL Buyer: Fellom Robert Fellom Robert Pavese Ernest & C Living Trust L & Carol L Jr & Pavese Ba Seller: Fellom Robert Pavese Ernest Pavese Ernest L & Carol L Jr & Barbara L Jr J Truste Title Company : Attorney Only Chicago Title Co Ofher Doc No: Mortgage History 1st Mortgage Details Mig. Date 05/15/1997 1,Ajg. Arnf : $75,000 Mtg. Dcc. No Doc. Type Loan Type: CONVENTIONAL 'Wlgc Rote Type: FIXED RATE LOAN Mfg. Term: Mtg. Rate: Lender: Lender Seller Borrower 1 : Fellom Robert L Borrower 2 ' Fellom Carol Borrower 3 Borrower 4 Preparee: Or, . 05113i2016 OLD REPUBLIC TITLE 2016 CoreLogic. FJf nat:ts reserved Nets. Refer to die popemy reports recorded documents QUALIFICATIONS OF APPRAISER QUALIFICATIONS OF JAMES R. FREE, MAI, SRA OFFICE 1760 Mt. Vernon Dr., San Jose, Ca. 95125 Phone: (408- 370 -2200) Fax: (408- 379 -7583) Certified General Appraiser #AG001883 E -Mail: jamesf733 @yahoo.com EXPERIENCE I have been an Independent appraiser, real estate broker and consultant since 1975. 1 have Appraised a wide variety of general and special purpose properties for purposes of loan underwriting, lease arbitration, leasehold interests, property acquisition and disposal, litigation support and eminent domain proceedings. Assignments have also included feasibility studies on residential and commercial properties, both existing and proposed. BACKGROUND Appraisal experience had generally been conducted in the Northern and Southern California regions with occasional out of state assignments. Assignments have included summary and full narrative report writing on general and special purpose residential and income producing properties of the following types: 1. Office buildings, medical office buildings, and office condominiums. 2. Shopping centers, including local, neighborhood, and regional in size. 3. Mobile home parks. 4. Freestanding retail buildings. 5. Industrial buildings, including research & development, light manufacturing and general warehouse uses. 6. Apartments, condominiums and Planned Unit Developments, both existing and proposed. 7. Single- family residential, including custom homes, existing and proposed residential subdivisions SPECIAL PURPOSE PROPERTIES INCLUDE: 1. Restaurants 2. Bowling alleys 3. Boat storage warehouses 4. Motels 5. Cold- storage warehouses 6. Overnight travel parks 7. Hospitals 8. Automobile dealerships 9. Drug & Alcohol Rehabilitation Centers 10. Mixed Use Properties 11. Single Family Residential EXPERT WITNESS QUALIFICATIONS I am qualified as an Expert Witness in the Superior Court of Santa Clara, San Mateo, Santa Cruz, and Monterey counties and the Federal District Court of Nevada. EDUCATION B.S. Degree: San Jose State University Major: Business Administration - Real Estate concentration; Minor: Mathematics Appraisal Institute Educational Courses (Partial List) Real Estate Appraisal 1 -A: Real Estate Appraisal 1 -13: Real Estate Appraisal II: Capitalization Theory & Techniques (Parts I, II, III): Real Estate Appraisal VI: Highest & Best Use Analysis & Studies Case Studies in Real Estate Valuation Standards of Professional Practice Litigation Valuation Basic Appraisal Principles Income Capitalization Application of Appraisal Theory Income Capitalization Theory Investment Analysis USPAP - 2014 Update Numerous courses and seminars sponsored by the Appraisal Institute, the Federal National Mortgage Association, the California Association of Realtors, and others. I have completed all of the current continuing education requirements of the Appraisal Institute. PROFESSIONAL Member: Member: Realtor Member: Past Director: Past Director: Past President: Past Chairman of Public Relations: Past Faculty Member: Vice President and Director: Steering Committee: Chairman of the Board Selected Citizen of the Year (2003): Appraisal Institute, MAI, SRA Designations Certified Commercial Investment Member CCIM Designation California Association of Realtors; San Jose Real Estate Board Appraisal Institute, Northern California, Chapter 11 California Market Data Cooperative Society of Real Estate Appraisers Appraisal Institute, Northern California, Chapter 11 Appraisal Institute Campbell Chamber of Commerce Historic Downtown Campbell Campbell Veterans Memorial Foundation, Inc. City of Campbell Selected Veteran of the Year (2013): California Assemblyman Paul Fong, District 28. REFERENCES: Provided upon request I JAMES R. FREE, MAI, SRA 7491 Railroad Street, Gilroy, Ca. 95020 Assessor's Parcel Number: 841 -06 -001 Effective Date of the Appraisal: May 8, 2016 APPRAISED FOR: Mr. Rick Smelser Director of Public Works /City Engineer City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 -6197 APPRAISED BY: James R. Free, MAI, SRA 1760 Mt. Vernon Dr. San Jose, Ca. 95125 Phone: (408) 370 -2200 Fax: (408) 265 -0843 O.R.E.A. #: A0001883 1760 Mt. Vernon Dr. - San Jose, CA 95125 - 408 - 370 -2200 - Fax 408 - 265 -0843 - Email: jamesf733 @yahoo.com -- - - - - -- . Page - 0 - J��IIES R. FREE, M.lII, 5RA May 10, 2016 Mr. Rick Smelser Director of Public Works /City Engineer City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 -6197 Re: 7491 Railroad Street Gilroy, Ca 95020 Assessor's Parcel Number: 841 -06 -001 Dear Mr. Smelser In response to your authorization; I have conducted the required investigation, gathered the necessary data, and made certain analyses that have enabled me to form an opinion of the market value of the fee simple estate of the above referenced property. This valuation assumes a full take of the subject property. The property is currently improved with an existing unreinforced brick masonry building originally constructed in 1900 and contains approximately 2160 square feet according to the Santa Clara County Assessor's records. The purpose of this appraisal is to estimate the market value of the fee simple estate of the subject property. Some of the terms used in this report are in accordance with the definitions of those terms found in the body of this document. The report that follows sets forth the identification of the property, the assumptions and limiting conditions. pertinent facts about the subject property. comparable data and the results of the investigation. analyses and reasoning leading to the final conclusion(s) of value. Based on my investigation, judgment, experience, and inspection of the existing property; it is my opinion that as of May 8. 2016, the market value of the above property is as follows: Two Hundred Thirty Five Thousand Dollars ($235,000) Following in this report are the descriptive and factual data upon which the above value estimates are predicated. Thank you for this assignment and please call if there are further questions inthis regard. Respectfully submitted, James R. Free, MAI SRA - 17-60 Mt. Vernon Dr. - San Jose, CA 95125 408- 370 -2200 Fax 408 - 265 -0843 - Email: jamesf733 @yahoo.com TABLE OF CONTENTS Part I. INTRODUCTION Page No. Summary of Salient Data 6 Certification of Appraiser 7 Definitions of Value & Terms 8 - 9 Limiting Conditions 10-16 Specific Conditions of this Appraisal 17 Ownership History 18 Scope of the Appraisal, Purpose and Function of Appraisal 19 Property Identification 15 Part II. ANALYSIS & VALUATION Highest & Best Use Analysis 2 i - 23 Appraisal Methodologies Utilized 20 Sales Comparison Approach 19-23 Reconciliation of Value 30 Part III. ADDENDA Subject Property Photos Photos of Comparable Sales Legal Description & Deed - Subject Property Zoning Ordinance — Subject Property Qualifications ofAppraiser �_ . Introduction ME SUMMARY OF SALIENT FACTS, DATA AND CONCLUSIONS Location: The Property: The Improvements: Zoning: Improvements: Highest & Best Use: Valuation Date: Thomas Bros. Map Code: APN: 841 -04 -001 Total Parcel Area: 6,100 sf. 2,160 s.f. Built 1900 ( +or -) C- 2(Commercial) Unreinforced Brick Masonry Vacant Land (C -2) May 8, 2016 Indicated Value of the Whole, (Fee Simple Interest) Subject Land Area as if Vacant: 6100 s.f. @ $40 /s.f. _ $244,000 Less estimated costs of demolition: 10,800 Indicated value of the subject (as is) $233,200 Indicated value say; $235 OQQ B. Severance Damages: $ None C. Indicated Special Benefits: $ None E. Indicated value of the subject property (As Is) $235,000 978 -A3 CERTIFICATION I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved. My 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. This appraisal assignment was not based on a requested minimum valuation, a specific valuation, or the approval of a loan. My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. I have made a personal inspection of the property that is the subject of this report. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute, and the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. I certify that 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; James R. Free, have completed the requirements underthe continuing education program of the Appraisal Institute. I have the knowledge and expertise to complete this appraisal assignment and have appraised this property type before. Please see appraiser's experience data included in the addenda of this report for additional information. pg. 7 DEFINITIONS OF TERMS The following terms are defined to assist the reader in understanding terminology. A. Market Value* The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell. and a buyer being ready, willing and able to buy but under no particular necessity for so doing. each dealing with the other with the full knowledge of all the uses and purposes for which the property is reasonably abatable and available. The fair market value of the property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable. `(California Code of Civil Procedure: pp1263.320) 8. Special Purpose Property A property devoted to; or available for utilization for a special purpose, such as a clubhouse, a church property, a public museum, a public school, and so on. It also includes other buildings having value, such as hospitals, theaters, breweries, etc., which cannot be converted to other uses without a large capital investment. C. Fee Simple Estate An absolute fee; a fee without limitations to any particular class of heirs or restrictions. but subject to the limitations of eminent domain. escheat , police power, and taxation. An inheritable estate. D. Leased Fee Estate An.ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others: usually consists of the right to receive rent and the right to repossession at the termination of the lease. E. Reproduction Cost "The estimate to construct, at current prices, an exact duplicate, or replica of the building being appraised, using the same materials, construction standards . design, layout. and quality of workmanship and embodying all the subject's deficiencies, super adequacies: and obsolescence of the subject building." (Real Estate Terminology Handbook, 2004). M A Replacement Cost "The cost of construction at current prices of a building with utility equivalent to the building being appraised but built with modern materials and according to current standards, design and layout. The use of the replacement cost concept presumably eliminates all functional obsolescence, and the only depreciation to be measured is physical deterioration and economic obsolescence." (Real Estate Terminology Handbook, 2004) F. Leasehold Estate The right to use and occupy real estate for a stated term and under certain conditions conveyed by a lease. When market rent exceeds contract rent, the leasehold acquires value. G. Contract Rent The actual rental income specified in a lease. H. Market Rent The rental income that a property would most probably command in the open market: indicated by current rents paid and asked for comparable space, as of the date of the appraisal. L. Property Rights Appraised: Fee Simple Interest STANDARD LIMITING CONDITIONS In accepting this appraisal assignment and in completing this appraisal report, it has been assumed by the appraisers that the appraisal process is necessarily guided by, and its results influenced by. the terms of the assignment and the assumptions upon which the appraisal is based. The following, together with the lesser assumptions embodied in the report, constitutes the framework of my analysis and conclusions. 1. Limit of Liability: The liability of James R. Free and subcontractors if any, is limited to the client only and to the fee actually received by the appraiser. Further there is no accountability, obligation, or liability to any third party. If this report is placed in the hands of anyone other than client, the client shall make such party aware of all limiting conditions and assumptions of the assignment and related discussions. The appraiser is in no way to be held responsible for any costs incurred to discover or correct any deficiencies of any type present in the property; physically, financially, and /or legally. In the case of limited partnerships or syndication offerings, or stock offerings in real estate: client agrees that if a legal action is initiated by any lender, partner, part-owner in any form of ownership, tenant. or any other party, the client will hold the appraiser completely harmless in any such action from any and all awards on settlements of any type. regardless of outcome. 2. Copies, Publication, Distribution. Use of Report: Possession of this report; or any copy thereof . does not carry with it the right of publication, nor may it be used for other than its intended use the physical report(s) remain the property of the appraiser for the use of the client; the fee being for the analytical services only. The bylaws and regulations of the Appraisal Institute require each member and candidate to control the use and distribution of each appraisal report signed by such member or candidate. Except as hereinafter provided, the client may distribute copies of this appraisal report in its entirety to such third parties as he or she may select. Selected portions of this appraisal report shall not be given to third parties without the prior written consent of the signatories of this appraisal report. Neither all nor any part of this appraisal report shall be disseminated to the general public by the use of advertising media, public relations news sales or other media for public communication without the prior written consent of the appraiser. 3. Confidentiality: This appraisal is to be used only in its entirety and no part is to be used without the whole report. All conclusions and opinions concerning the analysis as set forth in the report were prepared by the appraiser whose signature appears in this appraisal report. unless indicated as Review Appraiser. No change of any item in the report shall be made by anyone other than the appraiser The appraiser and his firm shall have no responsibility if any such unauthorized change is made. The appraiser may notdivulgethe material (evaluation) contents ofthe report, analytical findings, or conclusions, or give a copy of the report to anyone other than the client or his designee as specified in writing except as may be required by the Appraisal Institute, as they may request in confidence, or by a court of law or body with the power of subpoena. The written approval of the appraiser is required if any portion of this report is quoted or summarized in the registration statement or in a prospectus of any security offering , including private offerings. This is a regulation of the Securities Act of 1933, and the Securities Exchange Act of 1934. P& 10 4. Information Used: No responsibility is assumed for accuracy of information furnished by work of others, the client, his designee, or public records. We are not liable for such information or the work of possible subcontractors. Be advised that any person associated with the appraiser and possibly signing the report, are independent contractors. The comparable data relied upon in this report has been confirmed with one or more parties familiar with the transaction or from affidavit or other source thought reasonable. All sources of confirmation considered appropriate for inclusion to the best of the appraiser's factual judgment and knowledge have been considered. An impractical and uneconomic expenditure of time would be required in attempting to furnish unimpeachable verification in all instances, particularly as to engineering and market - related information. It is suggested that the client consider independent verification as a prerequisite to any transaction involving sale, lease, or other significant commitment of funds for the subject property. Information provided by informed local sources, such as governmental agencies, financial institutions, Realtors, buyers, sellers and others was considered in light of the reliability of the source from which it was obtained and verified by a secondary means whenever possible. No responsibility is assumed for possible misinformation provided the appraiser. The assumptions and rationale set forth herein are based on published data, data contained in office files. and other available information obtained from sources is considered reliable and accurate. 3. Testimony, Consultation. Complettion of Contract for Appraisal Services The contract for appraisal consultation or analytical service isfulfilled and the total fee is payable upon completion of the report. The appraiser, orthose assisting in preparation of the report, will not be asked or required to give testimony in court or hearing because of having made the appraisal, infull or in part, norengage inpostappraisal consultation with the client orthird parties except under separate and special arrangement and at additional fee. If testimony or deposition is required because of any subpoena,the client shall be responsible for any additional time fees and charges, regardless of issuing party. 4. Exhibits: All sketches, maps, and photographs in this report are included to assist the reader in visualizing the property and are not necessarily to scale. Site plans are not surveys unless shown from separate surveyor. 5. Legal. Engineering. Financial. Structural. or Mechanical Components: Soil Quality: No responsibility is assumed for matters legal in character or nature. nor of any architectural, structural, mechanical, or engineering nature. No opinion is rendered as to the title, which is presumed to be good and merchantable. The property is appraised as if free and clear unless otherwise stated in the report. The legal description is assumed to be correct as used in this report or as furnished by the client, his designee, or as derived by the appraiser. pg. 11 Please note that no advice is given regarding mechanical equipment or structural integrity or adequacy. soils and potential for settlement on drainage, matters concerning liens, title status and legal marketability, and similar matters. The client should seek assistance from qualified architectural, engineering or legal professionals regarding such matters should inspect the property before any disbursement of funds. Further, it is likely that the lender or owner may wish to require mechanical or structural inspections by a qualified and licensed contractor. civil or structural engineer, architect. or other expert. The appraiser has inspected as far as possible by observation,the land and the improvements however, it was not possible to personally observe conditions beneath the soil, hidden structural or other components. I have not critically inspected mechanical components within the improvements and no representations are made herein as to these matters unless specifically stated and considered in the report. The value estimate assumes there are no such conditions that would cause a loss of value. The land or the soil of the area being appraised appears firm, however, subsidence in the area is unknown. The Appraiser does not warrant against this condition or the occurrence of problems arising from soil conditions. The client is advised to secure a professional investigation of such matters should a definitive analysis and /or conclusion be desired. The appraisal is based on there being no hidden, unapparent, or apparent conditions of the property site, subsoil, or structures or toxic materials which would render it more or less valuable. No responsibility is assumed for any such condition or for any expertise or engineering to discover them. All mechanical components are assumed to be in operable condition and status standard for properties of the subject type. Conditions of heating, cooling, ventilating, electrical and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements unless otherwise stated. No judgment may be made by the appraiser as to adequacy of insulation, type of insulation, or energy efficiency of the improvements or equipment which is assumed standard for the subject property's age and t y p e. Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos polychlorinated biphenyls, petroleum leakage, or agricultural chemicals which may or may not be present on the property, or other environmental conditions, were not called to the attention of nor did the appraiser become aware of such during the appraiser's inspection. The appraiser has no knowledge of the existence of such materials on or in the property unless otherwise stated. The appraiser is not qualified to test such substances or conditions_ The presence of substances such as asbestos; urea formaldehyde foam insulation or other hazardous substances or environmental conditions that may affect the value of the property have not been considered unless so noted in this report. The value estimated herein is predicated on the assumption that there is no such condition on or in the property or such property in proximity thereto that would cause a loss in value. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. The appraiser has not been supplied with a termite inspection, survey or occupancy permit. No responsibility or representation is assumed or made for any costs associated with obtaining same or for any deficiencies discovered before or after they are obtained. No representations or warranties are made concerning the above mentioned items. The appraiser assumes no responsibility for any costs or consequences arising due to the need. or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. pg. 12 Legality of Use: The appraisal is based on the premise that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in the report, and that all applicable zoning, building, use regulations and restrictions of all types have been complied w permits, or other legislative or administrative approvals from all applicable local, state, federal and /or private authorities have been or can be obtained or renewed for any use considered in the value estimate. 9. Comnonent Values: The allocation of the total valuation in this report between land and improvements, if included in this report applies only to the use of the property which is assumed in this report. The separate valuations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 10. Auxiliary and Related Studies: No environmental or impact studies, special market study or analysis, special highest and best use study nor any feasibility study has been requested or made unless otherwise specified in an agreement for services, or inthe report. 11. Dollar Values, Purchasing Power: The market value estimated and the costs used are as of the day of the estimate of value. All dollar amounts are based on the purchasing power and value of the dollar as of the date of value estimate. 12. Factors Influencing Value / Alteration of the Value Estimate: The estimated market value: which is defined in the report is subject to change with market changes over time. Value is highly related to exposure, time, and promotional effort, terms, motivation, and market conditions. The value estimate considers the productivity and relative attractiveness of the property physically and economically in the marketplace as of the dateof value. In cases of appraisals involving the capitalization of income benefits the estimate of market value or investment value or value in use, is a reflection of such benefits and the appraiser's interpretation of income, yields and other factors derived from general and specific client and market information. Such estimates are as of the date of the estimate of value and are subject to change as market conditions change. The "Estimate of Value" in the appraisal report is not based in whole or in part upon the race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. This appraisal report and value estimates herein, are subject to change if the physical or legal entity or financing are different than that envisioned in this report. 13. Inclusions: In some property types, business and real estate interests and values are combined. Except as specifically indicated and typically considered as a part of the real estate, furnishings, equipment. other personal property, or business operations have been disregarded with only the real estate being considered in the value estimate. pg. 13 14. Proposed Improvements, Conditional V Improvements proposed if any, on -site or off -site, as well as any repairs required are considered for purposes of this appraisal are assumed to be completed in a good and workmanlike manner and according to the information submitted. In cases of proposed construction, the appraisal is subject to change upon inspection of the property after construction is completed. This estimate of market value is as of the date shown or as if completed projected on a pro -forma basis. Proposed developments, remodeling, renovation or rehabilitation projects are appraised based on completion in a timely manner and in accordance with the plans and specifications submitted by the client. The accompanying appraisal report has been prepared on the basis of information and assumptions set forth in the report. Although we believe the information and assumptions used constitute reasonable basis for the projections contained in the appraisal report, the achievement of any financial projection is dependent upon the occurrence of future events which cannot be assured. Therefore, the actual results achieved may vary from the projections. 15. Manaaement of the Property: It is assumed that the subject property is under prudent and competent management that is neither inefficient nor super - efficient. 16. Fee: The fee for this appraisal or study is for the service rendered and not for the time spent on the physical property or the report itself. 17. Insulation and Toxic Materials: Unless otherwise stated in this report, the appraiser signing this report has no knowledge concerning the presence or absence of toxic materials and /or ureaformaldehyde foam insulation in existing improvements. If such is present, the value of the property may be adversely affected and a re- appraisal at additional cost will be necessary to estimate the effects of such. 18. Chanaes, Modifications: The appraiser reserves the right to alter statements, analysis; conclusion or any value estimate in the appraisal if there becomes known to him facts pertinent to the appraisal process which were unknown when the report was completed. The terms of this assignment do not include any obligation to update this report or revise any data analysis, projections or conclusions herein as a result of changes; events or transactions occurring subsequent to the date of this report. 19. Earthauake Effects: The effective date of valuation is subsequent to the major earthquake which struck the San Francisco Bay Area on October 17, 1989. It is not known if the subject property has been inspected or respected since that date. Unless otherwise noted in this report, no extraordinary adverse conditions or structural damage considered to be a result of the earthquake was observed by inspection or is known to the appraisers. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. pg. 14 This applies to possible physical damage as well as investor perception of earthquake risks in the San Francisco Bay Area which may influence overall property market ability and future value trends. It is, however, stipulated that, to the best of our knowledge and beliefs, all statements contained in this report are true and correct and no significant information has been knowingly withheld. 20. Americans with Disabilities Act (ADA): The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific compliance survey and analysis of this property to determine whether or not it is inconformity with the various detailed 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 Act. If so. this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non - compliance with the requirements of ADA in estimating the value of the property, permits, or other legislative or administrative approvals from all applicable local, state. federal and /or private authorities have been or can be obtained or renewed for any use considered in the value estimate. 21. Management of the Prooerty: It is assumed that the subject property is under prudent and competent management that is neither inefficient nor super- efficient. 22. Fee: The fee for this appraisal or study is for the service rendered and not for the time spent on the physical property or the report itself. 23. Insulation and Toxic Materials: Unless otherwise stated in this report, the appraiser signing this report has no knowledge concerning the presence or absence of toxic materials and /or ureaformaldehyde foam insulation in existing improvements. If such is present, the value of the property may be adversely affected, and a re- appraisal at additional cost will be necessary to estimate the effects of such. 24. Changes. Modifications: The appraiser reserves the right to alter statements, analysis, conclusion or any value estimate in the appraisal if there becomes known to him facts pertinent to the appraisal process which were unknown when the report was completed. The terms of this assignment do not include any obligation to update this report or revise any data, analysis, projections or conclusions herein as a result of changes. events or transactions occurring subsequent to the date of this report. pg. 15 25. Earthauake Effects: The effective date of valuation is subsequent to the major earthquake which struck the San Francisco Bay Area on October 17, 1989. It is not known if the subject property has been inspected or respected since that date. Unless otherwise noted in this report, no extraordinary adverse conditions or structural damage considered to be a result of the earthquake was observed by inspection or is known to the appraisers. No responsibility is assumed for any such conditions or for any expertise or engineering knowledge required to discover them. This applies to possible physical damage as well as investor perception of earthquake risks in the San Francisco Bay Area which may influence overall property market ability and future value trends. It is, however. stipulated that, to the best of our knowledge and beliefs, all statements contained in this report are true and correct and no significant information has been knowingly withheld. •: Specific Limitina Conditions In addition to the aforementioned assumptions and limiting conditions, the appraiser has recognized the following conditions and limitations specific to this appraisal assignment. Ail In preparation of this appraisal report, the appraiser has not been provided a preliminary title report on the subject property for review. It is assumed that the subject site is encumbered by typical right of way and utility type easements and does not appear to be adversely impacted by any special assessments or encroachments. R) There are known environmental hazards or conditions associated with this site. However, the appraiser is not qualified to determine specific conditions of the subject site or any previous land uses, subsurface conditions or latent problems due to adjacent or nearby land uses. A qualified environmental engineering assessment firm should be consulted regarding the soils contamination if any. This valuation estimate assumes that the subject property is free and clear from any soils contamination. C) This appraiser has not inspected the interior of the subject building per request. Interior photos and have been provided by the City of Gilroy. The square footage of the subject building has been taken from the Santa Clara County Assessor's files on the property. The overall condition of the subject building is considered only in fair and dilapidated condition and as noted above is of unreinforced brick masonry. D) This city of Gilroy has informed me that the subject property may be registered as State Historical Building. The State Historical Building Code (SHBC) was created by legislation in 1975 giving authority to the State Historical Building Safety Board to write regulations, and have consultation, review and appellate functions for code and regulation issues relating to qualified historic buildings, structures and properties. The appraiser is assuming that the subject building will be demolished and therefore, whether or not the subject building is registered as a historic building is of no consequence in this appraisal. The estimated costs of demolition have been considered in this analysis. pg. 17 OWNERSHIP HISTORY The subject property has been under the current ownership since November 4, 1976 according to Santa Clara county records. This deed reflects a selling price of the subject property of $26,700 and is recorded in Document #5460596. MARKETING TIME Based on the interviews we conducted with brokers and agents who work in this market area, our inspection and evaluation of the subject site and improvements, along with our investigation of sales activity in the subject's market area, we estimate the marketing time for the subject to be on the order of six to nine months. We forecast that this is a reasonable time of exposure under current market conditions to sell the subject at the appraised value. The sales utilized in the Sales Comparison Approach section of this report had marketing times ranging for a minimum time period of nine months. Discussions with brokers active in the subject neighborhood were of the opinion that a marketing time of six to nine months is appropriate for the subject property given its size, and location and current market conditions. It should be noted that the marketing period is a function of several factors including the property's physical and locational characteristics. the demand for that property type, the length and type of exposure to the market, the market strategy utilized and available financing for that property type One of the most important factors is asking the price of the property. Please note that a property does not have one value, but rather a range of probable values as indicated by the Cost, Income Capitalization and Sales Comparison Approaches to value. Therefore, the estimated value(s) in this report should be used as a basis for pricing and negotiating but not as the absolute value. SCOPE OF APPRAISAL The scope of this appraisal is intended to provide the client with a summary of the investigative process in which data are collected, confirmed and reported. Essentially, it describes what the assignment entails, what resources were utilized and any special conditions placed on the appraisal. The purpose of this appraisal is to estimate the market value of the fee simple estate of the subject parcel as described above along with the fee value of the proposed take. The appraiser has been engaged by Mr. Rick Smelser, Director of Economic Development for the City of Gilroy. During the course of the appraisal assignment, the appraiser has conducted interviews with several individuals to include the representative- owners of the subject property, the City of Gilroy Planning Department, the County of Santa Clara County Assessor's office and others. The appraiser has extensively relied upon several resources for this assignment, namely Metro Scan, the Santa Clara County Multiple Listing Service, Costar. Loopnet, the appraiser's in- office files, and the CCIM Institute Site to do Business. The appraiser has conducted a personal inspection of the subject property. The appraiser subsequently viewed the comparable properties selected for comparison purposes. Consideration has also been given to the surrounding land uses of the subject and real estate market area trends in the general Gilroy market area that were felt to have an affect the subject. PURPOSE AND FUNCTION OF APPRAISAL The purpose of this appraisal is to estimate the as -is market value of the fee simple estate of the subject property as of May 8, 2016 which is the last date of the inspection. The purpose of this report is to present the data and reasoning used to form the opinions of value for the subject property described herein. The function of this appraisal is fcruse by the clientfor evaluation and acquisition purposes. DATE OF VALUATION Effective Date of the estimated market value(s): May 8, 2016 SUBJECT PROPERTY HISTORY The subject property is currently vacant. The property is located in the central easterly side of the Downtown Historic District of the City of Gilroy on Railroad Ave. LEGAL DESCRIPTION Please refer to the addenda of this report for a copy of the Deed on the subject parcel for a complete legal description. ZONING The subject property is governed and zoned for Commercial use (C -2). An copy of this Zoning code may be found in the addenda of this report. FEMA FLOOD DATA The subject site located in an area classified as a "Zone D" which is designated as an "Area of undetermined but possible flood hazards" according to the Federal Emergency Management Agency (FEMA) This flood zone designation was taken from panel #06085Ck06 pg. 19 ANALYSIS & VALUATION pg. 20 HIGHEST AND BEST USE This analysis will apply to the subject property both in the before and the after acquisition condition. It is felt that the value indications of both the before and after the take, the value of the subject will remain the same in this analysis with no severance damages and /or special benefits incurred as a result of the take. It is also felt that the proposed take will not alter the highest and best use of the subject parcel. The highest and best use analysis of the subject property involves a study of the present use of the property; surrounding property uses, the zoning designation and potential uses of the subject. Highest and best use may be defined as follows: a) The most reasonable and probable use that supports the highest present value of vacant land or improved property, as defined and as of the date of this appraisal b) The most reasonable, probable and legal use of land as though vacant, found to be physically possible, appropriately supported, financially feasible and that results in the highest present land value c) The most profitable use is that use which will return the highest level of income and profit to the property as a whole. Implied inthese definitions is that the determination of highest and best use takes into account the contribution of a specific use to the community and community development goals as well as the benefits of that use to individual property owners. It is recognized that in cases where a site has existing improvements located on the site, the highest and best use may be different than the current existing use. This existing use will continue however, unless and until the land alone in its highest and best use exceeds the total value of the land and current improvements thereon. (The Dictionary of Real Estate Appraisal) Generally, the highest and best use for a property is estimated after considering four factors. These factors are in sequence. (1) ) that use which is physically possible, (2) that use which is legally permissible. (3) that use which is financially feasible, and (4) that use which is maximally productive. The appraiser will consider these items in sequence in the following discussion. Generally. with an existing property the highest and best use analysis is completed under two scenarios; (a) The first scenario considers the property as though vacant assuming that the site is available to be developed into its highest and best use and (b) The second scenario considers the property as improved. Under this premise, the appraiser considers the current improvements and utilization of the site and Vany renovations, repairs. or conversions would enhance the overall value. If the value of the land is such that it exceeds the combined value of the improvements and the land together, it may be that converting to a different use of the property would be necessary thus reflecting a higher and better use of the property as a whole Hiahest and Best Use As Currently lmoroved Physically Possible Use: The first constraint imposed on the possible use of the property is dictated by the physical aspects of the site; such as size. shape soil conditions and topography. The size and pg. 21 location within a given area are the most important determinants of value. Normally, the larger the site the greater its potential to achieve economies of scale, flexibility and development. The size and shape of the parcel have considerable influence on its ultimate development and use. One key determinant in developing a site is the permitted size of the project. The total number of square feet or land area allowed for a development tends to rise in proportion to the size of the lot. The area that can be developed is influenced by zoning, setback requirements and other legal restrictions. Setback requirements will generally render less available area of the parcel for development as the shape of the parcel becomes more irregular. The subject site contains a total of approximately 6,100 s.f. according to the Santa Clara County Assessor's records. The current improvements are physically possible. However, as the subject building is currently vacant and prior to any occupancy of the building, it would have to be reinforced to current earthquake standards. The cost of such renovation would probably exceed the current value of the property as a whole in its current condition. Legally Permissible Use: In considering the legal possibilities of the subject, the subject site is located in the city limits of the City of Gilroy. As stated above, the subject is zoned for commercial use (C -2). These uses generally include land provided several types of retail and commercial uses in accordance with the overall plan of the Downtown Historic District. A copy of this Zoning code may be found in the addenda of this report. Legal restrictions, as they apply to the subject are private restrictions (deed restrictions) and public restrictions (zoning). I have not been made aware of any private restrictions that affect the title and assume no responsibility for such items of record not disclosed by my normal investigation. Therefore. the physical inspection revealed only common utility restrictions which are not detrimental and are not felt to be of any major consequence to any proposed or existing development of the site Given the zoning of the subject property, the current use is considered a legal use although the subject improvements are in dilapidated condition and of unreinforced brick masonry. However as noted above, the subject building is currently vacant and prior to any occupancy of the building, it would have to be reinforced to current earthquake standards. The cost of such renovation would probably exceed the current value of the property as a whole in its current condition. Financially Feasible Use: Those uses which are financially feasible, address that use which will provide the highest net return to the land. Therefore, the use considered a financially feasible use for the property provides for an acceptable net return to the land. As noted above, the current zoning of the subject is governed by the Gilroy zoning code. The subject property is located at the northerly corner of Railroad Ave. and Martin Street. Located about one block west of the subject is Monterey Street which is the major commercial retail area through downtown Gilroy. The uses in the immediate area of the subject property reflect commercial and industrial uses. Those uses westerly of the subject and toward Monterey Street are primarily retail and commercial uses while those uses southerly along Railroad Street are primarily industrial in nature. pg. 22 Hiahest and Best Use as though Vacant (Maximally Productive Use) The maximum productivity of the site is analyzed with several market factors taken into account. Given the affirmation of the physically possible, legally permitted and financially feasible uses, the maximum productivity of a property essentially provides for that use which will return the highest net value to the property as a whole. This also considers the overall development or redevelopment costs of the subject in its "as is" condition. The subject property is currently vacant and in an untenable condition. Given the current condition of the building on the subject, it is felt that to achieve the highest and best use of the property, the building should be demolished. It is not felt that the proposed take will alter the highest & best use of the subject property as if vacant as discussed above. This report considers a whole take of the subject. Therefore, the highest and best use of the subject property in the before and after acquisition will not change. It is also felt that there would be no severance damages or special benefits to the property after the take. Additionally, the possibility of any soils contamination and costs associated with the soils remediation on the subject property (if any) may exist. In order to assess this possibility a qualified engineering firm should investigate the soils conditions which would more than likely have to be cured prior to occupancy. pg. 23 VALUATION METHODOLOGY APPROACHES TO VALUE In the valuation of the subject property, three traditional approaches have been considered. These approaches are the Sale Comparison, and Income Capitalization Approach and the Cost approach. In appraisal practice.. an approach to value is either included or omitted based on its applicability to the property being valued and the quality of information available The final estimate of a value considers the result of and the applicability of each approach. The following is provided as a brief introduction of each approach which summarizes each approach as so defined in The Dictionary of Real Estate Appraisal. To arrive at an estimate of market value for the subject, the appraiser has primarily considered the Sales Comparison Approach to value in this analysis. DIRECT SALES COMPARISON APPROACH A set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently in the area of the subject and applying appropriate units of comparison . This also includes making adjustments to the sales price of the comparable based on the necessary elements of comparison. The sales comparison approach may be used to value improved properties, vacant land or land being considered as though vacant. It is the most common and preferred method of land valuation when adequate comparable sales are available. This approach has been used in this report. The price per square foot of land area will be the prime unit of comparison in this appraisal. INCOME CAPITALIZATION APPROACH The appraisal text defines the income approach as a set of procedures through which an appraiser derives a value indication for an income - producing property by converting the anticipated future benefits (cash annual flows and reversion) into an indication of the property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at a market- derived capitalization rate or at a capitalization rate which reflects a specified income pattern; return on investment or a change in the value of the investment. Alternatively, the annual cash flows for a projected holding period and the reversion or sale of the property at the end of that projected holding period; can be discounted at a specified yield rate to arrive at a present value indication. The subject is being valued primarily as land and the current depreciated value of the improvements thereon. Given the current market in the area of the subject property, the income approach will not be used. Cost Approach The Cost Approach is a measure of the reproduction cost or the replacement cost of the current improvements on a property. The reproduction cost new or the replacement cost new and the calculated depreciated value of the improvements is added to the existing land value to arrive at a total indicated value under this approach. Due to the age of the subject building and its current condition, the cost approach will not been used in this analysis. 20 pg. 24 SALES COMPARISON APPROACH s. , Sales Comparison Approach The Sales Comparison Approach to value is the methodology of choice when there are adequate sales which reasonably reflect what the subject property as improved, would bring in the open market in this area. The appraiser has identified four comparable sales which are felt to provide a reasonable comparison of values that the subject could command in the open market under current market conditions. These sales are briefly discussed below and further identified as follows: Comparable Sale One is the May 2015 sale of a vacant lot located at 130 Lewis Street about 1/4 mile northerly of the subject property which sold for $175,000 on an all -cash basis. This is a 7500 s.f. lot located next to an automotive collision repair shop and was purchased to accommodate parking for this facility. The property was zoned C -2, commercial use. This property overall is located in an inferior slightly inferior location compared to the subject, however the zoning is similar. Overall, this comparable sale is felt to be a reasonably good reflection of commercially zoned property in this area. Comparable Sale Two is the March 2013 sale of an office building located at 7191 Monterey Street in Gilroy. This is a single tenant corrugated metal commercial building constructed in 1987. The building was previously occupied by a motorcycle dealer with 10 parking spaces provided on site. According to the confirming source, Costar, the seller had added an approximate 3,000 sf. unpermitted structure to the rear of this property which is not included in the reported size. This property was sold with seller financing and it was reported that did not affect the selling price of the property. Economic indicators are estimated on an asking rental rate and market expense parameters. Overall, this building is inferior to the subject in overall quality, design and location and sold for $475,000 reflecting $87.50/sf. with a floor area ratio of about 35 %. Comparable Sale Three is the April 2014 sales an in -line retail property located at 381 1St Street in Gilroy. The building was approximately 4700 sf. and was built circa 1947. This is an average quality wood frame building in an average location with average exposure. The land area is 7,350 s.f. reflecting a floor area ratio of about 64 %. On -site parking is provided primarily in front of the building and on 1st_ Street. The property sold for $350,000 reflecting about $74.50/sf. and was financed with seller financing which did not affect the selling price of the property. The property was of reinforced concrete construction and was in average condition in an average location and is inferior to the subject property in terms of overall quality, design and location. Comparable Sale Four is a May 2015 Sale located at 7573 Monterey Street. This sale is located in a slightly superior area near the downtown core area in the Historic Downtown Business district of Gilroy. This is an in -line older retail building containing approximately 1,600 s.f. of building area in average condition. The property was leased on a month to month basis for $700 to $800 per month according to the selling broker. The total lot area is approximately 3,000 s.f. This was an all -cash transaction for $245,000 according to the selling broker and county records. This is a much smaller in -line commercial building in average condition for which adjustments have been made. A photo of the front of this comparable is included in the addenda of this report. pg. 26 �,t - •:rklr � i .. -. i ul {.111'�f� I m QxL �; ,. 3L 5 1a � UI■M YiYI(1 R. Y fJ IMYDIeG , c.YX yt-Wl Y w x'ay M♦:YUy ' AMaI)� - � d _ i ! [� 15 iUP- Tai IOU l Lt 3! A w {a 2t i - HC,nrYln 33 I/ {p[y +[r Annli,� Yn 31 u1 UfI3i - 0..iul lh a �, . o o J4 M1 i ,y ly' Il - 4I �� .$.• c kVs Dalk �v,F •, yyn . '•d' livlas_ip :T A4kp[k :y b` 4%. �} `.r cz. �3fm,�,U l: G 6 a .��,, iiesaw wa'I � 1fy, ": c+ Sr= ' ~" a NFrwrzlll �Il7er ¢��. ,�;tYM1iillsco y_.�r1W DrF =i r �s�_tv 9 G Svin)ulicu � 14 +n A» fd' a` '' "• tom yir!LI Alare U a � i� +� _ CPO i � ! �' A $Iola Pmo 0 r 5 Fj >o rnY f)i j l` b- W -n G{ IT IG P:Y4u9t �l 1 I } 7 J1^�ry i f _ " •� J U YJ I j lM LS Wool W,4i P 3 ,fat Am ITT AM Vl� "' �•%: xlA�ry ,jpl�� �jJrA`vfilY�1RIT�"n'2�'�'� })qY � resa6 - lnr- _ I(pwi ,f i• d n yr a AwY4a w«Hi+i gel i)m �m F 1 wit33 Y ro 1 I��3 x �i -t t� �waan o �r rv�nU C •" Ut^ Ji' b o, � n n , fi srI na)u'I li r 1y` a F rya i u..�.+ld :�gµ i yw,,t3 ��p aa�t+ r R ils+f i' t. ' qy ■IflAlwy. � i _:Y. :�, i ie?Yali om tti'. utiJ dua4mtl `'i v hllfuU S'kf ` _ O 1 - ' SiTc'•� "�' �a't � ? elq..-Iwr o '� � , n' zi 1�N1�: • Yi �' +'� .- � t��A) - A' WM�Ai M✓ri '� . 91 r tli,4 r fhriPl: O,. an y iR. th- , ca`' �) - nrfrw Sy g IL anal; Ir k �. ■. ,r 'F { ?, ���/ r � �. �:. .. hung I, �� m. � �� ' �� � • - � � -1 ° Y�! -�, �€ t •<1v rtNh i.YNIN i 1 ry a'4 r �'d „t• � �, a ( �.•.. ~`). J! - ,IA , ? 1 cl 3 y T j °'lam I ,� 6 SALES COMPARISON APPROACH •: The Valuation & Adiustment Process In utilizing the Sales Comparison Approach, it is generally accepted to first adjust for transactional differences if any. These include differences relative to preliminary or sales - related items and include property rights appraised, financing, conditions of the sale, costs incurred by the buyer immediately upon acquisition. and market conditions at the time of sale. After adjustment for the above differences, the physical elements of each sale are compared and adjusted. These adjustments are briefly summarized as follows. Property Rights Appraised In regard to the property rights appraised, the fee simple estate is being valued in this appraisal. All comparable sales used in this analysis were purchased by owner /users which is reflective of the current market for properties similar to the subject at this point in time. All comparable sales entailed the transfer of the fee simple interest in the property, therefore no adjustment is necessary. Financing This consideration relates to the financing of the sale. Often seller - provided financing, low down payments favorable interest rates, etc., can influence the purchase price which is paid for a property. All of the comparable sales used in this analysis were cash or cash equivalent transactions. As a result, no adjustment is necessary for financing in this analysis. Conditions of Sale The third criteria of the transactional adjustments relate to conditions of sale. This pertains primarily to the premise under which the property sold, i.e. was this was an "arm's length" transaction or was there an unusual condition involved in the transaction. These factors could include considerations such as transfers to relatives, divorce, foreclosure, bankruptcy, exchanges, the absence of broker's commissions, etc. Given the current market inthe area of the subject,all of the comparables selected for comparison purposes all were considered market transactions with no unusual conditions which impacted the selling price. Therefore, no adjustment is necessaryfor this item. Costs Incurred by The Buyer Immediately Uoon Acauisition The fourth criterion relates to costs incurred by the buyer immediately upon acquisition. This consideration must be determined by direct interview with the buyer, seller, or broker in the transaction. Oftentimes.. a buyer will immediately incur costs regarding improvements to the property after it has been acquired. However, this often relates to the preferences of the buyer as opposed to the immediate need for physical repairs regarding deferred maintenance or other major capital expenses. These are items which were directly discussed or considered in the negotiation process. Based upon the published data on the comparable sales and the appraiser's knowledge of these transactions, none of these purchases were impacted by costs that were immediately incurred by the buyer upon acquisition. Market Conditions The last element of comparison relates to market conditions at the time of sale. This relates to the time the sale occurred and recognizes that market values change over time. These changes could be favorable or adverse and may impact the value of the comparable property therefore, requiring an adjustment. A primary consideration has to do with appreciation (or deprecation) over time since the comparable property sold. pg. 27 It should be further noted that all of the comparable sales were sold to owner /users or were purchased as an investment which reflected the current market for this type of property at the time of sale. It is also noted that commercial and industrial property in almost every category in the area of the subject have shown some signs of stabilization in value in this sector of the market since the beginning of the current recession. Overall it is felt that some adjustment is necessary for appreciation of the comparable sales since the time of sale to the present. Zoning & Current Use The comparable sales are light industrial properties and /or property with some commercial - retail application. All of the comparables are located in light industrial areas with a similar use. Locational adjustments have been made where necessary to the comparable sales. M PROPERTY VALUATION Please refer to the following Land Sale Adjustment Grid which takes into consideration market factors that affect value and briefly discussed above. The Adjustment Grid and Adjustment Process In this analysis, Transactional adjustments are made for property rights conveyed, buyer and seller motivation, financing conditions and market conditions at time of sale. Locational adjustments are made for exposure and visibility and overall locational appeal. Physical adjustments consider the size of the comparable property in relation to the subject, configuration, terrain and other site influences. Transactional Adjustments are made sequentially in the order presumed and are based on the relative importance of each as they influence the selling price. All sales were purchased on a fee simple basis and on an all -cash basis or on cash equivalent terms. Locational Adjustments are separated into elements that reflect the property's identity to potential tenants or buyers (exposure and visibility) and overall desirability of the property and neighborhood location. Zoning and use are also considered inthis portion of the analysis. Physical Adjustments consider elements that reflectthe comparable property's size, soil condition and degree of on -site improvements. Generally, the larger the size of the comparable sale, the lower the selling price per unit of comparison that will be reflected primarily as a result of the economy of scale. If the comparable sale is smaller in size compared to the subject, a downward adjustment would normally be made to the comparable. Conversely if the comparable is larger than the subject, an upward adjustment would be made depending on market indications in the area. In this analysis, the price per square foot of building area is considered the primary market determinant. The above comparable sales reflect adjusted values ranging from about $33 /s.f. of land area for comparable sale number one, to a high of about $55 /s.f. for comparable sale number two. In the final analysis, it is felt that the value of the subject land as if vacant would be on the order of $40 /s.f. given its location and the current market. Please refer to the following land sale adjustment grid which takes into consideration the above. In the final analysis, the value of the subject is felt to be on the order of $40/ s.f. as if vacant and is calculated as follows. Subject Land Area: 6100 s.f. @ $40 /s.f. = $244,000 From the above indicated value, the estimated cost of demolition of the subject building must be deducted. It is estimated that those costs would be on the order of $5 /s.f. of building area and therefore calculated as follows: Subject Building area: 2,160 s.f. @ $5 1s.f. = $10,800 Therefore, the value of the subject property as if vacant is estimated as follows: Value of the Subject Property as if Vacant: $244,000 Less estimated costs of demolition: ($10,800) Indicated value of the subject (as is) $233,200 Indicated value say: Please refer to the following Improved Sales Adjustment Grid which takes into consideration the above discussion. pg. 29 I IMPROVED SALE ADJUSTMENT GRID 17491 RAILROAD AVE GILROY, CA 95020 Time & Cash Equivalent Adjustments Subject Property 7491 RAILROAD AVE. 1 130 Lewis Shceet Gilroy, CA 3 7191 Monterey Street Gilrov, CA 3 381 First Street Gilroy, CA 4 7573 Monterey Street Gilroy, CA Close of Escrow N/A March, 2015 March, 2013 March, 2013 April, 2015 Sale Price N/A 5175,000 $137,500 $350,000 $245,000 Building Area 19011 N.A. Financing 5000 S.F. Conventional 4700 SIT Conventional 16011 S.F. Conventional Est. Building Value Conventional N.A. Conditions of Sale 5200,000 Conventional 5188,000 Conventional $144,000 Conventional Residual Land Value Conventional N.A. Cash Equivalent Price 5237,500 $162,000 $59.38 5101,000 535.56 Land Area 6100 SF 7,500 SF 4,000 SF 4,700 SF +15.0% 2840 SF +15.0% Residual Land Value N/A $23.33 559.38 $34.47 $35.56 Time & Cash Equivalent Adjustments Property Rights Fee Simple Fee Simple -0- Fee Simple -0- Fee Simple -0- Fee Simple -0- Stabilization Stabilization -0- Stabilization -0- Stabilization -0- Stabilization -0- Financing Assumes Conventional Conventional -0- Conventional -0- Conventional -0- Conventional -0- Conditions of Sale N/A Conventional -0- Conventional -0- Conventional -0- Conventional -0- Cash Equivalent Price N/A $23.33 $59.38 $34.47 535.56 Time Adjustment -0- Mar -15 +10.0% Mar -13 +15.0% Mar -13 +15.0% Apr -15 +10.0% Time Adjusted Value N/A $25.67 568.28 539.64 $39.12 Additional Adjustments Location Average Sit. inferior +30% Superior -20% Superior -20% Superior -20% Age / Condition 1900 Poor N.A. -0- 1987 / Average -0- 1947 / Average -0- 1947 / Average -0- Quality /Appeal Poor N.A. -0- Average -0- Average -0- Average -0- Size (Land Area) 6,100 SF 7,500 SF -0- 4,000 SF -0- 3,339 SF -0- 3,339 SF -0- Building to Land Ratio 350/6 N.A. -0- 28% -0- 71% -0- 71% -0- Total Adjustment +30% -20% -20% -20% Indicated Price /SF N/A 533.37 554.63 531.71 531.29 RECONCILIATION OF VALUE pg. 31 RECONCILIATION In this appraisal, the subject property has been valued as if vacant and available development to its highest and best use. The subject building on the property is in poor and dilapidated condition and should be demolished. In this analysis, the estimated cost of demolition has been deducted from the estimated land value (as if vacant) in order to arrive at an estimated value of the subject in its (as is) condition. Based on the above analysis, the current market value of the subject property would be calculated as follows: Indicated value of the Subject Property as if Vacant: Less estimated costs of demolition: Indicated value of the subject (as is) Indicated value say: Less indicated severance damages Indicated Special Benefits: Indicated value of the subject property (as is) pg. 34 $244,000 80 $233,200 $ none $ none ADDENDA pg. 35 SUBJECT PROPERTY PHOTOS EXTERNAL VIEW OF SUBJECT BUILDING ON, 51 EXTERNAL VIEW OF SUBJECT BUILDING 0 EXTERNAL VIEW OF SUBJECT BUILDING EXTERNAL VIEW OF SUBJECT BUILDING INTERNAL VIEW OF SUBJECT BUILDING INTERNAL VIEW OF SUBJECT BUILDING INTERNAL VIEW OF SUBJECT BUILDING INTERNAL VIEW OF SUBJECT BUILDING PHOTOS OF COMPARABLE SALES IR ...E If +�ws� A COMPARABLE SALE NUMBER THREE COMPARABLE SALE NUMBER FOUR LEGAL DESCRIPTION SUBJECT PROPERTY k ZW Property Detail Subject Property : 7491 Railroad St Gilroy CA 95020 Owner Information Owner Name : Hill Lynette M (te) Mailing Address : 8825 8th Ave, Hesperia CA 92345 -3963 Vesting Codes: / / Trustee Location Information County: Santa Clara, Ca Market Area : 1 Census Tract % Block : 5126.03/1 APN 841 -06 -001 Legal Lot : 12 School District : Gilroy Legal Bioc� 1 Munic/iownship : Gilroy City Owner Transfer Information Recoidling /Sale Dote . 01/15/2009 / 11/26/2008 Deed Type: Affidavit Do: -umen, w 20103301 Last Market Sale Information Recording /Sale Dcte : 11/04/1976 Document = . 5460596 Sale Price : $26,700 Deed Type : Deed (reg) Sale Type . Full Property Characteristics Gros. Area : 2,160 9 of Stories: 1 Style : Rectangular Design Living Arc;(_.: 2,160 Construction: Concrete Quality: Average Year Built / Etf 1900/1900 Air C -nd : None Condition : Average Property Information Land Use : Industrial (nec) Resi;Ccrnm Units: 1 Lot Width /Depth : 61 X 100 County Use General Lot Acres: 0.14 State Use : ( C0500 ) Industrial Zor,;ng : C2 Lnt Si' 6,100 Prepared On: G5!101201.6 OLD RF.PUB11 1C TTTLF 2015 CoreLmic. All rights restwvod Tax Information -c*lol lvcjiuc $160.824 Land Value , $160,720 Improverner: $104 Vojue Total Taxable, $160,824 Value : Assessed Ye,-,r 2015 %; Rew0jlc Tili!� Tax Year: 2015 Property TaX : $2,125.90 1 Tax Rote Area: 02000 Water Tax : SANTA CLARA CO IMPOR SCVWD SAFE Tax $118.52/0.00 Property Detail CLEAN WATER $35.34/0.00 Tax / Rate : LIBRARY JPA CFD $14.82/0.00 2013-1 Tax / Rate : SCCO VECTOR $4.18/0.00 CONTRO Tax! Rate : fAOS'Q.UIT0 ASMT $172.86/0.00 #2 Tax / Rate : Prepared On . 05-l0-2016 OLD REPUBLIC TITLE ogic.Kidg-lits reserved "11111% If Sales History Rec. Date Sole Date Sale Price Rec.Doc.No Doc. Type Sale Prfce Type Buyer Seller Title Company Other Doc No Transaction History 01/15/2009 05/26/2005 11/26/2008 04/11/2005 20103301 18390822 AFFIDAVIT QUIT CLAIM DEED UNKNOWN Hill Lynette M Sachara Eugene F 2005 Trust Sachara Sachara Eugene F Eugene F Attorney Only Attorney Only Prepared On . 65:10 2016 OLD REPURTIC TITLE '1.015 Coro,oqic. A5 rights roservecl Note: Refer the croperty reports recorded documents O —MONTEREY ST Iz sa ALLEY RAILROAD ST. p ai ALEXANDER ST.' ra FOREST ST. R.O.S. e54147 4 is 6& e U) It o CHESTNUT ST. deW jossassV It o CHESTNUT ST. deW jossassV ZONING ORDINANCE SUBJECT PROPERTY City of Gilroy 0 Section 13.10 Statement of Intent ZONING ORDINANCE SECTION 13 C1 NEIGHBORHOOD COMMERCIAL DISTRICT The intent of the C1 Neighborhood Commercial District is to provide areas in the City suitable for commercial uses of a low intensity and of a neighborhood character, which cater directly to residents of the immediate neighborhood only, rather than to the entire City. The uses in this district are intended to be of low intensity in order to be compatible with residential living. Ample landscaping and creative design are encouraged in the C i Neighborhood Commercial District. The following regulations, except to the extert that they may be modified by a combining district, shall apply to every lot and building in a 121 Neighborhood Commercial District. Section 13.20 Permitted Uses and Conditional Uses Land in the C 1 Neighborhood Commercial District may be used as provided in the Commercial Use Table, Section 19.10 of this Ordinance. Conditional uses may be permitted with a conditional use permit, which may be issued by the Planning Commission in accordance with the regulations in Section 50.30 of this Ordinance. Section 13.30 Site and Building Requirements The Lot, Yard, Height and Additional Requirements in the C 1 Neighborhood Commercial District shall be as established in the Commercial Site and Building Requirement Table, Section 19.20 of this Ordinance. 13 -1 QUALIFICATIONS OF APPRAISER QUALIFICATIONS OF JAMES R. FREE, MAI, SRA OFFICE 1760 Mt. Vernon Dr., San Jose, Ca. 95125 Phone: (408-370-2200) Fax: (408- 379 -7583) Certified General Appraiser #AG001883 E -Mail: jamesf733 @yahoo.com EXPERIENCE I have been an Independent appraiser, real estate broker and consultant since 1975. 1 have Appraised a wide variety of general and special purpose properties for purposes of loan underwriting, lease arbitration, leasehold interests, property acquisition and disposal, litigation support and eminent domain proceedings. Assignments have also included feasibility studies on residential and commercial properties, both existing and proposed. BACKGROUND Appraisal experience had generally been conducted in the Northern and Southern California regions with occasional out of state assignments. Assignments have included summary and full narrative report writing on general and special purpose residential and income producing properties of the following types: 1. Office buildings, medical office buildings, and office condominiums. 2. Shopping centers, including local, neighborhood, and regional in size. 3. Mobile home parks. 4. Freestanding retail buildings. 5. Industrial buildings, including research & development, light manufacturing and general warehouse uses. 6. Apartments, condominiums and Planned Unit Developments, both existing and proposed. 7. Single- family residential, including custom homes, existing and proposed residential subdivisions SPECIAL PURPOSE PROPERTIES INCLUDE: 1. Restaurants 2. Bowling alleys 3. Boat storage warehouses 4. Motels 5. Cold- storage warehouses 6. Overnight travel parks 7. Hospitals 8. Automobile dealerships 9. Drug & Alcohol Rehabilitation Centers 10. Mixed Use Properties 11. Single Family Residential EXPERT WITNESS QUALIFICATIONS I am qualified as an Expert Witness in the Superior Court of Santa Clara, San Mateo, Santa Cruz, and Monterey counties and the Federal District Court of Nevada. EDUCATION B.S. Degree: San Jose State University Major: Business Administration - Real Estate concentration; Minor: Mathematics Appraisal Institute Educational Courses (Partial List) Real Estate Appraisal 1 -A: Real Estate Appraisal 1 -B: Real Estate Appraisal II: Capitalization Theory & Techniques (Parts I, II, III): Real Estate Appraisal VI: Highest & Best Use Analysis & Studies Case Studies in Real Estate Valuation Standards of Professional Practice Litigation Valuation Basic Appraisal Principles Income Capitalization Application of Appraisal Theory Income Capitalization Theory Investment Analysis USPAP - 2014 Update Numerous courses and seminars sponsored by the Appraisal Institute, the Federal National Mortgage Association, the California Association of Realtors, and others. I have completed all of the current continuing education requirements of the Appraisal Institute. PROFESSIONAL Member: Member: Realtor Member: Past Director: Past Director: Past President: Past Chairman of Public Relations: Past Faculty Member: Vice President and Director: Steering Committee: Chairman of the Board Selected Citizen of the Year (2003): Selected Veteran of the Year (2013) Appraisal Institute, MAI, SRA Designations Certified Commercial Investment Member CCIM Designation California Association of Realtors; San Jose Real Estate Board Appraisal Institute, Northern California, Chapter 11 California Market Data Cooperative Society of Real Estate Appraisers Appraisal Institute, Northern California, Chapter 11 Appraisal Institute Campbell Chamber of Commerce Historic Downtown Campbell Campbell Veterans Memorial Foundation, Inc. City of Campbell California Assemblyman Paul Fong, District 28. REFERENCES: Provided upon request