FINAL ENVIRONMENTAL IMPACT REPORT

APPENDICES

The Commons at Quartz Hill Project Appendices Volume II

Prepared for: City of Lancaster

Prepared By:

June 2009

City of Lancaster

Appendix A

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The Commons at Quartz Hill Appendices Final Environmental Impact Report

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City of Lancaster

Appendix B

Revised Economic Analysis

The Commons at Quartz Hill Appendices Final Environmental Impact Report

HR&A ADVISORS, INC. Economic Development, Real Estate Advisory & Public Policy Consultants

UPDATED ECONOMIC, FISCAL AND “URBAN DECAY” ANALYSIS OF THE COMMONS AT QUARTZ HILL, A PROPOSED SHOPPING CENTER IN THE CITY OF LANCASTER, CALIFORNIA

Prepared for:

Planning Department City of Lancaster 44933 Fern Avenue Lancaster, CA 93534

Prepared in association with Whitney & Whitney, Inc.

Updated Draft

June 2009

2800 28TH STREET, SUITE 325, SANTA MONICA, CALIFORNIA 90405 . TEL: 310.581.0900 . FAX: 310.581.0910

Los Angeles New York

TABLE OF CONTENTS

Page

List of Figures and Tables...... iv

Executive Summary...... 1

I. Introduction...... 10

A Purpose of the Analysis ...... 10

B. Overview of The Commons at Quartz Hill Proposed Shopping Center...... 11

C. Economic Impacts...... 16

D. Fiscal Impacts ...... 17

E. The “Urban Decay” Concept in Environmental Impact Analysis ...... 17

II. Economic Impact Analysis...... 19

A. Overview of the Economic Impact Analysis Approach ...... 19

B. Economic Impacts of Project Development ...... 20

C. Economic Impacts of Annual Operations...... 21

III. Fiscal Impact Analysis...... 21

A. Overview of the Fiscal Impact Analysis Approach ...... 22

B. One-Time ...... 22

C. Recurring Project Revenues...... 23

D. Public Service Costs and Net Fiscal Impact ...... 28

IV. “Urban Decay” Analysis...... 29

A. Overview of the Urban Decay Analysis Approach...... 29

B. Market Area Delineation...... 30

C. Existing and Projected Competitive Retail Supply...... 31

HR&A ADVISORS, INC. Page ii Page

D. Shopper Goods Space Impact Analysis………………………………… ...... 35

E. Building Materials/Garden Supplies Space Impact Analysis…………………….39

F. Convenience Goods Space Impact Analysis……………………………………..43

G. Eating and Drinking Facilities Space Impact Analysis...... 50

H. Evaluation of the Project’s Potential to Cause Urban Decay ...... 52

Appendix A: Summary Qualifications of HR&A Advisors, Inc. and Whitney & Whitney, Inc.

Appendix B: IMPLAN Economic Impact Analysis Results

Appendix C: Explanation of Population, Income and Retail Sales Allocation Factors Used in the Analysis

HR&A ADVISORS, INC. Page iii List of Figures Page

1. Regional and Project Vicinity Map...... 12

2. Conceptual Site Plan...... 14

3. Primary and Secondary Market Areas ...... 30

List of Tables Page

1. Proposed “The Commons at Quartz Hill” Retail Center ...... 2

2. Employment and Other Economic Impacts in Los Angeles County from Development and Operation of The Commons at Quartz Hill ...... 3

3. Estimate of One-Time and Recurring Annual Tax Revenues to the City of Lancaster from Development and Operation of The Commons at Quartz Hill ...... 4

4. Projected Distribution of Space and Total Sales by Major Retail Category The Commons at Quartz Hill...... 15

5. Employment and Other Economic Impacts in Los Angeles County from Construction of The Commons at Quartz Hill...... 20

6. Employment and Other Economic Impacts in Los Angeles County from Annual Operation of The Commons at Quartz Hill...... 21

7. Estimate of One-Time Tax Revenues to the City of Lancaster from Development of The Commons at Quartz Hill...... 23

8. Estimate of Recurring Annual Tax Revenues to the City of Lancaster from Operation of The Commons at Quartz Hill, 2012...... 24

9. Estimate of Recurring Annual Property Tax Revenue, 2012 ...... 25

9A. Estimate of In Lieu Motor Vehicle License Fee Revenue, 2012...... 25

10. Estimate of Recurring Annual Sales Tax Revenue, 2012...... 26

11. Estimate of Recurring Annual Tax Revenues to the City of Lancaster from Operation of The Commons at Quartz Hill Over 20 Years ...... 27

HR&A ADVISORS, INC. Page iv Page

12 Baseline Demographic Estimates and Projections, Los Angeles County and Lancaster Shopping Center Market Areas ...... 31

13. Proposed Lane Ranch Towne Center...... 32

14. Inventory of Potential Competitive Facilities, Lancaster Shopping Centers Primary Market Area (PMA)...... 33

15. Inventory of Retail and Related Space, Projected Competitive Facilities Identified in Table 14 ...... 34

16. Projected Increase in Supply of Competitive Retail, Space Lancaster Primary Market Area (PMA)...... 34

17. Percentages of Retail Sales Allocable to Shopper Goods, Los Angeles County and Lancaster Market Areas ...... 35

18. Projected Growth in Demand for Shopper Goods, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012...... 35

19. Projected Increase in Supportable Space for Shopper Goods, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 36

20. Comparison of Projected Increase in Demand with Projected Increase in Supply of Shopper Goods Space, Lancaster Shopping Center Primary Market Area and Other Sources, 2007-2012...... 37

21. Comparison of Projected Increase in Demand with Projected Increase in Supply of Shopper Goods Space, Lancaster Shopping Center Primary Market Area and Other Sources, 2007-2013...... 38

22. Comparison of Projected Increase in Demand with Projected Increase in Supply of Shopper Goods Space, Lancaster Shopping Center Primary Market Area and Other Sources, 2007-2013, Assuming Baseline Sales per Square Foot Requirement of $315 to Reflect Recent Market Conditions...... 38

23. Projected Growth in Demand for Building Materials and Garden Supplies, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 39

24. Projected Increase in Supportable Space for Building Materials and Garden Supplies, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 40

25. Comparison of Projected Increase in Demand with Projected Increase in Supply of Building Materials and Garden Supplies Store Space, Lancaster Shopping Center Primary Market Area, 2007-2012...... ………40

HR&A ADVISORS, INC. Page v Page

26. Comparison of Projected Increase in Demand with Projected Increase in Supply of Building Materials and Garden Supplies Store Space, Lancaster Shopping Center Primary Market Area, 2007-2015...... ………42

27. Comparison of Projected Increase in Demand with Projected Increase in Supply of Building Materials and Garden Supplies Store Space, Lancaster Shopping Center Primary Market Area, Assuming Development of a Home Improvement Facility at Avenue K and 60th Street West in 2014, 2007-2014 ...... ………43

28. Projected Growth in Demand for Convenience Goods, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012...... 44

29. Projected Increase in Supportable Space for Convenience Goods, Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 45

30. Comparison of Projected Increase in Demand with Projected Increase in Supply of Food and Beverage Store Space, Lancaster Shopping Center Market Areas, 2007-2012 ...... 46

31. Comparison of Projected Increase in Demand with Projected Increase in Supply of Food and Beverage Store Space, Lancaster Shopping Center Market Areas, 2007-2013 ...... 47

32. Comparison of Projected Increase in Market Demand with Projected Increase in Supply of Drug Store Space, Lancaster Shopping Center Market Areas, 2007-2012...... 48

33. Comparison of Projected Increase in Market Demand with Projected Increase in Supply of Drug Store Space, Lancaster Shopping Center Market Areas, 2007-2013...... 49

34. Projected Growth in Demand for Eating & Drinking Facilities Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 50

35. Projected Increase in Supportable Space for Eating & Drinking Facilities Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 51

36. Comparison of Projected Increase in Market Demand with Projected Increase in Supply of Food Eating & Drinking Facilities, Lancaster Shopping Center Market Area (PMA), 2007-2012 ...... 51

37. Comparison of Projected Increase in Market Demand with Projected Increase in Supply of Food Eating & Drinking Facilities, Lancaster Shopping Center Market Area (PMA), 2007-2013 ...... 52

HR&A ADVISORS, INC. Page vi Introduction

EXECUTIVE SUMMARY

Introduction

The following report provides an updated analysis of the general economic and fiscal impacts of The Commons at Quartz Hill (“Project”), a proposed shopping center that would be developed in the City of Lancaster, California, and the potential for the operation of the Project to directly or indirectly cause “urban decay,” as that concept has been addressed in court decisions interpreting the California Environmental Quality Act (CEQA). This report supersedes the economic, fiscal and urban decay analysis for the Project dated March 2008, and accounts for changed economic circumstances associated with the current national recession. It also reflects changes in certain physical parameters and the distribution of retail uses in the Project.

The general economic impacts of the Project refer to the jobs, worker compensation and total economic output associated with the Project’s construction and annual operation once it is completed and occupied. These impacts are measured at the scale of the County of Los Angeles, because that is the geographic scale at which total impacts are captured. The fiscal impacts of the Project refer to the difference between recurring annual Project-related tax and other revenues that are specific to the City of Lancaster and the marginal (i.e., incremental) costs for the provision of municipal services to the Project site.

The potential for the Project to cause “urban decay” — which has been described as a chain reaction of store closures and long term vacancies, ultimately destroying existing neighborhoods and leaving decaying building shells in their wake — involves a two-part analysis. First, it must be determined whether the Project will likely attract retail sales away from existing and/or other planned future retail centers and downtown districts to any significant degree. Second, if it can be reasonably foreseen that sales will be attracted away from other retailers, it must be determined whether the severity of this change in economic circumstances will likely cause disinvestment that is significant enough to result in business closures, abandonment or other forms of physical deterioration that may be considered manifestations of “urban decay.”

The Commons at Quartz Hill (“Project”) would consist of 366,376 square feet of Gross Leasable Area (GLA) that is to be distributed between retail stores, eating and drinking facilities and non-retail services space as summarized in Table 1.

HR&A ADVISORS, INC. Page 1

Executive Summary

Table 1 PROPOSED "THE COMMONS AT QUARTZ HILL" RETAIL CENTER Retail Square Feet Space Category GLA 1/ Wal-Mart Superstore, including Garden Center 217,652 General Merchandise Retailer 89,911 Drug Store 14,820 Other Retail Stores 27,150 Eating & Drinking Facilities 11,343 Services 5,500 Total GLA 366,376

1/ GLA: Gross Leasable Area. Source: Rothbart Development; HR&A Advisors, Inc.; W&W, Inc.

Construction is planned for completion by 2011, making 2012 the first full calendar year of the proposed center’s operation.

Economic Impacts Analysis

Using the well-established IMPLAN input-output model of the Los Angeles County economy, it is estimated that the planned expenditure of about $51.3 million to construct the Project will result in a total economic output impact of $88.6 million (in 2008 $) in the Los Angeles County economy, generating 580 total full-time and part-time jobs, of which 346 will be involved directly in the Project’s construction, as shown in the top panel of Table 2. Most of the direct (i.e., construction) and many of the indirect (i.e., materials and services supplied to contractors) economic impacts of Project development will occur in the City of Lancaster economy. Some of the remaining impacts (i.e., from household spending by direct and indirect workers) may occur in the City, or elsewhere in the County, depending on where these workers reside.

HR&A ADVISORS, INC. Page 2 Executive Summary

Table 2 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM CONSTRUCTION AND OPERATION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $) DUE TO PROJECT CONSTRUCTION Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment Construction 345.5 0 0 345.5 Other - 98.0 136.7 234.7 Total 345.5 98.0 136.7 580.3 Employee Compensation $16.9 million $5.3 million $5.7 million $38.0 million Total Economic Output $51.3 million $17.5 million $19.8 million $88.6 million

DUE TO ANNUAL OPERATION OF THE COMPLETED PROJECT Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment 665.0 79.5 104.8 849.3 Compensation $18.6 million $3.9 million $4.4 million $26.8 million Total Economic Output $44.1 million $13.4 million $15.2 million $72.7 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

Once the Project is in full operation in 2012, it is estimated that its annual sales will result in a total economic output impact of $72.7 million (in 2008 $) in the Los Angeles County economy, including 849 total full-time and part-time jobs, of which 665 will be directly located at the Project, as shown in the bottom panel of Table 2. The direct and total economic output impacts of the Project are less than the amount of projected annuals sales, because the economic impacts of retail sales are based only on the gross margin on direct sales (i.e., not including the cost of production, transportation and warehousing). Here again, most of the direct (i.e., retail sales) and many of the indirect (i.e., materials and services supplied to retail tenants) economic impacts of Project development will occur in the City economy. Some of the remaining impacts (i.e., from household spending by direct and indirect workers) may also occur in the City, or elsewhere in the County, depending on where these workers reside.

Fiscal Impacts Analysis

The Project will also yield $134,532 in one-time revenues to the City of from sales tax on construction materials and real estate transfer tax on the purchase of the Project site. Various permit, planning and mitigation fees are not included, because they directly offset City costs and therefore do not yield net new revenue to the City. In the opening year of 2012, the Project will yield about $1.4 million from the City’s share of the net increase in property tax, in lieu Motor Vehicle License Fee revenue, sales tax and business license tax. Over the following 20 years, the Project will generate $38.3 million in tax revenue to the City ($11.5 million in 2008 dollars). The Project’s revenue projections are summarized in Table 3.

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Table 3 ESTIMATE OF ONE-TIME AND RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM CONSTRUCTION AND OPERATION OF THE COMMONS AT QUARTZ HILL One-Time Revenues Construction Materials Sales Tax$ 128,232 Real Estate Transfer Tax $ 6,300 Total One-Time Revenues $ 134,532

Annual Recurring Revenues Nominal $ 2008 $ Opening Year Over 20 Years Opening Year Over 20 Years Property Tax $ 30,556 $ 787,835 $ 21,332 $ 242,912 In Lieu MVLF $ 74,984 $ 1,858,251 $ 43,738 $ 572,952 Sales Tax $ 1,240,059 $ 35,560,544 $ 865,711 $ 10,625,447 Business License Tax$ 1,700 $ 48,736 $ 1,186 $ 14,562 Total Recurring Revenues $ 1,347,298 $ 38,255,367 $ 931,968 $ 11,455,874 Source: HR&A, Inc.

The tax revenue estimates and projections are based on the first round of Project-related spending only — i.e., the tax revenues derived directly from Project construction and the Project’s annual sales. Secondary and tertiary sources of tax revenue will also be generated as a result of expenditures by local businesses that supply goods and services for construction of the Project, and to the retail tenants that will occupy it. The amounts of these indirect and induced tax revenues, and the degree to which they will accrue to the City, are not susceptible to reliable estimation. Therefore, the estimates presented here understate, to some unknown degree, the actual tax revenues the Project will produce for the City.

The Project will not have any significant marginal (i.e., incremental) impacts on City services, according to the Project’s Environmental Impact Report, and from this perspective, the Project’s net new revenues to the City represent the net fiscal impact of the Project (i.e., $1.4 million in 2012). Any costs generated by the Project for fire protection will be paid from a share of the property tax allocated to the Los Angeles County Fire District.

Urban Decay Analysis

The analysis presented here evaluates whether development of the retail and dining space contained in the Project, alone or in combination with other planned retail developments, will result in such intense competition that there is likely to be a significant adverse economic impact on existing retail developments in the City of Lancaster and other nearby jurisdictions that leads to “urban decay” as this concept has been defined by court decisions interpreting the California Environmental Quality Act (CEQA). Methodologically, the potential for such an impact can be determined in a given market area through a comparison of the projected growth in demand for retail goods, as measured by the change in supportable retail space for particular retail store categories, with the amount of proposed additions to the supply of retail space. In this particular context, the analysis focuses on whether the proposed amount of floor area in each major retail and dining use category planned for the Project exceeds the likely increase in demand for those same uses within the relevant market area(s) serving the Project, where demand is measured by

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the anticipated growth in population and per capita personal income that would be available for expenditures on the specified retail goods and dining activities.

If the amount of retail and eating and drinking facility space planned for the Project, together with proposed retail space for comparable uses in other planned projects within the same time frame, is equal to or less than the increase in space that can be supported by projected increases in future demand, it can be concluded that the proposed Project is not exerting significant adverse competitive pressures that could potentially lead to urban decay. This conclusion follows the logic that the growth in customer demand will be large enough to economically support both the Project and other existing and planned projects offering comparable retail and restaurant uses. Given such circumstances, there is no need to further evaluate the potential for urban decay as a consequence of the development of the Project.

Conversely, if the proposed change in the supply of floor area for retail and eating and drinking activities exceeds anticipated growth in demand, the resulting competitive conditions could challenge existing retailers and restaurateurs to such a degree that net sales could be attracted away from their existing stores without their likely replacement by sales from new sources of demand. Under such circumstances, further analyses is required to assess whether it is foreseeable that this draining of sales from existing businesses could logically result in significant disinvestment, business closures, store abandonment and other forms of physical deterioration leading to “urban decay.” Such additional investigation would include, for example, determining whether the exceedance concerns an anchor store whose fate is more central to the financial survival of the adjacent retail; the likelihood that stores suffering from significant competition caused by a new project can be reused for other retail or non-retail uses; and/or whether the competition is between stores of the same national retail brand, which may be willing to absorb short-term losses to gain local market share.

Making these economic impact measurements requires: (1) establishing appropriate market areas for each retail and restaurant category in the Project for which such retail space will be provided; (2) projecting the scale of customer demand based on population growth, income growth and spending growth for those use categories over a relevant time period (in this context, 2007-2012); (3) converting projected changes in future customer retail spending and eating and drinking facility spending into magnitudes of supportable square feet of gross leasable floor area (GLA), so that the projected increase in supportable space can be compared directly with the projected change in supply proposed for each retail space category in the Project’s development program; and (4) comparing the magnitude(s) of supportable space with the proposed supply of space and evaluating the results of this comparison.

Following the methodology outlined above, separate market impact analyses were conducted for the four basic types of retail and restaurant uses that are to be included in the Project: (1) Shopper Goods, consisting of stores offering General Merchandise (typically, department stores); Apparel and Accessories stores; Home Furnishings, Furniture and Appliance stores; and Other (or Specialty) retail stores; (2) Building Materials and Garden Supply stores; (3) Convenience Goods stores, including both food/ beverage stores (e.g., supermarkets,

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bakeries, liquor stores) and drug stores with pharmacies; and (4) Eating and Drinking Facility space, including both fast food facilities and “sit-down” restaurants serving alcohol1.

The analysis presented in the report leads to the following urban decay impact findings and conclusions:

. Delineation of Market Areas. Given the dispersed character of existing development patterns in the Antelope Valley and the location of existing and proposed competitive retail facilities, two market areas were established for the determination of potential demand for the four classes of retail goods that were evaluated in the analysis: (1) a Primary Market Area (PMA) encompassing the geographic circle of land area situated within five miles of the Project site, utilizing as a centroid the intersection of 60th Street W and West Avenue L; and (2) a Secondary Market Area (SMA) encompassing a circular area around the PMA that extends from five to 10 miles around the Project site. For certain types of retail goods — notably, Shopper Goods and Building Materials and Garden Supplies – the PMA would provide 70 percent of the market support and the SMA 30 percent of the market support. For other classes of goods (e.g., Convenience Goods and Eating and Drinking Facilities) 85 percent to 100 percent of the market support would be expected to be generated from the PMA.

The delineation of a secondary market area is particularly appropriate in this analysis due to the possibility that the Project will share the intersection at 60th Street West and West Avenue L with another proposed retail development known as Lane Ranch Towne Center (“Lane Ranch”), which is also planning its first full year of operation in 2012. Together, the two centers would provide nearly 800,000 square feet of new retail space in the Lancaster market, making this location one of the largest retail concentrations in the Antelope Valley and enhancing its drawing power well beyond the normal range for a single 366,376 square foot community shopping center.

. Sources of Market Support. The PMA for the Project is an historically fast-growing residential community of single-family detached homes occupied by residents whose incomes are higher than the Los Angeles County average. Between 2007 and 2012 the resident population of the PMA — defined as those residents living within five miles of the Project — is forecasted to increase by 13,245 persons, and should provide the major source of market support for the Project. In addition, the Project’s location, coupled with its anchor stores and the presence of an adjacent retail development known as the Lane Ranch Towne Center (“Lane Ranch”), should allow for it to draw additional market support from the SMA, defined here as the resident population living within a five- to 10- mile band around the Project site. According to recently updated forecasts, between 2007 and 2012 the SMA is projected to grow by 18,017 persons and contribute 30 percent of the total market support for the Shopper Goods and Building Materials/Garden Supply space at the Project.

1 In its aggregation of sales generated by Eating and Drinking Facilities, the State of California typically classifies restaurants by whether or not they sell alcoholic beverages. Characteristically, “Restaurants-No Alcohol” include fast food establishments, coffee shops and smaller convenience-oriented facilities such as doughnut shops; “Restaurants Serving Alcohol” encompass larger “sit-down” establishments that include both major dinner restaurants and bars.

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The growth forecasts have been examined from an historical perspective, recent changes in the national and regional economy, and from a review of proposed developments in the market areas. A recent listing of planned developments suggests that about 9,800 units have been proposed for development in the PMA alone that could generate population growth of over 29,000 persons. While the actual timing and delivery of these units is open to some question due to the downturn in the housing market and economy in general where mortgage foreclosures have spiked and access to mortgage debt has become more difficult, the forecasts appear to be realistic in their expectation that major growth is likely to continue in the Antelope Valley subregion after the current recession and extend well beyond 2012.

. Competitive Supply Considerations. As noted above, in addition to the Project there is a proposed development known as Lane Ranch that would be developed at the same intersection and would initiate operations in the same calendar year, 2012. As presently conceived these two developments together would add a total of 761,731 square feet GLA of retail space. Given their proximity and timing, they will likely function as one large project in terms of their potential drawing power in the local market areas. Effectively, the juxtaposition of these two centers should allow them to achieve “agglomerative” benefits in that the range of choice provided by the combined retail offerings at the two sites should enhance the location as a retail destination for SMA residents and enhance this location’s customer drawing power beyond the normal market reach of a single 400,000 square foot GLA community shopping center.

. Urban Decay Findings and Conclusions. The analysis presented in this report compares (1) the possible future supply of proposed retail and related space that would be provided by the Project and 13 other proposed retail developments during the analysis period 2007-2012 with (2) the projected incremental growth in resident demand for the same period, for each of five types of retail space: (1) General Merchandise, including major department stores; (2) Building Materials and Garden Supply stores; (3) Food and Beverage facilities; (4) Drug Store/Pharmacy stores; and (5) Eating and Drinking facilities. For three retail space categories — General Merchandise, Food/Beverage and Eating/Drinking facilities — the analysis indicates that under probable growth trends, the market forces of demand and supply will largely be in balance by 2013, or within the second calendar year after the proposed Project and Lane Ranch become fully operational. In contrast, assessment of the competitive market conditions for two other retail categories, Building Materials/Garden Supplies and Drug Store/Pharmacy space, raised issues related to potential imbalances from oversupply that needed further evaluation.

With respect to the Building Materials and Garden Supplies retail category, there are presently two proposals for development of a major home improvement center within the PMA over the period 2007-2014 on sites located one mile apart on 60th Street West — one at Lane Ranch, which shares the West Avenue L/60th Street West intersection with the Project; and the other, one mile north at 60th Street West and West Avenue K. The Project’s 21,624 square feet GLA of such space inside the Project’s proposed Wal-Mart is not a significant contributor in terms of the potential problem of oversupply. Per current development schedules, the Lane Ranch’s home improvement center would be

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completed first, and in the view of HR&A and W&W, would occupy the superior location in terms of serving the future market. The analysis indicates that there will not be sufficient sales generated by the increase in resident spending to support both projects at suitable sales levels until well after 2015. As a result, if both major home improvement centers are developed along with the Building Materials and Garden Supplies space included in the Project by the dates proposed, there could be serious competitive conditions that could lead to one or even both of the other stores closing down and leaving a residual supply of vacant retail space. While theoretically possible, this outcome is unlikely for the following reasons:

. First, while the potential operators of the home improvement centers have not been identified, the similarities of the store sizes, location and timing suggest that the same operator may be considering alternative sites, and would not proceed with both stores until market conditions were suitable to accommodate both outlets; and

. Second, the competitive circumstance is projected to occur at least five years from now, and thus there is ample time for the developers and potential operators of the home improvement facilities to consider market conditions before committing to the creation of a potentially significant oversupply and a large amount of vacant, unproductive space.

With respect to Drug Store/Pharmacy space, the comparative analysis of the potential growth in demand for Drug Store/Pharmacy space with proposed supply indicates that there will likely be a significant oversupply of this kind of space in the near future. However, further investigation indicates that new drug store development is being driven in large part by major drug store chains that are positioning their new stores at strategic locations around the existing hospitals and medical offices that are situated on the periphery of the PMA and centered on 15th Street between Avenue J and Avenue K. Moreover, while as many as six new drugstores could be developed at the Project and at other proposed centers within two miles of the Project site, such competitive circumstances do not portent conditions that are considered likely to lead to urban decay, for the following reasons:

. Of the six drugstores proposed at the Project and other nearby sites, two are small pharmacies that would be imbedded within larger department stores, and thus are not likely to be of great significance to the overall feasibility of the host department store or the retail center;

. The other four drugstores proposed for the immediate vicinity of the Project are being developed at centers with more than one anchor tenant, they will be situated on visible pads, and are being built at a scale (under 18,000 square feet GLA) that can be economically re-tenanted. Thus, they do not present a serious economic issue to the center operator if any should fail;

. The proposed drugstores in all likelihood will be operated by major drug store chains that have the financial ability to survive low sales performances in the early years while the store develops a presence in the market place; and

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. The existing drug stores in the PMA are either well-established in viable shopping centers or well-located on sites that can be re-utilized by other types of retail activities, and thus are not likely to create major long-term vacancies that could lead to urban decay.

Overall, the analysis concludes that, while the Project together with other new shopping centers will add new competitive retail and restaurant facilities to the Antelope Valley region, there is no reasonable likelihood that the operation of the Project and the other projects identified in this analysis as they are presently conceived, would result in significant adverse economic competition to the degree that this competition would lead to urban decay.

This conclusion also applies to the commercial district located at the intersection of Avenue M/Quartz Hill Road and 50th Street West in the unincorporated community of Quartz Hill, approximately 1.4 miles from the Project. Anchoring this district are a number of local- serving institutions, including County facilities (fire station and library) as well as a post office and an elementary school. Existing businesses include: an Antelope Valley Bank branch; animal hospital; several veterinary clinics; mini-storage facilities; equipment rental; feed and tack stores; garden center; building supplies; beauty salons; fitness/karate facilities; casual eating and drinking facilities; and numerous automobile-oriented businesses, including service stations, auto repair garages, automotive painting, and auto parts and muffler stores. These businesses offer goods and services that are substantially different from those planned for the Project, though there could be limited overlap, depending on the Project’s specific retail or service businesses when the Project is fully leased. Moreover, the district has no dominant business or group of stores that anchors it and is similar to the Project. Therefore, any limited competition between the Project and any individual store(s) in the district would not have an impact on the district so severe that it could foreseeably lead to “urban decay” within the meaning of CEQA.

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I. INTRODUCTION

A. Purpose of the Analysis

This report provides an updated analysis of the economic and fiscal impacts of The Commons at Quartz Hill (“Project’), a 366,376 square foot retail development located on 35.77 acres at the intersection of 60th Street West and West Avenue L in the City of Lancaster (“City”), County of Los Angeles, and the potential for the operation of the Project to directly or indirectly cause “urban decay,” as that concept has been defined in court decisions interpreting the California Environmental Quality Act (CEQA).2 This report supersedes the economic, fiscal and urban decay analysis for the Project dated March 2008, and accounts for changed economic circumstances associated with the current national recession. It also reflects changes in certain physical parameters and retail distribution of the Project.

The general economic impacts of the Project refer to the jobs, worker compensation and total economic output associated with the Project’s construction and operation. These impacts are measured at the scale of the County of Los Angeles, because that is the geographic scale at which total impacts are captured. The fiscal impacts of the project refer to the difference between recurring annual project-related tax and other revenues to the City of Lancaster and the marginal (i.e., incremental) or average costs to provide services to the project site.

Analysis of the potential for new retail development to cause urban decay — “. . . a chain reaction of store closures and long term vacancies, ultimately destroying existing neighborhoods and leaving decaying shells in their wake”3 — requires a two-stage analysis. First, it must be determined whether the new retail development will attract retail sales away from existing and/or other planned future retail centers to any significant degree. Second, if this is the likely outcome, then it must be determined whether the severity of this change in economic circumstances will likely cause significant disinvestment to such a degree such that it is reasonably foreseeable that business closures, store abandonment or other forms of physical deterioration or “urban decay” will result.

This report was prepared for the City of Lancaster by HR&A Advisors, Inc. (HR&A), in association with Whitney & Whitney, Inc. (W&W). The two firms provide independent professional urban and other economic analysis to a wide range of public and private clients. Summaries of the firms’ respective qualifications are included in Appendix A to this report.

2 Collectively, Cal. Public Resources Code § 21000, et seq. and Calif. Admin. Code §15000 et seq., commonly referred to as the “CEQA Guidelines.”

3 Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184 at 1204.

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B. Overview of The Commons at Quartz Hill Project

The following is an updated summary description of the proposed Project.

1. Project Location

The Commons at Quartz Hill is located at the northwest corner of the intersection of 60th Street West and West Avenue L in the City of Lancaster, California. The site lies about 4.5 miles west of S.R. 14/138 (Antelope Valley Freeway), a major north-south regional highway that connects the Antelope Valley with the Santa Clarita Valley, San Fernando Valley and other urbanized portions of Los Angeles County.

The two streets that provide direct frontage and ingress/egress to the Project — West Avenue L and 60th Street West — are regional arterial roads that are part of the one-mile grid system of streets and highways that cover the urbanizing portions of the Antelope Valley. In addition, 60th Street West and its extension to the south known as Godde Hill Road provide important direct access across the San Andreas Fault to Elizabeth Lake Road and the residential areas of the Leona Valley.

The Project’s location is unlike that of most of the other major shopping centers in the Antelope Valley that have been positioned on sites on or near Antelope Valley Freeway. In this regard, its westerly location relative to its competition places the site at an important point of “interception” for residents living in the western Leona Valley/Lake Hughes area or visitors coming into the area from other destinations found westerly of the Antelope Freeway corridor. The site’s location in the Antelope Valley is shown in Figure 1.

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Figure 1 Project Vicinity and Regional Map

Source: Christopher A. Joseph & Assoc.

2. Project Description

The Project is situated immediately adjacent to the community of Quartz Hill, an affluent residential area dominated by the recent construction of single-family detached and attached home subdivisions. This pattern of growth is likely to continue into the future. In this regard, a 2007 listing of proposed projects prepared by Overland Traffic Consultants indicated that there were over 75 projects under consideration with a total capacity approaching 9,800 units within a two-mile radius of the Project site. Allowing for an average household size of 3.0 persons per unit,4 the residential inventory under consideration could accommodate over 29,000 new residents.

As presently conceived the proposed Project would offer 366,376 square feet of Gross Leasable Area (GLA)5, of which 351,422 square feet GLA would be allocated for retail and related uses. The center would be anchored by a Wal-Mart Superstore that would have a

4 According to the 2000 U.S. Census, the average size of owner-occupied homes in Lancaster was 3.01 persons.

5 For purposes of this study the Project’s Gross Floor Area is used to represent the total Gross Leasable Area (GLA), which may overstate the actual GLA by two or three percent depending upon the final configuration. This overstatement, however, is not considered material to the analysis.

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total GLA of 217,652 square feet or nearly 60 percent of the total space in the development. For purposes of this analysis, the Wal-Mart square footage has been allocated as follows: (1) General Merchandise, 138,012 square feet GLA; (2) Building Materials and Garden supplies, 21,624 square feet GLA; (3) Food/Beverage facilities, 45,736 square feet GLA; (4) Drug Store, 744 square feet GLA; (5) Eating and Drinking facilities, 2,082 square feet GLA; and (6) Non- retail Services, 9,454 square feet GLA. The balance of the space would be allocated for the following uses: a major department store, 89,911 square feet GLA; a free-standing drug store, 14,820 square feet GLA; various retail shops, 27,150 square feet GLA; and a financial institution, 5,500 square feet GLA. The proposed center layout is shown in Figure 2 below.

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Figure 2. Conceptual Site Plan

Source: Tait & Assoc., Inc.

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Introduction

The Project is proposed to be constructed in one phase, with its first full calendar year of operations proposed for 2012. For purposes of this analysis the proposed space has been delineated into five major retail classifications as shown in Table 4 below, together with projections of the expected sales volume per square foot of GLA for each type of space and the expected annual sales volume expressed in 2007 constant dollars. The projected sales per square foot standards utilized in the table and at other places in this Report are based upon published industry reports such as The Urban Land Institute’s (ULI) Dollars & Cents of Shopping Centers biennial reports, discussions with other retail shopping center advisors, and HR&A/W&W expert opinion of the market potential at the site and the unique conditions represented by the Antelope Valley region.

Table 4 PROJECTED DISTRIBUTION OF SPACE AND TOTAL SALES BY MAJOR RETAIL CATEGORY THE COMMONS AT QUARTZ HILL (in Square Feet of Gross Leasable Area)

Square Feet Projected Sales 3/ Projected Retail Space Category GLA 1/ per Sq Ft GLA Annual Sales 1. Shopper Goods (GAFO) 2/ General Merchandise ( incl Department Stores) 227,923 $ 350 $ 79,773,050 Non-Specified GAFO Space 27,150 $ 350 $ 9,502,500 Subtotal, Shopper Goods 255,073 89,275,550 2. Building Materials/Garden Supplies 21,624 $ 250 $ 5,406,000 3. Convenience Goods: Food/Beverage Facilities 45,736 $ 500 $ 22,868,000 4. Convenience Goods: Drug Stores (Including Pharmacies) 15,564 650$ $ 10,116,600 5. Eating & Drinking Facilities 13,425 $ 500 $ 6,712,500 Subtotal, Retail/Restaurant Space 351,422 $ 134,378,650 6. Non-Retail Space (Business and Personal Services, et al) 14,954 - GRAND TOTAL 366,376 $ 134,378,650

1/ GLA: Gross Leasable Area. 2/ GAFO: Acronym for General Merchandise, Apparel, Furniture/Furnishings, Other (Specialty) Goods. It should be noted that for purposes of this analysis the GLA of Wal-Mart has been distributed as follows: General Merchandise, 138,012 square feet; Garden Supplies, 21,624 square feet; Food/Beverage, 45,736 square feet; Drugs, 744 square feet; Restaurants, 2,082 square feet; and non-Retail, 9,454 square feet. 3/ Sales expressed in 2007 Constant Dollars Source: Rothbart Development; HR&A Advisors, Inc.; W & W, Inc.

A more detailed description of the proposed space in the Project is provided below:

. Shopper Goods. Nearly 70 percent of the proposed space in the Project, or 255,073 square feet GLA, is to be allocated for “Shopper Goods.” Also referred to by the acronym “GAFO” or “Comparison Goods,” this type of retail activity is the staple of regional and large community shopping centers, as department stores and in-line retail stores selling Shopper Goods typically constitute the vast majority of the total occupied space. By definition, Shopper Goods encompass four types of retail stores:6 General merchandise stores (most commonly, department stores); Apparel and accessories stores; Furniture, home furnishings, appliance and related stores; and “Other” or specialty retail stores, encompassing a diverse array of retail shops selling such items as gifts, art goods,

6 The definition of “Shopper Goods” generally follows the retail store classification system utilized by the State of California Board of Equalization.

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Introduction

sporting goods, florists, photographic equipment, musical instruments, stationery, books, jewelry, and office and school supplies. Shopper Goods derive their name from shopper behavior commonly related to their purchase. Characteristically, given the level of expenditure and the diversity of product choice involved, shoppers will normally travel a further distance to compare prices and consider a range of alternative goods as part of the shopper goods purchase decision than they will for convenience goods such as food and drugs which are generally cheaper in price and frequently bought from the nearest available seller.

The Shopper Goods space in the Project is presently comprised of a portion of the Wal- Mart Superstore with 138,012 square feet GLA (out of a total 217,652 square feet of GLA), a major department store with 89,911 square feet GLA, and an allocation of 27,150 square feet GLA of non-specified GAFO space for tenants to be identified in the future.

. Building Materials and Garden Supplies. A total of 21,624 square feet GLA will be occupied by the Wal-Mart’s garden center.

. Convenience Goods. Convenience goods refer to those retail goods that are required to meet day-to-day living needs, such as food, drugs and sundries, which are purchased from locations conveniently located adjacent to residential development. Convenience goods retail space in the Project includes a proposed drug store with 14,820 square feet GLA on a separate pad; an allocation of 744 square feet GLA for a pharmacy within the Wal-Mart; and an additional allocation of 45,736 square feet GLA for Food/Beverage goods in the Wal-Mart.

. Eating and Drinking Facilities. This use category will constitute a net addition of 13,425 square feet GLA, equivalent to less than four percent of the total space in the Project. While some eating and drinking facility patronage will likely come from customers who are visiting other stores at the Project, it is likely that the major source of support for eating and drinking facilities will be the local residents living in the PMA.

C. Economic Impacts

The "economic impact" of the Project is the incremental difference that its construction and occupancy will make to the number of people employed, employee compensation earned (i.e., wages and benefits), and the resulting circulation of dollars through the local economy. Using a well-established input-output model and detailed data on the structure of the Los Angeles County economy, estimates were made of the Project’s economic impact. The estimates include the “direct” effects of the project (i.e., the development-related expenditures and annual occupancy of the Project once it is completed), as well as the “multiplier effect” from the circulation of these direct expenditures within the County economy.

The economic impact projections were made for the County economy, rather than the City of Lancaster, because the County is the scale of geography that best captures the transactional flows among and between all the industry sectors that together define a local

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economy. Nearly all of the direct impacts, many of the indirect impacts and some of the induced impacts will, however, occur in the City economy.

The projected economic impacts of the Project are presented in Chapter II.

D. Fiscal Impacts

In addition to the general economic impacts on the County economy, the $57 million investment in developing the Project, and its annual operation once it is completed and occupied, will also generate various tax and other revenues for the City, County, local school districts, the State of California and a variety of other governmental agencies. This analysis focuses on the revenues that will accrue to the City of Lancaster.

As with the Project’s general economic impacts, the development-related tax revenues will be a one-time event, whereas the completed Project, once it is occupied will generate new annual revenues to the City. These revenues result from a variety of taxes, some of which are unique to the City and therefore accrue entirely to the City (e.g., business license tax). Other revenues are shared between the City and other taxing entities (e.g., property tax and sales tax revenues that are shared with the County and State).

The tax revenue estimates are based primarily on the first round of Project-related spending only — i.e., the tax revenues derived directly from Project construction and annual Project operation. Secondary and tertiary sources of tax revenue will also be generated as a result of indirect and induced economic activity that result from expenditures for Project construction and household spending, but the amounts of these additional revenues, and the degree to which they will accrue to the City, are not susceptible to reliable estimation. Therefore, the estimates presented here understate, to some unknown degree, the actual tax revenues that the Project will produce for the City.

The projected fiscal impacts of the Project are presented in Chapter III.

E. The “Urban Decay” Concept in Environmental Impact Analysis

When a proposed development project is subject to CEQA, both direct and indirect (or “secondary”) impacts of the project on the physical environment must be analyzed.7 Economic and social impacts of a project, though they may be included in a CEQA document, are not to be treated as “significant” impacts on the physical environment,8 as defined.9 To the extent that there is a direct or indirect causal connection between a change in economic or social circumstances and a change in the physical environment, the economic or social change may be used to establish whether the physical change is “significant.”10

7 CEQA Guidelines § 15358.

8 CEQA Guidelines §§ 15064 and 15382.

9 “A substantial or potentially substantial adverse change in the environment.” (Public Resources Code § 21068). The focus on physical changes in the environment is further reinforced by §§ 21100 and 21151.

10 See, in general, CEQA Guidelines §§ 15131(a) and (b), and their associated discussion section.

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With this statutory and interpretive guidance in mind, the courts have recognized that there is a potential for a proposed new retail development to trigger economic competition with existing retailers in the project’s host community. If existing retailers are adversely affected by this competition, declines in sales could directly result in and/or lead to disinvestment, business closures, abandonment and other forms of physical deterioration that are indicative of “urban decay.” If the severity of this change in physical circumstances is so substantial that it adversely affects appropriate use of the area or otherwise threatens the public health, safety or general welfare, this situation may cross a threshold that defines a “significant impact” under CEQA, such that mitigation capable of reducing the impact on that physical environment must be considered.

Thus, for urban decay to be an issue within the meaning of CEQA, there must first be an adverse economic circumstance that is likely to be caused by a proposed project. If such an adverse effect is identified, then the severity of this economic impact must be evaluated for its potential to cause a significant change in the physical environment (i.e., “decay”). Accordingly, this report presents an assessment of whether the proposed Project’s retail uses could reasonably be projected to cause adverse economic circumstances in the surrounding market areas that could be traceable to the Project’s improvements. Only to the degree that such adverse circumstances can be predicted reasonably is there any need to evaluate the potential to cause “decay” or other significant physical changes in the environment.

Chapter IV of this report presents an analytic framework for assessing whether the Project’s development could cause adverse economic impacts on the surrounding retail market area, and then applies this framework to the specific retail components of the Project’s improvements and their respective market areas. Appendix C includes further details on the data sources and projections used in this analysis.

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II. ECONOMIC IMPACTS ANALYSIS

A. Overview of the Economic Impact Analysis Approach

As noted in Chapter I, the "economic impact" of the Project is the incremental difference that its construction and occupancy will make to the number of people employed, employee compensation earned (i.e., wages and benefits), and the resulting circulation of dollars through the local economy. Using the well-established IMPLAN input-output model and detailed data on the structure of the Los Angeles County economy, estimates were made of the Project’s economic impact. The estimates include the “direct” effects of the project (i.e., the development- related expenditures and annual occupancy of the Project once it is completed), as well as the “multiplier effect” from the circulation of these direct expenditures within the County economy.

Employment and other economic impacts related to the development of the Project and its annual operation once it is completed were estimated using the IMPLAN input-output model of the Los Angeles County economy as of 2007, which is the most recent year for which model data were available at the time this analysis was prepared. Input-output analysis is an economic impact modeling method for understanding the interactions among the industries in a local economy that result from investment in a new capital project or other changes. In form, it resembles a giant matrix, or spreadsheet, in which the “inflows” of goods and services needed by an industry (i.e., the purchasing sectors) are the columns, and the rows consist of the outputs or selling sectors. This enables analysis of the specific sectors of an area’s economy that are affected, and by how much, when a dollar’s worth of investment, new employment, or other measure of “final demand” is added to a particular sector or sectors. These inter-industry relationships can be expressed in terms of dollar impacts or employment impacts.

IMPLAN11 is a widely accepted model that the consultant team and many others, including public agencies, have used to estimate the economic consequences of new investment in, or other changes to, a local or regional economy.12 It explicitly accounts for impact leakage, or the fact that not all economic impacts are necessarily experienced inside the geographic area or site under study. The IMPLAN model can be used to generate estimates of direct, indirect and induced employment, compensation (i.e., wages and benefits), and total economic output (i.e., a summary measure of all spending and economic activity), for both the construction and operations phases of a project, on an annual basis. In this analysis, all economic impact dollar amounts are expressed in constant 2008 dollars (i.e., without the effects of inflation over time).

11 IMPLAN (IMpact Analysis for PLANning), a social accounting and impact analysis software program, was developed in 1979 by the U.S. Forest Service in cooperation with the Federal Emergency Management Agency and the U.S. Bureau of Land Management to assist the Forest Service in land and resource planning and management. The IMPLAN accounts closely follow the accounting conventions established for the U.S. economy and the rectangular format recommended by the United Nations.

12 HR&A has previously used IMPLAN to analyze the economic impacts of a wide range of projects throughout southern California and elsewhere in the nation, including large residential developments, high-rise office buildings, industrial projects, shopping centers, university buildings, and film and television studio campus expansions.

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Economic Impacts Analysis

“Employment” includes full-time and part-time jobs, regardless of whether they are permanent or temporary.

Direct impacts include the investment in Project construction, and annual retail sales. The direct impacts occur primarily in the City of Lancaster. Indirect impacts are those resulting from purchases of goods and services to support Project construction and retail businesses and eating and drinking facilities. These impacts, too, may occur in the City of Lancaster or elsewhere in the County. Induced impacts result when direct and indirect employees (related to both construction expenditures and Project retail and dining operations) spend their compensation on consumer and other household-related goods and services. Some of these expenditures may also occur in the City, but most will occur elsewhere in the County, since only some direct and indirect employees will reside in the City. The indirect and induced effects are together sometimes referred to as the “multiplier effect” of the direct expenditures associated with a development project.

B. Economic Impacts of Project Development

Direct construction-related employment, compensation, and total economic impact were derived from the IMPLAN model based on a hard construction cost estimate of $51.3 million provided by the Applicant. These are, essentially, one-time impacts that occur incrementally over the months of Project construction. The construction impacts are summarized in Table 5. It shows that the planned private investment of $51.3 million to construct the Project translates to a total economic output impact of about $88.6 million (in 2008 $) in the Los Angeles County economy. The investment is associated with 580 full-time and part-time jobs in the County economy, of which 346will be involved directly in the Project’s construction in the City. Compensation paid to workers whose job is supported by the development investment will total $38.0 million, including $16.9 million for those directly involved in its design and construction. Attachment B-1 provides the sector-by-sector distribution of these impacts in the County economy.

Table 5 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM CONSTRUCTION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $)

Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment Construction 345.5 - - 345.5 Other - 98.0 136.7 234.7 Total1 345.5 98.0 136.7 580.2 Employee Compensation $16.9 million $5.3 million $5.7 million $38.0 million Total Economic Output $51.3 million $17.5 million $19.8 million $88.6 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

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C. Economic Impacts of Annual Operations

The economic impacts of the Project once it is completed were also derived from the IMPLAN model. The model’s results are based on the estimated $134 million in annual sales by retail and dining facility type. Retail sales are adjusted to remove cost of goods sold. The IMPLAN model was then applied to estimate how these annual sales translate into direct, indirect, induced, and total employment, compensation and economic output impacts in the County economy. These impacts are summarized in Table 6. It shows that annual operation of the completed Project will result in a total economic output impact of about $72.7 million (in 2008 $) in the County economy,13 and total compensation paid to workers will be about $26.8 million, including $18.6 million paid to workers at the Project site. The total employment impact in the County economy that is associated with this scale of Project sales is 849 full-time and part- time jobs, including 665 jobs at the Project site. Attachment B-2 provides the sector-by-sector distribution of these impacts in the County economy.

Table 6 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM ANNUAL OPERATION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $)

Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment 665.0 79.5 104.8 849.3 Compensation $18.6 million $3.9 million $4.4 million $26.8 million Total Economic Output $44.1 million $13.4 million $15.2 million $72.7 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

13 The total economic impact is less than total projected sales, because the economic impacts are based only on the gross margin to the retailer (i.e., total sales price minus production costs, such as manufacturing, transportation, warehousing).

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III. FISCAL IMPACTS ANALYSIS

A. Overview of the Fiscal Impact Analysis Approach

In addition to the general economic impacts on the County economy, the $51.3 million investment in developing the Project and its annual operation once it is completed and occupied will also generate various tax and other revenues for the City, County, local school districts, the State of California and a variety of other governmental agencies. This analysis focuses on the municipal revenues that will accrue to the City of Lancaster.

As with the Project’s general economic impacts, the development-related tax revenues will be a one-time event, whereas the completed Project, once it is occupied, will generate new annual revenues to the City. These revenues result from a variety of taxes, some of which are unique to the City and therefore accrue entirely to the City (e.g., business license tax). Other revenues are shared between the City and other taxing entities (e.g., property tax and sales tax revenues that are shared with the County and State).

B. One-Time Project Revenues

The City will receive one-time revenues due to purchase of the Project site and purchase of certain construction materials. If the construction site is properly designated as a point-of-sale location, it is estimated that the Project will generate $128,232 (in 2008 $) in sales tax on purchase of some construction materials. The City already received $6,300 in real estate transfer tax on the purchase of the site by the Project Applicant. The basis for these one-time revenue estimates is shown in Table 7.

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Fiscal Impact Analysis

Table 7 ESTIMATE OF ONE-TIME TAX REVENUES TO THE CITY OF LANCASTER FROM CONSTRUCTION OF THE COMMONS AT QUARTZ HILL (all dollar values in 2008 $)

Sales Tax on Construction Materials Project S.F. GLA1 366,376 Hard Cost per S.F. GLA1 $ 140.00 Hard Construction Cost $ 51,292,640 Materials Share 50.0% Materials Amount $ 25,646,320 Materials Share Subject to Sales Tax 50.0% Amount Subject to Sales Tax $ 12,823,160 Tax Rate2 1.0% Tax Revenue to Lancaster$ 128,232

Real Estate Transfer Tax Site Purchase Price1 $ 10,500,000 Tax Rate 0.06% Tax Revenue to Lancaster $ 6,300

Total One-Time Tax Revenue $ 134,532

1 Per Project Applicant. 2 Assumes contractor takes out sub-permit designating site as point of sale. Includes 0.75% local sales tax plus 0.25% sales tax rebated as porpertytax. Source: HR&A, Inc.

Although the Project will also generate planning and construction permit fees, these fees are generally set at levels that are intended to directly offset City staff time to process them, and therefore they do not represent net new revenue to the City. Similarly, any Project payments for the estimated cost of traffic and other environmental mitigation are excluded, because they are also set at levels to directly offset Project impacts, and therefore do not represent net new revenue to the City.

C. Recurring Annual Project Revenues

Once the Project is completed and occupied, the City will receive annual revenues of about $1.4 million in the first full year of operation (2012) from its shares of the property taxes, in lieu Motor Vehicle License Fee revenue, sales taxes, and business license taxes, as shown in Table 8. Each tax revenue category utilizes a different estimation approach, which is briefly described below.

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Table 8 ESTIMATE OF RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM OPERATION OF THE COMMONS AT QUARTZ HILL, 2012 Property Tax $ 30,556 In Lieu MVLF $ 74,984 Sales Tax $ 1,240,059 Business License Tax $ 1,700 Total Revenues $ 1,347,299 Source: HR&A, Inc.

1. Property Tax Estimate

The property tax applicable to the Project site includes a one percent levy on the assessed value of land and buildings, which is distributed among 26 different local public agency accounts, plus a proportional share of voter-approved indebtedness (calculated as a percentage of assessed value) and direct assessments (calculated according to a formula established by each agency imposing the assessment). It is assumed in this analysis that the Project’s assessed value, and therefore the basis for the one percent general levy and the share of indebtedness, is equal to the construction cost ($51.3 million), which then increases a maximum of two percent per year under Proposition 13, until sold. The City receives about 6.6 percent14 of the one percent general levy for general governmental purposes in this part of the City, plus additional sums for voter- approved indebtedness and special assessments. The current assessed value of the Project site is about $11.0 million.15 The City’s current share of the one percent general levy is $7,247.

As shown in Table 9, the City’s net share of the one percent general levy will total $30,556 in 2012, after accounting for property tax revenue from existing uses at the Project site.

14 6.6107188%, for Tax Rate Area 02432, per the Los Angeles County Assessor.

15 Per Los Angeles County Assessor data provided by First American CoreLogic, Inc.

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Table 9 ESTIMATE OF RECURRING ANNUAL PROPERTY TAX REVENUES, 2012 THE COMMONS AT QUARTZ HILL

Construction Cost (2008 $)1 $ 51,292,640 Annual Construction Cost Inflation2 2.50% Construction Cost (2012 $) = Assesssed Value $ 58,032,914 1% General Levy 580,329 City's Share of 1% Levy3 6.6107188% City's Tax Revenue $ 38,364 Less Existing Tax Assessed Value (2008 $)3 $ 10,963,107 Annual AV Inflation2 1.50% Assessed Value (2012 $) $ 11,810,380 1% General Levy 118,104 City's Share of 1% Levy3 6.6107188% City's Tax Revenue $ (7,808) Total Revenues 30,556

1 From Table 7. 2 HR&A assumotions, considering recession impacts. 3 Per Los Angeles County Assessor, 2008.

Source: HR&A, Inc.

2. In Lieu Motor Vehicle License Fee Revenue

Beginning in 2005, the State reduced the Motor Vehicle License Fee from two percent to 0.65%. The State kept local government revenues whole by swapping the lost Motor Vehicle License Fee revenue for an equivalent amount of property tax revenue. In the City of Lancaster, the rebate is equal to approximately 0.124% of citywide assessed valuation. Applying this rate to the Project’s assessed value, the Project will yield $72,072 in 2012, as shown in Table 9A.

Table 9A ESTIMATE OF RECURRING ANNUAL IN LIEU MOTOR VEHICLE LICENSE FEE REVENUE, 2012 THE COMMONS AT QUARTZ HILL

Lancaster FY 2007-2008 Prop. Tax In Lieu of VLF$ 14,565,050 Lancaster FY 2007-2008 Citywide Assessed Value$ 11,727,911,000 1 In Lieu MVLF Factor 0.124% Construction Cost (2012 $) = Assesssed Value $ 58,032,914 Total Revenues $ 72,072

1 City Property Tax In Lieu of VLF Fees as a Percent of City Assessed Valuation

Source: HR&A, Inc.

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3. Sales Tax Revenue

The City receives one percent16 out of the 9.25 percent tax applicable to retail and certain other sales within the City limits that are subject to the State sales and use tax. The balance of the tax goes to the County and the State of California.

The sales tax revenue estimate for Project is based on taxable sales from each type of store planned for the Project. Most of these sales, with the exception of groceries and pharmacy items, are all subject to the sales tax. Only about 40 percent of grocery sales and 36 percent of pharmacy sales are subject to sales tax.17 As shown in Table 10, total annual sales at the Project are projected to equal about $139.0 million using 2008 sales per square foot values for each tenant category. Using sales per square foot growth factors that are equal to projected changes in consumer prices, according the March 2009 UCLA economic forecast for California (which reflects the current recession and prospects for recovery beginning in 2010), sales in 2012 would total $147.8 million. This translates to about $1.2 million in sales tax revenue to the City in 2012, assuming all space in the project is occupied and no sales are transferred from or otherwise reduced at other retailers located in the City as a consequence of opening the Project.

Table 10 ESTIMATE OF RECURRING ANNUAL SALES TAX REVENUES THE COMMONS AT QUARTZ HILL

Square Feet 2008 Projected Sales 2008 Projected 2008 1% 1 Retail Space Category GLA per Sq Ft GLA Annual Sales % Taxable Taxable $ City Tax, 2008 $ City Tax, 2012 $ General Merchandise ( incl Department Stores) 227,923 $362$ 82,485,334 100.0%$ 82,485,334 $ 824,853 $ 877,577 Non-Specified GAFO Space 27,150 $362 $ 9,825,585 100.0%$ 9,825,585 $ 98,256 $ 105,806 Subtotal 255,073 $ 92,310,919 $ 92,310,919 $ 923,109 $ 983,382

Building Materials/Garden Supplies 21,624 $259 $ 5,589,804 100.0%$ 5,589,804 $ 55,898 $ 55,898

Convenience Goods Food/Beverage 45,736 $517$ 23,645,512 39.5%$ 9,339,977 $ 93,400 $ 93,400 Drug Stores (incl Pharmacies) 15,564 $672$ 10,460,564 36.3%$ 3,797,185 $ 37,972 $ 37,972 Subtotal 61,300 $ 34,106,076 $ 13,137,162 131,372 131,372

Eating & Drinking Facilities 13,425 $517 $ 6,940,725 100.0%$ 6,940,725 $ 69,407 $ 69,407

Subtotal, Retail Space 351,422 $ 138,947,524 $ 117,978,610 $ 1,179,786 $ 1,240,059

1 Assumes annual sales growth from 2007 is as follows: 3.4% in 2008, -1.2% in 2009, 1.8% in 2010, 2.5% in 2011; and 3.2% in 2012, per March 2009 UCLA Forecast for consumer prices.

Source: HR&A, Inc.; W&W, Inc.

4. Business License Tax Revenue

The City currently collects an annual tax on the number of employees in each business. The current tax rate varies from $86 to $182, plus a new application ($64) or annual renewal processing fee ($23). Assuming the Project includes three tenants with less than 26 employees, two tenants with 26-50 employees, one tenant with 51-75 employees and two tenants with 76 or

16 Under recent changes in State law enacted to finance the State’s structural deficit, 0.75% is remitted to the City as sales tax revenue and another 0.25% is remitted as additional property tax. For calculation convenience this analysis treats the entire one percent as sales tax revenue.

17 Based on the ratios of “County Baseline” to “County Adjusted” in Appendix C, Table C-8.

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more employees, and that the current tax rates increase three percent per year, the total recurring business license fee revenue in 2012 would be $1,700.

5. 20-Year Tax Revenue Projection

Assuming that all of the taxes that now apply to commercial projects in Lancaster will remain in place over a 20-year period following Project completion, these revenues are projected to total $38.3 million in nominal dollars (i.e., including inflation),18 or $11.5 million in constant 2008 dollars (without inflation),19 as shown in Table 11.

Table 11 ESTIMATE OF RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM OPERATION OF THE COMMONS AT QUARTZ HILL, OVER 20 YEARS Nominal $ 2008 $ Property Tax $ 787,835 $ 242,912 Sales Tax $ 35,560,544 $ 10,625,447 In Lieu MVLF $ 1,858,251 $ 572,952 Business License Tax $ 48,736 $ 14,562 Total Recurring Revenues $ 38,255,367 $ 11,455,874 Source: HR&A, Inc.

18 Assumes 3% annual inflation in retail sales and the business license tax rate, and 2% per year in assessed value.

19 The discount rate used in the constant dollar calculation is equal to the unleveraged internal rate of return (9.4%) for regional shopping malls in Los Angeles County as of the first quarter of 2009, per Real Estate Research Council, Real Estate Report, Spring 2009.

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D. Public Service Costs and Net Fiscal Impact

The net fiscal impacts of a proposed development project is calculated by subtracting any recurring costs to provide public services to the project from the tax and other revenues it generates. The net result depends entirely on how the accounting is performed, and whether “average” or “marginal” public service costs are used in the calculation.

In HR&A’s view, “marginal” (or incremental) rather than “average” costs should be the basis for estimating public service costs for a development like the proposed Project. The marginal cost approach examines the degree to which a project’s service demands can be accommodated by existing service capacities, or would cause the need for an expansion of capacity. On the other hand, it does not account for the sunk (i.e., already expended) cost of producing any existing surplus service capacity, nor the opportunity cost when a project uses up existing service capacity that will then no longer be available to a future project. The marginal cost approach also ignores costs for services that historically do not actually change as each new project is developed. It is, however, more consistent with the way traffic and other environmental impacts, are calculated. In HR&A’s experience, the average cost approach is better suited to analysis of large-scale, long-term public investment decisions, such as the fiscal impacts of alternative General Plan buildout scenarios or annexations of large land areas.

According to the Project’s EIR, the County Fire District and County Sheriff have sufficient capacity to serve the Project at current levels of service.20 The EIR also concluded that the Project will not burden existing capacities of the water, electricity, wastewater, stormwater or solid waste systems serving the City.21

The Project’s EIR includes, however, a number of mitigation measures that reflect existing legal requirements and/or good planning principles that will limit Project impacts on the demand for public safety services (i.e., police, fire and emergency medical and parks and recreation). Thus, the completed Project is not expected to produce any marginal (or “incremental”) public service costs that would need to be netted against Project revenues to yield the net fiscal impact of the Project on the City. Therefore, the Project’s tax revenue yield of about $1.3 million in 2012 is also its net fiscal impact.

Although public school facilities are not the responsibility of the City, potential impacts on the Westside Union School District and Antelope Valley Union High School District were also reviewed in the EIR.22 The EIR found that the Project would generate a need for only __ additional student seats. The Project will be required, nevertheless, to pay a school facilities impact fee of about $154,000 to the District,23 which would fully mitigate potential school impacts under applicable law.

20 Christopher A. Joseph & Assoc., The Commons at Quartz Hill Draft EIR, September 2007, Sections IV.K.1. (Fire); IV.K.2. (Police).

21 Id., Section IV.O. (Utilities).

22 Id., Section IV.K.3. (Schools).

23 366,376 square feet x $0.42/square foot = $153,878.

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IV. URBAN DECAY ANALYSIS

A. Overview of the Urban Decay Analysis Approach

The urban decay analysis measures the degree to which the construction and operation of the Project could result in a significant adverse economic impact on existing and proposed retail developments in the same market area. Methodologically, any such impact is identified and measured by assessing the degree to which the amount of space planned for development in each of the Project’s retail and dining use categories would exceed the anticipated increase in the supportable amount of retail and dining space that can be projected to occur, based upon the anticipated growth in future customer demand for comparable retail and dining activities in a defined market area.

If the amount of retail and dining space planned for the Project is less than or equal to the amount of retail and dining space that can be supported by projected future demand, it can be concluded that the scale of potential customer demand is sufficiently large that it can support both the Project and all other existing and planned space proposed for those same general categories of retail use. There would be no need, therefore, to further evaluate the potential for urban decay associated with the Project.

On the other hand, if the proposed supply exceeds the anticipated growth in demand, it could be argued that the Project would attract sales away from other existing or planned new retail and dining establishments of the same type. Such a finding of potential sales transfer, in turn, requires further investigation to assess whether it is foreseeable that this potential attraction of sales away from existing retail and dining businesses could result in disinvestment, business closures, store abandonment, and/or other forms of physical deterioration that are effectively indicators of “urban decay.” Such additional investigation would include, for example, determining whether the exceedance concerns an anchor store whose fate is more central to the financial survival of the adjacent retail; the likelihood that stores suffering from significant competition caused by a new project can be reused for other retail or non-retail uses; and/or whether the competition is between stores of the same national retail brand, which may be willing to absorb short-term losses to gain local market share.

Making these economic impact measurements typically requires: (1) establishing logical market areas appropriate for each retail and dining category for which future retail space will be provided by the Project; (2) projecting the likely increase in customer demand based on population growth, income growth and spending patterns for particular categories of retail goods and eating and drinking facilities over a relevant time period (in this analysis, 2007-2012); (3) converting the projected changes in future customer demand to amounts of supportable retail and dining space measured in square feet GLA, and (4) making a comparison of the projected change in demand in the form of supportable space with the change in supply as represented by the increase in GLA proposed for the Project and other developments in the relevant market area(s).

Following this methodology, separate market impact analyses were conducted for the principal types of retail and related space that are to be included in the Project

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Urban Decay Analysis

B. Market Area Delineation

Given the proposed scale of the Project, the unique geography and development patterns of the Antelope Valley and the location of existing and proposed competitive retail facilities, two market areas were established in order to evaluate the potential for Shopper Goods Space: (1) a Primary Market Area (PMA), defined geographically as the land area contained within a circle having a 5-mile radius whose center is the intersection of 60th Street West and West Avenue L; and (2) a Secondary Market Area (SMA), represented by a circular ring around the PMA extending from five to 10 miles from the intersection of 60th Street West and West Avenue L. The two market areas are shown in Figure 3.

Figure 3: Lancaster Shopping Center Primary Market Area (PMA) and Secondary Market Area (SMA)

Source: Claritas

The basic demographic characteristics of the two market areas are shown in Table 12. According to Claritas, Inc., a well-accepted third party demographic data source, the 2007

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population in the PMA is estimated at 89,188 persons; by 2012 it is expected to increase by 13,245 residents to 102,433 persons. In comparison, the 2007 SMA population is estimated by Claritas to be 147,727 persons; by 2012 it is projected to reach 165,744 persons, realizing a net growth of 18,017 residents. Table 12 also shows for each market area the projected increase in average per capita income for the period 2007 to 2012 and the resulting growth in Aggregate Income, a key indicator of the growth in retail sales potential. Over the five year forecasting period, Aggregate Income in the PMA is projected to increase by over $1.25 billion; for the SMA, the projected increase is expected to exceed $1.21 billion. As the equivalent of one-third of personal income is typically allocated for retail sales, this increase in Aggregate Income should translate into $682 million in additional annual retail sales generated by the combined market areas.

Table 12 BASELINE DEMOGRAPHIC ESTIMATES AND PROJECTIONS LOS ANGELES COUNTY AND LANCASTER SHOPPING CENTER MARKET AREAS

Primary Secondary Market Area Market Area Data Category 0-5 Mile Radius 5-10 Mile Ring

Population 2007 89,188 147,727 2012 102,433 165,744 Net Increase 2007-2012 13,245 18,017 Average Per Capita Income (per BEA definition) 1/ 2007$ 44,288 $ 28,777 2012$ 50,777 $ 32,993

Aggregate Income 2007 $ 3,949,958,144 $ 4,251,139,879 2012 $ 5,201,240,441 $ 5,468,391,792 Net Increase 2007-2012 $ 1,251,282,297 $ 1,217,251,913

1/ See Appendix C for explanation of Income definitions. Source: Claritas, Inc.; United States Bureau of Economic Analysis (BEA); HR&A Advisors, Inc.; W & W, In

C. Existing and Projected Competitive Retail Supply

Within the PMA and SMA there are a number of existing shopping centers that will compete for Shopper Goods sales with the proposed Project, including four existing Wal-Mart stores. Most of these competitive facilities have been placed at locations that are immediately adjacent to or visible from the Antelope Valley Freeway. The largest and most dominant existing retail facility in the region is the Antelope Valley Mall, with over one million square feet GLA offering 135 stores and major anchor tenants that include Dillard’s, Sears, JC Penney, and a Cinemark 16-theater complex. The mall is located immediately west of the Antelope Valley Freeway at its interchange with Avenue P. However, it should be noted that the development has lost one anchor store in recent months — Mervyn’s — and will see the closure of two Gottschalk’s outlets in the near future. The Antelope Valley Mall is located in the City of

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Palmdale within the Antelope Valley Freeway (S. R. 14/138) corridor on a site that is about six miles southeast of the Project site.

In addition to the existing supply of retail space, the Project will also likely compete with a proposed retail development to be located across the intersection of 60th Street West and West Avenue L on the northwest corner known as the Lane Ranch Towne Center (“Lane Ranch”), as well as other developments proposed to be completed by 2012 in the PMA. As presently conceived, Lane Ranch will have a total complement of 395,355 square feet GLA, and feature a Target Department Store and a major home improvement center as the anchor tenants. Like the Project, the Lane Ranch center is scheduled to be in operation by 2012. A preliminary breakdown of the proposed space in Lane Ranch by major retail category is shown in Table 13.

Table 13 PROPOSED LANE RANCH TOWNE CENTER Retail Square Feet Space Category GLA 1/ Target Department Store, Including Garden Center 149,362 Home Improvement Store, Including Garden Center 160,221 Drug Store 17,272 Other Retail Shops 47,500 Eating & Drinking Facilities 16,000 Services 5,000 Total GLA 395,355

1/ GLA: Gross Leasable Area. Source: Lane Ranch LLC; HR&A Advisors, Inc.; W&W, Inc.

It should be noted that for purposes of this analysis the proposed 149,362 square feet of GLA within the Target Department Store in Lane Ranch has been allocated to the following space categories: (1) General Merchandise, 107,145 square feet GLA; (2) Building Materials/Garden Supplies, 10,817 square feet GLA; (3) Food/Beverage, 27,000 square feet GLA; (4) Pharmacy, 1,600 square feet GLA; and (5) Non-Retail Services, 2,800 square feet GLA.

In addition to Lane Ranch, discussions with City of Lancaster Planning Department staff indicated that there were 12 additional projects with major retail components that were known to the City. These projects were likely to be entitled, constructed and operational by the year 2012. Together with Lane Ranch, these projects, listed in Table 14 along with a description of their basic characteristics, represent potential competitive retail space that will likely be developed over the analysis period 2007-2012.

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Table 14 INVENTORY OF POTENTIAL COMPETITIVE FACILITIES LANCASTER SHOPPING CENTERS PRIMARY MARKET AREA (PMA) 2007-2012

Retail Allocation Center Identification/Location Acres Square Feet of Space Status/Comments

1 Neighborhood Shopping Center 12.5 96,100 Supermarket: 53,000 Undergoing entitlement process. NW Corner, 40th Street W and West Avenue J Drug Store: 13,000 Should be constructed and operational by 2012 Miscellaneous Shops: 26,600 Fast Food Restaurant: 3,500

2 Community Shopping Center 22.3 38,920 Phase I: Project currently undergoing entitlement. NW Corner, 60th Street W and West Avenue K CVS Drug Store 13,225 Phase I to be completed and operational in 2012. Restaurants 8,997 Retail Shops 16,698 Subtotal 38,920 Phase II: Phase II to be completed and operational in 2014. Lowe's Home Imp Ctr: 139,410 Upon completion, development will have 219,904 Lowe's Garden Ctr: 31,659 square feet of space. Fast Food 7,215 Conv. Store w/ Car Wash: 2,700 Subtotal 180,984

3 Armagosa Creek Commercial District 110+/- 1,100,000- Existing stores may relocate to project Specific Plan has been aprroved. As of April 2009 NE Corner, West Avenue L and 10th Street W 1,500,000 in its initial phases. No allocation of no development applications have been filed within this area. Development Area has been made public Potential space has not been considered in this analysis. Space not included as future competitive To be constructed in four phases over a 10 year supply for the Project. period. Located adjacent to eastern edge of PMA.

4 Lancaster Spectrum 14.72 88,490 Retail 75,690 Mixed use project; plans for a hotel and fitness center have bee SW Corner, 20th Street W and West Avenue J-8 Restaurant 12,800 approved, but no construction initiated as of April 2009.

5 Conditional Use Permit 05-10 9.72 35,228 Retail Building 1: 20,072 Approved mixed use development with hotel and office space. NE Corner, 20th Street W and West Avenue J-12 Retail Building 2: 10,156 Total developmpent area in permit is 103,422 square feet. Restaurant Building: 5,000 Hotel and office space have been constructed.

6 Conditional Use Permit 06-02 4.4 36,300 Restaurants: 10,500 Project approved in 2008; construction has not started as of SW Corner, 30th Street W andWest Avenue K Miscellaneous: 25,800 April 2009.

7 Conditional Use Permit 06-05 4.88 43,535 Retail Building 1: 20,000 Project has been constructed and Office Depot has occupied NE Corner, 20th Street W and Antelope Valley Retail Building 2: 15,000 one of the major retail buildings. Freeway (S. R. 14/138) Misc. Retail/Rest 8,535

8 Conditional Use Permit 07-10 8.52 42,867 Food Store; 15,000 Project has received approvals. Food store is reportedly moving SE Corner, 30th Street W and West Avenue K Drug Store: 17,272 forward, though no construction has been initiated as of April Miscellaneous Retail Stores 10,595 2009. Remainder of development area reportedly on hold.

9 Site Plan Review 06-21 6.89 14,500 Miscellaneous Retail Stores 8,500 Project has not been approved for development as of April 2009 South side West Avenue L, westerly of 10th Street W Restaurants: 6,000

10 Conditional Use Permit 07-11 43,494 CVS Drug Store: 15,789 Project was approved for development in 2008; no construction NE Corner, 20th Street W and West Avenue K Miscellaneous Retail Stores 17,105 initiated as of April 2009. Restaurants: 10,600

11 Conditional Use Permit 08-17 15,485 Rite Aid Drug Store: 15,485 Project has not been approved for development as of April 2009 SE Corner, 15th Street W and West Avenue J Former service station site; may have soil remediation issues.

12 Site Plan Review 06-23 13,000 Walgreens Drug Store 13,000 Project has been approved and is under construction as of SE Corner 20th Street W and West Avenue J April 2009.

Projected Total Retail and Related Space, 2012 467,919 Source: City of Lancaster Planning Department; HR&A Advisors, Inc.; W&W, Inc.

Table 15 translates the inventory of proposed space presented in Table 14 into the major retail and eating and drinking categories evaluated in this analysis. Together, these projects represent a potential competitive supply of 467,919 square feet of GLA, of which 370,089 square feet GLA is considered likely to be allocated for retail and related uses that would compete with the Project in 2012.

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Table 15 INVENTORY OF RETAIL AND RELATED SPACE, PROJECTED COMPETITIVE FACILITIES IDENTIFIED IN TABLE 14 Retail Square Feet Percent Space Category GLA 1/ of Total Shopper Goods Space (GAFO) 124,186 27% Building Materials and Garden Supplies 20,000 4% Convenience Goods: Food/Beverage Stores 73,000 16% Convenience Goods: Drug Stores 87,771 19% Eating & Drinking Facilities: All Restaurants 65,132 14% Subtotal, Competitive Retail Space 370,089 79% Services/Other Uses 97,830 21% Total 467,919 100%

1/ GLA: Gross Leasable Area.

Source: City of Lancaster; HR&A Advisors, Inc.; W&W, Inc.

Table 16 provides a summary of the proposed competitive supply of retail space used in the analysis by major space category. The total retail and other space that would be added to the PMA by 2012 is projected at 1,185,043 square feet GLA. The Project’s 366,376 square feet GLA of space represents 30.6% of the projected addition to future competitive supply in the PMA.

Table 16 PROJECTED INCREASE IN SUPPLY OF COMPETITIVE RETAIL SPACE LANCASTER PRIMARY MARKET AREA (PMA) 2007-2012 (in Square Feet of Gross Leasable Area)

Total Lane Ranch The Commons Other Retail Space Category Proposed Space Towne Center at Quartz Hill Retail Centers Shopper Goods (GAFO) General Merchandise (incl Department Stores) 335,068 107,145 227,923 Non-Specified GAFO Space 198,836 47,500 27,150 124,186 Subtotal 533,904 154,645 255,073 124,186 Building Materials/Garden Supplies 212,662 171,038 21,624 20,000 Convenience Goods: Food/Beverage Facilities 145,736 27,000 45,736 73,000 Convenience Goods: Drug Stores 122,207 18,872 15,564 87,771 Eating & Drinking Facilities (All Restaurants) 94,557 16,000 13,425 65,132 Subtotal, Retail Space 1,109,066 387,555 351,422 370,089 Non-Retail Space (Business and Personal Services, et al) 120,584 7,800 14,954 97,830 GRAND TOTAL 1,229,650 395,355 366,376 467,919

Source: Various developers; City of LancasterPlanning Department; HR&A Advisors, Inc.; W & W, Inc.

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D. Shopper Goods Space Impact Analysis

As reflected in Tables 4 and 16, the Project will provide a total of 255,073 square feet GLA of Shopper Goods space that will include the Wal-Mart Superstore (138,012 square feet GLA of General Merchandise); a second department store with 89,911 square feet GLA of General Merchandise; and various in-line space and free-standing pads that will offer a mix of apparel, home furnishings and other specialty stores totaling 27,150 square feet GLA. Based upon spending patterns exhibited in Los Angeles County, over 29 percent of PMA resident retail expenditures typically are allocated for Shopper Goods, as noted in Table 17 below.

Table 17 PERCENTAGES OF RETAIL SALES ALLOCABLE TO SHOPPER GOODS LOS ANGELES COUNTY AND LANCASTER MARKET AREAS

Retail Percent of Space Category Retail Sales General Merchandise (incl Department Stores) 9.56% Apparel and Accessories 4.60% Furniture, Furnishings and Appliances 3.38% Other or Specialty 11.71% Grand Total 29.25%

Source: California State Bopard of Equalization, 2007 Annual Report; HR&A, Inc.; W&W, Inc.

Table 18 provides an annual projection of the growth in demand for Shopper Goods in the PMA for the period 2007 through 2012 that is based upon projected increases in population and per capita incomes. Based upon the market area growth forecast, total sales in Shopper Goods should increase by nearly $121.9 million over the five-year projection period, as shown in the last row of Table 18.

Table 18 PROJECT ED GROWTH IN DEMAND FOR SHOPPER GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change ('0 00s) 2007-2012200720082009201020112012

Primary Market Area (PMA) Population 13,245 89,188 92,049 95,002 97,417 99,893 102,433

Per Capita Personal Income (per BEA Definition) $ 6,489 $ 44,288 $ 45,794 $ 45,198 $ 46,057 $ 48,590 $ 50,777

Aggregate Regional Market Area Income ('000s) $ 1,251,282 $ 3,949,958 $ 4,215,292 $ 4,293,900 $ 4,486,735 $ 4,853,801 $ 5,201,240

Percent of Personal Income Allocable for Retail Sales: 33.3% 33.3% 33.3% 33.3% 33.3% 33.3%

Potential Demand for Retail Sales ('000s) $ 416,677 $ 1,315,336 $ 1,403,692 $ 1,429,869 $ 1,494,083 $ 1,616,316 $ 1,732,013

Calculation of Increase in Demand for Shopper Goods:

Net Change % of Total ('0 00s) Retail Demand 2007-2012 2007 2008 2009 2010 2011 2012

All Shopper Goods ('000s) 29.25%$ 121,878 $ 384,736 $ 410,580 $ 418,237 $ 437,019 $ 472,772 $ 506,614

Incremental Growth in Demand by Year ('000s) $ 25,844 $ 7,657 $ 18,783 $ 35,753 $ 33,841

Cumulative Growth in Demand ('000s) $ 25,844 $ 33,501 $ 52,283 $ 88,037 $ 121,878 ______

Source: California State Board of Equalization; Claritas, Inc.; HR&A Advisors, Inc.; W & W, Inc.

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Table 19 translates the projected incremental change in PMA demand for Shopper Goods into a measure of net supportable retail space, allowing for a threshold sales requirement of $350 per square foot24 of GLA in 2007 to reflect the necessary basis for effective market support. This sales support requirement is expected to increase at a rate consistent with the growth in the Consumer Price Index (CPI) as forecasted by the UCLA Anderson Forecast (March 2009), reaching $385 per square foot of GLA in 2012. Over the five-year analysis period, the projected increase in supportable retail space for the combined Shopper Goods retail categories generated by the PMA is 316,540 square feet as noted in the last row of Table 19.

Table 19 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR SHOPPER GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space,Shopper Goods Stores:

Sales per Square Foot of GLA Requirement, Average: $ 350 $ 362 $ 358 $ 364 $ 373 $ 385 Base $ 350 Annual Increase in Required Support Per CPI 3.4% -1.2% 1.8% 2.5% 3.2%

In Square Feet GLA 2008 2009 2010 2011 2012

Annual Increase in Supportable Shopper Goods Space 71,412 21,414 51,601 95,829 87,893

Cumulative Increase (Adjusted for higher sales requirement per square foot) 71,412 93,694 143,638 235,964 316,540 ______

Source: HR&A Advisors, Inc.; W & W, Inc.

In 2012 the potential increase in supply of Shopper Goods retail space will be generated by three sources: (1) the Project, with 255,073 square feet GLA; (2) Lane Ranch, 154,645 square feet GLA; and (3) the other competitive centers identified in Table 14, with 124,186 square feet GLA. This projected additional supply, summarized in Table 16 and presented again in Table 20, totals 533,904 square feet GLA.

24 This sales requirement and others utilized in the analysis are based on performance data from The Urban Land Institute and International Council of Shopping Centers, Dollars & Cents of Shopping Centers, 2006 and 2008 as well as the consultant’s knowledge of the industry and major retailers’ expectations. Given the recent declines in retail spending and shopping center performances since the start of the current national recession, in some circumstances developers and anchor tenants would be willing to accept initial store performances at less than the $350 standard in the initial years of operation (e.g., 90%, or $315 per square foot of sales), particularly if the opportunity resulted in the establishment of a dominant position within a growing market area such as the western Antelope Valley.

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Table 20 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY OF SHOPPER GOODS SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) AND OTHER SOURCES 2007-2012

Square Feet GLA

Factor 2008 2009 2010 2011 2012

Total Supportable GAFO Space by PMA Residents 70% 71,412 93,694 143,638 235,964 316,540 Total Supportable GAFO Space from Other Market Sources 30% 30,605 40,154 61,559 101,127 135,660 Total Supportable Space 100% 102,018 133,848 205,198 337,091 452,200

Projected Supply of Additional GAFO Space PROPOSED PR OJECT 255,073 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 154,645 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 409,718 Other Proposed Space in PMA 124,186 Grand Total, All Proposed Shopper Goods Space 533,904

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 81%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space from All Market Sources 91%

Comparison 3: Projected Total Supply of Space as a Share of Total Supportable Space from all Market Sources 118% ______Source: HR&A Advisors, Inc.; W & W, Inc.

The final step in the analysis of Shopper Goods is making a comparison between the projected demand and projected supply of Shopper Goods space. In this regard, three comparisons are considered relevant to the analysis: (1) a comparison between the growth in demand for Shopper Goods space in the PMA with the additional supply represented by the Project; (2) a comparison between the demand for Shopper Goods space in the combined PMA and SMA with potential supply represented by both the Project and the Lane Ranch shopping center, where the SMA represents 30 percent of total demand; and (3) a comparison between potential demand for Shopper Goods at the Project location from both the PMA and the SMA, and the cumulative development of the Project, Lane Ranch and the other competitive centers. Each comparison is presented below and summarized in the bottom three rows of Table 20.

. Comparison 1: Increase in Shopper Goods supportable space in the PMA with the Shopper Goods space proposed at the Project. In this comparison the total supply of Shopper Goods space in the Project of 255,073 square feet GLA is 81 percent of the projected increase in demand for Shopper Goods space in the PMA. Thus, if the Project provided the only new Shopper Goods retail space developed in the PMA by 2012, it could easily be supported without impacting existing retailers’ sales support levels from PMA residents, and therefore would not raise any issues regarding urban decay.

. Comparison 2: Increase in Shopper Goods supportable space in the PMA (70% of total market support) and SMA (30% of total market support) with the combined Shopper Goods space .for the Project and Lane Ranch that will be developed at the intersection of 60th Street W and West Avenue L. The combined development of the two centers would provide 409,718 square feet GLA of Shopper Goods space, which is equivalent to 91 percent of the Total Shopper Goods space that can be supported by the combined demand from both PMA and SMA residents. This comparison suggests that by 2012, the growth in market demand for Shopper Goods space would increase to such a degree that the combined development of Shoppers Goods space in the two centers would not adversely impact future market conditions or lead to a process of urban decay.

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. Comparison 3: Increase in Supportable Shopper Goods space planned for the combined PMA and SMA with the Cumulative Shopper Goods Space for all Projects proposed for development by 2012. In this comparison the projected cumulative supply of Shopper Goods space represents 118 percent of total demand, representing a condition of potential oversupply of 81,704 square feet in 2012. However, given that the annual growth in Shopper Goods demand should exceed 100,000 square feet per year by that date, the potential oversupply should be eliminated by market area growth in demand by 2013. This projection is shown below in Table 21.

Table 21 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY OF SHOPPER GOODS SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) AND OTHER SOURCES 2007-2013

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013

Total Supportable GAFO Space by PMA Residents 70% 71,412 93,694 143,638 235,964 316,540 397,970 Total Supportable GAFO Space from Other Market Sources 30% 30,605 40,154 61,559 101,127 135,660 170,558 Total Supportable Space 100% 102,018 133,848 205,198 337,091 452,200 568,528

Projected Supply of Additional GAFO Space PROPOSED PROJECT 255,073 255,073 Other Competitive Center at 60th Street West and West Avenue L (Lane Ranch) 154,645 154,645 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 409,718 409,718 Other Proposed Space in PMA 124,186 124,186 Grand Total, All Proposed Shopper Goods Space 533,904 533,904

Comparison: Projected Total Supply of Space as a Share of Total Supportable Space from all Market Sources 118% 94% ______Source: HR&A Advisors, Inc.; W & W, Inc.

A second test of the future market’s ability to support the proposed Shopper Goods space was to consider the amount of space that could be supported if the sales per square foot requirement were reduced by 10 percent, thus reflecting recent declines in market performance for most retail facilities. As noted in Table 22, if the basic level of sales support is reduced by 10 percent to $315 per square foot GLA, the projected growth in demand from the PMA and SMA is also sufficient to accommodate the entire anticipated increase of Shopper Goods space in the combined 14 centers within the second full calendar year of the Project’s operation or 2013.

Table 22 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY OF SHOPPER GOODS SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) AND OTHER SOURCES 2007-2013 ASSUMING BASELINE SALES PER SQUARE FOOT REQUIREMENT OF $315 PER SQUARE FOOT GLA TO REFLECT RECENT MARKET CONDITIONS

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013

Total Supportable GAFO Space by PMA Residents 70% 79,347 104,104 159,598 262,182 351,711 442,188 Total Supportable GAFO Space from Other Market Sources 30% 34,006 44,616 68,399 112,364 150,733 189,509 Total Supportable Space 100% 113,353 148,720 227,997 374,546 502,444 631,698

Projected Supply of Additional GAFO Space PROPOSED PROJECT 255,073 255,073 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 154,645 154,645 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 409,718 409,718 Other Proposed Space in PMA 124,186 124,186 Grand Total, All Proposed Shopper Goods Space 533,904 533,904

Comparison: Projected Total Supply of Space as a Share of Total Supportable Space from all Market Sources 106% 85% ______Source: HR&A Advisors, Inc.; W & W, Inc.

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Summarizing these comparative calculations, given the likely continued growth of both the PMA and the SMA in population and per capita personal income over the period 2007 through 2013, together with the likelihood that the Project will draw significant patronage from the SMA, development of the Project should not have a significant impact on the existing base of Shopper Goods retail space in the PMA or the SMA. Moreover, the likely depth of the expanding market should also allow for the successful development of the proposed Shopper Goods facilities at the adjacent Lane Ranch center without creating circumstances that would lead to urban decay.

Two final observations can be made regarding the proposed development of Shopper Goods space on the site that has been chosen for the Project. First, the proposed location and timing of the Project and the Lane Ranch developments strongly suggest that the developers and their anchor store tenants are establishing positions in the market that are slightly in advance of future demand. In taking this step they may be intending to pre-empt market competition in the future by selecting a superior position and accepting short term sales “shortfalls” in order to ensure long term market success. Second, it is also important to recognize that if there is any major impact on existing or new developments in the PMA from a short term oversupply of Shopper Goods space, this impact is most likely to affect the two shopping centers that are being developed at the intersection of West Avenue L and 60th Street West, namely the Project and Lane Ranch. Of the 14 new or proposed centers under considered in this evaluation, they are the only two proposed developments that are “anchored” by a large retailer offering General Merchandise, thus the only centers that would experience major problems should one of the major General Merchandise stores fail. In contrast, all of the other centers are either anchored by other types of retail stores or do not have a major anchor tenant. As a result, an excess supply of Shopper Goods in the PMA over the short term is not likely to cause such a large vacancy problem to any of them that the condition would likely lead to urban decay.

E. Building Materials and Garden Supplies Space Impact Analysis

Based upon recent (2007) sales data, Los Angeles County residents typically allocate 5.91% of their retail purchases for the combined Building Materials and Garden Supplies retail categories. As noted in Table 23 below, based upon the anticipated growth in population and income, PMA residents are projected to increase their retail sales for Building Materials and Garden Supplies by over $24.6 million between 2007 and 2012.

Table 23 PROJECTED GROWTH IN DEMAND FOR BUILDING MATERIALS AND GARDEN SUPPLIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change 2007-2012 2007 2008 2009 2010 2011 2012

Potential PMA Demand for Retail Sales ('000s) $ 416,676 $ 1,315,336 $ 1,403,692 $ 1,429,869 $ 1,494,083 $ 1,616,316 $ 1,732,012

Calculation of Demand for Building Materials and Garden Supplies: Net Change % of Total ('000s) Demand 2007-2012

Building Materials and Garden Supplies Demand ('000s) 5.91%$ 24,626 $ 77,736 $ 82,958 $ 84,505 $ 88,300 $ 95,524 $ 102,362

Incremental Growth in Demand by Year ('000s) $ 5,222 $ 1,547 $ 3,795 $ 7,224 $ 6,838

Cumulative Growth in Demand ('000s) $ 5,222 $ 6,769 $ 10,564 $ 17,788 $ 24,626 ______Source: California State Board of Equalization; Claritas, Inc.; HR&A Advisors, Inc.; W & W, Inc.

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Table 24 translates the projected 2007-2012 growth in Building Materials and Garden Supply sales demand within the PMA into supportable retail space. Given a market standard of $250 per square foot (expressed initially in 2007 dollars and adjusted annually at the projected change in the Consumer Price Index or CPI), the projected increase in demand in the PMA is projected to support an additional 89,540 square feet GLA of Building Materials and Garden Supplies space by 2012.

Table 24 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR BUILDING MATERIALS AND GARDEN SUPPLIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space:

Sales per Square Foot of GLA Requirement, Average: $ 250 $ 259 $ 255 $ 260 $ 266 $ 275 Base $ 250 Annual Increase in Required Support per CPI 3.4% -1.2% 1.8% 2.5% 3.2%

In Square Feet GLA

Supportable Building Materials and Related Space in GLA, Annual Increase 20,201 6,057 14,597 27,107 24,862

Supportable Building Materials and Related Space in GLA, Cumulative Increase 20,201 26,503 40,631 66,748 89,540 ______Source: HR&A Advisors, Inc.; W & W, Inc.

A major garden center at Wal-Mart can expect to draw substantial patronage from an area beyond the PMA, in this instance most probably from portions of the SMA that are located westerly and southerly of the shopping center site. Demand for sales should also come from builders and landscape contractors that are active in the community. As a consequence, after allowance is made for 30 percent of the market support to come from beyond the PMA, the total supportable space approaches 127,914 square feet GLA, as presented in Table 25 below.

Table 25 COMPARISON OF PROJECTED DEMAND WITH PROJECTED INCREASE OF SUPPLY OF BUILDING MATERIALS AND GARDEN SUPPLIES STORE SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA 2007-2012

Square Feet GLA

Factor 2008 2009 2010 2011 2012

Total Supportable Building Materials Space by PMA Residents 70% 20,201 26,503 40,631 66,748 89,540 Total Supportable Building Materials Space from Other Market Sources 30% 8,657 11,359 17,413 28,606 38,374 Total Supportable Space 100% 28,858 37,862 58,045 95,354 127,914

Projected Supply of Additional Building Materials and Related Space PROPOSED PROJECT 21,624 Other Competitive Center at 60th Street W est and Avenue L (Lane Ranch) 171,038 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 192,662 Other Existing and Proposed Space in PMA, 2007-2012 20,000 Grand Total, All Proposed Building Materials and Garden Supply Space 212,662

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 24%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space from All Market Sources 151%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space from all Market Sources 166% ______Source: HR&A Advisors, Inc.; W & W, Inc.

In addition to the proposed Garden Supplies space at the Project, additional space will be provided by Lane Ranch in the form of a major home improvement store that will feature a garden center and a second garden center that will be part of the Target store. As noted in Tables 14 and 25, the Lane Ranch development is expected to add a total of 171,038 square feet GLA of

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Building Materials/Garden Supplies space to the market, thus increasing the total additions to space in this category at the intersection of 60th Street West and West Avenue L from the two proposed projects to 192,664 square feet GLA by 2012. Further, it should be noted that another home improvement center has been proposed in the second phase of another shopping center being developed in the PMA (see project #2, Table 14), though this specific facility is not scheduled to open until 2014. If completed as presently conceived, this project would add an additional 171,069 square feet GLA of Building Materials and Garden Supplies space to the PMA by that date.

Following the same comparative analysis sequence that was utilized to evaluate Shopper Goods, three basic comparisons were made between the projected additional demand and proposed additional supply of Building Materials and Garden Supplies space: (1) a comparison of additional demand for space generated by the PMA with the amount of space proposed by the Project; (2) a comparison of additional PMA and SMA resident demand with the total supply proposed by the Project and Lane Ranch where the SMA residents represent 30 percent of total demand; and (3) a comparison of the demand for space generated by combined PMA residents and SMA residents with the total space proposed by the Project and all other new projects planned for completion in the PMA over the same time period. These comparisons are shown in the bottom three rows of Table 25.

. Comparison 1: Increase in Building Materials and Garden Supplies supportable space in the PMA with Building Materials and Garden Supplies space proposed at the Project. In this comparison the total space proposed by the Project represents only 24 percent of the projected increase in PMA demand, and thus could be supported without adversely impacting the existing pattern of sales in the market area. Therefore, the Project considered alone does not raise any urban decay issues.

. Comparison 2: Increase in Building Materials and Garden Supplies supportable space in the PMA and SMA with the combined Building Materials and Garden Supplies space provided by the Project and Lane Ranch. The combined development of the Project and Lane Ranch as currently proposed would provide Building Materials and Garden Supplies space totaling 192,662 square feet GLA, an amount which is equivalent to 151 percent of the projected growth in demand from the combined market areas in 2012. Projected growth in demand for subsequent years suggests that the space in the two projects and other new space developed in the PMA would be fully supported at the suggested baseline 2007 level of $250 sales per square foot GLA (inflated per CPI annually) by 2015. This is shown in Table 26 below. Assuming that there is no further growth in supply in the PMA other than what has been identified in Tables 14 through 16 for the period 2007-2012 and already in operation, there would be no significant urban decay issues related to development of these two projects.

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Table 26 COMPARISON OF PROJECTED DEMAND WITH PROJECTED INCREASE OF SUPPLY OF BUILDING MATERIALS AND GARDEN SUPPLIES STORE SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA 2007-2015

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013 2014 2015

Total Supportable Building Materials Space by PMA Residents 70% 20,201 26,503 40,631 66,748 89,540 112,574 135,877 154,994 Total Supportable Building Materials Space from Other Market Sources 30% 8,657 11,359 17,413 28,606 38,374 48,246 58,233 66,426 Total Supportable Space 100% 28,858 37,862 58,045 95,354 127,915 160,821 194,110 221,420

Projected Supply of Additional Building Materials and Related Space PROPOSED PROJECT 21,624 21,624 21,624 21,624 Other Competitive Center at 60th Street W est and Avenue L (Lane Ranch) 171,038 171,038 171,038 171,038 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 192,662 192,662 192,662 192,662 Other Proposed and New Space in PMA, 2007-2012 20,000 20,000 20,000 20,000 Grand Total, All Proposed Building Materials and Garden Supply Space 212,662 212,662 212,662 212,662

Comparison: Projected Total Supply of Space as a Percent of Total Supportable Space from all Market Sources 166% 132% 110% 96% ______

Source: HRA Advisors, Inc.; W & W, Inc.

. Comparison 3: Increase in Building Materials and Garden Supplies supportable space in the PMA and the SMA with the proposed space for the Project and all other projects proposed for development by 2012. Given the findings of Comparison 2 above indicating that the development of both the Project and Lane Ranch could provide an increase in supply of Building Materials and Garden Supplies space that likely would exceed market demand until 2015 under the sales requirements utilized for this analysis, the evaluation period was extended beyond 2012 with respect to consideration of additional sources of future supply. Accordingly, Comparison 3 includes the proposed addition of a second major home improvement center proposed for completion by 2014 as part of Phase II of the proposed shopping complex (project #2, Table 14) under consideration at West Avenue K and 60th Street West that is located approximately one mile north of the Project. Table 27 adds this proposed addition to the supply of Building Materials and Garden Supplies space to the inventory in year 2014, the anticipated date of this facility’s completion. As shown in the table, this addition would raise the total supply of Building Materials and Garden Supplies space to a level equivalent to 198 percent of the total anticipated growth in demand by the year 2014, thus representing an effective oversupply in that year of 189,621 square feet GLA. Based upon this projection of future market conditions, it is clear that this proposed addition of a second major home improvement center would not be warranted by anticipated growth in demand, and would contribute to the condition of potential oversupply that was identified in Comparison 2 above.

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Table 27 COMPARISON OF PROJECTED DEMAND WITH PROJECTED INCREASE OF SUPPLY OF BUILDING MATERIALS AND GARDEN SUPPLIES STORE SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA ASSUMING DEVELOPMENT OF A SECOND MAJOR HOME IMPROVEMENT FACILITY AT AVENUE K AND 60TH STREET WEST IN 2014 2007-2014

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013 2014

Total Supportable Building Materials Space by PMA Residents 70% 16,961 20,101 31,301 54,242 77,566 97,646 117,932 Total Supportable Building Materials Space from Other Market Sources 30% 7,269 8,615 13,415 23,247 33,242 41,848 50,542 Total Supportable Space 100% 24,230 28,716 44,715 77,489 110,808 139,494 168,474

Projected Supply of Additional Building Materials and Related Space PROPOSED PROJECT 21,624 21,624 21,624 Other Competitive Center at 60th Street W est and W est Avenue L (Lane Ranch) 171,038 171,038 171,038 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 192,662 192,662 192,662 Other Proposed and New Space in PMA, 2007-2012 20,000 20,000 20,000 Home Improvement Center, Avenue K and 60th Street West, 2014 171,069 Grand Total, All Proposed Building Materials and Garden Supply Space 212,662 212,662 383,731

Comparison: Projected Total Supply of Space as a Percent of Total Supportable Space from all Market Sources 192% 152% 228% ______Source: HR&A Advisors, Inc.; W & W, Inc.

Recognizing the probable condition of significant oversupply if a second major home improvement center is developed as presented in Table 27, the important follow-on question to consider is whether there would be conditions that could contribute to significant urban decay if both major home improvement centers were completed by 2014 without a dramatic growth in potential demand not foreseen in this analysis. In this regard, it should be recognized that only two existing or proposed projects located in the PMA have a significant amount of Building Materials and Garden Supplies space that would affected if all the proposed home improvement space were constructed: (1) Lane Ranch, which shares the West Avenue L/60th Street West intersection with the Project; and (2) the center identified above as project #2 being developed at West Avenue K and 60th Street West, just one mile north of the Project/Lane Ranch locations.

Effectively, these projects would be competing for the same market area — residents and builders located and/or working west of the Antelope Valley Freeway corridor. Also, it should be noted that the home improvement centers proposed for each location have strikingly similar dimensions, 170,000+/- square feet GLA including a 30,000+/- square foot outdoor garden supply component. Given (1) the similarity of location, (2) the similarity of proposed building configuration, and (3) the recent delay in the development of the home improvement center at the West Avenue K/60th Street West project to a second phase scheduled to open in 2014, it is entirely possible that the home improvement center operator is the same at both locations and/or the developer at the West Avenue K site is waiting to see whether Lane Ranch is approved before he makes a final commitment to a home improvement center facility on his site. Moreover, given (1) that the potential condition of extreme oversupply at the earliest would occur five years into the future, and (2) recognizing that both the Lane Ranch developer and the West Avenue K/60th Street West developer will have substantial opportunities to reconfigure or refine their respective development programs, it is highly unlikely that both home improvement centers would be completed by 2014 where such a condition of oversupply, in turn, could lead to a condition of extreme oversupply of space in the PMA.

F. Convenience Goods Space Impact Analysis

Typically, there are two major types of Convenience Goods that are included in retail analysis: (1) Food/Beverage Stores, including supermarkets, specialty food stores like Trader

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Joe’s and beverage stores; and (2) large, free-standing drugstores that offer a variety of household goods, such as paper and personal care products and small pharmacies specializing in prescriptions. The following section reviews the market for both food/beverage stores and drug stores.

Given the dispersed character of the Antelope Valley development pattern and the likely presence of two regional anchor tenants that would draw patronage, the primary market area for food stores and drug stores at the Project is considered to be the same as the PMA or the five- mile market radius. This radius is larger than would typically be used in urban settings where development is more dense and compact, and where competitive facilities are found at nearby locations. Moreover, given the Project’s location nearly five miles west of the Antelope Valley Freeway (S. R. 14/138) at a key point of access on the existing regional highway system, the Project is also likely to attract patronage from at least the western half of the SMA for food/beverage and drug purchases.

Analysis of Los Angeles County resident spending patterns taken from both the State Board of Equalization and U.S. Census of Retail Trade publications indicates that 14.21 percent of all retail expenditures are captured by food stores and 4.38 percent of all retail expenditures are captured by drug stores. Over the period 2007 through 2012, the projected increase in PMA resident demand should $59.2 million for food and beverage store purchases and nearly $18.3 million for drugstore purchases. These projections are presented in Table 28.

Table 28 PROJECTED GROWTH IN DEMAND FOR CONVENIENCE GOODS LANCASTER SHOPPING CENT ER PRIMARY MAR KET AREA (PMA) 2007-2012

Net Change ('000s) 2007-2012 2007 2008 2009 2010 2011 2012

Potential Demand for Retail Sales ('000s))$ 416,677 $ 1,315,336 $ 1,403,692 $ 1,429,869 $ 1,494,083 $ 1,616,316 $ 1,732,013

Calculation of Demand for Selected Convenience Goods by Major Category:

Net Change % of Total ('000s) Demand 2007-2012 2007 2008 2009 2010 2011 2012

Food and Beverage Stores ('000s) 14.21%$ 59,210 $ 186,909 $ 199,465 $ 203,184 $ 212,309 $ 229,679 $ 246,119

Incremental Growth in Demand by Year ('000s)) $ 12,555 $ 3,720 $ 9,125 $ 17,369 $ 16,441

Cumulative Growth in Demand ('000s) $ 12,555 $ 16,275 $ 25,400 $ 42,769 $ 59,210

Drug Stores ('000s) 4.38%$ 18,250 $ 57,612 $ 61,482 $ 62,628 $ 65,441 $ 70,795 $ 75,862

Incremental Growth in Demand by Year ('000s)) $ 3,870 $ 1,147 $ 2,813 $ 5,354 $ 5,068

Cumulative Growth in Demand ('000s) $ 3,870 $ 5,017 $ 7,829 $ 13,183 $ 18,250 ______Source: California State Board of Equalization; Claritas, Inc.; HR&A Advisors, Inc.; W & W, Inc.

Table 29 converts the projected 2007-2012 PMA growth in food store and drug store sales demand into supportable square feet GLA of drugstore/pharmacy space. Utilizing market standards that are appropriate for this location of $500 per square foot GLA for food stores and $650 per square foot for drug stores/pharmacies (expressed initially in 2007 dollars and adjusted annually at the projected change in the Consumer Price Index or CPI), the projected increase in supportable food store space in 2012 is 107,645 square feet GLA and 25,523 square feet GLA for drug stores.

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Table 29 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR CONVENIENCE GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space, Food/Beverage Stores:

Sales per Square Foot of GLA Requirement, Average: $ 500 $ 517 $ 511 $ 520 $ 533 $ 550 Base $ 500 Annual Increase in Required Support per CPI 3.4% -1.2% 1.8% 2.5% 3.2%

Projected Increase in Supportable Retail Space, Drug Stores:

Sales per Square Foot of GLA Requirement, Average: $ 650 $ 672 $ 664 $ 676 $ 693 $ 715 Base $ 650 Annual Increase in Required Support per CPI 3.4% -1.2% 1.8% 2.5% 3.2%

In Square Feet GLA

2008 2009 2010 2011 2012

Supportable Food/BeverageSpace in GLA, Annual Increase 24,285 7,282 17,548 32,588 29,889

Cumulative Increase (Adjusted for higher sales requirement per square foot) 24,285 31,862 48,847 80,244 107,645

Supportable Drug Store Space in GLA, Annual Increase 5,758 1,727 4,161 7,727 7,087

Cumulative Increase (Adjusted for higher sales requirement per square foot) 5,758 7,555 11,582 19,026 25,523 ______Source: HR&A Advisors, Inc.; W & W, Inc.

1. Food Stores, including Supermarkets, Other Food Stores and Beverage Stores

Food store space at the Project is projected to approach 45,736 square feet GLA, based on the typical allocation for this category within a Wal-Mart Superstore. For Lane Ranch, the allocation is estimated at 27,000 square feet GLA, per space provided within the Target Department Store. The other proposed centers in the PMA are expected to supply 73,000 square feet of food store space by 2012, raising the total addition to supply to 145,736 square feet GLA. These additions to supply were summarized previously in Table 14 and noted in Table 30 below.

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Table 30 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY OF FOOD AND BEVERAGE STORE SPACE, LANCASTER SHOPPING CENTER MARKET AREAS 2007-2012

Square Feet GLA

Factor 2008 2009 2010 2011 2012

Total Supportable Food/Beverage Space by PMA Residents 85% 24,285 31,862 48,847 80,244 107,645 Total Supportable Food/Beverage Space from Other Market Sources 15% 4,286 5,623 8,620 14,161 18,996 Total Supportable Space 100% 28,571 37,485 57,467 94,405 126,641

Projected Supply of Additional Food/Beverage Space PROPOSED PROJECT 45,736 Other Competitive Center at 60th Street West and West Avenue L (Lane Ranch) 27,000 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 72,736 Other Proposed Space in PMA 73,000 Grand Total, All Proposed Food Store Space 145,736

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 36%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and West Avenue L as a Percent of Total Supportable Space by All Market Sources 57%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by All Market Sources 115% ______Source: HR&A Advisors, Inc.; W & W, Inc.

Following same analysis sequence that was utilized to evaluate Shopper Goods and Building Materials/Garden Supplies, three basic comparisons were made between the projected additional demand and proposed additional supply of Food and Beverage Facilities space: (1) a simple comparison of additional demand for space generated by the PMA with the amount of space proposed by the Project; (2) a comparison of additional PMA and SMA resident demand with the total supply proposed by the Project and Lane Ranch where the SMA residents represent 15 percent of total demand; and (3) a comparison of the demand for space generated by combined PMA residents and SMA residents with the total space proposed by the Project and all other new projects planned for completion in the PMA over the same time period. These comparisons are shown in the bottom three rows of Table 30.

. Comparison 1: Increase in Food and Beverage supportable space in the PMA with Food and Beverage Space proposed at the Project. In this comparison the total Food and Beverage space proposed by the Project represents 36 percent of the projected increase in PMA demand, and thus could be supported without adversely impacting the existing pattern of sales in the market area (i.e., no urban decay impacts).

. Comparison 2: Increase in Food and Beverage supportable space in the PMA and SMA with the combined Food and Beverage supportable space provided by the Project and Lane Ranch. The combined development of the Project and Lane Ranch would generate Food and Beverage space totaling 72,736 square feet of GLA, an amount that would be equivalent to 57% of the supportable demand from the combined market areas in 2012, and therefore presents no urban decay impacts.

. Comparison 3: Increase in Food and Beverage supportable space in the PMA and SMA with the proposed space in the Project and all other retail centers proposed for development by 2012. The proposed cumulative development of all projects by 2012 would generate a total supply of 145,736 square feet of Food and Beverage space, an amount that represents 115 percent of projected growth in demand, or a potential over-

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supply of 19,095 square feet GLA utilizing the 2007 $500 square foot sales standard inflated to an equivalent 2012 value . Effectively, current projections for 2012 suggest that the market support level would be closer to $406 per square foot GLA.

Table 31 provides a further examination of market conditions beyond 2012 in order to determine when market demand would provide support at the sales levels suggested as most appropriate for major food and beverage facilities. As noted, market demand would reach the desired support level by 2013, thus in the second full calendar year of operations.

Table 31 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY OF FOOD AND BEVERAGE STORE SPACE LANCASTER SHOPPING CENTER MARKET AREAS 2007-2013

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013

Total Supportable Food/Beverage Space by PMA Residents 85% 24,285 31,862 48,847 80,244 107,645 135,337 Total Supportable Food/Beverage Space from Other Market Sources 15% 4,286 5,623 8,620 14,161 18,996 23,883 Total Supportable Space 100% 28,571 37,485 57,467 94,405 126,641 159,220

Projected Supply of Additional Food/Beverage Space PROPOSED PROJECT 45,736 45,736 Other Competitive Center at 60th Street West and West Avenue L (Lane Ranch) 27,000 27,000 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 72,736 72,736 Other Proposed Space in PMA 73,000 73,000 Grand Total, All Proposed Food Store Space 145,736 145,736

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 36% 29%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and Avenue L as a Percent of Total Supportable Space by All Market Sources 57% 46%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by All Market Sources 115% 92% ______Source: HR&A Advisors, Inc.; W & W, Inc.

While there is a possibility that there would be a short term oversupply of Food and Beverage space based in part upon the sales standard applied in this evaluation, this issue is not considered likely to cause conditions leading to urban decay for the following reasons:

(1) One half of the proposed Food and Beverage space (an estimated 72,736 square feet GLA) would be provided by grocery departments that are embedded within the two anchor stores proposed for development at the West Avenue L/60th Street West site: Wal-Mart (Project); and Target (Lane Ranch). If sales were low in the Food and Beverage sections, the retailers could re- configure the space to fill other market niches for the short term;

(2) The only other proposed shopping center with a major Food and Beverage component is the neighborhood center proposed for development at the northwest corner of 40th Street West and West Avenue J (project #1, Table 14). This project is currently undergoing entitlement, and assuming it were approved for construction, the developer(s) of this project would then need to consider the competitive conditions that their center would face in the future from the Project, Lane Ranch and other existing and proposed retail centers in the PMA; and

(3) Growth in market demand in the PMA and SMA should be sufficient to support all proposed Food and Beverage space by 2013, thus obviating conditions that could be causal factors leading to future extreme oversupply and possible urban decay.

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2. Drug Stores/Pharmacies

In contrast to the relative balance that is likely to be achieved between supply and demand for general merchandise, building materials/garden supply and food/beverage store space within two to three calendar years after full operation of the proposed centers in the PMA, if all the drug store and pharmacy space that is presently included in proposed shopping center development programs is constructed as currently proposed, there will likely be a major oversupply by 2012 that will not be easily resolved by growth in demand.

Both the developers of the Project and Lane Ranch, for example, have expectations of providing: (1) a free-standing drug store on a pad; and (2) a pharmacy inside one of the anchor stores in their respective centers, potentially resulting in four drug/pharmacy facilities with a total of 34,436 square feet GLA of drug/pharmacy space at the intersection of 60th Street W and West Avenue L. In addition, other projects are expecting to add another 87,771 square feet GLA of drug stores/pharmacies to the PMA, raising the total additional space in this Convenience Goods category to 122,207 square feet GLA by 2012. These additions to inventory were itemized in Table 14 and are shown below in Table 32 following:

Table 32 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY OF DRUG STORE SPACE LANCASTER SHOPPING CENTER MARKET AREAS 2007-2012

Square Feet GLA

Factor 2008 2009 2010 2011 2012

Total Supportable Drug Store Space by PMA Residents 85% 5,758 7,555 11,582 19,026 25,523 Total Supportable Drug Store Space from Other Market Sources 15% 1,016 1,333 2,044 3,358 4,504 Total Supportable Space 100% 6,774 8,888 13,626 22,384 30,027

Projected Supply of Additional Drug Store Space PROPOSED PROJECT 15,564 Other Competitive Center at 60th Street West and West Avenue L (Lane Ranch) 18,872 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 34,436 Other Proposed Space in PMA 87,771 Grand Total, All Proposed Food Store Space 122,207

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 61%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and West Avenue L as a Percent of Total Supportable Space by All Market Sources 115%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by All Market Sources 407% ______Source: HR&A Advisors, Inc.; W & W, Inc.

Following the same analysis sequence that was utilized to evaluate other retail goods, a comparison between supply and demand for drug store/pharmacy space under three sets of potential future market conditions is presented below:

. Comparison 1: Increase in Drug Store supportable space in the PMA with Drug Store Space proposed at the Project. The Project will offer both a stand-alone drug store and pharmacy space within the Wal-Mart, resulting in a total of 15,564 square feet GLA. This potential supply represents 61 percent of total projected PMA resident demand, and therefore does not present any urban decay issues.

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. Comparison 2: Increase in Drug Store supportable space in the PMA and SMA with the combined Drug Store supportable space provided by the Project and Lane Ranch. The combined development of the Project and Lane Ranch would generate drug store space totaling 34,436 square feet of GLA, an amount that would be equivalent to 115% of the supportable demand from the combined market areas in 2012. However, as presented in the Comparison 2 line in Table 33 below, by 2013 market demand would likely be sufficient to support market supply from the Project and the Lane Ranch facilities at the level of support utilized in this analysis of $650 per square foot GLA. Again, this does not raise any significant urban decay issues.

Table 33 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY OF DRUG STORE SPACE LANCASTER SHOPPING CENTER MARKET AREAS 2007-2013

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013

Total Supportable Drug Store Space by PMA Residents 85% 5,758 7,555 11,582 19,026 25,523 32,089 Total Supportable Drug Store Space from Other Market Sources 15% 1,016 1,333 2,044 3,358 4,504 5,663 Total Supportable Space 100% 6,774 8,888 13,626 22,384 30,027 37,752

Projected Supply of Additional Drug Store Space PROPOSED PROJECT 15,564 15,564 Other Competitive Center at 60th Street West and West Avenue L (Lane Ranch) 18,872 18,872 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 34,436 34,436 Other Proposed Space in PMA 87,771 87,771 Grand Total, All Proposed Drug Store /Pharmacy Space 122,207 122,207

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 61% 49%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and West Avenue L as a Percent of Total Supportable Space by All Market Sources 115% 91%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by All Market Sources 407% 324% ______Source: HR&A Advisors, Inc.; W & W, Inc.

. Comparison 3: Increase in Dug Store supportable space in the PMA and SMA with the proposed space in the Project and all other Projects proposed for development by 2012. The proposed cumulative development of all projects by 2012 would generate a total supply of 122,207 square feet of Drug Store space, an amount that represents 407 percent of projected growth in demand by that date. This magnitude of development represents a potential oversupply of 92,180 square feet GLA, an amount equivalent to more than four times the square feet GLA that can be supported by projected growth in demand. Further, this condition of oversupply does not materially change in the future; as presented in Table 33, by 2013 there would still likely be an oversupply of 84,455 square feet GLA, equivalent to an amount of space that represents 324 percent of the potential growth in demand over the period.

Given the potential for this significant oversupply, a more detailed analysis of existing and projected future drug store/pharmacy space was undertaken in order to better understand and assess whether this possible future condition could lead to urban decay. The results of this analysis are presented in Section H. below.

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G. Eating and Drinking Facilities Impact Analysis

While the demand for the Project’s Eating and Drinking Facilities would be generated by the entire range of customers at the center, it can be argued that the major source of market support for the Project’s restaurants would come from residents living near the site. As a consequence, the Eating and Drinking Facilities analysis utilizes the 5.0-mile PMA as the basis for determining the magnitude of market support that will exist for proposed restaurants at the Project site.

Table 34 provides a projection of the increase in Eating and Drinking Facilities demand for the period 2007 through 2012 by utilizing the same analytic approach presented above for other types of retail space. Based upon Los Angeles County resident spending patterns, 11.42 percent of retail expenditures are made at Eating and Drinking facilities. Accordingly, the projected growth in PMA demand for restaurant expenditures between 2007 and 2012 is nearly $47.6 million.

Table 34 PROJECTED GROWTH IN DEMAND FOR EATING & DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change ('000s) 2007-2012 2007 2008 2009 2010 2011 2012

Potential Demand for Retail Sales ('000s)) $ 416,677 $ 1,315,336 $ 1,403,692 $ 1,429,869 $ 1,494,083 $ 1,616,316 $ 1,732,013

Calculation of Demand for Eating & Drinking Facilities

Net Change % of Total ('000s) Demand 2007-2012 2007 2008 2009 2010 2011 2012

Eating & Drinking Facilities Demand ('000s) 11.42%$ 47,585 $ 150,211 $ 160,302 $ 163,291 $ 170,624 $ 184,583 $ 197,796

Incremental Growth in Demand by Year ('000s)) $ 10,090 $ 2,989 $ 7,333 $ 13,959 $ 13,213

Cumulative Growth in Demand ('000s) $ 10,090 $ 13,080 $ 20,413 $ 34,372 $ 47,585 ______Source: California State Board of Equalization; Claritas, Inc.; HR&A Advisors, Inc.; W & W, Inc.

Allowing for Eating and Drinking facilities on average to achieve sales volumes approaching $500 per square feet (expressed initially in 2007 dollars and adjusted annually at the projected change in the Consumer Price Index or CPI to 2012), by 2012 the anticipated increase in PMA demand should be able to sustain additional restaurant space in an amount approaching 86,510 square feet GLA as shown in Table 35.

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Table 35 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR EATING & DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Eating & DrinkingSpace:

Sales per Square Foot of GLA Requirement, Average:$ 500 $ 517 $ 511 $ 520 $ 533 $ 550 Base $ 500 Annual Increase in Required Support per CPI 3.4% -1.2% 1.8% 2.5% 3.2%

In Square Feet GLA

2008 2009 2010 2011 2012

Supportable Eating & Drinking Space in GLA, Annual Increase 19,517 5,852 14,103 26,190 24,021

Cumulative Increase (Adjusted for higher sales requirement per square foot) 19,517 25,606 39,256 64,489 86,510 ______Source: HR&A Advisors, Inc.; W & W, Inc.

As the analysis of potential market support for Eating and Drinking Facilities was based exclusively on the additional demand generated by PMA residents, the three comparisons between projected demand and projected supply were modified to reflect the following methodological structure: (1) Project with PMA; (2) Project and Lane Ranch with PMA; and (3) Cumulative Projects in the PMA with PMA. The results of these comparisons, shown in Table 36, are discussed below:

Table 36 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY EATING AND DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

In Square Feet GLA

2008 2009 2010 2011 2012

Total Supportable Eating & Drinking Space by PMA Residents 19,517 25,606 39,256 64,489 86,510

Projected Supply of Additional Eating & Drinking Space PROPOSED PROJECT 13,425 Other Competitive Center at 60th Street W est and W est Avenue L (Lane Ranch) 16,000 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 29,425 Other Proposed Space in PMA 65,132 Grand Total, All Proposed Eating and Drinking Facility Space 94,557

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 16%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and West Avenue L as a Percent of Total Supportable Space by PMA Residents 34%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 109% ______

Source: HR&A Advisors, Inc.; W & W, Inc.

. Project with PMA: The Project’s Eating and Drinking Facility space of 13,425 square feet GLA represents only 16 percent of the potential growth in PMA resident demand in 2012, and therefore does not raise any urban decay issues;

. Project and Lane Ranch with PMA: The two projects together will provide space sufficient to accommodate 34 percent of the total growth in PMA resident demand for this category by 2012, and also do not raise any urban decay issues;

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. Cumulative Projects with the PMA: The cumulative proposed supply from all developments represents 109 percent of total growth in PMA demand in 2012, but as shown in Table 37 below, demand substantially exceeds supply by 2013.

Table 37 COMPARISON OF PROJECTED INCREASE IN DEMAND WITH PROJECTED INCREASE IN SUPPLY, EATING AND DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2013

In Square Feet GLA

2008 2009 2010 2011 2012 2013

Total Supportable Eating & Drinking Space by PMA Residents 19,517 25,606 39,256 64,489 86,510 108,765

Projected Supply of Additional Eating & Drinking Space PROPOSED PROJECT 13,425 13,425 Other Competitive Center at 60th Street W est and W est Avenue L (Lane Ranch) 16,000 16,000 Subtotal, Supply of Space, Combined Centers at 60th Street West and West Avenue L 29,425 29,425 Other Proposed Space in PMA 65,132 65,132 Grand Total, All Proposed Eating and Drinking Facility Space 94,557 94,557

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 16% 12%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and West Avenue L as a Percent of Total Supportable Space by PMA Residents 34% 27%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 109% 87% ______

Source: HR&A Advisors, Inc.; W & W, Inc.

Based upon (1) the results of the comparisons between growth in demand and projected additions to supply, (2) the relatively small proportion of future supportable space that is represented by the Project’s and Lane Ranch’s Eating and Drinking Facilities, and (3) the limited importance that is placed on restaurants in most of the proposed developments in that they are not anchor tenants and do not occupy significant amounts of space, it can be concluded that the development of additional Eating and Drinking Facility space as currently projected is not likely to have a major impact on the existing base of restaurants in the local market area. Therefore, it may be concluded that the development of additional Eating and Drinking space as presently proposed will not contribute to adverse market conditions that could lead to urban decay.

H. Evaluation of the Project’s Potential to Cause Urban Decay

Based on the foregoing analysis, the proposed Project would be a significant source of new competitive supply of retail space in a number of the retail space categories that have been evaluated in this study. However, analysis of each retail category suggests that with two exceptions — Building Materials/Garden Supply space and Drug Store/Pharmacy space — market growth in demand for retail and dining space within the relevant market areas surrounding the Project will be sufficient to absorb the additional supply from the Project and other proposed centers by 2014. As a result, it is unlikely that the short-term oversupply will create conditions that could result in extreme economic competition leading to the threat of “urban decay.”

More specifically, the analysis of potential impacts has revealed the following:

. Sources of Market Support. The PMA for the Project is an historically fast-growing residential community of single-family detached homes occupied by residents whose incomes are higher than the Los Angeles County average. Between 2007 and 2012 the resident population of the PMA — defined as those residents living within five miles of

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the Project — is forecasted to increase by 13,245 persons, and should provide the major source of market support for the Project. In addition, the Project’s location, coupled with its anchor stores and the presence of an adjacent retail development known as the Lane Ranch Towne Center, should allow for it to draw additional market support from the SMA, defined here as the resident population living within a five- to 10-mile band around the Project site. According to recently updated forecasts, between 2007 and 2012 the SMA is projected to grow by 18,017 persons and contribute 30 percent of the total market support for the Shopper Goods and Building Materials/Garden Supply space at the Project.

The growth forecasts have been examined from an historical perspective, recent changes in the national and regional economy, and from a review of proposed developments in the market areas. A recent listing of planned developments suggests that about 9,800 units have been proposed for development in the PMA alone that could generate population growth of over 29,000 persons. While the actual timing and delivery of these units is open to some question due to the downturn in the housing market and economy in general where mortgage foreclosures have spiked and access to mortgage debt has become more difficult, the forecasts appear to be realistic in their expectation that major growth is likely to continue in the Antelope Valley subregion after the current recession and extend well beyond 2012.

. Competitive Supply Considerations. As noted above, in addition to the Project there is a proposed development known as Lane Ranch that would be developed at the same intersection that would initiate operations in the same full calendar year, 2012. As presently conceived these two developments together would add a total of 761,731 square feet GLA of retail space. Given their proximity and timing, they will likely function as one large project in terms of their potential drawing power in the local market areas. Effectively, the juxtaposition of these two centers should allow them to achieve “agglomerative” benefits in that the range of choice provided by the combined retail offerings at the two sites should enhance the location as a retail destination for SMA residents and enhance this location’s customer drawing power beyond the normal market reach of a single 400,000 square foot GLA community shopping center.

. Shopper Goods (General Merchandise, Apparel, Home Furnishings, Other/Specialty Goods. The analysis of Shopper Goods considered three different measures of comparison between potential market support for new retail space and potential future competitive supply. These three comparisons were as follows:

-- Comparison 1: Project’s proposed Shopper Goods space with growth in PMA resident support for additional space;

-- Comparison 2: Combined Project and Lane Ranch Shopper Goods space with the combined PMA and SMA growth in resident support for additional Shopper Goods space; and

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-- Comparison 3: Total proposed Shopper Goods space (Project, Lane Ranch and 13 other proposed retail developments) with the combined growth in PMA resident and SMA resident support of additional retail space.

The results of the first of these comparisons indicate that the Project’s Shopper Goods space can be supported by the PMA, as it would provide the equivalent of 81 percent of the PMA’s potential supportable Shopper Goods space. In the second comparison, the analysis shows that the combination of the Project and Lane Ranch would provide an amount of space that would constitute the equivalent of 91 percent of potential growth in demand generated by the combined PMA and SMA resident markets in 2012. In the final comparison, the total Shopper Goods from all proposed projects represents 118 percent of the projected demand from the combined PMA and SMA resident markets in 2012, though there would be more than adequate support for the proposed space by 2013. Thus, while the Project and Lane Ranch together would leave little capacity for additional new General Merchandise space in the PMA, it is unlikely that they would individually or collectively create adverse market conditions that could lead to urban decay. In addition to the results of the comparative analyses, this conclusion is based on the following considerations:

-- The market demand for Shopper Goods in the PMA and SMA is growing with the development of the residential base, and by 2012 the annual growth in additional supportable Shopper Goods space should exceed 100,000 square feet GLA. Accordingly, if there is excess supply, it would likely be a short-term phenomenon that would be resolved from growth in resident demand by 2013, or within the second calendar year after the Project is planned to be fully operational.

-- The proposed major Shopper Goods anchor tenants for the two centers to be located at the intersection of 60th Street West and West Avenue L generally are already well- established in the Antelope Valley. If the two projects draw sales from other establishments it is likely that this “cannibalization” will come largely from their own existing stores. Presumably, this potential loss in sales has already been considered in each anchor store’s decision to place a new store at this location.

-- The threshold sales requirement per square foot for Shopper Goods that has been utilized in the analysis has been set at a level equivalent to the magnitudes achieved by mature stores, and therefore it may be conservative (i.e., too high) in the short term, particularly in the current economic climate, in which sales per square foot have declined for many retailers. Moreover, normally, there is a “ramp-up” period where stores take several years to achieve threshold sales levels, particularly in rapid-growth residential markets like the Antelope Valley. The anchor stores that are locating at this position in the market also appear to be making a strategic choice to establish new outlets in advance of the long-term demand that will ultimately be present in the growing community, and in their planning may have allowed for lower than typical sales performances in the first years of operation.

-- Developers of potentially competitive projects will have the option to delay or otherwise adjust their development programs to reflect evolving market conditions,

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particularly in recognition of the strength of the anchor tenants that will be present at the Project and Lane Ranch. Moreover, recent trends in the housing market may have a significant impact on the timing of some or all of the other new competitive retail projects, as development timing will be correlated with the presence of new residents in the market areas.

. Building Materials and Garden Supplies. The analysis of Building Materials and Garden Supplies retail space follows the same basic approach that was utilized for the Shopper Goods analysis, recognizing that shopping behavior for this type of good will likely attract significant sales from beyond the PMA, particularly from non-local builders constructing projects in the vicinity. Once again, three basic comparisons were made between the projected growth in market demand for supportable space and the proposed supply of new space, following the comparative framework noted above for Shopper Goods. The results of these comparisons were as follows:

-- Comparison 1: Growth in demand within the PMA for Building Materials and Garden Supply space is sufficient to support the space proposed for this use in the Project.

-- Comparison 2: The proposed cumulative supply of Building Materials and Garden Supply space from the combined Project and Lane Ranch would represent over one- and-a-half times the amount of supportable space that would be generated by growth in market area demand for the period 2007-2012. Projections of future increases in demand after 2012 suggest that demand and supply would be in balance by 2015.

-- Comparison 3: Projected growth in supply from known competitive sources would likely include the addition of a 170,000+/- square foot Lowe’s Improvement Center proposed for a shopping center undergoing entitlement that would be located at the intersection of West Avenue K and 60th Street West as well as the space proposed at the Project and Lane Ranch. The home improvement center is scheduled for the second phase of that center, and is presently scheduled for opening in 2014. Under these conditions, in 2014 the projected increase in supply in Building Materials and Garden Supplies floor area would represent more than double the amount of space that can be supported by growth in demand generated from residents in the PMA and SMA.

Assessment of the potential for urban decay caused by an oversupply of Building Materials and Garden Supplies space needs to recognize that the potential oversupply problem would be caused by the cumulative impact generated by three separate developments25. Under current circumstances, the total supply of additional space would come from the Project (21,624 square feet GLA, 6 percent of the total new space), Lane Ranch (171,038 square feet GLA, 47 percent of the new space) and the West Avenue K/60th Street West center (171,069 square feet GLA, 47 percent of the new space). With its small share, the Project’s Building Materials/Garden Supply component is not a major factor contributing to the oversupply, and

25 There are actually four developments that contribute to this supply, but one of these — the space from the center listed as project #7, Table 14 — has already been completed and is in operation, thus is effectively part of the existing supply.

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could be easily absorbed in a future market context where there was only one additional major home improvement center added to the PMA between 2009 and 2014. Rather, the problem of a potential significant oversupply of Building Materials and Garden Supply space arises with the possible development of two major home improvement centers in the PMA during the next five years in a market that likely can support only one such facility at the proposed size of 170,000 square feet GLA.

Perhaps the major question that cannot be resolved in this analysis is whether or not the development of the two proposed home improvement centers is a reasonable proposition in the next five to seven years in the PMA at the two locations that have been identified to date. While it was not possible to confirm the identity of the home improvement center operator at each site,26 the similarity of location, proposed building configuration and recent change in timing of the home improvement center at the West Avenue K/60th Street West location to a future phase (2014) suggests that the two projects may have the same operator in mind, or, at a minimum, the developers will carefully consider the potential competitive circumstances presented by other projects before proceeding with such a commitment.

These competitive market circumstances strongly suggest that only one major home improvement center will be built in the foreseeable future on 60th Street West, and that the superior location for such a retailer is the Lane Ranch site. Regardless, given the small contribution of Building Materials and Garden Supply space that will be contributed by the Project, it is unlikely that its development would contribute significantly to conditions of oversupply and potential urban decay.

. Convenience Goods. Two types of Convenience Goods space were considered in this analysis: (1) Food and Beverage facilities; and (2) Drug Store/Pharmacy space. Each type is reviewed below.

1. Food and Beverage Facilities

The comparisons of projected growth in demand with projected additions to supply indicated that there will be ample support in 2012 for the 45,376 square feet GLA of Food and Beverage space at the Project as well as the 27,000 square feet GLA proposed for development at Lane Ranch. However, the third comparison which evaluated the projected increase in demand with the combined space from all 14 retail developments under consideration in the PMA indicates that there would likely be an oversupply of 19,905 square feet GLA of Food and Beverage space by 2012, if current development schedules were maintained. Further analysis suggests that the anticipated growth in market demand should be sufficient to support all the proposed space by mid-2013, thus obviating any major concern that this short-term oversupply could lead to potential forces that promote urban decay.

26 The operator of the home improvement center at the West Avenue K/60th Street location was identified in 2007 as Lowe’s. The developer of the Project has indicated that the identity of its home improvement center is confidential at this time.

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2. Drug Store and Pharmacy Space

In contrast to the evaluation of other retail space categories, which suggests that growth in market demand will likely support proposed changes in supply by 2013, if all the proposed drug store and pharmacy space is completed as currently conceived in the 14 centers reviewed in this analysis there will likely by a major oversupply of this type of space that will not easily be accommodated by continued growth in demand. Starting first with Project, it should be noted that the developer proposes to provide two drug store/pharmacy facilities, one on a free-standing pad and the second within the Wal-Mart. In total, the two outlets would provide 15,564 square feet GLA, an amount that is equivalent to 70 percent of the projected growth in supportable drug store space in the PMA between 2007 and 2012. Similarly, the developer of Lane Ranch also proposes two drug store/pharmacy facilities, bringing the number of such stores to four and the total square footage to 34,436 square feet GLA at the intersection of West Avenue L and 60th Street West. While projected growth in market demand should reach levels sufficient to adequately support this amount of space by 2014, there are six additional major drug stores proposed in other developments (see Table 14) in the PMA that could add another 87,771 square feet of GLA to the market by 2012. Taken together with the Project and Lane Ranch, they represent more than four times the amount of space that can be supported by projected market area growth between 2007 and 2012 as defined in this analysis.

Given the abundance of proposed drug stores, field surveys were conducted in order to better understand the locational attributes of existing and proposed drug store facilities in and adjacent to the PMA that could be affected is all these new drug stores are actually built. The pattern that emerges is one that suggests that the proposed stores are not intended to serve the needs of the growing residential population conveniently located near these store sites. Rather, the locations of the proposed stores suggest that a primary factor driving the development of these facilities is the competition for visibility and market share between major drug store chains seeking advantageous locations in the Antelope Valley Freeway corridor near the Antelope Valley Hospital and Medical Center and the Lancaster Community Hospital. These two hospitals already serve as a strong magnet for doctors’ offices and related medical service businesses that serve the health care needs of the Antelope Valley. Field investigation identified at least five existing major chain drug stores on their own sites and two additional chain drug stores imbedded within supermarkets — seven facilities in total — located within a 1.5 mile radius of the Antelope Valley Hospital. This clustering pattern would be continued if four of the proposed drug stores — those contained in projects #8, #10, #11 and #12 in Table 14 — were developed as currently proposed. Given that these decisions are being made by major chain store operators, it is unlikely that their individual or collective failure would create conditions of urban decay, as (1) they are not serving as “lynchpins” to urban districts or major shopping centers, and (2) if they fail, the space can be recycled to serve other uses.

The two remaining planned drug stores (in projects #1 and #2 in Table 14) are in shopping centers proposed for development along Avenue K. If developed per the current schedule they would likely encounter significant competitive issues with the

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cluster of facilities located around Antelope Valley Hospital as well as from other existing stores and the new facilities at the Project and Lane Ranch. However, neither of these projects has finalized its building program. Also, each center has multiple anchor tenants, and therefore would likely survive the failure of the drug store component without suffering conditions leading to full-scale urban decay.

The projected supply-demand imbalance and resulting competition for customers could also have an impact on existing drug stores and on those centers where drug stores serve as important anchors or customer draws. Those retail centers considered most at risk would be older drug store facilities found at inferior locations or in existing or proposed convenience centers where a major drug store was the exclusive or dominant anchor tenant. In such circumstances, the failure of the anchor tenant drug store could lead to a major decline in patronage at the center, resulting in the failure of in-line tenants who were dependent on the drug store’s drawing power. Field surveys and related research were conducted to determine which drug stores, if any, would be most vulnerable to extreme competition if all or most of the proposed drug store space was developed at the intersection of 60th Street West and West Avenue L. Four existing stores located westerly of the Antelope Valley Freeway commercial corridor within the PMA are considered most at risk, including the following facilities:

CVS 4105 West Avenue L Lancaster Walgreens 2840 West Avenue L Lancaster Sav-on 5038 West Avenue N Palmdale Rite Aid 3105 Rancho Vista Boulevard Palmdale

Analysis of each drug store’s susceptibility to conditions of extreme competition is provided below.

-- CVS. This drug store is the one located closest to the Project at a shopping center known as Quartz Hill Town Center. The site is located about two miles east of the Project on West Avenue L, the major east-west regional arterial street that will provide major access to both the Project and Lane Ranch. The CVS store serves as a co-anchor with a Von’s supermarket that has an imbedded Sav-on Pharmacy. It is a newer shopping center that enjoys a high occupancy rate for its available space. Many of the existing spaces are occupied by services and office-users. Given its existing and projected local market base, accessibility, age, configuration, tenant mix and the presence of anchor stores, this center is not considered at great risk to lose its pharmacy and be negatively impacted by development of the Project to such a degree that it would lead to conditions of urban decay.

-- Walgreens. The Walgreens is a newer drive-through store located as a “stand-alone” project at the southeast corner of the intersection of West Avenue L and 30th Street West opposite the West Lancaster Plaza Shopping Center. The site has excellent accessibility and visibility. If it were to close due to extreme competition, the building and its location would be attractive to other retailers. As the store does not anchor any other retail space, its possible closure should not materially impact other retailers.

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-- Sav-on. The Sav-on facility co-anchors (with Albertson’s) a recently-developed convenience shopping center located at the intersection of Avenue N and Rancho Vista Boulevard in the City of Palmdale. The location is at a key intersection with high traffic volume and excellent visibility. Moreover, the center’s performance is likely to improve substantially with additional residential development in the immediate vicinity in the near future. Given the center’s location, visibility, co- anchorage and relative age, the likelihood of its being severely impacted to such an extent that there would be store closures and urban decay is minimal.

-- Rite Aid. The Rite Aid store is located five miles from the Project at the intersection of Sierra Vista Boulevard and 30th Street West, and thus it is at the edge of the Project’s PMA. The drug store serves as a co-anchor with a Von’s supermarket at a well-established, modern convenience center known as Rancho Vista Plaza. Given this center’s location, visibility, accessibility and design configuration, it is not likely to be materially impacted by development of the Project and suffer from the effects of extreme competition.

Summarizing the assessment of existing drug stores in the PMA, the site-specific analyses indicate that while there could be a serious oversupply of drug store/pharmacy space in the Project’s PMA if the Project and Lane Ranch open as currently scheduled, this oversupply is not likely to create conditions at any of the specific locations studied that would likely lead to significant urban decay. The four major drug store chains with stores in the PMA identified above are all capable of holding on to their market shares for the long term, due both to their brand strengths and to their respective geographic positioning. However, it is also very possible that the sales achieved per square foot at these stores may fall below the standard threshold utilized in this analysis for determining supportable drug store space.

. Eating and Drinking Facilities. Analysis of the potential impact of the proposed Eating and Drinking Facility component of the Project indicates that there is sufficient market support generated by the PMA resident population and other market sources to fully support the proposed addition of this type of space by 2013. As the addition of the proposed eating and drinking uses in the Project represents such a small share of the total space that it will not have a significant negative impact on the existing and proposed supply of existing restaurant uses in the PMA, this component of the Project will not lead to urban decay at any of the existing or proposed shopping centers and business districts found in the competitive market area.

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Overall, this analysis concludes that, while the Project together with other new shopping centers will add new competitive retail and restaurant facilities to the Antelope Valley region, there is no reasonable likelihood that the operation of the Project and the other projects identified in this analysis as they are presently conceived, would result in significant adverse economic competition to the degree that this competition would lead to urban decay.27

27 This includes consideration of the commercial district located at the intersection of Avenue M/Quartz Hill Road and 50th Street West in the unincorporated community of Quartz Hill, approximately 1.4 miles from the Project. Anchoring this district are a number of local-serving institutions, including County facilities (fire station and library) as well as a post office and an elementary school. Existing businesses include: an Antelope Valley Bank branch; animal hospital; several veterinary clinics; mini-storage facilities; equipment rental; feed and tack stores; garden center; building supplies; beauty salons; fitness/karate facilities; casual eating and drinking facilities; and numerous automobile-oriented businesses, including service stations, auto repair garages, automotive painting, and auto parts and muffler stores. These businesses offer goods and services that are substantially different from those planned for the Project, though there could be limited overlap, depending on the Project’s specific retail or service businesses when the Project is fully leased. Moreover, the district has no dominant business or group of stores that anchors it and is similar to the Project. Therefore, any limited competition between the Project and any individual store(s) in the district would not have an impact on the district so severe that it could forseeably lead to “urban decay” within the meaning of CEQA.

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APPENDIX A

Summary Qualifications of HR&A Advisors, Inc. and Whitney & Whitney, Inc.

HR&A ADVISORS, INC.

HR&A ADVISORS, INC. Economic Development, Real Estate Advisory & Public Policy Consultants

QUALIFICATIONS TO PREPARE CEQA/NEPA DOCUMENTATION ON SOCIOECONOMIC ISSUES

HR&A Advisors, Inc. (HR&A) is a full service policy, financial and management consulting firm. Founded in 1976, the firm has a distinguished track record of providing realistic answers to complex economic, economic development, public finance, real estate, housing and strategic planning problems. HR&A clients include Fortune 500 corporations, all levels of government, the nation’s leading foundations, and not-for-profit agencies. The firm has extensive experience working for the legal community in such roles as court-appointed special master, consent decree monitor, technical advisor and expert witness.

HR&A’s practice lines include local and regional economic analysis, economic development program formulation and analysis, fiscal impact analysis, real estate analysis and advisory services, housing policy research and analysis, population forecasting and demographic analysis, and transportation and other capital facilities analysis and financing.

Among the qualities for which HR&A is widely known and respected are the impeccable quality of its analysis, ability to invent new analytic methods and approaches to suit the needs of a particular client, independent professional judgment honed through extensive exposure to the rigors of the public review process and the scrutiny of the judicial system, the ability to translate complex technical analysis for a variety of non-technical audiences, and the extensive involvement of its Partners in every project it accepts.

The firm’s domestic and international consulting is provided by a staff of 30 people located in offices in Los Angeles and New York. Staff members include public finance professionals, planners, economists, architects, lawyers, and experienced project managers. Virtually every member of the firm has substantial public or private sector experience in economic, financial and policy analysis, real estate development and planning.

HR&A has frequently been called on by its public and private sector clients to provide analysis of population, housing, employment, economic, public school facilities and induced growth impacts for projects subject to the California Environmental Policy Act and the National Environmental Policy Act. The following are examples of projects that illustrate this experience.

2800 28TH STREET, SUITE 325, SANTA MONICA, CALIFORNIA 90405 $ TEL: 310.581.0900 $ FAX: 310.581.0910

Los Angeles New York HR&A CEQA & NEPA Qualifications

For Public Sector Clients

. For the City of Lancaster, HR&A is preparing economic, fiscal and “urban decay” analysis for EIRs on the Lane Ranch Towne Center and The Commons at Quartz Hill, two regional shopping centers planned for opposite corners at 60th and Avenue L.

. For Los Angeles World Airports, HR&A prepared all of the economic impact analyses needed to evaluate alternative Master Plan concepts for future development of Los Angeles International Airport. The project included extensive econometric modeling of future baseline (pre-project) economic conditions and forecasts of conditions under alternative development scenarios in the City of Los Angeles, the County of Los Angeles, incorporated and unincorporated areas adjacent to the airport, and the surrounding five-county region.

. For the City of Chicago Department of Aviation, HR&A prepared regional and local economic and fiscal impact analyses of the O'Hare Modernization Program (OMP), which was be used by the Federal Aviation Administration to prepare an Environmental Impact Statement on the project. The analysis includes econometric modeling of the six-county Chicago regional area to forecast the employment, total economic output, population and households, among other factors, that would be associated with the $16-billion OMP project, as compared with a No Project scenario.

. For the City of Los Angeles Environmental Affairs Department, HR&A prepared draft Initial Study screening criteria, thresholds of significance and recommendations for analysis approach on the topics of housing, population and employment impacts.

. For Central City West Association and the City of Los Angeles, HR&A prepared a demographic portrait and forecast, and baseline "jobs/housing balance" analysis as part of the Central City West Specific Plan, a transitional neighborhood located directly north of Pico-Union, and across the Harbor Freeway, from the Los Angeles central business district. HR&A's analysis was used as the technical basis for the population, housing and employment sections of the EIR on the Plan. The firm also assisted counsel for interested parties regarding these issues during subsequent litigation over the adequacy of the Final EIR, which was ultimately decided in favor of the City.

. For the Santa Monica-Malibu Unified School District, HR&A managed a detailed review of the options available to the District to consolidate use of its four properties in the Ocean Park neighborhood of Santa Monica, an area which had been experiencing significant enrollment declines. The project included managing the preparation and certification of an EIR on the multi-site strategy adopted by the Board of Education, which included construction of the first new elementary school since the 1950s.

. For the University of California, Los Angeles, the firm prepared an analysis of the degree to which employment and housing associated with UCLA's 1991 Long Range Development Plan was consistent with the emerging regional planning concept of "jobs-housing balance." The firm's analysis was included as a technical appendix to the Final EIR on the Plan, which received approval by the Regents of the University.

. Also for the University of California, Los Angeles, HR&A prepared the population and housing section, and contributed to the induced growth section of the EIR on the 2000-2010 Long-Range Development Plan Update for the campus. The Final EIR was certified by the Regents.

. For the University of California, Santa Barbara, HR&A analyzed the public school impacts of the 1992 Long- Range Development Plan for the Santa Barbara campus, and prepared a Supplemental Environmental Impact Report on this issue, pursuant to a judgment against the University in an action brought by the Goleta Union School District. The Supplemental EIR was certified by the Regents of the University. Upon return to the writ, the court found that the analysis adequately supported the Regent's action. This determination was upheld by the Second District Court of Appeal in Goleta Union School District v. Regents of the University of California , 36 Cal. App. 4th 1121 (1995) (opinion on rehearing), holding that the University was not required to pay school mitigation fees.

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. For the Southern California Association of Governments (SCAG), HR&A prepared the economic and fiscal impact sections of the EIR on SCAG’s 1996 Regional Comprehensive Plan and Guide.

For Private Sector Clients

. For Westfield Corporation, HR&A prepared “urban decay,” economic and fiscal impact analyses for a number expansions and new construction of Westfield super-regional shopping centers in Southern California, including Westfield Century City, Westfield Santa Anita, Westfield Fashion Square (Sherman Oaks), The Village at Westfield Topanga, Westfield Palm Desert, Westfield University Towne Center (San Diego), and Westfield North County (Escondido).

. For the University of Southern California, HR&A is preparing employment, housing, population, retail “urban decay,” economic and fiscal impact analysis for a mixed-use (academic facilities, student and faculty housing, retail, hotel) Specific Plan to implement USC’s long-range development plan for its academic campus in Los Angeles.

. For Fifteen Group Land and Development, HR&A is preparing employment, housing, population, retail “urban decay,” economic and fiscal impact analysis for a 4,000-unit mixed-income housing, office and retail mixed-use development in the Boyle Heights community of Los Angeles.

. For Wilson Meany Sullivan, HR&A prepared employment estimates, “urban decay” analysis for retail uses, economic and fiscal impact analysis for a major mixed-use development (3,500 mixed-income housing, retail and office) to be developed on the site of the Hollywood Park race track in the City of Inglewood.

. For Bisno Development Company and Ponte Vista Partners, LLC, HR&A is preparing technical reports on the population, housing employment and school facilities impacts of a 2,300-unit condominium project proposed for a former US Navy housing site in the San Pedro-Wilmington area of Los Angeles.

. For General Growth Properties, HR&A prepared detailed comments on various socio-economic issues in the Draft and Final EIR for the Americana at Brand, a “lifestyle” mall proposed for a site immediately adjacent to the Glendale Galleria in Glendale.

. For Universal Studios, Inc., HR&A analyzed the employment, housing, population and economic and fiscal impacts in Los Angeles County of a proposed $3 billion Specific Plan that will nearly double the intensity of development at Universal City, the home of Universal Studios, Inc.’s film studio, studio tour, various entertainment retail uses, commercial office buildings and hotels. HR&A is now preparing similar analyses for the EIR on the new Universal City Vision Plan being proposed by NBC Universal.

. For the Ratkovitch-Villaneuva Partnership, HR&A prepared the employment, housing, population and public schools impact analyses for the EIR on a proposal to construct 10 million square feet of new commercial and residential development around the City of Los Angeles’ Union Station. The Draft EIR was certified by the Los Angeles City Council.

. For St. John’s Hospital and Health Center, HR&A prepared analyses of the economic and fiscal impact of current health center impact on the economy of the City of Santa Monica, and the impact that will result from each of two phases of a major reconstruction of the health center following the 1994 Northridge earthquake. The analysis was relied on by the City’s consultants in preparing the project’s EIR, which was certified by the Santa Monica City Council. HR&A also prepared analysis for the Health Center on the degree to which draft police services mitigation measures being considered by the City met the requirements of CEQA.

. For The Walt Disney Company, HR&A prepared a comprehensive analysis of the employment, population, housing, "jobs-housing balance" and vehicle miles traveled impacts of Downtown Disney and Disney’s California Adventure, in Anaheim. The firm's analysis is contained in a series of technical appendices to the EIR, which was certified by the Anaheim City Council.

HR&A ADVISORS, INC. Page A-3 HR&A CEQA & NEPA Qualifications

. Also for The Walt Disney Company, HR&A analyzed the "jobs-housing balance" implications of a proposal to consolidate all of Disney's studio and studio-related administrative facilities on a single site in the City of Burbank. HR&A's analysis was included as a technical appendix to the project’s EIR, which was certified by the Burbank City Council.

. For Wilshire-Barrington Associates, HR&A analyzed the population, housing, employment and jobs-housing balance impacts of a preliminary concept for converting the Barrington Apartments in West Los Angeles into a mixed-use project consisting of 700 apartments, a 262-room hotel, 210,000 s.f. of office space plus miscellaneous retail.

. For the Santa Monica Beach Hotel Development Partnership, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a proposed 160-room luxury hotel and community center proposed for a parcel of State-owned land along Santa Monica Beach.

. For Reliance Development Group, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a 1.8 million square foot office park and studio complex proposed for surplus land at Santa Monica Airport.

. For Maguire Thomas Partners, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a proposed office building and hotel project to be developed on Ocean Avenue in the City of Santa Monica.

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REPRESENTATIVE LIST OF CLIENTS

Financial Institutions & Investment Companies World Financial Properties American Council on Life Insurance Citibank Private Banking Group Public Development Agencies Citicorp Real Estate, Inc. Alliance for Downtown New York Community Preservation Corporation Battery Park City Authority First Union National Bank Brooklyn Bridge Park Development Fleet Financial Group Brooklyn Navy Yard Development Goldman Sachs Corporation Hartland Asset Management Catskill Watershed Corporation Lehman Bros. Catholic Charities of Brooklyn Shorebank Corporation Cincinnati Business Committee Columbus Downtown Redevelopment Real Estate Development Organizations and Corporation Private Companies Downtown Brooklyn Local Development ARC Development Corporation ARCORP Properties Economic Development Growth Bermant Development Company Enterprises, Oneida Co., NY Boeing Realty Corporation Empire State Development Corporation Casden Properties, Inc. Inland Valley Development Agency Castle & Cook Development Company Memphis Riverfront Development Corp. Centex Homes National Capital Revitalization Corp. Continental Development Corporation New York City Economic Development Daniel Island Development Company Corporation Disney Development Corporation New York State Urban Development Edward J. Minskoff Equities Corporation Gaylord Entertainment Penmar Development Corporation General Growth Properties Port Authority of New York and Gibson Speno LLC New Jersey Home Depot Company Queens West Development Corporation JMB Urban Realty Corporation K. Hovnanian Companies of California Cultural, Recreational & Special Events Clients Landmark Land Company American Museum of Natural History Madison Square Garden Brooklyn Academy of Music Maefield Development Corporation Corporation Maserich Company Brooklyn Museum of Art Maguire Thomas Partners City of New Haven Arts & Millennium Partners Entertainment Facilities Committee Newhall Land & Farming Company Lincoln Center for the Performing Arts New York Times Company Madison Square Garden Olympia & York (USA) New Jersey Performing Arts Center The Related Companies NYC2008 Reliance Development Group Public Space for Public Life Santa Monica Beach Development Randall’s Island Sports Foundation Corporation The Trust for Public Land Starrett Housing Corporation Sunset Development Corporation Other Quasi-Public and Non-Profit Organizations Tishman Speyer Properties and Foundations Trammell Crow Company Apartment Association of Greater Trammell Crow Residential Los Angeles TransAction Companies, Ltd. The Bowery Mission Twentieth Century Fox Common Ground Community Universal Studios, Inc. Cornell University The Walt Disney Company Corporation for Supportive Housing Westfield Corporation, Inc. Community Services Society of William Lyon Homes New York

HR&A ADVISORS, INC. Page A-5 HR&A CEQA & NEPA Qualifications

Other Quasi-Public and Non-Profit Organizations Redevelopment Authority of the and Foundations (con’t.) City of Philadelphia The Enterprise Foundation San Diego Association of Governments Ford Foundation Santa Ana Unified School District (CA) Gay Men’s Health Crisis Santa Monica-Malibu Unified Griffiss Local Development Corporation School District Harry Frank Guggenheim Foundation Southern California Association of Kaiser Permanente Governments Local Initiatives Support Corporation Yonkers Office of Downtown & Los Angeles Collaborative for Community Waterfront Development Development Metropolitan Boston Housing Partnership Transportation Agencies Metropolitan Jewish Geriatric Center City of Chicago Department of Airports National Equity Fund Connecticut Dept. of Transportation Neighborhood Progress, Inc. Delaware Dept. of Transportation New York Blood Center Newark Alliance Los Angeles County Metropolitan Saint John’s Hospital and Health Center Transportation Authority Saint Vincent’s Hospital Los Angeles World Airports San Gabriel Valley Council of Governments Massachusetts Bay Transportation Spanish-American Merchant’s Assoc. Authority University of California, Los Angeles New Jersey Transportation Corp. University of California, Santa Barbara New York Metropolitan Transportation Upper Manhattan Empowerment Zone Authority Development Corp. San Diego County Regional Airport Williamsburg Affordable Housing Authority Westside Urban Forum U.S. Dept. of Transportation

Governmental Agencies Housing Agencies Boulder Urban Renewal Authority Chicago Housing Authority City of Berkeley Rent Stabilization Board Community Redevelopment Agency of the City of Beverly Hills City of Los Angeles City of Chester (PA) Cuyahoga Metropolitan Housing Authority City of Columbus (IN) City of Culver City (CA) Detroit Housing Commission City of Detroit Housing Authority of Baltimore City City of Houston Housing Authority of the City of Houston City of Huntington Beach (CA) Housing Authority of the County of Los City of Indianapolis Angeles City of Lancaster Housing Authority of the City of Santa City of Los Angeles Monica City of New York Housing Bureau, City of Long Beach City of Olathe (KS) Indianapolis Housing Authority City of Phoenix Los Angeles Housing Department City of San Luis Obispo (CA) New York City Housing Authority City of Santa Monica New York City Housing Development City of West Hollywood (CA) Corporation City of Yonkers New York State Housing Finance Agency Community Redevelopment Agency of the Omaha Housing Authority (NE) City of Los Angeles Philadelphia Housing Authority Compton Unified School District (CA) Redevelopment Authority of the City of County of Santa Barbara Philadelphia District of Columbia St. Louis Housing Authority (MO) New Jersey Department of Commerce and United States Department of Housing and Economic Development Urban Development

HR&A ADVISORS, INC. Page A-6

WHITNEY & WHITNEY, INC. 2876 Anchor Avenue Los Angeles, California USA Tel: 1.310.838.5240; Fax: 1.310.838.7448 e-mail: [email protected]

Whitney & Whitney, Inc. (W&W) is a real estate development advisory services firm located in Los Angeles, California. The company was founded by William H. Whitney, Ph.D. in 1984. After six years of serving the southern California and Hawaii markets, W&W reduced the scope of its activities when Mr. Whitney was recruited by Arthur Andersen to assist their Real Estate and Hospitality/Leisure consulting practices in establishing both a national and international presence.

Mr. Whitney served with Arthur Andersen for over nine years, participating on major real estate and hospitality consulting engagements in over 40 different countries throughout the world. Activities during this period also included starting Arthur Andersen’s Asia/Pacific Region real estate consulting practice in Manila, and spending three years in Andersen’s London offices serving as a resource for the European and Middle East real estate consulting practices.

Following his return to the United States in March 2000 Mr. Whitney has re-activated Whitney & Whitney, Inc. The firm’s major focus is on the provision of real estate consulting services to both public and private clients in the following areas:

 Due diligence services for companies involved with the acquisition and operation of real estate assets;  Participation on multi-disciplinary teams with architects, planners and other design professionals in the planning of resorts, new communities and urban mixed-use projects  Advisory services related to the maximization of returns from corporate real estate assets;  Advisory services related to the maximization of public benefits from proper utilization of public lands;  Market feasibility studies for large scale land development programs, including waterfront projects, shopping centers, resorts, and new communities;  Master planning for large-scale urban parks and open space programs;  Financial feasibility studies for proposed real estate investments;  Negotiation assistance related to the formation and implementation of public/private partnerships;  Fiscal impact, economic impact, cost-revenue and cost-benefit evaluations of proposed real estate development activities for public agencies and private developers;  Valuation/expert witness services related to complex real estate transactions and/or arbitration and litigation proceedings; and  Implementation services related to attaining necessary development entitlements and funding for real estate programs.

W & W’s recent projects include the following: since the early 1990s has served as a real estate economic and financial advisor to the State of Hawaii Aloha Tower Development Corporation related to the redevelopment of the downtown Honolulu waterfront; performed a market and financial analysis of a proposed “high technology” park/mixed-use commercial development program in Dubai, United Arab Emirates known as Dubai Internet City; conducted an analysis of the economic feasibility of converting the 4,700-acre El Toro Marine Corps Air Station to an urban park; conducted an analysis of the redevelopment potentials for tourist-serving projects in the Old City of Shanghai; provided a market analysis of the retail redevelopment potential for the International Market Place in Waikiki for the Queen Emma Foundation; performed an evaluation of redevelopment potentials and the resultant fiscal impacts from conversion of certain industrial lands to retail and other uses for the City of San Jose; provided an evaluation of the market feasibility for residential and commercial retail uses on surplus lands owned by Ohlone Community College, Fremont, California; evaluated the market and financial opportunity for development of a major shopping center near Mililani Town on the Island of Oahu, Hawaii for Forest City; and reviewed the market for office and retail commercial uses near the East Eisenhower Transit Station for the City of Alexandria, Virginia; and a market study for a C. J. Segerstrom & Sons development project

WHITNEY & WHITNEY, INC. Page A-7 HR&A CEQA & NEPA Qualifications located near South Coast Plaza in Orange County. Currently, the firm is serving as an advisor to Castle & Cooke on the preparation of a master plan and development strategy for 28,000+/- acres of land located on the North Shore of the Island of Oahu; providing a review of the master plan for the Sa’adiyat Island resort located in Abu Dhabi, United Arab Emirates; and preparing market/financial analyses and a business plan for a proposed destination spa to be located in the Santa Monica Mountains.

Mr. Whitney’s background in the analysis of major shopping center developments and the planning of their adjacent lands supersedes the formation of W & W. He has been conducting investigations of retail development opportunities for nearly 40 years, starting with the re-use of the Chevron properties located in El Segundo and Manhattan Beach that ultimately led to the development of Manhattan Beach Village. One such project, the planning of the Puente Hills Mall and its immediate surrounding lands for the Western Harness Racing Association in 1970, was the inspiration for his doctoral dissertation, “An Investigation of Selected Impacts on Surrounding Lands Which are Generated by Development of Regional Shopping Centers” (UCLA, 1975).

A partial listing of Mr. Whitney’s shopping center experience includes the following:

WESTFIELD CORPORATION: “Urban Decay” Analysis for Super-Regional Shopping Centers, California. In collaboration with HR&A Advisors, Inc., prepared “urban decay” analyses for a number expansions and new construction of Westfield super-regional shopping centers in Southern California, including Westfield Santa Anita, Westfield Fashion Square (Sherman Oaks), The Village at Westfield Topanga, Westfield Palm Desert, Westfield University Towne Center (San Diego), and Westfield North County (Escondido).

ERNEST W. HAHN, INC. (NOW TRIZECHAHN): Regional Shopping Center Market Analysis and Economic/Fiscal Impact Studies, California and Washington Conducted numerous market feasibility and economic/fiscal impact studies of proposed regional shopping centers for the Ernest W. Hahn Company, forerunner to TrizecHahn, including analyses for the following existing regional shopping centers: Puente Hills Mall, City of Industry; Mariner’s Island, San Mateo; North County Fair, Escondido; Kelso Mall, Kelso, Washington; and Sierra Vista, Clovis, California.

PSB REALTY CORPORATION: Costa Mesa Courtyards, Costa Mesa, California Performed market and financial feasibility studies for the Costa Mesa Courtyards, a 173,000 square foot shopping center once honored as the “Best Retail Development” in the Western States at the Pacific Coast Builders Conference. The 11-acre project has been an important stimulus to the revitalization of the City of Costa Mesa’s old central business district.

JAMES YOUNGBLOOD, DEVELOPER: The Lumberyard, Encinitas, California Conducted market and financial feasibility studies for the project, a specialty retail center with 80,000 square feet of retail space located in the City of Encinitas. The center has been successfully developed, and has performed at or above initial market expectations.

THE IRVINE COMPANY: Fashion Island and Spectrum Center Impact Studies, Newport Beach and Irvine, California Conducted economic and fiscal impact evaluations of these two major centers as part of their submissions for general plan amendments to the Cities of Newport Beach and Irvine, respectively. The Fashion Island expansion program focused on the interactive benefits that could be generated between the existing and proposed retail uses and the surrounding hotel and office developments; in contrast, the central concern regarding the proposed Spectrum project was its potential sales and property tax generation for the municipality.

LIVERPOOL DEPARTMENT STORE AND THE FRANSEN COMPANY: Regional Shopping Center Market Evaluations, Various Metropolitan Areas, Mexico Conducted detailed investigations of the market opportunities for Liverpool Department Store to serve as an anchor tenant and developer of regional shopping centers throughout Mexico. A number of sites in major metropolitan locations were evaluated, and projections were made of potential store sales and

WHITNEY & WHITNEY, INC. P age C-8 HR&A CEQA & NEPA Qualifications supportable retail space. As of 2001, the study had resulted in one new shopping center currently operating in the Mexico City metro area and a second project under construction.

MITSUI TRUST & BANKING CO., LTD.: Aloha Tower Marketplace, Honolulu, Oahu, Hawaii Provided a market validation study for a festival marketplace that was under construction in downtown Honolulu. The development program, which ultimately became the Aloha Tower marketplace, called for approximately 200,000 square feet of retail and restaurant space at Honolulu Harbors Piers 7, 8 and 9 adjacent to the historic Aloha Tower. The analysis included a thorough examination of each segment of the potential customer base and an assessment of the potential expenditure patterns at the center from those identified market segments. The results of the market studies were then utilized to generate sales projections for the center.

THE ROBERTS GROUP: Wood Ranch Development Program, Simi Valley, California Performed an analysis of retail commercial potentials for a major community shopping center located in the Wood Ranch planned community. The study involved a detailed assessment of competitive retail projects found within the immediate market area surrounding Wood Ranch and a determination of market support generated by Wood Ranch residents. The center is open and operating successfully.

A&B HAWAII, INC./VANGUARD PROPERTIES: Triangle Square Factory Stores, Kahului, Maui, Hawaii Provided a market analysis of a proposed factory outlet center in Kahului, Maui near the Kahului Airport. The development program called for 110,000 square feet of retail space to be built at one of Maui’s most important highway junctions. The analysis included an examination of the potential customer base, consideration of the potential expenditure patterns by the major market segments, and a projection of potential sales at the project. The project has been developed and is operating successfully.

CITY OF VISALIA: Regional Shopping Center Location Studies; Visalia, California Served the City of Visalia as market and planning consultants in the evaluation of potential locations for new regional shopping center facilities in the City of Visalia. The analysis included an assessment of the market, fiscal, transportation and other economic and social impacts related to the alternative sites under consideration for the new center.

AMFAC/JMB HAWAII, INC.: Kaanapali North Beach Entertainment / Retail Center Feasibility Studies, Kaanapali, West Maui, Hawaii Provided a detailed assessment of a proposed themed entertainment/retail attraction at North Beach. A number of different retail and entertainment concepts were evaluated for the property, including specialty retail alternatives similar to Whaler’s Village and more elaborate commercial recreation complexes featuring entertainment venues similar to Church Street Station in Orlando, Florida. The major finding of the study was that the most profitable use in terms of land utilization and environmental constraints was a major health spa, as this use generated the highest visitor expenditures per unit of land area and required relatively low market penetration of the existing visitor base.

CASTLE & COOKE PROPERTIES, INC.: Iwilei District Market Feasibility Study, Honolulu, Hawaii Conducted market feasibility studies to provide development guidelines for the redevelopment of the 50- acre Iwilei property. The site is located near downtown Honolulu in an area transitioning from industrial to commercial uses, and was previously occupied by the Dole Cannery. The market analysis concentrated primarily on the market potential for outlet-type retail shopping activities and “bull-pen”-type office space. Major issues raised by the study pertained to the site’s relative accessibility for both local residents and visitors.

CASTLE & COOKE PROPERTIES, INC.: Mililani Town Center Market Assessment, Mililani Town, Oahu, Hawaii Conducted a market analysis of the existing Mililani Town Center, a 166,500 square foot community shopping center located in central Oahu. The primary purposes of the investigation were to first, assess the current market performance of the center given its location, configuration and competitors; second, determine a strategy for expansion of the center to 400,000 square feet of space after giving full consideration to future market positioning, product mix and anchor tenants. Attention also focused on

WHITNEY & WHITNEY, INC. P age C-9 HR&A CEQA & NEPA Qualifications expanding the range of activities at the center to include a variety of service functions in addition to the retail tenants.

CITY OF LAWNDALE: South Bay Galleria Buyout, Redondo Beach, California Provided a financial evaluation of the ownership interest held by the City of Lawndale in the South Bay Galleria, a regional shopping center that was undergoing renovation by Forest City Development Company. The work performed by the consultant formed the basis for the city’s successful sale of its interest in the project to the developer.

CITY OF PASADENA: Lake/Washington Neighborhood Shopping Center, Pasadena, California Analyzed the development potential for a major new neighborhood shopping center intended to revitalize an older shopping district in Pasadena. The study involved an extensive review of existing businesses in order to assess both the positive and negative impacts of the new facility. The center has been constructed with a supermarket and drug store as the anchor tenants, and has successfully fostered revitalization of the entire district with new commercial development.

MAGUIRE THOMAS PARTNERS: Peter’s Landing Specialty Center, Huntington Harbour, California Provided market and financial consulting services to Peter’s Landing, a specialty retail center and marina complex located in the affluent waterfront residential community of Huntington Harbour. Initially, the focus was on evaluating the market potentials for boat slips and retail and office uses. Later, attention was focused on evaluating the financial trade-offs between retention of the marina as a rental program and sale of the berths under a “dockominium” concept.

THE IRVINE COMPANY: Mervyn’s Retail Location Study, Various Locations, Orange County Assisted The Irvine Company (TIC) in evaluating potential alternative locations for Mervyn’s department stores on various properties owned by TIC. The study considered both the provision of “blanket” coverage by the chain store throughout Orange County with multiple locations as well as an evaluation of specific sites on TIC lands. Presented results of the study to Mervyn’s leadership in Minneapolis.

SAN DIEGO UNIFIED PORT DISTRICT: Embarcadero Master Planning Program Feasibility Studies San Diego, California Performed market studies leading to the establishment of Seaport Village, a leading specialty retail center of about 200,000 square feet located on the San Diego waterfront. Other market and related investigations have led to development of hotel, marina, convention center and cruise ship terminal facilities along the Embarcadero.

CITY OF IRVINE: Retail Commercial Needs Assessment Study, Irvine, California Prepared a retail commercial needs assessment for the City of Irvine that considered the long term demand for and supply of retail commercial space in the community. One of the sites investigated ultimately became the Spectrum specialty/entertainment center. The results of the study were somewhat controversial, as the analysis was critical of a number of the existing and proposed retail locations in the residential villages of Irvine with respect to their long term economic viability.

DAVID HOCKER & ASSOCIATES: Shelter Cove Shopping Centers, Palmetto Dunes, Hilton Head, South Carolina Performed market investigations of the potential for (1) a 200,000 square foot specialty retail shopping center anchored by “downsized” department stores, and a (2) 120,000 square foot convenience retail center. While the convenience center was accepted and completed as originally conceived, there was significant resistance from department stores to the concept of the specialty center in a resort setting because of the low visitation at Hilton Head during the prime Christmas season.

ARROWHEAD REGIONAL DEVELOPMENT COMMISSION: Downtown Duluth Regional Center Evaluation, Duluth, Minnesota Performed a comprehensive economic and fiscal analysis of alternative locations for a regional shopping center in the Duluth region. While the study clearly showed the advantages to the community of utilizing the downtown as a location for the facility, these potential benefits did not convince potential chain

WHITNEY & WHITNEY, INC. P age C-10 HR&A CEQA & NEPA Qualifications retailers that there was sufficient market support for the facility or that the center city location could be successfully “retrofitted” with large quantities of retail space.

NANSAY CORPORATION: Market Assessment of Retail Potentials, Westwood Mixed Use Project Westwood, California Analyzed the market potential for development of a major new retail center in Westwood. The study documented the need for quality retail stores and restaurants in the Westwood area, though the stigma associated with Westwood following several crimes of violence plus the recession of the early 1990s effectively doomed the project. Notwithstanding, in recent years Westwood has been rejuvenated on a piecemeal basis with many of the retail activities proposed in the study.

PRUDENTIAL REALTY/MELVIN SIMON COMPANY: Marina Place Economic/Fiscal Impact Study, Culver City, California Provided market assessments and economic and fiscal impact analyses of the proposed Marina Place regional shopping center as part of the consultant team that was successful in obtaining approvals for the proposed development on a 30+/- acre site near Marina del Rey. Unfortunately, regional economic conditions coupled with the decline in performance of traditional department stores led to the project’s demise; the site was developed instead with a Costco department store.

HAWAII OMORI CORPORATION: Lahaina Cannery Shopping Center Evaluation, Lahaina, Maui Performed a series of market evaluations for three properties owned by Hawaii Omori Corporation that were located in the Town of Lahaina, Maui. One of the properties serves as the site for the Lahaina Cannery Shopping Center, an existing 180,000 square foot facility. The study examined the possibility of developing a multi-centered retail complex with both specialty and convenience retail nodes designed to serve the full range of resident and tourist retail needs.

MAUNA LANI RESORT, INC.: Specialty Retail Center Market Studies, Mauna Lani, South Kohala, Big Island of Hawaii Analyzed the market potentials for the development of a specialty retail center at Mauna Lani Resort. The analysis focused on upper-income visitors and their propensities to support specialty retail shops in hotels and at “boutique” centers similar to The Shops at Kapalua. The study identified candidate tenants for the development, provided recommendations regarding store mix, and offered suggestions with respect to the optimum location for the facility within the resort.

ALOHA TOWER DEVELOPMENT CORPORATION: Aloha Tower Development Program, Phases I and II, Honolulu, Hawaii Prepared developer selection criteria and evaluated business terms of proposals for redevelopment of the Aloha Tower complex, a $1 billion redevelopment program for the downtown Honolulu waterfront featuring a “festival market” specialty retail center, the precursor to current “entertainment/retail” projects. The first phase of the project, Aloha Tower Marketplace, was completed in 1994. Following the selection of the preferred developer, Enterprise Development Company, provided leasing advisory services and negotiated the business terms of the lease agreement between parties.

STATE OF HAWAII EMPLOYEES RETIREMENT SYSTEM (ERS): Kaahumanu Regional Center Expansion, Kahului, Maui, Hawaii Provided a market and financial evaluation of the proposed expansion of Kaahumanu Center from 316,600 square feet of gross leasable area (GLA) to 542,600 square feet. The only regional center located on Maui, the property was owned by Maui Land & Pineapple Company, developers of Kapalua Resort. The analysis measured investment returns to the State of Hawaii ERS under a range of future outcomes. Of particular significance were the assessments of potential competitive impacts on the center from Mainland retailers entering the Maui market. The expansion program was successfully completed.

STATE OF HAWAII EMPLOYEES RETIREMENT SYSTEM (ERS): Waikele Shopping Center, Central Oahu, Hawaii Completed a due diligence review of a proposed power center and an outlet mall which were developed on 40+ / - acres of freeway frontage in the Waikele master-planned community. The services provided to the ERS included a review of major sources of demand for retail goods and services, a survey of existing

WHITNEY & WHITNEY, INC. P age C-11 HR&A CEQA & NEPA Qualifications and proposed competitive facilities on Oahu, and a detailed examination of the developer’s proposed tenant mix and pro forma financial projections. Also compared actual leases with the pro-forma rent schedules to ensure that the project would achieve its target levels of return.

QUEEN LILIUOKALANI TRUST/FIRST HAWAIIAN BANK: Mauka Lands Evaluation, Kailua-Kona, Big Island of Hawaii Served the Queen Liliuokalani Trust as market and financial advisors for 1,200 acres of land located in Kailua-Kona on the Big Island of Hawaii. Following its re-classification to urban use by the State Land Use Commission, provided assistance to the Trust by performing market studies for the site and reviewing proposals for the first phase of development from shopping center developer candidates. The project has gone forward successfully, and several increments of retail commercial development have been completed.

T & S DEVELOPMENT, INC.: Regional Shopping Center Assessment, Riverside, California Provided a critique of the market study that supported the expansion of the existing Tyler Mall regional shopping center. Also presented a comparative analysis of the economic benefits resulting from the proposed expansion of Tyler Mall with an alternative program to develop a new regional center at Canyon Springs Road.

DONAHUE/SHRIBER AND THE IRVINE COMPANY: Comparative Analysis of Alternative Sites, City of Irvine, California Assisted the shopping center developer and the Irvine Company in evaluating alternative locations for the development of Target department stores. Primary focus was on two sited in the City of Irvine – Interstate-5/Myford and Culver/Barranca. The principal basis for comparison was the demographic characteristics of the primary market areas served by the two locations.

HOMART DEVELOPMENT CORP. (SEARS): Proposed Regional Shopping Center, Eugene, Oregon Evaluated the market potential for a regional shopping center to be located in the Eugene, Oregon metropolitan area. The results of the study suggested that the market was likely too small to absorb the retail space proposed in the Homart project.

THE IRVINE COMPANY: Proposed Regional Shopping Center, Orange County, California Provided a market analysis of the future potentials for a regional shopping center located on Santiago Canyon Road easterly of the City of Orange. The primary purpose of the study was to guide the master planning for the area and make necessary allocations for lands sufficient to accommodate future commercial space requirements.

AHMANSON COMMERCIAL DEVELOPMENT CORPORTATION: Palm Desert Community Shopping Center, Palm Desert, California Performed market and financial feasibility studies for this recently completed community shopping center located on Highway 111 adjacent to the Palm Desert Town Center regional mall. One purpose of the study was to consider a tenant mix that would be able to effectively compete with the regional mall.

LOS ANGELES COUNTY CHIEF ADMINISTRATIVE OFFICE: Civic Center Mall Retail Analysis Civic Center Mall, Los Angeles Evaluated the market potential for specialty retail and service commercial uses at a potential retail location on the Civic Center Mall near the Music Center. The purpose of the facility was to provide for the needs of governmental workers and visitors to County Hall of Administration. Consulting services also included lease negotiations with candidate tenants for the project.

WHITNEY & WHITNEY, INC. P age C-12

APPENDIX B

IMPLAN Economic Impact Analysis Results

B-1 Project Construction Impacts a. Employment b. Compensation c. Total Economic Output B-2 Project Annual Operation Impacts a. Employment b. Compensation c. Total Economic Output

HR&A ADVISORS, INC.

Appendix B-1(b) The Commons Construction Employment Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

34 Construct new nonresidential commercial and h 345.5 0 0 345.5 59.5% 59.5% 369 Architectural- engineering- and related servi 0 24.3 0.4 24.7 4.3% 63.8% 413 Food services and drinking places 0 3.9 15 18.8 3.2% 67.0% 319 Wholesale trade businesses 0 10.6 6.8 17.4 3.0% 70.0% 394 Offices of physicians- dentists- and other he 0 0 8.1 8.1 1.4% 71.4% 360 Real estate establishments 0 2.9 4.8 7.6 1.3% 72.7% 382 Employment services 0 4.2 2.6 6.9 1.2% 73.9% 397 Private hospitals 0 0 6.2 6.2 1.1% 75.0% 324 Retail Stores - Food and beverage 0 0.5 4.3 4.8 0.8% 75.8% 329 Retail Stores - General merchandise 0 0.5 4.3 4.8 0.8% 76.7% 426 Private household operations 0 0 4.2 4.2 0.7% 77.4% 398 Nursing and residential care facilities 00440.7%78.1% 354 Monetary authorities and depository credit in 0 2.1 1.7 3.8 0.7% 78.7% 320 Retail Stores - Motor vehicle and parts 0 0.5 3.3 3.7 0.6% 79.4% 367 Legal services 0 2.2 1.5 3.7 0.6% 80.0% 335 Transport by truck 0 2.5 1 3.6 0.6% 80.6% 414 Automotive repair and maintenance- except car 0 2 1.5 3.5 0.6% 81.2% 388 Services to buildings and dwellings 0 2 1.4 3.4 0.6% 81.8% 425 Civic- social- professional- and similar orga 0 1.4 1.6 3.1 0.5% 82.3% 356 Securities- commodity contracts- investments- 0 1.1 1.9 3 0.5% 82.9% 400Individual and family services 00330.5%83.4% 368 Accounting- tax preparation- bookkeeping- and 0 1.8 1.1 2.9 0.5% 83.9% 392 Private junior colleges- colleges- universiti 0 0 2.8 2.8 0.5% 84.4% 331 Retail Nonstores - Direct and electronic sale 0 0.3 2.4 2.6 0.4% 84.8% 327 Retail Stores - Clothing and clothing accesso 0 0.2 2.2 2.4 0.4% 85.2% 330 Retail Stores - Miscellaneous 0 0.3 2.1 2.4 0.4% 85.6% 381 Management of companies and enterprises 0 1.4 0.9 2.3 0.4% 86.0% 357 Insurance carriers 0 0.4 1.7 2.1 0.4% 86.4% 325 Retail Stores - Health and personal care 0 0.2 1.8 2 0.3% 86.7% 411Hotels and motels- including casino hotels 01120.3%87.1% 396 Medical and diagnostic labs and outpatient an 0 0 1.9 1.9 0.3% 87.4% 295 Wood kitchen cabinet and countertop manufactu 0 1.7 0.1 1.8 0.3% 87.7% 323 Retail Stores - Building material and garden 0 0.2 1.6 1.8 0.3% 88.0% 399 Child day care services 0 0 1.8 1.8 0.3% 88.3% 387 Investigation and security services 0 1.2 0.5 1.7 0.3% 88.6% 39 Maint & repair construct of nonresident struc 0 1 0.6 1.6 0.3% 88.9% 355 Nondepository credit intermediation and relat 0 0.5 1.1 1.6 0.3% 89.2% 374 Management- scientific- and technical consult 0 1 0.7 1.6 0.3% 89.5% 99 Wood windows and doors and millwork manufactu 0 1.5 0 1.5 0.3% 89.7% 351 Telecommunications 0 0.8 0.8 1.5 0.3% 90.0% 391 Private elementary and secondary schools 0 0 1.4 1.4 0.2% 90.2% 393 Other private educational services 0 0 1.4 1.4 0.2% 90.5% 395 Home health care services 0 0 1.4 1.4 0.2% 90.7% 417 Commercial and industrial machinery and equip 0 1.2 0.2 1.4 0.2% 90.9% 419 Personal care services 0 0 1.4 1.4 0.2% 91.2% 386 Business support services 0 0.9 0.4 1.3 0.2% 91.4% 427 US Postal Service 0 0.6 0.7 1.3 0.2% 91.6% 149 Other plastics product manufacturing 0 1.1 0.2 1.2 0.2% 91.8% 302 Showcase- partition- shelving- and locker man 0 1.2 0 1.2 0.2% 92.0% 401 Community food- housing- and other relief ser 0 0 1.2 1.2 0.2% 92.2% 321 Retail Stores - Furniture and home furnishing 0 0.3 0.9 1.1 0.2% 92.4% 328 Retail Stores - Sporting goods- hobby- book a 0 0.1 1 1.1 0.2% 92.6% 365 Commercial and industrial machinery and equip 0 1.1 0.1 1.1 0.2% 92.8% 409 Amusement parks- arcades- and gambling indust 0 0 1.1 1.1 0.2% 93.0% 322 Retail Stores - Electronics and appliances 0 0.1 0.9 1 0.2% 93.2% 336 Transit and ground passenger transportation 0 0.3 0.7 1 0.2% 93.3% 338 Scenic and sightseeing transportation and sup 0 0.6 0.4 1 0.2% 93.5% 339 Couriers and messengers 0 0.5 0.5 1 0.2% 93.7% 372 Computer systems design services 0 0.8 0.3 1 0.2% 93.9% 407 Fitness and recreational sports centers 0 0.2 0.8 1 0.2% 94.0% 424Grantmaking- giving- and social advocacy orga 00110.2%94.2% 432 Other state and local government enterprises 0 0.2 0.8 1 0.2% 94.4% 358 Insurance agencies- brokerages- and related a 0 0.2 0.7 0.9 0.2% 94.5% 377 Advertising and related services 0 0.4 0.5 0.9 0.2% 94.7% 159 Glass product manufacturing made of purchased 0 0.7 0 0.8 0.1% 94.8% 326 Retail Stores - Gasoline stations 0 0.1 0.7 0.8 0.1% 95.0% 340 Warehousing and storage 0 0.4 0.4 0.8 0.1% 95.1% 421 Dry-cleaning and laundry services 0 0.1 0.7 0.8 0.1% 95.2% 431 * Not unique commod (S&LG electricity) 0 0.4 0.5 0.8 0.1% 95.4% 376 Scientific research and development services 0 0.4 0.4 0.7 0.1% 95.5% 380 All other miscellaneous professional- scienti 0 0.5 0.2 0.7 0.1% 95.6% 384 Office administrative services 0 0.5 0.3 0.7 0.1% 95.7% 403 Spectator sports companies 0 0.2 0.5 0.7 0.1% 95.9% All Other Sectors 0 10.7 12.3 24 4.1% 100.0% Totals 345.5 98 136.7 580.3 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

HR&A ADVISORS, INC. Page B-1

Appendix B-1(c) The Commons Construction Employee Compensation Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

34 Construct new nonresidential commercial and h 16,941,354 0 0 16,941,354 60.6% 60.6% 369 Architectural- engineering- and related servi 0 1,606,155 26,753 1,632,908 5.8% 66.4% 319 Wholesale trade businesses 0 649,914 413,816 1,063,730 3.8% 70.2% 394 Offices of physicians- dentists- and other he 0 2 459,252 459,253 1.6% 71.8% 397 Private hospitals 0 2 451,997 451,999 1.6% 73.5% 413 Food services and drinking places 0 85,878 331,601 417,480 1.5% 75.0% 356 Securities- commodity contracts- investments- 0 114,307 193,922 308,228 1.1% 76.1% 381 Management of companies and enterprises 0 173,581 104,407 277,989 1.0% 77.1% 354 Monetary authorities and depository credit in 0 143,864 120,924 264,788 0.9% 78.0% 367 Legal services 0 154,161 109,630 263,792 0.9% 78.9% 320 Retail Stores - Motor vehicle and parts 0 25,328 180,443 205,771 0.7% 79.7% 382 Employment services 0 111,238 68,613 179,851 0.6% 80.3% 357 Insurance carriers 0 28,610 139,379 167,990 0.6% 80.9% 324 Retail Stores - Food and beverage 0 15,873 137,030 152,903 0.5% 81.5% 335 Transport by truck 0 97,533 40,588 138,121 0.5% 82.0% 355 Nondepository credit intermediation and relat 0 40,710 90,916 131,625 0.5% 82.4% 329 Retail Stores - General merchandise 0 13,658 115,966 129,625 0.5% 82.9% 425 Civic- social- professional- and similar orga 0 59,721 67,087 126,808 0.5% 83.3% 351 Telecommunications 0 59,222 59,891 119,113 0.4% 83.8% 368 Accounting- tax preparation- bookkeeping- and 0 72,901 45,881 118,782 0.4% 84.2% 431 * Not unique commod (S&LG electricity) 0 50,158 64,941 115,099 0.4% 84.6% 427 US Postal Service 0 48,854 64,033 112,887 0.4% 85.0% 360 Real estate establishments 0 41,413 68,835 110,248 0.4% 85.4% 392 Private junior colleges- colleges- universiti 0 1,344 103,694 105,038 0.4% 85.8% 374 Management- scientific- and technical consult 0 56,585 40,431 97,017 0.3% 86.1% 414 Automotive repair and maintenance- except car 0 54,116 41,857 95,973 0.3% 86.5% 388 Services to buildings and dwellings 0 53,390 36,723 90,113 0.3% 86.8% 396 Medical and diagnostic labs and outpatient an 0 43 88,665 88,708 0.3% 87.1% 432 Other state and local government enterprises 0 14,743 71,774 86,517 0.3% 87.4% 295 Wood kitchen cabinet and countertop manufactu 0 77,324 4,855 82,179 0.3% 87.7% 39 Maint & repair construct of nonresident struc 0 49,402 30,063 79,464 0.3% 88.0% 398 Nursing and residential care facilities 0 0 78,509 78,509 0.3% 88.3% 325 Retail Stores - Health and personal care 0 8,647 69,692 78,339 0.3% 88.6% 338 Scenic and sightseeing transportation and sup 0 42,546 31,990 74,537 0.3% 88.8% 323 Retail Stores - Building material and garden 0 6,731 64,540 71,271 0.3% 89.1% 411 Hotels and motels- including casino hotels 0 36,119 34,453 70,573 0.3% 89.3% 400 Individual and family services 0 0 69,694 69,694 0.2% 89.6% 149 Other plastics product manufacturing 0 57,360 8,311 65,672 0.2% 89.8% 327 Retail Stores - Clothing and clothing accesso 0 5,678 59,866 65,545 0.2% 90.1% 365 Commercial and industrial machinery and equip 0 57,526 3,715 61,240 0.2% 90.3% 358 Insurance agencies- brokerages- and related a 0 11,122 49,305 60,428 0.2% 90.5% 417 Commercial and industrial machinery and equip 0 52,253 7,725 59,977 0.2% 90.7% 117 Asphalt shingle and coating materials manufac 0 58,278 865 59,143 0.2% 90.9% 31 Electric power generation- transmission- and 0 25,353 33,145 58,498 0.2% 91.1% 302 Showcase- partition- shelving- and locker man 0 56,311 1,390 57,701 0.2% 91.3% 384 Office administrative services 0 36,507 21,003 57,510 0.2% 91.5% 322 Retail Stores - Electronics and appliances 0 8,007 48,234 56,242 0.2% 91.7% 99 Wood windows and doors and millwork manufactu 0 52,329 1,223 53,553 0.2% 91.9% 115 Petroleum refineries 0 35,701 17,282 52,982 0.2% 92.1% 377 Advertising and related services 0 24,161 28,231 52,392 0.2% 92.3% 372 Computer systems design services 0 37,981 14,362 52,343 0.2% 92.5% 20 Extraction of oil and natural gas 0 33,144 18,009 51,153 0.2% 92.7% 391 Private elementary and secondary schools 0 0 50,398 50,398 0.2% 92.9% 424 Grantmaking- giving- and social advocacy orga 0 9 50,314 50,323 0.2% 93.0% 386 Business support services 0 35,098 15,027 50,125 0.2% 93.2% 330 Retail Stores - Miscellaneous 0 5,638 44,333 49,971 0.2% 93.4% 376 Scientific research and development services 0 23,667 25,683 49,350 0.2% 93.6% 332 Transport by air 0 16,585 30,410 46,995 0.2% 93.7% 395 Home health care services 0 0 44,327 44,327 0.2% 93.9% 346 Motion picture and video industries 0 6,924 35,035 41,959 0.2% 94.0% 321 Retail Stores - Furniture and home furnishing 0 9,377 31,936 41,313 0.1% 94.2% 331 Retail Nonstores - Direct and electronic sale 0 4,008 36,398 40,405 0.1% 94.3% 387 Investigation and security services 0 28,670 11,544 40,213 0.1% 94.5% 340 Warehousing and storage 0 17,466 20,710 38,176 0.1% 94.6% 339 Couriers and messengers 0 19,635 18,118 37,753 0.1% 94.8% 409 Amusement parks- arcades- and gambling indust 0 20 37,307 37,327 0.1% 94.9% 393 Other private educational services 0 702 36,157 36,860 0.1% 95.0% 159 Glass product manufacturing made of purchased 0 34,088 1,895 35,983 0.1% 95.1% 426 Private household operations 0 0 33,289 33,289 0.1% 95.3% 399 Child day care services 0 0 32,367 32,367 0.1% 95.4% 336 Transit and ground passenger transportation 0 10,616 21,211 31,827 0.1% 95.5% 328 Retail Stores - Sporting goods- hobby- book a 0 3,694 27,308 31,002 0.1% 95.6% All Other Sectors 0 549,820 679,984 1,229,799 4.4% 100.0% Totals 16,941,354 5,311,801 5,719,262 27,972,417 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

WHITNEY & WHITNEY, INC. P age B-2

Appendix B-1(a) The Commons Construction Output Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

34 Construct new nonresidential commercial and h 51,292,632 0 0 51,292,632 57.9% 57.9% 369 Architectural- engineering- and related servi 0 3,410,189 56,802 3,466,991 3.9% 61.8% 319 Wholesale trade businesses 0 1,899,982 1,209,763 3,109,745 3.5% 65.3% 361 Imputed rental activity for owner-occupied dw 0 0 2,193,008 2,193,008 2.5% 67.8% 115 Petroleum refineries 0 1,258,934 609,404 1,868,339 2.1% 69.9% 360 Real estate establishments 0 583,236 969,429 1,552,664 1.8% 71.6% 413 Food services and drinking places 0 245,812 949,152 1,194,964 1.3% 73.0% 354 Monetary authorities and depository credit in 0 564,358 474,369 1,038,727 1.2% 74.2% 394 Offices of physicians- dentists- and other he 0 3 1,016,436 1,016,440 1.1% 75.3% 397 Private hospitals 0 3 808,146 808,149 0.9% 76.2% 356 Securities- commodity contracts- investments- 0 274,082 464,981 739,063 0.8% 77.1% 367 Legal services 0 418,807 297,830 716,637 0.8% 77.9% 351 Telecommunications 0 349,651 353,602 703,253 0.8% 78.7% 357 Insurance carriers 0 114,958 560,039 674,997 0.8% 79.4% 381 Management of companies and enterprises 0 361,969 217,720 579,689 0.7% 80.1% 335 Transport by truck 0 384,532 160,023 544,555 0.6% 80.7% 320 Retail Stores - Motor vehicle and parts 0 56,345 401,411 457,755 0.5% 81.2% 365 Commercial and industrial machinery and equip 0 375,016 24,216 399,232 0.5% 81.7% 324 Retail Stores - Food and beverage 0 39,066 337,246 376,312 0.4% 82.1% 355 Nondepository credit intermediation and relat 0 115,831 258,681 374,511 0.4% 82.5% 20 Extraction of oil and natural gas 0 232,620 126,395 359,015 0.4% 82.9% 414 Automotive repair and maintenance- except car 0 192,049 148,544 340,593 0.4% 83.3% 31 Electric power generation- transmission- and 0 145,302 189,962 335,263 0.4% 83.7% 396 Medical and diagnostic labs and outpatient an 0 151 311,024 311,175 0.4% 84.0% 144 Plastics pipe and pipe fitting manufacturing 0 290,680 7,016 297,696 0.3% 84.4% 368 Accounting- tax preparation- bookkeeping- and 0 180,096 113,344 293,440 0.3% 84.7% 329 Retail Stores - General merchandise 0 30,723 260,854 291,577 0.3% 85.0% 99 Wood windows and doors and millwork manufactu 0 273,064 6,383 279,446 0.3% 85.3% 149 Other plastics product manufacturing 0 241,574 35,003 276,577 0.3% 85.6% 295 Wood kitchen cabinet and countertop manufactu 0 248,044 15,574 263,618 0.3% 85.9% 432 Other state and local government enterprises 0 43,553 212,030 255,583 0.3% 86.2% 380 All other miscellaneous professional- scienti 0 173,370 71,931 245,301 0.3% 86.5% 349 Cable and other subscription programming 0 103,940 139,971 243,911 0.3% 86.8% 374 Management- scientific- and technical consult 0 141,079 100,804 241,883 0.3% 87.1% 382 Employment services 0 149,573 92,258 241,831 0.3% 87.3% 117 Asphalt shingle and coating materials manufac 0 228,495 3,392 231,886 0.3% 87.6% 32 Natural gas distribution 0 89,771 136,456 226,227 0.3% 87.8% 388 Services to buildings and dwellings 0 133,633 91,916 225,549 0.3% 88.1% 411 Hotels and motels- including casino hotels 0 113,275 108,049 221,324 0.2% 88.4% 302 Showcase- partition- shelving- and locker man 0 214,743 5,300 220,043 0.2% 88.6% 327 Retail Stores - Clothing and clothing accesso 0 18,803 198,238 217,041 0.2% 88.8% 431 * Not unique commod (S&LG electricity) 0 94,334 122,138 216,472 0.2% 89.1% 331 Retail Nonstores - Direct and electronic sale 0 21,348 193,892 215,240 0.2% 89.3% 392 Private junior colleges- colleges- universiti 0 2,721 209,827 212,547 0.2% 89.6% 425 Civic- social- professional- and similar orga 0 95,274 107,025 202,300 0.2% 89.8% 417 Commercial and industrial machinery and equip 0 176,055 26,026 202,081 0.2% 90.0% 384 Office administrative services 0 124,506 71,629 196,134 0.2% 90.3% 39 Maint & repair construct of nonresident struc 0 117,675 71,610 189,285 0.2% 90.5% 323 Retail Stores - Building material and garden 0 17,431 167,137 184,568 0.2% 90.7% 325 Retail Stores - Health and personal care 0 19,687 158,668 178,355 0.2% 90.9% 159 Glass product manufacturing made of purchased 0 163,539 9,091 172,630 0.2% 91.1% 359 Funds- trusts- and other financial vehicles 0 3,294 162,409 165,703 0.2% 91.3% 332 Transport by air 0 58,087 106,506 164,593 0.2% 91.4% 398 Nursing and residential care facilities 0 0 162,261 162,261 0.2% 91.6% 228 Material handling equipment manufacturing 0 161,361 487 161,848 0.2% 91.8% 427 US Postal Service 0 64,162 84,096 148,258 0.2% 92.0% 377 Advertising and related services 0 66,019 77,138 143,158 0.2% 92.1% 409 Amusement parks- arcades- and gambling indust 0 75 142,299 142,375 0.2% 92.3% 338 Scenic and sightseeing transportation and sup 0 80,205 60,307 140,512 0.2% 92.5% 358 Insurance agencies- brokerages- and related a 0 25,669 113,794 139,463 0.2% 92.6% 330 Retail Stores - Miscellaneous 0 15,385 120,970 136,355 0.2% 92.8% 400 Individual and family services 0 0 133,336 133,336 0.2% 92.9% 422 Other personal services 0 7,681 125,113 132,794 0.1% 93.1% 321 Retail Stores - Furniture and home furnishing 0 29,134 99,225 128,359 0.1% 93.2% 372 Computer systems design services 0 90,685 34,291 124,977 0.1% 93.4% 326 Retail Stores - Gasoline stations 0 9,987 107,587 117,574 0.1% 93.5% 322 Retail Stores - Electronics and appliances 0 15,904 95,806 111,710 0.1% 93.6% 386 Business support services 0 77,876 33,343 111,219 0.1% 93.7% 362 Automotive equipment rental and leasing 0 44,651 66,514 111,164 0.1% 93.9% 376 Scientific research and development services 0 52,573 57,049 109,622 0.1% 94.0% 346 Motion picture and video industries 0 17,372 87,892 105,264 0.1% 94.1% 59 Animal (except poultry) slaughtering- renderi 0 2,592 102,525 105,117 0.1% 94.2% 390 Waste management and remediation services 0 46,523 50,021 96,544 0.1% 94.3% All Other Sectors 0 2,097,178 2,924,461 5,021,642 5.7% 100.0% Totals 51,292,632 17,496,295 19,821,175 88,610,102 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

WHITNEY & WHITNEY, INC. P age B-3

Appendix B-2(b) The Commons Operations Employment Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

329 Retail Stores - General merchandise 413.3 0.8 3.3 417.4 49.1% 49.1% 413 Food services and drinking places 109.4 3.7 11.5 124.6 14.7% 63.8% 324 Retail Stores - Food and beverage 87.9 0.3 3.3 91.4 10.8% 74.6% 325 Retail Stores - Health and personal care 36.4 0.1 1.4 37.9 4.5% 79.0% 323 Retail Stores - Building material and garden 17.9 0.1 1.3 19.2 2.3% 81.3% 360 Real estate establishments 0 10 3.7 13.6 1.6% 82.9% 319 Wholesale trade businesses 0 4.3 5.2 9.5 1.1% 84.0% 382 Employment services 0 5.7 2 7.7 0.9% 84.9% 394 Offices of physicians- dentists- and other he 0 0 6.2 6.2 0.7% 85.7% 397 Private hospitals 0 0 4.8 4.8 0.6% 86.2% 340 Warehousing and storage 0 3.6 0.3 3.9 0.5% 86.7% 388 Services to buildings and dwellings 0 2.8 1.1 3.9 0.5% 87.1% 427 US Postal Service 0 3 0.6 3.6 0.4% 87.6% 368 Accounting- tax preparation- bookkeeping- and 0 2.3 0.9 3.2 0.4% 87.9% 426 Private household operations 0 0 3.2 3.2 0.4% 88.3% 398 Nursing and residential care facilities 0 0 3.1 3.1 0.4% 88.7% 377 Advertising and related services 0 2.7 0.4 3 0.4% 89.0% 354 Monetary authorities and depository credit in 0 1.6 1.3 2.9 0.3% 89.4% 381 Management of companies and enterprises 0 2.2 0.7 2.8 0.3% 89.7% 392 Private junior colleges- colleges- universiti 0 0.6 2.1 2.8 0.3% 90.0% 320 Retail Stores - Motor vehicle and parts 0 0.1 2.5 2.6 0.3% 90.3% 357 Insurance carriers 0 1.3 1.3 2.6 0.3% 90.7% 335 Transport by truck 0 1.6 0.8 2.4 0.3% 90.9% 339 Couriers and messengers 0 2 0.4 2.4 0.3% 91.2% 400 Individual and family services 0 0 2.3 2.3 0.3% 91.5% 39 Maint & repair construct of nonresident struc 0 1.7 0.5 2.2 0.3% 91.7% 367 Legal services 0 1.1 1.2 2.2 0.3% 92.0% 414 Automotive repair and maintenance- except car 0 1 1.2 2.2 0.3% 92.3% 356 Securities- commodity contracts- investments- 0 0.7 1.4 2.1 0.2% 92.5% 374 Management- scientific- and technical consult 0 1.5 0.5 2 0.2% 92.7% 386 Business support services 0 1.6 0.3 2 0.2% 93.0% 387 Investigation and security services 0 1.6 0.4 2 0.2% 93.2% 425 Civic- social- professional- and similar orga 0 0.7 1.2 1.9 0.2% 93.4% 331 Retail Nonstores - Direct and electronic sale 0 0 1.8 1.8 0.2% 93.7% 327 Retail Stores - Clothing and clothing accesso 0 0 1.7 1.7 0.2% 93.9% 355 Nondepository credit intermediation and relat 0 0.9 0.8 1.7 0.2% 94.1% 330 Retail Stores - Miscellaneous 0 0 1.6 1.6 0.2% 94.2% 393 Other private educational services 0 0.4 1 1.5 0.2% 94.4% 396 Medical and diagnostic labs and outpatient an 0 0 1.5 1.5 0.2% 94.6% 399 Child day care services 0 0 1.4 1.4 0.2% 94.8% 351 Telecommunications 0 0.6 0.6 1.2 0.1% 94.9% 358 Insurance agencies- brokerages- and related a 0 0.6 0.6 1.2 0.1% 95.0% 411 Hotels and motels- including casino hotels 0 0.4 0.7 1.2 0.1% 95.2% 431 * Not unique commod (S&LG electricity) 0 0.8 0.4 1.2 0.1% 95.3% 338 Scenic and sightseeing transportation and sup 0 0.8 0.3 1.1 0.1% 95.5% 395 Home health care services 0 0 1.1 1.1 0.1% 95.6% 419 Personal care services 0 0 1.1 1.1 0.1% 95.7% 372 Computer systems design services 0 0.7 0.2 1 0.1% 95.8% 391 Private elementary and secondary schools 0 0 1 1 0.1% 95.9% 432 Other state and local government enterprises 0 0.4 0.6 1 0.1% 96.1% 369 Architectural- engineering- and related servi 0 0.6 0.3 0.9 0.1% 96.2% 401 Community food- housing- and other relief ser 0 0 0.9 0.9 0.1% 96.3% 403 Spectator sports companies 0 0.5 0.4 0.9 0.1% 96.4% 409 Amusement parks- arcades- and gambling indust 0 0 0.9 0.9 0.1% 96.5% 421 Dry-cleaning and laundry services 0 0.3 0.5 0.9 0.1% 96.6% 328 Retail Stores - Sporting goods- hobby- book a 0 0 0.8 0.8 0.1% 96.7% 384 Office administrative services 0 0.6 0.2 0.8 0.1% 96.8% 389 Other support services 0 0.7 0.2 0.8 0.1% 96.9% 417 Commercial and industrial machinery and equip 0 0.6 0.1 0.8 0.1% 97.0% 321 Retail Stores - Furniture and home furnishing 0 0 0.7 0.7 0.1% 97.1% 322 Retail Stores - Electronics and appliances 0 0 0.7 0.7 0.1% 97.1% 336 Transit and ground passenger transportation 0 0.2 0.5 0.7 0.1% 97.2% 407 Fitness and recreational sports centers 0 0.2 0.6 0.7 0.1% 97.3% 424 Grantmaking- giving- and social advocacy orga 0 0 0.7 0.7 0.1% 97.4% 113 Printing 0 0.5 0.1 0.6 0.1% 97.5% 326 Retail Stores - Gasoline stations 0 0 0.5 0.6 0.1% 97.5% 346 Motion picture and video industries 0 0.3 0.3 0.6 0.1% 97.6% 348 Radio and television broadcasting 0 0.5 0.1 0.6 0.1% 97.7% 349 Cable and other subscription programming 0 0.5 0.1 0.6 0.1% 97.7% 375 Environmental and other technical consulting 0 0.4 0.1 0.6 0.1% 97.8% 380 All other miscellaneous professional- scienti 0 0.5 0.2 0.6 0.1% 97.9% 404 Promoters of performing arts and sports and a 0 0.3 0.2 0.6 0.1% 98.0% All Other Sectors 0.1 8.5 8.9 17.4 2.0% 100.0% Totals 665 79.5 104.8 849.3 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

WHITNEY & WHITNEY, INC. P age B-4

Appendix B-2(c) The Commons Operations Employee Compensation Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

329 Retail Stores - General merchandise 11,195,467 22,211 88,879 11,306,557 42.2% 42.2% 324 Retail Stores - Food and beverage 2,823,380 8,099 105,026 2,936,506 10.9% 53.1% 413 Food services and drinking places 2,424,855 82,253 254,173 2,761,281 10.3% 63.4% 325 Retail Stores - Health and personal care 1,414,418 4,584 53,415 1,472,417 5.5% 68.9% 323 Retail Stores - Building material and garden 703,183 2,120 49,466 754,770 2.8% 71.7% 319 Wholesale trade businesses 0 261,343 317,176 578,519 2.2% 73.9% 394 Offices of physicians- dentists- and other he 0 2 352,053 352,056 1.3% 75.2% 397 Private hospitals 0 3 346,524 346,527 1.3% 76.5% 381 Management of companies and enterprises 0 260,669 80,034 340,704 1.3% 77.7% 427 US Postal Service 0 255,281 49,083 304,364 1.1% 78.9% 356 Securities- commodity contracts- investments- 0 67,360 148,650 216,010 0.8% 79.7% 357 Insurance carriers 0 104,474 106,833 211,306 0.8% 80.5% 354 Monetary authorities and depository credit in 0 112,395 92,694 205,090 0.8% 81.2% 382 Employment services 0 149,050 52,596 201,646 0.8% 82.0% 360 Real estate establishments 0 143,764 52,776 196,540 0.7% 82.7% 340 Warehousing and storage 0 179,479 15,874 195,353 0.7% 83.4% 377 Advertising and related services 0 149,843 21,639 171,483 0.6% 84.1% 431 * Not unique commod (S&LG electricity) 0 111,675 49,787 161,462 0.6% 84.7% 367 Legal services 0 74,834 84,041 158,874 0.6% 85.3% 355 Nondepository credit intermediation and relat 0 73,470 69,687 143,157 0.5% 85.8% 320 Retail Stores - Motor vehicle and parts 0 3,835 138,300 142,135 0.5% 86.3% 368 Accounting- tax preparation- bookkeeping- and 0 95,237 35,170 130,407 0.5% 86.8% 374 Management- scientific- and technical consult 0 90,789 30,993 121,782 0.5% 87.3% 39 Maint & repair construct of nonresident struc 0 83,654 23,045 106,699 0.4% 87.7% 388 Services to buildings and dwellings 0 74,007 28,149 102,156 0.4% 88.1% 392 Private junior colleges- colleges- universiti 0 22,553 79,484 102,038 0.4% 88.4% 351 Telecommunications 0 46,160 45,913 92,073 0.3% 88.8% 335 Transport by truck 0 60,027 31,114 91,141 0.3% 89.1% 339 Couriers and messengers 0 76,162 13,888 90,050 0.3% 89.5% 432 Other state and local government enterprises 0 33,435 55,022 88,457 0.3% 89.8% 31 Electric power generation- transmission- and 0 55,992 25,411 81,403 0.3% 90.1% 358 Insurance agencies- brokerages- and related a 0 43,286 37,792 81,078 0.3% 90.4% 338 Scenic and sightseeing transportation and sup 0 54,844 24,522 79,366 0.3% 90.7% 348 Radio and television broadcasting 0 68,373 10,611 78,984 0.3% 91.0% 425 Civic- social- professional- and similar orga 0 27,139 51,425 78,563 0.3% 91.3% 386 Business support services 0 61,258 11,519 72,777 0.3% 91.6% 396 Medical and diagnostic labs and outpatient an 0 69 67,973 68,042 0.3% 91.8% 384 Office administrative services 0 49,458 16,100 65,558 0.2% 92.1% 369 Architectural- engineering- and related servi 0 41,562 20,508 62,070 0.2% 92.3% 414 Automotive repair and maintenance- except car 0 28,704 32,085 60,789 0.2% 92.5% 398 Nursing and residential care facilities 0 0 60,190 60,190 0.2% 92.7% 346 Motion picture and video industries 0 29,522 26,855 56,377 0.2% 92.9% 400 Individual and family services 0 0 53,429 53,429 0.2% 93.1% 349 Cable and other subscription programming 0 41,319 7,268 48,587 0.2% 93.3% 372 Computer systems design services 0 37,228 11,009 48,237 0.2% 93.5% 387 Investigation and security services 0 38,272 8,849 47,120 0.2% 93.7% 327 Retail Stores - Clothing and clothing accesso 0 860 45,884 46,744 0.2% 93.9% 411 Hotels and motels- including casino hotels 0 14,457 26,409 40,865 0.2% 94.0% 393 Other private educational services 0 11,125 27,713 38,838 0.1% 94.2% 391 Private elementary and secondary schools 0 0 38,624 38,624 0.1% 94.3% 424 Grantmaking- giving- and social advocacy orga 0 7 38,571 38,578 0.1% 94.4% 322 Retail Stores - Electronics and appliances 0 1,212 36,969 38,182 0.1% 94.6% 330 Retail Stores - Miscellaneous 0 854 33,979 34,832 0.1% 94.7% 395 Home health care services 0 0 33,982 33,982 0.1% 94.8% 389 Other support services 0 27,055 6,791 33,845 0.1% 95.0% 376 Scientific research and development services 0 14,043 19,686 33,729 0.1% 95.1% 417 Commercial and industrial machinery and equip 0 27,358 5,921 33,280 0.1% 95.2% 113 Printing 0 27,575 5,225 32,800 0.1% 95.3% 390 Waste management and remediation services 0 21,137 11,618 32,755 0.1% 95.5% 332 Transport by air 0 7,372 23,309 30,682 0.1% 95.6% 342 Periodical publishers 0 22,956 6,182 29,138 0.1% 95.7% 409 Amusement parks- arcades- and gambling indust 0 385 28,598 28,982 0.1% 95.8% 331 Retail Nonstores - Direct and electronic sale 0 607 27,897 28,504 0.1% 95.9% 321 Retail Stores - Furniture and home furnishing 0 1,420 24,477 25,897 0.1% 96.0% 426 Private household operations 0 0 25,515 25,515 0.1% 96.1% 399 Child day care services 0 0 24,812 24,812 0.1% 96.2% 375 Environmental and other technical consulting 0 17,796 5,993 23,789 0.1% 96.3% 380 All other miscellaneous professional- scienti 0 17,887 5,630 23,517 0.1% 96.4% 403 Spectator sports companies 0 13,019 10,404 23,423 0.1% 96.4% 20 Extraction of oil and natural gas 0 9,316 13,805 23,122 0.1% 96.5% 429 Other Federal Government enterprises 19,762 1,063 2,251 23,075 0.1% 96.6% 401 Community food- housing- and other relief ser 0 3 22,681 22,684 0.1% 96.7% All Other Sectors 0 390,182 494,094 884,274 3.3% 100.0% Totals 18,581,065 3,853,483 4,384,050 26,818,598 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

WHITNEY & WHITNEY, INC. P age B-5

Appendix B-2(a) The Commons Operations Output Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum % 329 Retail Stores - General merchandise 25,183,078 49,962 199,925 25,432,964 35.0% 35.0% 413 Food services and drinking places 6,940,728 235,436 727,526 7,903,690 10.9% 45.8% 324 Retail Stores - Food and beverage 6,948,663 19,933 258,481 7,227,077 9.9% 55.8% 325 Retail Stores - Health and personal care 3,220,239 10,436 121,611 3,352,286 4.6% 60.4% 360 Real estate establishments 0 2,024,682 743,270 2,767,952 3.8% 64.2% 323 Retail Stores - Building material and garden 1,821,006 5,491 128,101 1,954,598 2.7% 66.9% 319 Wholesale trade businesses 0 764,019 927,244 1,691,263 2.3% 69.2% 361 Imputed rental activity for owner-occupied dw 0 0 1,680,851 1,680,851 2.3% 71.5% 357 Insurance carriers 0 419,784 429,263 849,047 1.2% 72.7% 354 Monetary authorities and depository credit in 0 440,910 363,628 804,538 1.1% 73.8% 394 Offices of physicians- dentists- and other he 0 5 779,180 779,185 1.1% 74.9% 115 Petroleum refineries 0 254,245 467,154 721,399 1.0% 75.8% 349 Cable and other subscription programming 0 609,928 107,291 717,219 1.0% 76.8% 381 Management of companies and enterprises 0 543,574 166,896 710,469 1.0% 77.8% 397 Private hospitals 0 5 619,565 619,571 0.9% 78.7% 351 Telecommunications 0 272,529 271,074 543,603 0.7% 79.4% 356 Securities- commodity contracts- investments- 0 161,515 356,429 517,945 0.7% 80.1% 377 Advertising and related services 0 409,438 59,128 468,566 0.6% 80.8% 31 Electric power generation- transmission- and 0 320,902 145,633 466,535 0.6% 81.4% 367 Legal services 0 203,299 228,311 431,610 0.6% 82.0% 355 Nondepository credit intermediation and relat 0 209,043 198,279 407,322 0.6% 82.6% 427 US Postal Service 0 335,270 64,462 399,732 0.5% 83.1% 340 Warehousing and storage 0 330,899 29,267 360,165 0.5% 83.6% 335 Transport by truck 0 236,662 122,669 359,330 0.5% 84.1% 368 Accounting- tax preparation- bookkeeping- and 0 235,274 86,884 322,158 0.4% 84.5% 320 Retail Stores - Motor vehicle and parts 0 8,531 307,660 316,191 0.4% 85.0% 431 * Not unique commod (S&LG electricity) 0 210,033 93,636 303,669 0.4% 85.4% 374 Management- scientific- and technical consult 0 226,356 77,271 303,627 0.4% 85.8% 382 Employment services 0 200,415 70,721 271,136 0.4% 86.2% 432 Other state and local government enterprises 0 98,772 162,541 261,313 0.4% 86.5% 388 Services to buildings and dwellings 0 185,236 70,456 255,692 0.4% 86.9% 39 Maint & repair construct of nonresident struc 0 199,265 54,894 254,159 0.3% 87.2% 396 Medical and diagnostic labs and outpatient an 0 242 238,439 238,681 0.3% 87.6% 380 All other miscellaneous professional- scienti 0 175,178 55,137 230,315 0.3% 87.9% 384 Office administrative services 0 168,673 54,907 223,580 0.3% 88.2% 414 Automotive repair and maintenance- except car 0 101,865 113,864 215,729 0.3% 88.5% 392 Private junior colleges- colleges- universiti 0 45,637 160,839 206,476 0.3% 88.8% 32 Natural gas distribution 0 100,571 104,610 205,181 0.3% 89.1% 339 Couriers and messengers 0 169,249 30,862 200,111 0.3% 89.3% 348 Radio and television broadcasting 0 165,359 25,662 191,021 0.3% 89.6% 358 Insurance agencies- brokerages- and related a 0 99,901 87,222 187,123 0.3% 89.9% 20 Extraction of oil and natural gas 0 65,387 96,892 162,279 0.2% 90.1% 386 Business support services 0 135,920 25,558 161,478 0.2% 90.3% 327 Retail Stores - Clothing and clothing accesso 0 2,847 151,939 154,786 0.2% 90.5% 366 Lessors of nonfinancial intangible assets 0 132,238 21,465 153,703 0.2% 90.7% 331 Retail Nonstores - Direct and electronic sale 0 3,232 148,608 151,840 0.2% 90.9% 338 Scenic and sightseeing transportation and sup 0 103,390 46,227 149,617 0.2% 91.1% 59 Animal (except poultry) slaughtering- renderi 0 65,478 78,600 144,078 0.2% 91.3% 346 Motion picture and video industries 0 74,062 67,371 141,433 0.2% 91.5% 389 Other support services 0 112,389 28,210 140,599 0.2% 91.7% 369 Architectural- engineering- and related servi 0 88,245 43,542 131,787 0.2% 91.9% 359 Funds- trusts- and other financial vehicles 0 6,221 124,469 130,690 0.2% 92.1% 411 Hotels and motels- including casino hotels 0 45,337 82,821 128,159 0.2% 92.3% 425 Civic- social- professional- and similar orga 0 43,295 82,039 125,333 0.2% 92.4% 398 Nursing and residential care facilities 0 0 124,400 124,400 0.2% 92.6% 372 Computer systems design services 0 88,886 26,286 115,172 0.2% 92.8% 417 Commercial and industrial machinery and equip 0 92,179 19,950 112,129 0.2% 92.9% 409 Amusement parks- arcades- and gambling indust 0 1,467 109,079 110,546 0.2% 93.1% 422 Other personal services 0 13,072 95,903 108,975 0.1% 93.2% 390 Waste management and remediation services 0 69,764 38,347 108,111 0.1% 93.4% 332 Transport by air 0 25,821 81,638 107,459 0.1% 93.5% 342 Periodical publishers 0 83,969 22,612 106,581 0.1% 93.7% 400 Individual and family services 0 0 102,218 102,218 0.1% 93.8% 55 Fluid milk and butter manufacturing 0 54,026 46,497 100,523 0.1% 93.9% 362 Automotive equipment rental and leasing 0 48,527 50,985 99,512 0.1% 94.1% 330 Retail Stores - Miscellaneous 0 2,330 92,717 95,046 0.1% 94.2% 149 Other plastics product manufacturing 0 66,633 26,831 93,464 0.1% 94.3% 56 Cheese manufacturing 0 67,368 23,305 90,673 0.1% 94.5% 393 Other private educational services 0 25,412 63,305 88,717 0.1% 94.6% 350 Internet publishing and broadcasting 0 72,260 13,803 86,063 0.1% 94.7% 387 Investigation and security services 0 69,034 15,961 84,995 0.1% 94.8% 326 Retail Stores - Gasoline stations 0 1,512 82,460 83,972 0.1% 94.9% All Other Sectors 23,706 1,495,587 2,168,834 3,688,130 5.1% 100.0% Totals 44,137,420 13,404,412 15,193,715 72,735,547 100% Source: IMPLAN Pro ver. 2.0; HR&A Advisors, Inc.

WHITNEY & WHITNEY, INC. P age B-6

APPENDIX C

Explanation of Population, Income and Retail Sales Allocation Factors Used in the Analysis

HR&A ADVISORS, INC. P age C-1 Appendix C

This Appendix provides additional explanatory detail for the population, income and retail sales projections that are presented in the urban decay analysis presented in Chapter IV, and how potential conflicts among some of the data sources were reconciled.

Population, Households and Incomes

The baseline population forecasts underlying this analysis were prepared by Claritas, Inc., a nationally-recognized provider of demographic information for market analyses. As presented in Table C-1, Claritas provided population, households and baseline income data for two market areas applicable to the Project — (1) the Lancaster Shopping Center Primary Market Area (PMA), defined as the geographic area within a 5.0-Mile Radius from the intersection of 60th street West and West Avenue L in the City of Lancaster; and (2) the Lancaster Shopping Center Secondary Market Area (SMA), represented geographically by a circular ring around the PMA extending from 5.0 miles to 10.0 miles from the intersection of 60th Street West and West Avenue L — as well as for Los Angeles County. Data were prepared for several time periods: the baseline year 2000, per information collected from the U.S. Census; a current estimate for the year 2007, which serves as the base year for this analysis; and a five-year projection for the year 2012, the calendar year which serves as the first full year of operation of the proposed center. These estimates and projections were then evaluated for internal consistency and for comparability with other data sources, including the State of California Department of Finance and the United States Bureau of Economic Analysis (BEA). These data reflect new information since the publication of HR&A’s/W&W’s previous draft report in March 2008.

HR&A ADVISORS, INC. P age C-2 Appendix C

Table C-1 BASELINE DEMOGRAPHIC ESTIMATES AND PROJECTIONS. LOS ANGELES COUNTY AND LANCASTER SHOPPING CENTER MARKET AREAS SELECTED YEARS, 2000-2013

Primary Secondary Market Area Market Area Los Angeles Data Category 0-5 Mile Radius 5-10 Mile Ring County

Population 2000 71,502 123,860 9,519,338 2007 89,188 147,727 10,010,060 2012 102,427 165,744 10,451,889

Number of Households 2000 22,834 39,951 3,133,774 2007 28,650 46,991 3,256,139 2012 33,065 52,314 3,377,916

Average Per Capita Income 2000 1 $ 22,121 $ 15,588 $ 20,683 2007 $ 27,331 $ 17,759 $ 24,377 2012 $ 30,982 $ 19,649 $ 27,024

Average Household Income 2000 1 $ 67,146 $ 47,656 $ 61,811 2007 $ 83,156 $ 55,403 $ 74,060 2012 $ 94,269 $ 61,321 $ 82,767

1 Data actually are for calendar year 1999. Source: Claritas, Inc., 2007 and 2009 estimates and forecasts.

Income

Table C-1 also provides Claritas’ estimates of current household and per capita income for the Primary Market Area (PMA), the Secondary Market Area (SMA) and Los Angeles County. While these statistics are indicative to the degree that they reflect differences between the PMA, SMA and the entire Los Angeles County with respect to income levels, the current estimates made by Claritas appear to be quite conservative. For example, Claritas’ annual per capita income growth estimates for County residents between 1999 and 2007 is about 2.1 percent, while other estimates and projections for the area made by the United States Bureau of Economic Analysis, Bureau of Labor Statistics and the UCLA Anderson Forecast indicate that per capita personal incomes for the State were growing at a rate above 3.6 percent.28 Given what therefore appear to be unrealistically low estimates by Claritas, further analysis was conducted to arrive at more realistic estimates and projections of current and future income levels for the County, the PMA, and the SMA. These estimates and projections are presented in Table C-2. It should be noted that they reflect higher growth rates estimated by the Bureau of Economic Analysis for the period 1999-2007, then consider the latest forecast made by the UCLA

28 For example, the authoritative UCLA Forecast estimates the annual rate of per capita income growth in the State at about 5.3 percent for the period 1999-2008 and 4.5% for the period 2001-2008.

HR&A ADVISORS, INC. P age C-3 Appendix C

Economic Forecast for the State of California that indicate lower rates of projected per-capita personal income growth for the years 2008 through 2011 as noted below:

Table C-1A. PER-CAPITA INCOME GROWTH STATE OF CALIFORNIA, 2008-2012 Percent Change in Year Per Capita Personal Income 2008 3.4% 2009 -1.3% 2010 1.9% 2011 5.5% 2012 and thereafter 4.5% 1/ 1/ Based on average growth over period 2001-2008. Source: UCLA Anderson Forecast, March 2009; W&W, Inc.

For the forecast year of 2012 and future years that are used in the urban decay analysis, personal income growth is projected to average 4.5 percent annually, a level that is consistent with the rate of income growth estimated by the UCLA Anderson Forecast for the period 2001-2008.

There are two basic measures of per capita personal income that are commonly used in retail market analysis: (1) Per Capita Personal Income as measured by the U.S. Bureau of Economic Analysis (BEA); and (2) Per Capita Personal Income as reported in the United States Census, which is also the basis for the Claritas projections. The BEA definition is a broader definition of per capita personal income that includes both money receipts and changes in assets. It is generally a higher figure for a given population than the per capita amount reported by the U.S. Census, which reports a more limited concept of “money” income that is estimated by census respondents. As noted in Table C-2, the U.S. Census figure for Los Angeles County per capita income was equivalent to 75.85 percent of the BEA County per capita income measure estimate in 1999, and comparative data for other time periods suggest that the ratio between these two per capita income measures has stayed fairly consistent over time.

In the preparation of per capita personal income estimates and projections for the PMA and the SMA, the baseline estimates made by Claritas were adjusted upward to reflect both: (1) the recent BEA estimates of per capita income for State of California residents; (2) the recent BEA estimates of per capita income for County of Los Angeles residents; and (3) the relative differentials in per capita incomes historically found in the PMA and the SMA vis a vis Los Angeles County as measured by Claritas. The results of these adjustments are presented in Table C-2 in the form of per capita income estimates and projections in years 2007, 2008, 2009, 2010, 2011 and 2012 for the PMA, SMA and Los Angeles County residents.

HR&A ADVISORS, INC. P age C-4 Appendix C

Table C-2 COMPARISON OF PER CAPITA INCOMES FOR STATE OF CALIFORNIA, LOS ANGELES COUNTY AND LANCASTER MARKET AREAS 1999-2012

Estimated Estimated Projected Projected Projected Projected 1999 2000 2006 2007 2008 2009 2010 2011 2012 State of California Per Capita Personal Income, BEA Definition $29,828 $32,462$ 39,626 41,580$ 42,994$ 42,435$ 43,241$ 45,619$ 47,672$

County of Los Angeles Per Capita Personal Income, BEA Definition $27,270 $29,232 $37,362 $39,501 $40,844 $40,313 $41,079 $43,338 $45,289

County as Percent of State 93.2% 90.0% 94.3% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%

Money Income as Percent of Personal Income 75.85% 76.0% 76.0% 76.0% 76.0% 76.0% 76.0%

County of Los Angeles Per Capita Personal Income, Census Definition (Claritas): $ 20,683 $ 24,377 25,399$ 27,024$

Adjusted County of Los Angeles Per Capita Personal Income, Census Definition $ 20,683 $ 30,021 30,638$ 34,419$

Lancaster Market Areas

1. Primary Market Area (0-5.0 Mile Radius)

Per Capita Personal Income, Census Definition (Claritas) $ 22,121 $ 27,331 28,815$ 30,982$

Adjusted Per Capita Personal Income, Census Definition $ 22,121 $ 33,659 34,759$ 39,460$

Per Capita Personal Income: BEA Definition $ 29,166 $ 44,288 45,794$ 45,198$ 46,057$ 48,590$ 50,777$

2. Secondary Market Area (5.0-10.0 Mile Ring)

Per Capita Personal Income, Census Definition (Claritas) $ 15,588 $ 17,759 18,348$ 19,469$

Adjusted Per Capita Personal Income, Census Definition $ 15,588 $ 21,871 22,133$ 24,797$

Per Capita Personal Income: BEA Definition $ 20,552 $ 28,777 29,755$ 29,369$ 29,927$ 31,573$ 32,993$

Source: US Bureau of Economic Analysis; U S Census; State of California: Department of Finance & Employment Development Department; Bureau of Labor Statistics; Los Angeles County Economic Development Commission; Claritas, Inc.; W & W, Inc.; HR&A Advisors, Inc.

Retail Sales Demand

Future retail sales demand has been calculated by determining the percent of personal income that has historically been expended for retail sales in the State of California and applying it to existing and future population and income levels in the Lancaster market areas. This percentage has been calculated by comparing total retail sales as measured by the U.S. Census of Retail Trade in census years 1997 and 2002 with the BEA measure of California Personal Income for these two corresponding calendar years as noted in Table C-3.

Table C-3 RETAIL SALES AS PERCENT OF INCOME, US BEA AND US CENSUS STATE OF CALIFORNIA

Total Personal Total Retail Retail Sales Retail Sales Income Sales 1/ as % of Personal as % of Personal Year ('000s) ('000s) Income (BEA) Income (Census) 1997 $ 860,544,880 $ 285,356,629 33.2% 45.4% 2002 $ 1,147,868,177 $ 383,296,602 33.4% 45.7% Average 33.3% 45.5% 1/ Excludes e-sales and vending machines; adds Eating and Drinking facility sales. Source: U S Bureau of Economic Analysis (BEA); U S Census; W & W, Inc.; HR&A Advisors, Inc.

Allocations of retail sales to individual retail categories and store types have been developed following the retail store classification system utilized by the California State Board

HR&A ADVISORS, INC. P age C-5 Appendix C

of Equalization. As shown in Table C-4, annual retail sales measured by the State and by the U.S. Census correspond reasonably well after adjustments are made in the State’s taxable sales statistics that convert them to total retail sales. The adjustments that convert the State’s taxable retail sales to total retail sales are based on a review of data for 1997 and 2002, years when comparative data are available from both the U.S. Census and the Board of Equalization.

After the adjustments to retail sales by store category are made at the state level for 2002 and 2007 (see Tables C-5 and C-6), they are then refined to reflect local tastes and preferences by utilizing the retail sales distributions to various store categories per the percentage distributions that are found in Los Angeles County.

HR&A ADVISORS, INC. P age C-6 Appendix C

Table C-4 COMPARATIVE ANALYSIS, STATE BOARD OF EQUALIZATION AND U S CENSUS OF RETAIL TRADE RETAIL SALES BY M AJOR RETAIL CATEGORY, STATE OF CALIFORNIA 2002 (in Thousands of Current Dollars) 2002 Adjust. State 2002 Retail Store Category State Factor Adjusted Census Apparel Stores 14,029,200 14,029,200 Clothing, Accessories, Jewelry, Luggage 22,661,146 General Merchandise Stores Department Stores & Other General Merchandise 42,741,257 42,741,257 46,696,215 Drug Stores 5,745,634 3.069 17,635,808 17,635,808 Total, General Merchandise 48,486,891 60,377,065 64,332,023 Food Store Group Food Stores 18,951,412 58,106,188 57,964,493 Liquor Stores 2,137,065 2,137,065 2,278,760 Total, Food & Beverage 21,088,477 2.857 60,243,253 60,243,253 Eating & Drinking Group Limited Service Restaurants 17,202,160 17,202,160 Full Service Eating and Drinking Places 20,877,670 20,877,670 Total, Eating & Drinking 38,079,830 38,079,830 Household Furnishings Group 13,983,287 13,983,287 Furniture & Home Furnishings 11,605,138 Electronics & Appliances 13,186,464 Building Materials and Farm Supplies Building Materials and Supplies 25,816,009 25,816,009 24,515,132 Farm and Garden Supply 2,135,472 2,135,472 Lawn/Garden Supplies, including Farm Eqpt 2,265,209 Total, Building Materials and Garden Supplies 27,951,481 27,951,481 27,687,248 Automotive Group Auto Dealers/Parts 63,821,146 1.421 90,664,859 90,664,859 Service Stations 23,928,351 23,928,351 23,421,136 Total, Automotive Group 87,749,497 114,593,210 114,085,995 Specialty: State Board of Equalization Specialty Group(Calif definition) 43,539,120 43,539,120 Used Merchandise 520,999 520,999 Subtotal, Specialty, State Board of Equalization 44,060,119 44,060,119 All Other: State of California/US Census Farm Implement Dealers 2,258,243 2,258,243 Fuel and Ice Dealers 277,357 277,357 906,907 Mobile Home, RV, Motorcycle, Boat, Plane Dealers 3,647,924 1.441 5,256,663 5,256,663 Subtotal, All Other, State Board of Equalization 6,183,524 7,792,263 All Other: US Census Health & Personal Care(less Drug Stores/Pharmacies) 3,108,465 Sporting Goods, Hobby, Books, Music, et al 9,789,031 Misc. Retail: Florists, Office Supplies, Used Merch., Pets, Art, et al 10,786,260 Total, Other 50,243,643 51,852,382 28,940,419 Grand Total, Store Groups Noted Above 301,612,306 381,109,708 342,741,686 Less: Eating & Drinking (38,079,830) Total Retail Store Sales, Selected Categories 343,029,878 342,741,686 State as Percent of Census 100.08% Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A, Inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-7 Appendix C

Table C-5 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY STATE OF CALIFORNIA 2002 (in Thousands of Current Dollars) State Taxable Percent Adjustment State Adjusted Percent Retail Store Category Retail Sales Distribution Factor Retail Sales Distribution Apparel Stores 14,029,200 4.65% 14,029,200 3.68% General Merchandise Group Department Stores 42,741,257 14.17% 42,741,257 11.21% Drug Stores 5,745,634 1.90% 3.0694 17,635,808 4.63% Total, General Merchandise Group 48,486,891 16.08% 60,377,065 15.84% Food Store Group Food Stores 18,951,412 6.28% 58,106,188 15.25% Liquor Stores 2,137,065 0.71% 2,137,065 0.56% Total, Food & Beverage Group 21,088,477 6.99% 2.8567 60,243,253 15.81% Eating & Drinking Group Limited Service Restaurants 17,202,160 5.70% 17,202,160 4.51% Full ServiceEating and Drinking Places 20,877,670 6.92% 20,877,670 5.48% Total, Eating & Drinking 38,079,830 12.63% 38,079,830 9.99% Household Furnishings Group 13,983,287 4.64% 13,983,287 3.67% Building Materials Group 27,951,481 9.27% 27,951,481 7.33% Automotive Group Auto Dealers/Parts 63,821,146 21.16% 1.4206 90,664,859 23.79% Service Stations 23,928,351 7.93% 23,928,351 6.28% Total, Automotive Group 87,749,497 29.09% 114,593,210 30.07% Specialty Group, incl Used Merchandise 44,060,119 14.61% 44,060,119 11.56% All Other Mobile Home, RV, Motorcycle, Boat, Plane Dealers 3,647,924 1.21% 1.4410 5,256,663 1.38% Fuel and Ice Dealers, Farm Implement Dealers 2,535,600 0.84% 2,535,600 0.67% Total, All Other 6,183,524 2.05% 7,792,263 2.04% Total Retail Store Sales 301,612,306 100.00% 381,109,708 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A Advisors, Inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-8 Appendix C

Table C-6 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY STATE OF CALIFORNIA 2007 (in Thousands of Current Dollars) State Taxable Percent Adjustment State Adjusted Percent Retail Store Category Retail Sales Distribution Factor Retail Sales Distribution Apparel Stores 20,855,890 5.39% 20,855,890 4.39% General Merchandise Group Department Stores 53,428,213 13.80% 53,428,213 11.24% Drug Stores 6,469,137 1.67% 3.0694 19,856,548 4.18% Total, General Merchandise Group 59,897,350 15.48% 73,284,761 15.42% Food Store Group Food Stores 22,461,059 5.80% 69,320,828 14.59% Liquor Stores 2,777,271 0.72% 2,777,271 0.58% Total, Food & Beverage Group 25,238,330 6.52% 2.8567 72,098,099 15.17% Eating & Drinking Group Limited Service Restaurants 23,471,875 6.06% 23,471,875 4.94% Full ServiceEating and Drinking Places 28,186,700 7.28% 28,186,700 5.93% Total, Eating & Drinking Group 51,658,575 13.35% 51,658,575 10.87% Household Furnishings Group 16,720,852 4.32% 16,720,852 3.52% Building Materials Group 35,622,021 9.20% 35,622,021 7.50% Automotive Group Auto Dealers/Parts 65,735,209 16.98% 1.4206 93,383,993 19.65% Service Stations 47,084,940 12.17% 47,084,940 9.91% Total, Automotive Group 112,820,149 29.15% 140,468,933 29.56% Specialty Group, incl Used Merchandise 58,659,621 15.16% 58,659,621 12.35% All Other Mobile Home, RV, Motorcycle, Boat, Plane Dealers 5,044,769 1.30% 1.4410 5,256,663 1.11% Fuel and Ice Dealers, Farm Implement Dealers 507,545 0.13% 507,545 0.11% Total, All Other 5,552,314 1.43% 5,764,208 1.21% Total Retail Store Sales 387,025,102 100.00% 475,132,960 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A Advisors, Inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-9 Appendix C

The final retail sales distributions to individual retail store categories utilized in this analysis for the PMA, and SMA are derived from data presented in Tables C-7, C-8 and C-9. The data in these tables show the distribution of taxable and total retail sales in Los Angeles County for 2002 and 2007. In this regard, it should be noted that 2007 is the most recent calendar year for which annual taxable sales data are available as of the date this updated report was prepared.

HR&A ADVISORS, INC. P age C-10 Appendix C

Table C-7 COMPARATIVE ANALYSIS AND RECONCILIATION, STATE BOARD OF EQUALIZATION AND U S CENSUS OF RETAIL TRADE RETAIL SALES BY MAJOR RETAIL CATEGORY, LOS ANGELES COUNTY 2002 (in Thousands of Current Dollars) 2002 Adjust. County 2002 Retail Store Category County Factor Adjusted Census Apparel Stores 4,036,630 4,036,630 Clothing, Accessories, Jewelry, Luggage 6,887,625 General Merchandise Group Department Stores & Other General Merchandise 9,704,153 9,704,153 10,659,149 Drug Stores 1,492,554 3.2573 4,861,770 4,861,770 Total, General Merchandise Group 11,196,707 14,565,923 15,520,919 Food Store Group Food Stores 4,235,299 14,850,438 14,821,554 Liquor Stores 544,140 544,140 573,024 Total, Food Store Group 4,779,439 3.2210 15,394,578 15,394,578 Eating & Drinking Group Restaurants, no Alcohol 5,364,930 5,364,930 Resaurants with Alcohol 5,176,950 5,176,950 Total, Eating & Drinking Group 10,541,880 10,541,880 Household Furnishings Group 3,378,316 3,378,316 Furniture & Home Furnishings 3,003,224 Electronics & Appliances 3,542,758 Building Materials and Garden Supplies Building Materials and Supplies 5,528,888 5,528,888 4,991,218 Farm and Garden Supplies 213,137 213,137 Lawn/Garden Supplies 240,146 Total, Building Materials and Garden Supplies Group 5,742,025 5,742,025 5,231,364 Automotive Group Auto Dealers/Parts 15,869,231 1.5989 25,373,957 25,373,957 Service Stations 6,404,120 6,404,120 5,396,775 Total, Automotive Group 22,273,351 31,778,077 30,770,732 Specialty Group: State Board of Equalization Specialty Stores 11,638,907 11,638,907 Used Merchandise 100,733 100,733 Subtotal, Specialty Group 11,739,640 11,739,640 All Other: State Board of Equalization Farm Implement Dealers 250,116 250,116 Fuel and Ice Dealers 48,785 48,785 40,529 Mobile Home, RV, Motorcycle, Boat, Plane Dealers 561,088 1.2856 721,339 721,339 Subtotal, All Other (State Board of Equalization) 859,989 1,020,240 All Other: US Census Health & Personal Care(less Drug Stores/Pharmacies) 917,972 Sporting Goods, Hobby, Books, Music, et al 2,581,307 Misc. Retail: Florists, Office Supplies, Used Merch., Pets, Art, et al 2,731,895 Total, All Other 12,599,629 12,759,880 6,993,042 Grand Total, Store Groups Noted Above 74,547,977 98,197,309 87,344,242 Less: Eating & Drinking Group (10,541,880) Total Retail Store Sales 87,655,429 87,344,242 County as Percent of Census 100.36%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A Advisors, Inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-11 Appendix C

Table C-8 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY COUNTY OF LOS ANGELES 2002 (in Thousands of Current Dollars) County Percent of Adjustment County Percent of Retail Store Category Taxable Total Factor Estimated Total Total Apparel Stores 4,036,630 5.41% 4,036,630 4.11% General Merchandise Group Department Stores 9,704,153 13.02% 9,704,153 9.88% Drug Stores 1,492,554 2.00% 3.2573 4,861,770 4.95% Total, General Merchandise Group 11,196,707 15.02% 14,565,923 14.83% Food Store Group Food Stores 4,235,299 5.68% 14,850,438 15.12% Liquor Stores 544,140 0.73% 544,140 0.55% Total, Food & Beverage Group 4,779,439 6.41% 3.2210 15,394,578 15.68% Eating & Drinking Group Limited-Service Restaurants 5,364,930 7.20% 5,364,930 5.46% Full-Service Eating and Drinking Places 5,176,950 6.94% 5,176,950 5.27% Total, Eating & Drinking 10,541,880 14.14% 10,541,880 10.74% Household Furnishings Group 3,378,316 4.53% 3,378,316 3.44% Building Materials Group 5,742,025 7.70% 5,742,025 5.85% Automotive Group Auto Dealers/Parts 15,869,231 21.29% 1.5989 25,373,957 25.84% Service Stations 6,404,120 8.59% 6,404,120 6.52% Total, Automotive Group 22,273,351 29.88% 31,778,077 32.36% Specialty Group, incl Used Merchandise 11,739,640 15.75% 11,739,640 11.96% All Other Mobile Home, RV, Motorcycle, Boat, Plane Dealers 561,088 0.75% 1.2856 721,339 0.73% Fuel and Ice Dealers, Farm Implement Dealers 298,901 0.40% 298,901 0.30% Total, All Other 859,989 1.15% 1,020,240 1.04% Total Retail Store Sales 74,547,977 100.00% 98,197,309 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A Advisors, Inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-12 Appendix C

Table C-9 DISTRIBUTION OF TAXABLE AND TOTAL RETAIL SALES BY MAJOR RETAIL CATEGORY COUNTY OF LOS ANGELES 2007 (in Thousands of Current Dollars) County Adjustment County Percent of Retail Store Category Taxable Factor EstimatedTotal Total Apparel Stores 5,829,390 5,829,390 4.60% General Merchandise Group Department Stores 12,122,397 12,122,397 9.56% Drug Stores 1,703,141 3.2573 5,547,725 4.38% Total, General Merchandise Group 13,825,538 17,670,122 13.94% Food Store Group Food Stores 4,911,939 17,335,344 13.67% Liquor Stores 681,667 681,667 0.54% Total, Food & Beverage Group 5,593,606 3.2210 18,017,011 14.21% Eating & Drinking Group Limited Service Restaurants 7,274,685 7,274,685 5.74% Full-Service Eating and Drinking Places 7,198,514 7,198,514 5.68% Total, Eating & Drinking 14,473,199 14,473,199 11.42% Household Furnishings Group 4,287,090 4,287,090 3.38% Building Materials Group 7,494,731 7,494,731 5.91% Automotive Group Auto Dealers/Parts 16,463,589 1.5989 26,324,300 20.76% Service Stations 12,230,800 12,230,800 9.65% Total, Automotive Group 28,694,389 38,555,100 30.41% Specialty Group, incl Used Merchandise 14,845,935 14,845,935 11.71% All Other Mobile Home, RV, Motorcycle, Boat, Plane Dealers 692,629 1.2856 5,256,663 4.15% Fuel and Ice Dealers, Farm Implement Dealers 359,204 359,204 0.28% Total, All Other 1,051,833 5,615,867 4.43% Total Retail Store Sales 96,095,711 126,788,445 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HR&A Advisors, inc.; W & W, Inc.

HR&A ADVISORS, INC. P age C-13 City of Lancaster

Appendix C

Corrected Economic Analysis for the Draft EIR

The Commons at Quartz Hill Appendices Final Environmental Impact Report

HR&A ADVISORS, INC. Economic Development, Real Estate Advisory & Public Policy Consultants

Preliminary Working Draft Not for Public Distribution

ECONOMIC, FISCAL AND “URBAN DECAY” ANALYSIS OF THE COMMONS AT QUARTZ HILL, A PROPOSED SHOPPING CENTER IN THE CITY OF LANCASTER, CALIFORNIA

Prepared for:

Planning Department City of Lancaster 44933 Fern Avenue Lancaster, CA 93534

Prepared in association with Whitney & Whitney, Inc.

March 2008

2800 28TH STREET, SUITE 325, SANTA MONICA, CALIFORNIA 90405 $ TEL: 310.581.0900 $ FAX: 310.581.0910

Los Angeles New York

TABLE OF CONTENTS

Page

List of Figures and Tables...... iv

Executive Summary...... 1

I. Introduction...... 11

A Purpose of the Analysis ...... 11

B. Overview of The Commons at Quartz Hill Proposed Shopping Center...... 11

C. Economic Impacts...... 15

D. Fiscal Impacts ...... 16

E. The “Urban Decay” Concept in Environmental Impact Analysis ...... 16

II. Economic Impact Analysis...... 18

A. Overview of the Economic Impact Analysis Approach ...... 18

B. Economic Impacts of Project Development ...... 19

C. Economic Impacts of Annual Operations...... 20

III. Fiscal Impact Analysis...... 21

A. Overview of the Fiscal Impact Analysis Approach ...... 21

B. One-Time ...... 21

C. Recurring Project Revenues...... 22

D. Public Service Costs and Net Fiscal Impact ...... 26

IV. “Urban Decay” Analysis...... 27

A. Overview of the Urban Decay Analysis Approach...... 27

B. Market Area Delineation...... 27

C. Existing and Projected Competitive Retail Supply...... 29

HR&A ADVISORS, INC. Page ii March 2008

Page

D. Shopper Goods Space Impact Analysis………………………………… ...... 33

E. Building Materials/Garden Supplies Space Impact Analysis…………………….37

F. Convenience Goods Space Impact Analysis……………………………………..39

G. Eating and Drinking Facilities Space Impact Analysis...... 44

H. Evaluation of Potential for Urban Decay...... 47

Appendix A: Summary Qualifications of HR&A Advisors, Inc. and Whitney & Whitney, Inc.

Appendix B: IMPLAN Economic Impact Analysis Results

Appendix C: Explanation of Population, Income and Retail Sales Allocation Factors Used in the Analysis

HR&A ADVISORS, INC. Page iii March 2008

List of Figures Page

1. Regional and Project Vicinity Map...... 12

2. Conceptual Site Plan...... 13

3. Primary and Secondary Market Areas ...... 28

List of Tables Page

1. The Commons at Quartz Hill Proposed Retail Center...... 1

2. Employment and Other Economic Impacts in Los Angeles County from Development and Operation of The Commons at Quartz Hill ...... 2

3. Estimate of One-Time and Recurring Annual Tax Revenues to the City of Lancaster from Development and Operation of The Commons at Quartz Hill ...... 3

4. Projected Distribution of Space and Total Sales by Major Retail Category The Commons at Quartz Hill...... 14

5. Employment and Other Economic Impacts in Los Angeles County from Construction of The Commons at Quartz Hill...... 19

6. Employment and Other Economic Impacts in Los Angeles County from Annual Operation of The Commons at Quartz Hill...... 20

7. Estimate of One-Time Tax Revenues to the City of Lancaster from Development of The Commons at Quartz Hill...... 22

8. Estimate of Recurring Annual Tax Revenues to the City of Lancaster from Operation of The Commons at Quartz Hill, 2012...... 23

9. Estimate of Recurring Annual Property Tax Revenues, 2012...... 24

10. Estimate of Recurring Annual Sales Tax Revenues, 2012 ...... 25

11. Estimate of Recurring Annual Tax Revenues to the City of Lancaster from Operation of The Commons at Quartz Hill Over 20 Years ...... 25

12 Baseline Demographic Estimates and Projections, Lancaster Shopping Center Market Areas...... 29

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Page

13. Proposed Lane Ranch Towne Center...... 30

14. Inventory of Potential Competitive Facilities, Lancaster Shopping Centers Primary Market Area ...... 31

15. Inventory of Other Retail Space, Projected Competitive Facilities Identified in Table 14 ...... 32

16. Projected Increase in Supply of Competitive Retail Space Lancaster Primary Market Area ...... 32

17. Percentages of Retail Sales Allocable to Shopper Goods, Los Angeles County and Lancaster Market Areas ...... 33

18. Projected Growth in Demand for Shopper Goods, Lancaster Shopping Center Primary Market Area, 2007-2012...... 34

19. Projected Increase in Supportable Space for Shopper Goods Lancaster Shopping Center Primary Market Area (PMA), 2007-2012 ...... 35

20. Comparison of Projected Increase in Demand with Projected Increase in Supply of Shopper Goods Space, Lancaster Shopping Center Primary Market Area and Other Sources, 2007-2012...... 36

21. Projected Growth in Demand for Building Materials and Garden Supplies Lancaster Shopping Center Primary Market Area, 2007-2012 ...... 37

22. Projected Increase in Supportable Space for Building Materials and Garden Supplies, Lancaster Shopping Center Primary Market Area, 2007-2012 ...... 38

23. Comparison of Projected Increase in Demand with Projected Increase in Supply of Building Materials and Garden Supplies Store Space, Lancaster Shopping Center Primary Market Area, 2007-2012...... ………38

24. Projected Growth in Demand for Convenience Goods, Lancaster Shopping Center Primary Market Area, 2007-2012...... 40

25. Projected Increase in Supportable Space for Convenience Goods, Lancaster Shopping Center Primary Market Area, 2007-2012 ...... 41

26. Comparison of Projected Increase in Demand with Projected Increase in Supply of Food and Beverage Store Space, Lancaster Shopping Center Primary Market Area, 2007-2012...... 41

HR&A ADVISORS, INC. Page v March 2008

Page

27. Comparison of Projected Increase in Market Demand with Projected Increase in Supply of Drug Store Space, Lancaster Shopping Center Primary Market Area, 2007-2012...... 43

28. Projected Growth in Demand for Eating & Drinking Facilities Lancaster Shopping Center Primary Market Area, 2007-2012 ...... 44

29. Projected Increase in Supportable Space for Eating & Drinking Facilities Lancaster Shopping Center Primary Market Area, 2007-2012 ...... 45

30. Comparison of Projected Increase in Market Demand with Projected Increase in Supply, Fast Food Eating & Drinking Facilities, Lancaster Shopping Center Primary Market Area, 2007-2012...... 46

31. Comparison of Projected Increase in Market Demand with Projected Increase in Supply, Dinner Restaurant Facilities, Lancaster Shopping Center Primary Market Area, 2007-2012...... 46

HR&A ADVISORS, INC. Page vi March 2008

EXECUTIVE SUMMARY

Introduction

The following report provides an analysis of the general economic and fiscal impacts of The Commons at Quartz Hill (“Project”), a proposed shopping center that would be developed in the City of Lancaster, California, and the potential for the operation of the Project to directly or indirectly cause “urban decay,” as that concept has been addressed in court decisions interpreting the California Environmental Quality Act (CEQA).

The general economic impacts of the Project refer to the jobs, worker compensation and total economic output associated with the Project’s construction and annual operation once it is completed and occupied. These impacts are measured at the scale of the County of Los Angeles, because that is the geographic scale at which total impacts are captured. The fiscal impacts of the project refer to the difference between recurring annual project-related tax and other revenues to the City of Lancaster and the marginal (i.e., incremental) costs to provide services to the Project site.

The potential for the project to cause “urban decay” — which has been described as a chain reaction of store closures and long term vacancies, ultimately destroying existing neighborhoods and leaving decaying building shells in their wake — involves a two-part analysis. First, it must be determined whether the Project will attract retail sales away from existing and/or other planned future retail centers to any significant degree. Second, if it can be reasonably foreseen that sales will be attracted away from other retailers, it must be determined whether the severity of this change in economic circumstances will cause disinvestment that is significant enough to result in business closures, abandonment or other forms of physical deterioration or other manifestations of “urban decay.”

The Commons at Quartz Hill (“Project”) would consist of 369,444 square feet of Gross Leasable Area (GLA) that is to be distributed between retail stores, eating and drinking facilities and Non-retail Services space as summarized in Table 1.

Table 1 PROPOSED "THE COMMONS" RETAIL CENTER Retail Square Feet Space Category GLA 1/ Wal-Mart Superstore 220,800 Drug Store 14,740 Major retailer 20,000 Other Retail Shops 89,911 Services 5,500 Eating & Drinking Facilities 18,493 Grand Total 369,444

1/ GLA: Gross Leasable Area. Source: Rothbart Development; HR&A, Inc.; W&W, Inc.

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Construction is planned for completion by 2011, making 2012 the first full year of center operation.

Economic Impacts Analysis

Using the well-established IMPLAN input-output model of the Los Angeles County economy, it is estimated that the planned expenditure of about $52.0 million to construct the Project will result in a total economic output impact of $95.1 million (in 2008 $) in the Los Angeles County economy, generating 789 total full-time and part-time jobs, of which 461 will be involved directly in the Project’s construction, as shown in the top panel of Table 2. Most of the direct (i.e., construction) and many of the indirect (i.e., materials and services supplied to contractors) economic impacts of Project development will occur in the City of Lancaster economy. Some of the remaining impacts (i.e., from household spending by direct and indirect workers) may occur in the City, but most will occur elsewhere in the County economy where these workers reside.

Table 2 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM CONSTRUCTION AND OPERATION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $) DUE TO PROJECT CONSTRUCTION Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment Construction 461.0 - - 461.0 Other - 116.3 211.6 327.9 Total 461.0 116.3 211.6 788.9 Employee Compensation $19.2 million 4.8 million $7.9 million $31.9 million Total Economic Output $52.0 million $15.7 million $27.4 million $95.1 million

DUE TO ANNUAL OPERATION OF THE COMPLETED PROJECT Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment 680.0 103.6 143.3 927.0 Compensation $17.6 million $4.8 million $5.6 million $28.0 million Total Economic Output $44.5 million $16.6 million $19.6 million $80.7 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

Once the Project is in full operation in 2012, it is estimated that its $140 million in annual sales will result in a total economic output impact of $80.7 million (in 2008 $) in the Los Angeles County economy, including 927 total full-time and part-time jobs, of which 680 will be directly located at the Project, as shown in the bottom panel of Table 2. Here again, most of the direct (i.e., retail sales) and many of the indirect (i.e., materials and services supplied to retail tenants) economic impacts of Project development will occur in the City economy. Some of the remaining impacts (i.e., from household spending by direct and indirect workers) may occur in the City, but most will occur elsewhere in the County economy where these workers reside.

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Fiscal Impacts Analysis

The Project will also yield about $136,000 in one-time revenues to the City of from sales tax on construction materials and real estate transfer tax on the purchase of the Project site. Various permit, planning and mitigation fees are not included, because they directly offset City costs and therefore do not yield net new revenue to the City. In the opening year of 2012, the Project will yield about $1.3 million from the City’s share of the net increase in property tax, sales tax and business license tax. Over the following 20 years, the Project will generate $37.9 million in tax revenue to the City ($20.6 million in 2008 dollars). The Project’s revenue projections are summarized in Table 3.

Table 3 ESTIMATE OF ONE-TIME AND RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM CONSTRUCTION AND OPERATION OF THE COMMONS AT QUARTZ HILL One-Time Revenues Construction Materials Sales Tax$ 130,000 Real Estate Transfer Tax $ 6,300 Total One-Time Revenues $ 136,300

Annual Recurring Revenues Nominal $ 2008 $ Opening Year Over 20 Years Opening Year Over 20 Years Property Tax $ 31,849 $ 821,173 $ 25,729 $ 433,974 Sales Tax $ 1,290,601 $ 37,009,909 $ 1,088,067 $ 20,103,691 Business License Tax $ 1,639 $ 46,993 $ 1,382 $ 25,527 Total Recurring Revenues $ 1,324,089 $ 37,878,076 $ 1,115,178 $ 20,563,191 Source: HR&A, Inc.

The tax revenue estimates and projections are based on the first round of Project-related spending only — i.e., the tax revenues derived directly from Project construction and the Project’s annual sales. Secondary and tertiary sources of tax revenue will also be generated as a result of expenditures by local businesses that supply goods and services for construction of the Project, and to the retail tenants that will occupy it. The amounts of these indirect and induced tax revenues, and the degree to which they will accrue to the City, are not susceptible to reliable estimation. Therefore, the estimates presented here understate, to some unknown degree, the actual tax revenues the Project will produce for the City.

The Project will not have any significant marginal (i.e., incremental) impacts on City services, according to the Project’s Environmental Impact Report, and from this perspective, the Project’s net new revenues to the City represent the net fiscal impact of the Project (i.e., $1.3 million in 2012). Any costs generated by the Project for fire protection will be paid from a share of the property tax allocated to the County Fire District.

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Urban Decay Analysis

The analysis presented here evaluates whether development of the retail and dining space contained in the Project will result in such intense competition that there is likely to be a significant adverse economic impact on existing retail developments in the City of Lancaster and other nearby jurisdictions. Methodologically, the potential for such an impact can be determined in a given market area through a comparison of the projected growth in demand for retail goods, as measured by the change in supportable retail space for particular retail store categories, with the amount of proposed additions to the supply of retail space. In this particular context, the analysis focuses on whether the proposed amount of floor area in each major retail and dining use category planned for the Project exceeds the likely increase in demand for those same uses within the relevant market area(s) serving the Project, where demand is measured by the anticipated growth in population and per capita personal income that would be available for expenditure on the specified retail goods and dining. If the proposed change in the supply of floor area for retail and eating and drinking activities exceeds anticipated growth in demand, the resulting competitive conditions could challenge existing retailers and restaurateurs to such a degree that net sales could be attracted away from their existing stores without their likely replacement by sales from the new sources of demand. Under such circumstances, further analyses would be required to assess whether it is foreseeable that this draining of sales from existing businesses would logically result in significant disinvestment, business closures, abandonment, other forms of physical deterioration, leading to “urban decay.”

Conversely, if the amount of retail and eating and drinking facility space planned for the Project, together with proposed retail space for comparable uses in other planned projects within the same time frame, is equal to or less than the increase in space that can be supported by projected increases in future demand, it can be argued that the proposed Project is not exerting significant adverse competitive pressures that could potentially lead to urban decay. This conclusion follows the logic that the growth in customer demand will be large enough to economically support both the Project and other existing and planned projects offering comparable retail and restaurant uses. Given such circumstances, there is no need to further evaluate the potential for urban decay as a consequence of the development of the Project.

Making these economic impact measurements requires: (1) establishing appropriate market areas for each retail and restaurant category in the Project for which such retail space will be provided; (2) projecting the scale of customer demand based on population growth, income growth and spending growth for those use categories over a relevant time period (i.e., 2007- 2012); (3) converting projected changes in future customer retail spending and eating and drinking facility spending into magnitudes of supportable square feet of gross leasable floor area (GLA), so that the projected increase in supportable space can be compared directly with the projected change in supply proposed for each retail category in the Project’s development program; and (4) comparing the magnitude(s) of supportable space with the proposed supply of space and evaluating the results of this comparison.

Following the methodology outlined above, separate market impact analyses were conducted for the four basic types of retail and restaurant uses that are to be included in the Project: (1) Shopper Goods, consisting of stores offering General Merchandise (typically,

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department stores); Apparel and Accessories stores; Home Furnishings, Furniture and Appliance stores; and Other (or Specialty) retail stores; (2) Building Materials and Garden Supply stores; (3) Convenience Goods stores, including food stores (e.g., supermarkets, bakeries, liquor stores) and drug stores; and (4) Eating and Drinking Facility space, including both fast food facilities and “sit-down” restaurants serving alcohol.

The analysis presented in the report leads to the following urban decay impact findings and conclusions:

. Delineation of Market Areas. Given the dispersed character of existing development in the Antelope Valley and the location of existing retail development competition, two market areas were established for the determination of potential demand for the four classes of retail goods that were evaluated in the analysis: (1) a Primary Market Area (PMA) encompassing the geographic area situated within five miles of the Project site, utilizing a centroid at the intersection of 60th Street W and West Avenue L; and (2) a Secondary Market Area (SMA) encompassing a circular ring around the PMA and extending from five to 10 miles around the Project site. For certain types of retail goods — notably, Shopper Goods and Building Materials and Garden Supplies – the PMA would provide 70 percent of the market support and the SMA 30 percent of the market support. For other classes of goods (e.g., Convenience Goods and Eating and Drinking Facilities) market support would be expected almost entirely from the PMA.

The delineation of a secondary market area is particularly appropriate in this analysis due to the possibility that the Project will share the intersection at 60th Street W and West Avenue L with another proposed retail development known as the Lane Ranch Towne Center (“Lane Ranch”), which is also planning its first full year of operation in 2012. Together, the two centers would provide nearly 800,000 square feet of new retail space in the market, making this location the second largest retail concentration in the Antelope Valley and thereby enhancing the drawing power for the location that is well beyond the normal range for a single 400,000 square foot shopping center.

. Shopper Goods (General Merchandise, Apparel, Home Furnishings/Furniture and Specialty Goods). The analysis of Shopper Goods considered three different comparisons between potential market support for new retail space and potential future competitive supply. These three comparisons were as follows.

-- Project with PMA: The Project’s proposed Shopper Goods space is compared to future PMA resident support for additional Shopper Goods space;

-- Project and Lane Ranch with the Combined PMA and SMA: The total proposed Shopper Goods space from the Project and Lane Ranch is compared to the projected total supportable Shopper Goods space from all market sources, represented by both PMA residents and SMA residents; and

-- Cumulative Projects with the Combined PMA and SMA: The total proposed Shopper Goods space (including the Project, The Commons and all other identified

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developments proposed for completion by 2012) is compared to the projected total supportable Shopper Goods space from all market sources, represented by both PMA residents and SMA residents.

The results of the first of these comparisons indicate that the Project’s Shopper Goods space can be supported by the PMA, as it would provide the equivalent of 66 percent of the PMA’s potential supportable Shopper Goods space. Under the assumptions for the second comparison, the results indicate that the combination of the Project and Lane Ranch together would provide an amount of Shopper Goods space that would constitute 113 percent of the total supportable space from the combined PMA and SMA resident markets. This comparison recognizes that in this type of market context the two centers would draw patronage much like a regional shopping center, where the PMA would account for 70 percent of potential market support and the SMA an additional 30 percent. In the final comparison, the projected supply of Shopper Goods space from all proposed developments is compared with the Total Supportable Space from all sources of market demand as defined by the combination of PMA and SMA residents. Under these assumptions, the total proposed supply represents the equivalent of 145 percent of total demand in 2012. Effectively, the projected excess supply of Shopper Goods space in 2012 is measured at 231,965 square feet GLA.

While the development of the Project together with (1) the development of Lane Ranch and (2) other planned retail projects in the PMA could theoretically lead to an oversupply of Shopper Goods space in the PMA in 2012, this oversupply is unlikely to create extreme competitive conditions that could lead to urban decay. The primary reasons that underline this summary observation are the following:

-- The market demand for Shopper Goods in the PMA and SMA is growing with development of the residential base, and by 2012 the annual growth in supportable Shopper Goods space should exceed 100,000 square feet GLA. Thus, if there is excess supply, it would likely be a short-term phenomenon that would be resolved from growth in resident demand in the two market areas by 2014.

-- The proposed major Shopper Goods anchor tenants for the two centers (including the Project and Lane Ranch) to be developed at 60th Avenue W and West Avenue L are already well-established in the market area. If the two projects draw sales from other establishments it is likely that this “cannibalization” by the anchor tenants will largely come from their own existing stores. Presumably, this potential loss in sales has already been considered in the decisions by the major department store chains to locate additional new stores in the Lancaster market.

-- The threshold sales requirement for Shopper Goods that is utilized in the analysis has been set at a standard for the industry that assumes that the stores have reached maturity, and thus may be conservative (i.e., too high) for stores opening in a market area that is undergoing significant growth. Often there is a “ramp-up” period of several years for stores entering a market before they realize the threshold sales level(s) that are typical for the industry. In this regard, the anchor stores in all

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likelihood are establishing their location well in advance of the long term demand that will ultimately be present in the growing Quartz Hill community.

-- Developers of other projects have the option to delay or otherwise adjust their development programs to reflect market conditions, particularly in recognition of the strength of the anchor tenants present at the Project and Lane Ranch. There also could be adjustments to development schedules in response to recent trends in the residential market that are highly indicative of a major slow down in new residential construction. If there are no “rooftops” in the immediate vicinity, shopping center development likely will be delayed or phased to meet these changes in market conditions.

. Building Materials and Garden Supplies. The analysis of Building Materials and Garden Supplies retail space follows the same basic approach that was utilized for the Shopper Goods analysis, recognizing that shopping behavior for this type of good and anchor tenants that will provide this space, such as The Home Depot, Lowe’s, Wal-Mart and Target, will likely attract significant sales from beyond the PMA. Once again, three basic comparisons were made between supportable space and the proposed development supply, following the framework provided above for Shopper Goods. The results of these comparisons are as follows:

-- Project with PMA: Growth in demand within the PMA for Building Materials and Garden Supplies is sufficient to support the retail space proposed for this use in the Project. The proposed supply at the Project would effectively represent 103 percent of potential supportable space in this category, thus absorbing the entire projected increase in PMA demand by 2012.

-- Project and Lane Ranch with the Combined PMA and SMA: The proposed cumulative supply of Building Materials and Garden Supplies space in the Project and Lane Ranch would represent 84 percent of the total demand generated by PMA and SMA residents that could be captured at the shared location of 60th Street W and West Avenue L.

-- Cumulative Projects with the Combined PMA and SMA: The proposed supply represents 149 percent of total projected supportable space from the combined market areas, as it includes the space at the 60th Street/Avenue L complexes plus a proposed Lowe’s Home Improvement Center with 139,410 square feet of space by 2012. At the projected rate of growth in demand for this type of space, the market would not support all of the proposed space at the threshold sales level utilized in this analysis until 2015.

Despite the significant short term oversupply of space projected by the analysis, development of the proposed Project’s Building Materials and Garden Supply facilities would not likely create competitive conditions that would lead to urban decay for essentially the same reasons as were noted in the discussion of potential oversupply of Shopper Goods. Moreover, as was the case in the Shopper Goods analysis, any short- term sales losses would most likely be experienced by The Home Depot and Lowe’s, the

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two major chains that already have a major presence in the market areas. The other two potential sources of this space, Target and Wal-Mart, are also buffered by the fact that this retail category is a small percentage of their total business, and relatively small sales per square foot from this type of space could easily be offset by higher sales in other parts of the stores. All of these chains have the ability to withstand short-term competitive challenges in favor of establishing a longer-term position in the submarket. Even in situations where one store is closed in favor of a new location there are ample opportunities to re-tenant with other retailers.

. Convenience Goods. Analysis of the potential market support for Convenience Goods was based exclusively on the additional demand generated by PMA residents. Accordingly, the three comparisons were modified to the following for both Food Store Space and Drug Store/Pharmacy Space: (1) Project with PMA; (2) Project and The Commons with the PMA; and (3) Cumulative Projects with the PMA. These comparisons are summarized below:

Food Stores, including Supermarkets, Other Food Stores and Beverage Stores

-- Project with PMA: The Project will offer 49,800 square feet GLA of this type of space. This is equal to 42 percent of the potential supportable demand, leaving considerable market share available for other projects.

-- Project and Lane Ranch with the PMA: The two projects will offer 59,800 square feet GLA, representing 49 percent of the total demand for this category, again leaving considerable market share available for other projects.

-- Cumulative Projects with the PMA: The cumulative proposed supply will represent 109 percent of total supportable demand for this category. This oversupply would be balanced by growth in PMA residents by mid-2014, thus it is not considered to raise such a significant issue with respect to potential impact on existing and future retailers that the likely impact would lead to “urban decay.”

Drug Stores/Pharmacies (including free-standing drug stores and pharmacies within major retailers)

-- Project with PMA: The Project will provide a freestanding drug store and pharmacy space within the Wal-Mart, estimated to total 24,740 square feet GLA for the two facilities. This supply represents 82 percent of total projected PMA resident demand by 2012, leaving market share available for other projects.

-- Project and Lane Ranch with the PMA: The two projects together will provide two free-standing drug stores and two pharmacies within a larger department store setting, with a combined square footage of 91,467 square feet. This amount of space constitutes 158 percent of the total PMA resident demand for this expenditure category, and thus indicates a significant potential oversupply by 2012.

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-- Cumulative Projects with the PMA: As presently proposed, the cumulative supply of proposed drug stores and pharmacies represents three times (304 percent) of the total projected supportable demand from PMA residents for this category by 2012.

These results indicate that if all proposed drug stores and pharmacies are developed as currently proposed in the PMA by 2012 there could be a very significant oversupply of this type of space in the market. While this condition would not be generated by the Project in isolation of other projects, the proposed development of four drug stores and pharmacies at the intersection of 60th Avenue W and West Avenue L would appear to be unrealistic. In light of this information, and depending on which project signs up a drug store tenant first, it is possible that there would be adjustments to the tenant mix in one or both project development programs.

In recognition of the likely conditions of oversupply of drug store space in the PMA by 2012, field surveys and additional market research were conducted that related to the four existing drug stores and one proposed drug store in order to determine which, if any, of the properties would be susceptible to closure and significant urban decay from the forces of extreme competition caused by development of the proposed drug store and pharmacy facilities at the Project and other proposed developments. Five existing and proposed drug stores located near the intersection of 60th Avenue W and West Avenue L are considered most at risk, due to the likely overlap of their respective markets with that of the Project. These investigations indicate, for the reasons presented in the report, that even in light of a serious oversupply of drug store and pharmacy space in the Project’s PMA if the Project and Lane Ranch both open as currently scheduled, it is unlikely that the competitive retail developments studied would experience the store closures, abandonment and physical deterioration that characterizes “urban decay.” The four existing drug store chains with stores in the PMA are all capable of holding on to viable market shares over the long term due to their respective geographic positioning and the underlying strength of the brand. Moreover, it is also very possible that the sales thresholds actually achieved by these stores per square foot may be below the standard utilized in this analysis for determining supportable drug store and pharmacy space, and that this possibility has already been considered in the market strategies of the chains in their location decision-making..

. Eating and Drinking Facilities. The analysis of the potential impact of the proposed Eating and Drinking Facility component of the Project utilized the same comparison framework that was followed in the Convenience Goods analysis where market support is derived exclusively from PMA residents.

Two types of restaurant space are considered in the analysis: (1) fast food restaurants; and (2) “sit-down” restaurants serving alcohol. The analysis indicates that the PMA can adequately support the Project’s proposed fast food restaurants and all other proposed fast food restaurant space that was considered in the analysis. With regard to restaurants serving alcohol, the analysis indicates that there would be a short-term oversupply in 2012, though this imbalance would be satisfied by growth in PMA demand by 2013. Given these findings, there is little likelihood that the proposed restaurant space at the

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Project would have major competitive impacts on other existing or future eating and drinking facilities in the PMA. As the addition of the proposed eating and drinking uses in the Project will not have a significant negative impact on the existing and proposed supply of competitive uses in the PMA, this component of the Project will not lead to urban decay at any of the existing or proposed shopping centers and business districts found in the competitive market area.

The analysis concludes that, while the Project together with other new shopping centers will add new competitive retail and restaurant facilities to the Antelope Valley region, there is no reasonable likelihood that the operation of the Project and the other projects identified in this analysis as they are presently conceived would result in significant adverse economic competition within the regional market area to the degree that this competition would lead to urban decay. This conclusion is supported by the finding that the amount of new retail and restaurant facility space that can be supported by future growth in market demand exceeds or meets the amounts of new space for each use category that is planned for inclusion in the Project. As a result, there is no compelling economic reason to further evaluate potential changes in the physical environment (e.g., “urban decay”) that could be associated with the economic interactions between the Project and its market context.

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I. INTRODUCTION

A. Purpose of the Analysis

This report analyzes the economic and fiscal impacts of The Commons at Quartz Hill (“Project’), a 369,444 square foot retail development located on 35.77 acres at the intersection of 60th Street W and West Avenue L in the City of Lancaster (“City”), County of Los Angeles, and the potential for the operation of the Project to directly or indirectly cause “urban decay,” as that concept has been defined in court decisions interpreting the California Environmental Quality Act (CEQA).1

The general economic impacts of the Project refer to the jobs, worker compensation and total economic output associated with the Project’s construction and operation. These impacts are measured at the scale of the County of Los Angeles, because that is the geographic scale at which total impacts are captured. The fiscal impacts of the project refer to the difference between recurring annual project-related tax and other revenues to the City of Lancaster and the marginal (i.e., incremental) or average costs to provide services to the project site.

Analysis of the potential for new retail development to cause urban decay — “. . . a chain reaction of store closures and long term vacancies, ultimately destroying existing neighborhoods and leaving decaying shells in their wake”2 — requires a two-stage analysis. First, it must be determined whether the new retail development will attract retail sales away from existing and/or other planned future retail centers to any significant degree. Second, if this is the likely outcome, then it must be determined whether the severity of this change in economic circumstances will cause significant disinvestment to such a degree such that it is reasonably foreseeable that business closures, abandonment or other forms of physical deterioration or “urban decay” will result.

This report was prepared for the City of Lancaster by HR&A Advisors, Inc. (HR&A), in association with Whitney & Whitney, Inc. (W&W). The two firms provide independent professional urban and other economic analysis to a wide range of public and private clients. Summaries of the firms’ respective qualifications are included in Appendix A to this report.

B. Overview of The Commons at Quartz Hill Project

The following is a summary description of the proposed Project.

1. Project Location

The Commons at Quartz Hill is located at the northwest corner of the intersection of 60th Street W and West Avenue L in the City of Lancaster, California. The site lies about 4.5 miles

2 Collectively, Cal. Public Resources Code § 21000, et seq. and Calif. Admin. Code §15000 et seq., commonly referred to as the “CEQA Guidelines.”

2 Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184 at 1204.

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west of S.R. 14, or the Antelope Valley Freeway, a major north-south regional highway that connects the Antelope Valley with the Santa Clarita Valley, San Fernando Valley and other urbanized portions of Los Angeles County.

The two streets that provide direct frontage and ingress/egress to the Project — West Avenue L and 60th Street W — are regional arterial roads that are part of the one-mile grid system of streets and highways that cover the urbanizing portions of the Antelope Valley. In addition, 60th Street W and its extension to the south known as Godde Hill Road provide important direct access across the San Andreas Fault to Elizabeth Lake Road and the residential areas of the Leona Valley.

The Project’s location is unlike that of most of the other major shopping centers in the Antelope Valley that have been positioned on sites on or near Antelope Valley Freeway. However, its westerly location relative to its competition places the site at an important point of “interception” for residents and visitors living in or entering the area from positions westerly of the Freeway corridor. The site’s location in the Antelope Valley is shown in Figure 1 below.

Figure 1 Project Vicinity and Regional Map (need map from CAJA)

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2. Project Description

The Project is situated within the community of Quartz Hill, an affluent residential area dominated by the recent construction of single-family detached and attached home subdivisions. This pattern of growth is likely to continue into the future. In this regard, a recent listing of proposed projects prepared by Overland Traffic Consultants indicated that there were over 75 projects under consideration with a total capacity approaching 9,800 units within a two- mile radius of the Project site. Allowing for an average household size of 3.0 persons per unit,3 the residential inventory under consideration could accommodate over 29,000 new residents.

As presently conceived the proposed Project would offer 369,444 square feet of Gross Leasable Area (GLA), of which 356,944 square feet GLA would be allocated for retail uses. The center would be anchored by a Wal-Mart Superstore that would have a total GLA of 220,800 square feet or nearly 60 percent of the total space in the development. For purposes of this analysis, the Wal-Mart square footage has been allocated as follows: (1) General Merchandise, 127,800 square feet GLA; (2) Building Materials and Garden supplies, 26,200 square feet GLA; (3) Food Store, 49,800 square feet GLA; (4) Drug Store, 10,000 square feet GLA; and (5) Non-retail Services, 7,000 square feet GLA. The balance of the space would be allocated for a 20,000 square foot GLA mini-anchor, a 14,740 square foot GLA drug store, and a variety of smaller retail/restaurant/services uses. The proposed center layout is shown in Figure 2 below.

Figure 2. Conceptual Site Plan (need site plan from CAJA)

3 According to the 2000 U.S. Census, the average size of owner-occupied homes in Lancaster was 3.01 persons.

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The Project is proposed to be constructed in one phase, with its first full year of operations proposed for 2012. For purposes of this analysis the proposed space has been delineated into four major retail classifications as shown in Table 4 below, together with projections of the expected sales volume per square foot of GLA for each type of space and the expected annual sales volume expressed in 2007 constant dollars. The projected sales per square foot standards utilized in the table and at other places in this Report are based upon published industry reports such as The Urban Land Institute’s (ULI) Dollars & Cents of Shopping Centers biennial reports, discussions with other retail shopping center advisors, and HR&A/W&W expert opinion of the market potential at the site and the unique conditions represented by the Antelope Valley region.

Table 4 PROJECTED DISTRIBUTION OF SPACE AND TOTAL SALES BY MAJOR RETAIL CATEGORY THE COMMONS AT QUARTZ HILL (in Square Feet of Gross Leasable Area)

Square Feet Projected Sales 3/ Projected Retail Space Category GLA 1/ per Sq Ft GLA Annual Sales 1. Shopper Goods (GAFO) 2/ General Merchandise ( incl Department Stores) 127,800 $ 350 $ 44,730,000 Apparel and Accessories Furniture, Furnishings, Appliances Other or Specialty Retail Goods Non-Specified GAFO Space 109,911 $ 350 $ 38,468,850 Subtotal 237,711 83,198,850 2. Building Materials/Garden Supplies 26,200 $ 250 $ 6,550,000 3. Convenience Goods Food/Beverage (Supermarkets/Liquor Stores) 49,800 $ 500 $ 24,900,000 Drug Stores (incl Pharmacies) 24,740 $ 650 $ 16,081,000 Subtotal 74,540 40,981,000 4. Eating & Drinking Fast Food (Restaurants no Alcohol) 4,198 $ 500 $ 2,099,000 Restaurants (serving Alcohol) 14,295 $ 500 $ 7,147,500 Subtotal 18,493 9,246,500 Subtotal, Retail Space 356,944 $ 139,976,350 Non-Retail Space (Business and Personal Services, et al) 12,500 - GRAND TOTAL 369,444 $ 139,976,350

1/ GLA: Gross Leasable Area. 2/ GAFO: Acronym for General Merchandise, Apparel, Furniture/Furnishings, Other (Specialty) Goods. It should be noted that for purposes of this analysis the GLA of Wal-Mart has been distributed as follows: General Merchandise, 127,800 square feet; Garden Supplies, 26,200 square feet; Food/Beverage, 49,800 square feet; Drugs, 10,000 square feet; and Non-retail Services, 7,000 square feet.. 3/ Sales expressed in 2008 Constant Dollars Source: Lane Ranch LLC; HRA, Inc.; W & W, Inc.

A more detailed description of the proposed space in the Project is provided below:

. Shopper Goods. A total of 64 percent of the proposed space in the Project, or 237,711 square feet GLA, is to be allocated for “Shopper Goods.” Also referred to by the acronym “GAFO” or “Comparison Goods,” this type of retail activity is the staple of regional shopping centers, as department stores and in-line retail stores selling Shopper Goods typically constitute the vast majority of the total occupied space. By definition,

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Shopper Goods encompass four types of retail stores:4 General merchandise stores (most commonly, department stores); Apparel and accessories stores; Furniture, home furnishings, appliance and related stores; and “Other” or specialty retail stores, encompassing a diverse array of retail shops selling such items as gifts, art goods, sporting goods, florists, photographic equipment, musical instruments, stationery, books, jewelry, and office and school supplies. Shopper Goods derive their name from shopper behavior commonly related to their purchase. Characteristically, given the level of expenditure and the diversity of product choice involved, a shopper will travel a reasonable distance to compare prices and consider a range of alternative goods as part of the purchase decision.

The Shopper Goods space in the Project is presently comprised of a portion of the Wal- Mart Superstore with 127,800 square feet GLA (out of a total 220,800 square feet of GLA) and an allocation of 109,911 square feet GLA of non-specified GAFO space for tenants to be identified in the future.

. Building Materials and Garden Supplies. A total of 26,200 square feet GLA or nearly 38 percent of the total Project GLA will be occupied by the Wal-Mart’s garden center.

. Convenience Goods. Convenience goods refer to those retail goods that are required to meet day-to-day living needs, such as food, drugs and sundries, which are purchased from locations conveniently located adjacent to residential development. Convenience goods retail space in the Project includes a proposed drug store with 14,740 square feet GLA on a separate pad; an allocation of 10,000 square feet GLA for a pharmacy within the Wal-Mart; and an additional allocation of 49,800 square feet GLA in the Wal-Mart.

. Eating and Drinking Facilities. This use category will constitute a net addition of 18,493 square feet GLA, equivalent to five percent of the total space in the Project. Eating and drinking facilities will include a 14,295 square foot GLA for dinner restaurants and 4,198 square feet GLA for fast food units. While some eating and drinking facility patronage will likely come from customers who are visiting other stores at the Project, it is likely that most of the support for eating and drinking facilities will come from local residents.

C. Economic Impacts

The "economic impact" of the Project is the incremental difference that its construction and occupancy will make to the number of people employed, employee compensation earned (i.e., wages and benefits), and the resulting circulation of dollars through the local economy. Using a well-established input-output model and detailed data on the structure of the Los Angeles County economy, estimates were made of the Project’s economic impact. The estimates include the “direct” effects of the project (i.e., the development-related expenditures and annual

4 The definition of “Shopper Goods” generally follows the retail store classification system utilized by the State of California Board of Equalization.

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occupancy of the Project once it is completed), as well as the “multiplier effect” from the circulation of these direct expenditures within the County economy.

The economic impact projections were made for the County economy, rather than the City of Lancaster, because the County is the scale of geography that best captures the transactional flows among and between all the industry sectors that together define a local economy. Nearly all of the direct impacts, many of the indirect impacts and some of the induced impacts will, however, occur in the City economy.

The projected economic impacts of the Project are presented in Chapter II.

D. Fiscal Impacts

In addition to the general economic impacts on the County economy, the $57 million investment in developing the Project, and its annual operation once it is completed and occupied, will also generate various tax and other revenues for the City, County, local school districts, the State of California and a variety of other governmental agencies. This analysis focuses on the revenues that will accrue to the City of Lancaster.

As with the Project’s general economic impacts, the development-related tax revenues will be a one-time event, whereas the completed Project, once it is occupied will generate new annual revenues to the City. These revenues result from a variety of taxes, some of which are unique to the City and therefore accrue entirely to the City (e.g., business license tax). Other revenues are shared between the City and other taxing entities (e.g., property tax and sales tax revenues that are shared with the County and State).

The tax revenue estimates are based primarily on the first round of Project-related spending only — i.e., the tax revenues derived directly from Project construction and annual Project operation. Secondary and tertiary sources of tax revenue will also be generated as a result of indirect and induced economic activity that result from expenditures for Project construction and household spending, but the amounts of these additional revenues, and the degree to which they will accrue to the City, are not susceptible to reliable estimation. Therefore, the estimates presented here understate, to some unknown degree, the actual tax revenues that the Project will produce for the City.

The projected fiscal impacts of the Project are presented in Chapter III.

E. The “Urban Decay” Concept in Environmental Impact Analysis

When a proposed development project is subject to CEQA, both direct and indirect (or “secondary”) impacts of the project on the physical environment must be analyzed.5 Economic and social impacts of a project, though they may be included in a CEQA document, are not to be treated as “significant” impacts on the physical environment,6 as defined.7 To the extent that

5 CEQA Guidelines § 15358.

6 CEQA Guidelines §§ 15064 and 15382.

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there is a direct or indirect causal connection between a change in economic or social circumstances and a change in the physical environment, the economic or social change may be used to establish whether the physical change is “significant.”8

With this statutory and interpretive guidance in mind, the courts have recognized that there is a potential for a proposed new retail development to trigger economic competition with existing retailers in the project’s host community. If existing retailers are adversely affected by this competition, declines in sales could directly result in and/or lead to disinvestment, business closures, abandonment and other forms of physical deterioration that are indicative of “urban decay.” If the severity of this change in physical circumstances is so substantial that it adversely affects appropriate use of the area or otherwise threatens the public health, safety or general welfare, this situation may cross a threshold that defines a “significant impact” under CEQA, such that mitigation capable of reducing the impact on that physical environment must be considered.

Thus, for urban decay to be an issue within the meaning of CEQA, there must first be an adverse economic circumstance that is likely to be caused by a proposed project. If such an adverse effect is identified, then the severity of this economic impact must be evaluated for its potential to cause a significant change in the physical environment (i.e., “decay”). Accordingly, this Report presents an assessment of whether the proposed Project’s retail uses could reasonably be projected to cause adverse economic circumstances in the surrounding market areas that could be traceable to the Project’s improvements. Only to the degree that such adverse circumstances can be predicted reasonably is there any need to evaluate the potential to cause “decay” or other significant physical changes in the environment.

Chapter IV of this Report presents an analytic framework for assessing whether the Project’s development could cause adverse economic impacts on the surrounding retail market area, then applies this framework to the specific retail components of the Project’s improvements and their respective market areas. Appendix C includes further details on the data sources and projections used in this analysis.

7 “A substantial or potentially substantial adverse change in the environment.” (Public Resources Code § 21068). The focus on physical changes in the environment is further reinforced by §§ 21100 and 21151.

8 See, in general, CEQA Guidelines §§ 15131(a) and (b), and their associated discussion section.

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II. ECONOMIC IMPACTS ANALYSIS

A. Overview of the Economic Impact Analysis Approach

As noted in Chapter I, the "economic impact" of the Project is the incremental difference that its construction and occupancy will make to the number of people employed, employee compensation earned (i.e., wages and benefits), and the resulting circulation of dollars through the local economy. Using the well-established IMPLAN input-output model and detailed data on the structure of the Los Angeles County economy, estimates were made of the Project’s economic impact. The estimates include the “direct” effects of the project (i.e., the development- related expenditures and annual occupancy of the Project once it is completed), as well as the “multiplier effect” from the circulation of these direct expenditures within the County economy.

Employment and other economic impacts related to the development of the Project and its annual operation once it is completed were estimated using the IMPLAN input-output model of the Los Angeles County economy as of 2006, which is the most recent year for which model data were available at the time this analysis was prepared. Input-output analysis is an economic impact modeling method for understanding the interactions among the industries in a local economy that result from investment in a new capital project or other changes. In form, it resembles a giant matrix, or spreadsheet, in which the “inflows” of goods and services needed by an industry (i.e., the purchasing sectors) are the columns, and the rows consist of the outputs or selling sectors. This enables analysis of the specific sectors of an area’s economy that are affected, and by how much, when a dollar’s worth of investment, new employment, or other measure of “final demand” is added to a particular sector or sectors. These inter-industry relationships can be expressed in terms of dollar impacts or employment impacts.

IMPLAN9 is a widely accepted model that the consultant team and many others, including public agencies, have used to estimate the economic consequences of new investment in, or other changes to, a local or regional economy.10 It explicitly accounts for impact leakage, or the fact that not all economic impacts are necessarily experienced inside the geographic area or site under study. The IMPLAN model can be used to generate estimates of direct, indirect and induced employment, compensation (i.e., wages and benefits), and total economic output (i.e., a summary measure of all spending and economic activity), for both the construction and operations phases of a project, on an annual basis. In this analysis, all economic impact dollar amounts are expressed in constant 2008 dollars (i.e., without the effects of inflation over time).

9 IMPLAN (IMpact Analysis for PLANning), a social accounting and impact analysis software program, was developed in 1979 by the U.S. Forest Service in cooperation with the Federal Emergency Management Agency and the U.S. Bureau of Land Management to assist the Forest Service in land and resource planning and management. The IMPLAN accounts closely follow the accounting conventions established for the U.S. economy and the rectangular format recommended by the United Nations.

10 HR&A has previously used IMPLAN to analyze the economic impacts of a wide range of projects throughout southern California and elsewhere in the nation, including large residential developments, high-rise office buildings, industrial projects, shopping centers, university buildings, and film and television studio campus expansions.

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“Employment” includes full-time and part-time jobs, regardless of whether they are permanent or temporary.

Direct impacts include the investment in Project construction, and annual retail sales. The direct impacts occur primarily in the City of Lancaster. Indirect impacts are those resulting from purchases of goods and services to support Project construction and retail businesses and eating and drinking facilities. These impacts, too, may occur in the City of Lancaster or elsewhere in the County. Induced impacts result when direct and indirect employees (related to both construction expenditures and Project retail and dining operations) spend their compensation on consumer and other household-related goods and services. Some of these expenditures may also occur in the City, but most will occur elsewhere in the County, since only some direct and indirect employees will reside in the City. The indirect and induced effects are together sometimes referred to as the “multiplier effect” of the direct expenditures associated with a development project.

B. Economic Impacts of Project Development

Direct construction-related employment, compensation, and total economic impact were derived from the IMPLAN model based on a hard construction cost estimate of $52.0 million provided by the Applicant. These are, essentially, one-time impacts that occur incrementally over the months of Project construction. The construction impacts are summarized in Table 5. It shows that the planned private investment of $52.0 million to construct the Project translates to a total economic output impact of about $95.1 million (in 2008 $) in the Los Angeles County economy. The investment is associated with 789 full-time and part-time jobs in the County economy, of which 461 will be involved directly in the Project’s construction in the City. Compensation paid to workers whose job is supported by the development investment will total $31.9 million, including $19.2 million for those directly involved in its design and construction. Attachment B-1 provides the sector-by-sector distribution of these impacts in the County economy.

Table 5 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM CONSTRUCTION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $)

Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment Construction 461.0 - - 461.0 Other - 116.3 211.6 327.9 Total1 461.0 116.3 211.6 788.9 Employee Compensation $19.2 million 4.8 million $7.9 million $31.9 million Total Economic Output $52.0 million $15.7 million $27.4 million $95.1 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

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C. Economic Impacts of Annual Operations

The economic impacts of the Project once it is completed were also derived from the IMPLAN model. The model’s results are based on the estimated $140 million in annual sales by retail and dining facility type. Retail sales are adjusted to remove cost of goods sold. The IMPLAN model was then applied to estimate how these annual sales translate into direct, indirect, induced, and total employment, compensation and economic output impacts in the County economy. These impacts are summarized in Table 6. It shows that annual operation of the completed Project will result in a total economic output impact of about $81 million (in 2008 $) in the County economy,11 and total compensation paid to workers will be about $28 million, including $18 million paid to workers at the Project site. The total employment impact in the County economy that is associated with this scale of Project sales is 927 full-time and part- time jobs, including 680 jobs at the Project site. Attachment B-2 provides the sector-by-sector distribution of these impacts in the County economy.

Table 6 EMPLOYMENT AND OTHER ECONOMIC IMPACTS IN LOS ANGELES COUNTY FROM ANNUAL OPERATION OF THE COMMONS AT QUARTZ HILL (all dollar amounts in 2008 $)

Impact Category Direct Impact Indirect Impact Induced Impact Total Impact1 Employment 680.0 103.6 143.3 927.0 Compensation $17.6 million $4.8 million $5.6 million $28.0 million Total Economic Output $44.5 million $16.6 million $19.6 million $80.7 million

1 Totals may not sum precisely due to independent rounding. Source: HR&A, Inc.

11 The total economic impact is less than total projected sales, because the economic impacts are based only on the gross margin to the retailer (i.e., total sales price minus production costs, such as manufacturing, transportation, warehousing).

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III. FISCAL IMPACTS ANALYSIS

A. Overview of the Fiscal Impact Analysis Approach

In addition to the general economic impacts on the County economy, the $__ million investment in developing the Project and its annual operation once it is completed and occupied will also generate various tax and other revenues for the City, County, local school districts, the State of California and a variety of other governmental agencies. This analysis focuses on the municipal revenues that will accrue to the City of Lancaster.

As with the Project’s general economic impacts, the development-related tax revenues will be a one-time event, whereas the completed Project, once it is occupied, will generate new annual revenues to the City. These revenues result from a variety of taxes, some of which are unique to the City and therefore accrue entirely to the City (e.g., business license tax). Other revenues are shared between the City and other taxing entities (e.g., property tax and sales tax revenues that are shared with the County and State).

B. One-Time Project Revenues

The City will receive one-time revenues due to purchase of the Project site and purchase of certain construction materials. If the construction site is properly designated as a point-of-sale location, it is estimated that the Project will generate $130,000 (in 2008 $) in sales tax on purchase of some construction materials. The City will also receive $6,300 in real estate transfer tax on the purchase of the site by the Project Applicant. The basis for these one-time revenue estimates is shown in Table 7.

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Table 7 ESTIMATE OF ONE-TIME TAX REVENUES TO THE CITY OF LANCASTER FROM CONSTRUCTION OF THE COMMONS AT QUARTZ HILL (all dollar values in 2008 $)

Sales Tax on Construction Materials Hard Construction Cost$ 52,000,000 Materials Share 50.0% Materials Amount$ 26,000,000 Materials Share Subject to Sales Tax 50.0% Amount Subject to Sales Tax$ 13,000,000 1 Tax Rate 1.0% Tax Revenue to Lancaster $ 130,000

Real Estate Transfer Tax 2 Site Purchase Price $ 10,500,000 Tax Rate 0.06% Tax Revenue to Lancaster $ 6,300

Total One-Time Tax Revenue $ 136,300

1 Assumes contractor takes out sub-permit designating site as point of sale. Includes 0.75% local sales tax plus 0.25% sales tax rebated as porpertytax. 2 Per Project Applicant.

Source: HR&A, Inc.

Although the Project will also generate planning and construction permit fees, these fees are generally set at levels that are intended to directly offset City staff time to process them, and therefore they do not represent net new revenue to the City. Similarly, any Project payments for the estimated cost of traffic and other environmental mitigation are excluded, because they are also set at levels to directly offset Project impacts, and therefore do not represent net new revenue to the City.

C. Recurring Annual Project Revenues

Once the Project is completed and occupied, the City will receive annual revenues of about $1.3 million in the first full year of operation (2012) from its shares of the property taxes, sales taxes, and business license taxes, as shown in Table 8. Each tax revenue category utilizes a different estimation approach, which is briefly described below.

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Table 8 ESTIMATE OF RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM OPERATION OF THE COMMONS AT QUARTZ HILL, 2012 Property Tax $ 31,849 Sales Tax $ 1,290,601 Business License Tax $ 1,639 Total Recurring Revenues $ 1,324,089 Source: HR&A, Inc.

1. Property Tax Estimate

The property tax applicable to the Project site includes a one percent levy on the assessed value of land and buildings, which is distributed among 26 different local public agency accounts, plus a proportional share of voter-approved indebtedness (calculated as a percentage of assessed value) and direct assessments (calculated according to a formula established by each agency imposing the assessment). It is assumed in this analysis that the Project’s assessed value, and therefore the basis for the one percent general levy and the share of indebtedness, is equal to the construction cost ($52.0 million), which then increases a maximum of two percent per year under Proposition 13, until sold. The City receives about 6.6 percent12 of the one percent general levy for general governmental purposes in this part of the City, plus additional sums for voter- approved indebtedness and special assessments. The current assessed value of the Project site is $10.96 million.13 The City’s current share of the one percent general levy is $7,247.00.

As shown in Table 9, the City’s net share of the one percent general levy will total about $31,849 in 2012, after accounting for property tax revenue from existing uses at the Project site.

12 6.6107188%, for Tax Rate Area 02432, per the Los Angeles County Assessor.

13 Los Angeles County Assessor data provided by First American Real Estate Solutions, for APN 3102- 027-036, for 2006-07.

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Table 9 ESTIMATE OF RECURRING ANNUAL PROPERTY TAX REVENUES, 2012 THE COMMONS AT QUARTZ HILL

1 Construction Cost (2008 $) $ 52,000,000 Annual Construction Cost Inflation 3.00% Construction Cost (2012 $) $ 60,282,252 1% General Levy 602,823 2 City's Share of 1% Levy 6.610718800% City's Tax Revenue $ 39,851 Less Existing Tax 2 Assessed Value (2008 $) $ 10,963,107 Annual AV Inflation 2.00% Assessed Value (2012 $) $ 12,104,156 1% General Levy 121,042 2 City's Share of 1% Levy 6.610718800% City's Tax Revenue $ (8,002) Net Tax Revenue to City 31,849

1 Per Project Applicant 2 Per Los Angeles County Assessor

Source: HR&A, Inc.

2. Sales Tax Revenue

The City receives one percent14 out of the 8.25 percent tax applicable to retail and certain other sales within the City limits that are subject to the State sales and use tax. The balance of the tax goes to the County and the State of California.

The sales tax revenue estimate for Project is based on taxable sales from each type of store planned for the Project. Most of these sales, with the exception of groceries and pharmacy items, are all subject to the sales tax. Only about 40 percent of grocery sales and 36 percent of pharmacy sales are subject to sales tax.15 As shown in Table 10, total annual sales at the Project are projected to equal about $140 million using 2008 sales per square foot values for each tenant category. Assuming that these sales per square foot will increase at three percent per year to 2012, sales in that year would total $158 million. This translates to about $1.3 million in sales tax revenue to the City in 2012, assuming all space in the project is occupied and no sales are transferred from or otherwise reduced at other retailers located in the City as a consequence of opening the Project.

14 Under recent changes in State law enacted to finance the State’s structural deficit, 0.75% is remitted to the City as sales tax revenue and another 0.25% is remitted as additional property tax. For calculation convenience this analysis treats the entire one percent as sales tax revenue.

15 Based on the ratios of “County Baseline” to “County Adjusted” in Appendix C, Table C-8.

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Table 10 ESTIMATE OF RECURRING ANNUAL SALES TAX REVENUES THE COMMONS AT QUARTZ HILL

Square Feet 2008 Projected Sales 2008 Projected 2008 1% Retail Space Category GLA per Sq Ft GLA Annual Sales % Taxable Taxable $ City Tax, 2008 $ City Tax, 2012 $ General Merchandise ( incl Department Stores) 127,800 $350$ 44,730,000 100.0%$ 44,730,000 $ 447,300 $ 503,440 Non-Specified GAFO Space 109,911 $350$ 38,468,850 100.0%$ 38,468,850 $ 384,689 $ 432,970 Subtotal 237,711 $ 83,198,850 $ 83,198,850 $ 831,989 $ 936,410

Building Materials/Garden Supplies 26,200 $250$ 6,550,000 100.0%$ 6,550,000 $ 65,500 $ 73,721

Convenience Goods Food/Beverage 49,800 $500$ 24,900,000 39.5%$ 9,835,500 $ 98,355 $ 110,699 Drug Stores (incl Pharmacies) 24,740 $650$ 16,081,000 36.3%$ 5,837,403 $ 58,374 $ 65,700 Subtotal 74,540 $ 40,981,000 $ 15,672,903 156,729 176,400

Eating & Drinking Fast Food (Restaurants no Alcohol) 4,198 $500$ 2,099,000 100.0%$ 2,099,000 $ 20,990 $ 23,624 Restaurants (serving Alcohol) 14,295 $500$ 7,147,500 100.0%$ 7,147,500 $ 71,475 $ 80,446 Subtotal 18,493 $ 9,246,500 $ 9,246,500 92,465 104,070

Subtotal, Retail Space 356,944 $ 139,976,350 $ 114,668,253 $ 1,146,683 $ 1,290,601 Source: HR&A, Inc.; W&W, Inc.

3. Business License Tax Revenue

The City currently collects an annual tax on the number of employees in each business. The current tax rate varies from $83 to $176, plus a new application ($62) or annual renewal processing fee ($23). Assuming the Project includes five tenants with less than 26 employees, four tenants with 26-50 employees and two tenants with more than 76 employees, and that the current tax rates increase three percent per year, the total recurring business license fee revenue in 2012 would be $1,639.

4. 20-Year Tax Revenue Projection

Assuming that all of the taxes that now apply to commercial projects in Lancaster will remain in place over a 20-year period following Project completion, these revenues are projected to total $37.9 million in nominal dollars (i.e., including inflation16), or $20.6 million in constant 2008 dollars (without inflation), as shown in Table 11. Table 11 ESTIMATE OF RECURRING ANNUAL TAX REVENUES TO THE CITY OF LANCASTER FROM OPERATION OF THE COMMONS AT QUARTZ HILL, OVER 20 YEARS Nominal $ 2008 $ Property Tax $ 821,173 $ 433,974 Sales Tax $ 37,009,909 $ 20,103,691 Business License Tax $ 46,993 $ 25,527 Total Recurring Revenues $ 37,878,076 $ 20,563,191 Source: HR&A, Inc.

16 Assumes 3% annual inflation in retail sales and the business license tax rate, and 2% per year in assessed value.

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D. Public Service Costs and Net Fiscal Impact

The net fiscal impacts of a proposed development project is calculated by subtracting any recurring costs to provide public services to the project from the tax and other revenues it generates. The net result depends entirely on how the accounting is performed, and whether “average” or “marginal” public service costs are used in the calculation.

In HR&A’s view, “marginal” (or incremental) rather than “average” costs should be the basis for estimating public service costs for a development like the proposed Project. The marginal cost approach examines the degree to which a project’s service demands can be accommodated by existing service capacities, or would cause the need for an expansion of capacity. On the other hand, it does not account for the sunk (i.e., already expended) cost of producing any existing surplus service capacity, nor the opportunity cost when a project uses up existing service capacity that will then no longer be available to a future project. The marginal cost approach also ignores costs for services that historically do not actually change as each new project is developed. It is, however, more consistent with the way traffic and other environmental impacts, are calculated. In HR&A’s experience, the average cost approach is better suited to analysis of large-scale, long-term public investment decisions, such as the fiscal impacts of alternative General Plan buildout scenarios or annexations of large land areas.

According to the Project’s EIR, the County Fire District and County Sheriff have sufficient capacity to serve the Project at current levels of service.17 The EIR also concluded that the Project will not burden existing capacities of the water, electricity, wastewater, stormwater or solid waste systems serving the City.18

The Project’s EIR includes, however, a number of mitigation measures that reflect existing legal requirements and/or good planning principles that will limit Project impacts on the demand for public safety services (i.e., police, fire and emergency medical and parks and recreation). Thus, the completed Project is not expected to produce any marginal (or “incremental”) public service costs that would need to be netted against Project revenues to yield the net fiscal impact of the Project on the City. Therefore, the Project’s tax revenue yield of about $1.3 million in 2012 is also its net fiscal impact.

Although public school facilities are not the responsibility of the City, potential impacts on the Westside Union School District and Antelope Valley Union High School District were also reviewed in the EIR.19 The EIR found that the Project would generate a need for only __ additional student seats. The Project will be required, nevertheless, to pay a school facilities impact fee of about $155,000 to the District,20 which would fully mitigate potential school impacts under applicable law.

17 Christopher A. Joseph & Assoc., The Commons at Quartz Hill Draft EIR, September 2007, Sections IV.K.1. (Fire); IV.K.2. (Police).

18 Id., Section IV.O. (Utilities).

19 Id., Section IV.K.3. (Schools).

20 369,444 square feet x $0.42/square foot = $155,166.

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IV. URBAN DECAY ANALYSIS

A. Overview of the Urban Decay Analysis Approach

The urban decay analysis measures the degree to which the construction and operation of the Project could result in a significant adverse economic impact on existing and proposed retail developments in the same market area. Methodologically, any such impact is identified and measured by assessing the degree to which the amount of space planned for development in each of the Project’s retail and dining use categories would exceed the anticipated increase in the supportable amount of retail and dining space that can be projected to occur, based upon the anticipated growth in future customer demand for comparable retail and dining activities in a defined market area. If the proposed supply exceeds the anticipated growth in demand, it could be argued that the Project would attract sales away from other existing or planned new retail and dining establishments of the same type. Such a finding, in turn, would require further investigation to assess whether it is foreseeable that this potential attraction of sales away from other retail and dining businesses could result in disinvestment, business closures, abandonment, and/or other forms of physical deterioration that are effectively indicators of “urban decay.” If, on the other hand, the amount of retail and dining space planned for the Project is less than the amount of retail and dining space that can be supported by projected future demand, it can be concluded that the scale of potential customer demand is sufficiently large that it can support both the Project and all other existing and planned space proposed for those same general categories of retail use. There would be no need, therefore, to further evaluate the potential for urban decay associated with the Project.

Making these economic impact measurements typically requires: (1) establishing logical market areas appropriate for each retail and dining category for which future retail space will be provided by the Project; (2) projecting the likely increase in customer demand based on population growth, income growth and spending patterns for particular categories of retail goods and types of dining over a relevant time period (i.e., 2007-2012); (3) converting the projected changes in future customer demand to amounts of supportable retail and dining space measured in square feet GLA, and (4) making a comparison of the projected change in demand in the form of supportable space with the change in supply as represented by the increase in GLA proposed for the Project and other developments in the relevant market area(s).

Following this methodology, separate market impact analyses were conducted for each of the four principal types of retail and dining space that are to be included in the Project

B. Market Area Delineation

Given the proposed scale of the Project, the unique geography and development patterns of the Antelope Valley and the location of existing and proposed competitive retail facilities, two market areas were established in order to evaluate the potential for Shopper Goods Space: (1) a Primary Market Area (PMA), defined geographically as the land area contained within a circle having a 5-mile radius whose center is the intersection of 60th Street W and West Avenue L; and (2) a Secondary Market Area (SMA), represented by a circular ring around the PMA extending

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from five to 10 miles from the intersection of 60th Street W and West Avenue L. The two market areas are shown in Figure 3.

Figure 3: Lancaster Shopping Center Primary Market Area (PMA) and Secondary Market Area (SMA)

Source: Claritas

The basic demographic characteristics of the two market areas are shown in Table 12. According to Claritas, Inc., a well-accepted third party demographic data source, the 2007 population in the PMA is estimated at 88,234 persons; by 2012 it is expected to increase by 12,544 residents to 100,778 persons. In comparison, the 2007 SMA population is estimated by Claritas to be 146,798 persons; by 2012 it is projected to reach 162,723 persons, realizing a net growth of 15,925 residents. Table 12 also shows for each market area the projected increase in average per capita income for the period 2007 to 2012 and the resulting growth in Aggregate Income, a key indicator of the growth in retail sales potential. Over the five year forecasting period, Aggregate Income in the PMA is projected to increase by nearly $1.49 billion; for the

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SMA, the projected increase is expected to exceed $1.56 billion. As nearly one-third of personal income is typically allocated for retail sales, this increase in Aggregate Income should translate into $1.37 billion in additional annual retail sales in the combined market areas.

Table 12 BASELINE DEMOGRAPHIC ESTIMATES AND PROJECTIONS LANCASTER SHOPPING CENTER MARKET AREAS

Primary Secondary Market Area Market Area Data Category 0-5 Mile Radius 5-10 Mile Radius

Population 2007 88,234 146,798 2012 100,778 162,723 Net Increase 2007-2012 12,544 15,925

Average Per Capita Income (per BEA definition) 1/ 2007 $ 41,802 $ 28,935 2012 $ 51,357 $ 35,705

Aggregate Income 2007 $ 3,688,357,668 $ 4,247,600,130 2012 $ 5,175,655,746 $ 5,810,024,715 Net Increase 2007-2012$ 1,487,298,078 $ 1,562,424,585

1/ See Appendix B for explanation of Income definitions. Source: Claritas, Inc.; United States Bureau of Economic Analysis (BEA) HRA, Inc.; W & W, Inc.

C. Existing and Projected Competitive Retail Supply

Within the PMA and SMA there are a number of existing shopping centers that will compete for Shopper Goods sales with the proposed Project, including four existing Wal-Mart stores. Most of these competitive facilities have been placed at locations that are immediately adjacent to or visible from the Antelope Valley Freeway. The largest and most dominant existing retail facility in the region is the Antelope Valley Mall, with over one million square feet GLA offering 135 stores and six major anchors, including Dillard’s, two Gottschalks, Mervyn’s, Sears, JC Penney, and a Cinemark 10-theater complex. The mall is located immediately west of the Antelope Valley Freeway at its interchange with Avenue P.

In addition to the existing supply of retail space, the Project will also likely compete with a proposed retail development to be located across the intersection of 60th Street W and West Avenue L on the northwest corner known as the Lane Ranch Towne Center (“Lane Ranch”), as well as other developments proposed to be completed by 2012 in the PMA. As presently conceived, Lane Ranch will have a total complement of 407,429 square feet GLA, and feature a Target Department Store and a Lowe’s Home Improvement Store as the anchor tenants. Like the Project, Lane Ranch is scheduled to be in operation by 2012. A preliminary breakdown of the proposed space in Lane Ranch by major retail category is shown in Table 13.

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Table 13 PROPOSED LANE RANCH TOWNE CENTER Retail Square Feet Space Category GLA 1/ Target Department Store 177,390 Lowe's Store 141,919 Drug Store 14,820 Miscellaneous Shops 63,000 Eating & Drinking Facilities 10,300 Grand Total 407,429

1/ GLA: Gross Leasable Area. Source: Lane Ranch LLC; HR&A, Inc.; W&W, Inc.

It should be noted that for purposes of this analysis the proposed 177,390 square feet of GLA within the Target Department Store in Lane Ranch has been allocated to the following space categories: (1) General Merchandise, 145,190 square feet GLA; (2) Building Materials/Garden Supplies, 14,200 square feet GLA; (3) Food/Beverage, 10,000 square feet GLA; and (4) Pharmacy, 8,000 square feet GLA.

In addition to Lane Ranch, discussions with City of Lancaster Planning Department staff indicated that there were nine additional projects with major retail components that were known to the City and were either undergoing entitlement or anticipated to be starting this process in the near future. These projects, listed in Table 14 along with a description of their basic characteristics, also represent competitive retail space that could be developed over the analysis period 2007-2012.

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Table 14 INVENTORY OF POTENTIAL COMPETITIVE FACILITIES LANCASTER SHOPPING CENTERS PRIMARY MARKET AREA (PMA)

Retail Allocation Center Identification/Location Acres Square Feet of Space Status/Comments

1 Neighborhood Shopping Center 12.5 96,100 Supermarket: 53,000 Undergoing entitlement process. NW Corner, 40th Street West and West Avenue J Drug Store: 13,000 Should be constructed and operational by 2012 Miscellaneous: 26,600 Fast Food 3,500

2 Community Shopping Center 22.3 235,835 Lowe's Home Imp: 139,410 Undergoing entitlement process. NW Corner, 60th Street West and West Avenue K CVS Drug Store 13,225 Should be completed and operational by 2012 Three Mini-Majors 70,000 Two Pads (Rests.) 13,200

3 Armagosa Creek Commercial District 110+/- 1,100,000- Existing stores may relocate in Undergoing entitlement process. Space not considered. NE Corner, Avenue L and 10th Street West 1,500,000 initial phases ??? To be constructed in four phases over a 10 year period. Located at eastern edge of PMA

4 Lancaster Spectrum 14.72 43,883 Project includes a four-story hotel. Approved SW Corner, 20th Street West and Avenue J-8 but not under construction

5 Conditional Use Permit 05-10 9.72 ??? Mixed use development with hotel and office space. NE Corner, 20th Street West and Avenue J-12 Approved, under construction

6 Conditional Use Permit 06-02 4.4 36,300 Restaurants: 10,500 Hearings for approval to be held in 2008 SW Corner, 30th Street West and Avenue K Miscellaneous: 25,800

7 Conditional Use Permit 06-05 4.88 43,535 Office Depot: 20,000 Approved, under construction. NE Corner, 20th Street West and Avenue I Major 15,000 Misc. Retail/Rest 8,535

8 Conditional Use Permit 07-10 8.52 42,867 Food Store; 15,000 Hearings for approval to be held in late 2007 SE Corner, 30th Street West and Avenue K Drug Store: 17,272 Miscellaneous: 10,595

9 Site Plan Review 06-21 6.89 14,500 Fast Food 14,500 South side Avenue L, west of 10th Street West

Total Space 513,020 Source: City of Lancaster Planning Department

Table 15 provides a summary of this potential competitive space by the major retail and eating and drinking categories utilized in this analysis. Together, these projects represent a potential competitive supply of 513,020 square feet of GLA, of which 479,317 square feet GLA is considered likely to be allocated for retail activities.

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Table 15 INVENTORY OF OTHER RETAIL SPACE, PROJECTED COMPETITIVE FACILITIES IDENTIFIED IN TABLE 14 Retail Square Feet Space Category GLA 1/

Comparison Goods Space 163,000 Buildig Materials and Garden Supplies 139,410 Convenience Goods: Food Stores 73,000 Convenience Goods: Drug Stores 43,907 Eating & Drinking Facilities: Fast Food 30,000 Eating & Drinking Facilities: Dinner restaurants 30,000 Subtotal, Competitive Retail Space 479,317 Services/Other Uses 33,703 Grand Total 513,020

1/ GLA: Gross Leasable Area. Source: Lane Ranch LLC; City of Lancaster; HR&A, Inc.; W&W, Inc. Table 16 provides a summary of the proposed competitive supply of retail space used in the analysis by major space category. The total retail space that would be added to the PMA by 2012 is projected at 1,256,973 square feet GLA. The Project’s 356,944 square feet GLA of space represents 28.4% of the projected addition to future competitive supply.

Table 16 PROJECTED INCREASE IN SUPPLY OF COMPETITIVE RETAIL SPACE LANCASTER PRIMARY MARKET AREA (PMA) 2007-2012 (in Square Feet of Gross Leasable Area)

Total Proposed Lane Ranch Other Retail Space Category Proposed Space The Commons Town Centre Retail Centers Shopper Goods (GAFO) General Merchandise (incl Department Stores) 272,990 127,800 145,190 Apparel and Accessories Furniture, Furnishings, Appliances Other or Specialty Retail Goods 20,000 20,000 Non-Specified GAFO Space 315,911 109,911 43,000 163,000 Subtotal 608,901 237,711 208,190 163,000 Building Materials/Garden Supplies 321,729 26,200 156,119 139,410 Convenience Goods Food/Beverage (Supermarkets/Liquor Stores) 132,800 49,800 10,000 73,000 Drug Sores (incl Pharmacies) 91,467 24,740 22,820 43,907 Subtotal 224,267 74,540 32,820 116,907 Eating & Drinking Fast Food (Restaurants no Alcohol) 37,998 4,198 3,800 30,000 Restaurants (serving Alcohol) 50,795 14,295 6,500 30,000 Subtotal 88,793 18,493 10,300 60,000 Subtotal, Retail Space 1,243,690 356,944 407,429 479,317 Non-Retail Space (Business and Personal Services, et al) 46,203 12,500 - 33,703 GRAND TOTAL 1,289,893 369,444 407,429 513,020

Source: Various developers; City of LancasterPlanning Department; HRA, Inc.; W & W, Inc.

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D. Shopper Goods Space Impact Analysis

The Project will provide a total of 237,711square feet of Shopper Goods space that will include space in the Wal-Mart Superstore (127,800 square feet GLA of General Merchandise) and a mix of apparel, home furnishings and other specialty retail stores. Based upon spending patterns exhibited in Los Angeles County, over 29 percent of PMA resident retail dollars typically are spent for Shopper Goods, as noted in Table 17 below.

Table 17 PERCENTAGES OF RETAIL SALES ALLOCABLE TO SHOPPER GOODS LOS ANGELES COUNTY AND LANCASTER MARKET AREAS Retail Percent of Space Category Retail Sales

General Merchandise (incl Department Stores) 9.75% Apparel and Accessories 4.45% Furniture, Furnishings and Appliances 3.61% Other or Specialty 11.82% Grand Total 29.63%

Source: California State Board of Equalization, 2005 Annual Report; HR&A, Inc.; W&W, Inc.

Table 18 provides an annual projection of the growth in demand for Shopper Goods in the PMA for the period 2007 through 2012 that is based upon projected increases in population and per capita incomes. Based upon the market area growth forecast, total sales in Shopper Goods should increase by $145.4 million over the five-year projection period, as shown in the last row of Table 18.

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Table 18 PROJECTED GROWTH IN DEMAND FOR SHOPPER GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change ('000s) 2007-2012 2007 2008 2009 2010 2011 2012

Primary Market Area (PMA) Population 12,544 88,234 90,611 93,052 95,559 98,134 100,778

Per Capita Personal Income (per BEA Definition) $ 9,555 $ 41,802 $ 43,559 $ 45,390 $ 47,298 $ 49,285 $ 51,357

Aggregate Regional Market Area Income ('000s) $ 1,487,298 $ 3,688,358 $ 3,946,931 $ 4,223,631 $ 4,519,730 $ 4,836,586 $ 5,175,656

Percent of Personal Income Allocable for Retail Sales: 33.0% 33.0% 33.0% 33.0% 33.0% 33.0%

Potential Demand for Retail Sales ('000s) $ 490,808 $ 1,217,158 $ 1,302,487 $ 1,393,798 $ 1,491,511 $ 1,596,073 $ 1,707,966

Calculation of Demand for Selected Shopper Goods by Major Category:

Net Change % of Total ('000s) Demand 2007-2012 2007 2008 2009 2010 2011 2012

General Merchandise 9.75% $ 47,854 $ 118,673 $ 126,992 $ 135,895 $ 145,422 $ 155,617 $ 166,527

Incremental Growth in Demand by Year ('000s) $ 8,320 $ 8,903 $ 9,527 $ 10,195 $ 10,910

Cumulative Growth in Demand ('000s) $ 8,320 $ 17,222 $ 26,749 $ 36,944 $ 47,854

Apparel 4.45% $ 21,841 $ 54,164 $ 57,961 $ 62,024 $ 66,372 $ 71,025 $ 76,005

Incremental Growth in Demand by Year ('000s) $ 3,797 $ 4,063 $ 4,348 $ 4,653 $ 4,979

Cumulative Growth in Demand ('000s) $ 3,797 $ 7,860 $ 12,209 $ 16,862 $ 21,841

Household Furnishings, Appliances, et al 3.61% $ 17,718 $ 43,939 $ 47,020 $ 50,316 $ 53,844 $ 57,618 $ 61,658

Incremental Growth in Demand by Year ('000s) $ 3,080 $ 3,296 $ 3,527 $ 3,775 $ 4,039

Cumulative Growth in Demand ('000s) $ 3,080 $ 6,377 $ 9,904 $ 13,679 $ 17,718

Specialty or "Other" 11.82% $ 58,014 $ 143,868 $ 153,954 $ 164,747 $ 176,297 $ 188,656 $ 201,882

Incremental Growth in Demand by Year ('000s) $ 10,086 $ 10,793 $ 11,550 $ 12,359 $ 13,226

Cumulative Growth in Demand ('000s) $ 10,086 $ 20,879 $ 32,428 $ 44,788 $ 58,014

All Shopper Goods: Incremental Growth in Demand by Year ('000s) $ 25,283 $ 27,055 $ 28,952 $ 30,982 $ 33,154

Cumulative Growth in Demand ('000s) $ 25,283 $ 52,338 $ 81,291 $ 112,273 $ 145,427 ______Source: California State Board of Equalization; Claritas, Inc.; HRA, Inc.; W & W, Inc.

Table 19 translates the projected incremental change in PMA demand for Shopper Goods into a measure of net supportable retail space, allowing for a threshold sales requirement of $350 per square foot21 of GLA in 2007 to reflect the necessary basis for effective market support. This sales support requirement is expected to increase at the rate of three percent annually, reaching $406 per square foot of GLA in 2012. Over the five-year analysis period, the projected increase in supportable retail space for the combined Shopper Goods retail categories is 358,418 square feet.

21 This sales requirement and others utilized in the analysis are based on data from The Urban Land Institute and International Council of Shopping Centers, Dollars & Cents of Shopping Centers, 2006.

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Table 19 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR SHOPPER GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space, Department Stores:

Sales per Square Foot of GLA Requirement, Average:$ 350 $ 361 $ 371 $ 382 $ 394 $ 406 Base $ 350 Annual Increase in Required Support 3.0%

Projected Increase in Supportable Retail Space, Other Shopper Goods Stores:

Sales per Square Foot of GLA Requirement, Average: $ 350 $ 361 $ 371 $ 382 $ 394 $ 406 Base $ 350 Annual Increase in Required Support 3.0%

In Square Feet GLA

2008 2009 2010 2011 2012

Supportable General Merchandise Space in GLA, Annual Increase 23,073 23,971 24,904 25,874 26,882

Cumulative Increase (Adjusted for higher sales requirement per square foot) 23,073 46,372 69,926 93,763 117,914

Supportable Apparel Space in GLA, Annual Increase 10,533 10,943 11,369 11,812 12,272

Cumulative Increase (Adjusted for higher sales requirement per square foot) 10,533 21,170 31,923 42,805 53,830

Supportable Funiture/Furnishings Space in GLA, Annual Increase 8,551 8,884 9,230 9,589 9,962

Cumulative Increase (Adjusted for higher sales requirement per square foot) 8,551 17,185 25,915 34,749 43,699

SupportableSpecialtyRetail Space in GLA, Annual Increase 27,969 29,058 30,190 31,365 32,586

Cumulative Increase (Adjusted for higher sales requirement per square foot) 27,969 56,213 84,765 113,661 142,937

Total Supportable Shopper Goods Retail Space in GLA, Annual Increase 70,126 72,856 75,693 78,640 81,702

Cumulative Increase 70,126 140,940 212,528 284,978 358,380 ______

Source: HRA, Inc.; W & W, Inc.

In 2012 the potential increase in supply of Shopper Goods retail space will be generated by three sources: (1) the Project, with 237,711 square feet GLA; (2) Lane Ranch, 343,279 square feet GLA; and (3) other competitive centers, 163,000 square feet GLA. This projected additional supply, summarized in Table 20, totals 743,990 square feet GLA.

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Table 20 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY OF SHOPPER GOODS SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) AND OTHER SOURCES 2007-2014

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013 2014

Total Supportable GAFO Space by PMA Residents 70% 70,133 140,954 212,550 285,008 358,418 432,871 508,461 Total Supportable GAFO Space from Other Market Sources 30% 30,057 60,409 91,093 122,146 153,608 185,516 217,912 Total Supportable Space 100% 100,190 201,363 303,643 407,154 512,025 618,387 726,373

Projected Supply of Additional GAFO Space PROPOSED PROJECT 237,711 237,711 237,711 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 208,190 208,190 208,190 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 445,901 445,901 445,901 Other Proposed Space in PMA 163,000 163,000 163,000 Grand Total, All Proposed Shopper Goods Space 608,901 608,901 608,901

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 66% 55% 47%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space from All Market Sources 87% 72% 61%

Comparison 3: Projected Total Supply of Space as a Share of Total Supportable Space from All Market Sources 119% 98% 84% ______Source: HRA, Inc.; W & W, Inc.

The final step in the analysis is making a comparison between the projected demand and projected supply of Shopper Goods space. In this regard, three comparisons are considered relevant to this analysis: (1) a comparison between the growth in demand for Shopper Goods space in the PMA with the additional supply represented by the Project; (2) a comparison between the demand for Shopper Goods space in the combined PMA and SMA with potential supply represented by both the Project and Lane Ranch, where the SMA represents 30 percent of total demand; and (3) a comparison between potential demand for Shopper Goods at the Project location from both the PMA and the SMA, and the cumulative development of the Project, Lane Ranch and other competitive centers. Each comparison is presented below and summarized in the bottom three rows of Table 20.

. Comparison 1: Increase in Shopper Goods supportable space in the PMA with the Shopper Goods space proposed at the Project. In this comparison the total supply of Shopper Goods space in the Project of 237,711 square feet GLA is only 66 percent of the projected increase in demand for Shopper Goods space in the PMA. Thus, if the Project provided the only new Shopper Goods retail space developed in the PMA, it could easily be supported without impacting existing retailers’ sales support levels from PMA residents.

. Comparison 2: Increase in Shopper Goods supportable space in the PMA (70%) and SMA (30%) with the combined Shopper Goods space .for the Project and Lane Ranch that will be developed at the intersection of 60th Street W and West Avenue L. The combined development of the two centers would provide 445,901 square feet GLA of Shopper Goods space, which is equivalent to 87 percent of the Total Shopper Goods space that can be supported by the combined demand from both PMA and SMA residents. The amount of space in the two centers would not adversely impact future market conditions to the extent that it would lead to a process of urban decay.

. Comparison 3: Increase in Supportable Shopper Goods space for the combined PMA and SMA with the Cumulative Shopper Goods Space for all Projects. In this comparison the projected cumulative supply of space represents 119 percent of total demand, representing a condition of potential oversupply of 96,927 square feet in 2012.

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However, given that the growth in Shopper Goods demand is then likely to exceed 107,000 square feet per year, the potential oversupply should be eliminated by market area growth by 2013.

Summarizing the above findings, given the likely continued growth of both the PMA and the SMA in population and per capita personal income over the five year period 2007 through 2013, together with the likelihood that the Project will draw significant patronage from the SMA, development of the Project should not have a significant impact on the existing base of Shopper Goods retail space in the PMA or the SMA. Moreover, the likely depth of the expanding market should also allow for the successful development of the proposed competitive facility known as Lane Ranch without creating circumstances that would lead to urban decay.

One final observation should be made regarding the proposed development of Shopper Goods space on the site that has been chosen for the Project. The proposed location and timing of the Project and the Lane Ranch development strongly suggests that the developers and their anchor store tenants are establishing positions in the market that are in advance of future demand. In taking this step they may be intending to pre-empt market competition in the future by selecting a superior position, then accepting short term sales shortfalls in order to ensure long term success.

E. Building Materials and Garden Supplies Space Impact Analysis

Los Angeles County residents typically allocate 6.81% of their retail purchases for the combined Building Materials and Garden Supplies retail categories. As noted in Table 21 below, based upon the anticipated growth in population and income, PMA residents are projected to increase their retail sales for Building Materials and Garden Supplies by nearly $33.4 million between 2007 and 2012.

Table 21 PROJECTED GROWTH IN DEMAND FOR BUILDING MATERIALS AND GARDEN SUPPLIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change 2007-2012 2007 2008 2009 2010 2011 2012

Primary Market Area (PMA) Population 12,544 88,234 90,611 93,052 95,559 98,134 100,778

Per Capita Personal Income (per BEA Definition) $ 9,555 $ 41,802 43,559 45,390 47,298 49,285 51,357

Aggregate Regional Market Area Income ('000s) $ 1,487,298 $ 3,688,358 $ 3,946,931 $ 4,223,631 $ 4,519,730 $ 4,836,586 $ 5,175,656

Percent of Income Allocable for Retail Sales: 33.0% 33.0% 33.0% 33.0% 33.0% 33.0%

Potential Demand for Retail Sales ('000s) $ 490,808 $ 1,217,158 $ 1,302,487 $ 1,393,798 $ 1,491,511 $ 1,596,073 $ 1,707,966

Calculation of Demand for Building Materials and Related Space: Net Change % of Total ('000s) Demand 2007-2012

Building Materials and Related Sales Demand 6.81%$ 33,424 $ 82,888 $ 88,699 $ 94,918 $ 101,572 $ 108,693 $ 116,313

Incremental Growth in Demand by Year ('000s) $ 5,811 $ 6,218 $ 6,654 $ 7,121 $ 7,620

Cumulative Growth in Demand ('000s) $ 5,811 $ 12,029 $ 18,683 $ 25,804 $ 33,424 ______Source: California State Board of Equalization; Claritas, Inc.; HRA, Inc.; W & W, Inc.

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Table 22 translates the projected 2007-2012 growth in Building Materials and Garden Supply sales demand within the PMA into supportable retail space. Given a market standard of $250 per square foot (measured in constant 2007 dollars and inflated annually at three percent), the projected increase in demand in the PMA is projected to support an additional 115,328 square feet GLA of Building Materials and Garden Supplies space by 2012.

Table 22 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR BUILDING MATERIALS AND GARDEN SUPPLY SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space:

Sales per Square Foot of GLA Requirement, Average:$ 250 $ 258 $ 265 $ 273 $ 281 $ 290 Base $ 250 Annual Increase in Required Support 3.0%

In Square Feet GLA

Supportable Building Materials and Related Space in GLA, Annual Increase 22,567 23,445 24,358 25,307 26,292

Supportable Building Materials and Related Space in GLA, Cumulative Increase 22,567 45,355 68,392 91,707 115,328 ______Source: HRA, Inc.; W & W, Inc.

A major garden center at Wal-Mart can expect to draw substantial patronage from an area beyond the PMA, in this instance most probably from portions of the SMA that are located westerly and southerly of the shopping center site. Demand for sales should also come from builders and landscape contractors that are active in the community. As a consequence, after allowance is made for 30 percent of the market support to come from beyond the PMA, the total supportable space approaches 164,754 square feet GLA, as presented in Table 23 below..

Table 23 COMPARISON OF PROJECTED MARKET DEMAND WITH PROJECTED INCREASE OF SUPPLY OF BUILDING MATERIALS AND GARDEN SUPPLY SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA 2007-2013

Square Feet GLA

Factor 2008 2009 2010 2011 2012 2013

Total Supportable Building Materials Space by PMA Residents 70% 22,567 45,355 68,392 91,707 115,328 139,284 Total Supportable Building Materials Space from Other Market Sources 30% 9,671 19,438 29,311 39,303 49,426 59,693 Total Supportable Space 100% 32,238 64,792 97,703 131,009 164,754 198,977

Projected Supply of Additional Building Materials and Related Space PROPOSED PROJECT 26,200 26,200 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 156,119 156,119 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 182,319 182,319 Other Proposed Space in PMA 139,410 139,410 Grand Total, All Proposed Building Materials and Garden Supply Space 321,729 321,729

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 23% 19%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space from All Market Sources 111% 92%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space from all Market Sources 195% 162% ______Source: HRA, Inc.; W & W, Inc.

In addition to the proposed Garden Supplies space at the Project, additional space will be provided by Lane Ranch. As noted in Table 23 this development is expected to add a total of 156,119 square feet GLA of Building Materials/Garden Supplies space to the market, thus increasing the total additions to space in this category at the intersection of 60th Street W and West Avenue L from the two proposed projects to 182,319 square feet GLA by 2012. Further, another Lowe’s Home Improvement Center proposed for another shopping center (see Table 14)

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could increase the total Building Material and Garden Supplies space in the PMA to 179,810 square feet GLA by that date.

Following the logic presented previously for Shopper Goods, three comparisons were made between the projected additional demand and proposed additional supply of Building Materials and Garden Supplies space: (1) a simple comparison of additional demand for space generated by the PMA with the amount of space proposed by the Project; (2) a comparison of additional PMA and SMA resident demand with the total supply proposed by the Project and Lane Ranch where the SMA residents represent 30 percent of total demand; and (3) a comparison of the demand for space generated by combined PMA residents and SMA residents with the total space proposed by the Project and all other new projects planned for completion in the PMA over the same time period. These comparisons are shown in the bottom three rows of Table 23.

. Comparison 1: Increase in Building Materials and Garden Supplies supportable space in the PMA with Building Materials and Garden Supplies space proposed at the Project. In this comparison the total space proposed by the Project represents only 23 percent of the projected increase in PMA demand, and thus could be supported without adversely impacting the existing pattern of sales in the market area.

. Comparison 2: Increase in Building Materials and Garden Supplies supportable space in the PMA and SMA with the combined Building Materials and Garden Supplies space provided by the Project and Lane Ranch. The combined development of the Project and Lane Ranch would generate Building Materials and Garden Supplies space totaling 182,319 square feet GLA, an amount which is equivalent to 111 percent of the projected demand from the combined market areas in 2012. Additional demand in subsequent years would accommodate the two projects with no adverse impacts.

Comparison 3: Increase in Building Materials and Garden Supplies Supportable space in the PMA and the SMA with the proposed space for the Project and all other projects. In this comparison, the projected supply of 321,729 square feet GLA is measured at 195 percent of aggregate demand. Effectively, this comparison suggests that there is likely to be a significant oversupply of Building Materials and Garden Supply space in the PMA by 2012 if all projects proceed as presently proposed. Notwithstanding this likely oversupply condition, it is not considered to be a potential cause of conditions that would lead to urban decay, as explained in Section H below.

F. Convenience Goods Space Impact Analysis

Typically, there are two major types of Convenience Goods that are included in retail analysis: (1) Food Stores, including supermarkets, specialty food stores like Trader Joe’s and beverage stores; and (2) large, free-standing drugstores that offer a variety of household goods, such as paper and personal care products and small pharmacies specializing in prescriptions. The following section reviews the market for both food stores and drug stores.

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Given the dispersed character of the Antelope Valley development pattern and the existence of two regional anchor tenants in the Project, the market area for food stores and drug stores at the Project is considered to be the same as the PMA or the five-mile market radius. This radius is larger than would be used in urban settings where development is more dense and compact, and where competitive facilities are found at nearby locations. Given the relatively large size of the PMA and the presence of competitive facilities in the SMA, it is logical to assume that there would be very little demand generated from secondary sources for the Project’s food and drug store facilities. Analysis of Los Angeles County resident spending patterns taken from both the State Board of Equalization and U.S. Census of Retail Trade publications indicates that14.36 percent of all retail expenditures are captured by food stores and 4.62 percent of all retail expenditures are captured by drug stores. Over the period 2007 through 2012, the PMA resident demand should approach $70.5 million for food and beverage store purchases and $22.7 million for drugstore purchases. These projections are presented in Table 24.

Table 24 PROJECTED GROWTH IN DEMAND FOR CONVENIENCE GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change ('000s) 2007-2012 2007 2008 2009 2010 2011 2012

Primary Market Area (PMA) Population 12,544 88,234 90,611 93,052 95,559 98,134 100,778

Per Capita Personal Income (per BEA Definition) $ 9,555 $ 41,802 $ 43,559 $ 45,390 $ 47,298 $ 49,285 $ 51,357

Aggregate Regional Market Area Income ('000s)) $ 1,487,298 $ 3,688,358 $ 3,946,931 $ 4,223,631 $ 4,519,730 $ 4,836,586 $ 5,175,656

Percent of Personal Income Allocable for Retail Sales: 33.0% 33.0% 33.0% 33.0% 33.0% 33.0%

Potential Demand for Retail Sales ('000s)) $ 490,808 $ 1,217,158 $ 1,302,487 $ 1,393,798 $ 1,491,511 $ 1,596,073 $ 1,707,966

Calculation of Demand for Selected Convenience Goods by Major Category:

Net Change % of Total ('000s) Demand 2007-2012 2007 2008 2009 2010 2011 2012

Food and Beverage (Liquor) Stores 14.36%$ 70,480 $ 174,784 $ 187,037 $ 200,149 $ 214,181 $ 229,196 $ 245,264

Incremental Growth in Demand by Year ('000s))$ 12,253 $ 13,112 $ 14,032 $ 15,015 $ 16,068

Cumulative Growth in Demand ('000s) $ 12,253 $ 25,366 $ 39,397 $ 54,412 $ 70,480

Drug Stores 4.62%$ 22,675 $ 56,233 $ 60,175 $ 64,393 $ 68,908 $ 73,739 $ 78,908

Incremental Growth in Demand by Year ('000s)) $ 3,942 $ 4,219 $ 4,514 $ 4,831 $ 5,169

Cumulative Growth in Demand ('000s) $ 3,942 $ 8,161 $ 12,675 $ 17,506 $ 22,675 ______Source: California State Board of Equalization; Claritas, Inc.; HRA, Inc.; W & W, Inc.

Table 25 converts the projected 2007-2012 PMA growth in food store and drug store sales demand into supportable square feet GLA of drugstore/pharmacy space. Utilizing market standards that are appropriate for this location of $500 per square foot GLA for food stores and $650 per square foot for drug stores/pharmacies (in 2007 dollars and inflated at three percent per year to 2012), the projected increase in supportable food store space in 2012 is 121,593 square feet GLA and 30, 092 square feet GLA for drug stores.

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Table 25 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR CONVENIENCE GOODS LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Retail Space, Food/Beverage Stores:

Sales per Square Foot of GLA Requirement, Average:$ 500 $ 515 $ 530 $ 546 $ 563 $ 580 Base $ 500 Annual Increase in Required Support 3.0%

Projected Increase in Supportable Retail Space, Drug Stores:

Sales per Square Foot of GLA Requirement, Average: $ 650 $ 670 $ 690 $ 710 $ 732 $ 754 Base $ 650 Annual Increase in Required Support 3.0%

In Square Feet GLA

2008 2009 2010 2011 2012

Supportable Food/BeverageSpace in GLA, Annual Increase 23,793 24,719 25,682 26,682 27,721

Cumulative Increase (Adjusted for higher sales requirement per square foot) 23,793 47,819 72,108 96,689 121,593

Supportable Drug Store Space in GLA, Annual Increase 5,888 6,118 6,356 6,603 6,860

Cumulative Increase (Adjusted for higher sales requirement per square foot) 5,888 11,834 17,845 23,929 30,092 ______Source: HRA, Inc.; W & W, Inc.

1. Food Stores, including Supermarkets, Other Food Stores and Beverage Stores

Food store space at the Project is projected to approach 49,800 square feet GLA, based on the typical allocation for this category within a Wal-Mart Superstore. For Lane Ranch, the allocation is estimated at 10,000 square feet GLA, per space provided within the Target Department Store. The other proposed centers in the PMA are expected to supply 73,000 square feet of food store space by 2012, raising the total addition to supply to 132,800 square feet GLA. These additions to supply are summarized in Table 26 along with comparisons to future demand.

Table 26 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY OF FOOD/BEVERAGE STORE SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2014

Square Feet GLA

2008 2009 2010 2011 2012 2013 2014

Total Supportable Food/Beverage Space by PMA Residents 23,793 47,819 72,108 96,689 121,593 146,852 172,496

Projected Supply of Additional Food/Beverage Space PROPOSED PROJECT 49,800 49,800 49,800 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 10,000 10,000 10,000 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 59,800 59,800 59,800 Other Proposed Space in PMA 73,000 73,000 73,000 Grand Total, All Proposed Food/Beverage Store Space 132,800 132,800 132,800

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 41% 34% 29%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and Avenue L as a Percent of Total Supportable Space by PMA Residents 49% 41% 35%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 109% 90% 77% ______Source: HRA, Inc.; W & W, Inc.

Because the analysis of the potential market support for Convenience Goods was based exclusively on the additional demand generated by PMA residents, the three comparisons were modified to the following methodological structure for both Food Store Space and Drug Store Space: (1) Project with PMA; (2) Project and Lane Ranch with the PMA; and (3) Cumulative

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Projects with the PMA. The results for the comparisons of food store space supply and demand are summarized as follows:

. Project with PMA: The Project’s 49,800 square feet GLA of this type of space represents 41 percent of the potential supportable PMA resident demand;

. Project and Lane Ranch with the PMA: The two projects will offer about 49 percent of the total PMA resident demand for this category; and

. Cumulative Projects with the PMA: The cumulative proposed supply will represent 109 percent of total supportable demand for this category. This short-term oversupply would likely be balanced by continued growth in the PMA resident population by mid- 2014, thus is not considered to be a significant issue with respect to potential impact on existing and future food store retailers.

2. Drug Stores/Pharmacies

In contrast to the relative balance that is likely to be achieved between supply and demand for general merchandise, building materials/garden supply and food/beverage store space within two years after full operation of the proposed centers, if all the drug store and pharmacy space included in proposed shopping center development programs is constructed as currently proposed, there will be a major oversupply by 2012. Both the developers of the Project and Lane Ranch, for example, have expectations of providing: (1) a free-standing drug store on a pad; and (2) a pharmacy inside the anchor store in their respective centers, potentially resulting in four drug/pharmacy facilities with 47,560 square feet GLA of space at the intersection of 60th Street W and West Avenue L. In addition, other projects are expecting to add another 43,907 square feet GLA of drug stores/pharmacies to the PMA, raising the total additional space in this Convenience Goods category to 91,467 square feet GLA by 2012. These additions to inventory are summarized in Table 27 below.

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Table 27 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY OF DRUG STORE SPACE LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Square Feet GLA

2008 2009 2010 2011 2012

Total Supportable Drug Store Space by PMA Residents 5,888 11,834 17,845 23,929 30,092

Projected Supply of Additional Drug Store Space PROPOSED PROJECT 24,740 Other Competitive Center at 60th Street West and Avenue L (The Commons) 22,820 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 47,560 Other Proposed Space in PMA 43,907 Grand Total, All Proposed Drug Store Space 91,467

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 82%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space by PMA Residents 158%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 304% ______Source: HRA, Inc.; W & W, Inc.

The comparison between supply and demand for drug store/pharmacy space under the three sets of potential market conditions results in the following:

. Project with PMA: The Project will offer a stand-alone drug store and additional pharmacy space within the Wal-Mart, resulting in a total of 24,740 square feet GLA. This supply represents 82 percent of total projected PMA resident demand, and does not adversely affect future market conditions.

. Project and Lane Ranch with the PMA: The two projects together will offer two free- standing drug stores and two pharmacies within their respective anchor stores, for a total of 47,560 square feet GLA. This projected space constitutes 158 percent of the total PMA resident demand for this retail category, and thus indicates a significant potential oversupply in the market from these two developments alone, though continued population and income growth in the PMA would generate sufficient support of this space by 2014.

. Cumulative Projects with the PMA: As presently proposed, the cumulative supply of proposed drug stores and pharmacies from all projects represents three times (304%) the total projected supportable demand from PMA residents for this category. Given the potential for this significant oversupply to occur from the cumulative development of multiple drug stores, a more detailed analysis of existing and projected future drug store/pharmacy space in the PMA was undertaken in order to assess whether the condition could lead to urban decay. The results of this further evaluation are presented in Section H below.

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G. Eating and Drinking Facilities Impact Analysis

While the demand for the Project’s Eating and Drinking Facilities would logically be generated from the entire range of customers at the center, it can be argued that the major source of market support for the Project’s restaurants would come from residents living near the site. As a consequence, the Eating and Drinking Facilities analysis utilizes the 5.0-mile PMA as the basis for determining the magnitude of market support that will exist for proposed restaurants at the Project site.

Table 28 provides a projection of the increase in Eating and Drinking Facilities demand for the period 2007 through 2012 by utilizing an analytic approach similar to the one presented above for Convenience Goods retail space. The analysis considers two types of restaurant space: (1) fast food restaurant facilities; and (2) “sit-down” or dinner restaurant facilities that serve alcohol. In Table 28, the fast food units are considered to be comparable to restaurants that the California State Board of Equalization characterizes as “Restaurants, No Alcohol”, while dinner restaurants would be considered as comparable to the State’s category of “Restaurants with Alcohol.”

Table 28 PROJECTED GROWTH IN DEMAND FOR EATING & DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

Net Change ('000s) 2007-2012 2007 2008 2009 2010 2011 2012

Primary Market Area (PMA) Population 12,544 88,234 90,611 93,052 95,559 98,134 100,778

Per Capita Personal Income (per BEA Definition) $ 9,555 $ 41,802 $ 43,559 $ 45,390 $ 47,298 $ 49,285 $ 51,357

Aggregate Regional Market Area Income ('000s)) $ 1,487,298 $ 3,688,358 $ 3,946,931 $ 4,223,631 $ 4,519,730 $ 4,836,586 $ 5,175,656

Percent of Personal Income Allocable for Retail Sales: 33.0% 33.0% 33.0% 33.0% 33.0% 33.0%

Potential Demand for Retail Sales ('000s)) $ 490,808 $ 1,217,158 $ 1,302,487 $ 1,393,798 $ 1,491,511 $ 1,596,073 $ 1,707,966

Calculation of Demand for Selected Shopper Goods by Major Category:

Net Change % of Total ('000s) Demand 2007-2012 2007 2008 2009 2010 2011 2012

Restaurants, No Alcohol (Fast Food) 5.59%$ 27,436 $ 68,039 $ 72,809 $ 77,913 $ 83,375 $ 89,221 $ 95,475

Incremental Growth in Demand by Year ('000s))$ 4,770 $ 5,104 $ 5,462 $ 5,845 $ 6,255

Cumulative Growth in Demand ('000s) $ 4,770 $ 9,874 $ 15,336 $ 21,181 $ 27,436

Restaurants with Alcohol 5.35%$ 26,258 $ 65,118 $ 69,683 $ 74,568 $ 79,796 $ 85,390 $ 91,376

Incremental Growth in Demand by Year ('000s)) $ 4,565 $ 4,885 $ 5,228 $ 5,594 $ 5,986

Cumulative Growth in Demand ('000s) $ 4,565 $ 9,450 $ 14,678 $ 20,272 $ 26,258 ______Source: California State Board of Equalization; Claritas, Inc.; HRA, Inc.; W & W, Inc.

Based upon Los Angeles County resident spending patterns, 10.94 percent of retail expenditures made by PMA residents typically are made at restaurants, with 5.59 percent allocable to fast food restaurants (“Restaurants No Alcohol”) and 5.35 percent to dinner restaurants (“Restaurants with Alcohol”). As shown in Table 28, the projected growth in demand for Fast Food Eating and Drinking facilities between 2007 and 2012 is projected at $27.4 million; the projected growth in sales for Restaurants Serving Alcohol over the same period is nearly$26.3 million.

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Allowing for both types of restaurants to achieve sales volumes approaching $500 per square feet (in 2007 dollars and inflated 3% per year to 2012) as a threshold support requirement, by 2012 the anticipated increase in local area demand should be able to sustain additional restaurant space in an amount approaching 47,333 square feet GLA for fast food units and 45,301 square feet GLA for restaurants serving alcohol. These projections are shown in Table 29.

Table 29 PROJECTED INCREASE IN SUPPORTABLE SPACE FOR EATING & DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

2007 2008 2009 2010 2011 2012

Projected Increase in Supportable Space, Restaurants, no Alcohol (Fast Food):

Sales per Square Foot of GLA Requirement, Average:$ 500 $ 515 $ 530 $ 546 $ 563 $ 580 Base $ 500 Annual Increase in Required Support 3.0%

Projected Increase in Supportable Space, Restaurants with Alcohol:

Sales per Square Foot of GLA Requirement, Average:$ 500 $ 515 $ 530 $ 546 $ 563 $ 580 Base $ 500 Annual Increase in Required Support 3.0%

In Square Feet GLA

2008 2009 2010 2011 2012

Supportable Fast Food Restaurant Spacein GLA, Annual Increase 9,262 9,623 9,997 10,387 10,791

Cumulative Increase (Adjusted for higher sales requirement per square foot) 9,262 18,615 28,070 37,639 47,333

Supportable Dinner Restaurant Space in GLA, Annual Increase 8,864 9,209 9,568 9,941 10,328

Cumulative Increase (Adjusted for higher sales requirement per square foot) 8,864 17,816 26,865 36,023 45,301 ______Source: HRA, Inc.; W & W, Inc.

The Project has two fast food units that will provide 4,198 square feet GLA; this square footage represents nine percent of the potential increase in fast food restaurant supportable space by PMA residents. Lane Ranch would add another 3,800 square feet GLA of fast food space, bringing the total addition to supply to 7,998 square feet, equivalent to 17 percent of projected additional PMA resident demand at the 60th Street W and West Avenue L intersection. On a cumulative basis, the total projected supply of fast food space from all sources is estimated at 37,998 square feet GLA or about 80 percent of projected additional PMA resident demand, thus is not likely to have a significant impact on market conditions for this type of space. These findings are presented in Table 30.

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Table 30 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY FAST FOOD EATING AND DRINKING FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2012

In Square Feet GLA

2008 2009 2010 2011 2012

Total Supportable Space, Restaurants without Alcohol (Fast Food), by PMA Residents 9,262 18,615 28,070 37,639 47,333

Projected Supply of Additional Fast Food Restaurant Space PROPOSED PROJECT 4,198 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 3,800 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 7,998 Other Proposed Space in PMA 30,000 Grand Total, All Proposed Fast Food Space 37,998

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 9%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street West and Avenue L as a Percent of Total Supportable Space by PMA Residents 17%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 80% ______Source: HRA, Inc.; W & W, Inc.

With regard to “sit-down” or dinner restaurants (restaurants serving alcohol), as noted in Table 31, the cumulative supply of proposed space from all sources is 50,795 square feet GLA, an amount equivalent to 112 percent of projected demand. However, this oversupply would likely be resolved with continued PMA market growth by 2013, and therefore is not considered to represent an adverse market condition that could lead to urban decay.

Table 31 COMPARISON OF PROJECTED INCREASE IN MARKET DEMAND WITH PROJECTED INCREASE IN SUPPLY DINNER RESTAURANT FACILITIES LANCASTER SHOPPING CENTER PRIMARY MARKET AREA (PMA) 2007-2013

In Square Feet GLA

2008 2009 2010 2011 2012 2013

Total Supportable Restaurants with Alcohol (Dinner Restaurant) Space by PMA Residents 8,864 17,816 26,865 36,023 45,301 54,712

Projected Supply of Dinner Restaurant Space PROPOSED PROJECT 14,295 14,295 Other Competitive Center at 60th Street West and Avenue L (Lane Ranch) 6,500 6,500 Subtotal, Supply of Space, Combined Centers at 60th Street West and Avenue L 20,795 20,795 Other Proposed Space in PMA 30,000 30,000 Grand Total, All Proposed Dinner Restaurant Space 50,795 50,795

Comparison 1: Proposed Project Space as a Percent of Total Supportable Space by PMA Residents 32% 26%

Comparison 2: Projected Supply of Space at the Two Centers at 60th Street W and West Avenue L as a Percent of Total Supportable Space by PMA Residents 46% 38%

Comparison 3: Projected Total Supply of Space as a Percent of Total Supportable Space by PMA Residents 112% 93% ______

Source: HRA, Inc.; W & W, Inc.

In summary, given (1) the relatively small proportion of future supportable space that is represented by the Project’s Eating and Drinking Facilities, and (2) that the proposed developments are not counting on restaurants to serve as anchor tenants, it can be concluded that the development of the additional Eating and Drinking Facility space is not likely to have a major impact on the existing base of restaurants in the local market area, and therefore will not contribute to adverse market conditions that could lead to urban decay.

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H. Evaluation of the Project’s Potential to Cause Urban Decay

Based on the foregoing analysis, the proposed Project would be a significant source of new competitive supply of retail space in a number of the retail space categories that have been evaluated in this study. However, analysis of each retail category suggests that with one notable exception — drug store and pharmacy space — market growth in demand for retail and dining space within the relevant market areas surrounding the Project will be sufficient to absorb the additional supply without creating conditions that could result in extreme economic competition leading to the threat of “urban decay.”

More specifically, the analysis of potential impacts has revealed the following:

. Sources of Market Support. The PMA for the Project is a fast growing residential community of single-family detached homes with residents whose incomes are higher than the Los Angeles County average. Between 2007 and 2012 the resident population of the PMA is projected to increase by 12,544 persons that, along with general income growth in the region, should provide the major source of market support for the Project. In addition, the Project’s location coupled with its anchor stores and the presence of an adjacent retail development known as Lane Ranch, should draw additional market support from the SMA, defined here as the resident population living within a five- to 10- mile band around the Project site. Between 2007 and 2012 the SMA is projected to grow by 15,925 persons and contribute 30 percent of total market support to the Shopper Goods and Building Materials/Garden Supply space at the Project.

The growth forecasts have been examined from both an historical perspective and from a review of proposed developments in the market areas. A recent listing of planned developments suggests that about 9,800 units have been proposed for development in the PMA alone that could generate population growth over 29,000 persons. While the actual timing and delivery of this product is open to some question, particularly in the current market where mortgage foreclosures have spiked and access to mortgage debt has become more difficult, the forecasts appear to be realistic in their suggestion that major growth is likely to continue in the Antelope Valley subregion well beyond 2012.

. Competitive Supply Considerations. As noted above, in addition to the Project, there is a proposed development known as Lane Ranch that would be developed at the same intersection that would initiate operations in the same year, 2012. As presently conceived these two developments together would add a total of 780,783square feet GLA of retail space to the market area. Given their proximity and timing, they will function as one large project in terms of their potential impact on the local market area. In this regard, the juxtaposition of these two centers should yield “agglomerative” benefits in that the range of choice provided by the combined retail offerings on the two sites should enhance the location as a retail destination for SMA residents and enhance this location’s customer drawing power beyond the normal market reach of a single 400,000 square foot GLA shopping center.

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. Shopper Goods (General Merchandise, Apparel, Home Furnishings, Other/Specialty Goods. The analysis of Shopper Goods considered three different measures of comparison between potential market support for new retail space and potential future competitive supply. These three comparisons were as follows:

-- Comparison 1: Project proposed Shopper Goods space with PMA resident support for additional space;

-- Comparison 2: Combined Project and Lane Ranch Shopper Good Space with combined PMA and SMA resident support for additional Shopper Goods space; and

-- Comparison 3: Total proposed Shopper Goods space (Project and cumulative developments) with combined PMA resident and SMA resident support for additional space.

The results of the first of these comparisons indicate that the Project’s Shopper Goods space can be supported by the PMA, as it would provide the equivalent of 66 percent of the PMA’s potential supportable Shopper Goods space. In the second comparison, the analysis shows that the combination of the Project and Lane Ranch would provide an amount of space that would constitute 113 percent of potential additional demand generated by the combined PMA and SMA resident markets. In the final comparison, the total Shopper Goods from all proposed projects represents 145 percent of the projected demand from the combined PMA and SMA resident markets. While this projected magnitude of new development represents a significant oversupply in 2012, given the likely continued growth in population and resultant market demand in both the PMA and SMA, this short-term oversupply condition would be resolved by late 2014 or early 2015 when the anticipated additional growth would be capable of fully supporting the proposed space.

While the Project and Lane Ranch would leave little capacity for other new development in the subregion, it is unlikely that they would individually or collectively create conditions that could lead to urban decay. This conclusion is based on the following considerations.

-- The market demand for Shopper Goods in the PMA and SMA is growing with development of the residential base, and by 2012 the annual growth in supportable Shopper Goods space should exceed 100,000 square feet GLA on an annual basis. Thus, if there is excess supply, it would likely be a short-term phenomenon that would be resolved from growth in resident demand in the two market areas by 2014, about one and a half years after the projects are planned to be fully operational.

-- The proposed major Shopper Goods anchor tenants for the two centers to be located at the intersection of 60th Street W and West Avenue L are already well-established in the market area. If the two projects draw sales from other establishments it is likely that any such “cannibalization” will come largely from their own existing stores.

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Presumably, this potential loss in sales has already been considered in each anchor store’s decision to place a new store at this location.

-- The threshold sales requirement for Shopper Goods that has been utilized in the analysis has been set at a level equivalent to the magnitudes achieved by mature stores, thus may be conservative (i.e., too high) in the short term for a market area that is undergoing significant growth. Normally, there is a “ramp-up” period where stores require several years to achieve threshold sales levels, particularly in rapid- growth residential markets like the Antelope Valley. The anchor stores that are locating at this position in the market also appear to be making a strategic choice to establish new stores in advance of the long-term demand that will ultimately be present in the growing Quartz Hill community, and may have allowed for slightly lower sales in the first few years of operation.

-- Developers of other projects will have the option to delay or otherwise adjust their development programs to reflect evolving market conditions, particularly in recognition of the strength of the anchor tenants that will be present at the Project and Lane Ranch. Moreover, recent trends in the housing market may have a significant impact on the timing of some or all of new retail projects, as their development will probably be correlated with the presence of new residents in the market areas.

. Building Materials and Garden Supplies. The analysis of Building Materials and Garden Supplies retail space followed the same basic approach that was utilized for the Shopper Goods analysis, recognizing that shopping behavior for this type of good and anchor tenants such as The Home Depot at the proposed Lane Ranch Towne Center will likely attract significant sales from beyond the PMA, particularly from non-local builders constructing projects in the immediate vicinity. Once again, three basic comparisons were made between supportable space and the proposed development supply, following the framework provided above for Shopper Goods. The results of these comparisons were as follows:

-- Comparison 1: Growth in demand within the PMA for Building Materials and Garden Supply space is sufficient to support the space proposed for this use in the Project.

-- Comparison 2: The proposed cumulative supply of Building Materials and Garden Supply space in the Project and Lane Ranch would represent 84 percent of combined PMA and SMA resident demand.

-- Comparison 3: Projected growth in supply from known competitive sources would include the addition of a 139,000+/- square foot Lowe’s Improvement Center as well as space at the Project and Lane Ranch. Under these conditions, growth in supply would constitute 149 percent of additional demand from the combined PMA and SMA resident markets. At the projected rate of growth in demand for this type of space, the market would not support the proposed space at the threshold sales level utilized in this analysis until 2015.

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Despite the significant short term oversupply of space projected in the analysis, development of the proposed Project’s Building Materials and Garden Supply facilities would not create competitive conditions that could lead to urban decay for essentially the same reasons as were noted in the discussion of potential oversupply of Shopper Goods. Moreover, as was the case in the Shopper Goods analysis, any short-term sales losses would most likely be experienced by The Home Depot and Lowe’s, the two major chains that already have a major presence in the subregion. The other two potential sources of this type of space, Target and Wal-Mart, are also buffered by the fact that this retail category is a small percent of their total business, and relatively small sales per square foot from this type of space could easily be offset by high sales in other parts of the store.

All of these chains have the ability to withstand short-term competitive challenges in favor of establishing a longer-term position in the subregion. Even in situations where one store is closed in favor of a new location there are ample opportunities to re-tenant with other retailers. Further, the home improvement stores are typically one major tenant of “co- anchored” centers, and thus are not the only customer draw at existing retail complexes. If a store should close, the center would still have anchors that would generate a customer base for the in-line stores until a replacement co-anchor is found.

. Convenience Goods. Analysis of the potential market support for Convenience Goods was based exclusively on the additional demand generated by PMA residents. Two major types of Convenience Goods space were considered: (1) food/beverage store space; and (2) drug store/pharmacy space. The comparison analysis between the projected growth in PMA demand with potential growth in supply indicates a likely balance for food/beverage store space by early 2014. However, for drug store/pharmacy space, the projected increase in supply from all sources was 304 percent or three times projected PMA resident demand (i.e., 91,467 square feet GLA of proposed new space versus projected demand for 30,192 square feet GLA). In fact, the proposed drug store/pharmacy space included in just the Project and Lane Ranch projects represents 158 percent of potential additional demand in 2012.

This projected supply-demand imbalance and likely competition for customers--caused by the cumulative development of all drug store/pharmacy space as presently proposed for the PMA, of which the Project represents about 29 percent--could theoretically lead to store closures and consequent urban decay. Those retail centers most at risk would be older drug store facilities in inferior locations and existing and proposed convenience centers where a major drug store was the exclusive or major anchor tenant. In such circumstances, the failure of the “anchor tenant” drug store could lead to a major decline in patronage at the center, resulting in the failure of in-line tenants who were dependent on the drug store’s drawing power.

Given the above condition of likely oversupply, field surveys and related research were conducted to determine which drug stores would be most vulnerable to extreme competition if all or most of the proposed drug store space was developed at the intersection of 60th Street W and West Avenue L as envisioned in the analysis. Those

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stores considered most at risk are those existing and proposed drug stores located westerly of the Antelope Valley Freeway within the PMA. A total of five existing and proposed drug store properties were identified and evaluated, including the following facilities:

CVS Facility 4105 West Avenue L Lancaster Walgreens Facility 2840 West Avenue L Lancaster SavOn Facility 5038 West Avenue N Palmdale Rite Aid Facility 3105 Rancho Vista Boulevard Palmdale Proposed Drug Store SE Corner, 30th St W and W Avenue K Lancaster

Analysis of each drug store’s susceptibility to conditions of extreme competition is provided below.

-- CVS Facility. This drug store is the one located closest to the Project on a site about two miles east on West Avenue L, the major east-west arterial street that will serve as major access to both the Project and Lane Ranch. Currently, road improvements are being completed on 40th Street W that should enhance the CVS location as a convenience retail node. The CVS store serves as a co-anchor with a Von’s supermarket in this newer shopping center that enjoys a high occupancy rate for its available space as of the dates it was surveyed. Given its existing and projected local market base, accessibility, age, configuration, tenant mix and the presence of two anchor stores, this center is not at great risk to be negatively impacted by development of the Project to such a degree that it would lead to conditions of urban decay.

-- Walgreens Facility. The Walgreens store is a newer drive-through store located alone as a single unit at the intersection of West Avenue L and 30th Street W opposite the West Lancaster Plaza Shopping Center. The site has excellent accessibility and visibility. If it were to close due to extreme competition, the building and its location would be attractive to other retailers. As the store does not anchor any other retail space, its closure would not materially impact other retailers.

-- SavOn Facility. The SavOn facility co-anchors (with Albertson’s) a recently- developed convenience shopping center located at the intersection of Avenue N and Rancho Vista Boulevard in the City of Palmdale. The location is at a key intersection with high traffic volume and excellent visibility. Moreover, the center’s performance is likely to improve substantially with additional residential development in the immediate vicinity in the near future. Given the center’s location, visibility, co- anchorage and relative age, the likelihood of its being severely impacted to such an extent that there would be store closures and urban decay is minimal.

-- Rite Aid Facility. The Rite Aid store is located five miles from the Project at the intersection of Sierra Vista Boulevard and 30th Street W, thus it is at the edge of the Project’s PMA. The drug store serves as a co-anchor with a Von’s supermarket at a well-established, modern convenience center known as Rancho Vista Plaza. Given

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this center’s location, visibility, accessibility and design configuration, it is not likely to be materially impacted by development of the Project and suffer from the effects of extreme competition.

-- Proposed Drug Store Facility. A 17,272 square foot GLA drug store is proposed for development at the intersection of 30th Street W with West Avenue K. Hearings are scheduled for late 2007. The proposed 42,867 square foot GLA center has a second “mini-anchor,” a 15,000-square foot GLA food store. Given the relatively small scale of both the center and co-anchor food store, this project could be at risk due to its scale and the limited time it would have to establish a strong position in the market place. However, given the availability of information regarding likely market conditions, the developer of this project can re-position this project, delay its development or accept the market risk. In any event, the total amount of space potentially at risk is less than 43,000 square feet GLA, and, as this site has not even been approved for construction at this time, it can hardly be considered to constitute a situation that will lead to urban decay.

In summary, the site-specific analyses indicate that while there could be a serious oversupply of drug store/pharmacy space in the Project’s PMA if the Project and Lane Ranch open as currently scheduled, this oversupply is not likely to create conditions at any of the specific locations studied that would likely lead to significant urban decay. The four major drug store chains with stores in the PMA identified above are all capable of holding on to their market shares for the long term, due to their brand strengths and to their respective geographic positioning. However, it is also very possible that the sales achieved per square foot at these stores may be below the standard threshold utilized in this analysis for determining supportable drug store space.

. Eating and Drinking Facilities. Analysis of the potential impact of the proposed Eating and Drinking Facility component of the Project indicates that there is sufficient market support generated by the PMA resident population to support the proposed addition of this type of space in the market place.

As the addition of the proposed eating and drinking uses in the Project will not have a significant negative impact on the existing and proposed supply of competitive uses in the PMA, this component of the Project will not lead to urban decay at any of the existing or proposed shopping centers and business districts found in the competitive market area.

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APPENDIX A

Summary Qualifications of HR&A Advisors, Inc. and Whitney & Whitney, Inc.

HR&A ADVISORS, INC.

HR&A ADVISORS, INC. Economic Development, Real Estate Advisory & Public Policy Consultants

QUALIFICATIONS TO PREPARE CEQA/NEPA DOCUMENTATION ON SOCIOECONOMIC ISSUES

HR&A Advisors, Inc. (HR&A) is a full service policy, financial and management consulting firm. Founded in 1976, the firm has a distinguished track record of providing realistic answers to complex economic, economic development, public finance, real estate, housing and strategic planning problems. HR&A clients include Fortune 500 corporations, all levels of government, the nation’s leading foundations, and not-for-profit agencies. The firm has extensive experience working for the legal community in such roles as court-appointed special master, consent decree monitor, technical advisor and expert witness.

HR&A’s practice lines include local and regional economic analysis, economic development program formulation and analysis, fiscal impact analysis, real estate analysis and advisory services, housing policy research and analysis, population forecasting and demographic analysis, and transportation and other capital facilities analysis and financing.

Among the qualities for which HR&A is widely known and respected are the impeccable quality of its analysis, ability to invent new analytic methods and approaches to suit the needs of a particular client, independent professional judgment honed through extensive exposure to the rigors of the public review process and the scrutiny of the judicial system, the ability to translate complex technical analysis for a variety of non-technical audiences, and the extensive involvement of its Partners in every project it accepts.

The firm’s domestic and international consulting is provided by a staff of 30 people located in offices in Los Angeles and New York. Staff members include public finance professionals, planners, economists, architects, lawyers, and experienced project managers. Virtually every member of the firm has substantial public or private sector experience in economic, financial and policy analysis, real estate development and planning.

HR&A has frequently been called on by its public and private sector clients to provide analysis of population, housing, employment, economic, public school facilities and induced growth impacts for projects subject to the California Environmental Policy Act and the National Environmental Policy Act. The following are examples of projects that illustrate this experience.

2800 28TH STREET, SUITE 325, SANTA MONICA, CALIFORNIA 90405 $ TEL: 310.581.0900 $ FAX: 310.581.0910

Los Angeles New York

For Public Sector Clients

. For the City of Lancaster, HR&A is preparing economic, fiscal and “urban decay” analysis for EIRs on the Lane Ranch Towne Center and The Commons at Quartz Hill, two regional shopping centers planned for opposite corners at 60th and Avenue L.

. For Los Angeles World Airports, HR&A prepared all of the economic impact analyses needed to evaluate alternative Master Plan concepts for future development of Los Angeles International Airport. The project included extensive econometric modeling of future baseline (pre-project) economic conditions and forecasts of conditions under alternative development scenarios in the City of Los Angeles, the County of Los Angeles, incorporated and unincorporated areas adjacent to the airport, and the surrounding five-county region.

. For the City of Chicago Department of Aviation, HR&A prepared regional and local economic and fiscal impact analyses of the O'Hare Modernization Program (OMP), which was be used by the Federal Aviation Administration to prepare an Environmental Impact Statement on the project. The analysis includes econometric modeling of the six-county Chicago regional area to forecast the employment, total economic output, population and households, among other factors, that would be associated with the $16-billion OMP project, as compared with a No Project scenario.

. For the City of Los Angeles Environmental Affairs Department, HR&A prepared draft Initial Study screening criteria, thresholds of significance and recommendations for analysis approach on the topics of housing, population and employment impacts.

. For Central City West Association and the City of Los Angeles, HR&A prepared a demographic portrait and forecast, and baseline "jobs/housing balance" analysis as part of the Central City West Specific Plan, a transitional neighborhood located directly north of Pico-Union, and across the Harbor Freeway, from the Los Angeles central business district. HR&A's analysis was used as the technical basis for the population, housing and employment sections of the EIR on the Plan. The firm also assisted counsel for interested parties regarding these issues during subsequent litigation over the adequacy of the Final EIR, which was ultimately decided in favor of the City.

. For the Santa Monica-Malibu Unified School District, HR&A managed a detailed review of the options available to the District to consolidate use of its four properties in the Ocean Park neighborhood of Santa Monica, an area which had been experiencing significant enrollment declines. The project included managing the preparation and certification of an EIR on the multi-site strategy adopted by the Board of Education, which included construction of the first new elementary school since the 1950s.

. For the University of California, Los Angeles, the firm prepared an analysis of the degree to which employment and housing associated with UCLA's 1991 Long Range Development Plan was consistent with the emerging regional planning concept of "jobs-housing balance." The firm's analysis was included as a technical appendix to the Final EIR on the Plan, which received approval by the Regents of the University.

. Also for the University of California, Los Angeles, HR&A prepared the population and housing section, and contributed to the induced growth section of the EIR on the 2000-2010 Long-Range Development Plan Update for the campus. The Final EIR was certified by the Regents.

. For the University of California, Santa Barbara, HR&A analyzed the public school impacts of the 1992 Long- Range Development Plan for the Santa Barbara campus, and prepared a Supplemental Environmental Impact Report on this issue, pursuant to a judgment against the University in an action brought by the Goleta Union School District. The Supplemental EIR was certified by the Regents of the University. Upon return to the writ, the court found that the analysis adequately supported the Regent's action. This determination was upheld by the Second District Court of Appeal in Goleta Union School District v. Regents of the University of California , 36 Cal. App. 4th 1121 (1995) (opinion on rehearing), holding that the University was not required to pay school mitigation fees.

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. For the Southern California Association of Governments (SCAG), HR&A prepared the economic and fiscal impact sections of the EIR on SCAG’s 1996 Regional Comprehensive Plan and Guide.

For Private Sector Clients

. For Westfield Corporation, HR&A prepared “urban decay” and public services impact analyses for a 100,000 square foot addition to the existing Westfield Santa Anita super-regional shopping center in Arcadia, and a 280,000 square foot addition to Westfield Fashion Square in Sherman Oaks.

. For Bisno Development Company, HR&A is preparing technical reports on the population, housing employment and school facilities impacts of a 2,300-unit condominium project proposed for a former US Navy housing site in the San Pedro-Wilmington area of Los Angeles.

. For General Growth Properties, HR&A prepared detailed comments on various socio-economic issues in the Draft and Final EIR for the Americana at Brand, a “lifestyle” mall proposed for a site immediately adjacent to the Glendale Galleria in Glendale.

. For Universal Studios, Inc., HR&A analyzed the employment, housing, population and economic and fiscal impacts in Los Angeles County of a proposed $3 billion Specific Plan that will nearly double the intensity of development at Universal City, the home of Universal Studios, Inc.’s film studio, studio tour, various entertainment retail uses, commercial office buildings and hotels. HR&A’s analyses were included in the project’s Draft EIR. HR&A is now preparing similar analyses for the EIR on the new Universal City Vision Plan being proposed by NBC Universal.

. For the Ratkovitch-Villaneuva Partnership, HR&A prepared the employment, housing, population and public schools impact analyses for the EIR on a proposal to construct 10 million square feet of new commercial and residential development around the City of Los Angeles’ Union Station. The Draft EIR was certified by the Los Angeles City Council.

. For St. John’s Hospital and Health Center, HR&A prepared analyses of the economic and fiscal impact of current health center impact on the economy of the City of Santa Monica, and the impact that will result from each of two phases of a major reconstruction of the health center following the 1994 Northridge earthquake. The analysis was relied on by the City’s consultants in preparing the project’s EIR, which was certified by the Santa Monica City Council. HR&A also prepared analysis for the Health Center on the degree to which draft police services mitigation measures being considered by the City met the requirements of CEQA.

. For The Walt Disney Company, HR&A prepared a comprehensive analysis of the employment, population, housing, "jobs-housing balance" and vehicle miles traveled impacts of Downtown Disney and Disney’s California Adventure, in Anaheim. The firm's analysis is contained in a series of technical appendices to the EIR, which was certified by the Anaheim City Council.

. Also for The Walt Disney Company, HR&A analyzed the "jobs-housing balance" implications of a proposal to consolidate all of Disney's studio and studio-related administrative facilities on a single site in the City of Burbank. HR&A's analysis was included as a technical appendix to the project’s EIR, which was certified by the Burbank City Council.

. For Wilshire-Barrington Associates, HR&A analyzed the population, housing, employment and jobs-housing balance impacts of a preliminary concept for converting the Barrington Apartments in West Los Angeles into a mixed-use project consisting of 700 apartments, a 262-room hotel, 210,000 s.f. of office space plus miscellaneous retail.

. For the Santa Monica Beach Hotel Development Partnership, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a proposed 160-room luxury hotel and community center proposed for a parcel of State-owned land along Santa Monica Beach.

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. For Reliance Development Group, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a 1.8 million square foot office park and studio complex proposed for surplus land at Santa Monica Airport.

. For Maguire Thomas Partners, HR&A coordinated an extensive review and prepared the Draft EIR comment letter for the developer of a proposed office building and hotel project to be developed on Ocean Avenue in the City of Santa Monica.

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REPRESENTATIVE LIST OF CLIENTS

Financial Institutions & Investment Companies World Financial Properties American Council on Life Insurance Citibank Private Banking Group Public Development Agencies Citicorp Real Estate, Inc. Alliance for Downtown New York Community Preservation Corporation Battery Park City Authority First Union National Bank Brooklyn Bridge Park Development Fleet Financial Group Brooklyn Navy Yard Development Goldman Sachs Corporation Hartland Asset Management Catskill Watershed Corporation Lehman Bros. Catholic Charities of Brooklyn Shorebank Corporation Cincinnati Business Committee Columbus Downtown Redevelopment Real Estate Development Organizations and Corporation Private Companies Downtown Brooklyn Local Development ARC Development Corporation ARCORP Properties Economic Development Growth Bermant Development Company Enterprises, Oneida Co., NY Boeing Realty Corporation Empire State Development Corporation Casden Properties, Inc. Inland Valley Development Agency Castle & Cook Development Company Memphis Riverfront Development Corp. Centex Homes National Capital Revitalization Corp. Continental Development Corporation New York City Economic Development Daniel Island Development Company Corporation Disney Development Corporation New York State Urban Development Edward J. Minskoff Equities Corporation Gaylord Entertainment Penmar Development Corporation General Growth Properties Port Authority of New York and Gibson Speno LLC New Jersey Home Depot Company Queens West Development Corporation JMB Urban Realty Corporation K. Hovnanian Companies of California Cultural, Recreational & Special Events Clients Landmark Land Company American Museum of Natural History Madison Square Garden Brooklyn Academy of Music Maefield Development Corporation Corporation Maserich Company Brooklyn Museum of Art Maguire Thomas Partners City of New Haven Arts & Millennium Partners Entertainment Facilities Committee Newhall Land & Farming Company Lincoln Center for the Performing Arts New York Times Company Madison Square Garden Olympia & York (USA) New Jersey Performing Arts Center The Related Companies NYC2008 Reliance Development Group Public Space for Public Life Santa Monica Beach Development Randall’s Island Sports Foundation Corporation The Trust for Public Land Starrett Housing Corporation Sunset Development Corporation Other Quasi-Public and Non-Profit Organizations Tishman Speyer Properties and Foundations Trammell Crow Company Apartment Association of Greater Trammell Crow Residential Los Angeles TransAction Companies, Ltd. The Bowery Mission Twentieth Century Fox Common Ground Community Universal Studios, Inc. Cornell University The Walt Disney Company Corporation for Supportive Housing Westfield Corporation, Inc. Community Services Society of William Lyon Homes New York

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Other Quasi-Public and Non-Profit Organizations Redevelopment Authority of the and Foundations (con’t.) City of Philadelphia The Enterprise Foundation San Diego Association of Governments Ford Foundation Santa Ana Unified School District (CA) Gay Men’s Health Crisis Santa Monica-Malibu Unified Griffiss Local Development Corporation School District Harry Frank Guggenheim Foundation Southern California Association of Kaiser Permanente Governments Local Initiatives Support Corporation Yonkers Office of Downtown & Los Angeles Collaborative for Community Waterfront Development Development Metropolitan Boston Housing Partnership Transportation Agencies Metropolitan Jewish Geriatric Center City of Chicago Department of Airports National Equity Fund Connecticut Dept. of Transportation Neighborhood Progress, Inc. Delaware Dept. of Transportation New York Blood Center Newark Alliance Los Angeles County Metropolitan Saint John’s Hospital and Health Center Transportation Authority Saint Vincent’s Hospital Los Angeles World Airports San Gabriel Valley Council of Governments Massachusetts Bay Transportation Spanish-American Merchant’s Assoc. Authority University of California, Los Angeles New Jersey Transportation Corp. University of California, Santa Barbara New York Metropolitan Transportation Upper Manhattan Empowerment Zone Authority Development Corp. San Diego County Regional Airport Williamsburg Affordable Housing Authority Westside Urban Forum U.S. Dept. of Transportation

Governmental Agencies Housing Agencies Boulder Urban Renewal Authority Chicago Housing Authority City of Berkeley Rent Stabilization Board Community Redevelopment Agency of the City of Beverly Hills City of Los Angeles City of Chester (PA) Cuyahoga Metropolitan Housing Authority City of Columbus (IN) City of Culver City (CA) Detroit Housing Commission City of Detroit Housing Authority of Baltimore City City of Houston Housing Authority of the City of Houston City of Huntington Beach (CA) Housing Authority of the County of Los City of Indianapolis Angeles City of Lancaster Housing Authority of the City of Santa City of Los Angeles Monica City of New York Housing Bureau, City of Long Beach City of Olathe (KS) Indianapolis Housing Authority City of Phoenix Los Angeles Housing Department City of San Luis Obispo (CA) New York City Housing Authority City of Santa Monica New York City Housing Development City of West Hollywood (CA) Corporation City of Yonkers New York State Housing Finance Agency Community Redevelopment Agency of the Omaha Housing Authority (NE) City of Los Angeles Philadelphia Housing Authority Compton Unified School District (CA) Redevelopment Authority of the City of County of Santa Barbara Philadelphia District of Columbia St. Louis Housing Authority (MO) New Jersey Department of Commerce and United States Department of Housing and Economic Development Urban Development

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WHITNEY & WHITNEY, INC. 2876 Anchor Avenue Los Angeles, California USA Tel: 1.310.838.5240; Fax: 1.310.838.7448 e-mail: [email protected]

Whitney & Whitney, Inc. (W&W) is a real estate development advisory services firm located in Los Angeles, California. The company was founded by William H. Whitney, Ph.D. in 1984. After six years of serving the southern California and Hawaii markets, W&W reduced the scope of its activities when Mr. Whitney was recruited by Arthur Andersen to assist their Real Estate and Hospitality/Leisure consulting practices in establishing both a national and international presence.

Mr. Whitney served with Arthur Andersen for over nine years, participating on major real estate and hospitality consulting engagements in over 40 different countries throughout the world. Activities during this period also included starting Arthur Andersen’s Asia/Pacific Region real estate consulting practice in Manila, and spending three years in Andersen’s London offices serving as a resource for the European and Middle East real estate consulting practices.

Following his return to the United States in March 2000 Mr. Whitney has re-activated Whitney & Whitney, Inc. The firm’s major focus is on the provision of real estate consulting services to both public and private clients in the following areas:

 Due diligence services for companies involved with the acquisition and operation of real estate assets;  Participation on multi-disciplinary teams with architects, planners and other design professionals in the planning of resorts, new communities and urban mixed-use projects  Advisory services related to the maximization of returns from corporate real estate assets;  Advisory services related to the maximization of public benefits from proper utilization of public lands;  Market feasibility studies for large scale land development programs, including waterfront projects, shopping centers, resorts, and new communities;  Master planning for large-scale urban parks and open space programs;  Financial feasibility studies for proposed real estate investments;  Negotiation assistance related to the formation and implementation of public/private partnerships;  Fiscal impact, economic impact, cost-revenue and cost-benefit evaluations of proposed real estate development activities for public agencies and private developers;  Valuation/expert witness services related to complex real estate transactions and/or arbitration and litigation proceedings; and  Implementation services related to attaining necessary development entitlements and funding for real estate programs.

W & W’s recent projects include the following: since the early 1990s has served as a real estate economic and financial advisor to the State of Hawaii Aloha Tower Development Corporation related to the redevelopment of the downtown Honolulu waterfront; performed a market and financial analysis of a proposed “high technology” park/mixed-use commercial development program in Dubai, United Arab Emirates known as Dubai Internet City; conducted an analysis of the economic feasibility of converting the 4,700-acre El Toro Marine Corps Air Station to an urban park; conducted an analysis of the redevelopment potentials for tourist-serving projects in the Old City of Shanghai; provided a market analysis of the retail redevelopment potential for the International Market Place in Waikiki for the Queen Emma Foundation; performed an evaluation of redevelopment potentials and the resultant fiscal impacts from conversion of certain industrial lands to retail and other uses for the City of San Jose; provided an evaluation of the market feasibility for residential and commercial retail uses on surplus lands owned by Ohlone Community College, Fremont, California; evaluated the market and financial opportunity for development of a major shopping center near Mililani Town on the Island of Oahu, Hawaii for Forest City; and reviewed the market for office and retail commercial uses near the East Eisenhower Transit Station for the City of Alexandria, Virginia; and a market study for a C. J. Segerstrom & Sons development project

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located near South Coast Plaza in Orange County. Currently, the firm is serving as an advisor to Castle & Cooke on the preparation of a master plan and development strategy for 28,000+/- acres of land located on the North Shore of the Island of Oahu; providing a review of the master plan for the Sa’adiyat Island resort located in Abu Dhabi, United Arab Emirates; and preparing market/financial analyses and a business plan for a proposed destination spa to be located in the Santa Monica Mountains.

Mr. Whitney’s background in the analysis of major shopping center developments and the planning of their adjacent lands supersedes the formation of W & W. He has been conducting investigations of retail development opportunities for nearly 40 years, starting with the re-use of the Chevron properties located in El Segundo and Manhattan Beach that ultimately led to the development of Manhattan Beach Village. One such project, the planning of the Puente Hills Mall and its immediate surrounding lands for the Western Harness Racing Association in 1970, was the inspiration for his doctoral dissertation, “An Investigation of Selected Impacts on Surrounding Lands Which are Generated by Development of Regional Shopping Centers” (UCLA, 1975).

A partial listing of Mr. Whitney’s shopping center experience includes the following:

ERNEST W. HAHN, INC. (NOW TRIZECHAHN): Regional Shopping Center Market Analysis and Economic/Fiscal Impact Studies, California and Washington Conducted numerous market feasibility and economic/fiscal impact studies of proposed regional shopping centers for the Ernest W. Hahn Company, forerunner to TrizecHahn, including analyses for the following existing regional shopping centers: Puente Hills Mall, City of Industry; Mariner’s Island, San Mateo; North County Fair, Escondido; Kelso Mall, Kelso, Washington; and Sierra Vista, Clovis, California.

PSB REALTY CORPORATION: Costa Mesa Courtyards, Costa Mesa, California Performed market and financial feasibility studies for the Costa Mesa Courtyards, a 173,000 square foot shopping center once honored as the “Best Retail Development” in the Western States at the Pacific Coast Builders Conference. The 11-acre project has been an important stimulus to the revitalization of the City of Costa Mesa’s old central business district.

JAMES YOUNGBLOOD, DEVELOPER: The Lumberyard, Encinitas, California Conducted market and financial feasibility studies for the project, a specialty retail center with 80,000 square feet of retail space located in the City of Encinitas. The center has been successfully developed, and has performed at or above initial market expectations.

THE IRVINE COMPANY: Fashion Island and Spectrum Center Impact Studies, Newport Beach and Irvine, California Conducted economic and fiscal impact evaluations of these two major centers as part of their submissions for general plan amendments to the Cities of Newport Beach and Irvine, respectively. The Fashion Island expansion program focused on the interactive benefits that could be generated between the existing and proposed retail uses and the surrounding hotel and office developments; in contrast, the central concern regarding the proposed Spectrum project was its potential sales and property tax generation for the municipality.

LIVERPOOL DEPARTMENT STORE AND THE FRANSEN COMPANY: Regional Shopping Center Market Evaluations, Various Metropolitan Areas, Mexico Conducted detailed investigations of the market opportunities for Liverpool Department Store to serve as an anchor tenant and developer of regional shopping centers throughout Mexico. A number of sites in major metropolitan locations were evaluated, and projections were made of potential store sales and supportable retail space. As of 2001, the study had resulted in one new shopping center currently operating in the Mexico City metro area and a second project under construction.

MITSUI TRUST & BANKING CO., LTD.: Aloha Tower Marketplace, Honolulu, Oahu, Hawaii Provided a market validation study for a festival marketplace that was under construction in downtown Honolulu. The development program, which ultimately became the Aloha Tower marketplace, called for approximately 200,000 square feet of retail and restaurant space at Honolulu Harbors Piers 7, 8 and 9 adjacent to the historic Aloha Tower. The analysis included a thorough examination of each segment of

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the potential customer base and an assessment of the potential expenditure patterns at the center from those identified market segments. The results of the market studies were then utilized to generate sales projections for the center.

THE ROBERTS GROUP: Wood Ranch Development Program, Simi Valley, California Performed an analysis of retail commercial potentials for a major community shopping center located in the Wood Ranch planned community. The study involved a detailed assessment of competitive retail projects found within the immediate market area surrounding Wood Ranch and a determination of market support generated by Wood Ranch residents. The center is open and operating successfully.

A&B HAWAII, INC./VANGUARD PROPERTIES: Triangle Square Factory Stores, Kahului, Maui, Hawaii Provided a market analysis of a proposed factory outlet center in Kahului, Maui near the Kahului Airport. The development program called for 110,000 square feet of retail space to be built at one of Maui’s most important highway junctions. The analysis included an examination of the potential customer base, consideration of the potential expenditure patterns by the major market segments, and a projection of potential sales at the project. The project has been developed and is operating successfully.

CITY OF VISALIA: Regional Shopping Center Location Studies; Visalia, California Served the City of Visalia as market and planning consultants in the evaluation of potential locations for new regional shopping center facilities in the City of Visalia. The analysis included an assessment of the market, fiscal, transportation and other economic and social impacts related to the alternative sites under consideration for the new center.

AMFAC/JMB HAWAII, INC.: Kaanapali North Beach Entertainment / Retail Center Feasibility Studies, Kaanapali, West Maui, Hawaii Provided a detailed assessment of a proposed themed entertainment/retail attraction at North Beach. A number of different retail and entertainment concepts were evaluated for the property, including specialty retail alternatives similar to Whaler’s Village and more elaborate commercial recreation complexes featuring entertainment venues similar to Church Street Station in Orlando, Florida. The major finding of the study was that the most profitable use in terms of land utilization and environmental constraints was a major health spa, as this use generated the highest visitor expenditures per unit of land area and required relatively low market penetration of the existing visitor base.

CASTLE & COOKE PROPERTIES, INC.: Iwilei District Market Feasibility Study, Honolulu, Hawaii Conducted market feasibility studies to provide development guidelines for the redevelopment of the 50- acre Iwilei property. The site is located near downtown Honolulu in an area transitioning from industrial to commercial uses, and was previously occupied by the Dole Cannery. The market analysis concentrated primarily on the market potential for outlet-type retail shopping activities and “bull-pen”-type office space. Major issues raised by the study pertained to the site’s relative accessibility for both local residents and visitors.

CASTLE & COOKE PROPERTIES, INC.: Mililani Town Center Market Assessment, Mililani Town, Oahu, Hawaii Conducted a market analysis of the existing Mililani Town Center, a 166,500 square foot community shopping center located in central Oahu. The primary purposes of the investigation were to first, assess the current market performance of the center given its location, configuration and competitors; second, determine a strategy for expansion of the center to 400,000 square feet of space after giving full consideration to future market positioning, product mix and anchor tenants. Attention also focused on expanding the range of activities at the center to include a variety of service functions in addition to the retail tenants.

CITY OF LAWNDALE: South Bay Galleria Buyout, Redondo Beach, California Provided a financial evaluation of the ownership interest held by the City of Lawndale in the South Bay Galleria, a regional shopping center that was undergoing renovation by Forest City Development Company. The work performed by the consultant formed the basis for the city’s successful sale of its interest in the project to the developer.

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CITY OF PASADENA: Lake/Washington Neighborhood Shopping Center, Pasadena, California Analyzed the development potential for a major new neighborhood shopping center intended to revitalize an older shopping district in Pasadena. The study involved an extensive review of existing businesses in order to assess both the positive and negative impacts of the new facility. The center has been constructed with a supermarket and drug store as the anchor tenants, and has successfully fostered revitalization of the entire district with new commercial development.

MAGUIRE THOMAS PARTNERS: Peter’s Landing Specialty Center, Huntington Harbour, California Provided market and financial consulting services to Peter’s Landing, a specialty retail center and marina complex located in the affluent waterfront residential community of Huntington Harbour. Initially, the focus was on evaluating the market potentials for boat slips and retail and office uses. Later, attention was focused on evaluating the financial trade-offs between retention of the marina as a rental program and sale of the berths under a “dockominium” concept.

THE IRVINE COMPANY: Mervyn’s Retail Location Study, Various Locations, Orange County Assisted The Irvine Company (TIC) in evaluating potential alternative locations for Mervyn’s department stores on various properties owned by TIC. The study considered both the provision of “blanket” coverage by the chain store throughout Orange County with multiple locations as well as an evaluation of specific sites on TIC lands. Presented results of the study to Mervyn’s leadership in Minneapolis.

SAN DIEGO UNIFIED PORT DISTRICT: Embarcadero Master Planning Program Feasibility Studies San Diego, California Performed market studies leading to the establishment of Seaport Village, a leading specialty retail center of about 200,000 square feet located on the San Diego waterfront. Other market and related investigations have led to development of hotel, marina, convention center and cruise ship terminal facilities along the Embarcadero.

CITY OF IRVINE: Retail Commercial Needs Assessment Study, Irvine, California Prepared a retail commercial needs assessment for the City of Irvine that considered the long term demand for and supply of retail commercial space in the community. One of the sites investigated ultimately became the Spectrum specialty/entertainment center. The results of the study were somewhat controversial, as the analysis was critical of a number of the existing and proposed retail locations in the residential villages of Irvine with respect to their long term economic viability.

DAVID HOCKER & ASSOCIATES: Shelter Cove Shopping Centers, Palmetto Dunes, Hilton Head, South Carolina Performed market investigations of the potential for (1) a 200,000 square foot specialty retail shopping center anchored by “downsized” department stores, and a (2) 120,000 square foot convenience retail center. While the convenience center was accepted and completed as originally conceived, there was significant resistance from department stores to the concept of the specialty center in a resort setting because of the low visitation at Hilton Head during the prime Christmas season.

ARROWHEAD REGIONAL DEVELOPMENT COMMISSION: Downtown Duluth Regional Center Evaluation, Duluth, Minnesota Performed a comprehensive economic and fiscal analysis of alternative locations for a regional shopping center in the Duluth region. While the study clearly showed the advantages to the community of utilizing the downtown as a location for the facility, these potential benefits did not convince potential chain retailers that there was sufficient market support for the facility or that the center city location could be successfully “retrofitted” with large quantities of retail space.

NANSAY CORPORATION: Market Assessment of Retail Potentials, Westwood Mixed Use Project Westwood, California Analyzed the market potential for development of a major new retail center in Westwood. The study documented the need for quality retail stores and restaurants in the Westwood area, though the stigma associated with Westwood following several crimes of violence plus the recession of the early 1990s

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effectively doomed the project. Notwithstanding, in recent years Westwood has been rejuvenated on a piecemeal basis with many of the retail activities proposed in the study.

PRUDENTIAL REALTY/MELVIN SIMON COMPANY: Marina Place Economic/Fiscal Impact Study, Culver City, California Provided market assessments and economic and fiscal impact analyses of the proposed Marina Place regional shopping center as part of the consultant team that was successful in obtaining approvals for the proposed development on a 30+/- acre site near Marina del Rey. Unfortunately, regional economic conditions coupled with the decline in performance of traditional department stores led to the project’s demise; the site was developed instead with a Costco department store.

HAWAII OMORI CORPORATION: Lahaina Cannery Shopping Center Evaluation, Lahaina, Maui Performed a series of market evaluations for three properties owned by Hawaii Omori Corporation that were located in the Town of Lahaina, Maui. One of the properties serves as the site for the Lahaina Cannery Shopping Center, an existing 180,000 square foot facility. The study examined the possibility of developing a multi-centered retail complex with both specialty and convenience retail nodes designed to serve the full range of resident and tourist retail needs.

MAUNA LANI RESORT, INC.: Specialty Retail Center Market Studies, Mauna Lani, South Kohala, Big Island of Hawaii Analyzed the market potentials for the development of a specialty retail center at Mauna Lani Resort. The analysis focused on upper-income visitors and their propensities to support specialty retail shops in hotels and at “boutique” centers similar to The Shops at Kapalua. The study identified candidate tenants for the development, provided recommendations regarding store mix, and offered suggestions with respect to the optimum location for the facility within the resort.

ALOHA TOWER DEVELOPMENT CORPORATION: Aloha Tower Development Program, Phases I and II, Honolulu, Hawaii Prepared developer selection criteria and evaluated business terms of proposals for redevelopment of the Aloha Tower complex, a $1 billion redevelopment program for the downtown Honolulu waterfront featuring a “festival market” specialty retail center, the precursor to current “entertainment/retail” projects. The first phase of the project, Aloha Tower Marketplace, was completed in 1994. Following the selection of the preferred developer, Enterprise Development Company, provided leasing advisory services and negotiated the business terms of the lease agreement between parties.

STATE OF HAWAII EMPLOYEES RETIREMENT SYSTEM (ERS): Kaahumanu Regional Center Expansion, Kahului, Maui, Hawaii Provided a market and financial evaluation of the proposed expansion of Kaahumanu Center from 316,600 square feet of gross leasable area (GLA) to 542,600 square feet. The only regional center located on Maui, the property was owned by Maui Land & Pineapple Company, developers of Kapalua Resort. The analysis measured investment returns to the State of Hawaii ERS under a range of future outcomes. Of particular significance were the assessments of potential competitive impacts on the center from Mainland retailers entering the Maui market. The expansion program was successfully completed.

STATE OF HAWAII EMPLOYEES RETIREMENT SYSTEM (ERS): Waikele Shopping Center, Central Oahu, Hawaii Completed a due diligence review of a proposed power center and an outlet mall which were developed on 40+ / - acres of freeway frontage in the Waikele master-planned community. The services provided to the ERS included a review of major sources of demand for retail goods and services, a survey of existing and proposed competitive facilities on Oahu, and a detailed examination of the developer’s proposed tenant mix and pro forma financial projections. Also compared actual leases with the pro-forma rent schedules to ensure that the project would achieve its target levels of return.

QUEEN LILIUOKALANI TRUST/FIRST HAWAIIAN BANK: Mauka Lands Evaluation, Kailua-Kona, Big Island of Hawaii Served the Queen Liliuokalani Trust as market and financial advisors for 1,200 acres of land located in Kailua-Kona on the Big Island of Hawaii. Following its re-classification to urban use by the State Land

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Use Commission, provided assistance to the Trust by performing market studies for the site and reviewing proposals for the first phase of development from shopping center developer candidates. The project has gone forward successfully, and several increments of retail commercial development have been completed.

T & S DEVELOPMENT, INC.: Regional Shopping Center Assessment, Riverside, California Provided a critique of the market study that supported the expansion of the existing Tyler Mall regional shopping center. Also presented a comparative analysis of the economic benefits resulting from the proposed expansion of Tyler Mall with an alternative program to develop a new regional center at Canyon Springs Road.

DONAHUE/SHRIBER AND THE IRVINE COMPANY: Comparative Analysis of Alternative Sites, City of Irvine, California Assisted the shopping center developer and the Irvine Company in evaluating alternative locations for the development of Target department stores. Primary focus was on two sited in the City of Irvine – Interstate-5/Myford and Culver/Barranca. The principal basis for comparison was the demographic characteristics of the primary market areas served by the two locations.

HOMART DEVELOPMENT CORP. (SEARS): Proposed Regional Shopping Center, Eugene, Oregon Evaluated the market potential for a regional shopping center to be located in the Eugene, Oregon metropolitan area. The results of the study suggested that the market was likely too small to absorb the retail space proposed in the Homart project.

THE IRVINE COMPANY: Proposed Regional Shopping Center, Orange County, California Provided a market analysis of the future potentials for a regional shopping center located on Santiago Canyon Road easterly of the City of Orange. The primary purpose of the study was to guide the master planning for the area and make necessary allocations for lands sufficient to accommodate future commercial space requirements.

AHMANSON COMMERCIAL DEVELOPMENT CORPORTATION: Palm Desert Community Shopping Center, Palm Desert, California Performed market and financial feasibility studies for this recently completed community shopping center located on Highway 111 adjacent to the Palm Desert Town Center regional mall. One purpose of the study was to consider a tenant mix that would be able to effectively compete with the regional mall.

LOS ANGELES COUNTY CHIEF ADMINISTRATIVE OFFICE: Civic Center Mall Retail Analysis Civic Center Mall, Los Angeles Evaluated the market potential for specialty retail and service commercial uses at a potential retail location on the Civic Center Mall near the Music Center. The purpose of the facility was to provide for the needs of governmental workers and visitors to County Hall of Administration. Consulting services also included lease negotiations with candidate tenants for the project.

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APPENDIX B

IMPLAN Economic Impact Analysis Results

B-1 Project Construction Impacts a. Employment b. Compensation c. Total Economic Output B-2 Project Annual Operation Impacts a. Employment b. Compensation c. Total Economic Output

Page B-1

APPENDIX B-1(a) The Commons Construction Employment Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum %

38 Commercial and institutional buildings 461.0 0.0 0.0 461.0 58.4% 58.4% 481 Food services and drinking places 0.0 2.0 25.2 27.2 3.4% 61.9% 439 Architectural and engineering services 0.0 24.5 0.8 25.3 3.2% 65.1% 390 Wholesale trade 0.0 6.5 9.3 15.8 2.0% 67.1% 465 Offices of physicians- dentists- and other health 0.0 0.0 12.5 12.5 1.6% 68.7% 454 Employment services 0.0 8.0 4.2 12.2 1.5% 70.2% 410 General merchandise stores 0.0 4.9 5.0 10.0 1.3% 71.5% 405 Food and beverage stores 0.0 4.0 5.7 9.7 1.2% 72.7% 467 Hospitals 0.0 0.0 9.7 9.7 1.2% 73.9% 412 Nonstore retailers 0.0 5.7 2.9 8.6 1.1% 75.0% 431 Real estate 0.0 2.3 5.8 8.1 1.0% 76.1% 401 Motor vehicle and parts dealers 0.0 2.8 4.4 7.2 0.9% 77.0% 468 Nursing and residential care facilities 0.0 0.0 6.8 6.8 0.9% 77.8% 470 Social assistance- except child day care services 0.0 0.0 6.6 6.6 0.8% 78.7% 494 Private households 0.0 0.0 6.0 6.0 0.8% 79.4% 483 Automotive repair and maintenance- except car wash 0.0 0.9 4.9 5.9 0.7% 80.2% 408 Clothing and clothing accessories stores 0.0 2.5 2.6 5.2 0.7% 80.8% 411 Miscellaneous store retailers 0.0 1.7 3.2 4.9 0.6% 81.4% 406 Health and personal care stores 0.0 2.6 2.3 4.8 0.6% 82.1% 462 Colleges- universities- and junior colleges 0.0 0.3 4.3 4.6 0.6% 82.6% 458 Services to buildings and dwellings 0.0 2.1 2.3 4.4 0.6% 83.2% 394 Truck transportation 0.0 2.3 1.8 4.1 0.5% 83.7% 404 Building material and garden supply stores 0.0 1.9 2.1 4.0 0.5% 84.2% 437 Legal services 0.0 1.1 2.7 3.8 0.5% 84.7% 430 Monetary authorities and depository credit interme 0.0 1.0 2.7 3.7 0.5% 85.2% 493 Civic- social- professional and similar organizati 0.0 0.8 2.9 3.6 0.5% 85.7% 427 Insurance carriers 0.0 0.7 2.9 3.6 0.5% 86.1% 469 Child day care services 0.0 0.0 3.6 3.6 0.5% 86.6% 438 Accounting and bookkeeping services 0.0 2.0 1.6 3.6 0.5% 87.0% 426 Securities- commodity contracts- investments 0.0 0.9 2.2 3.1 0.4% 87.4% 451 Management of companies and enterprises 0.0 1.3 1.6 2.9 0.4% 87.8% 478 Other amusement- gambling- and recreation industri 0.0 0.0 2.8 2.8 0.4% 88.1% 466 Other ambulatory health care services 0.0 0.0 2.7 2.7 0.3% 88.5% 402 Furniture and home furnishings stores 0.0 1.2 1.4 2.6 0.3% 88.8% 107 Cut and sew apparel manufacturing 0.0 0.0 2.6 2.6 0.3% 89.1% 461 Elementary and secondary schools 0.0 0.0 2.4 2.4 0.3% 89.4% 479 Hotels and motels- including casino hotels 0.0 0.5 1.8 2.3 0.3% 89.7% 444 Management consulting services 0.0 1.2 1.0 2.2 0.3% 90.0% 487 Personal care services 0.0 0.0 2.1 2.1 0.3% 90.3% 398 Postal service 0.0 0.8 1.3 2.1 0.3% 90.5% 457 Investigation and security services 0.0 1.1 1.0 2.1 0.3% 90.8% 464 Home health care services 0.0 0.0 2.0 2.0 0.3% 91.1% 403 Electronics and appliance stores 0.0 1.0 1.0 2.0 0.3% 91.3% 409 Sporting goods- hobby- book and music stores 0.0 0.5 1.5 2.0 0.3% 91.6% 399 Couriers and messengers 0.0 1.1 0.8 1.9 0.2% 91.8% 463 Other educational services 0.0 0.0 1.8 1.8 0.2% 92.1% 407 Gasoline stations 0.0 0.9 0.9 1.8 0.2% 92.3% 425 Nondepository credit intermediation and related a 0.0 0.8 1.1 1.8 0.2% 92.5% 455 Business support services 0.0 0.7 1.0 1.8 0.2% 92.7% 422 Telecommunications 0.0 0.7 0.9 1.6 0.2% 92.9% 492 Grantmaking and giving and social advocacy organiz 0.0 0.0 1.5 1.5 0.2% 93.1% 447 Advertising and related services 0.0 0.6 0.9 1.5 0.2% 93.3% 472 Spectator sports 0.0 0.2 1.2 1.5 0.2% 93.5% 499 Other State and local government enterprises 0.0 0.3 1.2 1.5 0.2% 93.7% 199 Cut stone and stone product manufacturing 0.0 1.4 0.0 1.5 0.2% 93.9% 476 Fitness and recreational sports centers 0.0 0.2 1.2 1.4 0.2% 94.1% 177 Plastics plumbing fixtures and all other plastics 0.0 1.1 0.3 1.4 0.2% 94.2% 428 Insurance agencies- brokerages- and related 0.0 0.3 1.0 1.3 0.2% 94.4% 489 Drycleaning and laundry services 0.0 0.1 1.2 1.2 0.2% 94.6% 371 Showcases- partitions- shelving- and lockers 0.0 1.2 0.0 1.2 0.2% 94.7% 491 Religious organizations 0.0 0.0 1.2 1.2 0.2% 94.9% 485 Commercial machinery repair and maintenance 0.0 0.9 0.3 1.1 0.1% 95.0% 452 Office administrative services 0.0 0.7 0.4 1.1 0.1% 95.1% 490 Other personal services 0.0 0.0 1.0 1.1 0.1% 95.3% 432 Automotive equipment rental and leasing 0.0 0.3 0.7 1.0 0.1% 95.4% 119 Other millwork- including flooring 0.0 0.9 0.0 0.9 0.1% 95.5% 445 Environmental and other technical consulting servi 0.0 0.7 0.1 0.9 0.1% 95.6% 362 Wood kitchen cabinet and countertop manufacturing 0.0 0.8 0.1 0.9 0.1% 95.8% 397 Scenic and sightseeing transportation and support 0.0 0.4 0.5 0.9 0.1% 95.9% All Other Sectors 0.0 12.6 20.0 32.6 4.1% 100.0% TOTALS 461.0 116.3 211.6 788.9 100.0%

Source: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

Page B-2

APPENDIX B-1(b) The Commons Construction Worker Compensation Impacts in the Los Angeles County Economy (in 2008 $)

IMPLAN Industry Sector Direct* Indirect* Induced* Total* Percentage Cum. %

38 Commercial and institutional buildings $19,145,114 $0 $0 $19,145,114 60.1% 60.1% 439 Architectural and engineering services $0 $1,227,385 $38,108 $1,265,493 4.0% 64.1% 390 Wholesale trade $0 $358,808 $518,887 $877,696 2.8% 6.7% 465 Offices of physicians- dentists- and other health $0 $0 $657,525 $657,525 2.1% 4.8% 467 Hospitals $0 $0 $643,693 $643,693 2.0% 4.1% 481 Food services and drinking places $0 $38,741 $479,422 $518,163 1.6% 3.6% 401 Motor vehicle and parts dealers $0 $149,781 $237,421 $387,202 1.2% 2.8% 405 Food and beverage stores $0 $123,454 $174,639 $298,093 0.9% 2.2% 426 Securities- commodity contracts- investments $0 $81,186 $209,952 $291,137 0.9% 1.8% 451 Management of companies and enterprises $0 $133,428 $154,106 $287,534 0.9% 1.8% 454 Employment services $0 $183,606 $96,216 $279,822 0.9% 1.8% 427 Insurance carriers $0 $55,747 $215,924 $271,671 0.9% 1.7% 410 General merchandise stores $0 $125,674 $127,391 $253,065 0.8% 1.6% 437 Legal services $0 $71,782 $173,107 $244,890 0.8% 1.6% 430 Monetary authorities and depository credit interme $0 $60,665 $161,371 $222,037 0.7% 1.5% 468 Nursing and residential care facilities $0 $0 $191,656 $191,656 0.6% 1.3% 425 Nondepository credit intermediation and related a $0 $70,853 $98,384 $169,237 0.5% 1.1% 406 Health and personal care stores $0 $89,453 $78,760 $168,213 0.5% 1.1% 499 Other State and local government enterprises $0 $26,820 $123,522 $150,342 0.5% 1.0% 462 Colleges- universities- and junior colleges $0 $8,856 $141,049 $149,905 0.5% 0.9% 404 Building material and garden supply stores $0 $70,383 $78,361 $148,745 0.5% 0.9% 470 Social assistance- except child day care services $0 $19 $144,025 $144,045 0.5% 0.9% 408 Clothing and clothing accessories stores $0 $69,132 $72,363 $141,495 0.4% 0.9% 493 Civic- social- professional and similar organizati $0 $29,670 $110,219 $139,889 0.4% 0.9% 483 Automotive repair and maintenance- except car wash $0 $22,132 $115,841 $137,973 0.4% 0.9% 394 Truck transportation $0 $73,447 $57,171 $130,618 0.4% 0.8% 438 Accounting and bookkeeping services $0 $69,682 $57,633 $127,315 0.4% 0.8% 431 Real estate $0 $36,188 $90,491 $126,678 0.4% 0.8% 398 Postal service $0 $47,433 $71,891 $119,324 0.4% 0.8% 466 Other ambulatory health care services $0 $111 $118,504 $118,615 0.4% 0.7% 412 Nonstore retailers $0 $76,147 $38,356 $114,503 0.4% 0.7% 422 Telecommunications $0 $49,272 $64,027 $113,299 0.4% 0.7% 444 Management consulting services $0 $58,584 $49,801 $108,384 0.3% 0.7% 403 Electronics and appliance stores $0 $49,307 $47,688 $96,995 0.3% 0.6% 458 Services to buildings and dwellings $0 $45,950 $48,293 $94,243 0.3% 0.6% 411 Miscellaneous store retailers $0 $32,172 $59,413 $91,585 0.3% 0.6% 402 Furniture and home furnishings stores $0 $41,110 $47,088 $88,197 0.3% 0.6% 428 Insurance agencies- brokerages- and related $0 $17,862 $69,728 $87,590 0.3% 0.6% 107 Cut and sew apparel manufacturing $0 $206 $82,329 $82,535 0.3% 0.5% 478 Other amusement- gambling- and recreation industri $0 $257 $77,831 $78,088 0.2% 0.5% 461 Elementary and secondary schools $0 $0 $76,094 $76,094 0.2% 0.5% 447 Advertising and related services $0 $31,595 $43,457 $75,052 0.2% 0.5% 479 Hotels and motels- including casino hotels $0 $14,761 $58,269 $73,029 0.2% 0.5% 177 Plastics plumbing fixtures and all other plastics $0 $54,822 $14,997 $69,819 0.2% 0.4% 452 Office administrative services $0 $42,626 $23,235 $65,860 0.2% 0.4% 492 Grantmaking and giving and social advocacy organiz $0 $0 $65,727 $65,727 0.2% 0.4% 397 Scenic and sightseeing transportation and support $0 $24,581 $34,692 $59,273 0.2% 0.4% 464 Home health care services $0 $0 $59,239 $59,239 0.2% 0.4% 497 State and local government passenger transit $0 $7,461 $51,156 $58,617 0.2% 0.4% 399 Couriers and messengers $0 $33,229 $24,372 $57,600 0.2% 0.4% 199 Cut stone and stone product manufacturing $0 $57,038 $431 $57,470 0.2% 0.4% 455 Business support services $0 $23,395 $33,560 $56,955 0.2% 0.4% 409 Sporting goods- hobby- book and music stores $0 $14,370 $40,656 $55,026 0.2% 0.4% 418 Motion picture and video industries $0 $10,095 $44,679 $54,774 0.2% 0.3% 407 Gasoline stations $0 $26,141 $28,161 $54,302 0.2% 0.3% 469 Child day care services $0 $0 $54,102 $54,102 0.2% 0.3% 494 Private households $0 $0 $52,940 $52,940 0.2% 0.3% 371 Showcases- partitions- shelving- and lockers $0 $51,614 $698 $52,312 0.2% 0.3% 391 Air transportation $0 $11,527 $38,944 $50,471 0.2% 0.3% 463 Other educational services $0 $712 $48,482 $49,195 0.2% 0.3% 142 Petroleum refineries $0 $28,172 $17,712 $45,884 0.1% 0.3% 457 Investigation and security services $0 $22,150 $21,402 $43,552 0.1% 0.3% 19 Oil and gas extraction $0 $24,351 $18,892 $43,243 0.1% 0.3% 485 Commercial machinery repair and maintenance $0 $31,934 $9,571 $41,505 0.1% 0.3% 30 Power generation and supply $0 $11,267 $29,243 $40,510 0.1% 0.3% 420 Radio and television broadcasting $0 $15,467 $24,874 $40,341 0.1% 0.3% 400 Warehousing and storage $0 $16,553 $22,870 $39,423 0.1% 0.3% 362 Wood kitchen cabinet and countertop manufacturing $0 $33,984 $4,512 $38,496 0.1% 0.2% 487 Personal care services $0 $0 $37,464 $37,464 0.1% 0.2% 445 Environmental and other technical consulting servi $0 $30,605 $5,836 $36,441 0.1% 0.2% 434 Machinery and equipment rental and leasing $0 $30,459 $5,154 $35,613 0.1% 0.2% All Other Sectors $0 $561,206 $887,764 $1,448,970 4.5% 4.7% TOTALS $19,145,114 $4,805,419 $7,901,368 $31,851,900 100.0%

Source: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

P age B-3

APPENDIX B-1(c) The Commons Construction Total Economic Output Impacts in the Los Angeles County Economy (in 2008 $)

IMPLAN Industry Sector Direct* Indirect* Induced* Total* Percentage Cum. %

38 Commercial and institutional buildings $51,999,996 $0 $0 $51,999,996 54.7% 54.7% 439 Architectural and engineering services $0 $3,003,641 $93,258 $3,096,899 3.3% 58.0% 509 Owner-occupied dwellings $0 $0 $2,945,787 $2,945,787 3.1% 61.1% 390 Wholesale trade $0 $1,079,013 $1,560,405 $2,639,418 2.8% 63.8% 431 Real estate $0 $489,798 $1,224,786 $1,714,584 1.8% 65.6% 481 Food services and drinking places $0 $114,543 $1,417,465 $1,532,009 1.6% 67.2% 465 Offices of physicians- dentists- and other health $0 $0 $1,433,269 $1,433,269 1.5% 68.7% 142 Petroleum refineries $0 $827,669 $520,351 $1,348,020 1.4% 70.2% 467 Hospitals $0 $0 $1,256,133 $1,256,133 1.3% 71.5% 427 Insurance carriers $0 $204,927 $793,739 $998,666 1.1% 72.5% 430 Monetary authorities and depository credit interme $0 $264,407 $703,330 $967,737 1.0% 73.6% 401 Motor vehicle and parts dealers $0 $366,538 $581,008 $947,545 1.0% 74.6% 405 Food and beverage stores $0 $321,312 $454,529 $775,842 0.8% 75.4% 422 Telecommunications $0 $323,361 $420,196 $743,557 0.8% 76.2% 412 Nonstore retailers $0 $455,396 $229,388 $684,784 0.7% 76.9% 410 General merchandise stores $0 $310,513 $314,755 $625,268 0.7% 77.5% 451 Management of companies and enterprises $0 $287,910 $332,529 $620,439 0.7% 78.2% 437 Legal services $0 $181,594 $437,926 $619,520 0.7% 78.8% 426 Securities- commodity contracts- investments $0 $148,518 $384,078 $532,595 0.6% 79.4% 394 Truck transportation $0 $293,646 $228,571 $522,217 0.5% 79.9% 483 Automotive repair and maintenance- except car wash $0 $83,726 $438,226 $521,952 0.5% 80.5% 408 Clothing and clothing accessories stores $0 $252,457 $264,253 $516,711 0.5% 81.0% 499 Other State and local government enterprises $0 $79,224 $364,870 $444,093 0.5% 81.5% 404 Building material and garden supply stores $0 $197,131 $219,476 $416,606 0.4% 81.9% 466 Other ambulatory health care services $0 $389 $414,212 $414,600 0.4% 82.4% 425 Nondepository credit intermediation and related a $0 $171,563 $238,226 $409,789 0.4% 82.8% 406 Health and personal care stores $0 $204,509 $180,062 $384,572 0.4% 83.2% 107 Cut and sew apparel manufacturing $0 $941 $376,392 $377,333 0.4% 83.6% 454 Employment services $0 $244,454 $128,103 $372,557 0.4% 84.0% 438 Accounting and bookkeeping services $0 $184,016 $152,195 $336,211 0.4% 84.4% 468 Nursing and residential care facilities $0 $0 $333,194 $333,194 0.4% 84.7% 407 Gasoline stations $0 $156,595 $168,697 $325,292 0.3% 85.0% 160 Pharmaceutical and medicine manufacturing $0 $272 $323,391 $323,662 0.3% 85.4% 19 Oil and gas extraction $0 $172,453 $133,790 $306,243 0.3% 85.7% 462 Colleges- universities- and junior colleges $0 $16,781 $267,272 $284,053 0.3% 86.0% 444 Management consulting services $0 $152,355 $129,513 $281,867 0.3% 86.3% 177 Plastics plumbing fixtures and all other plastics $0 $219,832 $60,137 $279,969 0.3% 86.6% 402 Furniture and home furnishings stores $0 $129,383 $148,197 $277,580 0.3% 86.9% 434 Machinery and equipment rental and leasing $0 $231,827 $39,225 $271,052 0.3% 87.2% 478 Other amusement- gambling- and recreation industri $0 $876 $265,491 $266,367 0.3% 87.5% 470 Social assistance- except child day care services $0 $35 $260,033 $260,068 0.3% 87.7% 31 Natural gas distribution $0 $53,726 $199,071 $252,797 0.3% 88.0% 458 Services to buildings and dwellings $0 $121,799 $128,008 $249,808 0.3% 88.3% 411 Miscellaneous store retailers $0 $86,292 $159,357 $245,649 0.3% 88.5% 421 Cable networks and program distribution $0 $39,670 $199,681 $239,351 0.3% 88.8% 30 Power generation and supply $0 $64,927 $168,507 $233,434 0.2% 89.0% 452 Office administrative services $0 $144,278 $78,643 $222,921 0.2% 89.2% 447 Advertising and related services $0 $93,256 $128,266 $221,522 0.2% 89.5% 428 Insurance agencies- brokerages- and related $0 $44,757 $174,722 $219,479 0.2% 89.7% 479 Hotels and motels- including casino hotels $0 $44,333 $175,009 $219,342 0.2% 89.9% 432 Automotive equipment rental and leasing $0 $66,941 $147,379 $214,320 0.2% 90.2% 490 Other personal services $0 $7,458 $195,343 $202,801 0.2% 90.4% 485 Commercial machinery repair and maintenance $0 $143,011 $42,860 $185,872 0.2% 90.6% 371 Showcases- partitions- shelving- and lockers $0 $179,803 $2,433 $182,235 0.2% 90.8% 403 Electronics and appliance stores $0 $92,061 $89,037 $181,099 0.2% 91.0% 450 All other miscellaneous professional and technical $0 $96,094 $79,701 $175,795 0.2% 91.1% 429 Funds- trusts- and other financial vehicles $0 $5,738 $169,115 $174,853 0.2% 91.3% 291 Elevator and moving stairway manufacturing $0 $170,839 $211 $171,050 0.2% 91.5% 391 Air transportation $0 $37,293 $126,000 $163,293 0.2% 91.7% 418 Motion picture and video industries $0 $29,270 $129,548 $158,817 0.2% 91.8% 119 Other millwork- including flooring $0 $151,226 $5,842 $157,068 0.2% 92.0% 199 Cut stone and stone product manufacturing $0 $153,816 $1,163 $154,980 0.2% 92.2% 398 Postal service $0 $61,276 $92,872 $154,148 0.2% 92.3% 469 Child day care services $0 $0 $153,455 $153,455 0.2% 92.5% 491 Religious organizations $0 $0 $146,129 $146,129 0.2% 92.7% 409 Sporting goods- hobby- book and music stores $0 $36,618 $103,599 $140,218 0.1% 92.8% 455 Business support services $0 $55,141 $79,098 $134,238 0.1% 92.9% 399 Couriers and messengers $0 $76,832 $56,352 $133,184 0.1% 93.1% 445 Environmental and other technical consulting servi $0 $111,829 $21,323 $133,153 0.1% 93.2% 464 Home health care services $0 $0 $127,762 $127,762 0.1% 93.4% 190 Glass and glass products- except glass containers $0 $105,927 $18,576 $124,503 0.1% 93.5% All Other Sectors $0 $2,255,677 $3,936,359 $6,192,036 6.5% 100.0% TOTALS $51,999,996 $15,701,493 $27,371,881 $95,073,370 100.0%

Source: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

P age B-4

APPENDIX B-2(a) The Commons Operations Employment Impacts in the Los Angeles County Economy

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum. %

410 General merchandise stores 356.8 0.8 4.2 361.8 39.0% 39.0% 481 Food services and drinking places 158.2 3.8 15.1 177.1 19.1% 58.1% 405 Food and beverage stores 146.8 0.8 4.2 151.7 16.4% 74.5% 404 Building material and garden supply stores 17.9 0.4 1.7 19.9 2.1% 76.7% 431 Real estate 0.0 11.4 4.3 15.7 1.7% 78.3% 454 Employment services 0.0 9.4 3.1 12.5 1.3% 79.7% 390 Wholesale trade 0.0 4.5 6.5 11.0 1.2% 80.9% 451 Management of companies and enterprises 0.0 7.8 1.0 8.8 1.0% 81.8% 465 Offices of physicians- dentists- and other health 0.0 0.0 8.4 8.4 0.9% 82.7% 467 Hospitals 0.0 0.0 6.7 6.7 0.7% 83.5% 470 Social assistance- except child day care services 0.0 0.0 4.9 4.9 0.5% 84.0% 447 Advertising and related services 0.0 4.2 0.6 4.8 0.5% 84.5% 494 Private households 0.0 0.0 4.8 4.8 0.5% 85.0% 458 Services to buildings and dwellings 0.0 3.3 1.4 4.7 0.5% 85.5% 438 Accounting and bookkeeping services 0.0 3.5 1.1 4.5 0.5% 86.0% 468 Nursing and residential care facilities 0.0 0.0 4.0 4.0 0.4% 86.5% 401 Motor vehicle and parts dealers 0.0 0.6 3.2 3.8 0.4% 86.9% 462 Colleges- universities- and junior colleges 0.0 0.3 3.4 3.7 0.4% 87.3% 444 Management consulting services 0.0 2.8 0.7 3.6 0.4% 87.6% 425 Nondepository credit intermediation and related a 0.0 2.7 0.9 3.6 0.4% 88.0% 399 Couriers and messengers 0.0 2.9 0.5 3.5 0.4% 88.4% 437 Legal services 0.0 1.6 1.6 3.3 0.4% 88.8% 479 Hotels and motels- including casino hotels 0.0 1.6 1.5 3.0 0.3% 89.1% 398 Postal service 0.0 2.1 0.8 3.0 0.3% 89.4% 412 Nonstore retailers 0.0 0.5 2.2 2.7 0.3% 89.7% 430 Monetary authorities and depository credit interme 0.0 1.1 1.6 2.7 0.3% 90.0% 408 Clothing and clothing accessories stores 0.0 0.4 2.3 2.6 0.3% 90.3% 411 Miscellaneous store retailers 0.0 0.4 2.2 2.6 0.3% 90.6% 457 Investigation and security services 0.0 2.0 0.6 2.5 0.3% 90.8% 400 Warehousing and storage 0.0 2.2 0.3 2.5 0.3% 91.1% 426 Securities- commodity contracts- investments 0.0 0.8 1.6 2.4 0.3% 91.4% 455 Business support services 0.0 1.8 0.6 2.4 0.3% 91.6% 493 Civic- social- professional and similar organizati 0.0 0.7 1.7 2.4 0.3% 91.9% 394 Truck transportation 0.0 1.2 1.2 2.4 0.3% 92.1% 469 Child day care services 0.0 0.0 2.4 2.4 0.3% 92.4% 483 Automotive repair and maintenance- except car wash 0.0 0.5 1.8 2.2 0.2% 92.6% 472 Spectator sports 0.0 1.4 0.8 2.2 0.2% 92.9% 406 Health and personal care stores 0.0 0.4 1.8 2.2 0.2% 93.1% 427 Insurance carriers 0.0 0.4 1.7 2.2 0.2% 93.3% 466 Other ambulatory health care services 0.0 0.0 2.0 2.0 0.2% 93.6% 107 Cut and sew apparel manufacturing 0.0 0.0 1.7 1.8 0.2% 93.7% 478 Other amusement- gambling- and recreation industri 0.0 0.1 1.6 1.7 0.2% 93.9% 422 Telecommunications 0.0 1.0 0.7 1.6 0.2% 94.1% 461 Elementary and secondary schools 0.0 0.0 1.6 1.6 0.2% 94.3% 499 Other State and local government enterprises 0.0 0.7 0.9 1.6 0.2% 94.5% 43 Maintenance and repair of nonresidential buildings 0.0 1.2 0.3 1.5 0.2% 94.6% 487 Personal care services 0.0 0.0 1.5 1.5 0.2% 94.8% 464 Home health care services 0.0 0.0 1.4 1.4 0.2% 94.9% 463 Other educational services 0.0 0.1 1.3 1.4 0.2% 95.1% 439 Architectural and engineering services 0.0 0.9 0.5 1.4 0.2% 95.2% 471 Performing arts companies 0.0 1.0 0.4 1.3 0.1% 95.4% 489 Drycleaning and laundry services 0.0 0.6 0.8 1.3 0.1% 95.5% 409 Sporting goods- hobby- book and music stores 0.0 0.2 1.1 1.3 0.1% 95.7% 402 Furniture and home furnishings stores 0.0 0.2 1.0 1.3 0.1% 95.8% 459 Other support services 0.0 1.0 0.3 1.2 0.1% 95.9% 476 Fitness and recreational sports centers 0.0 0.3 0.9 1.2 0.1% 96.1% 442 Computer systems design services 0.0 0.9 0.3 1.1 0.1% 96.2% 452 Office administrative services 0.0 0.9 0.3 1.1 0.1% 96.3% 73 Bread and bakery product- except frozen- manufactu 0.0 0.7 0.3 1.0 0.1% 96.4% 139 Commercial printing 0.0 0.9 0.2 1.0 0.1% 96.5% 498 State and local government electric utilities 0.0 0.6 0.4 1.0 0.1% 96.6% 420 Radio and television broadcasting 0.0 0.9 0.1 1.0 0.1% 96.8% 492 Grantmaking and giving and social advocacy organiz 0.0 0.0 1.0 1.0 0.1% 96.9% 418 Motion picture and video industries 0.0 0.6 0.3 0.9 0.1% 97.0% 395 Transit and ground passenger transportation 0.0 0.4 0.5 0.9 0.1% 97.1% 403 Electronics and appliance stores 0.0 0.2 0.7 0.9 0.1% 97.2% 407 Gasoline stations 0.0 0.2 0.7 0.9 0.1% 97.3% 428 Insurance agencies- brokerages- and related 0.0 0.2 0.7 0.8 0.1% 97.3% 432 Automotive equipment rental and leasing 0.0 0.3 0.4 0.8 0.1% 97.4% 490 Other personal services 0.0 0.1 0.6 0.7 0.1% 97.5% 491 Religious organizations 0.0 0.0 0.7 0.7 0.1% 97.6% 440 Specialized design services 0.0 0.5 0.1 0.7 0.1% 97.6% All Other Sectors 0.4 10.9 10.5 21.8 2.4% 100.0% Totals 680.0 103.6 143.3 927.0 100.0%

Sources: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

P age B-5

APPENDIX B-2(b) The Commons Operations Worker Compensation Impacts in the Los Angeles County Economy (in 2007 $)

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum. %

410 General merchandise stores $9,243,552 $20,419 $108,946 $9,372,918 33.6% 33.6% 405 Food and beverage stores $4,506,061 $24,006 $127,921 $4,657,988 16.7% 50.2% 481 Food services and drinking places $3,148,893 $76,563 $299,935 $3,525,391 12.6% 62.8% 451 Management of companies and enterprises $0 $846,064 $112,097 $958,162 3.4% 66.3% 404 Building material and garden supply stores $674,001 $14,027 $63,407 $751,435 2.7% 69.0% 390 Wholesale trade $0 $262,132 $379,642 $641,775 2.3% 71.3% 467 Hospitals $0 $0 $475,922 $475,922 1.7% 73.0% 465 Offices of physicians- dentists- and other health $0 $0 $454,356 $454,356 1.6% 74.6% 425 Nondepository credit intermediation and related a $0 $229,129 $76,110 $305,239 1.1% 75.7% 454 Employment services $0 $210,603 $68,658 $279,261 1.0% 76.7% 447 Advertising and related services $0 $226,629 $30,810 $257,439 0.9% 77.6% 426 Securities- commodity contracts- investments $0 $79,428 $158,833 $238,261 0.9% 78.5% 431 Real estate $0 $167,358 $62,860 $230,218 0.8% 79.3% 437 Legal services $0 $106,081 $105,488 $211,569 0.8% 80.0% 401 Motor vehicle and parts dealers $0 $32,304 $173,543 $205,847 0.7% 80.8% 430 Monetary authorities and depository credit interme $0 $75,367 $113,715 $189,082 0.7% 81.5% 438 Accounting and bookkeeping services $0 $139,114 $42,116 $181,230 0.6% 82.1% 427 Insurance carriers $0 $33,631 $140,367 $173,999 0.6% 82.7% 444 Management consulting services $0 $138,220 $35,274 $173,494 0.6% 83.3% 398 Postal service $0 $114,901 $44,436 $159,336 0.6% 83.9% 462 Colleges- universities- and junior colleges $0 $10,932 $117,161 $128,093 0.5% 84.4% 400 Warehousing and storage $0 $108,018 $15,901 $123,919 0.4% 84.8% 498 State and local government electric utilities $0 $74,978 $48,780 $123,758 0.4% 85.3% 499 Other State and local government enterprises $0 $53,499 $69,167 $122,666 0.4% 85.7% 468 Nursing and residential care facilities $0 $0 $121,260 $121,260 0.4% 86.1% 420 Radio and television broadcasting $0 $101,594 $15,930 $117,524 0.4% 86.6% 458 Services to buildings and dwellings $0 $75,082 $32,975 $108,056 0.4% 86.9% 422 Telecommunications $0 $62,360 $44,461 $106,821 0.4% 87.3% 479 Hotels and motels- including casino hotels $0 $53,159 $50,816 $103,974 0.4% 87.7% 399 Couriers and messengers $0 $85,944 $15,599 $101,544 0.4% 88.1% 470 Social assistance- except child day care services $0 $64 $101,174 $101,238 0.4% 88.4% 493 Civic- social- professional and similar organizati $0 $27,297 $67,438 $94,735 0.3% 88.8% 466 Other ambulatory health care services $0 $138 $87,830 $87,968 0.3% 89.1% 418 Motion picture and video industries $0 $54,809 $30,504 $85,313 0.3% 89.4% 455 Business support services $0 $63,478 $20,570 $84,047 0.3% 89.7% 439 Architectural and engineering services $0 $52,493 $28,780 $81,274 0.3% 90.0% 406 Health and personal care stores $0 $14,483 $63,555 $78,037 0.3% 90.3% 394 Truck transportation $0 $37,610 $36,914 $74,524 0.3% 90.5% 452 Office administrative services $0 $54,995 $18,710 $73,705 0.3% 90.8% 43 Maintenance and repair of nonresidential buildings $0 $54,315 $14,522 $68,838 0.2% 91.0% 408 Clothing and clothing accessories stores $0 $9,766 $56,042 $65,809 0.2% 91.3% 107 Cut and sew apparel manufacturing $0 $494 $60,580 $61,074 0.2% 91.5% 428 Insurance agencies- brokerages- and related $0 $11,189 $47,277 $58,466 0.2% 91.7% 461 Elementary and secondary schools $0 $0 $56,697 $56,697 0.2% 91.9% 483 Automotive repair and maintenance- except car wash $0 $12,174 $44,103 $56,278 0.2% 92.1% 139 Commercial printing $0 $46,969 $9,250 $56,219 0.2% 92.3% 30 Power generation and supply $0 $32,807 $22,012 $54,819 0.2% 92.5% 457 Investigation and security services $0 $42,006 $12,608 $54,614 0.2% 92.7% 442 Computer systems design services $0 $39,159 $12,650 $51,809 0.2% 92.9% 472 Spectator sports $0 $30,868 $18,935 $49,803 0.2% 93.1% 411 Miscellaneous store retailers $0 $7,854 $41,904 $49,758 0.2% 93.2% 478 Other amusement- gambling- and recreation industri $0 $2,927 $46,740 $49,667 0.2% 93.4% 492 Grantmaking and giving and social advocacy organiz $0 $0 $49,391 $49,391 0.2% 93.6% 397 Scenic and sightseeing transportation and support $0 $22,909 $24,592 $47,501 0.2% 93.8% 471 Performing arts companies $0 $33,953 $13,302 $47,255 0.2% 93.9% 402 Furniture and home furnishings stores $0 $8,301 $36,763 $45,064 0.2% 94.1% 459 Other support services $0 $35,029 $9,005 $44,034 0.2% 94.2% 403 Electronics and appliance stores $0 $9,038 $34,955 $43,994 0.2% 94.4% 73 Bread and bakery product- except frozen- manufactu $0 $29,777 $13,659 $43,435 0.2% 94.6% 494 Private households $0 $0 $41,664 $41,664 0.1% 94.7% 412 Nonstore retailers $0 $7,406 $34,019 $41,425 0.1% 94.9% 464 Home health care services $0 $0 $40,141 $40,141 0.1% 95.0% 463 Other educational services $0 $2,736 $36,067 $38,803 0.1% 95.1% 469 Child day care services $0 $0 $37,623 $37,623 0.1% 95.3% 391 Air transportation $0 $15,430 $19,248 $34,678 0.1% 95.4% 414 Periodical publishers $0 $27,121 $7,515 $34,636 0.1% 95.5% 409 Sporting goods- hobby- book and music stores $0 $5,448 $27,337 $32,785 0.1% 95.6% 460 Waste management and remediation services $0 $23,452 $9,074 $32,526 0.1% 95.8% 19 Oil and gas extraction $0 $17,047 $13,982 $31,029 0.1% 95.9% 497 State and local government passenger transit $0 $11,847 $18,196 $30,043 0.1% 96.0% 489 Drycleaning and laundry services $0 $12,296 $17,058 $29,354 0.1% 96.1% 473 Independent artists- writers- and performers $0 $21,824 $7,309 $29,133 0.1% 96.2% All Other Sectors $13,989 $491,683 $559,352 $1,065,024 3.8% 100.0% Totals $17,586,495 $4,792,734 $5,555,534 $27,934,764 100.0%

Sources: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

P age B-6

APPENDIX B-2(c) Lane Ranch Operations Total Economic Output Impacts in the Los Angeles County Economy (in 2007 $)

IMPLAN Industry Sector Direct Indirect Induced Total Percentage Cum. %

410 General merchandise stores $22,121,292 $48,867 $260,724 $22,430,882 27.8% 27.8% 405 Food and beverage stores $11,266,334 $60,020 $319,837 $11,646,192 14.4% 42.2% 481 Food services and drinking places $9,246,496 $224,821 $880,738 $10,352,055 12.8% 55.1% 431 Real estate $0 $2,379,559 $893,769 $3,273,328 4.1% 59.1% 509 Owner-occupied dwellings $0 $0 $2,214,572 $2,214,572 2.7% 61.9% 404 Building material and garden supply stores $1,839,690 $38,287 $173,069 $2,051,046 2.5% 64.4% 451 Management of companies and enterprises $0 $1,757,410 $232,844 $1,990,254 2.5% 66.9% 390 Wholesale trade $0 $782,421 $1,133,168 $1,915,589 2.4% 69.3% 142 Petroleum refineries $0 $639,027 $505,826 $1,144,853 1.4% 70.7% 465 Offices of physicians- dentists- and other health $0 $0 $1,003,227 $1,003,227 1.2% 71.9% 467 Hospitals $0 $0 $915,101 $915,101 1.1% 73.0% 430 Monetary authorities and depository credit interme $0 $326,631 $492,821 $819,452 1.0% 74.1% 447 Advertising and related services $0 $667,528 $90,750 $758,278 0.9% 75.0% 425 Nondepository credit intermediation and related a $0 $556,904 $184,987 $741,891 0.9% 75.9% 422 Telecommunications $0 $377,648 $269,251 $646,899 0.8% 76.7% 427 Insurance carriers $0 $121,423 $506,784 $628,206 0.8% 77.5% 498 State and local government electric utilities $0 $351,031 $228,379 $579,410 0.7% 78.2% 437 Legal services $0 $274,446 $272,910 $547,356 0.7% 78.9% 401 Motor vehicle and parts dealers $0 $77,518 $416,441 $493,959 0.6% 79.5% 444 Management consulting services $0 $387,209 $98,817 $486,026 0.6% 80.1% 438 Accounting and bookkeeping services $0 $369,178 $111,766 $480,944 0.6% 80.7% 421 Cable networks and program distribution $0 $284,474 $182,550 $467,024 0.6% 81.3% 499 Other State and local government enterprises $0 $194,819 $251,879 $446,698 0.6% 81.8% 426 Securities- commodity contracts- investments $0 $144,197 $288,351 $432,547 0.5% 82.4% 454 Employment services $0 $279,836 $91,228 $371,063 0.5% 82.8% 30 Power generation and supply $0 $214,153 $143,690 $357,843 0.4% 83.3% 394 Truck transportation $0 $157,646 $154,726 $312,372 0.4% 83.7% 466 Other ambulatory health care services $0 $490 $311,409 $311,898 0.4% 84.1% 479 Hotels and motels- including casino hotels $0 $157,697 $150,745 $308,442 0.4% 84.4% 458 Services to buildings and dwellings $0 $196,135 $86,139 $282,274 0.3% 84.8% 420 Radio and television broadcasting $0 $235,794 $36,973 $272,767 0.3% 85.1% 107 Cut and sew apparel manufacturing $0 $2,072 $254,055 $256,127 0.3% 85.4% 31 Natural gas distribution $0 $112,572 $140,726 $253,298 0.3% 85.8% 452 Office administrative services $0 $183,151 $62,311 $245,463 0.3% 86.1% 68 Meat processed from carcasses $0 $172,054 $72,833 $244,887 0.3% 86.4% 412 Nonstore retailers $0 $43,266 $198,734 $242,000 0.3% 86.7% 408 Clothing and clothing accessories stores $0 $35,493 $203,667 $239,160 0.3% 87.0% 462 Colleges- universities- and junior colleges $0 $20,291 $217,477 $237,769 0.3% 87.3% 418 Motion picture and video industries $0 $151,706 $84,433 $236,139 0.3% 87.6% 399 Couriers and messengers $0 $197,140 $35,782 $232,921 0.3% 87.8% 436 Lessors of nonfinancial intangible assets $0 $172,652 $51,950 $224,602 0.3% 88.1% 43 Maintenance and repair of nonresidential buildings $0 $174,278 $46,597 $220,875 0.3% 88.4% 468 Nursing and residential care facilities $0 $0 $212,379 $212,379 0.3% 88.7% 19 Oil and gas extraction $0 $115,206 $94,493 $209,698 0.3% 88.9% 160 Pharmaceutical and medicine manufacturing $0 $137 $208,346 $208,483 0.3% 89.2% 398 Postal service $0 $149,947 $57,989 $207,936 0.3% 89.4% 400 Warehousing and storage $0 $178,249 $26,240 $204,489 0.3% 89.7% 483 Automotive repair and maintenance- except car wash $0 $43,759 $158,520 $202,279 0.3% 89.9% 439 Architectural and engineering services $0 $128,728 $70,577 $199,305 0.2% 90.2% 455 Business support services $0 $146,274 $47,400 $193,674 0.2% 90.4% 470 Social assistance- except child day care services $0 $114 $182,251 $182,366 0.2% 90.6% 450 All other miscellaneous professional and technical $0 $111,857 $65,035 $176,892 0.2% 90.9% 406 Health and personal care stores $0 $32,727 $143,619 $176,346 0.2% 91.1% 73 Bread and bakery product- except frozen- manufactu $0 $116,486 $53,433 $169,919 0.2% 91.3% 459 Other support services $0 $130,930 $33,657 $164,587 0.2% 91.5% 478 Other amusement- gambling- and recreation industri $0 $9,181 $146,583 $155,764 0.2% 91.7% 62 Fluid milk manufacturing $0 $102,475 $51,141 $153,616 0.2% 91.9% 428 Insurance agencies- brokerages- and related $0 $27,916 $117,957 $145,872 0.2% 92.1% 407 Gasoline stations $0 $25,957 $119,184 $145,141 0.2% 92.2% 402 Furniture and home furnishings stores $0 $25,351 $112,278 $137,629 0.2% 92.4% 429 Funds- trusts- and other financial vehicles $0 $790 $136,613 $137,403 0.2% 92.6% 490 Other personal services $0 $15,248 $118,971 $134,219 0.2% 92.8% 432 Automotive equipment rental and leasing $0 $58,157 $71,021 $129,178 0.2% 92.9% 411 Miscellaneous store retailers $0 $18,894 $100,812 $119,707 0.1% 93.1% 64 Cheese manufacturing $0 $91,096 $28,012 $119,108 0.1% 93.2% 493 Civic- social- professional and similar organizati $0 $34,157 $84,386 $118,542 0.1% 93.4% 414 Periodical publishers $0 $91,983 $25,488 $117,471 0.1% 93.5% 391 Air transportation $0 $47,311 $59,019 $106,330 0.1% 93.6% 139 Commercial printing $0 $87,742 $17,281 $105,023 0.1% 93.8% 71 Seafood product preparation and packaging $0 $89,804 $15,163 $104,967 0.1% 93.9% 469 Child day care services $0 $0 $103,324 $103,324 0.1% 94.0% 440 Specialized design services $0 $83,728 $18,795 $102,523 0.1% 94.1% All Other Sectors $14,085 $2,108,725 $2,598,135 $4,720,946 5.9% 100.0% Totals $44,487,897 $16,642,766 $19,550,140 $80,680,803 100.0%

Sources: IMPLAN Pro ver. 2.0.1025; HR&A, Inc.

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APPENDIX C

Explanation of Population, Income and Retail Sales Allocation Factors Used in the Analysis

. Page C-1

This Appendix provides additional explanatory detail for the population, income and retail sales projections that are presented in the preceding urban decay analysis, and how potential conflicts among some of the data sources were reconciled.

Population

The baseline population forecasts underlying this analysis were prepared by Claritas, Inc., a nationally-recognized provider of demographic information for market analyses. As presented in Table C-1, Claritas provided population and baseline income data for two market areas for the study property—the Lancaster Shopping Center Primary Market Area (PMA), defined as the geographic area within a 5.0-Mile Radius from the intersection of 60th street West and West Avenue L in the City of Lancaster; and the Lancaster Shopping Center Secondary Market Area (SMA), represented geographically by a circular ring around the PMA extending from 5.0 miles to 10.0 miles from the intersection of 60th Street West and West Avenue L—as well as for Los Angeles County. Data were prepared for several time periods: the baseline year 2000, per information collected from the U.S. Census; a current estimate for the year 2007; and a five-year projection for the year 2012. These estimates and projections were then evaluated for internal consistency and for comparability with other data sources, including the California State Department of Finance and the Los Angeles County Economic Development Commission.

Table C-1 BASELINE DEMOGRAPHIC ESTIMATES AND PROJECTIONS. LOS ANGELES COUNTY AND LANCASTER SHOPPING CENTER MARKET AREAS

Primary Secondary Market Area Market Area Los Angeles Data Category 0-5 Mile Radius 5-10 Mile Radius County

Population 2000 70,338 124,971 9,519,338 2007 88,234 146,798 10,164,031 2012 100,778 162,723 10,734,503

Number of Households 2000 22,453 40,299 3,133,774 2007 28,449 46,681 3,314,263 2012 32,730 51,414 3,486,188

Average Per Capita Income 2000 1 $ 22,102 15,654$ $ 20,683 2007 $ 26,724 17,244$ $ 23,618 2012 $ 29,703 18,798$ $ 25,813

Average Household Income 2000 1 $ 67,055 48,544$ $ 61,811 2007 $ 80,994 54,228$ $ 71,592 2012 $ 89,811 59,496$ $ 79,482

1 Data actually are for calendar year 1999. Source: Claritas, Inc.

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Income

Table C-1 also provides Claritas’ current and projected household and per capita income data for the PMA, SMA and Los Angeles County. While these statistics may be indicative to the degree that they reflect that there are basic differences between the three geographic areas with respect to income levels, the current estimates made by Claritas appear to be conservative. For example, Claritas’ household and per capita income growth estimates for Los Angeles County between 1999 and 2007 is measured at about 1.7 percent, while other income estimates for this jurisdiction suggest that incomes have been growing at a rate measured at 3.6 percent. Given what the consultant believes are unrealistically low estimates by Claritas, further analysis was conducted to arrive at more realistic projections of current and future income levels for the PMA, SMA and Los Angeles County. These revised estimates and projections and are noted in Table C-2.

There are two basic measures of per capita personal income that are commonly used in retail market analysis: Per Capita Personal Income as measured by the U.S. Bureau of Economic Analysis (BEA); and Per Capita Personal Income as reported in the United States Census. The BEA definition is a broad definition of per capita personal income that includes both money receipts and changes in assets; it usually is a substantially higher figure for a given population than the per capita amount reported by the U.S. Census, which reports a more limited concept of “money” income that is derived from estimates provided by a sample of census respondents. As noted in Table C-2, the U.S. Census figure for Los Angeles County per capita income was equivalent to only 73.1 percent of the BEA County per capita income measure estimate in 1999, and comparative data for other time periods suggest that the ratio between these two per capita income measures has stayed fairly consistent over time.

In the preparation of per capita personal income estimates and projections for the PMA and the SMA, the baseline estimates made by Claritas were adjusted upward to reflect both: (1) the recent 2005 and 2006 BEA estimates of per capita income for State of California residents; (2) the recent 2005 and 2006 BEA estimates of per capita income for County of Los Angeles residents; and (3) the relative differentials in per capita incomes historically found in the PMA and the SMA vis a vis Los Angeles County as measured by Claritas. The results of these adjustments are presented in Table C-2 in the form of per capita income estimates in 2007 for both PMA and SMA residents.

Per capita personal incomes for the PMA and SMA are projected to 2012 using an annual compound growth rate of 3.5 percent that is applied to the baseline 2007 estimates. This magnitude of growth is consistent with the State’s annual per capita income growth that has been experienced over the 7-year period 1999-2006, a period that reflects both recession and expansion phases in the general economy. The projection also reflects the fact that the PMA and SMA are important locations that are attracting County residents who seek single-family detached residential housing as land available for this purpose becomes increasingly scarce in Los Angeles County.

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Table C-2 COMPARISON OF PER CAPITA INCOMES FOR STATE OF CALIFORNIA, LOS ANGELES COUNTY AND LANCASTER SHOPPING CENTER MARKET AREAS

Preliminary Projected Projected 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2012 State of California Per Capita Personal Income, BEA Definition $29,489 $30,152 $32,588 $32,964 $32,751 $33,202 $35,172 $36,936$ 38,956 $ 40,319 47,887$

County of Los Angeles Per Capita Personal Income, BEA Definition $27,479 $28,294 $29,314 $30,478 $30,535 $31,193 $32,619 $34,350 $36,307 $37,577 $44,631

County as Percent of State 93.2% 93.8% 90.0% 92.5% 93.2% 93.9% 92.7% 93.0% 93.2% 93.2% 93.2%

Money Income as Percent of Personal Income 73.10% 73.10% 73.10% 73.10% 73.10%

County of Los Angeles Per Capita Personal Income, Census Definition (Claritas): $ 20,683 $ 22,727 $ 23,618 25,813$

Adjusted County of Los Angeles Per Capita Personal Income, Census Definition $ 20,683 $ 25,110 $ 26,450 $ 27,469 32,625$

Lancaster Shopping Center Market Areas Per Capita Personal Income:

Primary Market Area, 0-5 Mile Radius Per Capita Personal Income, Census Definition (Claritas)$ 22,102 $ 26,724 29,703$

Adjusted Per Capita Personal Income, Census Definition $ 22,102 $ 31,082 37,542$

Per Capita Personal Income: BEA Definition $ 30,235 $ 38,310 $ 40,796 $ 41,802 51,357$

Secondary Market Area, 5-10 Mile Radius Per Capita Personal Income, Census Definition (Claritas) $ 15,654 $ 17,244 18,798$

Adjusted Per Capita Personal Income, Census Definition $ 15,654 $ 21,151 26,100$

Per Capita Personal Income: BEA Definition $ 21,415 $ 25,763 $ 27,593 $ 28,935 35,705$

Source: US Bureau of Economic Analysis; U S Census of Retail Trade; State of California: Department of Finance, Employment Development Department, State Board of Equalization; Bureau of Labor Statistics; Los Angeles County Economic Development Commission; Claritas, Inc.; W & W, Inc.; HRA, Inc.

Retail Sales Demand

Future retail demand has been calculated by determining the percent of personal income that has historically been expended for retail sales in the State of California and applying it to existing and future population and income levels in the two Lancaster market areas. This percentage has been calculated by comparing total retail sales as measured by the U.S. Census of Retail Trade in census years 1997 and 2002 with the BEA measure of California Personal Income for those two corresponding periods. This comparison is noted below in Table C-3:

Table C-3 RETAIL SALES AS PERCENT OF INCOME, US BEA AND US CENSUS STATE OF CALIFORNIA

Total Personal Total Retail Retail Sales Retail Sales Income Sales 1/ as % of Personal as % of Personal Year ('000s) ('000s) Income (BEA) Income (Census) 1997 $ 860,544,880 $ 283,179,576 32.9% 45.0% 2002 $ 1,147,868,177 $ 379,500,969 33.1% 45.2% Average 33.0% 45.1% 1/ Excludes e-sales and vending machines; adds Eating and Drinking facility sales. Source: U S Bureau of Economic Analysis (BEA); U S Census; W & W, Inc.; HRA, Inc.

Allocations of retail sales to individual retail categories and store types have been developed following the retail store classification system utilized by the State of California State

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Board of Equalization. As shown in Table C-4, annual retail sales measured by the State and by the U.S. Census correspond reasonably well after adjustments are made in the State’s taxable sales statistics that convert them to total retail sales. The adjustments that convert the State’s taxable retail sales to total retail sales are based on a review of years 1997 and 2002, years when comparative data are available from both the U.S. Census and the Board of Equalization.

After the adjustments to retail sales by store category are made at the state level for 2002 and 2005 (see Tables C-5 and C-6), they are then refined to reflect local tastes and preferences by utilizing the retail sales distributions for various retail store categories per the percentage distributions that are found in Los Angeles County. The final retail sales distributions to individual retail store categories utilized in this analysis for the Lancaster Shopping Center PMA and SMA are derived from data presented in Tables C-7, C-8 and C-9. The data in these tables show the distribution of taxable and total retail sales in Los Angeles County for 2002 and 2005. In this regard, it should be noted that 2005 is the most recent calendar year for which annual data are available as of the date of preparation of this report.

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Table C-4 COMPARATIVE ANALYSIS, STATE BOARD OF EQUALIZATION AND U S CENSUS OF RETAIL TRADE RETAIL SALES BY MAJOR RETAIL CATEGORY, STATE OF CALIFORNIA 2002 (in Thousands of Current Dollars)

2002 Adjust. State 2002 Retail Store Category State Factor Adjusted Census Apparel Stores 14,029,200 14,029,200 Clothing, Accessories, Jewelry, Luggage 22,661,146

General Merchandise Stores Department Stores & Other General Merchandise 42,741,257 42,741,257 46,696,215 Drug Stores 5,745,634 3.069 17,635,808 17,635,808 Total, General Merchandise 48,486,891 60,377,065 64,332,023

Food Store Group Food Stores 18,951,412 3.066 58,106,188 57,964,493 Liquor Stores 2,137,065 2,137,065 2,278,760 Total, Food & Beverage 21,088,477 60,243,253 60,243,253

Eating & Drinking Group Restaurants, no Alcohol 17,202,160 17,202,160 Resaurants with Alcohol 20,877,670 20,877,670 Total, Eating & Drinking 38,079,830 38,079,830

Household Furnishings Group 13,983,287 13,983,287 Furniture & Home Furnishings 11,605,138 Electronics & Appliances 13,186,464

Building Materials and Farm Supplies Building Materials and Supplies 25,816,009 25,816,009 24,515,132 Fuel and Ice Dealers 277,357 277,357 906,907 Lawn/Garden Supplies, including Farm Eqpt 4,393,715 4,393,715 2,265,209 Total, Building Materials and Garden Supplies 30,487,081 30,487,081 27,687,248

Automotive Group Auto Dealers/Parts 63,821,146 1.421 90,664,859 90,664,859 Service Stations 23,928,351 23,928,351 23,421,136 Total, Automotive Group 87,749,497 114,593,210 114,085,995

All Other: State Board of Equalization Specialty Group(Calif definition) 43,539,120 43,539,120 Used Merchandise 520,999 520,999 Mobile Home, RV, Motorcycle, Boat, Plane Dealers 3,647,924 3,647,924 5,256,663 All Other: US Census Health & Personal Care(less Drug Stores/Pharmacies) 3,108,465 Sporting Goods, Hobby, Books, Music, et al 9,789,031 Misc. Retail: Florists, Office Supplies, Used Merch., Pets, Art, et al 10,786,260 Total, Other 47,708,043 47,708,043 28,940,419

Grand Total, Store Groups Noted Above 301,612,306 379,500,969 342,741,686 Less: Eating & Drinking (38,079,830)

Total Retail Store Sales, Selected Categories 341,421,139 342,741,686

State as Percent of Census 99.61%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Table C-5 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY IN PERCENTAGES STATE OF CALIFORNIA 2002 (in Thousands of Current Dollars)

TAXABLE SALES TOTAL SALES State Percent of Adjustment State Percent of Retail Store Category Baseline Total Factor Adjusted Total Apparel Stores 14,029,200 4.65% 14,029,200 3.70%

General Merchandise Department Stores 42,741,257 14.17% 42,741,257 11.26% Drug Stores 5,745,634 1.90% 3.069 17,635,808 4.65% Total, General Merchandise 48,486,891 16.08% 60,377,065 15.91%

Food Store Group Food Stores 18,951,412 6.28% 3.066 58,106,188 15.31% Liquor Stores 2,137,065 0.71% 2,137,065 0.56% Total, Food Store Group 21,088,477 6.99% 60,243,253 15.87%

Eating & Drinking Group Restaurants, no Alcohol 17,202,160 5.70% 17,202,160 4.53% Restaurants with Alcohol 20,877,670 6.92% 20,877,670 5.50% Total, Eating & Drinking Group 38,079,830 12.63% 38,079,830 10.03%

Household Furnishings Group 13,983,287 4.64% 13,983,287 3.68%

Building Materials and Farm Supplies Building Materials and Supplies 25,816,009 8.56% 25,816,009 6.80% Lawn/Garden Supplies, including Farm Eqpt. 4,671,072 1.55% 4,671,072 1.23% Total, Building Materials and Garden Supplies 30,487,081 10.11% 30,487,081 8.03%

Automotive Group Auto Dealers/Parts 63,821,146 21.16% 1.421 90,664,859 23.89% Service Stations 23,928,351 7.93% 23,928,351 6.31% Total, Automotive Group 87,749,497 29.09% 114,593,210 30.20%

Specialty Group, incl Used Merchandise 44,060,119 14.61% 44,060,119 11.61%

All Other (Camper, Boat, Airplane sales et al) 3,647,924 1.21% 3,647,924 0.96%

Retail Stores Total 301,612,306 100.00% 379,500,969 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Table C-6 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY STATE OF CALIFORNIA 2005 (in Thousands of Current Dollars)

TAXABLE SALES TOTAL SALES State Percent of Adjustment State Percent of Retail Store Category Baseline Total Factor Adjusted Total Apparel Stores 18,712,125 4.98% 18,712,125 4.04%

General Merchandise Department Stores 50,588,297 13.46% 50,588,297 10.92% Drug Stores 6,198,856 1.65% 3.069 19,026,940 4.11% Total, General Merchandise 56,787,153 15.11% 69,615,237 15.03%

Food Store Group Food Stores 21,128,469 5.62% 3.066 64,781,178 13.98% Liquor Stores 2,511,183 0.67% 2,511,183 0.54% Total, Food Store Group 23,639,652 6.29% 67,292,361 14.53%

Eating & Drinking Group Restaurants, no Alcohol 21,341,643 5.68% 21,341,643 4.61% Restaurants with Alcohol 25,071,204 6.67% 25,071,204 5.41% Total, Eating & Drinking Group 46,412,847 12.35% 46,412,847 10.02%

Household Furnishings Group 17,388,704 4.63% 17,388,704 3.75%

Building Materials and Farm Supplies Building Materials and Supplies 36,152,218 11.99% 36,152,218 7.80% Lawn/Garden Supplies, including Farm Eqpt. 6,541,010 2.17% 6,541,010 1.41% Total, Building Materials and Garden Supplies 42,693,228 11.36% 42,693,228 9.22%

Automotive Group Auto Dealers/Parts 73,601,374 19.58% 1.421 104,558,733 22.57% Service Stations 38,566,548 10.26% 38,566,548 8.33% Total, Automotive Group 112,167,922 29.85% 143,125,281 30.90%

Specialty Group, incl Used Merchandise 52,928,654 14.08% 52,928,654 11.43%

All Other (Camper, Boat, Airplane sales et al) 5,077,840 1.35% 5,077,840 1.10%

Retail Stores Total 375,808,125 100.00% 463,246,278 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Table C-7 COMPARATIVE ANALYSIS, STATE BOARD OF EQUALIZATION AND U S CENSUS OF RETAIL TRADE RETAIL SALES BY MAJOR RETAIL CATEGORY, LOS ANGELES COUNTY 2002 (in Thousands of Current Dollars)

2002 Adjust. County 2002 Retail Store Category County Factor Adjusted Census Apparel Stores 4,036,630 4,036,630 Clothing, Accessories, Jewelry, Luggage 6,887,625

General Merchandise Stores Department Stores & Other General Merchandise 9,704,153 9,704,153 10,659,149 Drug Stores 1,492,554 3.257 4,861,770 4,861,770 Total, General Merchandise 11,196,707 14,565,923 15,520,919

Food Store Group Food Stores 4,235,229 3.506 14,850,438 14,821,554 Liquor Stores 544,140 544,140 573,024 Total, Food & Beverage 4,779,369 15,394,578 15,394,578

Eating & Drinking Group Restaurants, no Alcohol 5,364,930 5,364,930 Resaurants with Alcohol 5,176,950 5,176,950 Total, Eating & Drinking 10,541,880 10,541,880

Household Furnishings Group 3,378,316 3,378,316 Furniture & Home Furnishings 3,003,224 Electronics & Appliances 3,542,758

Building Materials and Farm Supplies Building Materials and Supplies 5,528,888 5,528,888 4,991,218 Fuel and Ice Dealers 48,785 48,785 40,529 Lawn/Garden Supplies, including Farm Eqpt 463,253 463,253 240,146 Total, Building Materials and Garden Supplies 6,040,926 6,040,926 5,271,893

Automotive Group Auto Dealers/Parts 15,869,231 1.599 25,373,957 25,373,957 Service Stations 6,404,120 6,404,120 5,396,775 Total, Automotive Group 22,273,351 31,778,077 30,770,732

All Other: State Board of Equalization Specialty Group(Calif definition) 11,638,997 11,638,997 Used Merchandise 100,733 100,733 Mobile Home, RV, Motorcycle, Boat, Plane Dealers 561,088 561,088 721,339 All Other: US Census Health & Personal Care(less Drug Stores/Pharmacies) 917,972 Sporting Goods, Hobby, Books, Music, et al 2,581,307 Misc. Retail: Florists, Office Supplies, Used Merch., Pets, Art, et al 2,731,895 Total, Other 12,300,818 12,300,818 6,952,513

Grand Total, Store Groups Noted Above 74,547,997 98,037,148 87,344,242 Less: Eating & Drinking (10,541,880)

Total Retail Store Sales, Selected Categories 87,495,268 87,344,242

State as Percent of Census 100.17%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Table C-8 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY IN PERCENTAGES LOS ANGELES COUNTY 2002 (in Thousands of Current Dollars)

TAXABLE SALES TOTAL SALES County Percent of Adjustment County Percent of Retail Store Category Baseline Total Factor Adjusted Total Apparel Stores 4,036,630 5.41% 4,036,630 4.12%

General Merchandise Department Stores 9,704,153 13.02% 9,704,153 9.90% Drug Stores 1,492,554 2.00% 3.257 4,861,770 4.96% Total, General Merchandise 11,196,707 15.02% 14,565,923 14.86%

Food Store Group Food Stores 4,235,229 5.68% 3.506 14,850,438 15.15% Liquor Stores 544,140 0.73% 544,140 0.56% Total, Food Store Group 4,779,369 6.41% 15,394,578 15.70%

Eating & Drinking Group Restaurants, no Alcohol 5,364,930 7.20% 5,364,930 5.47% Restaurants with Alcohol 5,176,950 6.94% 5,176,950 5.28% Total, Eating & Drinking Group 10,541,880 14.14% 10,541,880 10.75%

Household Furnishings Group 3,378,316 4.53% 3,378,316 3.45%

Building Materials and Farm Supplies Building Materials and Supplies 5,528,888 7.42% 5,528,888 5.64% Lawn/Garden Supplies, including Farm Eqpt. 512,038 0.69% 512,038 0.52% Total, Building Materials and Garden Supplies 6,040,926 8.10% 6,040,926 6.16%

Automotive Group Auto Dealers/Parts 15,869,231 21.29% 1.599 25,373,957 25.88% Service Stations 6,404,120 8.59% 6,404,120 6.53% Total, Automotive Group 22,273,351 29.88% 31,778,077 32.41%

Specialty Group, incl Used Merchandise 11,739,730 15.75% 11,739,730 11.97%

All Other (Camper, Boat, Airplane sales et al) 561,088 0.75% 561,088 0.57%

Retail Stores Total 74,547,997 100.00% 98,037,148 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Table C-9 DISTRIBUTION OF RETAIL SALES BY MAJOR RETAIL CATEGORY LOS ANGELES COUNTY 2005 (in Thousands of Current Dollars)

TAXABLE SALES TOTAL SALES County Percent of Adjustment County Percent of Retail Store Category Baseline Total Factor Adjusted Total Apparel Stores 5,248,349 5.69% 5,248,349 4.45%

General Merchandise Department Stores 11,504,506 12.47% 11,504,506 9.75% Drug Stores 1,672,209 1.81% 3.257 5,446,969 4.62% Total, General Merchandise 13,176,715 14.28% 16,951,475 14.36%

Food Store Group Food Stores 4,532,723 4.91% 3.506 15,893,573 13.47% Liquor Stores 602,264 0.65% 602,264 0.51% Total, Food Store Group 5,134,987 5.57% 16,495,837 13.98%

Eating & Drinking Group Restaurants, no Alcohol 6,590,968 7.14% 6,590,968 5.59% Restaurants with Alcohol 6,313,342 6.84% 6,313,342 5.35% Total, Eating & Drinking Group 12,904,310 13.99% 12,904,310 10.94%

Household Furnishings Group 4,263,142 4.62% 4,263,142 3.61%

Building Materials and Farm Supplies Building Materials and Supplies 7,701,383 8.35% 7,701,383 6.53% Lawn/Garden Supplies, including Farm Eqpt. 676,879 0.73% 339,070 0.29% Total, Building Materials and Garden Supplies 8,378,262 9.08% 8,040,453 6.81%

Automotive Group Auto Dealers/Parts 18,263,829 19.79% 1.599 29,202,777 24.75% Service Stations 10,261,639 11.12% 10,261,639 8.70% Total, Automotive Group 28,525,468 30.91% 39,464,416 33.44%

Specialty Group, incl Used Merchandise 13,944,113 15.11% 13,944,113 11.82%

All Other (Camper, Boat, Airplane sales et al) 695,809 0.75% 695,809 0.59%

Retail Stores Total 92,271,155 100.00% 118,007,904 100.00%

Source: State of California, State Board of Equalization; U S Census of Retail Trade; HRA, Inc.; W & W, Inc.

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Appendix D

Traffic Calculations for Responses to Comments

The Commons at Quartz Hill Appendices Final Environmental Impact Report

Attachment 2 ICU/Delay Summary Existing + Ambient +Project Conditions 2008 Existing + Exist + Amb Exist+Amb+ Project Existing Ambient + Proj with Mitigation Peak ICU/ ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS DELAY LOS DELAY LOS Growth Impact Impact? DELAY LOS IMPACT Impact? 1. 60th Street West & AM WB 117.7 F 268.8 F 866.8 F + 598.0 222.5% YES 0.569 A N/A NO Avenue J EB 27.6 D 34.3 D 43.8 E + 9.5 27.7% YES NO PM WB 24.4 C 31.1 D 240.9 F + 209.8 674.6% YES 0.468 A N/A NO EB 17.2 C 19.8 C 43.6 E + 23.8 120.2% YES NO Sat WB 13.0 B 13.7 B 65.0 F + 51.3 374.5% YES 0.479 A N/A NO EB 11.8 B 12.2 B 15.3 C + 3.1 25.4% NO NO 2. 60th Street West & AM WB 14.3 B 14.9 B 22.1 C + 7.2 48.3% NO N/A Avenue J-8 EB 13.4 B 14.5 B 22.3 C + 7.8 53.8% NO PM WB 14.3 B 15.4 B 30.7 D + 15.3 99.4% NO N/A EB 11.8 B 12.3 B 20.0 C + 7.7 62.6% NO Sat WB 12.0 B 12.4 B 23.5 C + 11.1 89.5% NO N/A EB 10.1 B 10.3 B 15.3 C + 5.0 48.5% NO 3. 60th Street West & AM - 0.528 A 0.562 A 0.635 B + 0.073 13.0% NO N/A Avenue K PM - 0.457 A 0.486 A 0.675 B + 0.189 38.9% NO N/A Sat - 0.376 A 0.399 A 0.659 B + 0.260 65.2% NO N/A 4. 60th Street West & AM WB 12.9 B 13.4 B 18.2 C + 4.8 35.8% NO N/A Avenue K-8 EB 14.9 B 16.4 C 31.0 D + 14.6 89.0% NO PM WB 10.6 B 10.8 B 16.6 C + 5.8 53.7% NO N/A EB 11.8 B 12.3 B 27.3 D + 15.0 122.0% NO Sat WB 10.3 B 10.5 B 18.6 C + 8.1 77.1% NO N/A EB 10.7 B 11.0 B 27.5 D + 16.5 150.0% NO 5. 60th Street West & AM WB 15.3 C 16.4 C 34.5 D + 18.1 110.4% NO 0.398 A N/A NO Avenue K-12 EB N/A N/A 131.0 F - - YES NO PM WB 12.8 B 13.4 B 32.6 D + 19.2 143.3% NO 0.521 A N/A NO EB N/A N/A B 502.4 F - - YES NO Sat WB 11.5 B 11.9 B 90.3 F + 78.4 658.8% YES 0.617 B N/A NO EB N/A N/A 1894.0 F - - YES NO

ICU/Delay Summary (continued) Existing + Ambient +Project Conditions 2008 Existing + Exist + Amb Exist+Amb+ Project Existing Ambient + Proj with Mitigation Peak ICU/ ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS DELAY LOS DELAY LOS Growth Impact Impact? DELAY LOS IMPACT Impact? 6. 60th Street West & AM - 0.624 B 0.665 B 0.741 C + 0.076 11.4% NO N/A Avenue L PM - 0.533 A 0.569 A 0.823 D + 0.254 44.6% NO N/A Sat - 0.453 A 0.481 A 0.861 D + 0.380 79.0% NO N/A 7. 60th Street West & AM EB 15.7 C 17.4 C 33.3 D + 15.9 91.4% NO N/A Avenue L-4 PM EB 13.7 B 14.5 B 32.7 D + 18.2 125.5% NO N/A Sat EB 11.5 B 12.0 B 25.1 D + 13.1 109.2% NO N/A 8. 60th Street West & AM - 0.544 A 0.581 A 0.649 B + 0.068 11.7% NO N/A Avenue L-8 PM - 0.404 A 0.427 A 0.569 A + 0.142 33.3% NO N/A Sat - 0.339 A 0.358 A 0.556 A + 0.198 55.3% NO N/A 9. 60th Street West & AM - 17.80 C 21.85 C 37.02 E + 15.17 69.4% YES 0.521 A N/A NO Avenue M/Columbia PM - 19.76 C 25.69 D 89.40 F + 63.71 248.0% YES 0.479 A N/A NO Sat - 13.21 B 14.65 B 63.65 F + 49.00 334.5% YES 0.457 A N/A NO 10. 70th Street West & AM - 11.12 B 11.86 B 12.79 B + 0.93 7.8% NO 0.510 A N/A NO Avenue L PM - 8.68 A 8.84 A 9.65 A + 0.81 9.2% NO 0.394 A N/A NO Sat - 8.47 A 8.60 A 9.72 A + 1.12 13.0% NO 0.396 A N/A NO 11. 65th Street West & AM NB 13.2 B 14.2 B 18.4 C + 4.2 29.6% NO N/A Avenue L PM NB 9.2 A 9.3 A 10.2 B + 0.9 9.7% NO N/A Sat NB 9.1 A 9.2 A 10.5 B + 1.3 14.1% NO N/A 12. 57th Street West & AM NB 14.1 B 15.0 B 16.2 C + 1.2 8.0% NO N/A Avenue L PM NB 11.2 B 11.6 B 13.6 B + 2.0 17.2% NO N/A Sat NB 12.2 B 12.6 B 16.5 C + 3.9 31.0% NO N/A 13. 55th Street West & AM NB 17.8 C 20.4 C 29.4 D + 9.0 44.1% NO N/A Avenue L PM NB 12.1 B 12.8 B 15.7 C + 2.9 22.7% NO N/A Sat NB 11.4 B 12.0 B 15.0 C + 3.0 25.0% NO N/A

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ICU/Delay Summary (continued) Existing + Ambient +Project Conditions 2008 Existing + Exist + Amb Exist+Amb+ Project Existing Ambient + Proj with Mitigation Peak ICU/ ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS DELAY LOS DELAY LOS Growth Impact Impact? DELAY LOS IMPACT Impact? 14. 50th Street West & AM - 0.726 C 0.776 C 0.815 D + 0.039 5.0% NO N/A Avenue L PM - 0.758 C 0.810 D 0.887 D + 0.077 9.5% NO N/A Sat - 0.662 B 0.708 C 0.804 D + 0.096 13.6% NO N/A 15. 45th Street West & AM - 0.507 A 0.539 A 0.567 A + 0.028 5.2% NO N/A Avenue L PM - 0.740 C 0.791 C 0.883 D + 0.092 11.6% NO N/A Sat - 0.719 C 0.768 C 0.860 D + 0.092 12.0% NO N/A 16. 40th Street West & AM - 0.716 C 0.766 C 0.786 C + 0.020 2.6% NO N/A Avenue L PM - 0.721 C 0.772 C 0.819 D + 0.047 6.1% NO N/A Sat - 0.624 B 0.667 B 0.727 C + 0.060 9.0% NO N/A

Dir = Direction - used for two-way stopped control delay analysis only (unsignalized locations) No Data = No information available as there is a system failure in the direction of analysis N/A = NOT APPLICABLE ICU = Intersection Capacity Untilization which is the intersections volume/capacity Delay = Calculated using Highway Capacity Method which is seconds of delay per vehicle

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ICU/Delay Summary (continued) Existing + Ambient +Project Conditions Exist + Amb Future Future with Project + Rel Proj With Project with Mitigation Peak ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS Growth DELAY LOS IMPACT Impact Impact? DELAY LOS IMPACT Impact? 1. 60th Street West & AM WB NO DATA - - NO DATA - - - Yes 0.670 B N/A No Avenue J EB 76.6 F + 42.3 112.8 F + 36.2 47.3% Yes PM WB 419.1 F + 388.0 783.1 F + 364.0 86.9% Yes 0.669 B N/A No EB 65.9 F + 46.1 194.7 F + 128.8 195.4% Yes Sat WB 1586.0 F + 1572.3 NO DATA - - - Yes 0.758 C N/A No EB 38.1 E + 25.9 111.8 F + 73.7 193.4% Yes 2. 60th Street West & AM WB 31.3 D + 16.4 43.2 E + 11.9 38.0% Yes 0.742 C N/A No Avenue J-8 EB 100.6 F + 86.1 173.2 F + 72.6 72.2% YES PM WB 60.5 F + 45.1 163.4 F + 102.9 170.1% YES 0.678 B N/A No EB 103.8 F + 91.5 318.3 F + 214.5 206.6% Yes Sat WB 43.1 F + 30.7 118.4 F + 75.3 174.7% YES 0.777 C N/A No EB 94.8 F + 84.5 391.2 F + 296.4 312.7% YES 3. 60th Street West & AM - 0.820 D + 0.258 0.909 E + 0.089 10.9% Yes 0.772 C -0.048 No Avenue K PM - 1.010 F + 0.524 1.201 F + 0.191 18.9% Yes 0.906 E -0.104 No Sat - 1.051 F + 0.652 1.312 F + 0.261 24.8% Yes 0.929 E -0.122 No 4. 60th Street West & AM WB 529.3 F + 515.9 1082.0 F + 552.7 104.4% Yes 0.562 A No Avenue K-8 EB 485.7 F + 469.3 NO DATA - - - Yes PM WB NO DATA - - NO DATA - - - Yes 0.616 B No EB 809.7 F + 797.4 NO DATA - - - Yes Sat WB NO DATA - - NO DATA - - - Yes 0.681 B No EB NO DATA - - NO DATA - - - Yes 5. 60th Street West & AM WB 60.9 F + 44.5 106.6 F + 45.7 75.0% Yes 0.501 A No Avenue K-12 EB 60.4 F - 678.9 F + 618.5 1024.0% Yes PM WB 105.3 F + 91.9 786.6 F + 681.3 647.0% Yes 0.674 B No EB 85.0 F - 927.4 F + 842.4 991.1% Yes Sat WB 162.4 F + 150.5 3733.0 F + 3570.6 2198.6% Yes 0.830 D No EB 95.0 F - 33856.0 - + - - Yes

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ICU/Delay Summary (continued) Existing + Ambient +Project Conditions Exist + Amb Future Future with Project + Rel Proj With Project with Mitigation Peak ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS Growth DELAY LOS IMPACT Impact Impact? DELAY LOS IMPACT Impact? 6. 60th Street West & AM - 0.948 E + 0.283 0.963 E + 0.015 1.6% No 0.751 C -0.197 No Avenue L PM - 1.206 F + 0.637 1.224 F + 0.018 1.5% No 0.889 D -0.317 No Sat - 1.230 F + 0.749 1.336 F + 0.106 8.6% Yes 0.980 E -0.250 No 7. 60th Street West & AM EB 65.8 F + 48.4 131.4 F + 65.6 99.7% Yes 0.563 A No Avenue L-4 PM EB 84.5 F + 70.0 312.6 F + 228.1 269.9% Yes 0.519 A No Sat EB 58.4 F + 46.4 276.6 F + 218.2 373.6% Yes 0.519 A No 8. 60th Street West & AM - 0.707 C + 0.126 0.775 C + 0.068 9.6% No 0.572 A -0.135 No Avenue L-8 PM - 0.721 C + 0.294 0.862 D + 0.141 19.6% NO 0.553 A -0.168 No Sat - 0.712 C + 0.354 0.909 E + 0.197 27.7% Yes 0.573 A -0.139 No 9. 60th Street West & AM - 113.53 F + 91.68 160.65 F 47.12 41.5% Yes 0.633 B No Avenue M/Columbia PM - 255.10 F + 229.41 369.62 F + 114.52 44.9% Yes 0.713 C No Sat - 242.63 F + 227.98 387.19 F + 144.56 59.6% Yes 0.717 C No 10. 70th Street West & AM - 38.95 E + 27.09 47.05 E + 8.10 20.8% Yes 0.728 C No Avenue L PM - 21.56 C + 12.72 30.37 D + 8.81 40.9% No 0.721 C No Sat - 20.74 C + 12.14 33.68 D + 12.94 62.4% No 0.742 C No 11. 65th Street West & AM NB 26.3 D + 12.1 31.2 D + 4.9 18.6% No N/A No Avenue L PM NB 12.1 B + 2.8 13.4 B + 1.3 10.7% No N/A Sat NB 12.6 B + 3.4 14.7 B + 2.1 16.7% No N/A 12. 57th Street West & AM NB 17.3 C + 2.3 18.3 C + 1.0 5.8% No N/A Avenue L PM NB 17.0 C + 5.4 19.8 C + 2.8 16.5% No N/A Sat NB 17.9 C + 5.3 22.0 C + 4.1 22.9% No N/A 13. 55th Street West & AM NB 59.6 F + 39.2 132.4 F + 72.8 122.1% Yes 0.520 A No Avenue L PM NB 38.4 E + 25.6 75.3 F + 36.9 96.1% Yes 0.548 A No Sat NB 33.9 D + 21.9 75.0 F + 41.1 121.2% Yes 0.550 A No

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ICU/Delay Summary (continued) Existing + Ambient +Project Conditions Exist + Amb Future Future with Project + Rel Proj With Project with Mitigation Peak ICU/ ICU/ % Significant ICU/ Significant No. Intersection Hour Dir* DELAY LOS Growth DELAY LOS IMPACT Impact Impact? DELAY LOS IMPACT Impact? 14. 50th Street West & AM - 0.950 E + 0.174 0.990 E + 0.040 4.2% Yes 0.697 B -0.253 No Avenue L PM - 1.060 F + 0.250 1.137 F + 0.077 7.3% Yes 0.842 D -0.218 No Sat - 0.981 E + 0.273 1.077 F + 0.096 9.8% Yes 0.769 C -0.212 No 15. 45th Street West & AM - 0.700 C + 0.161 0.727 C + 0.027 3.9% No 0.458 A -0.242 No Avenue L PM - 0.986 E + 0.195 1.053 F + 0.067 6.8% Yes 0.699 B -0.287 No Sat - 0.981 E + 0.213 1.146 F + 0.165 16.8% Yes 0.631 B -0.350 No 16. 40th Street West & AM - 0.932 E + 0.166 0.952 E + 0.020 2.1% Yes 0.688 B -0.244 No Avenue L PM - 1.029 F + 0.257 1.077 F + 0.048 4.7% Yes 0.866 D -0.163 No Sat - 0.928 E + 0.261 0.988 E + 0.060 6.5% Yes 0.723 C -0.205 No

Dir = Direction - used for two-way stopped control delay analysis only (unsignalized locations) No Data = No information available as there is a system failure in the direction of analysis N/A = NOT APPLICABLE ICU = Intersection Capacity Untilization which is the intersections volume/capacity Delay = Calculated using Highway Capacity Method which is seconds of delay per vehicle

Page 7 City of Lancaster

Appendix E

Traffic Memo

The Commons at Quartz Hill Appendices Final Environmental Impact Report

Overland Traffic Consultants 27201 Tourney Road, # 206 Overland Traffic Consultants, Inc. Santa Clarita, CA 91355 Phone (661) 799 - 8423 Fax: (661) 799 – 8456 E-mail: [email protected]

May 18, 2009

Ms. Jocelyn Swain City of Lancaster, Planning Department 44933 Fern Avenue Lancaster, Ca 93534

RE: The Commons at Quartz Hill Project Trip Generation – 8th Edition 2008 Dear Ms. Swain, December 2008 the Institute of Transportation Engineers (ITE) published an updated Trip Generation Handbook. This latest version of the handbook (8th Edition) includes additional land uses and additional site surveys from the previous edition. Overland Traffic Consultants has conducted an updated Trip Generation for The Commons at Quartz Hill project. The updated trip generation is presented in Table 1. The results of the trip generation calculation and comparison to the 7th Edition are presented in Table 2. As can be seen from this comparison, the Weekday daily, PM Peak Hour and Saturday Mid-Day Peak Hour trip generation increases by 213, 56 and 2 trips respectively. The weekday AM Peak Hour and Saturday Daily trip generation decreases by 33 and 165 trips respectively. An evaluation of the Intersection Capacity Utilization (ICU) and Delay summary of the project was conducted to determine if the updated trip generation would change the results of the conclusions. None of the intersections identified as significantly impacted by traffic in the Existing + Ambient + Project scenario and Existing + Ambient + Cumulative + Project scenario would change as a result of the changes in trip generation. A review of the intersections not identified as significantly impacted by the project revealed two intersections (60th Street West at Avenue J-8 and at Avenue L-4) during the Existing + Ambient + Project scenario are close to significant impacts during the PM Peak Hour and warrant further analysis. This additional analysis with the increased PM Peak Hour project trip generation indicated that the intersections remain not significantly impacted as noted in Table 3. In summary, an update of the project trip generation to the most recent version of the ITE trip generation handbook indicates no change to the conclusion of the previous study. Please contact me if you have questions or comments. Sincerely,

Liz Culhane

A Traffic Engineering and Transportation Planning Consulting Services Company Table 1 8th Edition Trip Generation Rates (Equations)

ITE Daily AM Peak Hour PM Peak Hour Code Description Traffic Total In Out Total In Out

934 Fast-Food With Drive-Thru 496.12 49.35 25.17 24.18 33.84 17.60 16.24

820 Retail LN(T)=.65LN(X)+ 5.83 LN(T) =.59LN(X)+ 2.32 61% 39% LN(T) =.67LN(X)+ 3.37 49% 51%

912 Bank With Drive-Thru 148.15 12.35 6.92 5.43 25.82 12.91 12.91

932 Hi Turnover Sit Dwn Rstrnt 127.15 11.52 5.99 5.53 11.15 6.58 4.57

881 Drugstore With Drive-Thru 88.16 2.66 1.52 1.14 10.35 5.18 5.18

813 Free Stnd Discount Super Ctr 53.13 1.67 0.94 0.73 4.61 2.26 2.35 Trip Generation rate per 1,000 sf

ITE Saturday SAT Mid Day Peak Hour Code Description Daily Total In Out 934 Fast-Food With Drive-Thru 722.03 59.39 30.29 29.10

820 Retail LN(T)=.63LN(X)+6.23 LN(T)=.65LN(X)+3.76 52% 48% 912 Bank With Drive-Thru 86.32 26.53 13.80 12.73 932 High Turnover Sit Down Restaurant 158.37 14.07 7.46 6.61 881 Drugstore With Drive-Thru 78.50 7.85 3.93 3.93

813 Free Standing Discount Super Center 64.07 5.64 2.82 2.82 Trip Generation rate per 1,000 sf Black - same Blue - Lower Red - Higher

A Traffic Engineering and Transportation Planning Consulting Services Company Table 2 Project Trip Generation – 8th Edition ITE Daily AM Peak Hour PM Peak Hour Saturday SAT Mid Day Peak Hour Code Description Size Traffic Total In Out Total In Out Daily Total In Out 813 Super Discount Store 195,906 sf 10,408 327 183 144 904 443 461 12,552 1,104 552 552 Internal Capture 10% (1,041) (32) (18) (14) (90) (44) (46) (1,255) (110) (55) (55) Subtotal Building 1 195,906 sf 9,367 295 165 130 814 399 415 11,297 994 497 497 934 Fastfood 2,448 sf 1,215 121 62 59 83 43 40 1,768 145 74 71 934 Fastfood 1,750 sf 868 86 44 42 59 31 28 1,264 104 53 51 Internal Capture 30% (625) (62) (32) (30) (42) (22) (20) (910) (75) (38) (37) Subtotal Buildings 3 & 5 4,198 sf 1,458 145 74 71 100 52 48 2,122 174 89 85 932 Resturant 3,200 sf 407 37 19 18 36 21 15 507 45 24 21 932 Resturant 7,895 sf 1,004 91 47 44 88 52 36 1,250 111 59 52 Internal Capture 20% (282) (25) (13) (12) (25) (15) (10) (351) (32) (17) (15) Subtotal Buildings 6A & 6B 11,095 sf 1,129 103 53 50 99 58 41 1,406 124 66 58 881 Pharmacy 14,740 sf 1,299 39 22 17 152 76 76 1,157 116 58 58 Internal Capture 20% (260) (7) (4) (3) (30) (15) (15) (231) (24) (12) (12) Subtotal Building 4 14,740 sf 1,039 32 18 14 122 61 61 926 92 46 46 820 Retail 89,911 sf 6,337 145 88 57 592 290 302 8,641 800 416 384 820 Retail 20,000 sf 2,386 60 37 23 216 106 110 3,352 301 157 144 820 Retail 3,200 sf 725 20 12 8 63 31 32 1,057 91 47 44 Subtotal Buildings 2, 8, 6A 113,111 sf 9,448 225 137 88 871 427 444 13,050 1,192 620 572 911 Bank 5,500 sf 815 68 38 30 142 71 71 475 146 76 70 Internal Capture 25% (204) (18) (10) (8) (36) (18) (18) (119) (37) (19) (18) Subtotal Building 7 5,500 sf 611 50 28 22 106 53 53 356 109 57 52 SUBTOTAL The Commons 344,550 sf 23,052 850 475 375 2,112 1,050 1,062 29,157 2,685 1,375 1,310 Pass-By Discount 25% (5,763) (213) (119) (94) (528) (262) (266) (7,289) (671) (344) (327) 8th TOTAL The Commons 344,550 sf 17,289 637 356 281 1,584 788 796 21,868 2,014 1,031 983 7th Previous TOTAL 344,550 sf 17,076 670 363 307 1,528 755 773 22,034 2,012 1,051 961 difference 213 (33) (7) (25) 56 33 22 (165) 2 (20) 22

Table 3 Delay Summary #2&7 PM Peak Hour 2008 Existing + Exist + Amb Existing Ambient + Proj Peak ICU/ ICU/ ICU/ % Significant No. Intersection Hour Dir* DELAY LOS DELAY LOS DELAY LOS Growth Impact Impact? 2. 60th Street West & PM WB 14.3 B 15.4 B 31.4 D + 16.0 103.9% NO Avenue J-8 EB 11.8 B 12.3 B 20.3 C + 8.0 65.0% NO 7. 60th Street West & Avenue L-4 PM EB 13.7 B 14.5 B 33.5 D + 19.0 131.0% NO

A Traffic Engineering and Transportation Planning Consulting Services Company