0000004162.00000 Advice 4162-E

Gary A. Stern, Ph.D.

Managing Director, State Regulatory Operations

February 11, 2020

ADVICE 4162-E (U 338-E)

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

SUBJECT: Request by Southern California Edison Company for Approval to Grant an Easement to Daggett Solar Power 1, LLC, a Delaware Limited Liability Company

PURPOSE

Southern California Edison Company (SCE) respectfully requests an order from the California Public Utilities Commission (Commission) authorizing SCE to grant to Daggett Solar Power 1, LLC, a Delaware limited liability company, its successors and assigns (collectively, “DSP1”), an easement for electric transmission lines (the “Easement”) on land owned by SCE in the County of San Bernardino, California (the “Property”) pursuant to Public Utilities Code (PUC) Section 851 and General Order (GO) 173.1 The form of the grant of the Easement is attached hereto as Exhibit A.

BACKGROUND

SCE owns land, buildings and other facilities in connection with its provision of electric services to its customers in southern and central California. The fee parcels that SCE owns include the Property. A portion of SCE’s Coolwater-SEGS-Tortilla 115kV interconnection transmission line is sited on the Property.

The Property consists of three continguous land parcels that collectively total 394.79 acres. It is located in the Mojave Desert at the northeast quadrant of Santa Fe Road and Daggett Yermo Road approximately two miles outside the unincorporated town of Daggett, California. It is used as a utility right-of-way. The Property is located east of the site of SCE’s former Coolwater Electric Power Plant. It is bordered by Santa Fe Road to the south, the Mojave River to the north, the Sunray Energy 2 solar generation facility and private farms to the east and a Burlington Northern Santa Fe railroad track to

1 GO 173 makes permanent the former pilot program regulations for PUC Section 851 advice letters, as adopted or amended in the Commission Resolutions ALJ-186, ALJ-202, ALJ-244 and ALJ-272 (PUC Section 851 Pilot Program). The General Order authorizes regulated utilities to request Commission approval of PUC Section 851 transactions transferring interests in utility property valued at $5 million or less by advice letter.

P.O. Box 800 8631 Rush Street Rosemead, California 91770 (626) 302-9645 Fax (626) 302-6396

ADVICE 4162-E (U 338-E) - 2 - February 11, 2020

the west. The Property is primarily vacant but is improved with SCE’s facilities and a paved roadway.

DSP1, a subsidary of Clearway Energy Group, LLC, is seeking the Easement to support its Daggett Solar Power Facility (the “Project”). The Project is a 650 MW photovoltaic solar power generating facility, including 450 MW of battery storage. DSP1 will be constructing 115 kV and 220 kV interconnection transmission lines on the Easement, connecting the Project to SCE’s Coolwater substation. The Easement is approximately one hundred twenty (120) feet wide and is in two strips: the first strip runs north and south and measures 1,263.24 feet in length, while the second strip runs east and west and measures 9,608.61 feet in length.

SCE operations at the Property are compatible with the construction and use of the DSP1 transmission line, which will cross SCE’s facilities in one place. The Easement is being granted subject to SCE’s right to construct its utility facilities on the easement area, should that be necessary in the future, as long as such installations do not unreasonably interfere with the rights that DSP1 is being granted in the Easement. The Easement requires DSP1 to maintain its facilities and to indemnify SCE for all claims arising out of the exercise of the rights granted in the Easement.

SCE believes that the proposed transaction provides a public benefit that is not adverse to the public interest because the proposed transaction will support the operation of the Project, which SCE believes will benefit the community and will have no effect on SCE’s ability to provide safe and reliable service to its customers at reasonable rates.

INFORMATION AS REQUIRED UNDER RULES 3 AND 4 OF GO 173

Rule 3 Requirements

SCE is permitted to submit this advice letter seeking Commission approval under PUC Section 851 because it believes it has satisfied the eligibility requirements set forth in Rule 3 of GO 173:

3a: The activity proposed in the transaction will not require environmental review by the Commission as a Lead Agency under California Environmental Quality Act (“CEQA”).

San Bernardino County reviewed the Project (State Clearinghouse No. 2018041007) and adopted its Environmental Impact Report pursuant to a Notice of Determination filed with the County Clerk for San Bernardino County on September 23, 2019, which is attached hereto as Exhibit B.

3b: The transaction will not have an adverse effect on the public interest or on the ability of the utility to provide safe and reliable service to customers at reasonable rates. ADVICE 4162-E (U 338-E) - 3 - February 11, 2020

SCE believes that the granting of the Easement will not have an adverse effect on the public interest because the construction and operation of the proposed DSP1 transmission line will not diminish the safety or reliability of SCE’s electric systems’ operations.

3c: Any financial proceeds from the transaction will either be booked to a memorandum account for distribution between shareholders and ratepayers during the next general rate case or be immediately divided between shareholders and ratepayers based on a specific distribution formula previously approved by the Commission for that utility.

The financial proceeds received by SCE from the proposed transaction will be allocated between SCE’s shareholders and ratepayers through the Gross Revenue Sharing Mechanism as described in SCE’s response to Rule 4e below.

3d: If the transaction results in a fee transfer of real property, the property does not have a fair market value in excess of $5 million.

Not applicable because there is no fee transfer of real property.

3e: If the transaction results in the sale of a building, the building does not have a fair market value in excess of $5 million.

Not applicable because no building is being sold in this transaction.

3f: If the transaction is for the sale of depreciable assets, the assets do not have a fair market value in excess of $5 million.

Not applicable because the transaction does not involve the sale of depreciable assets.

3g: If the transaction is a lease or a lease-equivalent, the total net present value of the lease payments, including any purchase option, does not have a fair market value in excess of $5 million, and the term of the lease will not exceed 25 years.

Not applicable because the transaction does not involve a lease.

3h: If the transaction conveys an easement, right-of-way, or other less than fee interest in real property, the fair market value of the easement, right-of-way, or other interest in real property, the fair market value of the easement, right-of-way, or other interest in the property does not exceed $5 million.

The fair market value of the Easement has been valued at $17,300, as described in SCE’s response in Rule 4(i) below.

ADVICE 4162-E (U 338-E) - 4 - February 11, 2020

3i: The transaction does not materially impact the ratebase of the utility.

The value of this transaction will not materially impact SCE’s ratebase.

3j: If the transaction is a transfer or change in ownership of facilities currently used in regulated utility operations, the transaction will not result in a significant physical and operational change in the facility.

There will be no physical or operational change in the SCE facilities on the Property.

3k: The transaction does not warrant a more comprehensive review that would be provided through a formal PUC Section 851 application.

SCE believes that this transaction does not contain any issues that would trigger a need for a more comprehensive review through a formal PUC Section 851 application.

Rule 4 Requirements

Rule 4 requires that the following information be included in advice letters submitted under GO 173:

4a: Identity and addresses of all parties to the proposed transaction:

Southern California Edison Company 2244 Walnut Grove Avenue Rosemead, CA 91770

Daggett Solar Power 1, LLC c/o Clearway Energy Group, LLC 5780 Fleet Street, Suite 130 Carlsbad, CA 92008 Attn: James Kelly, Senior Director, Development

4b: A complete description of the property including present location, condition and use:

The affected Property is located in the County of San Bernardino and consists of three continguous parcels. It is undeveloped desert land except for SCE’s facilities and a paved roadway. It is bordered by Santa Fe Road to the south, the Mojave River to the north, the Sunray Energy 2 solar generation facility and private farms to the east and Burlington Northern Santa Fe railtrack to the west.

ADVICE 4162-E (U 338-E) - 5 - February 11, 2020

4c: Transferee’s intended use of the property:

DSP1 will construct overhead electric interconnection transmission lines on the Easement.

4d: Complete description of financial terms of the proposed transaction:

DSP1 will pay SCE $17,300 for the Easement. DSP1 will also pay all special assessments or fees levied against its improvements located on the Easement.

4e: Description of how financial proceeds of the transaction will be distributed:

D.99-09-070 approved a settlement between SCE and the Office of Ratepayer Advocates (“ORA”) concerning SCE’s application for a revenue sharing mechanism for certain other operating revenue. The adopted Gross Revenue Sharing Mechanism allocates revenues resulting from non-tariffed products and services between shareholders and ratepayers. In the settlement, SCE and ORA agreed to classify all existing non-tariffed products and services as either active or passive. The gross revenue from active products and services is allocated 90 percent to shareholders and 10 percent to ratepayers; passive products and services are allocated 70 percent to shareholders and 30 percent to ratepayers. The classifications are listed in Attachment A to the settlement agreement and were subsequently affirmed in Resolution E-3639 (effective May 15, 2000, approving Advice Letter 1286-E/1286-E-A). They were also submitted as Preliminary Statement G to SCE’s tariffs. The granting of the Easement on the Property is classified as a passive use of SCE’s land and, accordingly, the easement payment paid by DSP1 will be allocated 70 percent to shareholders and 30 percent to ratepayers.

4f: A statement on the impact of the transaction on ratebase and any effect on the ability of the utility to serve customers and the public:

Due to the small amount of revenue derived from this transaction compared to SCE’s ratebase, the transaction will not materially impact SCE’s ratebase. SCE believes that the granting of the Easement on the Property to DSP1 will have no effect on SCE’s ability to serve its customers or the public as the transmission lines to be placed within the Easement area will not affect SCE operations and allows SCE to operate its current facilities on the Property. The Easement also allows SCE to place its facilities in the Easement area, subject to the rights granted in the Easement.

4g: For sales of real property and depreciable assets, the original cost, present book value, and present fair market value, and a detailed description of how the fair market value was determined (e.g. appraisal): ADVICE 4162-E (U 338-E) - 6 - February 11, 2020

Not applicable as this transaction did not involve a sale of real property and depreciable assets.

4h: For leases of real property, the fair market rental value, a detailed description of how the fair market rental value was determined, and any additional information necessary to show compliance with Rule 3(g):

Not applicable as this transaction does not involve a lease of real property.

4i: For easements or rights-of-way, the fair market value of the easement or right-of-way and a detailed description of how the fair market value was determined:

An appraisal of the fair market value of the Easement, dated October 17, 2019, was completed by The Bronstein Company, Inc. The appraisal is attached as Exhibit C and used a sales comparison approach to establish the fair market value of the Easement.

4j: A complete description of any recent past (within the prior two years) or anticipated future transactions that may appear to be related to the present transaction, such as sales or leases of real property that are located near the property at issue or that are being transferred to the same transferee; or for depreciable assets, sales of similar assets or sales to the same transferee:

None.

4k: Sufficient information and documentation (including environmental documentation) to show that all of the eligibility criteria stated in Rule 3 have been met:

As presented in the discussion on Rule 3 Requirements, SCE believes that all applicable eligibility criteria stated in Rule 3 have been satisfied.

4l: The filing utility may submit additional information to assist in the review of the advice letter, including recent photographs, scaled maps, drawings, etc.:

No additional information is being submitted.

4m: Environmental Information: If the applicant believes that the transaction is not a project under CEQA, the applicant shall include an explanation of its position.

Not applicable. ADVICE 4162-E (U 338-E) - 7 - February 11, 2020

TIER DESIGNATION

Pursuant to PUC Section 851, GO 96-B, and GO 173, this advice letter is submitted with a Tier 2 designation.

EFFECTIVE DATE

Consistent with GO 173 (see especially GO 173, Rule 7(a)(5)), SCE requests Commission approval by March 12, 2020, which is 30 days after the date submitted.

NOTICE

Anyone wishing to protest this advice letter may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice letter. Protests should be submitted to:

California Public Utilities Commission, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: [email protected]

In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of:

Gary A. Stern, Ph.D. Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Facsimile: (626) 302-4829 E-mail: [email protected]

Laura Genao Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5540 E-mail: [email protected]

There are no restrictions on who may submit a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above. ADVICE 4162-E (U 338-E) - 8 - February 11, 2020

In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice letter to the interested parties shown on the attached GO 96-B list and, in accordance with GO 173, on the Energy Division, the Public Advocates Office, the Commission CEQA Team ([email protected]; [email protected]; [email protected]) and the County of San Bernardino Address change requests to the GO 96-B service list should be directed by electronic mail to [email protected] or at (626) 302-3719. For changes to all other service lists, please contact the Commission’s Process Office at (415) 703-2021 or by electronic mail at [email protected].

Further, in accordance with PUC Section 491, notice to the public is hereby given by submitting and keeping the advice letter at SCE’s corporate headquarters. To view other SCE advice letters submitted with the Commission, please visit https://www.sce.com/regulatory/advice-letters.

For questions, please contact Claire Keane at (626) 302-6654 or by electronic mail at [email protected].

Southern California Edison Company

/s/ Gary A. Stern Gary A. Stern, Ph.D.

GAS:ck:cm Enclosures

ADVICE LETTER SUMMARY ENERGY UTILITY

MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/CPUC Utility No.:

Utility type: Contact Person: ELC GAS WATER Phone #: E-mail: PLC HEAT E-mail Disposition Notice to:

EXPLANATION OF UTILITY TYPE (Date Submitted / Received Stamp by CPUC) ELC = Electric GAS = Gas WATER = Water PLC = Pipeline HEAT = Heat Advice Letter (AL) #: Tier Designation: Subject of AL:

Keywords (choose from CPUC listing): AL Type: Monthly Quarterly Annual One-Time Other: If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #:

Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL:

Confidential treatment requested? Yes No If yes, specification of confidential information: Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/ access to confidential information:

Resolution required? Yes No Requested effective date: No. of tariff sheets:

Estimated system annual revenue effect (%):

Estimated system average rate effect (%):

When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting).

Tariff schedules affected:

Service affected and changes proposed1: Pending advice letters that revise the same tariff sheets:

1Discuss in AL if more space is needed. Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to:

Name: CPUC, Energy Division Title: Attention: Tariff Unit Utility Name: 505 Van Ness Avenue Address: San Francisco, CA 94102 City: Email: [email protected] State: Zip: Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: Email:

Name: Title: Utility Name: Address: City: State: Zip: Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx: Email: ENERGY Advice Letter Keywords

Affiliate Direct Access Preliminary Statement Agreements Disconnect Service Procurement Agriculture ECAC / Energy Cost Adjustment Qualifying Facility Avoided Cost EOR / Enhanced Oil Recovery Rebates Balancing Account Energy Charge Refunds Baseline Energy Efficiency Reliability Bilingual Establish Service Re-MAT/Bio-MAT Billings Expand Service Area Revenue Allocation Bioenergy Forms Rule 21 Brokerage Fees Franchise Fee / User Tax Rules CARE G.O. 131-D Section 851 CPUC Reimbursement Fee GRC / General Rate Case Self Generation Capacity Hazardous Waste Service Area Map Cogeneration Increase Rates Service Outage Compliance Interruptible Service Solar Conditions of Service Interutility Transportation Standby Service Connection LIEE / Low-Income Energy Efficiency Storage Conservation LIRA / Low-Income Ratepayer Assistance Street Lights Consolidate Tariffs Late Payment Charge Surcharges Contracts Line Extensions Tariffs Core Memorandum Account Taxes Credit Metered Energy Efficiency Text Changes Curtailable Service Metering Transformer Customer Charge Mobile Home Parks Transition Cost Customer Owned Generation Name Change Transmission Lines Decrease Rates Non-Core Transportation Electrification Demand Charge Non-firm Service Contracts Transportation Rates Demand Side Fund Nuclear Undergrounding Demand Side Management Oil Pipelines Voltage Discount Demand Side Response PBR / Performance Based Ratemaking Wind Power Deposits Portfolio Withdrawal of Service Depreciation Power Lines

Exhibit A

RECORDING REQUESTED BY SOUTHERN CALIFORNIA EDISON COMPANY

RECORDING REQUESTED BY SOUTHERN CALIFORNIA EDISON COMPANY 2 INNOVATION WAY, 2ND FLOOR POMONA, CA 91768

ATTN: TITLE & REAL ESTATE SERVICES

SPACE ABOVE THIS LINE FOR RECORDER'S USE

Easement DOCUMENTARY TRANSFER TAX $______Serial 72154A Service Order : 801520224 Location: Unincorporated COMPUTED ON FULL VALUE OF PROPERTY CONVEYED ______APPROVED APN: 0516-341-18, 0516- OR COMPUTED ON FULL VALUE LESS LIENS AND 331-06, and 0515-011-21 ______GEOMATICS, LAND & ENCUMBRANCES REMAINING AT TIME OF SALE INFORMATION MANAGEMENT RP File No.: GRT203362503 SO. CALIF. EDISON CO. SCE Document: 261078 SIGNATURE OF DECLARANT OR AGENT DETERMINING TAX FIRM NAME BY SF DATE 08/30/2019

SOUTHERN CALIFORNIA EDISON COMPANY, a corporation, hereinafter called "Grantor", does hereby grant to DAGGETT SOLAR POWER 1 LLC., a limited liability company, hereinafter called "Grantee", an easement for Electric Transmission Right-of-Way purposes, in, on, under, over, along and across that certain real property in the County of San Bernardino, State of California, described as follows:

Those portions of Section 23, and Section 24, Township 9 North, Range 1 East, San Bernardino Meridian, and Section 19, Township 9 North, Range 2 East, San Bernardino Meridian, and Parcel 1 of Parcel Map 15198 as shown by Parcel Map on file in Book 185 Pages 15 through 17, inclusive of Parcel Maps, in the office of the county recorder of said county.

Said electric transmission right of way easement is more particularly described on the Exhibit “A” and more particularly depicted on the Exhibit “B”, both attached hereto and by this reference made a part hereof.

SUBJECT TO covenants, conditions, restrictions, reservations, exceptions, encumbrances, rights, easements, leases and licenses, affecting the above described real property or any portion thereof, whether of record or not.

The foregoing grant is made subject to the following terms and conditions:

1. The said Easement is granted subject to the right of Grantor to construct, maintain, use, operate, alter, add to, repair, replace, reconstruct, enlarge and/or remove in, on, over, under, through, along and across the above described real property, electric transmission and distribution lines and communication lines, together with supporting structures and appurtenances including the right of access, ingress and egress, for conveying electric energy for light, heat, power and communication purposes, and pipelines and appurtenances for the transportation of oil, petroleum, gas, water, or other substances, and conduits for any and all purposes.

2. Grantor shall not erect or place at any future time any of its facilities so as to unreasonably interfere with the rights of Grantee created by this Easement grant.

3. The said Easement shall be exercised so as not to unreasonably endanger or interfere with the construction, maintenance, use, operation, presence, repair, replacement, relocation, reconstruction or removal of such electric transmission, distribution or communication lines, pipelines, or other conduits.

Grant of Easement S.C.E., a corporation to Daggett Solar Power 1 LLC Serial No. 72154A RP File No.: GRT203362503 Affects SCE Document(s): 261078

4. Grantee agrees to hold harmless and indemnify Grantor to the fullest extent to which it can legally do so, from and against all claims, liens, encumbrances, actions, loss, damage, expense and/or liability arising from or growing out of loss or damage to property, including Grantor's own property, or injury to or death of persons, including employees of Grantor, resulting in any manner whatsoever, directly or indirectly, by reason of the exercise of the rights hereby granted; provided, however, that this covenant shall not apply in those instances where such claims, liens, encumbrances, actions, loss, damage, expense and/or liability are caused by the sole active negligence of Grantor.

5. Grantee agrees to pay to Grantor, upon demand, any and all costs of relocation and/or construction of such electric transmission, distribution and communication lines and supporting structures, pipelines, and conduits which may be or become necessary by reason of the exercise of the rights granted pursuant to this Easement.

6. Grantee agrees that in the exercise of its rights hereunder, its contractors, employees and other agents will maintain a minimum clearance of fifty (50.00) feet between their equipment and any and all overhead electric conductors.

7. Grantor shall have full unobstructed access to its facilities at all times and the right to clear, keep clear, and remove any and all obstructions of any kind at all times.

8. Grantor reserves for itself the right to trim any tree or trees which may grow in or on the above described real property and which, in the opinion of Grantor, endanger or interfere with the proper operation or maintenance of said electric transmission, distribution and communication lines, to the extent necessary to prevent any such interference or danger.

9. The above described real property is to be used only for the purposes specified herein and in the event:

a. said real property is not so used;

b. said real property shall be vacated as an electric transmission right of way; or

c. the project for which this Easement is being granted is abandoned,

the Easement shall thereupon, ipso facto, revert to and merge in the interest of Grantor in the above described real property.

10. Upon termination or reversion of the rights herein granted, Grantee shall execute and deliver to Grantor, within thirty (30) days after service of a written demand therefore, a good and sufficient quitclaim deed to the rights herein given. Should Grantee fail or refuse to deliver to Grantor a quitclaim deed, as aforesaid, a written notice by Grantor reciting the failure or refusal of Grantee to execute and deliver said quitclaim deed as herein provided and terminating this Easement shall, after ten (10) days from the date of recordation of said notice, be conclusive evidence against Grantee and all persons claiming under Grantee of the termination or reversion of the rights herein given.

11. As a controlling part of the consideration for the execution and delivery of this instrument by Grantor, the Easement is accepted upon and subject to the express condition that the

Grant of Easement S.C.E., a corporation to Daggett Solar Power 1 LLC Serial No. 72154A RP File No.: GRT203362503 Affects SCE Document(s): 261078

improvement for which the Easement is given, regardless of the time performed, and any other work or improvement commenced within five years from the date of recording of this Easement (which improvement and other work or improvement are hereinafter sometimes collectively called “Improvement”) shall be done without any cost or expense whatsoever to Grantor, and that in the event a special assessment or assessments is or are levied by an authorized lawful body against the real property of Grantor for the Improvement, Grantee agrees that it will reimburse Grantor and it shall be the binding obligation of the Grantee to reimburse Grantor for the full amount of any and all such special assessment or assessments so levied for said Improvement and paid by Grantor.

12. Also as a controlling part of the consideration for the execution and delivery of this instrument by Grantor, Grantee covenants, for itself, its successors and assigns, to construct and maintain the improvement to be located on the above described real property at its own expense.

13. Grantee hereby recognizes Grantor’s title and interest in and to the above described real property and agrees never to assail or resist Grantor’s title or interest therein.

14. Any earth fill placed by Grantee within the boundaries of the above described real property shall have a relative compaction density of ninety percent (90%).

15. Grantee agrees that all construction equipment, when not in use, shall be parked clear of Edison's right of way and/or rendered immobile.

16. Grantee agrees to maintain the above described real property.

17. In case of a suit to enforce any terms, covenants or conditions of this Easement, Grantee agrees to pay Grantor in addition to any other recovery or relief for which Grantor may be entitled, a reasonable attorney's fee to be fixed and allowed by the Court.

18. Any notice provided herein to be given by either party hereto to the other may be served by depositing in the United States Post Office, postage prepaid, a sealed envelope containing a copy of such notice and addressed to said other party at its principal place of business.

Jennifer Hein General Counsel 5780 Fleet Street, Suite 130 Carlsbad, CA 92008 Phone: 760-710-2187 Email: [email protected]

19. Upon the termination or reversion of the rights herein granted, Grantee shall at its own risk and expense remove said electric transmission right of way and restore said above described real property as nearly as possible to the same state and condition that it was in prior to any construction of said facilities, but if it should fail to do so within sixty (60) days after such termination, Grantor may do so at the risk of Grantee, and all cost and expense of such removal and the restoration of said premises as aforesaid, together with interest thereon at the rate of ten percent (10%) per annum shall be paid by Grantee upon demand.

20. Grantee agrees that all fencing and metallic structures installed within the above described real property shall be adequately grounded.

Grant of Easement S.C.E., a corporation to Daggett Solar Power 1 LLC Serial No. 72154A RP File No.: GRT203362503 Affects SCE Document(s): 261078

21. Grantee agrees that no additional structures will be installed on the above described real property.

22. Grantee agrees that the construction of the electric transmission right of way must be adequately sloped, so as to provide Grantor through access across the above described real property.

23. Grantee agrees not to store flammable materials nor store any vehicle on the above described real property.

24. Any trees or plants installed by Grantee within the above described real property shall be maintained by Grantee and shall not exceed a height of fifteen (15) feet.

25. Grantee agrees that during any period of construction activity, it will periodically water down the construction area within the above described real property, so as to prevent dust contamination of Grantor's facilities.

26. The use of the neuter gender herein will, when appropriate, be construed to mean either the masculine or feminine gender or both. Unless expressly provided elsewhere, herein to the contrary, the terms, covenants and conditions of this Easement shall inure to the benefit of and are binding upon the heirs, successors, representatives and assigns of the parties hereto.

27. Assignment – Grantee shall have the right to assign this Easement to (i) a subsidiary or affiliate, (ii) collaterally for financing purposes or (iii) to an unaffiliated third party who acquires the power project which serves this Easement.

IN WITNESS WHEREOF, said Southern California Edison Company has caused this instrument to be executed this ______day of ______, 20____.

SOUTHERN CALIFORNIA EDISON COMPANY, a corporation

By: Richard Fujikawa Land Services Agent RE Development & Disposition Geomatics, Land & Information Management

Grant of Easement S.C.E., a corporation to Daggett Solar Power 1 LLC Serial No. 72154A RP File No.: GRT203362503 Affects SCE Document(s): 261078

A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )

County of )

On ______before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ______

GRANTEE, does hereby accept the above and foregoing Easement upon and subject to all of the terms, covenants and conditions therein contained, and does hereby agree to comply with and perform each and all of said terms, covenants and conditions.

DATED as of this ______day of ______, 20____.

DAGGETT SOLAR POWER 1 LLC, a limited liability company

By: Name: Title:

Grant of Easement S.C.E., a corporation to Daggett Solar Power 1 LLC Serial No. 72154A RP File No.: GRT203362503 Affects SCE Document(s): 261078

State of California )

County of )

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ______

State of California )

County of )

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature ______

Exhibit B

Exhibit C

The Bronstein Company, Inc. TBCinc REAL ESTATE VALUATION & CONSULTING

Cary R. Bronstein, MAI Cell Phone: (818) 601- 0776 [email protected]

APPRAISAL REPORT

Proposed Powerline Easement Across Three Contiguous Parcels Located at Northwest Quadrant of Santa Fe Road & Sunray Lane Daggett, CA 92327

TBC Inc. File: 3808

5200 Kanan Road, Suite 226 Agoura Hills, CA 91301 Telephone (818) 483-6309 YOU CAN ORDER OR HAVE US BID YOUR NEXT APPRAISAL ON THE WEB! @ www.TBCappraisal.com

The Bronstein Company happily donates a portion of all company earnings to the Enrichment Foundation for Handicapped Children. Thank you for your patronage & support.

The Bronstein Company, Inc. TBCinc REAL ESTATE VALUATION & CONSULTING

Cary R. Bronstein, MAI Cell Phone: (818) 601- 0776 [email protected]

APPRAISAL REPORT Proposed Powerline Easement Across Three Contiguous Parcels Located at Northwest Quadrant of Santa Fe Road & Sunray Lane Daggett, CA 92327

Property Type Proposed Powerline Easement

Interest Appraised Appurtenant Easement

As of Date of Date of Report “As Is” Value October 17, 2019 September 30, 2019

USPAP Criteria Report Type Development Process Appraisal Report See Scope of Work

Performed For James Kelly Sr. Director, Development Clearway Energy Group LLC, 5780 Fleet Street Suite 130 Carlsbad, CA 92008

Performed By Cary Bronstein, MAI Daryl Johnson, CCGREA CA #AG013774; Expires 11/6/2020 CA #AG036857; Expires 3/29/2021

5200 Kanan Road, Suite 226 Agoura Hills, CA 91301 Telephone (818) 483-6309 YOU CAN ORDER OR HAVE US BID YOUR NEXT APPRAISAL ON THE WEB! @ www.TBCappraisal.com

The Bronstein Company happily donates a portion of all company earnings to the Enrichment Foundation for Handicapped Children. Thank you for your patronage & support.

The Bronstein Company, Inc. TBCinc REAL ESTATE VALUATION & CONSULTING

Cary R. Bronstein, MAI Cell Phone: (818) 601- 0776 [email protected]

James Kelly Sr. Director, Development October 17, 2019 Clearway Energy Group LLC 5780 Fleet Street Suite 130 Carlsbad, CA 92008

RE: Appraisal Report Proposed Powerline Easement (Across Three Contiguous Parcels) Northwest Quadrant of Santa Fe Road & Sunray Lane Daggett, CA 92327

Dear Mr. Kelly:

Per your request we have appraised the above property. The purpose of this appraisal is to provide a value estimate for the subject property under the following premises:

AS- IS VALUE Reflects the subject’s current physical and economic condition at the time of (LAND VALUE) our study. In the present case, the subject is effectively vacant land. This portion of our analysis is utilized to establish a baseline, or foundational Fee Simple value of the underlying land (full parcels). PROPOSED POWER LINE Reflects the value of a permanent easement to construct, operate, and EASEMENT VALUE maintain electricity transmission lines through a section of the subject property. This portion of our analysis focuses exclusively on the impacted areas of the proposed easement.

Our analysis is in conformance with the cited Scope of Work outlined in this appraisal report, in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).

This appraisal is valid only for the intended client and for the intended use noted below. This appraisal is not valid for any third party or any use other than that stated below.

CLIENT Clearway Energy Group LLC INTENDED USER(S) Clearway Energy Group LLC and Southern California Edison INTENDED USE Negotiations and determination of land value for proposed power line easement.

5200 Kanan Road, Suite 226 Agoura Hills, CA 91301 Telephone (818) 483-6309 YOU CAN ORDER OR HAVE US BID YOUR NEXT APPRAISAL ON THE WEB! @ www.TBCappraisal.com

The Bronstein Company happily donates a portion of all company earnings to the Enrichment Foundation for Handicapped Children. Thank you for your patronage & support.

Letter of Transmittal Page 2

Based on the information, analysis and reasoning provided in the attached appraisal report, together with our best judgment and experience, we estimate the following value conclusion(s) pertinent to the subject property, as of our stated date of valuation, September 30, 2019:

Summary of Valuation Land Area (Acres) Price / Acre Price PSF Indicated Value PRIME ACREAGE RATE 234.08 $ 725 $ 0.017 $ 169,708 234.08 $ 825 $ 0.019 $ 193,116 Contributory Value (Rounded): $ 181,000 SECONDARY ACREAGE RATE 660.71 $ 575 $ 0.013 $ 379,908 660.71 $ 725 $ 0.017 $ 479,015 Contributory Value (Rounded): $ 429,000

TOTAL FEEE SIMPLE LAND VALUE: $ 610,000

Per Acre Equivalent: $ 681.72 Per Square Foot Equivalent: $ 0.016

EASEMENT VALUE Land Area (Acres) Price / Acre Price PSF Indicated Value 29.95 $ 682 $ 0.016 $ 20,418 Rounded (Fee Simple): $ 20,400 Easement Value (% of Fee Value) 85.00% $ 17,340 Estimated Easement Land Area $ 17,300

The value estimates cited above are inclusive of real property only, and do not include furniture, fixtures & equipment (FF&E), or similar non-realty items. Our opinions and conclusions are subject to each of the Assumptions & Limiting Conditions made a part of the attached report.

Particular attention is directed to the following Extraordinary & Hypothetical Assumption(s), which if found to be false could impact our reported assignment conclusions:

EXTRAORDINARY ASSUMPTION #1 The subject is undeveloped vacant land which is adjacent to the former Southern California Edison Coolwater Electricity Power Plant, currently owned by RRI Energy West LLC. The plant was the first use of coal gasification (IGCC) technology in a modern electric power plant in the United States. Research indicated the facility was closed down in 1990’s due to deregulation of the energy sector.

We were not provided with a certified soil or subsoil analysis of the subject property. Though no adverse soil conditions were noted upon visual inspection of the property, the discovery of adverse soil conditions is beyond our area of expertise. We therefore assume that there exist no soil or subsoil conditions which would preclude or adversely affect the development of the site or render it more or less valuable. We assume no responsibility for any such conditions or for the engineering which might be required to discover these factors.

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EXTRAORDINARY ASSUMPTION #1 (CONT.) No determination has been made concerning the existence of any latent or claimed defects on the property. Such defects could include UFFI, asbestos, ground water contamination, radon gas, lead-based paint, soil contamination, toxic or radioactive waste, geological or topographic defects, flood hazards or any other unnamed hazards. We assume no responsibility for the presence of such defects on the property. In the absence of such studies, the appraisers hereby reserves the right to review, alter, revise and/or rescind this appraisal or any part thereof, based on the subsequent environmental impact studies.

EXTRAORDINARY ASSUMPTION #2 Per client instruction, the date of value utilized in this analysis is current as of September 30, 2019. The scope of assignment did not include a physical site inspection of the subject, nor was it required for credible assignment results. Therefore we assume the property and its environs have not changed and remain the same as of our previous site observations performed on June 3, 2017.

Thank you for the opportunity to have been of service. If you should require any further assistance or have any questions regarding the material discussed in this report, please do not hesitate to call.

Respectfully Submitted,

THE BRONSTEIN COMPANY, INC.

Cary Bronstein, MAI Daryl Johnson CA #AG013774; Expires 11/6/2020 CA # AG 036857; Expires 3/29/2021

Attachments: Appraisal Report

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APPRAISAL REPORT TABLE OF CONTENTS

EXECUTIVE SUMMARY 1 Property Location Property Type Site Information Improvement Information Type(s) of Value Estimate Sought Interest Appraised Critical Dates Value Conclusion(s)

PROPERTY OVERVEW & KEY VALUATION ISSUES 3

SCOPE OF WORK (APPRAISAL DEVELOPMENT & REPORTING PROCEDURES) 8

INTENDED USE AND USER 10

EXPOSURE/MARKETING TIME 11

MARKET AREA ANALYSIS (REGIONAL) 12

MARKET AREA ANALYSIS (LOCAL) 20

SITE DESCRIPTION 30

OWNERSHIP INFORMATION 39

ASSESSED VALUE & TAXES 39

HIGHEST & BEST USE 45

VALUATION SECTION 47 Introduction & Methodology 48 Sales Comparison Approach (Fee Simple Land Value) 49 Easement Valuation 65

ADDENDA 77 Certification Copy of State License Assumptions & Limiting Conditions Definitions Qualifications of the Appraisers

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EXECUTIVE SUMMARY

Subject Location NW Quadrant of Santa Fe Road & Sunray Lane Daggett, CA 92327 Property Type Analysis of vacant land for proposed power line easement. Census Tract 103.00

PROJECT SUMMARY

Property Type: Three Adjacent Vacant Land Parcels

Location: NW- Santa Fe Road & Sunray Lane Daggett, CA 92327

LARGER SITE AREA (FULL PARCELS) Assessor's Pacel Land Area (Gross) Land Area (Net) Numbers (APNs) Zone Acreage Sq. Ft. Acreage Sq. Ft. 0516-331-06 (*) IR (Regional Ind) Prime 192.50 8,385,300 157.60 6,865,056 0516-341-18 (*) IR (Regional Ind) Secondary 660.71 28,780,528 660.71 28,780,528 0515-011-21 (*) IR (Regional Ind) Prime 76.48 3,331,469 76.48 3,331,469 Total Land Area: 929.69 40,497,297 894.79 38,977,053

Total Prime Acreage 234.08 10,196,525 Total Secondary Acreage 660.71 28,780,528 Total Acreage 894.79 38,977,052

EASEMENT AREA (Approx 120' x10,871.85') Land Area (Gross) Land Area (Net) Zone Acreage Sq. Ft. Acreage Sq. Ft. IR (Regional Ind) 29.95 1,304,622 29.95 1,304,622 Total Land Area: 29.95 1,304,622 29.95 1,304,622

(*) The easement area under appraisement reflects of a portion of each cited APN.

Flood Zone Zone D (Flood Panel 06071C4600H, dated September 26, 2008)

Valuation Estimates: As-Is Market Value Proposed Power Line Easement Value

Interests Appraised: Fee Simple (Land Value) & Permanent Easement

Critical Dates Date of Inspections June 3, 2017 (Date of Prior Physical Site Observations) Date of “As-Is” Value September 30, 2019 Date of Report October 17, 2019

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EXECUTIVE SUMMARY

TOTAL FEEE SIMPLE LAND VALUE: $ 610,000

Per Acre Equivalent: $ 681.72 Per Square Foot Equivalent: $ 0.016

Our opinions and conclusions are subject to each of the Assumptions & Limiting Conditions made a part of this report. Particular attention is directed to any Extraordinary Assumption(s) or Hypothetical Condition(s), previously noted.

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PROPERTY OVERVIEW & SUMMARY OF KEY VALUATION ISSUES Per your request we have appraised the above property. The purpose of this appraisal is to provide a value estimate for the subject property under the following premises:

AS- IS VALUE Reflects the subject’s current physical and economic condition at the time of (LAND VALUE) our inspection. In the present case, the subject is effectively vacant land. This portion of our analysis is utilized to establish a baseline, or foundational Fee Simple value of the underlying land (full parcels). PROPOSED POWER LINE Reflects the value of a permanent easement to construct, operate, and EASEMENT VALUE maintain electricity transmission lines through a section of the subject property. This portion of our analysis focuses exclusively on the impacted areas of the proposed easement.

The subject property consist of three contiguous vacant land parcels totaling 894.79 net acres in size positioned at the Northwest Quadrant of Santa Fe Road & Sunray Lane. The three parcels are owned by Southern California Edison Company. The subject is located in an industrial zoned district near the small high desert Town of Daggett situated within unincorporated San Bernardino County California.

Positioned on the north side of Santa Fe Road, the subject is located between Interstate 15 and Interstate 40. The subject lies to the east of the former Southern California Edison Company Coolwater Electric Power Plant currently owned by RRI Energy West LLC. Southern California Edison Company still retains ownership of the land surrounding the power plant of which includes the subject properties. Running northeast to southwest, the Mojave River demarcates the subject’s north boundary. The United States Marine Corps Supply Annex in Yermo is to the northwest and the small town of Daggett located two miles west. To the east of the subject is the small Barstow-Daggett Airport followed by sparse rural residential dwellings to include alfalfa farming operations. The remaining area is vast amounts of raw undeveloped desert land.

In the analysis of vacant land there are six readily defined options available to the appraisers:

1. Sales Comparison Approach; 2. Residual Analysis; 3. Subdivision Development Study; 4. Extraction Analysis; 5. Allocation Analysis; and, 6. Ground Rent Capitalization

Given the availability of land transactions, the most reliable method for analyzing a Fee Simple land interest is the Sales Comparison Approach (which is utilized in this appraisal). The Sales Comparison Approach (SCA) utilizes a mixture of several proximately-located transactions from the subject’s local trade area. The data items bracket the subject in terms of location, physical aspects, Highest & Best Use potential, development appeal, etc. The data items are compared to the subject and analyzed (adjusted) to reflect distinctions in key features of comparison such as location, date of sale, condition of sale, parcel size, zoning and development potential, topography, utility status, parcel shape, etc. In the present case, the subject and data items have been analyzed on a Price per Acre basis – the dominant metric used in the local marketplace.

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PROPERTY OVERVIEW & SUMMARY OF KEY VALUATION ISSUES The second component of our scope of work includes formulating an opinion of value for a proposed powerline line easement across the subject property. The purpose of the easement is to construct, operate, access and maintain electricity power transmission lines on the subject property. The easement type would be an appurtenant easement. Per information from the client the dominant tenement would be the property owned by RRI Energy West LLC (Coolwater Facility west of the subject) in conjunction with the proposed easement to be operated and maintained by Clearway Energy Group. A 120 foot wide strip that passes through three adjacent parcels owned by Southern California Edison would be the servient tenement. Due to the fact the easement would be a mutual agreement between Clearway Energy Group and Southern California Edison as opposed to a condemnation proceeding, the elements of value specific to eminent domain are not applicable.

A survey map and legal description of the proposed easement was prepared by Bonadiman & Associates Civil Engineering Firm. The survey map states the easement is 120 feet wide and runs a total distance of 10,871.85 feet in length. The easement is plotted in two strips. Strip #1 runs north and south and is calculated to be 1,263.24 in length. Strip #2 runs east and west and is calculated to be 9,608.61 in length. (1,263.24 + 9,608.61 = 10,871.85). An aerial map of the proposed easement is shown below. The legal description and survey map are shown on the following pages.

AERIAL VIEW OF PROPOSED EASEMENT

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SCOPE OF WORK (APPRAISAL DEVELOPMENT & REPORTING PROCEDURES) Our appraisal analysis and the appraisal report document are based on the scope of wok determined appropriate for this engagement. Based on the 2016/2017 version of USPAP, the scope of work rule is summarized as follows:

SCOPE OF WORK RULE For each appraisal and appraisal review assignment, an appraiser must:

1. Identify the problem to be solved; 2. Determine and perform the scope of work necessary to develop credible assignment results; and 3. Disclose the scope of work in the report.

An appraiser must properly identify the problem to be solved in order to determine the appropriate scope of work. The appraiser must be prepared to demonstrate that the scope of work is sufficient to produce credible assignment results.

An appraiser must gather and analyze information about those assignment elements that are necessary to properly identify the appraisal or appraisal review problem to be solved.

Scope of Work Acceptability The scope of work must include the research and analyses that are necessary to develop credible assignment results.

An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.

An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.

Disclosure Obligations The report must contain sufficient information to allow intended users to understand the scope of work performed.

Based on the above-cited criteria, a further amplification of the scope of work for this particular assignment is provided below.

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SCOPE OF WORK (APPRAISAL DEVELOPMENT & REPORTING PROCEDURES)

SCOPE OF WORK GUIDE FOR VALUE APPROACHES MINIMUM STANDARDS USED IN TBC APPRAISAL REPORTS

LAND VALUATION SALES COMPARISON

1. Minimum4 Closed, Comparable Land Sales 1. Minimum 4 Closed, Comparable Improved Sales 2. Adequate description of data items utilized. 2. Adequate description of data items utilized. 3. Cite verification sources of all data items. 3. Cite verification sources of all data items. 4. Adjustment Matrix - Quantitative 4. Adjustment Matrix - Quantitative 5. Adequate analytic comments and support for 5. Adequate analytic comments and support for adjustments applied. adjustments applied. 6. Market participant interviews. 6. Market participant interviews. 7. Plat Map of each land sale, when available. 7. Photograph of each data item, when available.

COST APPROACH INCOME APPROACH

1. When available, analyze actual or budget DIRECT CAPITALIZAITION construction costs 1. Minimum4 Comparable Rental Items (to 2. Utilize Marshall & Swift Cost Guide (show base include at least 3 Closed Leases) factor development) 2. Adequate description of data items utilized. 3. Reasonably account for Soft / Indirect Costs 3. Cite verification sources of all rental data. 4. Address all forms of possible depreciation 4. Adjustment Matrix - Quantitative 5. Address Entrepreneurial Profit 5. Adequate analytic comments and support for adjustments applied. 6. Separate treatment and analysis of Market versus Contract Rents (when applicable). 7. Effort to obtain and analyze 3 years of Historical Operating information. NOTES / OTHER 8. Market support for Vacancy & Collection Loss; Expense Analysis; Capitalization Rate 9. Market participant interviews. 1. The items cited on this table reflect our 10. Photograph of each data item, when minimum standards consistently applied in TBC available. Appraisal Reports. When a Discounted Cash Flow is deemed 2. Not all assignments require each of the applicable, the following requirements apply: approaches to value cited herein. DISCOUNTED CASH FLOW (DCF) 3. Supplemental Client Standards will be 1. Utilization of ARGUS software incorporated in our Scope of Work, whenever 2. Market based support and adequate applicable. discussion relating to Discount/Yield Rate;

** AS NOTED ABOVE, NOT ALL OF THE APPROACHES REFERENCED ABOVE MAY APPLY TO THE CURRENT ASSIGNMENT. THE FOLLOWING SECTION ADDRESSES SPECIFIC METHODOLOGIES USED IN THIS PARTICULAR APPRAISAL REPORT.

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SCOPE OF WORK (APPRAISAL DEVELOPMENT & REPORTING PROCEDURES) The purpose of the appraisal is to provide an estimate of value for the subject under the following premise(s):

To develop our opinion of value, we performed the following Scope of Work, per the Uniform Standards of Professional Appraisal Practice (USPAP). The scope of work undertaken includes (but is not limited to) the following:

a. Inspection* of the subject property and its surroundings; b. Research and verification of current land sales and rental comparables; c. Inspection of the data items relied on in this report; d. Interviews with brokers, managers, and other market participants; e. Interviews with city officials and other related governmental agencies; f. Review of information available on public records; g. Review of economic and other area-specific overviews such as those published by major brokerage firms, universities, government agencies, etc.; h. Research relating to current market trends including development patterns, vacancy and absorption rates, supply and demand characteristics, etc. i. Development of a credible value estimate utilizing the Sales Comparison Approach.

Inspection: Prior physical inspection performed as of June 3, 2017. Current observation using aerial mapping.

Our analysis is in conformance with the cited Scope of Work outlined in this appraisal report, in accordance with Standard 1 of the Uniform Standards of Professional Appraisal Practice (USPAP); and this reporting of our analysis is in compliance with Standard Rule 2 of USPAP.

INTENDED USE & USER This appraisal is valid only for the intended client and for the intended use noted below. This appraisal is not valid for any third party or any use other than that stated below.

CLIENT Clearway Energy Group LLC INTENDED USER(S) Clearway Energy Group LLC and Edison Company INTENDED USE Negotiations and determination of land value for proposed power line easement.

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EXPOSURE/MARKETING TIME The value conclusion(s) in this appraisal – which are stated as of the cited date of valuation – presume (retroactively) that the subject has had sufficient time and exposure on the market to facilitate a sale as of the valuation date. This reflects our estimation (and presumption) of Exposure Time. Conversely, we recognize that if the asset were put on the market for sale contemporaneously with this appraisal it would take some degree of time (prospective) to achieve a sale. This prospective estimate is termed Marketing Time. The concept marketing versus exposure time is visually noted below:

With respect to the data items used in this appraisal the following market time were reported:

Sale Item Marketing Time (Months)

Land Sale 1 49.7 Land Sale 2 3.6 Land Sale 3 1.7 Land Sale 4 5.9 Active Listing 5 80.0

In addition to the sale items noted above, we have also reviewed numerous other sales cited on secondary sources such as CoStar. Review of these items reveals a common marketing timeframe in the 6 to 24 month range.

Subject Conclusion

Exposure Time: 6 to 24 Months

Marketing Time: 6 to 24 Months

As noted, the estimated time required to market the subject property for sale is between 6 and 24 months. This estimate correlates with the improved sales analyzed in this report, and the feedback generated from our market inquiries.

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REGIONAL ECONOMIC OVERVIEW

GREATER LOS ANGELES AREA BASIN The subject property is located in the small desert community of Daggett which is situated in San Bernardino County California. Daggett is influenced by the larger incorporated City of Barstow. This area of the high desert has a northeastern orientation within the county, as well as the five-county area comprising the greater Los Angeles Area Basin (Los Angeles, Orange, Ventura, San Bernardino, and Riverside Counties).

REGIONAL MAP

San Bernardino County is part of the five-county area known as the Los Angeles Metropolitan Area (LAMA), which is comprised of Los Angeles, Orange, Ventura, San Bernardino and Riverside Counties. The LAMA boasts an expansive regional economic base in terms of geography, population, and economic productivity. This five-county metropolitan area covers over 34,000 square miles and represents the second largest metropolitan area in the country by population. Rated on a purely economic scale LAMA has the 16th largest economy in the world according to the LAEDC (Los Angeles Economic Development Corporation) - Economic Forecast & Industry Outlook.

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The following population chart reflects the results of the 2010 national Census and growth of Southern California Counties. Riverside County experienced the most growth at 11.31% followed by San Diego 7.74% and San Bernardino County 6.40%.

While 2018 California saw 3.4 GDP however there are signs of a pull back as market participants remain tepid as to opinions of sustainability. Even so, a number of the region’s major industries continue to be challenged.

The table below from the most recent LAEDC depicts California’s Gross Domestic Product year over year since 2009. GDP is down from a 5.0% growth high that occurred in 2015.

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Investment in the state has also declined since mid-2017 as fewer deals for new projects have transpired. This is illustrated in the chart below.

The United States Bureau of Labor reports that unemployment rate was 4.1% as of August 2019 for the state of California.

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CALIFORNIA’S HOUSING MARKET FORECAST (MANAGE CASA SEPTEMBER 2019) This report on the US housing market covers important data including California home prices, sales, recent trends from CAR, NAR, Statista, Zillow and more, and predict what might be next for 2020.

August home sales showed from July, although sales are still up from August 2018. Sales are buoyed by lower priced segments, although supply is throttling home sales numbers. Median selling prices hit an all-time high with single family homes leading the charge.

Active listings plummeted 8.9%, the slowest growth since 2017. Prices were stable with the exception of Silicon Valley where home prices fell 5.3% Mom, and 3.7% YoY. Sales in Central Valley and San Francisco fell 2.5 and 2.9% respectively. Home Prices in Santa Clara, Alameda, Ventura and Orange County saw big drops in prices.

California home sales Prices. Screen Capture courtesy of CAR.org

IS CALIFORNIA REAL ESTATE RECOVERING?

Sales according to CAR, rose about 4.6% in the 4ook to 749k price range. Home prices rose to a new median all time high of $611,190 which is which is $266,000 higher than the price of $245,230 ten years ago. California condo prices bounced back to $470,000.

With mortgage rates dropping, homeowners are engaged in refinancing as opposed to selling. Sellers may be content with the status quo as mortgage payments decreased to 3 year lows.

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Zillow reports May median prices came in at $547,700, and they forecast home prices will rise only about $1000 by next summer. Property managers and landlords will enjoy high occupancy rates and perhaps rising ROI if they use the right property management software and modern management strategy.

California Home Prices – Screen capture courtesy of CAR.org

Despite lower mortgage rates, flat home prices, Zillow predicts California rent prices will rise. Unlike those in the national housing picture, Californians have solved the buy versus rent home dilemma, by continuing with renting. This is fueling a surge in build-to-rent developments. Given the ultra-high real estate prices, first time buyers simply can’t come up with the down payment or manage the lofty mortgage payments.

California Rent Price History Timeline – Screen Capture courtesy of Zillow

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Despite all the political turmoil and trade uncertainty, not much seems to get in the way of California’s immense economic machine. The Golden State is moving into the rank of 4th of world’s largest economies. A record 18.7 million Californians are employed, wages are rising, and they’re ready to buy homes if they’re affordable.

The issue is buying power and home prices coupled with the lack of available homes and apartments in California that makes the market so tough here. Per the California Association of Realtors the state needs 200,000+ new housing units to keep pace with demand. However only about half that number is being built. The high cost of new construction to include environmental hurdles with new development keep new construction at a minimum. Adding to the already high cost of living coupled with the highest fuel prices in the nation, talk of higher taxes continue from the legislators in Sacramento. This continues as more and more people exit the state seeking places with lower cost of living and new opportunities.

SAN BERNARDINO COUNTY San Bernardino County is located in the southern portion of California. As of the 2010 census, the population was 2,035,210, making it the fifth-most populous county in the state, and the 12th-most populous in the United States. San Bernardino County is included in the Riverside-San Bernardino- Ontario, CA Metropolitan Statistical Area (MSA), also known as the Inland Empire, as well as the Los Angeles-Long Beach, CA Combined Statistical Area. With an area of 20,105 square miles, San Bernardino County is the largest county in the United States by area.

The following data is from the University of Riverside 2nd Quarter 2019 report. Business activity in the Inland Empire picked up again in the second quarter of 2019 after slowing conspicuously earlier in the year. The new Inland Empire Business Activity Index released today by the University California Riverside School of Business Center for Economic Forecasting and Development, shows a jump of 2.5% in the region’s business activity in the second quarter, a noticeable increase over the scant 0.8% gain in the first quarter. Looking over the past year, however, the region has been outpaced by the nation as a whole, with U.S. GDP growing by 2.3% from the second quarter of 2018 to the second quarter of 2019 compared to the Inland Empire’s to 1.8% expansion in business activity.

The economy of Riverside and San Bernardino counties grew at a 1.6% annual pace in the 12 months ended in March, by this math. That’s No. 47 among the 68 big metro areas tracked and down from 4.5% a year earlier when the Inland Empire was ninth-best 9 nationally. The past year’s change in growth is a 2.9 percentage-point decrease and was third-worst among the 68 metro areas. Conversely, the Los Angeles and Orange County economy grew at a 4% annual pace.

“While quarter-to-quarter variations like this are to be expected, the most recent growth in business activity is a reassuring sign of continued expansion in the Inland Empire economy,” said Robert Kleinhenz, Executive Director of Research at the Center for Economic Forecasting and one of the Index authors. “The slower pace of growth compared to the nation as a whole is the result of labor market constraints across Southern California, with employers in the Inland Empire competing with the broader region for the workers in Riverside and San Bernardino Counties.”

The latest Index report also uses a ‘shift share’ analysis to illustrate which industries in the Inland Empire are the most competitive and which ones lag the most when compared to the nation. While the health care industry contributes the greatest number of jobs to the region, transportation and warehousing is the most competitive local industry nationally as a large share of its performance can be attributed specifically to regional characteristics and conditions – lending inherent competitiveness.

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The industry contributes the fourth largest number of jobs, behind health care, retail, trade, and accommodation. Along with construction and manufacturing, these six industries make up the most competitive or leading sectors in the Inland Empire.

According to the Index authors, the least competitive industry in the region is finance and insurance. In this industry, the growth that can be attributed specifically to local factors falls into negative territory. Other lagging industries include management, professional and technical services, information, and utilities.

“The analysis demonstrates the level of competitive advantage that certain industries currently find in the Inland Empire,” says Kleinhenz. “For example, the strength of the transportation and warehousing industry is being partly driven by the rise in e-commerce, but it’s the need for developable land, which the Inland Empire has a lot of, that makes the region so desirable to the industry and fuels the local advantage.”

The following chart shows which industries in the Inland Empire are leading and which are lagging.

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The following is from the LAEDC 2019 Greater Los Angeles Area Economic Forecast and Industry Outlook for San Bernardino County.

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LOCAL ECONOMIC OVERVIEW –VICTOR VALLEY

The larger Mojave Desert region of San Bernardino County is located at a higher elevation situated to the north and east and covers the majority of land within the county. The bulk of the population is found in the lower elevation Inland Empire situated at the southwest corner of the county and more heavily influenced by the Los Angeles Basin. The high desert region of the county largest metropolitan area is the Victor Valley. This area of the county lies about 70 miles east of the Pacific Ocean and 25 miles north of downtown San Bernardino. There are four incorporated cities within the Victor Valley; Adelanto, Apple Valley, Hesperia, and Victorville. Also included are the smaller unincorporated communities of Lucerne Valley, Oak Hills, Phelan and Wrightwood. The estimated combined population for Victor Valley is about 390,000. This area is part of what has been referred to as the “E” Corridor. It’s comprised of key incorporated communities in the Inland Empire, including San Bernardino, Ontario, Fontana, Rancho Cucamonga, Rialto, Hesperia, Apple Valley, and Barstow.

The City of Victorville is the primary business hub of the high desert region of San Bernardino County and draws its workforce and consumers from well beyond its immediate area. It is the largest commercial center between San Bernardino and the Nevada border. Victorville is situated approximately 97 miles northeast of Los Angeles and 35 miles north of San Bernardino, just north of the San Bernardino Mountains, at the edge of the Mojave Desert. Interstate 15 and State Highway 18 intersect near the center of Victorville and the city is bordered on the west by US Highway 395.

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Most of the area's employment opportunities fall into service-related businesses, with nearly 42% of businesses in the city located in the retail sales category. Local manufacturing companies are primarily related to mining and cement production. Major industry includes the Southern California Logistics Airport, located in Victorville, which is home to many global companies like Boeing, General Electric, and the Burlington Northern and Santa Fe Railway Company. This facility is the primary center of the city’s effort to reshape the Southern California Logistics Airport (SCLA) into a major distribution hub for consumer goods. SCLA is targeted to be the largest rail logistics facility west of the Mississippi River. Plans are in the works to transform SCLA into a multi-modal facility and inland port designed to receive both domestic and international goods for distribution throughout the country.

The City of Barstow is located 28 miles northeast of the Victor Valley and 55 miles north of the City of San Bernardino. Barstow is a major transportation center for the Inland Empire. Several major highways including Interstate 15, Interstate 40, and California State Route 58 converge in the city. It is the site of a large rail classification yard, belonging to the BNSF Railway. The Union Pacific Railroad also runs through town using trackage rights on BNSF's main line to Daggett 10 miles east, from where it heads to Salt Lake City and the BNSF heads to Chicago. Barstow is about 62 miles from Baker, California and 111 miles from Primm, Nevada. Barstow is almost exactly midway between Los Angeles, California (130 miles southwest) and Las Vegas, Nevada (125 miles northeast). Barstow is home to Marine Corps Logistics Base Barstow, the largest employer in the area. The population for Barstow was 22,639 at the 2010 census.

Heading north, northeast, and east from the Victor Valley and the Barstow region of the county, vast areas of thinly populated deserts and mountains stretch for miles. Most of the region is zoned Resource Conservation and primarily owned by the Federal Government. Small pockets of privately owned parcels can be found in clusters located along the highways and some dirt roads. Lack of infrastructure and distance to larger metropolitan areas prevent any development in the area. The Mojave National Preserve covers some of the eastern desert portion, especially between Interstate 15 and Interstate 40. The desert portion also includes the cities of Needles next to the Colorado River and Barstow at the junction in Interstate 15 and Interstate 40. Trona is at the northwestern part of the county west of Death Valley. Further south, a portion of Joshua Tree National Park overlaps the county near Twentynine Palms. Additional places near and west of Twentynine palms include Yucca Valley, Joshua Tree, and Morongo Valley.

Solar and Wind Power Generation In 2002, California established its Renewable's Portfolio Standard (RPS) Program, with the goal of increasing the percentage of renewable energy in the state. On November 17, 2008, Governor Arnold Schwarzenegger signed Executive Order S-14-08 requiring that "all retail sellers of electricity shall serve 33 percent of their load with renewable energy by 2020." The following year, Executive Order S-21-09 directed the California Air Resources Board, under its AB 32 authority, to enact regulations to achieve the goal of 33 percent renewables by 2020. As result of the formation of the California RPS program and recent change in the goals to meet state mandates, there has been a sector of land purchases specifically for the purpose of building solar farms in the Antelope Valley. To date there have been about thirty approved projects, however a large majority have not gone forward with development plans. To date both county and city planning officials indicated a small portion of the projects have been completed as many companies have withdrawn plans altogether. Reports indicate the Greater Antelope Valley Economic Alliance renewable resource members are planning to make an investment of $10 billion for renewable energy generation. However there remains only a few

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APPRAISAL REPORT: TBC FILE: 3808 P a g e | 22 approved projects that are pending submitted construction plans for review. It remains to be seen as to whether or not the projects will actually be built as many of the government subsidies will no longer be available.

Since the start of the state's RPS Program subsequent senate bills and action plans have been passed to further the 100% goal of climate friendly energy sources.

Timeline of California's Renewables Portfolio Standard

 2002: Senate Bill 1078 establishes the RPS program, requiring 20% of retail sales from renewable energy by 2017.  2003: Energy Action Plan I accelerated the 20% deadline to 2010.  2005: Energy Action Plan II recommends a further goal of 33% by 2020.  2006: Senate Bill 107 codified the accelerated 20% by 2010 deadline into law.  2008: Governor Schwarzenegger issues Executive Order S-14-08 requiring 33% renewables by 2020.  2009: Governor Schwarzenegger issues Executive Order S-21-09 directing the California Air Resources Board, under its AB 32 authority, to adopt regulations by July 31, 2010, consistent with the 33% renewable energy target established in Executive Order S-14- 08.  2011: Senate Bill X1-2, signed by Gov. Edmund G. Brown, Jr., codifies 33% by 2020 RPS.  2015: Senate Bill 350, signed by Gov. Edmund G. Brown, Jr. codifies 50% by 2030 RPS  2018: Senate Bill 100, signed by Gov. Edmund G. Brown, Jr. codifies 60% by 2030 & 100% by 2045 RPS

Despite California’s ambitious RPS Program, San Bernardino County, the largest county in the state, has banned the construction of large solar and wind farms on more than 1 million acres of private land, bending to the will of residents who say they don’t want renewable energy projects industrializing their rural desert communities northeast of Los Angeles. A vote by San Bernardino County’s Board of Supervisors in February 2019 highlighted a challenge California could face as it seeks to eliminate the burning of planet-warming fossil fuels.

State lawmakers passed a bill last year requiring utility companies to get 60% of their electricity from renewable sources by 2030, and 100% from climate-friendly sources by 2045. But achieving those goals will require cooperation from local governments working with solar and wind farm developers. However, like many large infrastructure projects, they are often unpopular at the local level.

The policy approved by the supervisors prohibits utility-oriented renewable energy projects — defined as projects that would mostly serve out-of-town utility customers, rather than local power needs — within the boundaries of Community Plans that have been adopted by more than a dozen unincorporated towns. Construction of utility-oriented solar and wind farms would also be banned in so-called Rural Living (RL) zones. Solar projects that are already going through the permitting process would still be allowed to proceed.

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The most comprehensive economic report for the high desert region of San Bernardo County is published by The Bradco Companies based out of Victorville. Bradco Companies is the longest serving commercial real estate firm in the region. The High Desert Economic Overview has been published since 1993 and recognized as a reliable source for decades. The recent 57th Edition reports the High Desert region of the county, like most of the California economy, is slowly but steadily recovering from the recession. That said, properties located within the incorporated cities are performing better than those located in the unincorporated sections. Although the report cited several positive development projects and promising trends for the Victor Valley, Barstow, and more specifically the Daggett-Yermo areas, appear to be outside the sphere of influence to capture a noticeable amount of the economic prosperity.

Conclusion Given the significant presence of the logistics industry, the regional economy is somewhat more dependent upon the U.S. and global economies compared with other Southern California counties. In addition, the other three main drivers of the high desert regional economy are housing, construction, and manufacturing. All of these industries will ultimately determine the strength of the region's economy over the short term and more importantly, the long term. In the coming years, the key advantages for the region will once again be the affordability of housing, population growth and available low-cost land for additional warehouse construction.

Daggett, California Daggett is an unincorporated community located in San Bernardino County, California. The town has a population of about 200 and is located on Interstate 40 ten miles east of Barstow. Daggett was originally founded in the 1880s just after the discovery of silver in the mines near Calico to the north. Daggett became quite a big city in the 1890s of which included three stores, two restaurants, three saloons, three hotels, a lumberyard, and a Chinese eating place. But after 1911, when richer borax deposits were discovered north of Daggett in Death Valley at the Lila C. Mines, all the mining operations were moved which caused Daggett to go into a steady decline. The town has never recovered even to the present day. Despite the establishment of the solar energy plants, Daggett still struggles to hang on to life. Travel through the town is primarily motorist attempting to reach Yermo and connect to Interstate 15 to Las Vegas.

Located five miles east of Daggett and 14 miles east of Barstow, the Barstow-Daggett Airport is a county-owned public airport in San Bernardino County, California.. The facility is a general aviation airport serving the Barstow area. It is also the regional weather information center. Built in 1933, it is the oldest of the six airports operated by the county. The airport covers 1,087 acres at an elevation of 1,930 feet above mean sea level. It has two asphalt runways. The airport was built as a modification center for the Douglas A-20 Havoc bomber aircraft that were sent to Russia as part of the Lend-Lease program during World War II. Today the Army has based several UH-60 Blackhawks there operating under the Fort Irwin National Training Center aviation company which on paper is based in Fort Irwin. Daggett was the site for the world's first commercial solar power plants, SEGS I (built in 1984) and SEGS II (built in 1985) of the SEGS network. Daggett was also home to a unique solar thermal energy plant named Solar One, a pilot project which was operational from 1982 to 1986. The plant used mirror- like heliostats to aim sunlight at a collecting sphere located on a solar power tower (a type of solar furnace), through which oil flowed. The large quantity of sunlight reflected on the sphere superheated the oil, which was then used to create steam for power generation. The plant was upgraded in 1995 as part of the Solar Two project. Solar Two substituted molten salt compounds instead of oil as an energy storage medium.

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Location Map- Daggett

During calibration of the power plant's thousands of heliostats, a ball of glowing light was sometimes seen in the nearby area. This effect was caused by the heliostats focusing sunlight onto a specific point. As the intensity of the light increased, it reflected off dust in the desert air. This phenomenon was sometimes seen by passersby on the nearby Interstate 40 and 15. Solar Two was decommissioned in 1999, and the facility was converted in 2001 into a gamma-ray astronomy telescope. The facility is now known as CACTUS (Converted Atmospheric Cherenkov Telescope Using Solar-2). CACTUS, which is operated by the University of California, Davis but owned by Southern California Edison, operated from late 2004 until late 2005.

On November 25, 2009, the Solar Two tower was demolished and the site was razed by Southern California Edison. All heliostats and other hardware were removed. Plans are in place to develop a training facility for Southern California Edison to train personnel on construction and maintenance of high power transmission lines and towers.

Currently, there is only one solar renewable energy project in Daggett that has recently completed construction on a new and upgraded facility. Sunray Energy 2 is a 44 megawatt project covering 333 acres. The project replaces an old outdated solar power facility built in 1984. The facility is located on the north side of Interstate 40 between the town of Daggett and Newberry Springs. The site was built in 1984 when the property was owned by Southern California Edison and was authorized by the California Energy Commission. The new site does not use heat transfer fluid, which caused a fire at the

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APPRAISAL REPORT: TBC FILE: 3808 P a g e | 25 site in 1999 that resulted in extensive property damage. The new facility dramatically reduced water usage because it does not require water for cooling.

Daggett is a station on the BNSF Railway on the Needles Subdivision. Trains are frequent on the line as this line goes to Chicago, it is also a junction of the Union Pacific's Cima subdivision, the former LA&SL, line from Salt Lake City, Utah via Las Vegas, Nevada. The Union Pacific runs via trackage rights on the BNSF and goes to Riverside, California.

Back in its early days, Daggett had two narrow gauge railroads, the Borate and Daggett Railroad and the Waterloo Mining Railroad, both built to export silver and borax ore out of the Calico Mountains several miles north. Both were 3 foot gauge, and both were serviced by two steam locomotives each. But after 1910, both of these railroads were closed down and abandoned due to the mining companies moving on to greener pastures found to the north in Death Valley. The old railroad beds can still be traced in some places in the desert, but now most of the old grades have been paved over to support cars and off-road vehicles. LOCATION MAP

Subject Neighborhood The subject is positioned at the northeast quadrant of Santa Fe Road and Daggett Yermo Road about two miles east of the Town of Daggett. This section of remote highway is between Daggett and the community of Newberry Springs. The subject is located on Santa Fe Road which parallels National Trails Highway, a train rail line, and Interstate 40, all of which lead to Needles Arizona. Access to the subject is via the Interstate 40 between the Avenue A-Street off-ramp in Daggett or five miles east off the Hidden Springs Road exit.

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On the west side of the subject are a few small ranch properties with single-family residential dwellings. The Mojave River demarcates the west and north boundaries of the subject as it stretches east to west through this section of the desert. A rail line crosses the river as it runs northeast along Interstate 15 heading to Baker California and then onward to Las Vegas Nevada. Northwest across the riverbed is home to the United States Marine Corps Annex. Southwest of I- 40 Interstate are vast amounts of raw undeveloped desert land, much of which is owned by the Federal Government as part of the Marine Base facility. Immediately east of the subject is the new Sunray Energy 2 solar electricity generating facility covering 333 acres. Approximately two miles east of the solar project is the Daggett/Barstow municipal airport followed by Newberry Springs. Small Alfalfa agricultural farms are scattered around the airport. Rural residential dwellings to include two private man-made lake subdivisions are found between Interstate 40 and Interstate 15.

VICINITY MAP

The boundaries of the subject’s local area of influence may essentially be defined as outlined below:

Northern Boundary: Interstate 15 Southern Boundary: Interstate 40 Eastern Boundary: Newberry Springs/Undeveloped Raw Desert Land Western Boundary: City of Barstow

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LAND SECTOR Vacant land typically falls into two categories. The first and most prevalent is the vast amount of land located in areas outside the sphere of influence of major cities and towns. These properties sit idle as they wait for a highest and best use to form based on the path of future development. It can take years to several decades before properties in this category begin to appreciate in value. Most of the vacant land properties fall into this category.

The second class of vacant land properties are those whereby the requirements of a specific highest and best use must be matched with a particular size and location parcel. An example of this would be a fast-food restaurant chain seeking a corner location with the right combination of exposure, traffic count, egress and ingress, etc. Vacant land parcels in this category are fewer in number and have greater demand.

Based on our research of the subject market area and current economic conditions in concert with forecasted projections for the Barstow-Daggett region of unincorporated San Bernardino County, we have concluded the demand remains to be minimal for large vacant land properties in the foreseeable future.

SALES ACTIVITY There has been a two-tiered land investment market in the Mojave Desert for several decades due to the vast amounts of undeveloped raw scrub land and presence of "land dealers". For many years land dealers have been in the practice of purchasing raw land and reselling parcels to out of area buyers. These can include out of state and even out of the country investors. The buyers are typically not well informed as to land values in the region and often solicited on potential growth patterns that are not realistic for the area. The parcels are often purchased by the land brokers at tax sales or directly from distressed or unknowledgeable sellers who are contacted by the dealers directly. In some cases the properties are purchased off the local multiple listing service. These parcels are often resold within a very short time for two or three times more than the recent purchase price, in some cases to several buyers as cotenant ownership.

As result of the circumstances surrounding these types of sale transactions by land brokers, the sales do not meet the definition of an "arm's length transaction" and therefore not considered for comparison in this report. However the purchases by land dealers might be relied upon to estimate the subject’s market value. In the comparable sales analysis used in this report, importance was placed on using sales that were professionally marketed for sale in the local multiple listing service.

The California Regional Multiple Listings Service (CRMLS) reported 893 current vacant land listings for the Barstow, Daggett, Kramer Junction, Lucerne Valley, Yermo and Newberry Springs area. Over the last twenty four months 473 were sold. With respect to larger size properties 10 acres or more, the CRMLS reported 367 active listings with 165 sold over the last twenty four month period.

The data indicates there is more 31/2 year supply of land properties available at the current annual absorption rate.

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The graph below shows the number of sales month to month for the Barstow, Daggett, Kramer Junction, Lucerne Valley, Yermo and Newberry Springs area. Sales volume dropped dramatically from a peak in August 2019.

An analysis of exposure time revealed that over 50% of the active listings have been for sale on the market more than 180 days. Properties located within the incorporated cities tend to sell faster due to the development potential.

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BROKER SURVEY As part of our market research we interviewed local brokers familiar with the Barstow-Daggett land market to include San Bernardino Regional Planning, San Bernardino Assessor’s Office, and San Bernardino Real Estate Services Division.

BROKER OPINION SURVEY

Opinion of Broker Company Value Acre Rent Acre Land Rate Comments

Robert Keller Willaims $400 to $750 for No Opinion No Opinion Mr. Patterson is a 47 year resident of the Victor Patterson Victorville larger acreage Valley an has expertise in rural farm and ranch properties properties. He indicated land has been more challenging to sell recently. Although there is no specific reason to point to, increased building costs and water availability are two primary factors. His opinion of price per acre coincides with the sales research performed.

Jim Patton JP Broker, High $300 to $1,000 No Opinion No Opinion Mr. Patton is a higher desert real estate broker Desert with several decades of experience dealing exclusively with vacant land properties. Due to the current forces in the market land sales activity has dramatically decreased. He stated 2019 will be his slowest year since 2009. His price per acre range is based on current values, although there are some properties he would not list due to the difficulty with selling land some of the more remote areas.

Michael Coldwell Banker See Comments No Opinion No Opinion Mr. Vedder is a veteran broker in the high desert Vedder area. He advised land sales activity has experienced a slow down and remains soft. He was the listing broker for Comp Sale #2 whereby the reason for the purchase was for land banking and speculation purposes.

Richard High Country Under $1,000 for No Opinion No Opinion Mr. Granfield is based out of Lucerne Valley and Granfield Real Estate larger size is deals with rural land properties in the properties 40+ surrounding area. Based on his experience acres vacant land has seen a decline overall. He pointed to the fact that there has bee a push back by high desert residents regarding renewable energy projects coupled with the county-wide moratorium on new solar farms.

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SITE DESCRIPTION

Legal Description The subject property is currently owned by the Southern California Edison. An abbreviated legal description was available through RealQuest Public Records Reporting Services. APN: 0516-331-06 (North Section Map)

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SITE DESCRIPTION

APN: 0516-331-06 (South Section Map)

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SITE DESCRIPTION

APN: 0516-341-18

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SITE DESCRIPTION

APN: 0515-011-21 (North & South Sections)

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PROPOSED EASEMENT AREA

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SITE DESCRIPTION

Site Description

PROJECT SUMMARY

Property Type: Three Adjacent Vacant Land Parcels

Location: NW- Santa Fe Road & Sunray Lane Daggett, CA 92327

Total Prime Acreage 234.08 10,196,525 Total Secondary Acreage 660.71 28,780,528 Total Acreage 894.79 38,977,052

(*) The easement area under appraisement reflects of a portion of each cited APN.

Site Orientation Northeast orientation

Census Tract / Block 103.00

Topography Level at street grade.

Comments The subject is comprised of three contiguous parcels that form an irregular shaped property. All three of the parcels are zoned IR- Regional Industrial.

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ZONING MAP

The subject three parcels are all zoned IR Regional Industrial

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SITE DESCRIPTION

Zoning Designation IR- Regional Industrial Purpose & Allowable Uses *The IR Zone is established to preserve land within the planning area for manufacturing, processing, assembly, fabrication, distribution, and similar activities related to production and transport of goods. Commercial uses which are compatible with and supportive of the manufacturing uses within these zones are also provided for.

Height: 30 feet maximum (IR) Setbacks: Front: 15 ft. (IR) Side: 10 ft. (IR) Rear: 10 ft. (IR) Minimum Lot Area: 5.0 Acre both (IR) Minimum Lot Width: 60 feet (IR) Minimum Lot Depth: 100 feet (IR) Width to Depth Ratio 1:3 Max Coverage: 80% Maximum (IR) FAR: .5:1 (IR) Parking 1:1,000 sf for first 40,000 sf of bldg area. (IR) 1: 4,000 sf for additional 40,000 sf or industrial uses. 1 for each facility vehicle.

Subject’s Conformance to Zone Not applicable, subject is vacant undeveloped land.

Utilities Gas None Electricity Electricity is available located along Santa Fe Lane. Water None Sewer None

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SITE DESCRIPTION

Soil Conditions The site appears to have adequate drainage. The client has not provided us with a soils report. Therefore, we assume that the site has sufficient load bearing capacity and that drainage is adequate. It is an assumption of our analysis that the subject’s soil conditions are suitable and adequate for the proposed usage.

Earthquake/Seismic Risk To our knowledge, the subject is not located within an Alquist- Priolo special study zone for earthquake fault activity. Since the subject site is located within proximity to various faults in Southern California, there is some degree of earthquake hazard at the subject location. It is recommended that any interested party obtain a complete geological study to determine any potential hazard specifically germane to the subject locale.

Environmental & Toxic We are aware of no environmental/toxic contamination Contamination impacting the subject site. The subject property is assumed to be free and clear of any such contamination. No evidence of this kind of contamination was observed during our inspection.

EXTRAORDINARY ASSUMPTION #1 The subject is undeveloped vacant land which surrounds the former Southern California Edison Coolwater Electricity Power Plant now owned by RRI Energy West LLC. The plant was the first use of coal gasification (IGCC) technology in a modern electric power plant in the United States. Sources indicate the facility was closed down in 1990’s.

No determination has been made concerning the existence of any latent or claimed defects on the property. Such defects could include UFFI, asbestos, ground water contamination, radon gas, lead-based paint, soil contamination, toxic or radioactive waste, geological or topographic defects, flood hazards or any other unnamed hazards. We assume no responsibility for the presence of such defects on the property. In the absence of such studies, the appraisers hereby reserves the right to review, alter, revise and/or rescind this appraisal or any part thereof, based on the subsequent environmental impact studies.

WE EMPHASIZE TO THE USER OF THIS REPORT THAT THE APPRAISERS ARE NOT QUALIFIED TO DETECT SUCH SUBSTANCES, AND IT IS AN EXPRESS ASSUMPTION OF OUR ANALYSIS THAT THE SUBJECT IS A CLEAN SITE WITH NO CONTAMINATION OR TOXICITY.

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SITE DESCRIPTION

Easements, Encumbrances, & Restrictions Report Type: No report provided Company: N/A Date: N/A Order Number: N/A Comments A Title Report was not provided for our review. Overall, based on our property inspection, and general market research, we are not aware of any items deemed to represent a negative impact on the subject’s value or marketability.

THIS APPRAISAL ASSUMES THAT NO SUBSTANTIVE EASEMENTS, RESTRICTIONS, ENCROACHMENTS OR ENCUMBRANCES NEGATIVELY IMPACT THE SUBJECT PROPERTY.

Flood Hazard Per the FEMA website, the subject is located in panel #06071C6400H within zone "D".

OWNERSHIP & PROPERTY HISTORY

Current Owner Southern California Edison Company Date Acquired N/AV Consideration N/Av Document Type / Number There were no document numbers for any of the subject parcels reported in the public records data sources

Three Year Sales History No other transactions in the past three years discovered or disclosed

ASSESSED VALUE & TAXES

The three parcels are owned by the Southern California Edison Company and are not subject to property tax assessment

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SUBJECT PHOTO

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SUBJECT PHOTOGRAPHS (JUNE 2017 OBSERVATIONS)

VIEW E ON SANTA FE STREET- SUBJECT SOUTH BORDER VIEW NW ON SANTA FE STREET- SUBJECT SOUTH BORDER

VIEW N ON SANTA FE STREET- SUBJECT WEST BORDER VIEW W ON SANTA FE RD TOWARD TOWN OF DAGGETT

VIEW W AT CORNER OF SANTA FE ST & HIDDEN SPRINGS RD VIEW NW AT CORNER OF SANTA FE ST & SUNRAY LN

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SUBJECT PHOTOGRAPHS (JUNE 2017 OBSERVATIONS)

VIEW W TOWARD SUBJECT (ALFALFA CROP ON EAST SIDE) VIEW SOUTH ALONG SUBJECT’S EAST BORDER

VIEW NORTH ALONG SUBJECT’S EAST BORDER VIEW N ON SUNRAY LN- SUBJECT’S EAST BORDER

NORTHEAST SECTION OF SUBJECT ON SUNRAY LN CENTER SECTION

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SUBJECT PHOTOGRAPHS (JUNE 2017 OBSERVATIONS)

VIEW NW AT SUBJECT’S NORTH BOUNDARY VIEW NW FROM SUBJECT CENTER (RAIL SPUR)

VIEW S FROM SUBJECT CENTER (ACCESS RD) VIEW NW FROM SUBJECT CENTER (ACCESS RD)

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SUBJECT AERIAL EXHIBITS PROPOSED EASEMENT PATH

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HIGHEST & BEST USE Highest and Best Use may be defined as follows:

“The reasonable, probable, and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.”1

An analysis of Highest & Best Use (HBU) must consider a property as though vacant and as currently improved. In either case, the HBU analysis must address the following four criteria:

Four Tests of Highest & Best Use

Test 1 Test 2 Test 3 Test 4 Legally Physically Financially Maximally Permissible Possible Feasible Productive

What can the land Of the legal uses Among the legally From the potential uses legally be used for permitted, which are permissible and that are financially given current zoning most appropriate physically possible feasible, which yield and building codes, physically given the uses, which are likely the highest returns? environmental size, shape, area, to produce a positive regulations, historic terrain, condition, and financial return? district controls, private overall utility of the and other restrictions? property?

HBU AS VACANT

Legally Permissible The subject property consists of three adjacent vacant land parcels totaling 894.79 net acres in size positioned at the northwest quadrant of Santa Fe Road and Sunray Lane. The subject is located in a Regional Industrial (IR) zoned district within San Bernardino County California. Surrounding the subject’s IR zone also include Floodway (FW) that lies within the Mojave River as well as Resource Conservation (RC) and Institutional (IN) land use, both of which allow for renewable energy facilities with a Conditional Use Permit (CUP).

The IR-Regional Industrial zone allows for a wide variety of land uses to include manufacturing, warehouse distribution, construction yard & materials, recycling centers, and renewable energy generation facilities. Current land uses along this corridor include one renewable energy project that was recently upgraded along with some alfalfa agriculture operations and sparse residential dwellings separated by raw undeveloped desert land. The most prominent improved land properties are the Coolwater Generating Station (non-operational, formerly a Southern California Edison facility), the Sunray Energy 2 Solar Farm, and the Barstow-Daggett Airport.

Because of the recent countywide moratorium on any new solar and renewable energy facilities, a solar farm would not be a legally permissible use. Per the client, the County of San Bernardino Land Use Services/Planning Division has grandfathered the Clearway Energy solar electricity generating facility plan. However, if the project was not completed by the client the approval would

1 The Appraisal of Real Estate, Ibid., p. 305. TBCinc

APPRAISAL REPORT: TBC FILE: 3808 P a g e | 46 no longer be in force. As such the approval for construction and operation of the facility is non- transferable.

Physically Possible The subject’s large size and zoning to include relatively level topography of which is located next to a primary arterial would allow for many different types of uses under its current zoning.

The abundance of available land suitable for potential solar facilities throughout the high desert region lowers the demand in a specific area. Prospective solar electricity generation facilities can take years of planning of which include obtaining a power purchase agreement (PPA) in addition to plan submission and approval by the county or city planning departments. However in light of the recent countywide moratorium, renewable energy use is not possible at this time.

Financially Feasible & Maximally Productive Generally speaking, land values in the unincorporated regions of the Barstow-Daggett area have remained stagnate for the past several years due to their location outside the immediate sphere of influence of the Victor Valley. Future development is likely to occur within, or closer to, the incorporated cities where planned residential subdivisions and commercial business parks have been integrated into the areas general plan. Population growth will stem from this economic hub where it could take several years or perhaps decades before the more remote sections of the high desert begin to experience noticeable growth.

Large acreage land use such as alfalfa farming requires adequate water for a sustainable business. Many of the current operations are long-time local farmers who grow their own alfalfa to support dairy businesses elsewhere. In some cases the farmers have sold their water shares separately resulting in significantly lower land values.

Although the subject zoning is tied to the industrial sector of the economy, based on its location and proximity to economic centers, any potential project would depend on many factors and will have a greater amount of risk. An extensive feasibility study would need to be performed in order to investigate all of the variables associated with a development plan. Because of the economic conditions that currently exist coupled with feedback from local brokers, the appraiser has concluded the highest and best use of the subject property is to hold for investment purposes.

HBU As Improved Not applicable.

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VALUATION SECTION Appraisers have three traditional tools, or methods to rely upon in the valuation process. These methods, which are commonly referred to as the Cost, Sales Comparison, and Income Approaches, are used because they reflect the best available system – or structure – to mirror and provide insight into the thinking process of active market participants.

Derived from these three major approaches, there are numerous other related techniques and methods which an appraiser can make use of, depending on the nature of the valuation problem. A brief description of some of appraisal’s major tools is provided below:

Primary Methods of Valuation

COST APPROACH SALES COMPARISON APPROACH INCOME APPROACH

This approach is based upon the The Sales Comparison Approach relies This approach is based on the proposition that an informed purchaser on a process of contrasting market economic principle of Anticipation. would pay no more for a property than transactions to the property under Succinctly stated, the marketplace the cost of producing a substitute appraisement. routinely demonstrates that there is a property of similar utility. measurable value placed on the right The appraiser develops search criteria to collect income over time and/or sell This approach is particularly helpful based on traits identified in the subject a property for profit at a future date. when analyzing a newly constructed or property. These traits include physical proposed building, especially when the attributes such as size, configuration, The Income Approach allows the improvements represent the HBU of quality, condition, etc. – as well as appraiser to analyze future benefits the site. other important features such as time projected for a property and translate of sale, location, use, and economic them, via market-derived rates, into a It is also quite helpful when dealing characteristics. present value estimate. with special use properties where truly comparable sale data may be The appraiser then narrows the pool of The primary tools of the Income sparse. available market data to those items Approach are Direct Capitalization, deemed most comparable. From that and Discounted Cash Flow (DCF) When a property has aged, estimating pool, distinctions observed among the analyses. depreciation becomes increasingly data items are accounted for in order difficult and the Cost Approach to derive an estimate of value This method of analysis is especially becomes a less useful tool. appropriate for the subject property. important when dealing with income- producing assets in which the likely This approach can be quite useful for buyer would be making value both income producing, and owner- decisions stemming from investment- user style properties. based criteria.

Additional Comments The principles that make up the foundation for the three major approaches described above can be applied in the form of related, and tangential methodologies – depending on the nature of the appraisal problem. For example, in the analysis of vacant land there are six readily defined options available to appraisers: 1) Sales Comparison Approach; 2) Residual Analysis; 3) Extraction Analysis; 4) Subdivision Development Study; 5) Allocation Analysis; and, 6) Ground Rent Capitalization. But, nevertheless, each of these techniques has its roots in the three primary methods elaborated on above. And, many of these supplemental techniques have application when appraising improved properties as well.

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INTRODUCTION & METHODOLOGY The purpose of this appraisal is to provide a value estimate for the subject property under the following premises:

In the analysis of vacant land there are six readily defined options available to the appraisers:

1. Sales Comparison Approach; 2. Residual Analysis; 3. Subdivision Development Study; 4. Extraction Analysis; 5. Allocation Analysis; and, 6. Ground Rent Capitalization

Additionally, our scope of work includes formulating an opinion of value for a proposed powerline line easement across the subject property. A map and legal description of the proposed easement was provided by the client and has been relied on exclusively to formulate an opinion of value for the easement.

The purpose of the easement is to construct, operate, access and maintain electricity power transmission lines on the subject property. The easement type would be an appurtenant permanent easement as opposed to a deeded fee title. Per information from the client the dominant tenement would be the property owned by RRI Energy West LLC, current owner of Coolwater Facility, in conjunction with Clearway Energy Group who would construct the power lines and maintain the easement. A detailed explanation of the methodology utilized to formulate an opinion of value for the easement follows the Sales Comparison Approach.

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SALES COMPARISON APPROACH (SCA) – FEE SIMPLE LAND VALUE The Sales Comparison Approach (SCA) is a method of valuation that compares prices paid for similar properties in an open and free marketplace. A study of the market in the subject’s trade area was performed in an effort to locate comparable sales, open escrows, and listings of vacant land properties that could support similar uses. This data of comparable properties are the basis in forming an opinion of value for the subject property.

Summary of Parameters

General Location Primary Sort: Daggett-Newberry Springs-Yermo-Barstow trade area. Secondary Sort: Greater Mojave High Desert trade area. Date of Sale Primary Sort: Previous 12 months. Secondary Sort: Older sales, if appropriate. Land Area (sf) Primary Sort: Greater than 100 acres Secondary Sort: Smaller as deemed appropriate. Use Primary Sort: Large acreage parcels with focus on proximity to major arterials. Secondary Sort: Other land sales.

Below is a sales map showing the proximity of the comparables sales discovered to the subjects location. On the following pages the reader will find a summary of each of the sales employed in our analysis. Subsequent to the presentation of data, further comments relating to our analysis and valuation are provided. LAND SALE MAP

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1 NW Quad of Silver Vy Rd & Lake Vw Rd August 2, 2019 RL $ 31,000 Newberry Springs, CA 92365 263420 1,663,120 $ 0.02 0515-162-10 49.7 Mo 38.18 $ 812 Conventional Fee Simple No Cash

Other Transaction Details Topography: Level Utility Status: Electricity poles at south boundary Parcel Configuration: Interior Parcel Shape: Rectangular Entitlement Status: None Demolition Required: No Interim Value: No Buyer: Aidy Young Seller: Jaco Enterprises LLC Seller's Broker: Mark Hamilton, Hamilton Landon Real Estate Buyer's Broker: Not listed Verification Sources: RealQuest, CRMLS, Public Records. Verification Date: October 1, 2019

Comments This sale was discovered in the CRMLS. The property had been listed for just over 4 years with an asking price of $37,500. The sales price of $31,000 represents a 17.33% reduction. The parcel is positioned on the north side of Interstate 40 in Newbery Springs surrounded by a mix of raw land, agricultural and rural residential dwellings. The parcel has 330 feet of paved road frontage along the south boundary with power poles on the south side of the street.

2 SE Quad Interstate 15 & Field Rd June 21, 2019 RC $ 40,000 NE of Yermo, CA 92327 205507 2,466,367 $ 0.02 0541-211-28 3.6 Mo 56.62 $ 706 Conventional Fee Simple No Cash

Other Transaction Details Topography: Semi-Level Utility Status: None Parcel Configuration: Interior Parcel Shape: Rectangular Entitlement Status: None Demolition Required: No Interim Value: No Buyer: CMN Properties INC Seller: Frederick Loo Seller's Broker: Michael Vedder- Coldwell Banker Buyer's Broker: MVP Realty SoCal Verification Sources: RealQuest, CRMLS, Public Records. Verification Date: October 1, 2019

Comments Discovered in the CRMLS, this parcel was marketed along with another smaller property, each selling to different buyers. The selling price equates to a 5.88% reduction from the asking price. The property is positioned on the south side of Interstate 15 about 18 miles NE of Yermo. The property has no road access per the plat map. A rail line runs near the SE corner of the rectangular shaped property. The listing broker stated he thought the buyer purchased for land banking reasons.

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PRESENTATION OF EFFECTIVELY VACANT LAND SALES Item Street Address Sale Date Zone Sale Price City/State Document No. Sq. Ft. Price psf Assessor's Parcel No(s) Marketing Time Acres Price acre Condition of Sale Interest Acquired Exp After Purch Financing Terms 3 NW Quad Interstate 15 & Arbuckle St March 29, 2019 OS $ 65,000 Barstow, CA 92311 97283 4,917,924 $ 0.01 0421-111-68 1.7 Months 112.90 $ 576 Conventional Fee Simple No Cash Other Transaction Details Topography: Semi-Level to Hilly Utility Status: None Parcel Configuration: Interior Parcel Shape: Rectangular Entitlement Status: None Demolition Required: No Interim Value: No Buyer: Santa Marina Properties Seller: Legacy Land Co LLC Seller's Broker: Ryan Travis, Kursch Group Buyer's Broker: Same as above Verification Sources: RealQuest, CRMLS, Public Records. Verification Date: October 1, 2019 Comments Property was advertised in the CRMLS. The original asking price was $75,000 whereby the selling price represents a 13.33% reduction. The parcel is situated within the incorporated City of Barstow on the west side of Interstate 15 about three miles south of development. Although the parcel has approximately 2,000 feet of freeway frontage there is no direct access. The immediate surrounding area is raw undeveloped land.

4 NE Wannbollet Rd & Bragdon Rd July 12, 2018 RL $ 225,000 Newberry Springs, CA 92365 254464 13,503,600 $ 0.02 0539-071-03, 05, 43 5.9 Months 310.00 $ 726 Conventional Fee Simple No Cash Other Transaction Details Topography: Level Utility Status: Electricity power poles located at the west boundary Parcel Configuration: Interior Parcel Shape: Rectangular Entitlement Status: None Demolition Required: No Interim Value: No Buyer: James Cashel Seller: Anne Ching Seller's Broker: Robert Patterson, Keller Williams Buyer's Broker: Not listed (Non MLS Member) Verification Sources: RealQuest, CRMLS, Public Records. Verification Date: October 1, 2019 Comments Listed in the CRMLS, this sale was comprised of three contiguous parcels. Positioned NE of the subject on the north side of Interstate 15, the property is situated in a sparsely developed area with improved properties consisting of rural residential dwellings. The property was originally listed at $375,000. The selling price of $225,000 equates to a 40% reduction. The buyer has since sold one of the smaller lots.

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PRESENTATION OF EFFECTIVELY VACANT LAND SALES Item Street Address Sale Date Zone Sale Price City/State Document No. Sq. Ft. Price psf Assessor's Parcel No(s) Marketing Time Acres Price acre Condition of Sale Interest Acquired Exp After Purch Financing Terms 5 SW Quad Interstate 40 & National Trails Active Listing RC $ 239,000 Newberry Springs, CA 92365 N/A 6,512,220 $ 0.04 0521-091-04, 05, 06 80 Months 149.50 $ 1,599 Conventional Fee Simple No Conv Other Transaction Details Topography: Semi-level to sloping Utility Status: None Parcel Configuration: Corner Parcel Shape: Irregular Entitlement Status: None Demolition Required: No Interim Value: No Buyer: Active Seller: David Duc Pham Seller's Broker: Richard Granfield, High Country RE Buyer's Broker: N/A Verification Sources: RealQuest, CRMLS, Public Records. Verification Date: October 1, 2019 Comments This is a current active listing positioned to the east of the subject on the south side of Interstate 40. The asking price was based on seller expectations and overpriced. Per the listing broker a price per acre of $700 was considered to be more realistic in the current market. The property consists of two parcels separated by a flood water culvert. The property has been on the market for over 6 years advertised with available seller financing.

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COMPARABLE SALE #1

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COMPARABLE SALE #2

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COMPARABLE SALE #3

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COMPARABLE SALE #4

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COMPARABLE SALE #5

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ANALYSIS OF LAND SALE DATA A recap of the data is tabled below, followed by additional discussion and analysis:

SUMMARY OF LAND SALES Sale Land Area Price Price Sale Street Address City / State Date Zoning SF Acres PSF Acre

NW Quad of Silver Vy Newberry Springs, CA 1 Aug-19 RL 1,663,120 38.18 $ 0.02 $ 812 Rd & Lake Vw Rd 92365

SE Quad Interstate NE of Yermo, CA 2 Jun-19 RC 2,466,367 56.62 $ 0.02 $ 706 15 & Field Rd 92327

NW Quad Interstate 3 Barstow, CA 92311 Mar-19 OS 4,917,924 112.90 $ 0.01 $ 576 15 & Arbuckle St

NE Wannbollet Rd & Newberry Springs, CA 4 Jul-18 RL 13,503,600 310.00 $ 0.02 $ 726 Bragdon Rd 92365

SW Quad Interstate Newberry Springs, CA Active 5 RC 6,512,220 149.50 $ 0.04 $ 1,599 40 & National Trails 92365 Listing

On the following page is an adjustment matrix that displays each of the features of comparison deemed necessary to reach an opinion of value for the respective subject sites.

The adjustments are not necessarily based on a paired-data study. Rather, the categories and adjustments are intended to offer general insight with regard to the order of magnitude afforded each of the features of comparison, as determined by our investigation into the subject marketplace.

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ADJUSTMENT OF COMPARABLE LAND DATA SUBJECT ONE TW0 THREE FOUR FIVE Sale Price N/A $31,000 $40,000 $65,000 $225,000 $239,000 Site Size (Acres) 894.79 38.18 56.62 112.90 310.00 149.50 General Location Daggett, CA 92327 Newberry NE of Yermo, Barstow, CA Newberry Newberry Springs, CA CA 92327 92311 Springs, CA Springs, CA 92365 92365 92365 Specific Location NW- Santa Fe Road & NW Quad of SE Quad NW Quad NE Wannbollet SW Quad Sunray Lane Silver Vy Rd & Interstate 15 & Interstate 15 & Rd & Bragdon Interstate 40 & Lake Vw Rd Field Rd Arbuckle St Rd National Trails Site Configuration Road Fronting Similar Similar Similar Similar Similar Assemblage Site Shape Irregular Rectangular Rectangular Rectangular Rectangular Irregular Topography Essentially Level Level Semi-Level Semi-Level to Level Semi-level to Utility Status None Electricity None NoneHilly Electricity slopingNone Zone/Density IR poles RLat south RC OS powerRL poles RC Demolition N/A No No No No No Interim Value N/A No No No No No Entitlements N/A None None None None None Well / Site Imprs N/A N/A N/A N/A N/A N/A

Unadjusted $ Acre N/A $812 $706 $576 $726 $1,599

Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple 0% 0% 0% 0% 0% Adjusted $ acre N/A $812 $706 $576 $726 $1,599

Financing Terms Conventional Cash Cash Cash Cash Conv 0% 0% 0% 0% 0% Condition of Sale Conventional Conventional Conventional Conventional Conventional Conventional 0% 0% 0% 0% 0% Exp. After Purch. N/A No No No No No 0% 0% 0% 0% 0% Adjusted $ acre N/A $812 $706 $576 $726 $1,599

Date Sep-19 Aug-19 Jun-19 Mar-19 Jul-18 Active Listing No. Mos----> 1 3 6 14 0 0.0% 0.0% 0.0% 0.0% -50.0% Adjusted $ Acre N/A $812 $706 $576 $726 $799

General Location Daggett, CA 92327 0% 0% 0% 0% 0% Specific Location NW- Santa Fe Road & 0% 0% 0% 0% 0% Site Size (Acres) Sunray894.79 Lane 0% 0% 0% 0% 0% Site Configuration Road Fronting 0% 0% 0% 0% 0% Site Shape AssemblageIrregular 0% 0% 0% 0% 0% Topography Essentially Level 0% 0% 0% 0% 0% Utility Status None 0% 0% 0% 0% 0% Zone/Density IR 0% 0% 0% 0% 0% Demolition N/A 0% 0% 0% 0% 0% Interim Value N/A 0% 0% 0% 0% 0% Entitlements N/A 0% 0% 0% 0% 0% Well / Site Imprs N/A 0% 0% 0% 0% 0% Subtotal of Adjust. N/A 0% 0% 0% 0% 0%

FINAL INDICATORS N/A $812 $706 $576 $726 $799 Total % Adjustment N/A 0% 0% 0% 0% -50%

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RANGE OF UNIT VALUE INDICATORS The Price per Acre method involves a comparative analysis of property and transaction characteristics between the subject and recent sales of similar properties in the local market. Differences in date of sale, location, size, other physical features, and conditions of sale will cause variances in this measure. A summary of the analyzed data is provided below: Price Per Acre Unadjusted Adjusted Minimum: $576 $576 Maximum: $1,599 $812 Range: $1,023 $236 Range Reduction: N/A -76.91% Average: $884 $724 Excluding Listing #5 Unadjusted Adjusted Minimum: $576 $576 Maximum: $812 $812 Range: $236 $236 Range Reduction: N/A 0.00% Average: $705 $705

Based on the aforementioned highest and best use of the subject property, our initial search for comparable sales involved attempts to find raw land sales with similar characteristics to that of the subject within the Daggett-Yermo as well as the Barstow and surrounding market areas. Several properties were discovered, of which four closed sales and one active listing provide a good basis for analyzing the subject’s value under market conditions prevailing as of the date of value. The comparables range in size from about 38 to 310 acres with unadjusted per unit values ranging from between $576 to $1,599 per acre. The comparable properties share similar physical characteristics to the subject property. With respect to zoning, the properties share some overlapping permissible land uses, to include other uses which require a conditional use permit.

Consideration has been given to each of the comparable items reported in this study. After adjustments for the features of comparison previously summarized, we estimate a probable value for the site approximating $576 to $812 per acre. This represents a 76.91% range reduction.

DISCUSSION OF ADJUSTMENTS

COMMENTS REGARDING SPECIFIC ADJUSTMENTS:

. The dearth of available transactions leads to a natural inefficiency in the market. As a result we have opted to take a purposefully minimalist approach in terms of the application of numeric adjustments.

. RIGHTS CONVEYED: All sales are Fee Simple transactions, thus no adjustments were necessary.

. FINANCING TERMS: Each sale was reported in cash or cash-equivalent terms. Accordingly, numeric adjustment for this feature of comparison was not deemed warranted.

. CONDITION OF SALE: All of the sales were discovered in the MLS that were listed as standard sales with no special conditions of sale reported or discovered.

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COMMENTS REGARDING SPECIFIC ADJUSTMENTS, CONT.:

. MARKET CONDITIONS AT TIME OF SALE:

Our examination of the market over the last 18 months has indicated land values in the less developed and more remote areas of the county have remained flat. Sales data further back in time in concert with our broker interviews show a drop in vacant land values compared to the current date utilized in our analysis.

The table below - with attention directed to the Rolling Average Trend Line - reflects regional transaction data for larger acreage parcels and shows no indications of price movement (as of mid-2018-2019).

Time Trend of Land Sales Data $900

$800

$700

$600

$500

$400

$300

$200

$100

$0 May-18 Jul-18 Sep-18 Oct-18 Dec-18 Feb-19 Mar-19 May-19 Jul-19 Aug-19 TIME TREND OF LAND SALES DATA Expon. (TIME TREND OF LAND SALES DATA)

Based on the above analysis, we have not applied any time adjustments to the comparable properties in the data set.

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COMMENTS REGARDING SPECIFIC ADJUSTMENTS:

 ACTIVE LISTING: Comparable property #5 is an active listing that has been on the market for over 80 months. Based on our research on the relationship between asking price relative to negotiated sales price on vacant land properties, it is common to see a 30% to 50% reduction from the initial listed price. Therefore we have adjusted Comparable #5 by 50%.

 SIZE: The subject property consist of 894.79 net acres, whereas the data items available for consideration range from 38 to 310 acres. Overall, it is not uncommon to observe general economies of scale in the marketplace wherein larger data items may sell at lower PSF (or Per Acre) price points. This sometimes occurs because there are fewer buyers available for larger assets, which in turn can create a favorable negotiating posture. However, when some property types reach a certain size, this factor may not be distinguishable

The general concept of economies of scale can be observed by charting the subject comps based on size versus price psf and calculating a trend line, as noted below.

Site Size Vs PSF $900

$800

$700

$600

$500

$400

$300

$200

$100

$0 0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 Site Size Vs Acre Expon. (Site Size Vs Acre)

COMMENTS REGARDING SPECIFIC ADJUSTMENTS:

The chart above reflects adjusted price psf (after Rights Conveyed, Financing, Condition of Sale and Date of Sale) relative to parcel size. The data provides a visual point of reference as to economy of scale. In many cases larger sites tend to sell at slightly higher per acre value points. Based on this data no adjustments for parcel size were applied to comparable properties in the matrix.

In keeping with a minimalist approach with respect to adjustments we have concluded that any adjustments for the remaining categories would be too subjective as all of the comparable properties in the data set share similar characteristics and would appeal to the same class of land investor-speculator.

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CONCLUSION OF SITE VALUE (AND AS-IS VALUE) Ideally, appraisers look for benchmark comparables that might serve as the strongest possible indicators of value for the asset being appraised. In the present case, we must recognize that due to the limitations of available data, no such benchmark comp is available. As a result, the data items offer a somewhat disparate range of unit values, and by necessity, include a somewhat disparate range in terms of size, use potential, location, etc.

To supplement our research and analysis performed on the comparable properties utilized in the matrix we have researched sales on a broader range to include sales of other parcels within a 24 months period and those located further distance from the subject. The properties in the chart below have a price per acre that is within our bracketed conclusion for the subject property.

SUPPLEMENTAL LAND SALES DATA

Sale Land Area Sales Price Item Property Address City Date Zone Acres SF Total Per Acre PSF UNDER 80 ACRES 1 Interstate 15 x-st Field Rd Barstow May-19 RC 17.04 742,262 $ 12,500 $ 734 $ 0.02 2 Boulder Rd x-st Barstow Rd Barstow Mar-19 RL 10.00 435,600 $ 7,000 $ 700 $ 0.02 3 Interstate 40 x-st National Trails Newberry Sprngs Feb-19 RL 20.00 871,200 $ 9,000 $ 450 $ 0.01 4 Pipeline Rd x-st Barstow Rd Barstow Dec-18 RC 20.00 871,200 $ 11,000 $ 550 $ 0.01 5 Interstate 15 x-st Troy Rd Newberry Sprngs Nov-18 RL-40 20.00 871,200 $ 20,000 $ 1,000 $ 0.02 6 Topanga St x-st Mountain Vw Newberry Sprngs Oct-18 RL-5 9.78 426,017 $ 9,000 $ 920 $ 0.02 7 Silver Valley Rd x-st Mountain Vw Newberry Sprngs Aug-18 RL 15.00 653,400 $ 20,000 $ 1,333 $ 0.03 80+ ACRES 8 Fairview Vly & Cahuilla Rd Apple Valley Aug-19 RL-20 147.00 6,403,320 $ 118,000 $ 803 $ 0.02 9 Interstate 40 x-st Pisgah Crater Rd Newberry Sprngs Jul-19 RC 160.00 6,969,600 $ 160,000 $ 1,000 $ 0.02 10 Camp Rock Rd x-st Mercury Rd Lucerne Valley Jun-19 LV AG 100.00 4,356,000 $ 80,000 $ 800 $ 0.02 11 Interstate 15 x-st Alvord Mnt Rd Newberry Sprngs Jun-19 RC 80.00 3,484,800 $ 22,000 $ 275 $ 0.01 12 Lucerne Vly Rd x-st Barstow Rd Lucerne Valley Feb-19 RC 120.00 5,227,200 $ 49,000 $ 408 $ 0.01 13 Lincoln Ave x-st Northside Rd Lucerne Valley Dec-18 LV RL-5 80.00 3,484,800 $ 40,000 $ 500 $ 0.01 14 Harrod Rd x-st Squaw Bush Rd Lucerne Valley Nov-18 LV RL-5 111.60 4,861,296 $ 65,000 $ 582 $ 0.01 15 Cherokee Rd x-st Mojave Trail Newberry Sprngs Nov-18 RC 160.00 6,969,600 $ 48,000 $ 300 $ 0.01 16 Interstate 395 x-st Rosewood Kramer Junction Oct-18 RC 160.00 6,969,600 $ 50,000 $ 313 $ 0.01 17 Bowen ranch Rd x-st Round Up Rd Apple Valley Oct-18 RL-20 160.00 6,969,600 $ 135,000 $ 844 $ 0.02 18 Cardiff St & Huerscher Wy Newberry Sprngs Feb-18 RC 90.00 3,920,400 $ 57,500 $ 639 $ 0.01 19 Orchard Rd x-st Halstead Rd Lockhart-N Hinkley Jan-18 RC 640.00 27,878,400 $ 67,500 $ 105 $ 0.00 Minimum 9.78 426,017 $ 7,000 $ 450 $ 0.01 Maximum 20.00 871,200 $ 20,000 $ 1,333 $ 0.03 UNDER 80 ACRES Average 15.97 695,840 $ 12,643 $ 812 $ 0.02 Median 17.04 742,262 $ 11,000 $ 734 $ 0.02 Minimum 80.00 3,484,800 $ 22,000 $ 105 $ 0.00 Maximum 640.00 27,878,400 $ 160,000 $ 1,000 $ 0.02 80+ ACRES Average 167.38 7,291,218 $ 74,333 $ 547 $ 0.01 Median 133.50 5,815,260 $ 61,250 $ 541 $ 0.01 Minimum 9.78 426,017 $ 7,000 $ 105 $ 0.00 Maximum 640.00 27,878,400 $ 160,000 $ 1,333 $ 0.03 ALL SUPPLEMENTAL DATA Average 111.60 4,861,342 $ 51,605 $ 645 $ 0.01 Median 90.00 3,920,400 $ 48,000 $ 639 $ 0.01

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Based on our analysis, the subject’s estimated land value is calculated as follows:

TOTAL FEEE SIMPLE LAND VALUE: $ 610,000

Per Acre Equivalent: $ 681.72 Per Square Foot Equivalent: $ 0.016

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EASEMENT ANALYSIS As previously cited on page 3, our scope of work includes formulating an opinion of value for a proposed powerline line easement across the subject property. The purpose of the easement is to construct, operate, access and maintain electricity power transmission lines on the subject property. Discussions with the client imply the easement type would be an appurtenant easement. The dominant tenement would be the property owned by RRI Energy West LLC (former Edison Coolwater Facility) in conjunction with Clearway Energy Group LLC of the proposed easement across the subject. A 120 foot wide strip that passes through three adjacent parcels owned by Southern California Edison would be the servient tenement.

AERIAL OF PROPOSED EASEMENT

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EASEMENT LEGAL DESCRIPTION

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General Comments Regarding Easements

Black’s Law Dictionary states the following regarding the definition of an easement:

A right of use over the property of another. Traditionally the permitted kinds of uses were limited, the most important being rights of way and rights concerning flowing waters. The easement was normally for the benefit of adjoining lands, no matter who the owner was (an easement appurtenant), rather than for the benefit of a specific individual (easement in gross). The land having the right of use as an appurtenance is known as the dominant tenement and the land which is subject to the easement is known as the servient tenement.

The client has stated the type of easement as being an appurtenant easement. As cited in the Black’s Law Dictionary, this type of easement has both dominant and servient estates. The easement interest passes with title to the dominant estate and continues to burden the servient estate. An easement appurtenant contrasts with an easement in gross, which has a servient estate but no dominant estate.

The land to be utilized for the transmission lines will be a permanent easement rather than a fee taking and recorded deed. As such the dominant tenement will not possess unrestricted use of the land. An easement is restrictive in nature in that the land can only be used for the purposes called out in the degree of title being conveyed. Based on discussions with the client we have assumed the easement will be limited to construct, operate, access and maintain electricity power transmission lines on the servient estate (subject property). We further assume if the dominant estate wants to utilize the land for purposes other than what has been described it would have to obtain an additional easement for that specific purpose. Since the proposed appurtenant easement will not be a fee taking, the servient tenement does not relinquish all of the ownership rights with respect to the physical land itself as well as the associated bundle rights as part of the land. Due to the fact the easement would be a mutual agreement between Clearway Energy Group LLC and Southern California Edison as opposed to a condemnation proceeding, the elements of value specific to eminent domain are not applicable.

Of additional note, the client has indicated a separate construction easement will not be needed due to the fact the construction site with stay within the proposed easement area and will not extend into sections of land outside the borders.

Per discussions with the client the project will consists of a series of single pole towers measuring approximately 150 feet tall and placed every 500 feet as well as at turning points. The towers will support electricity power transmission lines that will run overhead though the subject property. Based on the description and positioning of the poles we have estimated 22 structures. The exhibit below estimates the approximate distance of each leg of the route. A total length that equals 10,871.85 feet as calculated from Exhibit “B”.

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Type of Pole Structure

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Type of Pole Structure

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EASEMENT IMPACT ON PROPERTY RIGHTS Since all easement valuations are partial acquisitions, an analysis must be performed to evaluate the “rights conveyed” by the creation of the easement. Since the property owner retains some residual rights within the easement area, the value of an easement is measured by what the property owner has lost from the bundle of rights, not by what the grantee has gained.

Upon review of the legal description of the easement and agreement between the parties we have made the assumption that the land owner, Southern California Edison Company will still possess access rights and that Clearway Energy Group LLC will maintain the easement.

An Easement Valuation Matrix was published in Right of Way Magazine June 2006 which provides a general guide in looking at the effect an easement may have on the total bundle of rights. The chart is not considered an exclusive list as to the type of easements and their effect on the property rights, rather it is a guide to general effects on the total fee ownership.

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Typically easements that effect surface rights have the greatest impact on land use as listed on the chart. Overhead electric power lines, railroad right-of-way, irrigation canals, and drainage easements can impact the percentage of fee ownership from 75% to 100%.

Aerial Map of Proposed Easement

The map above shows the proposed easement area across all three subject parcels. Some of the proposed easement area runs along the subject property boundary lines. The central portion of the proposed easement on parcel 0516-341-18 runs through an existing powerline easement underneath high voltage power transmission lines. The northern portion of parcel 0515-011-21 is also encumbered by the same easement.

Upon our examination of the proposed easement route and the fact an existing easement already exists over the same area of the subject’s southeasterly portion, our conclusion is that the path of the proposed easement is located along areas of the subject that would not severely impact future use. As result we have concluded 85% of the fee is a reasonable conclusion of value for the easement area.

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CONCLUSION OF EASEMENT VALUE Thus, the final easement value is estimated at 85% of the underlying Fee Simple value of the impacted area (based on the previously determined per-acre value of the underlying land), as summarized below:

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RECONCILIATION OF VALUE The subject was analyzed exclusively via the Sales Comparison Approach, with the Fee Simple land value indication then used as a basis to form a conclusion pertinent to the percentage of fee applicable to the proposed easement.

Therefore, based on the information, analysis and reasoning provided herein, together with our best judgment and experience, we estimate the following value conclusion(s) pertinent to the subject property, as of the effective date of value of September 30, 2019:

TOTAL FEEE SIMPLE LAND VALUE: $ 610,000

Per Acre Equivalent: $ 681.72 Per Square Foot Equivalent: $ 0.016

Particular attention is directed to the following Extraordinary & Hypothetical Assumption(s), which if found to be false could impact our reported assignment conclusions:

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SUMMARY OF ADDENDA ATTACHMENTS

CERTIFICATION

ASSUMPTIONS & LIMITING CONDITIONS

DEFINITIONS

QUALIFICATIONS OF THE APPRAISERS

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CERTIFICATION

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CERTIFICATION

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

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

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

We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.

We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

No one provided significant real property appraisal assistance to the person signing this certification with regard to assisting with the property inspection, fieldwork, data research and verification, and writing portions of this report.

Daryl Johnson made a personal inspection of the property that is the subject of this report on June 3, 2017; Cary Bronstein, MAI did not personally inspect the subject property. Per agreement with the client, the scope of work for this assignment relied on observations previously made. Physical site observations as of the effective date of value were not required for a credible opinion of value.

The appraisers have performed appraisal services regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

Supplemental Appraisal Institute Certification Statements The reported analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives

As of the date of this report, Cary Bronstein, MAI, has completed the continuing education program of the Appraisal Institute.

Respectfully submitted,

THE BRONSTEIN COMPANY, INC.

Cary Bronstein, MAI Daryl Johnson CA #AG013774; Expires 11/6/2020 CA # AG 036857; Expires 3/29/2021

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ASSUMPTIONS & LIMITING CONDITIONS

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UNDERLYING ASSUMPTIONS & LIMITING CONDITIONS

THIS APPRAISAL REPORT HAS BEEN MADE WITH THE FOLLOWING GENERAL ASSUMPTIONS:

1) NO RESPONSIBILITY IS ASSUMED FOR THE LEGAL DESCRIPTION OR FOR MATTERS INCLUDING LEGAL OR TITLE CONSIDERATIONS. TITLE TO THE PROPERTY IS ASSUMED TO BE GOOD AND MARKETABLE UNLESS OTHERWISE STATED.

2) THE PROPERTY IS APPRAISED FREE AND CLEAR OF ANY OR ALL LIENS OR ENCUMBRANCES UNLESS OTHERWISE STATED.

3) RESPONSIBLE OWNERSHIP AND COMPETENT PROPERTY MANAGEMENT ARE ASSUMED.

4) THE INFORMATION FURNISHED BY OTHERS IS BELIEVED TO BE RELIABLE. HOWEVER, NO WARRANTY IS GIVEN FOR ITS ACCURACY.

5) ALL ENGINEERING IS ASSUMED TO BE CORRECT. THE PLOT PLANS AND ILLUSTRATIVE MATERIAL IN THIS REPORT ARE INCLUDED ONLY TO ASSIST THE READER IN VISUALIZING THE PROPERTY.

6) IT IS ASSUMED THAT THERE ARE NO HIDDEN OR NON-APPARENT CONDITIONS OF THE PROPERTY, SUBSOIL, OR STRUCTURES THAT RENDER IT MORE OR LESS VALUABLE. NO RESPONSIBILITY IS ASSUMED FOR SUCH CONDITIONS OR FOR ARRANGING FOR ENGINEERING STUDIES THAT MAY BE REQUIRED TO DISCOVER THEM.

7) IT IS ASSUMED THAT THERE IS FULL COMPLIANCE WITH ALL APPLICABLE FEDERAL, STATE, AND LOCAL ENVIRONMENTAL REGULATIONS AND LAWS UNLESS NONCOMPLIANCE IS STATED, DEFINED, AND CONSIDERED IN THE APPRAISAL REPORT.

8) IT IS ASSUMED THAT ALL APPLICABLE ZONING AND USE REGULATIONS AND RESTRICTIONS HAVE BEEN COMPLIED WITH, UNLESS A NONCONFORMITY HAS BEEN STATED, DEFINED, AND CONSIDERED IN THE APPRAISAL REPORT.

9) IT IS ASSUMED THAT ALL REQUIRED LICENSES, CERTIFICATES OF OCCUPANCY, CONSENTS, OR OTHER LEGISLATIVE OR ADMINISTRATIVE AUTHORITY FROM ANY LOCAL, STATE, OR NATIONAL GOVERNMENT OR PRIVATE ENTITY OR ORGANIZATION HAVE BEEN OR CAN BE OBTAINED OR RENEWED FOR ANY USE ON WHICH THE VALUE ESTIMATE CONTAINED IN THIS REPORT IS BASED.

10) IT IS ASSUMED THAT THE UTILIZATION OF THE LAND AND IMPROVEMENTS IS WITHIN THE BOUNDARIES OR PROPERTY LINES OF THE PROPERTY DESCRIBED AND THAT THERE IS NO ENCROACHMENT OR TRESPASS UNLESS NOTED IN THE REPORT.

THIS APPRAISAL REPORT HAS BEEN MADE WITH THE FOLLOWING GENERAL LIMITING CONDITIONS:

1) PER CLIENT REQUEST, WE HAVE APPRAISED THE SUBJECT PROPERTY PERFORMING AN APPRAISAL PROCESS AS DEFINED BY THE SCOPE OF WORK CITED IN THIS REPORT, PER THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP).

2) OUR APPRAISAL REPORT IS A SUMMARY APPRAISAL REPORT TYPE COMPLYING WITH THE REPORTING REQUIREMENTS SET FORTH UNDER STANDARDS RULE 2-2(B) OF THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE. AS SUCH, IT PRESENTS ONLY SUMMARY DISCUSSIONS OF THE DATA, REASONING, AND ANALYSES THAT WERE USED IN THE APPRAISAL PROCESS TO DEVELOP THE APPRAISER'S OPINION OF VALUE. SUPPORTING DOCUMENTATION CONCERNING THE DATA, REASONING AND ANALYSES IS RETAINED IN THE APPRAISER'S FILE. THE DEPTH OF DISCUSSION CONTAINED IN THIS REPORT IS SPECIFIC TO THE NEEDS OF THE CLIENT AND FOR THE INTENDED USE STATED.

3) THE DISTRIBUTION, IF ANY, OF THE TOTAL VALUATION IN THIS REPORT BETWEEN LAND AND IMPROVEMENTS APPLIES ONLY UNDER THE STATED PROGRAM OF UTILIZATION. THE SEPARATE ALLOCATIONS FOR LAND AND BUILDINGS MUST NOT BE USED IN CONJUNCTION WITH ANY OTHER APPRAISAL AND ARE INVALID IF SO USED.

4) POSSESSION OF THIS REPORT, OR A COPY THEREOF, DOES NOT CARRY WITH IT THE RIGHT OF PUBLICATION.

5) THE APPRAISERS, BY REASON OF THIS APPRAISAL, ARE NOT REQUIRED TO GIVE FURTHER CONSULTATION, TESTIMONY, OR BE IN ATTENDANCE IN COURT WITH REFERENCE TO THE PROPERTY IN QUESTION UNLESS ARRANGEMENTS HAVE BEEN PREVIOUSLY MADE.

6) NEITHER ALL NOR ANY PART OF THE CONTENTS OF THIS REPORT (ESPECIALLY ANY CONCLUSIONS AS TO VALUE, THE IDENTITY OF THE APPRAISERS, OR THE FIRM WITH WHICH THE APPRAISERS ARE CONNECTED) SHALL BE DISSEMINATED TO THE PUBLIC THROUGH ADVERTISING, PUBLIC RELATIONS, NEWS, SALES, OR OTHER MEDIA WITHOUT THE PRIOR WRITTEN CONSENT AND APPROVAL OF THE APPRAISER.

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7) ANY VALUE ESTIMATES PROVIDED IN THE REPORT APPLY TO THE ENTIRE PROPERTY, AND ANY PRORATION OR DIVISION OF THE TOTAL INTO FRACTIONAL INTERESTS WILL INVALIDATE THE VALUE ESTIMATE, UNLESS SUCH PRORATION OR DIVISION OF INTERESTS HAS BEEN SET FORTH IN THE REPORT.

8) THE APPRAISERS ASSUME THAT THE READER OR USER OF THIS REPORT HAS BEEN PROVIDED WITH COPIES OF AVAILABLE BUILDING PLANS AND ALL LEASES AND AMENDMENTS, IF ANY, ENCUMBERING THE PROPERTY.

9) NO SURVEY WAS FURNISHED SO THE APPRAISERS UTILIZED THE COUNTY TAX PLAT TO ASCERTAIN THE PHYSICAL DIMENSIONS AND ACREAGE OF THE PROPERTY. SHOULD A SURVEY PROVE THESE CHARACTERISTIC INACCURATE, IT MAY BE NECESSARY FOR THIS APPRAISAL TO BE ADJUSTED.

10) THE FORECASTS, PROJECTIONS, OR OPERATING ESTIMATES CONTAINED HEREIN ARE BASED UPON CURRENT MARKET CONDITIONS, ANTICIPATED SHORT-TERM SUPPLY AND DEMAND FACTORS, AND A CONTINUED STABLE ECONOMY. THESE FORECASTS ARE, THEREFORE, SUBJECT TO CHANGES IN FUTURE CONDITIONS.

11) ONLY PRELIMINARY PLANS AND SPECIFICATIONS WERE AVAILABLE IN THE PREPARATION OF THIS APPRAISAL; THE ANALYSIS, THEREFORE, IS SUBJECT TO A REVIEW OF THE FINAL PLANS AND SPECIFICATIONS WHEN AVAILABLE.

12) ANY PROPOSED IMPROVEMENTS ARE ASSUMED TO HAVE BEEN COMPLETED UNLESS OTHERWISE STIPULATED; ANY CONSTRUCTION IS ASSUMED TO CONFORM TO THE BUILDING PLANS REFERENCED IN THE REPORT.

13) SINCE EARTHQUAKES ARE NOT UNCOMMON IN THE AREA, NO RESPONSIBILITY IS ASSUMED DUE TO THEIR POSSIBLE EFFECT ON INDIVIDUAL PROPERTIES UNLESS DETAILED GEOLOGIC REPORTS ARE MADE AVAILABLE.

14) TERMITE INSPECTION REPORT WAS AVAILABLE. THE APPRAISERS PERSONALLY INSPECTED THE SUBJECT PROPERTY AND FOUND NO SIGNIFICANT EVIDENCE OF TERMITE DAMAGE OR INFESTATION; HOWEVER, NO GUARANTEE THAT NONE EXISTS SHOULD BE CONSTRUED.

15) CONSIDERATION HAS BEEN GIVEN IN THIS APPRAISAL AS TO THE VALUE OF THE PROPERTY CONSIDERED BY THE APPRAISERS TO BE PERSONAL, LOCATED ON THE PREMISES, OR THE COST OF MOVING, RELOCATING SUCH PERSONAL PROPERTY; ONLY THE REAL ESTATE HAS BEEN CONSIDERED.

16) RENTAL AREAS HEREIN DISCUSSED HAVE BEEN CALCULATED IN ACCORDANCE WITH THE STANDARDS DEVELOPED BY THE AMERICAN STANDARD ASSOCIATION AS INCLUDED IN THE "REAL ESTATE APPRAISAL TECHNOLOGY" HANDBOOK SPONSORED BY THE AMERICAN INSTITUTE OF REAL ESTATE APPRAISERS AND THE SOCIETY OF REAL ESTATE APPRAISERS.

17) IN THIS APPRAISAL ASSIGNMENT, THE EXISTENCE OF POTENTIALLY HAZARDOUS MATERIAL USED IN THE CONSTRUCTION OR MAINTENANCE OF THE BUILDING, SUCH AS THE PRESENCE OF ASBESTOS OR UREA FORMALDEHYDE FOAM INSULATION, AND/OR EXISTENCE OF TOXIC WASTE, WHICH MAY OR MAY NOT BE PRESENT ON THE PROPERTY, HAS NOT BEEN CONSIDERED.

18) THE AMERICANS WITH DISABILITIES ACT (ADA) BECAME EFFECTIVE JANUARY 26, 1992. WE HAVE NOT MADE A SPECIFIC SURVEY OR ANALYSIS OF THE SUBJECT PROPERTY TO DETERMINE WHETHER THE PHYSICAL ASPECTS OF THE IMPROVEMENTS MEET THE ADA ACCESSIBILITY GUIDELINES. SINCE COMPLIANCE MATCHES EACH OWNER'S FINANCIAL ABILITY WITH THE COST-TO-CURE THE PROPERTY'S POTENTIAL PHYSICAL CHARACTERISTICS, THE REAL ESTATE APPRAISER CANNOT COMMENT ON COMPLIANCE TO ADA. A BRIEF SUMMARY OF THE SUBJECT'S PHYSICAL ASPECTS IS INCLUDED IN THIS REPORT. IT DOES NOT IN ANY WAY SUGGESTS ADA COMPLIANCE BY THE CURRENT OWNER. GIVEN THAT COMPLIANCE CAN CHANGE WITH EACH OWNER'S FINANCIAL ABILITY TO CURE NON-ACCESSIBILITY, THE VALUE OF THE SUBJECT DOES NOT CONSIDER POSSIBLE NON-COMPLIANCE. SPECIFIC STUDY OF BOTH THE OWNER’S FINANCIAL ABILITY AND THE COST-TO-CURE ANY DEFICIENCIES WOULD BE NEEDED FOR THE DEPARTMENT OF JUSTICE TO DETERMINE COMPLIANCE.

19) OUR ANALYSIS AND CONCLUSIONS WERE PERFORMED WITHOUT REGARD TO RACE, COLOR, RELIGION, NATIONAL ORIGIN, SEX, MARITAL STATUS, OR ANY OTHER PROHIBITED BASIS.

This report includes the following Hypothetical Conditions and/or Extraordinary Assumptions (which if found to be false could impact our reported assignment results):

Hypothetical None Condition(s):

Extraordinary Yes. See following page Assumption(s):

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Particular attention is directed to the following Extraordinary & Hypothetical Assumption(s), which if found to be false could impact our reported assignment conclusions:

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DEFINITIONS

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DEFINITIONS The "Market Value" definition provided in 12 CFR, Part 54.42(g); 55 Federal Register 34696, August 24, 1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994:

The most probable price in terms of money which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in the definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

. Buyer and seller are typically motivated; . Both parties are well informed or well advised, and each acting in what they consider their own best interests; . A reasonable time is allowed for exposure in the open market; . Payment is made in terms of cash in U.S. dollars, or in terms of financial arrangements comparable thereto; and . The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Market Value “As Is” is based on the general definition noted above but specifically accounts for any impact to value stemming from property conditions, physical or economic, that are deemed to represent a measurable detriment (or enhancement) to the subject’s overall value. For example, the need to cure physical defects or deficiencies; or, the loss in value stemming from non-stabilized occupancy as of the date of analysis are examples of items addressed in deriving an “As Is’ estimate of Market Value.

Market Rent* may be defined as: The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the specified lease agreement including term, rental adjustment and revaluation, permitted uses, use restrictions, and expense obligations; the lessee and lessor each acting prudently and knowledgeably, and assuming consummation of a lease contract as of a specified date and the passing of the leasehold from lessor to lessee under conditions whereby:

. Lessee and lessor are typically motivated. . Both parties are well informed or well advised, and acting in what they consider their best interests; . A reasonable time is allowed for exposure in the open market; . The rent payment is made in terms of cash in U.S. dollars, and is expressed as an amount per time period consistent with the payment schedule of the lease contract. . The rental amount represents the normal consideration for the property leased unaffected by special fees or concessions granted by anyone associated with the transaction.

*Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002).

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The Fee Simple* interest reflects absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

The Leased Fee* interest reflects an ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease.

The Leasehold interest reflects an ownership interest held by a tenant. This can be the result of a ground lease wherein the ground tenant has a leasehold ownership in the improvements constructed on the site, and can also be the result of any tenancy wherein the rent being paid is not at a Fair Market Rent level. To the extent a disparity exists between Contract and Market Rent, the tenant’s Leasehold interest can be either positive or negative.

*Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002).

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QUALIFICATIONS OF THE APPRAISERS

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PROFESSIONAL QUALIFICATIONS OF: CARY BRONSTEIN, MAI

Professional Designations & Affiliations  “MAI” (Designated Member of the Appraisal Institute, #11230)  California State Certified General Appraiser (#AG013774)  Chairman – Technology Committee of the Southern California Chapter of the Appraisal Institute (SCCAI), Year 2000  Member – SCCAI Admissions Committee, Year 2000  Treasurer / BOD Member – Enrichment Foundation for Handicapped Children (TBC Inc. is closely affiliated with this foundation and a portion of all company earnings is donated to this not-for-profit organization)

Background & Experience  The Bronstein Company, Inc. (Since 1999) Principal of TBC Inc., a Southern California based appraisal firm providing a wide variety of services including commercial, industrial, and multi-residential valuations; appraisal reviews; estate planning & partial interest discount studies; and, related consultation services. Property types appraised include office, retail, industrial, apartment, vacant land, and special use properties. Primary areas of expertise include Los Angeles, Orange, Ventura, San Bernardino, and Riverside Counties. Additionally, TBC Inc. has affiliated appraisers with expertise in other regions within California, Nevada, and Arizona.

TBC Inc. provides services for a variety of appraisal users including Lenders, Mortgage Bankers & Brokers, Estate Planners, Attorneys, Accountants, Insurance Companies, Pension Funds, Developers, and other Real Estate Companies.

 Prior Experience Cary’s previous experience includes appraisal and consulting services in both the public and private sectors. Prior to forming TBCinc, he was affiliated with the California-based appraisal firm Curtis-Rosenthal, LLC (1992-1999), where he served as that company’s Director; and, between 1990-1992 he was employed by Lea Associates as a senior level analyst. His public sector employment (1987-1990) included serving as an appraiser specialist for the San Bernardino County Assessor’s Office in their construction cost estimating division.

Expert Witness  Cary has served as an expert witness before the following venues: - San Bernardino County Assessment Appeals Board - City of West Hollywood Rent Stabilization Board

Education  Bachelor of Arts Degree California State University Northridge Political Science Major, Public Law Concentration (1987)

 Appraisal Institute & Related Coursework Continuous coursework with regard to fulfilling the requirements of both the Appraisal Institute (100 hours every five years); and, the State of California Office of Real Estate Appraisers (14 hours each calendar year).

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PROFESSIONAL QUALIFICATIONS OF: DARYL JOHNSON CALIFORNIA STATE CERTIFIED GENERAL REAL ESTATE APPRAISER

Professional Designations & Affiliations  California State Certified General Appraiser (#AG036857)

Background & Experience  The Bronstein Company, Inc. 2012-Present Affiliated with TBC Inc., a Southern California appraisal firm providing a wide variety of services regarding commercial, industrial, and multi-residential valuation; and related consultation services. Property types appraised include office, retail, industrial, apartment, vacant land and special use properties. Primary areas of expertise include Los Angeles, Ventura, Kern, San Bernardino and Riverside Counties.

 Prior Experience Senior Appraiser- Urban Land Economics Group Lancaster, CA Affiliations Appraisal Institute Affiliate Member (Past & Present) Former President, Victor Valley Appraisers Association Integrity Member Real Estate Appraisers Association Antelope Valley Appraisers Round Table Land Appraiser for ACEH Capital LLC

 Guest Lecturer UCLA Real Estate Finance Class

EXPERT WITNESS  Mr. Johnson has served as an expert witness before the following venues: - Los Angeles Superior Court

- San Diego Superior Court

INDUSTRY California State Certified General Real Estate Appraiser, License# AG036857 EDUCATION/ Federal Housing Administration (FHA) Approved Appraiser Certifications Federal Housing & Urban Development (HUD) Approved Appraiser Vale Technical Institute, Fresno CA Completed numerous California OREA Approved Real Estate Courses

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