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HomeMy WebLinkAbout12-15-14 TC Agenda PacketThe Regular Meeting of the Town of Westlake Town Council will begin immediately following the conclusion of the Town Council Workshop but not prior to the posted start time. TOWN OF WESTLAKE, TEXAS Vision Statement An oasis of natural beauty that maintains our o•en s. aces in balance with distinctive development, trails, and quality of life amenities amidst an ever expanding urban landscape. TOWN COUNCIL MEETING AGENDA December 15, 2014 WESTLAKE TOWN HALL 3 VILLAGE CIRCLE, 2ND FLOOR WESTLAKE, TX 76262 COUNCIL CHAMBERS Workshop Session: 5:00 p.m. Regular Session: 6:30 p.m. Mission Statement Westlake is a unique community blending preservation of our natural environment and viewscapes, while serving our residents and businesses with superior municipal and academic services that are accessible, efficient, cost - effective, and transparent. Westlake, Texas — "One -of -a -kind community; natural oasis — providing an exceptional level of service." Page 1 of 5 Work Session 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. REVIEW OF CONSENT AGENDA ITEMS FOR THE DECEMBER 15, 2014, TOWN COUNCIL REGULAR MEETING AGENDA. (10 min) 4. EXECUTIVE SESSION The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 5. RECONVENE MEETING 6. TAKE ANY ACTION, IF NEEDED, FROM EXECUTIVE SESSION ITEMS. Page 2 of 5 7. DISCUSSION ITEMS a. Standing Item: Update and discussion regarding the Granada Development. (30 min) b. Standing Item: Presentation, Discussion, and Update on the Process to Date for the Establishment of the Entrada Proposed Public Improvement District and Developer and Staff Presentations Related to the PID Documents Including the PID Appraisal, Service Assessment Plan, Preliminary Official Statement, and the Calendar for Issuing Bonds for this PID. (30 min) 8. COUNCIL RECAP / STAFF DIRECTION 9. ADJOURNMENT Regular Session 1. CALL TO ORDER 2. CITIZEN PRESENTATIONS AND RECOGNITIONS: This is an opportunity for citizens to address the Council on any matter whether or not it is posted on the agenda. The Council cannot by law take action nor have any discussion or deliberations on any presentation made to the Council at this time concerning an item not listed on the agenda. The Council will receive the information, ask staff to review the matter, or an item may be noticed on a future agenda for deliberation or action. 3. CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the November 17, 2014, meeting. b. Consider approval of Resolution 14 -41, Authorizing the Town Manager to execute an agreement with Badger Meter for meter reading and web hosting services as outlined in the AMA Managed Solution Master Agreement. c. Consider approval of Resolution 14 -42, Authorizing the Town Manager to execute an Interlocal Agreement with Trophy Club Municipal Utility District providing for participation in a water supply feasibility and route study. d. Consider approval of Ordinance 740, Amending Water and Wastewater Rate and Fee Schedule, and repealing Ordinance 699. 4. PUBLIC HEARING AND CONSIDERATION OF RES 14 -43 APPROVING A FINAL PLAT FOR PHASE I OF THE APPROXIMATELY 84 ACRE DEVELOPMENT KNOWN AS GRANADA, LOCATED GENERALLY EAST OF DAVIS BLVD., SOUTH OF SOLANA BLVD., AND NORTH OF DOVE ROAD. 5. CONSIDER APPROVAL OF RESOLUTION 14 -44, DETERMINING THE COSTS OF CERTAIN AUTHORIZED IMPROVEMENTS TO BE FINANCED BY THE SOLANA Page 3 of 5 PUBIC IMPROVEMENT DISTRICT; APPROVING A PRELIMINARY SERVICE PLAN AND ASSESSMENT PLAN (SAP), INCLUDING A PROPOSED ASSESSMENT ROLE; DIRECTING THE FILING OF THE PROPOSED ASSESSMENT ROLE WITH THE TOWN SECRETARY, CALLING FOR A SPECIAL MEETING AND NOTICING A PUBLIC HEARING ON JANUARY 15, 2015 TO CONSIDER LEVYING ASSESSMENT ON SAID PROPERTY WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT; DIRECTING THE TOWN STAFF TO PUBLISH AND MAIL NOTICE OF SAID PUBLIC HEARING; AND RESOLVING OTHER MATTERS INCIDENT AND RELATED THERETO. 6. CONSIDER APPROVAL OF RESOLUTION 14 -45, PRELIMINARY OFFERING STATEMENT (POS) AND LEVYING ASSESSMENT DOCUMENTS. 7. EXECUTIVE SESSION The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 8. RECONVENE MEETING 9. TAKE ANY ACTION, IF NEEDED, FROM EXECUTIVE SESSION ITEMS. Page 4 of 5 10. FUTURE AGENDA ITEMS: Any Council member may request at a workshop and / or Council meeting, under "Future Agenda Item Requests ", an agenda item for a future Council meeting. The Council Member making the request will contact the Town Manager with the requested item and the Town Manager will list it on the agenda. At the meeting, the requesting Council Member will explain the item, the need for Council discussion of the item, the item's relationship to the Council's strategic priorities, and the amount of estimated staff time necessary to prepare for Council discussion. If the requesting Council Member receives a second, the Town Manager will place the item on the Council agenda calendar allowing for adequate time for staff preparation on the agenda item. 11. COUNCIL CALENDAR 12. ADJOURNMENT ANY ITEM ON THIS POSTED AGENDA COULD BE DISCUSSED IN EXECUTIVE SESSION AS LONG AS IT IS WITHIN ONE OF THE PERMITTED CATEGORIES UNDER SECTIONS 551.071 THROUGH 551.076 AND SECTION 551.087 OF THE TEXAS GOVERNMENT CODE. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 3 Village Circle, December 10, 2014, by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. Kelly Edwards, TRMC, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817 - 490 -5710 and reasonable accommodations will be made to assist you. Page 5 of 5 Town of Westlake Item # 2 — Pledge of Allegiance Texas Pledge: "Honor the Texas flag; I pledge allegiance to thee, Texas, one state under God, one and indivisible." Town of Westlake Item # 3 — Review of Consent Agenda Items CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the November 17, 2014, meeting. b. Consider approval of Resolution 14 -41, Authorizing the Town Manager to execute an agreement with Badger Meter for meter reading and web hosting services as outlined in the AMA Managed Solution Master Agreement. c. Consider approval of Resolution 14 -42, Authorizing the Town Manager to execute an Interlocal Agreement with Trophy Club Municipal Utility District providing for participation in a water supply feasibility and route study. d. Consider approval of Ordinance 740, Amending Water and Wastewater Rate and Fee Schedule, and repealing Ordinance 699. Town of Westlake Item # 4 — Executive Session EXECUTIVE SESSION a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 Town of Westlake Item # 5 — Reconvene Meeting Town of Westlake Item # 6 — Take any Necessary Action, if necessary The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 Town of Westlake Item # 7 — Discussion Items DISCUSSION ITEMS a. Standing Item: Update and discussion regarding the Granada Development. (30 min) b. Standing Item: Presentation, Discussion, and Update on the Process to Date for the Establishment of the Entrada Proposed Public Improvement District and Developer and Staff Presentations Related to the PID Documents Including the PID Appraisal, Service Assessment Plan, Preliminary Official Statement, and the Calendar for Issuing Bonds for this PID. (30 min) Town of Westlake Item #7a —No Supporting documentation Standing Item: Update and discussion regarding the Granada Development. (30 min) 7 Cl, estlake Town Council TYPE OF ACTION Workshop Meeting - Discussion Item Westlake Town Council Workshop Meeting Monday, December 15, 2014 TOPIC: Presentation, Discussion, and Update on the Process to Date for the Establishment of the Entrada Proposed Public Improvement District and Developer and Staff Presentations Related to the PID Documents Including the PID Appraisal, Service Assessment Plan, Preliminary Official Statement, and the Calendar for Issuing Bonds for this PID. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high - quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: To be Funded by PID Bonds Status - ® Not Funded Until PID Bond Issuance Source — PID Bonds EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Previously this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1 -2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town's Comprehensive Plan was amended to provide for the uses requested in Page 1 of 4 the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development's name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re- zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 1 lth, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time the Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General's Office would provide a preliminary approval. The developer's team discussed this at the Town Council's January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned by the Council back to the Page 2 of 4 original Developer (Mehrdad Moayedi) on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer's PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. Next steps in the PID bond issuance process are set out in the attached calendar. At the work shop, Town Staff, along with our PID consultants and the Developer's PID consultants, will review key points of the PID Appraisal, Service Assessment Plan (SAP), Preliminary Official Statement (POS), and the calendar for issuing bonds for this PID. RECOMMENDATION Council hear from the Town Staff as well as the Developer's PID team regarding the status of the PID bond issuance process, work to date on the Entrada project regarding detailed design guidelines for Entrada, as well as review high points in the PID documents (i.e. the PID Appraisal, SAP, POS, and calendar). Provide feedback and direction to Staff pertaining to same. ATTACHMENTS 1. Letter dated from 12 -8 -14 from Developer's Financial Advisor, Mark Curran of Jefferies LLC outline next steps on bond marketing and bond sale for Entrada PID. 2. PID submittal calendar 3. Entrada Master Plan 4. Entrada Appraisal Master Plan- POD Layout 5. Entrada Appraisal East POD Residential Master Plan 6. Entrada Appraisal Block Designations NOTE: DOCUMENTS BELOW ARE WITH THE RESOLUTIONS THAT WILL CONSIDERED FOR APPROVAL AT THE REGULAR MEETING THIS DATE. 1. PID Appraisal 2. Service Assessment Plan (SAP) 3. Preliminary Official Statement (POS) THERE IS STILL LANGUAGE BEING DRAFTED FOR SOME OF THESE DOCUMENTS AND ISSUES RELATED TO THIS PID REMAINING TO BE RESOLVED AS OF THE TIME OF PREPARATION OF THE TOWN COUNCIL PACKET. STAFF WILL SPEAK TO THIS AT THE WORKSHOP. Page 3 of 4 Page 4 of 4 December 8, 2014 Mr. Thomas Brymer Town Manager Town of Westlake #3 Village Circle Suite 202 Westlake, TX 76226 Dear Mr Brymer: Jefferies LLC Municipal Securities Group 300 Crescent Court, Ste. 500 Dallas, TX 75201 tel 972.701.3000 Jefferies.com It is truly a pleasure to send this brief letter updating the Town Council on the progress that has been achieved on the Town of Westlake Entrada Public Improvement District (the PID). We are even more pleased to see that the financing program is now in its final stages and should be ready for a bond sale in January of 2015. This coincides with the very major accomplishments on the part of the Development Team (Centurion American and Blackard Global) in terms of refining their development plans and securing major purchasers for key components of the Entrada Project. Background Over the last 14 months Jefferies has worked with the Town Staff and Development Team to structure this financing program. Over the last several months the basic financing documents have been fine -tuned so that the allocation of the PID debt expenditures and repayment program are now reasonably finalized. At the same time, The Development Team has put in place key agreements with several property purchasers for the residential and certain commercial parts of the PID Area. Based on all of this activity, Jackson Claborn has appraised the Entrada site assuming that all of the PID financed improvements are in place. This appraisal analysis has produced a value in the high $70 million range. The appraisal is currently being updated to reflect the most current development expectations for Entrada and the final document should be ready this week. The bond financing will be sized at not to exceed one third (1/3) of the appraised value. This is a reasonably low leverage financing. The Next Step - Approval of the Preliminary Official Statement for Distribution The Preliminary Official Statement ( "POS ") is the summary document that will be employed by Jefferies to market the PID bonds. This document is to summarize the entire PID financing program. The POS included in the Town Council packets represents the 6th+ draft of this document and has received substantial comments from all parties. Further, it very clearly outlines the workings of the financing and the credit features of the PID 1 financing. And as you can see, it clearly and repeatedly states that the PID bonds are secured solely by the Special Assessments on Entrada and bond funded reserves - not any Town funds. The POS fully describes the proposed PID financing and precisely summarizes the revenue pledge of the proposed bond offering. In the upcoming week, we look forward to filling in the remaining blanks and updating the appraisal information. That work should be completed by December 15th. The POS will undergo at least one more fine - tuning before Town Staff, your Financial Advisor and Bond Counsel are asked to approve the formal distribution of the document by December 18 or 19. The changes between now and then will be refinements - there will be no substantive changes. The Bond Marketing Once the POS is released for distribution to the market Jefferies will formally commence the bond marketing process. Over the last four months we have done three site tours with potential investors and plan at least one more site tour in early January. The POS will be sent to well over 100 institutional investors throughout the US. The Jefferies sales staff and my team of bankers will intensify our outreach once the POS is formally distributed. PID bonds require a special Town Council meeting to approve the bond sale after Jefferies has committed to a firm pricing. Ideally this meeting is on a Wednesday evening or Thursday morning. This schedule permits us to market the bonds on a Monday, set the pricing in concrete late Tuesday afternoon and then prepare all of the documents for final Town approval on Wednesday morning. The following schedule assumes that the Town of Westlake can hold a special meeting to approve the PID on either January 14 or 15. By January 7th to 9th our plan is to have secured credit qualification from at least ten major institutions for the purchase of these PID bonds. At the same time, we will begin discussing the proposed interest rates with the market participants. On January 12th and 13th Jefferies will move into the final pricing stage with a goal of securing preliminary orders from several firms to cover the entire bond financing. We will look to present the proposed final pricing to the Town Financing Team on the afternoon of January 13th. With Staff level approval, Bond Counsel and the Financial Advisor and the Jefferies Team will work to finalize all of the PID financing documents and bond sale approvals for consideration by the Town Counsel at an evening meeting on the 14th of January or an early morning meeting on the 15th. Summary It has truly been a pleasure to work with your team and the property owners on the preparation of this PID financing. We are very enthused about helping to finance what we expect to be a truly excellent project - Entrada - in the Town of Westlake. We are committed to providing a PID financing that is the same high level of quality as the planned Entrada Project. 2 I look forward to attending the meeting next week to present the Preliminary Official Statement and to answer any questions. Best regards, Mark Curran Cc: Interested Parties List, Westlake Entrada PID 3 November -14 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Town Council Special Meeting Date: October 8, 2014 October 13, 2014 Town of Westlake, Texas Entrada Improvement District Special Assessment Revenue Bonds, Series 2015 Financing Schedule December -14 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Action: January -15 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Town Council Special Meeting Holiday: Market Closed 12/8/2014 February -15 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 • PID Kick -Off meeting to discuss Bond documents and financing schedule • Distribution of 1st updated draft of the CFA and Bond Indenture • Distribution of 1st updated draft of the Service and Assessment Plan ( "SAP ") October 16, 2014 • Comments due on 2nd draft of CFA & SAP • Distribution of updated draft of the Preliminary Official Statement ( "POS ") October 20, 2014 • Comments Due on updated draft of POS October 24, 2014 • Distribution of CFA and 2nd draft of POS November 3, 2014 • Draft appraisal expected values received November 17, 2014 • Distribution of 1st draft of the appraisal November 19, 2014 • Group call to discuss draft appraisal and provide status updates on other bond documents November 20, 2014 • Distribution of 3rd Draft of POS November 24, 2014 • Distribution of Final Appraisal November 25, 2014 • Comments due on 3rd draft of POS December 2, 2014 • Distribution of "Final" POS December 5, 2014 • Deadline to have documents to Town for inclusion in the Dec. 15 Council Meeting Agenda December 15, 2014 December 18, 2014 December 19, 2014 Page 1 Town Council Meeting to: • Approve preliminary SAP, • Approve release of POS • Set date for PH on levying of PID assessments • Instruct publication & mailing of notices for PH on PID reassessments • Instruct filing of proposed reassessment roll with Town Secretary • Posting of the POS subject to Staff, BC and FA approval • Bond pre- marketing commences November -14 Town of Westlake, Texas Entrada Improvement District Special Assessment Revenue Bonds, Series 2015 Financing Schedule December -14 S M T W Th F S S M T W Th F S 1 1 2 3 4 5 6 2 3 4 5 6 7 8 7 8 9 10 11 12 13 9 10 11 12 13 14 15 14 15 16 17 18 19 20 16 17 18 19 20 21 22 21 22 23 24 25 26 27 23 24 25 26 27 28 29 28 29 30 31 30 Town Council Special Meeting Town Council Special Meeting Date: Action: January -15 S M T W Th F S 12/8/2014 February -15 S M T W Th F S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 Holiday: Market Closed December _, • Last day to mail notice to residents and post notice in newspaper of public hearing on levying of PID assessments January 14, 2015 • Bond Pricing Special Town Council Meeting to: Jan 14 p.m. or Jan 15 a.m. • Approve Bond Sale • Public Hearing on PID Assessment • Approve Assessment PID Ordinance with Final SAP • Approve Reimbursement Agreement • Approve Bond Documents and sale of PID Bonds February 5, 2015 • Bond Closing Page 2 60 WESTLAKE ENTRADA MASTER PLAN 61 WESTLAKE ENTRADA MASTER PLAN - POD LAYOUT 63 PLAT OF EAST RESIDENTIAL POD 62 WESTLAKE ENTRADA MASTER PLAN – BLOCK DESIGNATIONS Town of Westlake Item #8 Council Recap / Staff Direction COUNCIL RECAP / STAFF DIRECTION Town of Westlake Item # 9 — Workshop Adjournment Back up material has not been provided for this item. Town of Westlake Item # 2 — Citizen's Presentations and recognitions CITIZEN PRESENTATIONS AND RECOGNITIONS: This is an opportunity for citizens to address the Council on any matter whether or not it is posted on the agenda. The Council cannot by law take action nor have any discussion or deliberations on any presentation made to the Council at this time concerning an item not listed on the agenda. The Council will receive the information, ask staff to review the matter, or an item may be noticed on a future agenda for deliberation or action. Town of Westlake Item # 3 — Consent Agenda CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the November 17, 2014, meeting. b. Consider approval of Resolution 14 -41, Authorizing the Town Manager to execute an agreement with Badger Meter for meter reading and web hosting services as outlined in the AMA Managed Solution Master Agreement. c. Consider approval of Resolution 14 -42, Authorizing the Town Manager to execute an Interlocal Agreement with Trophy Club Municipal Utility District providing for participation in a water supply feasibility and route study. d. Consider approval of Ordinance 740, Amending Water and Wastewater Rate and Fee Schedule, and repealing Ordinance 699. MINUTES OF THE TOWN OF WESTLAKE, TEXAS TOWN COUNCIL MEETING November 17, 2014 PRESENT: Mayor Laura Wheat and Council Members, Alesa Belvedere, Carol Langdon, Rick Rennhack and Wayne Stoltenberg. ABSENT: Michael Barrett OTHERS PRESENT: Town Manager Tom Brymer, Town Secretary Kelly Edwards, Town Attorney L. Stanton Lowry, Finance Director Debbie Piper, Director of Facilities and Parks & Recreation Troy Meyer, Fire Chief Richard Whitten, Planning and Development Director Eddie Edwards, Director of Public Works Jarrod Greenwood, Director of HR & Administrative Services Todd Wood, Director of Information & Technology Jason Power, Communications & Community Affairs Director Ginger Awtry, and Susan McFarland, Communications Specialist. Work Session 1. CALL TO ORDER Mayor Wheat called the work session to order at 7:10 p.m. 2. REVIEW OF CONSENT AGENDA ITEMS FOR THE NOVEMBER 17, 2014, TOWN COUNCIL REGULAR MEETING AGENDA. No additional discussion. Town Council Minutes 11/17/14 Page 1 of 5 3. DISCUSSION ITEMS a. Discussion and presentation regarding the Water and Waste Water Study and proposed rate increase. Director Greenwood provided a presentation and overview of the proposed increase. Discussion ensued regarding the City of Fort Worth's project to increase the service capacity to Westlake and the percentage of increase that is contributable to Westlake's usage. Discussion also ensued regarding effluent discharge that runs into Lake Grapevine, rates comparison of surround municipalities, N1 Sewer Line, funding the project using Utility Fund Balance, and the remaining number of operating days. b. Standing Item: Update and discussion regarding the Granada and Entrada Developments including the Entrada Public Improvement District (PID). Town Manager Brymer provided an update regarding the Granada subdivision infrastructure. Discussion ensued regarding the development agreements and residential permits. Town Manager Brymer then provided an update regarding the Planned Improvement District (PID) schedule, timeline for the delivery of the required documents for review and the proposed issuance of debt in January 2015. Mr. Beaty stated that they are negotiating with two builders Tresor Custom Homes and Veranda Designer Homes for the residential portions. He also said EB5 Financing, PID financing are moving forward and that MUD discussions will not prevent the developer from moving forward with Entrada. Town Manager Brymer also mentioned an amendment to the zoning ordinance allowing for a specific architectural design. c. Update on pending development submissions. Proposed development on the Kuelbs property (off of Dove Road) located East of GlenWyck. The developer may ask for rezoning from R -1 zoning to allow for a denser development and the proposed builder would be Calais Custom Homes. Town Council Minutes 11/17/14 Page 2 of 5 Southlake Meadows addition contains one street within the Town of Westlake. The developer may ask for rezoning from R -1 to allow for a higher density of home along that property. Discussion ensued regarding the creation of an ordinance requiring developers to conduct a neighborhood meeting as soon as a zoning change is filed with the Town. Town Attorney Lowry provided an overview of the parameters for such an ordinance stating the developer cannot force a neighborhood to meet and this would delay any fast -track process, but he believes there is a process that can be implemented. 4. EXECUTIVE SESSION The Council did not convene into executive session. The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada b. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. c. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 5. RECONVENE MEETING 6. TAKE ANY ACTION, IF NEEDED, FROM EXECUTIVE SESSION ITEMS. 7. COUNCIL RECAP / STAFF DIRECTION No additional direction. Town Council Minutes 11/17/14 Page 3 of 5 8. ADJOURNMENT Mayor Wheat adjourned the work session at 8:25 p.m. Regular Session 1. CALL TO ORDER Mayor called the regular session to order at 8:25 p.m. 2. CITIZEN PRESENTATIONS AND RECOGNITIONS Mary Jean Moloney, Atmos, stated that she would be retiring and introduced Kelly Pacleb as her successor. 3. CONSENT AGENDA a. Consider approval of the minutes from the October 20, 2014 meeting. b. Consider approval of Resolution 14 -37, Adopting the 2015 Meeting Schedule for the Town Council and Board of Trustees. c. Consider approval of Resolution 14 -38, Authorizing and Approving the Purchase of a Fire Engine /Pumper from Hall Motors /Ferrara Fire Apparatus. d. Consider approval of Resolution 14 -39, Amending the Fire Station Site Plan. e. Consider approval of Resolution 14 -40, Amending an existing agreement for Water Service with the City of Fort Worth relating to construction of the Northside II 48 -inch water main and allocated capacity of wholesale purchase of treated water. MOTION: Council Member Rennhack made a motion to approve consent agenda. Council Member Langdon seconded the motion. The motion carried by a vote of 4 -0. 4. EXECUTIVE SESSION The Council convened into executive session at 8:27 p.m. The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental Town Council Minutes 11/17/14 Page 4 of 5 body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion's development known as Entrada b. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. c. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 5. RECONVENE MEETING 6. TAKE ANY ACTION, IF NEEDED, FROM EXECUTIVE SESSION ITEMS. 7. FUTURE AGENDA ITEMS 8. COUNCIL CALENDAR 9. ADJOURNMENT There being no further business before the Council, Mayor Wheat asked for a motion to adjourn the meeting. MOTION: Council Member Rennhack made a motion to adjourn the meeting. Council Member Langdon seconded the motion. The motion carried by a vote of 4 -0. Mayor Wheat adjourned the meeting at 9:22 p.m. APPROVED BY THE TOWN COUNCIL ON DECEMBER 15, 2014. ATTEST: Laura Wheat, Mayor Kelly Edwards, Town Secretary Town Council Minutes 11/17/14 Page 5 of 5 Westlake Town Council TYPE OF ACTION Regular Meeting - Consent Westlake Town Council Meeting Monday, December 15, 2014 RDA'' TOPIC: Consider a resolution authorizing the Town Manager to execute an agreement with Badger Meter for meter reading and web hosting services as outlined in the AMA Managed Solution Master Agreement. STAFF CONTACT: Jarrod Greenwood, Public Works Director Strategic Alignment Vision., Value, Mission Pers • ective Strategic Theme & Results, Outcome Objective Fiscal Responsibility People, Facilities, & Technology Exemplary Service & Governance - We set the standard by delivering unparalleled municipal and educational services at the lowest cost. Maximize Efficiencies & Effectiveness Strategic Initiative Increase Efficiency of Utility Billing and Internal Processes Time Line - Start Date: December 15, 2014 Completion Date: September 30, 2016 Funding Amount: $3,524.40 Status - ® Funded Source - Utility Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) As you may recall, staff conducted a three month pilot program from July 2014 through August 2014 for a new meter reading technology; a cellular based meter reading with online customer portal, to determine if it was worth pursuing. This change will increase operational efficiency and promote water conservation provide by providing customers with the ability to monitor their water consumption. Staff will spread implementation of the entire meter reading system over two fiscal years to minimize financial and workload impact. There are two costs associated with the new meter electronic devices: 1) $70,735 will be the costs in year one to retrofit our existing meter drive -by electronics to the new cellular based devices and 2) $0.89 /meter /month is the ongoing annual cost of the cellular based meter reading and online web portal access. The cost in year one will be $3,524 for 320 meters (see attached pricing schedule). The cost to retrofit the remaining meters in year two will be approximately $30,000. The cellular meter reading and online customer portal costs will increase in year two to approximately $7,400 and will continue to increase each year by $0.89 /month for each new account added to the system. The annual cellular and web portal access will be based on the actual number of active meters. As development occurs and new water services are added, this cost will increase accordingly. New meters installed will be paid for by the applicant consistent with the Town's Code of Ordinances. These costs were included in the FY 2015 -2019 adopted CIP. RECOMMENDATION AND ATTACHMENTS Staff recommends approval. Badger Cellular Pricing Resolution Contract ATLAS UTILITY SUPPLY COMPANY 2301 CARSON STREET FORT woRTH, TEXAS 76117-5212 817/831 -1275 EA,X 517/831 -1014 Salem atIasutility,Com Town of Westlake 12/2/2014 BADGER ORION CELLULAR AND BEACON PRICING WITH E- SERIES METERS QUANTITY DESCRIPTION PRICE EXTENDED 1 Badger Engagement Fee (one time fee) $5,875.00 BADGER E- SERIES METERS 42 5/8" X 3/4" Badger Model E -25 E Series ultra sonic meter stainless $160.00 steel, HR -E LCD Encoder with 308 connectors 92 1" Badger Model E -55 E Series ultra sonic meter stainless steel, $210.00 HR -E LCD Encoder with 308 connector 5 11/2" Badger Model E- 11/2" E Series ultra sonic meter stainless $570.00 steel, HR -E LCD Encoder with 308 connector 8 2" Badger Model E -2" E Series ultra sonic meter stainless steel, HR- $710.00 E LCD Encoder with 308 connector 320 1 330 ORION CELLULAR ENDPOINTS Orion cellular endpoint with 308 connector TRAINING Beacon Training 8 hours WebEx TOTAL BEACON SUBSCRIPTION FEES Access to BEACON AMA Meter Data Management Software (MDMS), BEACON smartphone utility app, EyeOnWater consumer web portal and EyeOnWater consumer smartphone app. BEACON AMA MDMS and EyeOnWater consumer portal are Hosted by Badger Meter Inc. on a secure website, and is accessible via Internet Browser. 330 MONTHLY SUBSCRIPTION FEE CHARGES PER MONTH $89.50 $1,650.00 $ .89, per water service, per month $5,875.00 $6,720.00 $19,320.00 $2,850.00 $5,680.00 $28,640.00 $1,650.00 $70,735.00 Pricing is based on approximately 320 services, with a ten (10) year subscription agreement with Badger Meter directly. $293.70 NOTE: It is Badger Meter's recommendation for best practices that all pit meter box lids be made of composite or plastic material. Page 1 of 1 TOWN OF WESTLAKE RESOLUTION NO. 14 -41 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING THE TOWN MANAGER TO EXECUTE A CONTRACT WITH BADGER METER FOR METER READING AND WEB HOSTING SERVICES. WHEREAS, the Town Council fmds that meter reading accuracy and efficiency are in the best interest of the Town and its customers; and WHEREAS, Westlake desires to provide cellular meter reading and customer web portal services to its customers; and WHEREAS, the Badger Meter contract provides residents with a tool in which to conserve water; and WHEREAS, the Town Council finds that the proposed contract with Badger Meter. is necessary for the provision of accurate and efficient utility billing services; and WHEREAS, the Town Council fmds that the passage of this Resolution is in the best interest of the public. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That, the Town Council of the Town of Westlake, Texas, hereby approves the contract with Badger Meter attached here to as Exhibit `A ' ; and further authorizes the Town Manager to execute said contract on behalf of the Town of Westlake, Texas. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 14 -41 Page 1 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 15TH DAY OF DECEMBER 2014 ATTEST: Laura Wheat, Mayor Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney Resolution 14 -41 Page 2 of 2 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S This BEACON AMA MANAGED SOLUTION MASTER AGREEMENT ( "Agreement ") is entered into as of the day of , 201_ (the "Effective Date ") by and between Badger Meter, Inc. , a Wisconsin corporation with offices located at 4545 W. Brown Deer Road, Milwaukee, Wisconsin 53223 ( "Badger Meter ") , and The Town of Westlake, 3 Village Cir., Suite 202, Westlake, TX 76262, and as applicable its officers, directors, members, board members, governing members, trustees, commissioners, elected and appointed officials, employees, agents, consultants and other representatives ( "Customer "). (1) SERVICE. Badger Meter and its cellular service aggregator and data - hosting service providers ( "Suppliers ") have developed a hosted, on- demand, web -based service website ( "Portal ") accessible to its customers to provide metering and water usage service information, communicated through a cellular network, for its customers ( "Service "), and documentation to assist customers in using the Portal and the Service ( "Documentation "). (2) RIGHT TO ACCESS AND USE THE PORTAL AND SERVICE. In consideration of the payment of the Service Fees as set forth in Section (5), Badger Meter grants to Customer, its employees and contractors that Customer approves as users of the Service ( "Authorized User ") and Customer's approved end -user water customers ( "Authorized Consumer ") the right to remotely access and use the Service from the Portal (as currently configured) for Customer's internal business use and for the benefit of its Authorized Consumers in accordance with this Agreement. (3) OWNERSHIP OF PORTAL AND SERVICE. (a) Badger Meter Service. Badger Meter owns all rights, title and interest in the Portal, Service and Documentation, including all associated intellectual property rights. Neither Customer, nor its Authorized Users or Authorized Consumers will obtain any rights, title or interest in the Portal, Service, or Documentation or any associated intellectual property rights, other than the right to access and use the Portal, Service and Documentation, subject to the terms of this Agreement. (b) Suggestions. If Customer provides Badger Meter any suggested improvements ( "Suggestions ") to the Portal, Service or Documentation, Customer agrees that Badger Meter will own all rights, title and interest in and to the Suggestions, even if Customer has designated the Suggestions as confidential. Badger Meter will be entitled to use the Suggestions without restriction. By entering into this Agreement, Customer irrevocably assigns, conveys and transfers to Badger Meter all right, title and interest in and to the Suggestions and agrees to provide Badger Meter with commercially reasonable assistance to document, perfect and maintain Badger Meter's rights in the Suggestions. (4) TERM. The term of this Agreement begins on the Effective Date and continues for a ten (10) year term unless earlier terminated in accordance with Section (16) of the Agreement (the "Term "). ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 1 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT (5) FEES. 116114V.' 44Tsic^' estla e T E X A S (a) Service Fees. In consideration for the right to access and use the Portal, Service and Documentation, Customer agrees to pay Badger Meter certain fees ( "Service Fees ") to obtain enterprise -wide access to the Portal, Service and Documentation, authorizing all of its Authorized Users and Authorized Consumers to use the Portal and Service and Documentation in accordance with the terms of this Agreement, pursuant to the pricing set forth in Exhibit 1 - Fees. (b) Taxes and Surcharges. Customer will be responsible to pay any sales, use, value added or excise taxes or surcharges resulting from use of the Portal, Service and Documentation by Customer, its Authorized Users or Authorized Consumers, excluding taxes due on Badger Meter's income. Customer will not be responsible for payment of taxes or surcharges resulting from its use of the cellular service included as part of the Service, as those charges are included in the Service Fees. (c) Updated Schedule of Fees. At least ninety (90) days prior to the expiration date of the Term ( "Anniversary Date "), Badger Meter will provide Customer with an updated Schedule of Fees for the Service for the upcoming contract term. (6) RESTRICTIONS ON RIGHT TO USE. Customer agrees that Customer, its Authorized Users and Authorized Consumers will not use or permit or assist another to use the Portal, Service or Documentation in violation of this Agreement and will not: (a) Sell, license, resell, sublicense, or otherwise permit any third parties other than Authorized Users or Authorized Consumers to access or use the Portal, Service, or Documentation. (b) Remove patent, copyright, trademark or other intellectual property markings from the Portal, Service or Documentation. (c) Modify, alter, tamper with, repair or otherwise creative derivatives from the Portal, Service or Documentation. (d) Copy, reverse engineer, disassemble or decompile the Portal, Service or Documentation or apply any other process or procedure to derive the source code from any software included in the Portal or Service. (e) Provide Customer Content which infringes on the intellectual rights of any person or entity or use the Portal, Service or Documentation in violation of the intellectual property rights of Badger Meter, its Suppliers or any third party. (f) Use the Portal or Service in a manner that violates any applicable international, federal, state or local laws, rules or regulations. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 2 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 116114V.' 44rsic^' estla e T E X A S (g) Assert or authorize, assist or encourage any third party to assert against Badger Meter, its affiliates, customers, vendors, business partners, Servicers or licensors any intellectual property infringement Claim regarding the Portal, Service or Documentation. (h) Transmit content or messages that are illegal, fraudulent, threatening, abusive, defamatory, or obscene. (i) Make any unauthorized connection to Badger Meter's information technology architecture ( "Network ") (j) Communicate any unsolicited commercial, voice, SMS, or other message. (k) Upload or transmit any "virus," "worm," or malicious code or access, alter, or interfere with the communications of and/or information about another customer. (1) Take actions that could cause damage to or adversely affect Badger Meter, the Service, Portal, Suppliers, Network or the property or reputation of Badger Meter or its Suppliers. Customer and Badger Meter agree to make good faith efforts to minimize abuse or fraudulent use of the Portal and Service, to promptly report to each other any such abuse or fraudulent use of which they become aware, and to fully cooperate in any investigation or prosecution initiated by Badger Meter, its Suppliers or Customer related to abuse or fraudulent use of the Portal and Service. (7) CUSTOMER SUPPORT. Badger Meter will provide Customer the support services described in Exhibit 2 - Service Level Agreement. (8) CUSTOMER CONTENT. (a) Customer Content Defined. Customer, its Authorized Users and Authorized Consumers will provide Badger Meter and its Suppliers certain text, audio, video, images, Customer Data, customer billing information, personally identifiable information or other content ( "Customer Content "). (b) Ownership. The Parties agree that the Customer Content is and shall remain the sole and exclusive property of Customer and /or its licensors or Authorized Consumers, including but not limited to any intellectual rights in the Customer Content. (c) Use of Customer Content by Badger Meter. Customer, its Authorized Users and Authorized Consumers consent to Badger Meter and its Suppliers' right to host, access, store, copy and use the Customer Content as reasonably necessary to provide, maintain, repair and enhance the Portal, Service and Documentation. Badger Meter may disclose certain Customer Content only to provide the Service to Customer, its Authorized Users and Authorized ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 3 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 116114V.' 44Tsic^' estla e T E X A S Consumers or to comply with the law or request of a governmental or regulatory body (including subpoenas or court orders.) Badger Meter will give Customer reasonable notice of a request from a governmental entity to allow Customer to seek a protective order or other appropriate remedy (except to the extent such notice would violate a court order or other legal requirement). (d) Customer Responsibilities. Customer is solely responsible for the development, content, operation and maintenance of the Customer Content, including but not limited to the technical operation of the Customer Content, and ensuring that calls made to the Service from Customer's network are compatible with then - current API's for the Service. Customer is responsible to ensure that Customer, its Authorized Users and Authorized Consumers comply with the Badger Meter Terms of Use Policy, the Badger Meter Privacy Policy or any other policies referenced in this Agreement and the law. Customer will respond to any Claims related to the Customer Content and is responsible for properly handling and processing notices sent to Customer by any person claiming that the Customer Content violates such person's legal rights, including notices pursuant to the Digital Millennium Copyright Act. (9) CONFIDENTIALITY. (a) Confidential Information Defined. For purposes of this Agreement, Confidential Information means all nonpublic information disclosed by one party to the other that is designated as confidential or that given the nature of the information or circumstances surrounding its disclosure, reasonably should be understood to be confidential, including but not limited to: (a) nonpublic information related to Badger Meter or its affiliates, Suppliers, business partners, technology, customers, business plans, intellectual property, promotional and marketing activities, finances and other business affairs; (b) third party information Badger Meter is obligated to keep confidential; (c) the content and existence of any discussions or negotiations between the parties; (d) Badger Meter's intellectual property used in providing the Portal, Service or Documentation; (e) the Customer Content, but only to the extent that Customer Content contains proprietary information, billing information or other personally identifiable information ( "Customer Data "); and (f) Traffic Data. (b) Protection of Confidential Information. To the extent permitted by law, t he parties agree to hold the other party's Confidential Information in strict confidence and will not copy, reproduce, give, sell, assign, license, market, transfer or otherwise dispose of the Confidential Information of the other party to any third parties or use the Confidential Information for any purposes whatsoever other than as contemplated by this Agreement. The Parties will take commercially reasonable steps to avoid disclosure, dissemination or unauthorized access to or use of the Confidential Information during the Term and for a period of five (5) years after the end of the Term, except that Confidential Information which is designated as a trade secret which shall continue to be subject to these confidentiality obligations in perpetuity. The Parties will not issue any press release or make any other public communication with respect to this Agreement or Customer's use of the Portal or Service. Customer agrees it will not misrepresent ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 4 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT or embellish the relationship between the Parties (including by expressing or implying that Badger Meter supports, sponsors, endorses or contributes to Customer or its business endeavors) or express or imply any relationship or affiliation between Badger Meter and Customer or any other person or entity except as expressly permitted by this Agreement. (c) Ownership of Customer Data. All Customer Data pertaining to Customer or its Authorized Consumers is considered Confidential Information of Customer and owned by Customer. Customer grants Badger Meter and its Suppliers the right to host, access, store, copy, and use the Customer Data as is reasonably necessary to provide, maintain, repair and enhance the Portal, Service and Documentation. (d) Traffic Information. All de- identified data generated or collected by Badger Meter through operation of the Portal and Service is referred to as the "Traffic Data." All Traffic Data shall be the Confidential Information of and owned exclusively by Badger Meter. (e) Third Party Requests for Confidential Information. Neither party may disclose the other party's Confidential Information except to a Supplier subject to the restrictions in this Agreement or an Authorized User or Authorized Consumer except as otherwise required by law. If a party receives a request for access to the other party's Confidential Information from a third party, the receiving party agrees to inform the disclosing party in writing within three (3) business days of receipt of the request unless prohibited by law. (f) Exclusions from Confidential Information. Confidential Information of a party shall not include information which: (i) is in or becomes part of the public domain through no fault of the receiving party; (ii) the receiving party can prove was known to it prior to its receipt from the disclosing party without reference to the Confidential Information; (iii) is independently developed by the receiving party outside of this Agreement without use of the disclosing party's Confidential Information; or (iv) is obtained by the receiving party from a third party which had no obligation of confidentiality to the disclosing party. (10) CUSTOMER'S REPRESENTATIONS AND WARRANTIES. Customer represents and warrants to Badger Meter that Customer: (a) Authority. Has the right and authority to enter into this Agreement and to meet its financial and legal obligations under this Agreement. (b) Ownership. Customer, its licensors or its Authorized Consumers, own all rights, title and interest in and to the Customer Content, including but not limited to the Customer Data. Customer has all rights in the Customer Content necessary to grant the rights to Badger Meter contemplated under this Agreement. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 5 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estiai e- T E X A S (c) Compliance with Badger Meter Policies. None of the Customer Content or the use of the Customer content, the Portal or Service by Customer, its Authorized Users or its Authorized Consumers will violate Badger Meter's Terms of Use Policy or Privacy Policy. (d) No Infringement. To Customer's knowledge, none of the Customer Content infringes the Intellectual Property Rights of any third party or is the subject matter of any pending or threatened lawsuit, legal proceeding or Claim. (e) Compliance with the Law. Neither Customer, the Authorized Users or the Authorized Consumers will access or use the Portal, Service or Documentation in any manner that violates any applicable international, federal, state or local laws and / or regulations, including but not limited to all applicable data protection, intellectual property and privacy laws. (11) REPRESENTATIONS AND WARRANTIES OF BADGER METER. (a) Authority. Badger Meter represents and warrants to Customer that it has the right and authority to enter into this Agreement and to perform its obligations under this Agreement. (b) Service Warranty. Badger Meter represents and warrants to Customer that the Portal and Service will be provided pursuant to Exhibit 2 - Service Level Agreement. In providing the Portal and Service, Badger Meter will maintain sufficient data storage capacity to satisfy the technical requirements and required storage capacity to host the Portal and Service, in its reasonable discretion. If Customer allows unauthorized users to access the Portal, Service or Documentation, this express limited warranty will immediately become null and void. (c) Remedy for Breach of the Express Limited Warranty. If the Portal, Service or Documentation fail to meet the terms of the express limited warranty set forth in Section 11(b), Customer is required to notify Badger Meter promptly and in no event later than thirty (30) days from the date of the breach, in writing, of any alleged failure and provide information to support its warranty claim. Customer's exclusive remedy for a breach of the express limited warranty is a Service credit to be calculated in accordance with Exhibit 2 - Service Level Agreement. (d) DISCLAIMER OF IMPLIED WARRANTIES. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET FORTH IN SECTION 11(b), BADGER METER MAKES NO OTHER EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO THE PORTAL, SERVICE OR DOCUMENTATION. BADGER METER EXPRESSLY DISCLAIMS ANY OTHER EXPRESS OR IMPLIED WARRANTIES WITH REGARD TO THE PORTAL, SERVICE OR DOCUMENTATION, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, NON - INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE, QUIET ENJOYMENT, OR IMPLIED WARRANTIES ARISING FROM A COURSE OF DEALING, INDUSTRY PRACTICE OR USAGE OF TRADE. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 6 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estiai e- T E X A S BADGER METER EXPRESSLY DISCLAIMS THAT THE PORTAL AND SERVICE WILL BE UNINTERRUPTED, ERROR FREE OR FREE OF HARMFUL COMPONENTS, AND EXPRESSLY DISCLAIMS ANY WARRANTIES AS TO THE RELIABILITY, QUALITY, SECURITY, CONDITION, DESIGN, SUITABILITY, INTER - OPERABILITY, AVAILABILITY, COMPLETENESS OF THE PORTAL OR SERVICE OR THAT ANY CONTENT, INCLUDING THE CUSTOMER CONTENT, WILL BE SECURE OR NOT OTHERWISE LOST OR DAMAGED. (e) ESSENTIAL TERMS. THE ENFORCEABILITY OF THIS SECTION (11) IS ESSENTIAL TO BADGER METER'S WILLINGNESS TO ENTER INTO THIS AGREEMENT WITH CUSTOMER. (12) LIMITATION OF LIABILITY. IF ANY PARTY DEFAULTS IN ITS OBLIGATIONS UNDER THIS AGREEMENT AND SUBJECT TO THE LIABILITY CAP SET FORTH IN SECTION (14): (a) DIRECT DAMAGES. THE NON - BREACHING PARTY WILL BE ENTITLED TO RECOVER FROM THE BREACHING PARTY ONLY THE ACTUAL AND DIRECT DAMAGES THAT THE NON - BREACHING PARTY MAY INCUR AS A RESULT OF SUCH BREACH. CUSTOMER'S ACTUAL AND DIRECT DAMAGES WILL BE LIMITED TO THE RECOVERY OF FEES ACTUALLY PAID TO BADGER METER BY CUSTOMER FOR THE PREVIOUS THREE MONTH TIME PERIOD. (b) LIMITS ON DAMAGES. EXCEPT FOR PAYMENT OBLIGATIONS (i) ARISING UNDER SECTIONS (14) AND (15) (INDEMNIFICATION), (ii) DAMAGES FOR GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OR CLAIMS FOR VIOLATION OF THE OTHER PARTY'S INTELLECTUAL PROPERTY RIGHTS, NEITHER PARTY NOR ANY OF ITS RESPECTIVE AFFILIATES, SUPPLIERS OR LICENSORS WILL BE LIABLE TO THE OTHER PARTY, AN AUTHORIZED USER, AUTHORIZED CONSUMER OR ANY THIRD PARTY FOR ANY CLAIMS, DEMANDS, ACTIONS, LOSSES, DAMAGES, FINES, JUDGMENTS SETTLEMENTS, COSTS, EXPENSES, ATTORNEY'S FEES, AND COURT COSTS OR ANY OTHER LIABILITIES OF ANY NATURE WHATSOEVER, INCLUDING BUT NOT LIMITED TO THE PORTAL, SERVICE, DOCUMENTATION OR THE SUBJECT MATTER OF THIS AGREEMENT ( "CLAIM "). (c) NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL BADGER METER BE LIABLE TO CUSTOMER, AN AUTHORIZED USER, AN AUTHORIZED CONSUMER OR ANY THIRD PARTY FOR (A) ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY THEREOF; (B) ANY CLAIMS RESULTING FROM LOSS OF DATA, CUSTOMER CONTENT, CUSTOMER DATA, BREACH OF CONFIDENTIALITY, LOST REVENUE, LOST PROFITS, LOSS OF CONTRACT OR OF OTHER ECONOMIC ADVERSITY; OR (C) ANY CLAIM ARISING IN CONTRACT, TORT, OR OTHERWISE. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 7 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estiai e- r E X n S NEITHER BADGER METER NOR ANY OF ITS AFFILIATES, SUPPLIERS OR LICENSORS WILL BE RESPONSIBLE FOR ANY COMPENSATION, REIMBURSEMENT OR DAMAGES ARISING IN CONNECTION WITH: (A) CUSTOMER'S INABILITY TO USE THE PORTAL OR SERVICE, INCLUDING AS A RESULT OF ANY: (i) TERMINATION OR SUSPENSION OF THIS AGREEMENT OR CUSTOMER'S USE OF OR ACCESS TO THE SERVICE ; OR (ii) WITHOUT LIMITING ANY OBLIGATIONS UNDER THE SERVICE LEVEL AGREEMENT, ANY UNANTICIPATED OR UNSCHEDULED DOWNTIME OF ALL OR A PORTION OF THE SERVICE FOR ANY REASON, INCLUDING BUT NOT LIMITED TO AS A RESULT OF A POWER OUTAGE, SYSTEM FAILURE OR OTHER INTERRUPTION; (B) THE COST OF PROCUREMENT OF SUBSTITUTE SERVICES; (C) ANY INVESTMENTS, EXPENDITURES OR COMMITMENTS MADE BY CUSTOMER IN CONNECTION WITH THIS AGREEMENT OR CUSTOMER'S USE OF OR ACCESS TO THE SERVICE OR (D) ANY UNAUTHORIZED ACCESS TO, ALTERATION OR THE DELETION, DESTRUCTION, DAMAGE, LOSS OR FAILURE TO STORE ANY OF CUSTOMER'S CONTENT OR OTHER DATA. (d) INDEPENDENT LIMITATIONS. THESE LIMITATIONS ARE INDEPENDENT FROM ALL OTHER PROVISIONS OF THIS AGREEMENT AND WILL APPLY NOTWITHSTANDING THAT A REMEDY FAILS OF ITS ESSENTIAL PURPOSE AND IRRESPECTIVE OF THE MANNER IN WHICH THE CLAIM IS MADE. (13) CAP ON DAMAGES. Notwithstanding anything to the contrary contained in this Agreement, Badger Meter's total liability during the previous twelve month period from the date of the Claim for Claims made by Customer or any third party against Badger Meter arising from or related to the Portal, Service or Documentation may not exceed the amount charged by Badger Meter to Customer for the previous (3) month. (14) CUSTOMER'S INDEMNIFICATION OBLIGATIONS. (a) Generally. To the extent permitted by law, Customer agrees to defend, indemnify, and hold harmless Badger Meter as well as its parents, subsidiaries, affiliates, officers, employees, agents, licensors, Suppliers, representatives and customers and each of their respective employees, officers, directors, members and representatives (the "Badger Meter Parties "), against any and all Claims made against the Badger Meter Parties by any third party arising out of or related to: (i) Customers, Authorized Users or Authorized Consumers access and use of the Portal, Service, or Documentation; (ii) the subject matter of this Agreement ; (iii) violation of applicable law by Customer, its Authorized Users or Authorized Consumers; (iv) the Customer Content or the combination of the Customer Content with other applications, content or processes, including any claim involving alleged infringement or misappropriation of third party rights related to the Customer Content or by the use, development, design, producing, advertising or marketing of Customer Content; or (v) a dispute between Customer and any Authorized User or Authorized Consumer. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 8 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT (b) Procedure for Indemnification. Upon receipt of a Claim, Badger Meter will provide prompt written notice to Customer of the Claim for which the Badger Meter Parties seek indemnification. Badger Meter's failure to promptly notify Customer will only affect Customer's obligation to indemnify the Badger Meter Parties to the extent such failure causes actual prejudice to Customer's ability to defend the Claim. The notice must include a description of the Claim with reasonable detail of the facts giving rise to the Claim. Upon receipt of notice of a Claim, Customer shall be obligated to assume and control the defense of such Claim at its own expense. The Badger Meter Parties may retain their own counsel to cooperate in defending the Claim, at their own expense. The Badger Meter Parties agree to cooperate with Customer in defending the Claim and in making available to Customer all witnesses, records, materials and information in their possession or control to assist in the defense of the Claim, as is reasonably requested by Customer. Customer may not settle or compromise any Claim or consent to the entry of any judgment unless Badger Meter provides prior written consent and the Badger Meter Parties are given an unconditional written release from Customer with respect to the Claim. In the event Customer fails to defend, indemnify, and hold the Badger Meter Parties harmless, after notice of a request for indemnification, the Badger Meter Parties shall be entitled to assume the defense and seek reimbursement from Customer for all losses with regard to the Claim and all attorneys' fees and litigation costs expended by the Badger Meter Parties in defending the Claim. (c) Third Party Subpoenas: If Badger Meter is obligated to respond to a third party subpoena or other compulsory legal order or process, Customer will reimburse Badger Meter for reasonable attorney's fees as well as its employees or subcontractors time and materials spent responding to the third party subpoena or other compulsory legal order or process, at Badger Meter's then current hourly rate. (15) BADGER METER'S INDEMNIFICATION OBLIGATIONS. (a) Generally. Subject to the limitations of liability provisions set forth in Section (12) of this Agreement, Badger Meter agrees to indemnify, defend and hold harmless Customer, and as applicable its officers, directors, members, board members, governing members, trustees, commissioners, elected and appointed officials, employees, agents, consultants and other representatives ( "Customer Parties ") from and against any legal proceedings filed against the Customer Parties by a third party based upon the allegations that the Portal, Service or Documentation infringes or violates a third party's patent, copyright or other intellectual property rights ( "Intellectual Property Dispute "). (b) Mitigation. If the Portal, Service or Documentation becomes the subject of an Intellectual Property Dispute and is enjoined, Badger Meter will have the right to (i) procure for Customer the right to continue using the Portal and Service; (ii) modify the Portal and Service to avoid allegations of infringement, provided the modification does not materially change the functionality of the Portal and Service; (iii) replace the Portal and Service with an equally suitable, functionally equivalent, non - infringing Portal and Service; or (iv) immediately ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 9 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT terminate this Agreement and provide Customer with a refund of any unused pre -paid portion of the Service Fees. (c) Exclusions. Badger Meter assumes no liability for and Customer will not be entitled to receive indemnification from Badger Meter for any Intellectual Property Dispute which results directly or indirectly from (i) Customer's failure to use the Portal or Service in conformity with the Documentation; (ii) Customer's actions in combining the Service with any third party software, technology, hardware or data; or (iii) Customer's violation of access granted in Section (2). (d) Procedure for Indemnification. Upon receipt of an Intellectual Property Dispute, Customer will provide prompt written notice to Badger Meter of the Intellectual Property Dispute for which the Customer Parties seek indemnification. Customer's failure to promptly notify Badger Meter will only affect Badger Meter's obligation to indemnify the Customer Parties to the extent such failure causes actual prejudice to Badger Meter's ability to defend the Claim. The notice must include a description of the Intellectual Property Dispute with reasonable detail of the facts giving rise to the Intellectual Property Dispute. Upon receipt of notice of an Intellectual Property Dispute, Badger Meter shall be obligated to assume and control the defense of such Intellectual Property Dispute at its own expense. Customer may retain its own counsel to cooperate in defending the Intellectual Property Dispute, at its own expense. Customer agrees to cooperate with Badger Meter in defending the Intellectual Property Dispute and in making available to Badger Meter all witnesses, records, materials and information in Customer's possession or control to assist in the defense of the Intellectual Property Dispute as is reasonably requested by Badger Meter. Badger Meter may not settle or compromise any Intellectual Property Dispute or consent to the entry of any judgment unless Customer provides prior written consent and the Customer is given an unconditional written release from Badger Meter with respect to the Intellectual Property Dispute. In the event Badger Meter fails to defend, indemnify, and hold the Customer Parties harmless, after notice of a request for indemnification, Customer shall be entitled to assume the defense and seek reimbursement from Badger Meter for all losses with regard to the Intellectual Property Dispute and all attorneys' fees and litigation costs expended by Customer in defending the Intellectual Property Dispute. (16) TERMINATION. (a) Termination for Cause. A party is in default under this Agreement if it materially breaches or materially fails to perform its obligations under this Agreement, which includes any failure to make payment pursuant to Section (5) ( "Event of Default "). (b) Opportunity to Cure. Upon the occurrence of an Event of Default, the non - defaulting party shall deliver a written notice describing the Event of Default (the "Cure Notice "). If the receiving party has not cured the Event of Default within thirty (30) days after receipt of the Cure Notice, then the non - defaulting party shall have the right to terminate this Agreement, at ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 10 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT its option, by delivering to the defaulting party a written notice of termination (the "Termination Notice "). estla e T E X A S (c) Immediate Right to Terminate. Badger Meter shall have the right to immediately terminate this Agreement: (i) in order to protect its Confidential Information, or its Intellectual Property Rights in the Portal or Service; (ii) in order to comply with applicable law (iii) if Customer makes any representation or warranty which is materially untrue as of the Effective Date or at any time during the Term; or (iv) upon an assignment for the benefit of creditors, if Customer suffers or permits the appointment of a receiver for its business or assets, or avails itself of, or becomes subject to, any proceeding under any statute relating to insolvency or for the protection of creditor rights or if a party becomes insolvent or technically bankrupt. (d) Non - Appropriation. Customer shall have the right to terminate this Agreement, with or without cause, upon ninety (90) days written notice to Badger Meter. (e) Termination. Upon delivery of the Termination Notice to the other party: (i) Badger Meter may cease providing Services to Customer, its Authorized Users and Authorized Consumers; (ii) Customer, its Authorized Users and Authorized Consumers will have no further right to use the Portal, Service or Documentation, will immediately cease using the Portal, Service and Documentation, and will receive no further Service; (iii) Customer will deliver to Badger Meter any Confidential Information of Badger Meter's in its possession or control, and (iv) Badger Meter may cease gathering data from Customer's endpoints, within a reasonable time, up to one hundred twenty (120) days after termination. Within a reasonable time after termination, at Badger Meter's discretion, Badger Meter will scrub the personally identifiable information from the Customer Data. Customer must immediately return, or at Badger Meter's option, destroy all Documentation provided to Customer by Badger Meter. Customer will remain liable for any Service Fees incurred prior to termination. (f) Post - Termination Assistance. At either the expiration of the Term without renewal, or upon termination by Customer, Badger Meter will provide post- termination data retrieval assistance to Customer for an additional fee, which shall be invoiced at the rate of $200 /hour, with the number of hours required determined by the amount of data Customer wishes to extract from the Service. Any additional post- termination assistance from Badger Meter is subject to mutual agreement by the parties. (g) Reinstatement Fee. If Customer desires to reinstate access to the Portal and Service after termination, a reinstatement fee of $7.50 per endpoint reinstated will apply. (17) SUSPENSION OF SERVICES. (a) Nonpayment. Badger Meter may suspend the Service and access to the Portal and shall not be obligated to provide access to the Portal and Service to Customer, its Authorized Users or ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 11 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e Authorized Consumers until all outstanding invoices for the Service have been paid in full, including any fees associated with suspension of the Service. x AS (b) Network Protection. Customer acknowledges that Badger Meter (and any of its Suppliers) may restrict, or suspend all or a portion of the Service or limit the Service as may be reasonably necessary to prevent or limit suspected fraud or any problem that materially and adversely affects the performance of the Service and /or is likely to do substantial damage to Badger Meter, Badger Meter's customers or Suppliers. Some of these actions may interrupt or prevent legitimate communications and usage. Such situations may arise: (a) if a device deployed on the Service is materially out of compliance with the technical requirements; (b) in case of actual or suspected fraudulent use; or (c) in case of disruptive or damaging operation. (c) Notification. In the event that Badger Meter or one of its Suppliers restricts, suspends or cancels any portion of the Service or limits the operation of the Service, Badger Meter shall use reasonable efforts to (i) promptly notify Customer in advance; (ii) provide reasonable information regarding its identification of the issue that resulted in the actions taken; and (iii) reinstate Service upon resolution of the issue as soon as practicable and in any case within a reasonable timeframe. (d) Immediate Suspension. Badger Meter may suspend Customer's or an Authorized Users or Authorized Consumers right to access or use the Service immediately upon notice to Customer if Badger Meter determines: (i) Use of the Service poses a security risk to the Service, the Network or any third party, adversely impacts the Service, the Network or content of any other Badger Meter customer, or subjects Badger Meter or any third party to liability or fraud. (ii) Customer or one of its Authorized Users or Authorized Customers is in breach of this Agreement or is delinquent on its payments for more than fifteen (15) days. (iii) Badger Meter ceases to operate in the ordinary course, has an assignment for the benefit of creditors or similar disposition of its assets or becomes the subject of any bankruptcy, reorganization, liquidation dissolution or similar proceeding. (e) Reinstatement. Badger Meter will use commercially reasonable efforts to restore Customer's rights to use and access those portions of the Service or accounts that gave rise to the suspension promptly after Customer has resolved the problem giving rise to the suspension. (f) Effect of Suspension. If Badger Meter suspends Customer's right to access or use all or any portion of the Service or the Portal: (i) Customer remains responsible for all Service Fees and charges incurred through the date of suspension. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 12 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S (ii) Customer remains responsible for any applicable Service Fees and charges for any Services to which Customer has continued access as well as applicable fees and charges. (iii) Customer will not be entitled to any service credits under the Service Level Agreement for any period of suspension. (iv) Badger Meter's right to suspend the Services is in addition to Badger Meter's right to terminate this Agreement. (18) COMPLIANCE WITH REGULATIONS; DATA PRIVACY. Each party is responsible for complying with industry standards and such applicable laws and regulations, including, but not limited to, the generally accepted practices in the information technology service management industry for providing secure data handling and management, including meeting or exceeding ETIL standards for logical and physical security and all requirements regarding the protection of data in its possession or under its control. A party will not be liable for any failure of the other party to comply with this requirement. (19) DATA SECURITY AND RECOVERY. (a) Data Security. In order to protect the Customer Content and prevent unauthorized access to or use of the Customer Content, Portal or Service, Badger Meter has implemented commercially reasonable internal procedures and systems designed to protect the privacy and security according to the requirements set forth in Exhibit 3 - BEACON AMA Managed Solution Security Policy ( "Security Standards "), consistent with applicable international, federal, state and local laws. The purpose of the security policy is to identify reasonably foreseeable and internal risks to security and unauthorized access to Badger' Meter's Network and minimize security risks, including through risk assessment and regular testing. Badger Meter will designate one or more employees to coordinate and be accountable for the security program. (b) Protection of Customer Content. Badger Meter will implement reasonable and appropriate measures for the Badger Meter Network designed to help Customer secure the Customer Content against accidental or unlawful loss, access or disclosure in accordance with Badger Meter's Security Standards. Badger Meter may modify its Security Standards from time to time but will continue to provide at least the same level of security as described in the Security Standards as of the Effective Date. The security and data privacy provisions in this Section contain Badger Meter, and its Suppliers entire obligation regarding the security, privacy and confidentiality of the Customer Content. (c) Data Storage. Badger Meter will employ commercially reasonable storage (including backup, archive and redundant data storage) and commercially reasonable precautions to prevent the loss of or alteration of Customer Content, but does not guarantee against any such ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 13 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S loss or alteration. Badger Meter will not serve as Customer's official record keeper. Customer will maintain source documents of the Confidential Information (such as billing information) hosted by Badger Meter under this Agreement. (d) Customer Responsibilities. Customer is responsible for properly configuring and using the Service and taking steps to maintain appropriate security, protection and backup of the Customer Content, including but not limited to the use of encryption technology to protect Customer Content from unauthorized access and will perform routine archiving of the Customer Content. (e) Data Transmission Risks. (f) (i) Cellular Transmissions. Badger Meter cellular endpoints conform to the AES256 encryption standards or the latest AES standard in effect. Customer acknowledges that neither Badger Meter nor its Suppliers can guarantee the privacy or security of any cellular transmissions as part of the Service. Customer acknowledges that cellular transmissions are capable of being intercepted by third parties without the knowledge or permission of Badger Meter or its Suppliers. Badger Meter and its Suppliers shall not be liable to Customer, the Authorized Users, the Authorized Consumers or any third party for interception or unauthorized use of any data transmitted through the cellular network, as part of the Service. (ii) Internet Transmissions. Customer acknowledges that security of transmissions over the Internet cannot be guaranteed. Badger Meter is not responsible for: (i) Customer's access to the Internet; (ii) interception, unauthorized use or interruptions of communications through the Internet; or (iii) changes or losses of data through the Internet, in each case other than to the extent caused solely by Badger Meter. In order to protect Customer Content, Badger Meter may suspend Customer, Customer's Authorized Users or Authorized Consumers access to or use of the Badger Meter Portal or Service via the Internet immediately, without prior notice, pending an investigation of any potential security breach. Coverage Availability. The Service is provided using a wireless network. Actual signal availability in the Service Area will depend on the device used to access the Service as well as coverage for the applicable wireless network provided in specific geographic regions. Coverage may be refused, interrupted or limited by environmental factors such as signal strength, buildings, weather, geography, topography, or by factors affecting the Suppliers, such as usage concentration or by facilities changes, modifications, updates, relocations, repairs, maintenance or other similar activities necessary for the proper or improved operation of the Supplier's facilities. Any such factors may result in dropped and blocked connections or slower data speeds. Neither Badger Meter nor any of its Suppliers will be responsible to Customer or any of Customer's Authorized Users or Authorized Consumers for any such lapses in or obstructions to coverage. The Service Area is subject to change from time to time. Should Badger Meter receive ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 14 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S notice from its Supplier that such Supplier intends to discontinue its support for the Badger Meter Service in all or part of the Service Area, Badger Meter will provide Customer with as much advance notice as practicable under the circumstances. (g) Password Protection. Customer, its Authorized Users and Authorized Consumers will be required to select and use certain user names, passwords or codes to access and use the Service and Portal. Customer assumes sole responsibility for the selection, management and use of any codes or passwords as may be permitted or required for the access to and use of the Portal and Service by Customer, its Authorized Users and its Authorized Consumers. Customer agrees to maintain the privacy of usernames and passwords associated with the Badger Meter Portal and Service. Customer shall remain responsible for all activities that occur under Customer's password or Internet account. Customer will immediately notify Badger Meter of any unauthorized use of Customer's password or Internet account or any other breach of security, and ensure that Customer exits from Customer's Internet account at the end of each session. Badger Meter shall not be liable for any damages incurred by Customer or any third party arising from Customer's failure to comply with this Section. (h) Third Party Access. To the extent that Customer requests that Badger Meter provide any Customer Content to Authorized Users, Authorized Consumers or third parties or any non -U.S. location, Customer represents that it has acquired any consents or provided any notices required to transfer such content or information and that such transfer does not violate any applicable international, federal, state or local laws and/or regulations. (i) Security Breach. If Badger Meter becomes aware of a security breach or any other event that compromises the security, confidentiality or integrity of the Customer Content ( "Incident "), Badger Meter will promptly notify Customer in writing and take appropriate actions to resolve the Incident. Badger Meter will reasonably cooperate with Customer to investigate the nature and scope of any Incident. In its initial notification to Customer, Badger Meter will provide Customer with: (i) a description of the Incident; (ii) the estimated impact of the Incident on Customer's Content; (iii) the name and contact information of the person at Badger Meter who will be primarily responsible for resolving the issues for Customer; and (iv) the investigation taken and the suggested corrective action. Badger Meter will provide commercially reasonable cooperation to Customer in investigating, assisting with notification of the Incident and taking corrective action as requested by Customer. (j) Notification of Breach. In the event that applicable law requires notification to individuals of an Incident or if requested by Customer, Badger Meter will take additional mitigation steps for the benefit of Customer, including, but not limited to, providing reasonable assistance with drafting and sending of required notifications. (k) Disclosure of Customer Content. Badger Meter will only use the Customer Content to provide the Service to Customer and its Authorized Users and Authorized Consumers in accordance with this Agreement or to comply with the law or any governmental or regulatory ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 15 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S body (including subpoenas or court orders). Badger Meter will give Customer reasonable notice of the request to allow Customer to seek a protective order or seek any other appropriate relief except to the extent required for Badger Meter to comply with a court order or other legal requirement. (20) CHANGES. (a) Right to Make Changes. Badger Meter may from time to time make changes, without Customer's approval, to this Agreement, including, but not limited to, changes to the Terms of Use, the policies, the Portal, Service or Documentation, provided that such changes: (i) do not increase Customer's total costs of accessing and using the Portal and Service during the Term of this Agreement ; (ii) do not require Customer to make any material changes to its systems, software, equipment, policies or procedures ; (iii) do not have a material adverse impact on the functionality, interoperability, performance, reliability, security or resource efficiency of the Portal and Service ; (iv) do not materially reduce the scope of the Portal and Service; and (v) are otherwise consistent with this Agreement. Badger Meter will publicize any changes by a notice given to Customer or by a prominent announcement on the Portal. Any such changes will not take effect until thirty (30) days after posting of notice on the Portal. (b) Emergency Changes; System Improvement. Notwithstanding the foregoing, Badger Meter and its Suppliers may make temporary changes to the Portal and Service required by an emergency or threat to the security or integrity of the Portal or Service, to respond to Claims, litigation or loss of license rights related to third party intellectual property rights or to comply with the law or requests of a government entity, as well as take actions deemed reasonably necessary to protect or optimize the Service. Some of these actions may interrupt or prevent legitimate communications and usage, including, for example, use of message filtering /blocking software to prevent SPAM or viruses, limitations on throughput, and scheduled maintenance. Badger Meter will provide notice by sending a message to the email address then associated with Customer's account and by posting it on Badger Meter's Portal. Badger Meter will provide Customer with: (i) at least thirty (30) days' advance notice of planned maintenance by Badger Meter; and (ii) as much advance notice as reasonably possible of emergency changes or maintenance by Badger Meter or its Suppliers. Any actions resulting in permanent changes shall only be made in compliance with Section (20) (a). (21) PRIVACY POLICY. When accessing and using the Service, Customer agrees that Customer, its Authorized Users and Authorized Consumers will comply with the Badger Meter Privacy Policy located at https: / /beaconama .net /privacy /privacy.html. (22) RIGHT TO SUBCONTRACT. Badger Meter may subcontract the performance of any of its duties or obligations under this Agreement, and will use commercially reasonable efforts to subcontract only with subcontractors that have the requisite skills to perform any subcontracted obligations in accordance with the terms of this Agreement. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 16 of 30 BADGER METER BdgeC�, BEACON AMA MANAGED SOLUTION MASTER AGREEMENT (23) GENERAL. 116114V.' 44Tsic^' estla e T E X A S (a) Binding Agreement. This Agreement is binding upon and will inure to the benefit of the parties and their respective successors and assigns. (b) Affiliates. This Agreement covers only the employees and agents of Customer. If Customer wishes to have any entity which directly or indirectly controls, is controlled by or is in common control with Customer to access the Portal and use the Service, Customer's Affiliate must execute a separate agreement with Badger Meter. (c) Assignment. Either party may assign its rights and obligations under this Agreement with the express written consent of the other party, which consent will not be unreasonably withheld or delayed. Any purported assignment or transfer in violation of this Section will be null and void. Notwithstanding the foregoing, Badger Meter may assign its rights and obligations under this Agreement without the consent of Customer: (i) upon a sale of a majority of its outstanding capital stock to an affiliate or third party; (ii) if it sells all or substantially all of its assets; (iii) in the event of a merger; or (iv) in the event of a similar change of control. (d) No Waiver. The waiver or failure of either party to exercise any right or remedy provided under this Agreement will not be deemed a waiver of any further right or remedy. All waivers must be in writing to be effective. (e) Severability. If any portion of this Agreement is held to be invalid or unenforceable, the remaining portions of this Agreement will remain in full force and effect. Any invalid or unenforceable portions of this Agreement will be interpreted to effectuate the intent of the original Agreement. If such construction is not possible, the invalid or unenforceable portion of the Agreement will be severed from this Agreement, and the remainder of the Agreement will remain in full force and effect. (f) Independent Contractors. The Parties agree that they are independent contractors and that neither party nor any of their respective affiliates, is an agent of the other for any purpose or has the authority to bind the other. (g) Savings Clause. The invalidity of any provision of this Agreement shall not affect the validity and binding effect of the remaining provisions. (h) No Third Party Beneficiaries. Nothing express or implied in this Agreement shall confer any rights, remedies, obligations or liabilities whatsoever to third parties which are not signatories to this Agreement. (i) Governing Law. The terms of this Agreement are governed by the laws of the State of Wisconsin, without reference to its conflict of laws principles. The United Nations Convention for the International Sale of Goods does not apply to this Agreement. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 17 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 116114V.' 44Tsic^' estla e T E X A S (j) No Claims Against or Liability of Badger Meter Suppliers. Customer acknowledges that the Service utilizes services that are furnished to Badger Meter and one or more Suppliers pursuant to agreements between Badger Meter and its Suppliers. Neither Customer nor any Authorized Users or Authorized Consumers has a contractual relationship with Badger Meter's Suppliers and neither Customer nor its Authorized Users or Authorized Consumers is a third party beneficiary of or will have any claim against Badger Meter's Suppliers in the event any such agreement expires or is terminated. Customer further acknowledges that the Suppliers disclaim all liability of any nature, whether legal or equitable, to Customer, its Authorized Users or Authorized Consumers, whether direct, indirect, incidental or consequential, arising out of the use of Badger Meter Portal or Service by Customer, its Authorized Users or Authorized Consumers, including any liability for personal injury or death, failure to be able to use the Service or otherwise. Customer agrees that neither it nor any Authorized Users or Authorized Consumers shall have any Claim against the Supplier of any kind with respect thereto, whether arising out of breach of contract, warranty, negligence, and tort or otherwise. (k) Dispute Resolution. (i) Initial Resolution Efforts. The parties shall act in good faith and use commercially reasonable efforts to promptly resolve any claim, dispute, controversy or disagreement (each a "Dispute ") between the parties or any of their respective subsidiaries, affiliates, successors and assigns under or related to this Agreement or any document executed pursuant to this Agreement or any of the transactions contemplated hereby. (ii) Mediation. If the parties cannot resolve the Dispute within ten (10) days after initial notice of the Dispute, the Dispute shall be submitted for resolution to the Judicial Arbitration and Mediation Services ( "JAMS "), or its successor ( "Mediation ") in Chicago, Illinois. If the mediator is unable to amicably resolve the Dispute, then the mediator will refer the matter to a JAMS arbitrator to resolve the Dispute. Neither party shall seek, nor shall be entitled to seek, binding outside resolution of the Dispute unless and until the parties have been unable to amicably resolve the dispute as set forth in this Section, and then only in compliance with the procedures set forth in this Section. Except for Disputes relating to issues of (i) proprietary rights, including, but not limited to, intellectual property and confidentiality, and (ii) any provision of this Agreement which expressly or implicitly provides for the parties to reach mutual agreement as to certain terms, any Dispute not resolved by amicable resolution as set forth in this Section shall be governed exclusively and finally by arbitration described below. (iii) Arbitration. Either party may initiate arbitration with respect to a Dispute by submitting a written demand at any time following Mediation. • Arbitration shall be administered by JAMS, or its successor, pursuant to the Comprehensive Arbitration Rules and Procedures. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 18 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 116114V.' 44Tsic^' estla e T E X A S • Either party may commence arbitration by notifying the other in writing that arbitration is desired and setting forth the topics to be arbitrated. Within thirty (30) days of mailing a notice of arbitration, the party receiving the notice may specify additional topics of arbitration in writing to the other party. Within forty - five (45) days of the mailing of the notice of arbitration, the parties will confirm and attempt to identify an arbitrator associated with JAMS to resolve the Dispute. If the parties cannot agree, JAMS will appoint an arbitrator who is a lawyer familiar with software as a service and information technology support services agreements. • Except to the extent, if any, that law applicable to the dispute requires that arbitrators retain authority to award punitive damages, the arbitrators shall not have such authority. • Each party will bear its own costs of the arbitration. The resulting award may be confirmed and reduced to judgment in any court of competent jurisdiction. With respect to any such post - arbitral judicial proceedings, the parties consent to the exercise of personal jurisdiction over them by the state and federal courts sitting in Milwaukee, Wisconsin and waive any objection that they would otherwise have to venue in such courts. • The duty to arbitrate does not preclude either party from pursuing interlocutory or provisional relief pending arbitration in any court of competent jurisdiction if such relief is necessary in order to preserve the practical ability of the arbitrator to make an effective award or to avoid a genuine and substantial risk of injury that cannot be adequately remedied by an eventual arbitral award. Neither the pursuit of nor the failure to provide any such interlocutory or provisional remedy in court, however, shall relieve either party of the duty to pursue ultimate resolution of the dispute through arbitration as provided for herein. • The arbitration shall be governed by and construed and interpreted in accordance with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (24) INJUNCTIVE RELIEF: Notwithstanding the provisions of Section 23, Badger Meter shall have the right to pursue injunctive, declaratory or other relief by the state and federal courts sitting in Milwaukee, Wisconsin and waive any objection that they would otherwise have to venue in such courts. (25) NOTICES. All notices shall be in writing and delivered to the other party by means of: (a) personal delivery set forth below; (b) posting a notice on Badger Meter's Portal; (c) courier (signature required upon delivery); (d) recognized overnight courier, at the following address; (e) fax with proof ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 19 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estla e T E X A S of delivery; or (f) via electronic mail with proof of delivery: Notices sent by email will be effective when sent and notices posted on Badger Meter's Portal will be effective upon posting. All notices must be provided in the English language. If to Badger Meter: Legal Department, Attn: Assistant General Counsel 4545 W. Brown Deer Road. Milwaukee, WI 53223 If to Customer: The Town of Westlake, Attn: 3 Village Cir., Suite 202 Westlake, TX 76262 (26) SURVIVABILITY. Any provision of this Agreement which by its nature should survive termination or expiration of this Agreement shall survive its expiration or termination. (27) LIMITATION OF CLAIMS. No action arising under or in connection with this Agreement, regardless of the form, may be brought by Customer more than one (1) year after Customer becomes aware of or should reasonably have become aware of the occurrence of events giving rise to the Claim. (28) FORCE MAJEURE. Neither party shall be liable to the other or any third party by reason of any failure or delay of its obligations under this Agreement where the delay or failure results from any cause beyond its reasonable control, including, but not limited to, acts of God, fires, storms, floods or other acts of nature, explosions, systemic electrical telecommunications or other utility failures, earthquakes, hurricanes, tornados, natural disasters, strikes, shortage of materials, work stoppage or other labor dispute, embargoes, riots, insurrections, acts of war or terrorism, or any action or restraint by court order or public or governmental authority ( "Force Majeure Event "). The party subject to the Force Majeure Event agrees to use commercially reasonable efforts to minimize the impact of the Force Majeure Event on the other party. (29) AMENDMENT. This Agreement may only be amended by a written document signed by both parties. Badger Meter will not be bound by and specifically objects to any term, condition or other provision which is different from or in addition to the provisions of this Agreement (whether or not it would materially alter this Agreement) and which is submitted by Customer in any receipt, acceptance, confirmation, agreement, purchase order, correspondence or other documentation. If the terms of this Agreement are not consistent with the terms contained in any policy, the terms contained in this Agreement will control, except that the Service Terms will control over this Agreement. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 20 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT estlaie T E X A S (30) POLICIES. Badger Meter reserves the right to modify the policies at any time by posting a revised version on the Portal or otherwise providing notice to Customer. The modified terms will become effective upon posting or notice. By continuing to use the Service after the effective date of the modification to a policy, Customer agrees to be bound by the modified policies. It is Customer's responsibility to check the Badger Meter site regularly for modifications to the policies. (31) ENTIRE AGREEMENT. This Agreement, including all applicable Exhibits and policies, constitutes the entire agreement between the parties with regard to its subject matter. This Agreement supersedes all prior or contemporaneous agreements, discussions, negotiations, undertakings, communications, representations or proposals, whether written or oral. (32) ORIGINALS, COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which together will be deemed to constitute one and the same document. This Agreement may be executed and delivered by facsimile signature or portable document format (.pdf) by electronic mail. IN WITNESS WHEREOF, the authorized representatives of the parties hereby bind the parties to this BEACON AMA Managed Solution Master Agreement by signing below: BADGER METER, INC THE TOWN OF WESTLAKE Signature Signature Printed Name Printed Name Title Title Date Date ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 21 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT EXHIBIT 1 FEES estla e T E X A S 1. Service Fees. Customer agrees to pay the following Service Fees, as consideration for the right to access and use the Portal, Service and Documentation during the Term, as well as applicable Taxes. 2. Invoicing. Badger Meter shall issue invoices to Customer for Service and Support Fees on a monthly basis. Payment is due within thirty (30) days of the date of the invoice. 3. Interest and Costs. Customer agrees that it will be responsible to pay Badger Meter for any collection expenses incurred by Badger Meter, including interest at the highest interest rate permitted by law, and reasonable attorneys' fees and court costs incurred by Badger Meter in enforcing its rights under this Agreement. BEACON Monthly Endpoint Subscription Fee Hourly Data, Once Daily Call -in: $0.89 15- Minute Data, Once Daily Call -in: $2.67 Invoicing for monthly endpoint subscription fee starts at time of endpoint activation or 6 months from date of shipment, whichever comes first. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 22 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT EXHIBIT 2 SERVICE LEVEL AGREEMENT estla e T E X A S This Service Level Agreement ( "SLA ") will go into effect upon completion of Endpoint Provisioning, which is the point during meter installation when the endpoint is installed and verified to provide data to the BEACON AMA Managed Solution. 1. CUSTOMER SUPPORT. Service Levels. Within one (1) hour after a request for Customer Support Services from Customer, Badger Meter will respond to such request in accordance with the procedures set forth below. Customer may report the problem by phone, email or website provided by Badger Meter to Customer. Badger Meter will use commercially reasonable efforts to meet the response and resolution times set forth below: Severity Level Response Time Resolution Time Level 1 - Service is unavailable 1 hour Six (6) hours Level 2 - certain interruptions but service is still available 24 hours 24 hours Level 3 - minor intermittent malfunction 24 hours 3 days Level 4 - suggestions for new features or enhancements to BEACON Portal and Service 24 hours Evaluated, scheduled and prioritized for potential inclusion in upcoming releases. 2. BEACON PORTAL AND SERVICE AVAILABILITY PROMISE. Badger Meter will use commercially reasonable efforts to fulfill the following Service Promise: • BEACON Portal and Service Availability of 99% within each calendar month, excluding any Emergency Downtime, Scheduled Downtime, any unavailability of the Portal and Service due ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 23 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 116111V. '44Fxic estla e T E X A S to any Force Majeure Event and any unavailability of the Portal and Service less than fifteen (15) minutes in duration following written notice thereof. Definitions "Availability" is the monthly uptime percentage with normal functionality of the Portal and the Service, calculated as described below. "Emergency Downtime" means any unavailability of the Portal or Service due to a temporary suspension by Badger Meter to perform maintenance to address any, urgent and unexpected issue with the Portal or Service. "Scheduled Downtime" means any unavailability of the Portal or Service due to scheduled maintenance. Scheduled maintenance may occur between 10:00 p.m. on Saturday to 4:00 a.m. on Sunday (Pacific Time) every week. Badger Meter shall have the right to change the scheduled maintenance times upon notice to Customer posted on the BEACON Portal. CALCULATION of BEACON Portal and Service Availability: Availability is measured by Badger Meter through standard monitoring software that tests the application availability at least every five (5) minutes and logs unavailability incidents (date and UTC time) for each monitored component. Availability is calculated as the percentage of uptime in the applicable calendar month, excluding scheduled downtime: (l TotalUnavailiabiltyMinutes TotalMinutesofServiceMonth — TotalMinutesofApprovedDowntime Where: "Total Unavailability Minutes" is the cumulative unavailability time in minutes in the applicable month where the Portal and Service are not available due to unplanned outages or from systematic errors on the part of Badger Meter, "Total Minutes of Service Month" is the cumulative time in minutes in the month in question, calculated by taking the number of days in month x 24 hours /day x 60 minutes /hour, and "Total Minutes of Approved Downtime" is the cumulative time in minutes in the applicable month where the Supplier applications are not available due to scheduled downtime ; other planned scheduled outages, or approved exclusion conditions as defined in this Agreement. In order to be included within the Total Unavailability Minutes: (a) Customer shall notify Badger Meter, in writing, via email(techsupport @badgermeter.com) of the unavailability of the Portal or the Service; (b) such unavailability shall be greater than fifteen (15) minutes in duration following Badger Meter's receipt of such notice; and (c) Customer shall notify Badger Meter, in writing, via email ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 24 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT within twenty -four (24) hours of such unavailability that it should be included within the Total Unavailability Minutes unless such unavailability is due to any Emergency Downtime, Scheduled Downtime, or any unavailability of the Services due to any Force Majeure Event. Service Credits If Badger Meter fails to meet the BEACON Portal and Service Availability Promise, the following Service Credits apply: ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 25 of 30 % of Availability in the Month Service Credit(% of monthly recurring fees) >99% 0% 98% and <99% 5% 96.5% and <98% 10% ?_95.0% and <96.5% 15% <95.0% 25% ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 25 of 30 Badger Meter BADGER METER BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 3. MONTHLY BILLING DATA SERVICE PROMISE. estla e T E X A S Badger Meter will use commercially reasonable efforts to fulfill the following Service Promise: • The BEACON AMA Managed Solution will successfully provide Monthly Billing Data at least 97.0% at the time of billing request to the BEACON AMA Managed Solution. Definitions "Monthly Billing Data" is a valid meter reading obtained within three (3) days of the billing as performed through the BEACON AMA Managed Solution to provisioned meters. Provisioned accounts are accounts with endpoints that are discovered by the network, fully able to communicate with the network, and completely entered correctly in the BEACON AMA Managed Solution. CALCULATION of Monthly Billing Data Service Promise: Monthly Billing Data success rate is calculated by the count of accounts in the billing cycle with meter read data within three (3) days ( "Count of Billing Reads ") divided by the number of active and provisioned accounts in the billing cycle ( "Count of Total Billing Cycle "). Count of Billing Reads Count of Total Billing Cycle Where: "Count of Billing Reads" is the total number of accounts in the billing file with valid data that a billing quality reading is supplied "Count of Total Billing Cycle" is the total number of accounts with valid data in the billing file being processed. Service Credits If Badger Meter fails to meet the Monthly Billing Data Service Promise, the following Service Credits appl % of Successful Billing Reads in the Applicable Billing Cycle Service Credit (% of monthly recurring fees) >_97.0% 0% 95.0% and <97.0% 5% 90.0% and <95.0% 10% <_90.0% 25% ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 26 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT 4. MISCELLANEOUS. 116114V.' 44Tsic^' estla e T E X A S Exclusions The BEACON Portal and Service Availability Promise and Monthly Billing Data Service Promise do not apply to any of the following performance issues: (i) Resulting from any actions or inactions of Customer, its Authorized Users or Authorized Consumers; (ii) Resulting from Customer or its Suppliers equipment, software, or other technology and /or Customer's third party equipment, software, or other technology outside of Badger Meter's control; (iii) Caused by failures, including, but not limited to, internet connectivity, port availability, firewall configuration, or cellular networks at Customer's location; (iv) Resulting from Customer's breach of any term or condition under the Agreement; (v) Caused by unexpected or unintentional RF interference or signal obstruction caused by sources not present or not in use during endpoint installation; (vi) Caused by intentional RF interference or signal obstruction not present during endpoint installation, caused by third parties; (vii) Caused by Customer, an Authorized User's or an Authorized Consumer's misuse or abuse of the Portal or Service; (viii) During an event triggering a disaster recovery and for a twenty -four (24) hour period after the resumption of the Service following such an event to allow for the system to return to normal operating ranges; (ix) Arising from Badger Meter's suspension or termination of Customer's right to use the BEACON Managed Solution in accordance with the Agreement; (x) Arising from failure of Customer to follow Badger Meter's published installation, operation and maintenance instructions and Clarifications from Badger Meter's Preliminary Network Design; (xi) When outdoor temperatures either exceed or are below the endpoint operating temperature range as described in the applicable product data sheet. In the event Badger Meter does not meet a Service Promise hereunder, Badger Meter will conduct a commercially reasonable root cause analysis of the Service promise failure. If Badger Meter's analysis is inconclusive, or if Badger Meter concludes that circumstances outside of Badger Meter's control caused the Service promise failure, or if Badger Meter concludes that a failure falls under any other exclusions described hereunder, Customer will not be entitled to a Service Credit. If Badger Meter's analysis is conclusive and that circumstances within Badger Meter's control caused the Service failure, Customer will be eligible to receive a Service Credit as described above. EXCEPT AS EXPRESSLY PROVIDED IN THIS SLA, THE SERVICE CREDITS SPECIFIED IN THIS SLA WILL BE CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR BADGER METER'S FAILURE TO MEET THE SERVICE PROMISE SPECIFIED IN THIS SLA. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 27 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT Badger Meter will report Service Promises and applicable Service Credits upon request and upon a commercially reasonable frequency. Following each report, upon Customer request, the parties will discuss such performance and the extent to which any Service Credits either are appropriate or should be modified due to circumstances not captured by the reporting methodology. Upon agreement concerning the Service Credits due, such Service Credits will be applied against Badger Meter's charges in the months following the month in which the credits were incurred. ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 28 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT EXHIBIT 3 BEACON AMA MANAGED SOLUTION SECURITY POLICY estla e T E X A S 1. BEACON AMA Portal and Service Information Security Program. Badger Meter maintains an information security program (including the adoption and enforcement of internal policies and procedures) designed to (a) support the BEACON AMA Managed Solution, (b) identify reasonably foreseeable and internal risks to the BEACON Portal and Service security and unauthorized access to the Badger Meter Network, and (c) minimize security risks. The BEACON Portal and Service information security program includes the following measures: 1.1 Network Security. The Badger Meter Network is electronically accessible to employees, and contractors necessary to provide the Portal and Service. Badger Meter maintains access controls and policies to manage what access is allowed to the Badger Meter Network from each network connection and user, including the use of firewalls or functionally equivalent technology and authentication controls. Badger Meter maintains corrective action and incident response plans to respond to potential security threats. 1.2 Physical Security. 1.2.1 Physical Access Controls. Physical components of the Badger Meter Network are housed in nondescript facilities (the "Facilities "). Physical barrier controls are used to prevent unauthorized entrance to the Facilities both at the perimeter and at building access points. Passage through the physical barriers at the Facilities requires either electronic access control validation (e.g., card access systems, etc.) or validation by human security personnel (e.g., contract or in -house security guard service, receptionist, etc.). Employees and contractors are assigned photo -ID badges that must be worn while the employees and contractors are at any of the Facilities. Visitors are required to sign in with designated personnel, must show appropriate identification, and are assigned a visitor ID badge that must be worn while the visitor is at any of the Facilities, and are continually escorted by authorized employees or contractors while visiting the Facilities. 1.2.2 Limited Employee and Contractor Access. Badger Meter provides access to the Facilities to those employees and contractors who have a legitimate business need for such access privileges. When an employee or contractor no longer has a business need for access privileges, the access privileges are promptly revoked, even if the employee or contractor continues to be an employee of Badger Meter or its affiliates. 1.2.3 Physical Security Protections. All major access points (other than main entry doors) are maintained in a secured (locked) state. Access points to the Facilities are monitored by video surveillance cameras designed to record all individuals accessing the Facilities. All physical access to the Facilities by employees and contractors is logged and routinely audited. 1.2.4 Pre - Employment Screening. Badger Meter conducts criminal background checks, as permitted by applicable law, as part of pre - employment screening practices for ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 29 of 30 BADGER METER Badger Meter BEACON AMA MANAGED SOLUTION MASTER AGREEMENT employees commensurate with the employee's position and level of access to the Facilities. Badger Meter will not permit an employee to have access to the non - public Customer Content or perform material aspects of the Service if such employee has failed to pass such background check. 2. Continued Evaluation. Badger Meter will conduct periodic reviews of the security of its Badger Meter Network and adequacy of its information security program as measured against industry security standards and its policies and procedures. Badger Meter will continually evaluate the security of its Badger Meter Network and associated Service to determine whether additional or different security measures are required to respond to new security risks or findings generated by the periodic reviews. 3. Customer Responsibilities. System security is a shared responsibility between Badger Meter and Customer. Customer shall assign a systems service administrator to be responsible for establishing access and usage policies. Customer shall develop commercially reasonable policies and procedures to insure physical security, establishing account access approvals and procedures, conduct regular reviews of access rights, and provide security awareness training for staff using the Service. The administrator shall also be responsible for policies and procedures related to Authorized Consumers access to their individual data resident on the Network. 24549447_7.DOCX ©2014 Badger Meter, Inc. Confidential and Proprietary to the extent permitted by law Page 30 of 30 Westlake Town Council TYPE OF ACTION Regular Meeting - Consent Westlake Town Council Meeting Monday, December 15, 2014 TOPIC: Consider a resolution authorizing the Town Manager to execute an interlocal agreement with Trophy Club Municipal Utility District providing for participation in a water supply feasibility and route study. STAFF CONTACT: Jarrod Greenwood, Public Works Director Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development People, Facilities, & Technology High Quality Planning, Design & Development - We are a desirable well planned, high - quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Annual Review of Capacity to Reinvest in Infrastructure and Community Assets Time Line - Start Date: December 15, 2014 Completion Date: March 22, 2015 Funding Amount: $32,593 Status - ® Not Funded Source - Utility Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) At the November 17, 2014 regular meet, Council approved an amended contract with our wholesale water provider, City of Fort Worth, for Westlake's proportionate cost for the installation of a new 48" water line. This is the first phase of a two -phase project that would provide for Westlake to have additional capacity of water for our consumption needs at ultimate build out. Phase one that was previously approved, will consist of the 48" water line from the fort Worth water treatment plant to the Fort Worth Caylor pump station located just east of US 377. Phase two will consist of the installation of a water line extending from the Fort Worth Caylor pump station to the Westlake pump station and continue to the Trophy Club pump station. The size and three route options are to be determined by the attached route and feasibility study. Timing of phase two construction has not been determined at this time. Staff will include phase two construction in the FY 2016 — 2020 CIP during the FY 2016 budget process for Council consideration. This cost was not included in the adopted budget. Staff will include an amendment for this work in a mid -year budget amendment. RECOMMENDATION AND ATTACHMENTS Staff recommends approval. Resolution TOWN OF WESTLAKE RESOLUTION NO. 14 -42 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING THE TOWN MANAGER TO EXECUTE AN INTERLOCAL AGREEMENT BETWEEN THE TOWN OF WESTLAKE AND TROPHY CLUB MUNICIPAL UTILITY DISTRICT PROVIDING FOR PARTICIPATION IN A WATER SUPPLY FEASIBILITY AND ROUTE STUDY. WHEREAS, the Town of Westlake desires to foster and promote region cooperative efforts; and WHEREAS, the Town of Westlake and Trophy Club Municipal Utility District are both wholesale water customers of the City of Fort Worth; and WHEREAS, the Town of Westlake and Trophy Club Municipal Utility District recognize that there is a need for additional water capacity in the northeast sector of the Fort Worth wholesale area including Westlake and Trophy Club Municipal Utility District; and WHEREAS, the Town of Westlake desires to partner with Trophy Club Municipal Utility District for the water supply feasibility and route study; and WHEREAS, the Town Council finds that the funding for the water supply feasibility and route study is necessary and provides sound infrastructure planning consistent with goals and objectives within the adopted strategic plan; and WHEREAS, the Town Council fmds that the passage of this Resolution is in the best interest of the public. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1. All matters stated in the Recitals above are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2. The Town Council of the Town of Westlake hereby approves the ILA between the Town of Westlake and Trophy Club Municipal Utility District providing for participation in a water supply feasibility and route study, attached as Exhibit "A", and further authorizes the Town Manager to execute the agreement on behalf of the Town of Westlake, Texas. Resolution 14 -42 Page 1 of 2 SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 15th DAY OF DECEMBER, 2014. ATTEST: Laura Wheat, Mayor Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney Resolution 14 -42 Page 2 of 2 INTERLOCAL AGREEMENT PROVIDING FOR PARTICIPATION IN THE WATER SUPPLY FEASIBILITY AND ROUTE STUDY THE STATE OF TEXAS COUNTIES OF DENTON AND TARRANT THIS INTERLOCAL AGREEMENT REGARDING PARTICIPATION IN THE WATER SUPPLY FEASIBILITY AND ROUTE STUDY ( "Agreement ") is entered into between Trophy Club Municipal Utility District No. 1, a conservation and reclamation district of the State of Texas (the "District ") and the Town of Westlake, a political subdivision of the State of Texas (the "Town "). In this Agreement, the District and the Town are sometimes individually referred to as a "Party" and collectively referred to as the "Parties." RECITALS WHEREAS, the City of Fort Worth (the "City ") is the wholesale water supplier for both the District and the Town and has agreed to engage engineering services on behalf of the Parties to perform a study related to waterline routing; and WHEREAS, the District, is a legal entity that is physically located in the area to be served from the waterline included in the study and which would benefit from the study to determine the most economically feasible route for a waterline to distribute water to the District from the City of Fort Worth's regional waterline; and WHEREAS, the Town, is a legal entity that is physically located in the area to be served from the waterline included in the study and which would benefit from the study to determine the most economically feasible route for a waterline to distribute water to the Town from the City of Fort Worth's regional waterline; and WHEREAS, the Parties desire to use this study to best provide water system redundancy and reliability as well as the efficient sharing of resources, and WHEREAS, the Parties desire to pay their pro -rata share of the study. The parties to this Agreement hereby agree as follows: I. STATEMENT OF SERVICES TO BE PERFORMED BY THE CITY OF FORT WORTH 1) The study shall develop Options of Probable Construction Costs for up to three possible routes utilizing up to three alternate diameter pipes in the geographical area located as designated in EXHIBIT A. 2) The study shall produce maps for each potential route. 3) The City will obtain the services of a professional engineering consultant ( "Engineer ") to perform the planning study which will include the preparation of presentation materials, draft of the report, and the preparation and presentation of final reports. 4) The study will be performed by the City of Fort Worth in accordance with the City's Task order which is hereto attached as EXHIBIT B. 5) The study will begin upon the engineer's receipt of a Notice to Proceed from the City and will be performed as shown in the project schedule attached hereto as EXHIBIT C. II. RESPONSIBILITIES OF THE PARTIES 1) The parties agree to fund the study budgeted in equal pro rata shares. 2) The parties agree that if additional participants desire to participate in the study, they shall be responsible for their pro -rata share and will be required to enter into this agreement with the parties. Each additional participant shall be required to pay half of their pro -rata share to each of the parties hereto. 3) The parties agree to cooperate in good faith with the City and with each other in the preparation of the study. The City shall provide copies of the final report on the study to each Party upon completion of the study. 3) The parties agree that the parameters of this study shall follow the Task Order provided by the City, attached as EXHIBIT B. 4) The parties agree that any amendment to the Task Order and/or this Agreement must be in writing and signed by the authorized representative for each party to this Agreement. 5) No party to this Agreement may assign its rights and obligations under this Contract except by written amendment signed by the authorized representative for each party to this Agreement. 6) This Agreement shall be construed under and in accordance with the laws of the State of Texas. 7) The parties shall each provide a formal, direct, and continuous liaison for this study to assist the City in coordinating the scope of work and in obtaining available data for the development of the study. III. CONTRACT AMOUNT AND PAYMENT OF SERVICES 1) The parties agree to fund the study budgeted at $65,186 as follows: Entity Percent Share Amount Trophy Club M.U.D. No. 1 50% $32,593 Town of Westlake 50% $32,593 2) At the date of execution of this Agreement, the contracting parties shall provide their respective cash contributions to the City. The failure of either party to fund their obligations under this Agreement by December 31, 2014, shall be a default. 3) The City shall be permitted to use contributed funds for work performed by it or its contractors as each payment becomes due. IV. TERM OF AGREEMENT The term of this agreement is to begin when fully executed, and shall terminate on completion of the study. IN WITNESS WHEREOF, the governing bodies of both the District and the Town have approved and adopted this Agreement and have caused this Agreement to be executed. It shall become effective upon the date that both parties have signed this Agreement. AGREED to and ADOPTED by Trophy Club Municipal Utility District No. 1 on this day of 2014. ATTEST Jim Moss Kevin Carr President, Board of Directors Secretary, Board of Directors Laurie Slaght District Secretary (Seal) AGREED to and ADOPTED by the Town of Westlake on this day of 2014. ATTEST Thomas E. Brymer L. Stanton Lowry Town Manager Town Attorney Kelly Edwards Town Secretary (Seal) EXHIBIT A Geographical Area of Study "C` Westlake #110" Turbine Meter UT §¨¦35 £¤377 ¬«170 ¬«114 Caylor Rd 5.0 MGGround Storag e Ta nk 377 35W N O R T H W E S T P K W Y DOVE RD PEARSON LN NORTH FWY ALTA VISTA RD KELLER H ICKS RD HIGHWAY 1709 A L L I A N C E G A T E W A Y F W Y 114 PEYTONVILLE AVE GOLDEN TR IANGLE BLVD KATY RD HARMON RD HIGHWAY 114 FLOR ENC E RD DAVIS BLVD S O U T H L A K E B L V DJOHNSON RD CONTINENTAL BLVD CAYLOR RD BEACH ST MOUNT GILEAD RD VINE ST TIM BERL A N D B L V D BANCROFT RD ALLE N TRL KNOX RD ROANOKE RD FM 156 FAWKES LN OAK ST RAY WHITE RD RUFE SNOW DR KELLER HASLET RD HENRIETTA CREEK RD MAIN ST ELM ST PATE ORR RD OLD DENTON RD PEARL ST WALNUT ST VIC TORY WHITLEY RD PARKVISTABLVD POST O A K P L TROPH Y C L U B D R N O R M A L N EAGLEPKWY RANDALL MILL RD CH HILL CT CORRAL DR R A N C H O D R DANA LN MELODY HILLS DR WALL PRICE KELLER RD ANITA AVE P E N N Y L N EL A I N E S T WOO D B R O O K L N LA K E V I E W D R HASLET ROANOKE RD ROY LN J T O T T I NGER RD RIDGETOP RD OAK TRL MORGAN RD RO BIN D R CABEL A D R MELISSA DR KEL ASPEN LN OA K DR CHAPARRAL LN S U MMER LN FALCON DR G R AY H AW K L N PRESTIGE RD CHAND LER RD SIMMONS D R C R E E K R D T W KING RD I N D I A N C REEKDR JOSH RD PECAN ST B E N S O N L N TALBOT ST E A G L E T R L KENNY D R NORTHRIDGE DR KIRKW O O D B L V D VOSS A V E SPORT PKWY BLEVI N S D R OTTINGER RD WINTER DR PRECINCT LINE RD HARRELL DR F O R E S T B E N D L N VI S T A TRL B A R B A R A L N P E C OSDR M I S T YSR U N L A K E P O I N T DR L E D A R A L N BRENTWOOD TRL LIBERTY WAY BLUE MOUND RD WESTPORT PKWY B E L I N D A D R OAK LN B L UEB O N NET DR PARISH LN C HE SAP E A K E L N HILLCREST DR PA D R E AVE SUNSET CIR R A I S I N T R E E D R FIR DRALDERSYDE DR DALLAS DR LAMAR ST A U S T I N W A T E R L I L Y D R PARK PL CE D A R ELM TER S P RING DR JELL I C O C I R TREEHOUSE CIR BEAR CRE E K TRL CHISOLM TRL BEAR CR EEKPKWY PRESTON LN BE R R Y W OODTRL CARNOUSTI E D R EVERGREEN DR B A R T ST CHARLES ST A S TOR DR WATERCREST D R CIMAR R O N D R BELLAIRE DR GLEN VISTA DR KINGSBRIDG E L N PENINSULA LN HERITAGE PKWY T R O O N D R D A Y R D SCENIC DR CASTL E M A N CT MONIC A LN FAIR OAKS D R B O L E N S T BEAR RUN P O N D E R O S A R A N C H R D M A N O R W A YOAKWOOD DR KERR CT SUNSET DR ROYAL LN BROCK DR L O S T T R L L E E S B U R G D R INDIA ST MEA D O W B R O O K L N D A R T M O U TH D R REYCT LA M B E R T L N MARLI N L N RIVER TRL STAGE COACH RD PINELLAS AVE SUMAC DR SE-HA-PAY A K RD F R I O D R EMORY TRL B R O K E N B END D R BODEGA BAY DR VERMILION CT ENGLISH OAK DR T.W. KING RD MARA NTHA WAY CANYON RANCH RD B O B B I C T T W E N TY DEER HOLLOW BLVD SABINE CT FAIR GREEN DR W I L D R O S E W A Y CAMPUS CIR W A T E R F O R D D R DIAR LN A L L I A N C E B L V D A M A D O R D R RAVEN TRCE KEITH DR BETTY LN L A U R E N W A Y HIGHLAND CT STEVE CT NORTHERN TRCE LEGACY XING RICHMONDLN ASPEN CT CANARY LN OAKWOOD TRL SAGEBRUSH ST FURLONG WAY RED WING CT VALLE VISTA CT HERITAGE PKWY WESTPORT PKWY NORTH FWY TROPHYCLUB D R NORTH FWY JOSH RD 35W NORTHWEST PKWY OLD DENTON RD NORTH FWY KELLER HASLET RD POSTOAK P L HARMON RD HIGHWAY114 A L LIA N C E G A T E W A Y F W Y P E Y T O NVILLE AVE JOHNSON RD J T OTTINGER RD OTTINGER RD Colleyville Keller Roanoke Southlake Trophy Club Westlake Fort Worth CITY O F FORT WO RTHEXHIBIT A STUDY AREA LEGEND UT Existing Ground Storage Tank "C`Wholesale Meter Street Fort Worth City Limit County Boundary Created By Freese and Nichols, Inc. Job No.: FTW13135 Location: H:\W_WW_PLANNING\DELIVERABLES\00-WORKING\(Figure_X)_Caylor_Rd_GST_Westlake_Meter.mxd Updated: Friday, December 05, 2014 December 05, 2014 0 3,000 SCALE IN FEET !I EXHIBIT B City of Fort Worth Task Order 1    Task Order to an Agreement   by and between the City of Fort Worth, Texas (City)   and Freese and Nichols, Inc. (Consultant)   to perform On‐Call Professional Civil Engineering Services  Water and Wastewater Modeling (Project)      TASK ORDER NUMBER 2014‐003  Water Supply Feasibility and Route Study for Northeast Wholesale Customers    THIS TASK ORDER is made pursuant to the terms and conditions of the Professional Services  Agreement (the "Agreement"), City Secretary Contract No. 45164, dated September 17, 2013,  entered into by and between the City of Fort Worth, Texas (City) and Freese and Nichols, Inc.  (Consultant).    I. ARTICLE 1. Consultant will perform the on‐call professional civil engineering services in  accordance with the Agreement and the Scope of Services / Compensation Schedule / Budget  Summary attached hereto as Exhibit "A" and incorporated herein by reference for all  purposes.    II. ARTICLE 2. Compensation for this Task Order shall be on a not to exceed basis, not to exceed  sixty‐five thousand one hundred eighty‐six and 00/100 Dollars ($65,186.00), and shall be  paid in accordance with Article 3 of the Agreement and the WScope of Services /  Compensation Schedule / Budget Summary as set forth in Exhibit "A" of the Task Order.  Consultant shall not exceed the amount specified in this Task Order without the issuance of  a supplemental Task Order issued by City in writing to Consultant.    III. ARTICLE 3. This Task Order shall become effective on the latest date as reflected by the  signatures below and shall terminate on December 31, 2014 unless extended by a  supplemental Task Order issued by City in writing to Consultant.    IV. ARTICLE 4. The City Project number and the Project Account Code are the  following:    City CIP Number:   N/A  City Project Account Code:  N/A    V. ARTICLE 5.   Upon execution of this Task Order, the funds available under the  Agreement are revised to the following:    Current Project Budget (As Revised by Approved Task Orders):    $ 120,349.00  Approved Work by this Task Order:                                                                              $   65,186.00  Revised Project Budget:    $   55,163.00  2   ARTICLE 6. The following exhibits are attached below and made a part of this  Task Order:  A. Exhibit "A," Scope of Services / Compensation Schedule / Budget Summary.    VI. ARTICLE 7. This Task Order does not waive the parties' responsibilities and obligations  provided under the Agreement.    IN WITNESS WHEREOF, the parties have executed this Task Order and caused this Task  Order to be effective on the latest day as reflected by the signatures below.    CITY   CONSULTANT  The City of Fort Worth, Texas   Freese and Nichols, Inc.    By:  _____________________                                 By: _____________________  Name:   Nowzar Dinyarian, P.E ____________    Name:  _Jessica Brown, P.E.____  Title:      Project Manager    Title:  _Principal_____________  Date: _____________________                                   Date:  _____________________      Exhibit A‐1  EXHIBIT "A"  SCOPE OF SERVICES / COMPENSATION SCHEDULE    Task Order to an Agreement   by and between the City of Fort Worth, Texas (City)   and Freese and Nichols, Inc. (Consultant)   to perform On‐Call Professional Civil Engineering Services  Water and Wastewater Modeling (Project)    I. Scope of Services    Water Supply Feasibility and Route Study for Northeast Wholesale Customers   Task A: Project Management and General Services    FNI shall ensure efficient and effective use of Engineer’s and City’s time and resources.     Engineer shall manage change and,     communicate effectively,    coordinate internally and externally as needed, and    proactively address issues with the City’s Project Manager and others as necessary  to make progress on the work.  I. Managing the Team   Lead, manage and direct route study team activities   Ensure quality control is practiced in performance of the work   Communicate internally among team members   Task and allocate team resources  II. Communications and Reporting   Attend a project kickoff/chartering meeting with City’s staff to confirm and clarify  scope, understand City’s objectives.   Prepare invoices and submit monthly in the format acceptable to the City.   Prepare and submit monthly progress reports   Coordinate with other agencies and entities as necessary for the study of the  proposed infrastructure.  Exhibit A‐2  Task B: Route Analysis for Northeast Wholesale Customers     I. Project Kick‐off Meeting:  Freese and Nichols, Inc. (FNI) will meet with the City to review  scope, project team and schedule of the project. The meeting will also serve as time to  determine criteria for pipeline route selection including:   Construction Costs   Properties affected   Potential conflicts   Hydraulics    II. Meeting with Customer Cities: FNI will conduct three (3) meetings with Customer cities to  gather information and discuss preferences.    III. Data Collection:  in addition to data obtained from the City, FNI will coordinate with sub  consultant to compile and create maps with pertinent geographical information which may  include :     Utilities from GIS   Storm drainage facilities   USGS digital contour maps   Mapping of land owners   Utilities observed from field visit   Data from other agencies (TxDOT and Railroads)    IV. Review Pipeline Route: After obtaining data and mapping information. FNI will review the  route originally proposed on the Northside Water System Recommended Improvements  figure, as well as review two additional routes. FNI will perform reconnaissance level  viewing of the proposed routes where access permits. FNI will suggest modifications as  needed/necessary and meet with the City of Forth Worth to determine preferred route and  possible modifications. FNI will evaluate the proposed routes by performing the following  tasks:    a. Develop Options of Probable Construction Costs (OPCC’s) for each route.  The OPCC’s will take into consideration preliminary pipeline diameter  analysis, pipe pressure class, road crossings (if any), creek crossings (if any),  typical appurtenances, and general construction requirements. A total of  nine (9) Cost estimates will be developed with three (3) alternate diameters  for each route.    b. FNI will coordinate with sub consultant to produce maps for three routes.   The maps will present data used to evaluate each route.    Exhibit A‐3  V. Hydraulic evaluation: FNI will utilize the Northside Water Model to evaluate the effects on  the pressure plane for each of the three propose alignments. FNI will conduct hydraulic  analysis to confirm the sizing of the pipeline, capacity, and pipeline pressure requirements.     VI. Technical Memorandum: FNI will prepare a technical memorandum summarizing the  findings for the route study and recommend a preferred route. The technical memorandum  will include discussion on the following topics:  a. Description of Alternates  b. Maps of pipeline routes     11x17 map book at 1”=100’ scale for one route   Large map for two routes at large scale    c. Results of Hydraulic Analysis  d. Engineers Opinion of Probable Construction Costs (OPCC’s)  e. Recommendation    VII. Assumptions:  a. FNI will attend four (4) meetings: One (1) with the City and three (3) with customer  cities.   b. Eight (8) copies of the memorandum and associated maps will be delivered to the City      Exhibit A‐4  II. Compensation Schedule    The City shall pay Consultant an amount not to exceed $65,186 in accordance with the provisions of this  Agreement and the Payment Schedule attached as Exhibit “B,” which is incorporated for all purposes  herein. Consultant shall not perform any additional services for the City not specified by this Agreement  unless the City requests and approves in writing the additional costs for such services.  The City shall not  be liable for any additional expenses of Consultant not specified by this Agreement unless the City first  approves such expenses in writing.    III. Schedule  Freese and Nichols is authorized to commence work on the Project upon execution of this Agreement and  agrees to complete the services in accordance with the following schedule: Complete evaluation and  technical memorandum three months from Notice to Proceed.    If Freese and Nichols’ services are delayed through no fault of Freese and Nichols, Freese and Nichols shall  be entitled to equitable adjustment of compensation and Freese and Nichols shall be entitled to adjust  contract schedule consistent with the number of days of delay.    Exhibit B‐1  EXHIBIT "B"  On‐Call Professional Services for Water and Wastewater Modeling  COMPENSATION    A. Not to Exceed:  The total fee for Basic Services in Exhibit “A” shall be computed on the basis of the  Schedule of Charges but shall not exceed $65,186.  If FNI sees the Scope of Services changing so that  Additional Services are needed, FNI will notify OWNER for OWNER’s approval before proceeding.   Additional services shall be computed based on the Schedule of Charges.  B. Schedule of Charges:    Position Min Max PRINICIPAL 174.83 267.00 GROUP MANAGER 198.93 261.80 ENGINEER VIII 211.44 272.38 ENGINEER VII 180.53 233.63 ENGINEER VI 159.10 224.39 ENGINEER V 134.11 173.56 ENGINEER IV 116.59 153.51 ENGINEER III 103.94 148.67 ENGINEER II 89.91 116.35 ENGINEER I 85.72 110.93 CADD DESIGNER 115.84 149.90 TECHNICIAN IV 90.58 117.22 TECHNICIAN III 75.01 100.93 TECHNICIAN II 68.50 91.88 TECHNICIAN I 51.58 69.21 GIS COORDINATOR 106.79 138.20 GIS ANALYST IV 99.43 128.68 GIS ANALYST III 72.56 101.64 GIS ANALYST II 61.65 79.79 GIS ANALYST I 51.44 66.57 WORD PROCESSING/SECRETARIAL 53.90 81.49 OPERATIONS ANALYST 100.24 140.51 CONTRACT ADMINISTRATOR 68.05 88.07 INFORMATION SERVICES SUPERVISOR 64.97 84.08 INFORMATION SERVICES CLERK III 48.26 62.46 INFORMATION SERVICES CLERK II 36.25 46.91 INFORMATION SERVICES CLERK I 38.09 42.88 CO-OP 39.16 71.20     The ranges and individual salaries will be adjusted annually.    RATES FOR IN‐HOUSE SERVICES    Plotter   Printing  Bond $2.50 per plot  Black and White Color  Other $5.00 per plot  $0.10 per single side copy $0.50 per single side copy  Color $5.75 per plot  $0.20 per double side copy $1.00 per double side copy      Binding      $5.75 per book                 OTHER DIRECT EXPENSES  Other direct expenses are reimbursed at actual cost times a multiplier of 1.10.  They include outside printing and reproduction expense,  communication expense, travel, transportation and subsistence away from Fort Worth and other miscellaneous expenses directly related  to the work, including costs of laboratory analysis and tests.  Other work required to be done by independent persons other than staff  members are reimbursed at actual cost times a multiplier of 1.05. EXHIBIT C Project Schedule ID T a s k  Na m e D u r a t i o n S t a r t F i n i s h 1 Ro u t e  St u d y 9 da y s ? Mo n  12 / 1 / 1 4 Th u  12 / 1 1 / 1 4 2 No t i c e  to  Pr o c e e d 1 da y ? Mo n  12 / 1 / 1 4 Mo n  12 / 1 / 1 4 3 Ki c k ‐of f  Me e t i n g 1 da y Tu e  12 / 2 / 1 4 Tu e  12 / 2 / 1 4 4 Pr e p a r e  fo r  Me m b e r  Ci t y  Me e t i n g 3 da y s We d  12 / 3 / 1 4 Fr i  12 / 5 / 1 4 5 Me e t  wi t h  Me m b e r  Ci t i e s 4 da y s Mo n  12 / 8 / 1 4 Th u  12 / 1 1 / 1 4 6 GI S  Wo r k  (P a c h e c o  Ko c h ) 38  da y s ? Fr i  12 / 1 2 / 1 4 Tu e  2/ 3 / 1 5 20 En g i n e e r i n g / T e c h i n c a l  Me m o r a n d u m 24  da y s We d  1/ 7 / 1 5 Mo n  2/ 9 / 1 5 31 Su b m i t  Dr a f t  Me m o 1 da y ? Tu e  2/ 1 0 / 1 5 Tu e  2/ 1 0 / 1 5 32 Ci t y  Re v i e w  Dr a f t  Me m o 4 da y s We d  2/ 1 1 / 1 5 Mo n  2/ 1 6 / 1 5 33 FN I  Ad d r e s s  Co m m e n t s 4 da y s Tu e  2/ 1 7 / 1 5 Fr i  2/ 2 0 / 1 5 34 Su b m i t  Te c h n i c a l  Me m o 1 da y ? Mo n  2/ 2 3 / 1 5 Mo n  2/ 2 3 / 1 5 12 / 1 2/10 2/23 S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W T F S S MTWTFSSMTWTFSSMTWTFSSMTWTFSSMTWTFSSMTWTFSSMTWTF No v  30 ,  '1 4 De c  7,  '1 4 De c  14 ,  '1 4 De c  21 ,  '1 4 De c  28 ,  '1 4 Ja n  4,  '1 5 Ja n  11, '15Jan 18, '15Jan 25, '15Feb 1, '15Feb 8, '15Feb 15, '15Feb 22, '15 Ta s k Sp l i t Mi l e s t o n e Su m m a r y Pr o j e c t  Su m m a r y Ex t e r n a l  Ta s k s Ex t e r n a l  Mi l e s t o n e In a c t i v e  Ta s k In a c t i v e  Mi l e s t o n e In a c t i v e  Su m m a r y Ma n u a l  Ta s k Du r a t i o n ‐on l y Manual Summary Rollup Manual Summary Start‐onlyFinish‐only Deadline Progress Wa t e r  Su p p l y  An d  Ro u t e  St u d y  fo r  NE  Wh o l e s a l e  Cu s t Pa g e  1 Pr o j e c t :  Ro u t e  St u d y  Sc h e d u l e Da t e :  Tu e  11 / 4 / 1 4 estlake Town Council TYPE OF ACTION Regular Meeting - Consent Westlake Town Council Meeting Monday, December 15, 2014 TOPIC: Consider approval of Ordinance amending Water and Wastewater Rate and Fee Schedule, and repealing Ordinance 699. STAFF CONTACT: Jarrod Greenwood, Public Works Director Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Fiscal Responsibility Fiscal Stewardship Exemplary Service & Governance - We set the standard by delivering unparalleled municipal and educational services at the lowest cost. Increase Financial Capacity / Reserves Strategic Initiative Fees Increase at Rate of Inflation Time Line - Start Date: January 1, 2015 Completion Date: January 1, 2015 Funding Amount: N/A Status - N/A Source - Utility Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) The current utility rates and structure were adopted at the March 23, 2013 regular Town Council meeting. Town staff recently conducted a rate study in-house and present this information at the November 17, 2014 Town Council meeting. Municipalities typically conduct a comprehensive rate study like we performed in March 2013 about every three years, with staff making adjustments in between. The purpose of a rate study is to determine whether the Utility Fund is accomplishing full recovery of cost of services while maintaining an appropriate fund reserve balance in accordance with the Town’s adopted Financial Policy. As you may recall, Council approved a pass-through ordinance that allows increases from the Town’s wholesale providers to be passed through automatically. RECOMMENDATION AND ATTACHMENTS Staff recommends approval. Ordinance Ordinance 740 Page 1 of 5 TOWN OF WESTLAKE ORDINANCE NO. 740 AN ORDINANCE OF THE TOWN OF WESTLAKE ESTABLISHING A NEW WATER AND WASTEWATER RATE AND FEE SCHEDULE; REPEALING ORDINANCE 699 IN ITS ENTIRETY; PROVIDING A PENALTY; PROVIDING A CUMULATIVE CLAUSE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A SAVINGS CLAUSE; AUTHORIZING PUBLICATION; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the Town Council of the Town of Westlake finds the provision of water and wastewater services throughout the Town of Westlake, Texas, (the “Town”) is of vital importance to the health, safety and welfare of the citizens of the Town; and WHEREAS, the Town Council of the Town of Westlake finds the pro posed Water and Wastewater rate and fee schedule provides full recovery of cost of services while maintaining an appropriate fund reserve balance in accordance with the Town’s adopted Financial Policy; and WHEREAS, the Town Council repeals Ordinance 699 in its entirety to consolidate the Water and Wastewater rate and fee schedule; and WHEREAS, upon the recommendation of the Public Works Department, the Town Council of the Town of Westlake, Texas, is of the opinion that it is in the best interests of the Town and its citizens that the proposed Water and Wastewater rates should be approved and adopted. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That all matters stated in the preamble are found to be true and correct and are incorporated herein as if copied in their entirety. SECTION 2: That That the Town Council does hereby approve the Water and Wastewater rate and tap fee schedule as shown on Exhibit “A” hereto, which said exhibit is hereby incorporated in its entirety as if fully set forth. SECTION 3: That all provisions of this ordinance shall remain in full force and effect. Ordinance 740 Page 2 of 5 SECTION 4: That this Ordinance shall be cumulative of all other Town Ordinances and all other provisions of other Ordinances adopted by the Town which are inconsistent with the terms or provisions of this Ordinance are hereby repealed. SECTION 5: That any person, firm or corporation violating any of the provisions or terms of this ordinance shall be subject to the same penalty as provided for in the Code of Ordinances of the Town of Westlake, and upon conviction shall be punishable by a fine not to exceed the sum of five hundred dollars ($500.00) for each offense. Each day that a violation is permitted to exist shall constitute a separate offense. SECTION 6: It is hereby declared to be the intention of the Town Council of the Town of Westlake, Texas, that sections, paragraphs, clauses and phrases of this Ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this Ordinance shall be declared legally invalid or unconstitutional by the valid judgment or decree of any court of competent jurisdiction, such legal invalidity or unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs or sections of this Ordinance since the same would have been enacted by the Town Council of the Town of Westlake without the incorporation in this Ordinance of any such legally invalid or unconstitutional, phrase, sentence, paragraph or section. SECTION 7: This ordinance shall take effect immediately from and after its passage as the law in such case provides. PASSED AND APPROVED ON THIS 15th DAY OF DECEMBER 2014. _____________________________ ATTEST: Laura Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney Ordinance 740 Page 3 of 5 Exhibit A EFFECTIVE MARCH 25, 2013 Base Service Charges Residential Commercial Meter Size Water Sewer Water Sewer 3/4" $45 $35 $49 $42 1" $73 $65 $80 $78 1 1/2" $143 $120 $157 $144 2" $227 $190 $249 $228 3" $493 $410 $542 $492 4" $885 $700 $973 $840 6" $1,653 $1,450 $3,853 $1,610 8" $2,403 $2,100 $4,843 $2,320 Volume Charge Rate Per 1,000 gallons Residential Commercial Volume (gallons) Water Sewer Water FRAC Water Sewer 0-2,000 $3.40 $0.00 $3.74 $20.18 $6.85 2,001 - 20,000 $3.40 $5.85 $3.74 $20.18 $6.85 20,001 - 100,000 $4.45 $5.85 $4.90 $20.18 $6.85 100,001 - 400,000 $5.50 $5.85 $6.05 $20.18 $6.85 over 400,000 $6.80 $5.85 $7.48 $20.18 $6.85 Ordinance 740 Page 4 of 5 Deposits Residential Commercial Meter Size Water Sewer Water Sewer 3/4" $200 $150 $200 $150 1" $250 $200 $250 $200 1 1/2" $300 $250 $300 $250 2" $500 $320 $500 $320 3" $1,000 $700 $1,000 $700 4" $1,800 $1,200 $1,800 $1,200 6" $3,750 $2,500 $3,750 $2,500 8" $5,400 $3,600 $5,400 $3,600 Tap Fees Water Connection Minimum Service Tap Fee** Meter Size Existing Service Line Tap Fee Street Cut/Bore 3/4" $600 $1,100 $1,100 1" $650 $1,250 $1,200 1 1/2" $875 $1,750 $1,300 2" Disc $1,100 $2,400 $1,400 Sewer Connection Minimum Service Tap Fee** Depth Existing Service Line Tap Fee Street Cut/Bore 0 - 6 feet $450 $650 $1,300 6 - 12 feet $450 $950 $1,400 12 - 18 feet $450 $1,250 $1,800 2" Compound & larger, or unusual installation conditions, fee to be actual cost to Town plus 10%. **Tap fees for connection installed by Town will be actual cost to Town plus 10%. Does not include City of Fort Worth water or other impact fees. Ordinance 740 Page 5 of 5 2015 Gas Well Water Rate Model Assumptions Usage Volume = 5,000,000 gallons Total assumed usage per well Usage Period = 10 days Assumed time frame for drilling & Fracing Probability of Peak Period = 2/3 Peaks are assumed to only occur in the "summer" months Jun-Aug Affected years = 1.5 Assumed Current Annual Effect (MGD) FW Rate Effect Max Day 0.5 $156,017.00 $78,008.50 Max Hour 0.020833333 $30,616.00 $ 637.83 Potential annual effect $78,646.33 per 1,000 gallons / 5,000 Probability 2/3 Affected years x 1.5 Rate of use effect $ 15.75 Base cost + $ 4.43 Proposed Rate $20.18 per 1000 gals. rev. 1/1/15 Page 1 of 2 estlake Town Council TYPE OF ACTION Regular Meeting - Action Item Westlake Town Council Meeting Monday, December 15, 2014 TOPIC: Conduct a public Hearing and consider the Final Plat for Phase I of the approximately 84 acre development known as Granada, located generally east of Davis Blvd., south of Solana Blvd., and north of Dove Road. STAFF CONTACT: Eddie Edwards, Director of Planning and Development Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: Status - Not Funded Source - N/A EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) The Final Plat comports to the previously approved Preliminary Plat and the infrastructure has largely been completed and accepted by Town staff. The developer (Centurion American) has also complied with, or provided appropriate financial assurances to Town staff, that he will comply with all of the developer obligations that were specified in the approved Development Agreement and the Economic Development Agreement for this development. The Final Plat for Granada Phase I consists of 41 residential lots plus 2 lots, one of which is for the private streets and the other is for the pedestrian access/landscape buffer. Note: Phase II Granada has been preliminarily platted (but not final platted) and contains 43 residential lots. The infrastructure for Phase II will be built at a later date as determined by the Developer. Page 2 of 2 RECOMMENDATION The Planning and Zoning Commission held a public hearing on December 8, 2014 and voted unanimously to recommend approval of the Final Plat for Granada Phase I conditioned upon the developer complying with all the terms and conditions of the Granada Development Agreement (Resolution 13-25) and the Granada Economic Development Agreement (Resolution 13-09). Compliance with the terms and conditions of the Granada Development Agreement and Economic Development agreement includes the requirement for payment of all financial assurances, prior to the filing of this final plat with the county. These financial assurances are for : a.) any unfinished on-site infrastructure improvements (for entire Granada) b.) any off-site infrastructure improvements (for entire Granada) c.) the per residential lot fee for Westlake Academy impact (Phase One only) It should be noted that unfinished on-site infrastructure is largely perimeter streetscaping, as well as off-sit e improvements. Off-site infrastructure improvements are the Granada development’s pro-rata share of certain traffic signals and Solana Boulevard improvement s. Financial assurances will be provided via an unrestricted Letter of Credit, the form for which must first be approved by the Town Attorney. Also, the dollar amount of these financial assurances for any unfinished on-site or off-site infrastructure improvements must first be submitted by the Developer and approved by Staff. ATTACHMENTS 1. Granada Concept Plan as approved in the rezoning ordinance for Granada, Ordinance 693 adopted by the Town Council on February 25, 2013. 2. Resolution. Note: This is for Town Council consideration only at the Town Council’s December 15th meeting. It is furnished to Planning & Zoning Commission for background and information as to the basis for the approval recommendation from Staff and to assist the P&Z in the formulation of their recommendation to the Town Council regarding this final plat for Granada Phase One. This document also notes some of the significant Town development review milestone approvals for Granada that have taken place up to this point. 3. Final Plat Exhibit . Note: At the time of P&Z packet distribution, some final minor changes are being to the notation section of this plat as required by Staff. Staff will review this final plat note language at the P&Z meeting. Concept Plan Resolution 14-43 Page 1 of 2 TOWN OF WESTLAKE RESOLUTION NO. 14-43 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, APPROVING A FINAL PLAT FOR PHASE ONE OF THE PROPERTY DESCRIBED AS BEING THE TRACTS OF LAND TOTALING 84.28 ACRES, GENERALLY LOCATED AT THE NORTHEAST CORNER OF DAVIS BLVD. AND DOVE ROAD; COMMONLY KNOWN AS THE GRANADA SUBDIVISION ALSO KNOWN AS THE PROPERTY ZONED PD1 - PLANNING AREA 3 (PD1-3); TARRANT COUNTY, TEXAS. WHEREAS, the Town Council of the Town of Westlake approved resolution 13-23, approving the Preliminary Plat for the subject property on June 17th, 2013; and WHEREAS, the Planning and Zoning Commission held a public hearing on December 8th, 2014, and voted to recommend that the Town Council approve of the Final Plat, attached as Exhibit “A”; and WHEREAS, the Final Plat comports to the previously approved Preliminary Plat, and all necessary infrastructure has been installed and accepted by the town, or financial instruments assuring their completion have been executed; and WHEREAS, The Town Council finds that it is in the best interest of the citizens of the Town of Westlake. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: The Town Council of the Town of Westlake, Texas, after considering the recommendation for approval from the Planning and Zoning Commission on December 8th, 2014, does hereby approve the Final Plat for the Granada subdivision, (PD1-3), as attached, subject to final compliance with the Development Agreement (Resolution 13-25) and Economic Development Agreement (Resolution 13-09). The Final Plat is attached as Exhibit “A”. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 14-43 Page 2 of 2 SECTION 4: That this Resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 15th DAY OF DECEMBER 2014. ___________________________________ Laura Wheat, Mayor ATTEST: ___________________________________ ___________________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________________ L. Stanton Lowry, Town Attorney Page 1 of 3 estlake Town Council TYPE OF ACTION Regular Meeting – Action Item Westlake Town Council Regular Meeting Monday, December 15, 2014 TOPIC: Consideration of a Resolution Determining the Costs of Certain Authorized Improvements to be Financed by the Solana Pubic Improvement District; Approving a Preliminary Service Plan and Assessment Plan, Including a Proposed Assessment Role; Directing the Filing of the Proposed Assessment Role with the Town Secretary, Calling for a Special Meeting and Noticing a Public Hearing on January 15, 2015 to Consider Levying Assessment on Said Property Within the Solana Public Improvement District; Directing the Town Staff to Publish and Mail Notice of Said Public Hearing; and Resolving Other Matters Incident and Related Thereto. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: To be Funded by PID Bonds Status - Not Funded Until PID Bond Issuance Source – PID Bonds Page 2 of 3 EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) Previously this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1-2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town’s Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development’s name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re-zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 11th, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time t he Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General’s Office would provide a preliminary approval. The developer’s team discussed this at the Town Council’s January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. Page 3 of 3 The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned back to the original Developer (Mehrdad Moayedi) by the Council on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer’s PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. Consideration of this resolution is one of the next steps in the PID bond issuance process. RECOMMENDATION Recommend approval of this resolution authorizing the preliminary costs to be financed by the Solana Public Improvement District (PID), approving the preliminary service assessment plan (which includes the appraisal and construction funding agreement ), approving the assessment role, directing sending of notice to property owners, and directing publication of notice for a public hearing on January 15, 2015 related to the Solana PID. ATTACHMENTS 1. Resolution and Exhibits, Including Draft Service Assessment Plan (SAP) and Appraisal that Supports the Assessments Contained in the SAP. NOTE: THERE IS STILL LANGUAGE BEING DRAFTED FOR SOME OF THESE DOCUMENTS AND ISSUES RELATED TO THIS PID REMAINING TO BE RESOLVED AS OF THE TIME OF PREPARATION OF THE TOWN COUNCIL PACKET. STAFF WILL SPEAK TO THIS AT THE WORKSHOP. estlake Town Council TYPE OF ACTION Regular Meeting - Consent Westlake Town Council Meeting Monday, December 15, 2014 TOPIC: Consider approval of Ordinance amending Water and Wastewater Rate and Fee Schedule, and repealing Ordinance 699. STAFF CONTACT: Jarrod Greenwood, Public Works Director Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Fiscal Responsibility Fiscal Stewardship Exemplary Service & Governance - We set the standard by delivering unparalleled municipal and educational services at the lowest cost. Increase Financial Capacity / Reserves Strategic Initiative Fees Increase at Rate of Inflation Time Line - Start Date: January 1, 2015 Completion Date: January 1, 2015 Funding Amount: N/A Status - N/A Source - Utility Fund EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) The current utility rates and structure were adopted at the March 23, 2013 regular Town Council meeting. Town staff recently conducted a rate study in-house and present this information at the November 17, 2014 Town Council meeting. Municipalities typically conduct a comprehensive rate study like we performed in March 2013 about every three years, with staff making adjustments in between. The purpose of a rate study is to determine whether the Utility Fund is accomplishing full recovery of cost of services while maintaining an appropriate fund reserve balance in accordance with the Town’s adopted Financial Policy. As you may recall, Council approved a pass-through ordinance that allows increases from the Town’s wholesale providers to be passed through automatically. RECOMMENDATION AND ATTACHMENTS Staff recommends approval. Ordinance Page 1 of 2 estlake Town Council TYPE OF ACTION Regular Meeting - Action Item Westlake Town Council Meeting Monday, December 15, 2014 TOPIC: Conduct a public Hearing and consider the Final Plat for Phase I of the approximately 84 acre development known as Granada, located generally east of Davis Blvd., south of Solana Blvd., and north of Dove Road. STAFF CONTACT: Eddie Edwards, Director of Planning and Development Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: Status - Not Funded Source - N/A EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) The Final Plat comports to the previously approved Preliminary Plat and the infrastructure has largely been completed and accepted by Town staff. The developer (Centurion American) has also complied with, or provided appropriate financial assurances to Town staff, that he will comply with all of the developer obligations that were specified in the approved Development Agreement and the Economic Development Agreement for this development. The Final Plat for Granada Phase I consists of 41 residential lots plus 2 lots, one of which is for the private streets and the other is for the pedestrian access/landscape buffer. Note: Phase II Granada has been preliminarily platted (but not final platted) and contains 43 residential lots. The infrastructure for Phase II will be built at a later date as determined by the Developer. Page 2 of 2 RECOMMENDATION The Planning and Zoning Commission held a public hearing on December 8, 2014 and voted unanimously to recommend approval of the Final Plat for Granada Phase I conditioned upon the developer complying with all the terms and conditions of the Granada Development Agreement (Resolution 13-25) and the Granada Economic Development Agreement (Resolution 13-09). Compliance with the terms and conditions of the Granada Development Agreement and Economic Development agreement includes the requirement for payment of all financial assurances, prior to the filing of this final plat with the county. These financial assurances are for : a.) any unfinished on-site infrastructure improvements (for entire Granada) b.) any off-site infrastructure improvements (for entire Granada) c.) the per residential lot fee for Westlake Academy impact (Phase One only) It should be noted that unfinished on-site infrastructure is largely perimeter streetscaping, as well as off-sit e improvements. Off-site infrastructure improvements are the Granada development’s pro-rata share of certain traffic signals and Solana Boulevard improvement s. Financial assurances will be provided via an unrestricted Letter of Credit, the form for which must first be approved by the Town Attorney. Also, the dollar amount of these financial assurances for any unfinished on-site or off-site infrastructure improvements must first be submitted by the Developer and approved by Staff. ATTACHMENTS 1. Granada Concept Plan as approved in the rezoning ordinance for Granada, Ordinance 693 adopted by the Town Council on February 25, 2013. 2. Resolution. Note: This is for Town Council consideration only at the Town Council’s December 15th meeting. It is furnished to Planning & Zoning Commission for background and information as to the basis for the approval recommendation from Staff and to assist the P&Z in the formulation of their recommendation to the Town Council regarding this final plat for Granada Phase One. This document also notes some of the significant Town development review milestone approvals for Granada that have taken place up to this point. 3. Final Plat Exhibit . Note: At the time of P&Z packet distribution, some final minor changes are being to the notation section of this plat as required by Staff. Staff will review this final plat note language at the P&Z meeting. Resolution 14-43 Page 1 of 2 TOWN OF WESTLAKE RESOLUTION NO. 14-43 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, APPROVING A FINAL PLAT FOR PHASE ONE OF THE PROPERTY DESCRIBED AS BEING THE TRACTS OF LAND TOTALING 84.28 ACRES, GENERALLY LOCATED AT THE NORTHEAST CORNER OF DAVIS BLVD. AND DOVE ROAD; COMMONLY KNOWN AS THE GRANADA SUBDIVISION ALSO KNOWN AS THE PROPERTY ZONED PD1 - PLANNING AREA 3 (PD1-3); TARRANT COUNTY, TEXAS. WHEREAS, the Town Council of the Town of Westlake approved resolution 13-23, approving the Preliminary Plat for the subject property on June 17th, 2013; and WHEREAS, the Planning and Zoning Commission held a public hearing on December 8th, 2014, and voted to recommend that the Town Council approve of the Final Plat, attached as Exhibit “A”; and WHEREAS, the Final Plat comports to the previously approved Preliminary Plat, and all necessary infrastructure has been installed and accepted by the town, or financial instruments assuring their completion have been executed; and WHEREAS, The Town Council finds that it is in the best interest of the citizens of the Town of Westlake. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: The Town Council of the Town of Westlake, Texas, after considering the recommendation for approval from the Planning and Zoning Commission on December 8th, 2014, does hereby approve the Final Plat for the Granada subdivision, (PD1-3), as attached, subject to final compliance with the Development Agreement (Resolution 13-25) and Economic Development Agreement (Resolution 13-09). The Final Plat is attached as Exhibit “A”. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Page 1 of 3 estlake Town Council TYPE OF ACTION Regular Meeting – Action Item Westlake Town Council Regular Meeting Monday, December 15, 2014 TOPIC: Consideration of a Resolution Determining the Costs of Certain Authorized Improvements to be Financed by the Solana Pubic Improvement District; Approving a Preliminary Service Plan and Assessment Plan, Including a Proposed Assessment Role; Directing the Filing of the Proposed Assessment Role with the Town Secretary, Calling for a Special Meeting and Noticing a Public Hearing on January 15, 2015 to Consider Levying Assessment on Said Property Within the Solana Public Improvement District; Directing the Town Staff to Publish and Mail Notice of Said Public Hearing; and Resolving Other Matters Incident and Related Thereto. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: To be Funded by PID Bonds Status - Not Funded Until PID Bond Issuance Source – PID Bonds Page 2 of 3 EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) Previously this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1-2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town’s Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development’s name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re-zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 11th, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time t he Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General’s Office would provide a preliminary approval. The developer’s team discussed this at the Town Council’s January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. Page 3 of 3 The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned back to the original Developer (Mehrdad Moayedi) by the Council on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer’s PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. Consideration of this resolution is one of the next steps in the PID bond issuance process. RECOMMENDATION Recommend approval of this resolution authorizing the preliminary costs to be financed by the Solana Public Improvement District (PID), approving the preliminary service assessment plan (which includes the appraisal and construction funding agreement ), approving the assessment role, directing sending of notice to property owners, and directing publication of notice for a public hearing on January 15, 2015 related to the Solana PID. ATTACHMENTS 1. Resolution and Exhibits, Including Draft Service Assessment Plan (SAP) and Appraisal that Supports the Assessments Contained in the SAP. NOTE: THERE IS STILL LANGUAGE BEING DRAFTED FOR SOME OF THESE DOCUMENTS AND ISSUES RELATED TO THIS PID REMAINING TO BE RESOLVED AS OF THE TIME OF PREPARATION OF THE TOWN COUNCIL PACKET. STAFF WILL SPEAK TO THIS AT THE WORKSHOP. Resolution 14-44 Page 1 of 6 TOWN OF WESTLAKE RESOLUTION NO. 14-44 A RESOLUTION OF THE TOWN OF WESTLAKE, TEXAS DETERMINING THE COSTS OF CERTAIN AUTHORIZED IMPROVEMENTS TO BE FINANCED BY THE SOLANA PUBLIC IMPROVEMENT DISTRICT; APPROVING A PRELIMINARY SERVICE PLAN AND ASSESSMENT PLAN, INCLUDING A PROPOSED ASSESSMENT ROLL; DIRECTING THE FILING OF THE PROPOSED ASSESSMENT ROLL WITH THE TOWN SECRETARY; CALLING A SPECIAL MEETING AND NOTICING A PUBLIC HEARING FOR JANUARY 15, 2015 TO CONSIDER AN ORDINANCE LEVYING ASSESSMENTS ON PROPERTY LOCATED WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT; DIRECTING THE TOWN STAFF TO PUBLISH AND MAIL NOTICE OF SAID PUBLIC HEARING; AND RESOLVING OTHER MATTERS INCIDENT AND RELATED THERETO. RECITALS WHEREAS, the Public Improvement District Assessment Act, Texas Local Government Code, Chapter 372, as amended (the "Act") authorizes the governing body (the “Town Council”) of the Town of Westlake, Texas (the “Town”), to create a public improvement district within the Town; and WHEREAS, on February 24, 2014, the Town Council conducted a public hearing to consider a petition received by the Town on October 18, 2013 titled “Petition for the Creation of a Public Improvement District Within the Town of Westlake, Texas, for the Solana Public Improvement District” requesting the creation of a public improvement district; and WHEREAS, on February 24, 2014, the Town Council approved Resolution No. 14-07 (the “Authorization Resolution”), authorizing, establishing and creating the Solana Public Improvement District (the "District"); and WHEREAS, the Town authorized the creation of the District and the issuance of up to $32,000,000.00 in bonds for the District; and WHEREAS, the Town Council and the Town staff have previously reviewed a draft preliminary service and assessment plan for the District and have been presented an updated "Solana Public Improvement District Preliminary Service and Assessment Plan", including the Resolution 14-44 Page 1 of 6 TOWN OF WESTLAKE RESOLUTION NO. 14-44 A RESOLUTION OF THE TOWN OF WESTLAKE, TEXAS DETERMINING THE COSTS OF CERTAIN AUTHORIZED IMPROVEMENTS TO BE FINANCED BY THE SOLANA PUBLIC IMPROVEMENT DISTRICT; APPROVING A PRELIMINARY SERVICE PLAN AND ASSESSMENT PLAN, INCLUDING A PROPOSED ASSESSMENT ROLL; DIRECTING THE FILING OF THE PROPOSED ASSESSMENT ROLL WITH THE TOWN SECRETARY; CALLING A SPECIAL MEETING AND NOTICING A PUBLIC HEARING FOR JANUARY 15, 2015 TO CONSIDER AN ORDINANCE LEVYING ASSESSMENTS ON PROPERTY LOCATED WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT; DIRECTING THE TOWN STAFF TO PUBLISH AND MAIL NOTICE OF SAID PUBLIC HEARING; AND RESOLVING OTHER MATTERS INCIDENT AND RELATED THERETO. RECITALS WHEREAS, the Public Improvement District Assessment Act, Texas Local Government Code, Chapter 372, as amended (the "Act") authorizes the governing body (the “Town Council”) of the Town of Westlake, Texas (the “Town”), to create a public improvement district within the Town; and WHEREAS, on February 24, 2014, the Town Council conducted a public hearing to consider a petition received by the Town on October 18, 2013 titled “Petition for the Creation of a Public Improvement District Within the Town of Westlake, Texas, for the Solana Public Improvement District” requesting the creation of a public improvement district; and WHEREAS, on February 24, 2014, the Town Council approved Resolution No. 14-07 (the “Authorization Resolution”), authorizing, establishing and creating the Solana Public Improvement District (the "District"); and WHEREAS, the Town authorized the creation of the District and the issuance of up to $32,000,000.00 in bonds for the District; and WHEREAS, the Town Council and the Town staff have previously reviewed a draft preliminary service and assessment plan for the District and have been presented an updated "Solana Public Improvement District Preliminary Service and Assessment Plan", including the Resolution 14-44 Page 2 of 6 proposed assessment roll attached as Appendix E (the "Proposed Assessment Roll"), dated November 21, 2014 (collectively, the "Preliminary SAP"), a copy of which is attached hereto as Exhibit A and is incorporated herein for all purposes; and WHEREAS, the Preliminary SAP includes the estimated total costs of the Authorized Improvements to be financed by the District and the Proposed Assessment Rolls state the assessment proposed to be levied against each parcel of land in the District for each phase of the Development as determined by the method of assessment chosen by the Town; and WHEREAS, the Act requires that that the Proposed Assessment Roll be filed with the Town Secretary of the Town (the “Town Secretary”) and be subject to public inspection; and WHEREAS, the Act requires that a public hearing (the “Assessment Hearing”) be called to consider proposed assessments and requires the Town Council to hear and pass on any objections to the proposed assessments at, or on the adjournment of, the Assessment Hearing; and WHEREAS, the Act requires that notice of the Assessment Hearing be mailed to property owners liable for assessment and published in a newspaper of general circulation in the Town at least ten (10) days before the date of the Assessment Hearing. NOW THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS AS FOLLOWS: SECTION 1: THAT the recitals set forth above in this Resolution are true and correct and are hereby adopted as findings of the Town Council and are incorporated into the body of this Resolution as if fully set forth herein. SECTION 2: THAT the Town Council does hereby accept the Preliminary SAP for the District, including the Proposed Assessment Rolls, a copy of which is attached hereto as Exhibit A and is incorporated herein for all purposes. SECTION 3: THAT the Town Council hereby determines that the total costs of the Authorized Improvements to be financed by the District are as set forth in Table IV-A of the Preliminary SAP. Resolution 14-44 Page 3 of 6 SECTION 4: THAT the Town Council’s final determination and approval of the costs of the Authorized Improvements, or any portion thereof, shall be subject to and contingent upon Town Council approval of a final Service and Assessment Plan which will include final Assessment Rolls, after the properly noticed and held Assessment Hearing, and shall be based upon the Town Council’s exercise of due diligence. SECTION 5: THAT the Proposed Assessment Rolls state the assessment proposed to be levied against each parcel of land in the District as determined by the method of assessment chosen by the Town in the Authorization Resolution and as more fully described in the Preliminary SAP. SECTION 6 : THAT the Town Council hereby authorizes and directs the filing of the Proposed Assessment Roll with the Town Secretary and the same shall be available for public inspection. SECTION 7: THAT the Town Council hereby authorizes and calls a special meeting and a public hearing (the Assessment Hearing as defined above) to be held on January 15, 2015 at ______ __.m at Westlake Town Hall, 3 Village Circle, Westlake, Texas 76262, at which the Town Council shall, among other actions, hear and pass on any objections to the proposed assessments; and, upon the adjournment of the Assessment Hearing, the Town Council will consider an ordinance levying the assessments as special assessments on property within the District (which ordinance shall specify the method of payment of the assessments). SECTION 8: THAT the Town Council hereby authorizes and directs the Town Secretary to publish notice of the Assessment Hearing to be held on January 15, 2015, in substantially the form attached hereto as Exhibit B and incorporated herein for all purposes, in a newspaper of general circulation in the Town, before the 10th day before the January 15, 2015 hearing as required by Section 372.016(b) of the Act. SECTION 9: THAT when the Proposed Assessment Rolls are filed with the Town Secretary, the Town Council hereby authorizes and directs the Town Secretary to mail to owners of property liable for assessment notice of the Assessment Hearing to be held on January 15, 2015, as required by Section 372.016(c) of the Act. Formatted: Highlight Comment [SB1]: Must be confirmed by Town and included in attached notice. Resolution 14-44 Page 4 of 6 SECTION 10: THAT Town staff is authorized and directed to take such other actions as are required (including, but not limited to, notice of the public hearing as required by the Texas Open Meetings Act) to place the public hearing on the agenda for the January 15, 2015 meeting of the Town Council. SECTION 11: THAT this Resolution shall become effective from and after its date of passage in accordance with law. PASSED AND APPROVED ON THIS THE 15TH DAY OF DECEMBER, 2014. ATTEST: _____________________________ Laura L. Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney Resolution 14-44 Page 5 of 6 EXHIBIT A PRELIMINARY SERVICE AND ASSESSMENT PLAN Resolution 14-44 Page 6 of 6 EXHIBIT B TOWN OF WESTLAKE, TEXAS NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN THAT a public hearing will be conducted by the Town Council of Westlake, Texas on the 15th day of January at __:00 __.m. at Westlake Town Hall, 3 Village Circle, Westlake, Texas 76262. The public hearing will be held to consider proposed assessments to be levied against the assessable property within the Solana Public Improvement District (the “District”) pursuant to the provisions of Chapter 372 of the Texas Local Government Code, as amended (the “Act”). The general nature of the proposed improvements authorized by the Act to be undertaken and financed for the benefit of the property within the District (the “Authorized Improvements”) include, but are not limited to, landscaping, entryway features, water, wastewater, sidewalks, streets, roadways, off-street parking, drainage system improvements, trails, parks and open space. The total costs of the Authorized Improvements to be undertaken pursuant to the Series 2015 Bond issuance (including the costs of creating the District and issuing the bonds) is $26,175,000.00. The total costs of the subsequent Authorized Improvements (including bond issuance costs) are $10,215,000.00.The total costs of the Authorized Improvements to be undertaken pursuant to the Series 2015 Bond issuance is $____________________. The total costs of the subsequent Authorized Improvements are $_______________. The District includes approximately 85.90 acres of land generally located south of State Highway 114, east of Davis Boulevard, and north of Solana Boulevard, as more particularly described by a metes and bounds description available for public inspection at the office of the Town Secretary, 3 Village Circle, Westlake, Texas 76262. All written or oral objections on the proposed assessment within the District will be considered at the public hearing. A copy of the Proposed Assessment Roll relating to the Authorized Improvements to be undertaken at this time, which includes the assessments to be levied against each parcel in the District, is available for public inspection at the office of the Town Secretary, 3 Village Circle, Westlake, Texas 76262. Formatted: Highlight Comment [SB2]: Must be confirmed by Town. Formatted: Highlight Draft MuniCap Inc. v6.2 SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN NOVEMBER 21, 2014 MuniCap, Inc. v6.2 SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN Table of Contents Section I Plan Description and Defined Terms 1 Section II Property Included in the PID 7 Section III Description of Authorized Improvements 9 Section IV Service Plan 13 Section V Assessment Plan 16 Section VI Terms of the Assessments 23 Section VII Assessment Roll 29 Section VIII Miscellaneous Provisions 30 List of Appendix Appendix A The PID Map Appendix B Estimated Costs of the Authorized Improvements Appendix C Diagrams of the Authorized Improvements Appendix D Land Use Class, Equivalent Units and Allocation of Assessment Part A Appendix E Assessment Rolls 1 Section I PLAN DESCRIPTION AND DEFINED TERMS A. Introduction On February 24, 2014, (the “Creation Date”) the Town of Westlake Town Council (“Town Council”) passed Resolution No. 14-07 approving and authorizing the creation of the Solana Public Improvement District (the “PID”) to finance the costs of certain public improvements for the benefit of property in the PID, all of which is located within the boundaries of the Town of Westlake, Texas (“Town”). Upon application of the current property owners, the property within the PID was zoned by Ordinance No. 703 (the “Zoning Ordinance”) adopted by the Town on April 22, 2013, as amended and including all required approvals. The Zoning Ordinance designates the type of land uses that are permitted within the project and includes development standards for each land use type. Chapter 372 of the Texas Local Government Code, “the Public Improvement Assessment Act” (as amended, the “PID Act”), governs the creation and operation of public improvement districts within the State of Texas. This Service and Assessment Plan has been prepared pursuant to the PID Act and specifically Sections 372.013, 372.014, 372.015 and 372.016, which address the requirements of a service and assessment plan and the assessment roll. According to Section 372.013 of the PID Act, a service plan “must cover a period of at least five years and must also define the annual indebtedness and the projected costs for improvements. The plan shall be reviewed and updated annually for the purpose of determining the annual budget for improvements.” The service plan is described in Section IV of this Service and Assessment Plan. Section 372.014 of the PID Act states that “an assessment plan must be included in the annual service plan.” The assessment plan is described in Section V of this Service and Assessment Plan. Section 372.015 of the PID Act states that “the governing body of the municipality or county shall apportion the cost of an improvement to be assessed against property in an improvement district.” The method of assessing the PID Costs (herein after defined) and apportionment of such costs to the property in the PID is included in Section V of this Service and Assessment Plan. Section 372.016 of the PID Act states that “after the total cost of an improvement is determined, the governing body of the municipality or county shall prepare a proposed assessment roll. The roll must state the assessment against each parcel of land in the district, as determined by the method of assessment chosen by the municipality or county under this subchapter.” The Assessment Rolls for the PID are included as Appendix E of this Service and Assessment Plan. The Assessments as shown on the Assessment Rolls are based on the method of assessment and apportionment of costs described in Section V of this Service and Assessment Plan. B. Definitions Capitalized terms used herein shall have the meanings ascribed to them as follows: 2 “Actual Cost(s)” means, with respect to an Authorized Improvement, the demonstrated, reasonable, allocable, and allowable costs of constructing such Authorized Improvement, as specified in a Certification for Payment that has been reviewed and approved by the Town. Actual Cost may include but are not limited to (a) the costs for the design, planning, financing, administration, management, acquisition, installation, construction and/or implementation of such Authorized Improvement, including general contractor construction management fees, if any, (b) the costs of preparing the construction plans for such Authorized Improvement, (c) the fees paid for obtaining permits, licenses or other governmental approvals for such Authorized Improvement, (d) the costs for external professional costs associated with such Authorized Improvement, such as engineering, geotechnical, surveying, land planning, architectural landscapers, advertising, marketing and research studies, appraisals, legal, accounting and similar professional services, taxes (property and franchise) (e) the costs of all labor, bonds and materials, including equipment and fixtures, incurred by contractors, builders and material men in connection with the acquisition, construction or implementation of the Authorized Improvements, (f) all related permitting, zoning and public approval expenses, architectural, engineering, legal, and consulting fees, financing charges, taxes, governmental fees and charges (including inspection fees, County permit fees, development fees), insurance premiums, miscellaneous expenses, and all advances and payments for Administrative Expenses. Actual Costs include general contractor’s fees in an amount up to a percentage equal to the percentage of work completed and accepted by the City or construction management fees in an amount up to five percent of the eligible Actual Costs described in a Certification for Payment (and subject to approval by the Town). General contractor’s fees and construction management fees shall be budgeted in the project budget and itemized on each submittal on a payment request; and the amounts expended on legal costs, taxes, governmental fees, insurance premiums, permits, financing costs, and appraisals shall be excluded from the base upon which the general contractor and construction management fees are calculated. “Administrator” means the employee or designee of the Town who shall have the responsibilities provided for herein, in the Trust Indenture related to Bonds issued for the PID or otherwise approved by the Town Council. “Administrative Expenses” mean the costs associated with or incident to the administration, organization, maintenance and operation of the PID, including, but not limited to, the costs of: (i) creating and organizing the PID, including conducting hearings, preparing notices and petitions, and all costs incident thereto, engineering fees, legal fees and consultant fees, (ii) the annual administrative, organization, maintenance, and operation costs and expenses associated with, or incident and allocable to, the administration, organization, maintenance and operation of the PID and the Authorized Improvements, (iii) computing, levying, billing and collecting Assessments or the installments thereof, (iv) maintaining the record of installments of the Assessments and the system of registration and transfer of the Bonds, (v) paying and redeeming the Bonds, (vi) investing or depositing of monies, (vii) complying with the PID Act and codes with respect to the Bonds, (viii) Trustee fees and expenses relating to the Bonds, (ix) legal counsel, engineers, accountants, financial advisors, investment bankers or other consultants and advisors providing services related to the Bonds, and (x) administering the construction of the Authorized Improvements. Administrative Expenses do not include payment of the actual principal of, redemption premium, and interest on the Bonds. Amounts collected in conjunction with Annual 3 Installments for Administrative Expenses and not expended for actual Administrative Expenses shall be carried forward and applied to reduce Administrative Expenses in subsequent years to avoid the over-collection of Administrative Expenses. “Annual Installment” means, with respect to each Parcel, each annual payment of: (i) the Assessments, including any applicable interest, as shown on the Assessment Rolls attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section IV of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section IV of this Service and Assessment Plan. “Annual Installment Part A” means, with respect to each Parcel, each annual payment of: (i) the Assessment Part A, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. “Annual Installment Part B” means, with respect to each Parcel, each annual payment of: (i) the Assessment Part B, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. “Annual Service Plan Update” has the meaning set forth in the first paragraph of Section IV of this Service and Assessment Plan. “Assessed Property” means the property within the PID that benefits from the Authorized Improvements, as determined by the Town Council, on which Assessments have been imposed as shown in the Assessment Rolls, as the Assessment Rolls are updated each year by the Annual Service Plan Update. Assessed Property includes all Parcels within the PID other than Non- Benefited Property. “Assessment” means the assessment(s) levied against Parcels within the PID imposed pursuant to the Assessment Ordinance and the provisions herein as shown on the Assessment Rolls, subject to reallocation upon the subdivision of such Parcel or reduction according to the provisions herein and the PID Act. “Assessment Ordinance” means an Ordinance adopted by the Town Council approving the Service and Assessment Plan (including updates, amendments or supplements to the Service and Assessment Plan) and levying the Assessments. “Assessment Part A” means the portion of the Assessments levied for Improvement Project A as shown in the Assessment Rolls. 4 “Assessment Part B” means the portion of the Assessments levied for Improvement Project B as shown in the Assessment Rolls, as may be updated in the Annual Service Plan Updates. “Assessment Revenues” mean the revenues actually received by the Town from Assessments. “Assessment Roll” means an assessment roll included in Appendix E of this Service and Assessment Plan, as it may be updated, amended, or replaced by a supplement to this Service and Assessment Plan or an Annual Service Plan Update. “Authorized Improvements” mean those public improvements described in Section III and Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Authorized Improvement Costs” mean the actual or budgeted costs, as applicable, of all or any portion of the Authorized Improvements, as described in Section III and shown in Appendix B, as these costs may be updated from time to time. “Bonds” mean any bonds issued by the Town in one or more series and secured by the Assessment Revenues. “Bond Indenture” means the indenture, ordinance or similar document setting forth the terms and other provisions relating to the Bonds, as modified, amended, or supplemented from time to time. “Certification for Payment” means the document to be provided by the Developer to substantiate the Actual Cost of one or more Authorized Improvements, as approved by the Town. “Delinquent Collection Costs” mean interest, penalties and expenses incurred or imposed with respect to any delinquent installment of an Assessment in accordance with the PID Act and the costs related to pursuing collection of a delinquent Assessment and foreclosing the lien against the Assessed Property, including attorney’s fees. “Developer” means Maguire Partners – Solana Land, L.P. “Equivalent Units” mean, as to any Parcel, the number of dwelling units by Land Use Class or non-residential development by type expected to be built on the Parcel multiplied by the factors calculated and shown in Appendix D attached hereto, as Appendix D may be updated by an Annual Service Plan Update. “Improvement Area #1” means the area of the PID to be improved by Improvement Project A and Improvement Project B, consisting of the property shown within Improvement Area #1 on Appendix A, and commonly referred to as the Mixed-Use Core. “Improvement Area #2” means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #2 on Appendix A, and commonly referred to as West Residential. 5 “Improvement Area #3” means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #3 on Appendix A and commonly referred to as East Residential. “Improvement Area #1 Assessed Property” means the property within the PID that benefits from the Improvement Project A and Improvement Project B as determined by the Town Council on which Assessments Part A and Assessments Part B have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #1 Assessed Property includes all Parcels within Improvement Area #1 of the PID other than Non-Benefited Property. “Improvement Area #2 Assessed Property” means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #2 Assessed Property includes all Parcels within Improvement Area #2 of the PID other than Non-Benefited Property. “Improvement Area #3 Assessed Property” means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #3 Assessed Property includes all Parcels within Improvement Area #3 of the PID other than Non-Benefited Property. “Improvement Project A” means the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Improvement Project B” means the portion of the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Land Use Class” means a classification of property with similar characteristics regarding the intended use of the property (e.g., residential, retail, office, hotel, etc.), as allowed by the Zoning Ordinance. “Lot” means a tract of land described as a “lot” in a subdivision plat recorded in the official public records of Tarrant County, Texas. “Non-Benefited Property” means Parcels within the boundaries of the PID that accrue no special benefit from the Authorized Improvements, as determined by the Town Council, including Property Owner Association Property, public property and easements that create an exclusive use for a public utility provider. Property identified as Non-Benefited Property at the time the Assessments (i) are imposed or (ii) are reallocated pursuant to a subdivision of a Parcel, is not assessed. Assessed Property converted to Non-Benefited Property, if the Assessments may not be reallocated pursuant to the provisions herein, remains subject to the Assessments and requires the Assessments to be prepaid as provided for in Section VI. C. 2. 6 “Parcel” or “Parcels” means a parcel or parcels within the PID identified by either a tax map identification number assigned by the Tarrant Central Appraisal District for real property tax purposes or by lot and block number in a final subdivision plat recorded in the real property records of Tarrant County. “PID” has the meaning set forth in Section I.A of this Service and Assessment Plan. “PID Act” means Texas Local Government Code Chapter 372, Public Improvement Assessment Act, Subchapter A, Public Improvement Districts, as amended. "PID Costs" means the Administrative Expenses and the Authorized Improvement Costs “Prepayment Costs” mean interest and expenses to the date of prepayment, plus any additional expenses related to the prepayment, reasonably expected to be incurred by or imposed upon the Town as a result of any prepayment of an Assessment. “Property Owners’ Association” means that mandatory association of all property owners in the PID other than owners only of non-benefitted property, which shall be responsible for the operation and maintenance of the Property Owner’s Association Property, public infrastructure, and the right-of-ways. “Property Owner Association Property” means property within the boundaries of the PID that is owned by or dedicated to, whether in fee simple or through an exclusive use easement, a property owners’ association. All Property Owner Association Property will be identified on approved plats. “Property Owner Association Property – Public Access” means property (as shown in Exhibit _) within the boundaries of the PID that is owned or dedicated to, whether in fee simple or through an exclusive use easement, a property owners’ association and that allows public access through public access easements or similar instruments. “Public Property” means property within the boundaries of the PID that is owned by or irrevocably offered for dedication to the federal government, the State of Texas, Tarrant County, the Town, a school district or any other public agency, whether in fee simple, through dedication by plat, or through an exclusive use easement. “Service and Assessment Plan” means this Service and Assessment Plan prepared for the PID pursuant to the PID Act, as the same may be amended from time to time. “Town” means the Town of Westlake, Texas. “Town Council” means the duly elected governing body of the Town. “Trustee” means the fiscal agent or trustee as specified in the Trust Indenture, including a substitute fiscal agent or trustee. “Zoning Ordinance” has the meaning set forth in Section I.A of this Service and Assessment Plan. 7 Section II PROPERTY INCLUDED IN THE PID Property Included in the PID The PID is presently located within the Town and contains approximately 85 acres of land. A map of the property within the PID is shown on Appendix A to this Service and Assessment Plan. At completion, the PID is expected to consist of approximately 322 residential units, approximately 1,158,299 square feet of commercial development, landscaping, and infrastructure necessary to provide roadways, drainage, and utilities for the property in the PID. The estimated number of lots and the classification of each lot are based upon the Zoning Ordinance. The property within the PID is proposed to be developed as follows: Table II-A Proposed Development Proposed Development Type Improvement Area #1 Improvement Area #2 Improvement Area #3 Planned No. of Units Unit of Measure Planned No. of Units Unit of Measure Planned No. of Units Unit of Measure Residential Condo Units (more than 3,600 sq. ft) 38 Units 0 Units 0 Units Condo Units (2,500 to 3,600sq. ft) 71 Units 0 Units 0 Units Condo Units (1,800 to 2,500 sq. ft) 6 Units 0 Units 0 Units Villa - West (more than 3,600 sq. ft) 0 Units 42 Units 0 Units Villa - West (2,500 to 3,600sq. ft) 0 Units 16 Units 0 Units Villa - West (1,800 to 2,500 sq. ft) 0 Units 69 Units 0 Units Villa - East (more than 3,600 sq. ft) 0 Units 0 Units 21 Units Villa - East (2,500 to 3,600sq. ft) 0 Units 0 Units 23 Units Villa - East (1,800 to 2,500 sq. ft) 0 Units 0 Units 36 Units Subtotal - Residential 115 Units 127 Units 80 Units Commercial Commercial - Retail 372,099 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Office 266,100 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Hospitality 255,500 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Institutional 264,600 Sq. Ft 0 Sq. Ft 0 Sq. Ft Subtotal – Commercial 1,158,299 Sq. Ft 0 Sq. Ft 0 Sq. Ft The current Parcels in the PID are shown on the Assessment Roll included as Appendix E and the map included as Appendix A. 8 The estimated number of units at the build-out of the PID is based on the land use approvals for the property, the anticipated subdivision of property in the PID, and the Developer’s estimate of the highest and best use of the property within the PID subject to the land use approvals. 9 Section III DESCRIPTION OF THE AUTHORIZED IMPROVEMENTS A. Authorized Improvements Overview Section 372.003 of the PID Act defines the improvements that may be undertaken by a municipality or county through the establishment of a public improvement district, as follows: 372.003. Authorized Improvements (a) If the governing body of a municipality or county finds that it promotes the interests of the municipality or county, the governing body may undertake an improvement project that confers a special benefit on a definable part of the municipality or county or the municipality’s extraterritorial jurisdiction. A project may be undertaken in the municipality or county or the municipality’s extraterritorial jurisdiction. (b) A public improvement may include, among others: (i) landscaping; (ii) erection of fountains, distinctive lighting, and signs; (iii) acquiring, constructing, improving, widening, narrowing, closing, or rerouting of sidewalks or of streets, any other roadways, or their rights-of way; (iv) construction or improvement of pedestrian malls; (v) acquisition and installation of pieces of art; (vi) acquisition, construction, or improvement of libraries; (vii) acquisition, construction, or improvement of off-street parking facilities; (viii) acquisition, construction, or improvement of water, wastewater, or drainage facilities or improvements; (ix) the establishment or improvement of parks; (x) projects similar to those listed in Subdivisions (i)-(x); (xi) acquisition, by purchase or otherwise, of real property in connection with an authorized improvement; (xii) special supplemental services for improvement and promotion of the district, including services relating to advertising, promotion, health and sanitation, water and wastewater, public safety, security, business recruitment, development, recreation, and cultural enhancement; and (xiii) payment of expenses incurred in the establishment, administration and operation of the district. 10 After analyzing the public improvement projects authorized by the PID Act, the Town has determined that the Authorized Improvements as described in Appendix B and shown on the diagrams included as Appendix C should be undertaken by the Town for the benefit of the property within the PID. B. Description of the Authorized Improvements The Authorized Improvements are described below. The costs of the Authorized Improvements are shown in Table III-A. The costs shown in Table III-A are estimates and may be revised in Annual Service Plan Updates, including such other improvements as deemed necessary to further improve the properties within the PID. Improvement Project A The Authorized Improvements to be constructed as Improvement Project A include roadway improvements, water distribution system improvements, storm sewer collection system improvements, wastewater collection system improvements and landscaping & public park improvements that will provide service to the property intended for development within the PID. The Authorized Improvements benefit all of the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3. As a result, Improvement Project A benefits all of the property within the PID proposed for development. Road Improvements The roadway improvements include approximately 49,116 SY of 6-inch reinforced concrete pavement, 34,506 SY of 8-inch reinforced concrete pavements, 89,500 SY of 8-inch treated sub- grade compacted to 95% SPD, striping, street signage and signals, turn lanes and bridges. A detailed description of the roadway improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All roadway improvements will be constructed according to the Town requirements. See Table III-A for cost details. Water Distribution System Improvements The water distribution system improvements consist of approximately 15,640 linear feet of 12- inch water lines, approximately 6,149 linear feet of 8-inch water lines, fire hydrants and trench safety procedures. A detailed description of the water distribution system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All water distribution system improvements will be constructed according to the Town requirements. This development will be served in its entirety by the Town for all water and sewer services. See Table III-A for cost details. Sanitary Sewer Improvements The sanitary sewer collection system improvements consist of approximately 14,554 linear feet of 8-inch PVC, including sewer laterals, manholes and trench safety procedures. A detailed description of the sanitary sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All sanitary sewer collection 11 system improvements will be constructed according to the Town requirements. See Table III-A for cost details. Storm Drainage Improvements The storm sewer collection system improvements consist of approximately 6,014 linear feet of various sized RCP pipes, manholes, junction boxes, inlets, headwalls and trench safety procedures. A detailed description of the storm sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All storm sewer collection system improvements will be constructed according to the Town requirements. See Table III-A for cost details. Landscaping Landscaping, which includes public park improvements, include the creation of a 12-acre central lake, vineyards, trees, rubble stone walls and pathways on approximately nine acres, installation of over 2½ miles of 8-12’ wide concrete paths with seating areas, public art and public lighting details, including bollards, gathering area lighting and street lighting. All landscaping improvements will be constructed according to the Town requirements. See Table III-A for cost details. The water and sanitary sewer improvements listed above help create the grid for the water line system and the sanitary sewer collection system for the property. The storm sewer improvements collect and control the runoff created on each Parcel and conveys this runoff to the large central lake, which also serves as a storm water detention pond for the property in the PID. The road improvements provide for the traffic circulation within the property, allowing access to and from the adjacent roadways to each Parcel. Duct Bank Extension The duct bank extension improvements include 4,955 linear feet of double conduit with pull boxes and 13,891 linear feet of single conduit with pull boxes that runs parallel to the street network and to be used by franchise utilities such as cable and fiber. Improvement Project B The Authorized Improvements to be constructed as Improvement Project B include a parking structure with approximately 440 parking spaces. Improvement Project B will provide service to the property intended for development with the PID. These Authorized Improvements benefit all of the property within Improvement Area #1. As shown in the map on Appendix A, the Improvement Area #1 boundary covers a portion of the property in the PID. As a result, Improvement Project B benefits the property within Improvement Area #1 of the PID proposed for development. 12 Table III-A Estimated Authorized Improvement Costs Authorized Improvements Improvement Project A Improvement Project B Total Estimated Costs Road improvements $4,389,900 $0 $4,389,900 Water distribution system improvements $1,061,720 $0 $1,061,720 Sanitary sewer collection system improvements $1,881,296 $0 $1,881,296 Storm sewer collection system improvements $1,733,872 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $1,830,501 Duct bank improvements $733,954 $0 $733,954 Other costs (See Appendix B for details) $8,694,755 $0 $8,694,755 Parking facility improvements $0 $6,160,000 $6,160,000 Total – Estimated Authorized Improvement Costs $20,325,998$6,160,000 $26,485,998 The detailed cost estimates are provided as Appendix B to this Service and Assessment Plan. The costs shown in Table III-A are current estimates and may be revised in Annual Service Plan Updates. Savings from one line item may be applied to a cost increase of an Authorized Improvement in another line item, to construct additional Authorized Improvements or to pay debt service on the Bonds, as determined by the Town. 13 Section IV SERVICE PLAN A. Sources and Uses of Funds The PID Act requires the service plan to cover a period of at least five years. The service plan is required to define the annual projected costs and indebtedness for the Authorized Improvements undertaken within the PID during the five year period. It is anticipated that it will take approximately 24 to 36 months for Improvement Project A to be constructed. The Authorized Improvement Costs of Improvement Project A and Improvement Project B, including costs related to the issuance of the Bonds and payment of expenses incurred in the establishment, administration and operation of the PID, are estimated at $36,390,000 as shown in Table IV-A. Improvement Project A is anticipated to be funded with the Series 2015 Bonds and a Reimbursement Agreement in the total amounts of $26,175,000 and $3,400,000, respectively, as shown in Table IV-A. Improvement Project B is anticipated to be funded in the total amount of $2,425,000, which shall be funded through a deferred Assessment Part B, as shown in Table IV-A. The service plan shall be reviewed and updated at least annually for the purpose of determining the annual budget for Administrative Expenses, updating the estimated Authorized Improvement costs, and updating the Assessment Rolls. Any update to this Service and Assessment Plan is herein referred as an “Annual Service Plan Update.” Table IV-A summarizes the estimated sources and uses of funds required to construct the Authorized Improvements, establish the PID, and issue the Bonds. The sources and uses of funds shown in Table V-A shall be updated each year in the Annual Service Plan Update to reflect any changes including budget revisions and Actual Costs. The Bonds shown in Table IV-A (the “Series 2015 Bonds”) are anticipated to be issued starting early 2015 and will be used to pay and/or reimburse the Developer for a portion of Improvement Project A. The remaining costs of Improvement Project A will be financed through a Reimbursement Agreement dated as of ______ (the “Reimbursement Agreement”), which is anticipated to be replaced by one or more series of future Bonds (“Future Bonds”). The Future Bonds are anticipated to be issued in 2017 after some or all of the Authorized Improvements are constructed and will be used to replace the Town’s obligations under the Reimbursement Agreement to reimburse the Developer for the remaining portion of the costs of the Authorized Improvements. 14 Table IV-A Estimated Sources and Uses Sources of Funds Series 2015 Bonds Reimbursement Agreement Deferred Assessment Part B Total Estimated Authorized Improvements Improvement Project A Improvement Project A Improvement Project B Estimated Bond par amount $26,175,000 $3,400,000 $2,425,000 $32,000,000 Developer funds $0 $0 $4,390,000 $4,390,000 Total Sources $26,175,000 $3,400,000 $6,815,000 $36,390,000 Uses of Funds Authorized Improvements Road improvements $3,767,430 $622,470 $0 $4,389,900 Water distribution system improvements $890,040 $171,680 $0 $1,061,720 Sanitary sewer improvements $1,531,196 $350,100 $0 $1,881,296 Storm drainage improvements $1,154,306 $579,566 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $0 $1,830,501 Duct bank improvements $640,304 $93,650 $0 $733,954 Other costs (See Appendix B) $8,195,623 $499,132 $0 $8,694,755 Parking facility improvement $0 $0 $6,160,000 $6,160,000 Subtotal $18,009,400 $2,316,598 $6,160,000 $26,485,998 Bond issue costs Capitalized interest $3,664,500 $238,000 $364,125 $4,072,500 Debt service reserve $2,225,600 $340,000 $485,500 $2,808,100 Other Bond issuance related costs $2,275,500 $505,402 $485,500 $3,023,402 Subtotal $8,165,600 $1,083,402 $1,335,125 $9,904,002 Total Uses $26,175,000$3,400,000$6,815,000 $36,390,000 B. Annual Projected Costs and Annual Projected Indebtedness The annual projected costs and annual projected indebtedness is shown by Table IV-B. The annual projected costs and indebtedness are subject to revision and each shall be updated in the Annual Service Plan Update to reflect any changes in the costs or indebtedness expected for each year. 15 Table IV-B Annual Projected Costs and Annual Projected Indebtedness Year Annual Projected Cost Annual Projected Indebtedness Sources other than PID Bonds 2014 $0$0$0 2015 $26,175,000$26,175,000$0 2016 $0$0$0 2017 $3,400,000$3,400,000$0 2018 $6,815,000$2,425,000$4,390,000 Total $36,390,000$32,000,000$4,390,000 The annual projected costs shown in Table IV-B are the annual expenditures relating to the Authorized Improvement Costs shown in Table III-A, including costs associated with setting up the PID and Bond issuance costs, shown in Table IV-A. The difference between the total projected cost and the total projected indebtedness is the amount contributed by the Developer. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The estimated costs and related indebtedness for Improvement Project B are not shown in Table IV-B as a result of the Assessment Part B deferral. C. Maintenance of the Authorized Improvements Administrative and operation expenses of the PID shall include the expenses of maintaining and repairing the Authorized Improvements other than the water distribution system improvements, sanitary system improvements and duct bank extension in order to operate and maintain the applicable Authorized Improvements in a manner consistent with the Town's standards for maintenance of similar public improvements throughout the Town and as further described in the Development Agreement with the Developer dated as of________. The Town shall be responsible for the maintenance and repair expenses of the water distribution system improvements, sanitary system improvements and duct bank extension. The Annual Installments may include in Administrative Expenses a Maintenance Assessment as described in V.C.3 to pay such expenses. The Town may enter into an agreement (a "Maintenance Agreement") with a Property Owners' Association ("POA") wherein the POA agrees to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement. In the event the POA fails to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement, the Town may operate, maintain and repair the applicable Authorized Improvements or contract with another third party to operate, maintain and repair the applicable Authorized Improvements. 16 Section V ASSESSMENT PLAN A. Introduction The PID Act requires the Town Council to apportion the PID Costs on the basis of special benefits conferred upon the property because of the Authorized Improvements. The PID Act provides that the PID Costs may be assessed: (i) equally per front foot or square foot; (ii) according to the value of the property as determined by the governing body, with or without regard to improvements on the property; or (iii) in any other manner that results in imposing equal shares of the cost on property similarly benefited. The PID Act further provides that the governing body may establish by ordinance or order reasonable classifications and formulas for the apportionment of the cost between the municipality and the area to be assessed and the methods of assessing the special benefits for various classes of improvements. This section of this Service and Assessment Plan describes the special benefit received by each Parcel within the PID as a result of the Authorized Improvements, provides the basis and justification for the determination that this special benefit exceeds the amount of the Assessments, and establishes the methodologies by which the Town Council allocates and reallocates the special benefit of the Authorized Improvements to Parcels in a manner that results in equal shares of the Actual Costs being apportioned to Parcels similarly benefited. The determination by the Town Council of the assessment methodologies set forth below is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer and all future owners and developers of the Assessed Property. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property as described below: 1. The Authorized Improvement Costs for Improvement Project A and Improvement Project B shall be allocated to the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property respectively, on the basis of the total estimated improvement costs that benefit each Improvement Area (“Direct Improvement Costs”) and the improvement costs that benefit the entire PID (“Common Improvement Costs), as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. 2. The Town Council has concluded that larger more expensive homes are likely to be built on the larger lots, and that larger more expensive homes are likely to make greater use of and receive greater benefit from the Authorized Improvements. In determining the relative construction costs of Parcels, the Town Council has taken in to consideration (i) the type of development (i.e., residential, commercial, etc), (ii) residential lot sizes and the size of homes likely to be built on lots of different sizes, (iii) current and projected construction costs per square foot as provided by the Developer, (iv) the Authorized Improvements to be provided and the estimated costs, and (v) the ability of different property types to utilize and benefit from the improvements. 17 3. The Assessed Property is classified into different Land Use Classes as described in Appendix D based on the type and size of proposed development on each Parcel. 4. Equivalent Units are calculated for each Land Use Class in each Improvement Area based on the relative average construction cost per unit of each Land Use Class as shown in Appendix D. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of each commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. 5. The Authorized Improvement Costs of Improvement Project A and Improvement Project B that benefit the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property, respectively, are proportionally allocated based on the total Equivalent Units estimated for each Parcel of Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. Table V-A provides the estimated allocation of costs of the Authorized Improvements. B. Special Benefit Assessed Property must receive a direct and special benefit from the Authorized Improvements, and this benefit must be equal to or greater than the amount of the Assessments. For the purpose of this Service and Assessment Plan, special benefit means a specific and localized benefit, and a quantifiable amount of benefit, that infrastructure has on a tract of land. An example is a roadway providing a specific benefit to the tracts of land immediately in the vicinity of the roadway, for without its construction, the tracts near a proposed roadway would likely remain underdeveloped. The quantifiable benefit may be expressed as the increased value of the land and improvements located on the land because of the placement of public infrastructure near that land. The Authorized Improvements (more particularly described in line-item format in Appendix B to this Service and Assessment Plan) and the costs of issuance and payment of costs incurred in the establishment of the PID shown in Table IV-A are authorized by the Act. These improvements are provided specifically for the benefit of the Assessed Property. Each owner of the Assessed Property has acknowledged that the Authorized Improvements confer a special benefit on the Assessed Property and has consented to the imposition of the Assessments to pay for the Actual Costs associated therewith. Pursuant to the Landowner’s Agreement, each owner of the Assessed Property has ratified, confirmed, accepted, agreed to and approved; (i) the determinations and finding by the Town Council as to the special benefits described in this Service and Assessment Plan and the Assessment Ordinance; (ii) the Service and Assessment Plan and the Assessment Ordinance, and (iii) the levying of Assessments on the Assessed Property. Each of the owners is acting in its interest in consenting to this apportionment and levying of the Assessments because the special benefit conferred upon the Assessed Property by the Authorized Improvements exceeds the amount of the Assessments. The public improvements provide a special benefit to the Assessed Property as a result of the close proximity of these improvements to the Assessed Property and the specific purpose of 18 these improvements of providing infrastructure for the Assessed Property so that the property may be developed as proposed. In other words, the Assessed Property could not be used in the manner proposed without the construction of the Authorized Improvements. The Authorized Improvements are being provided specifically to meet the needs of the Assessed Property as required for the proposed use of the property. The Assessments are being levied to provide the Authorized Improvements that are required for the highest and best use of the Assessed Property (i.e., the use of the property that is most valuable, including any costs associated with that use). Highest and best use can be defined as “the reasonably probable and legal use of property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.” (Dictionary of Real Estate Appraisal, Third Edition.) The Authorized Improvements are expected to be required for the proposed use of the Assessed Property to be physically possible, appropriately supported, financially feasible, and maximally productive. The Developer has evaluated the potential use of the property and has determined that the highest and best use of the property is the use intended and the legal use for the property as described in Section II of this Service and Assessment Plan. The use of the Assessed Property as described herein will require the construction of the Authorized Improvements. The special assessments will repay financing that is on advantageous terms, as the Bonds issued to finance the public improvements will pay interest that is exempt from federal income tax. As a result, all other terms being equal (e.g., maturity, fixed vs. variable rate, risk and credit quality), the tax-exempt bonds will have a lower interest rate than debt that is not tax-exempt. Use of the Assessed Property as described in this Service and Assessment Plan and as authorized by the Zoning Ordinance requires that Authorized Improvements be acquired, constructed, installed, or improved. Funding the Actual Costs through the PID has been determined by the Town Council to be the most beneficial means of doing so. Since the Authorized Improvements are required for the highest and best use of the property, and the PID provides the most beneficial means of financing the Authorized Improvements, the improvements provided by the PID will be equal to or greater than the cost of the Assessments levied on the property. Accordingly, the Assessments result in a special benefit to the Assessed Property, and this special benefit exceeds the amount of the Assessments. This conclusion is based on and supported by the evidence, information, and testimony provided to the Town Council. In summary, the Assessments result in a special benefit to the Assessed Property for the following reasons: 1. The Authorized Improvements are being provided specifically for the use of the Assessed Property and a special benefit to the Assessed Property as a result; 2. The Developer has consented to the imposition of the Assessments for the purpose of providing the Authorized Improvements and the Developer is acting in its interest by consenting to this imposition; 19 3. The Authorized Improvements are required for the highest and best use of the property; 4. The highest and best use of the Assessed Property is the use of the Assessed Property that is most valuable (including any costs associated with the use of the Assessed Property); 5. Financing of the PID Costs by establishing the PID is determined to be the most beneficial means of providing for the Authorized Improvements; and, 6. As a result, the special benefits to the Assessed Property from the Authorized Improvements will be equal to or greater than the Assessments. C. Assessment Methodology C.1 Assessment Part A The Actual Costs of Improvement Project A may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on the Assessed Property in each Improvement Area similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of Improvement Project A to be financed with the Series 2015 Bonds and the Reimbursement Agreement shall be allocated to the Improvement Area #1 Assessed Property by spreading the entire Assessment Part A across the Parcels based on the estimated Equivalent Units as calculated and shown in Appendix D using the types and number of lots anticipated to be developed on each Parcel of the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. As part of the determination as to the ability of different Land Use Classes to utilize and benefit from the Authorized Improvements, the Town Council has taken into consideration that larger, more expensive homes, on average, will create more vehicle trips and greater demands for water and wastewater consumption, and larger, more expensive homes are likely to be built on larger, more valuable lots. Based on the estimates of the costs of Improvement Project A that benefit the Assessed Property in all Improvement Areas, as provided by G&A Consultants, LLC., and set forth in Table III-A, the Town Council has determined that the benefit to the Assessed Property in each Improvement Area, is at least equal to the Assessment Part A levied on the Assessed Property in each Improvement Area. The Assessment Part A and Annual Installment Part A for each Parcel or Lot of the Assessed Property in each Improvement Area are shown on the Assessment Rolls, attached as Appendix E, and no Assessment Part A shall be changed except as authorized by this Service and Assessment Plan or the PID Act. Upon subdivisions of any Parcel, the Assessment Part A applicable to a Parcel will be apportioned pro rata to the resulting Parcels based on the Equivalent Units of each newly created Parcel. For residential Lots, when final residential building sites are platted, Assessment Part A will be apportioned proportionately among each Land Use Class based on the ratio of the Equivalent Unit applicable to each Land Use Class at the time Lots are platted to the total Equivalent Units of all Lots in the platted Parcel, as determined by the Administrator and confirmed by the Town Council. The result of this approach is that each final Lot within a recorded subdivision plat with similar values will have the same Assessment Part A, with larger, 20 more valuable Lots having a proportionately larger share of the Assessments than smaller, less valuable Lots. The detailed calculation of the Equivalent Units and allocation of Assessment Part A to each Improvement Area is shown in Appendix D. Table V-A below sets forth a summary of Assessment Part A per unit for each of the Land Use Classes in each Improvement Area of the PID. Table V-A Assessment Part A per Unit Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Improvement Area #1 Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Subtotal: Improvement Area #1 $19,087,620.54 Improvement Area #2 Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Subtotal: Improvement Area #2 $5,622,857.55 Improvement Area #3 Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Subtotal: Improvement Area #3 $4,864,521.90 Grand Total Assessment Part A $29,575,000.00 C.2 Assessment Part B The Actual Costs of Improvement Project B may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on Improvement Area #1 Assessed Property similarly benefited. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The methodology for allocating Assessment Part B to each 21 Parcel in Improvement Area #1 will be provided as part of an Annual Service Plan Update at the Assessment Part B is levied. C.3 Maintenance Assessment The annual Maintenance Assessment may be assessed using any methodology that results in the imposition of equal shares of the Maintenance Assessment on Assessed Property similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Maintenance Assessment to be collected in any given year shall be allocated to each Improvement Area based on a ratio of the total Equivalent Units for each Improvement Area. In recognition of the higher traffic generated by the non-residential Land Use Classes in Improvement Area #1 as compared to the residential Land Use Classes, the Town has determined approximately 65% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the non-residential Land Use Classes and the remaining 35% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the residential Land Use Classes. The total amount of Maintenance Assessment allocated to the non- residential Land Use Classes in Improvement Area #1 will then be allocated to each Land Use Class based on the relative Equivalent Unit of each Land Use Class. The total amount of Maintenance Assessment allocated to the residential Land Use Classes in Improvement Area #1 will be allocated to each residential unit equally based on the number of units. The total amount of Maintenance Assessment allocated to Improvement Area #2 and Improvement Area #3 will also be allocated to each residential unit equally based on the number of units. D. Assessments The Assessments for the Authorized Improvements will be levied on each Parcel according to the Assessment Rolls, attached hereto as Appendix E. The Assessment Part A and Assessment Part B on each Parcel was allocated as explained above based on the development to occur on each Parcel and the Assessment per unit by Land Use Class. The Annual Installment Part A and Annual Installment Part B will be collected at the time and in the amounts shown on the Assessment Rolls, subject to any revisions made during an Annual Service Plan Update. E. Administrative Expenses The cost of administering the PID and collecting the Annual Installments shall be paid for on a pro rata basis by each Parcel based on the amount of Assessment levied against the Parcel. The Administrative Expenses shall be collected as part of and in the same manner as Annual Installments in the amounts shown on the Assessment Roll, which may be revised based on actual costs incurred in Annual Service Plan Updates. Administrative Expenses other than Maintenance Assessments shall be allocated among Parcels in proportion to the amount of the respective Annual Installments for the Parcels. G. Additional Interest Pursuant to the PID Act, the interest rate for Assessments may exceed the actual interest rate per annum paid on the Bonds by no more than one half of one percent (0.50%). The interest rate used to determine the Assessments is one half of one percent (0.50%) per annum higher than the actual rate paid on the Bonds. The Town may allocate up to 0.50% of the interest rate component 22 of the Annual Installments to pay for a prepayment reserve, delinquency reserve, Administrative Expenses, improvement costs, any other use that benefits the Assessed Property or reduce the Assessments, as determined by the Town Council. 1. Prepayment Reserve The Town Council has provided for up to 0.20% of the additional interest may be allocated to fund the associated interest charged between the date of prepayment of an Assessment and the date on which Bonds are prepaid. The actual amount of the additional interest to be set aside in the prepayment reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 2. Delinquency Reserve Up to 0.30% of the additional interest component of the Annual Installments may be allocated to offset any possible delinquent payments. The actual amount of the additional interest to be set aside in the delinquency reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 23 Section VI TERMS OF THE ASSESSMENTS A. Amount of Assessments and Annual Installments The Assessments and Annual Installments for each Parcel of Assessed Property located within the PID are shown on the Assessment Rolls, attached as Appendix E, and no Assessment shall be changed except as authorized by this Service and Assessment Plan and the PID Act. The Annual Installments shall be collected in an amount sufficient to pay principal and interest on the Bonds and amounts payable pursuant to the Reimbursement Agreement, to fund the prepayment reserve and delinquency reserve described in Section V and to pay Administrative Expenses. The annual Maintenance Assessments shall be collected in an amount sufficient to pay the estimated costs of maintenance included in the Authorized Improvements maintenance budget for the year and/or an amount sufficient to replenish withdrawals during the previous year(s), if any, from any funds or accounts established and maintained for such purpose. B. Reallocation of Assessments 1. Subdivision Upon the subdivision of any Parcel, the Assessment Part A for the Parcel prior to the subdivision shall be reallocated among the new subdivided Parcels according to the following formula: A = B x (C ÷ D) Where the terms have the following meanings: A = the Assessment Part A for each new subdivided Parcel B = the Assessment Part A for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels Similarly, upon the subdivision of any Parcel, the Assessment Part B for the Parcel prior to the subdivision, if any, shall be reallocated among the new subdivided Parcels according to the following formula: A = B x (C ÷ D) Where the terms have the following meanings: A = the Assessment Part B for each new subdivided Parcel B = the Assessment Part B for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel 24 D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels The calculation of the estimated number of units to be built on a Parcel shall be performed by the Administrator and confirmed by the Town Council based on the information available regarding the use of the Parcel. The estimate as confirmed shall be conclusive. The number of units to be built on a Parcel may be estimated by net land area and reasonable density ratios. The sum of the Assessment Part A for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, the sum of the Assessment Part B for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 2. Consolidation Upon the consolidation of two or more Parcels, the Assessment Part A for the consolidated Parcel shall be the sum of the Assessment Part A for the Parcels prior to consolidation. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, upon the consolidation of two or more Parcels, the Assessment Part B for the consolidated Parcel shall be the sum of the Assessment Part B for the Parcels prior to consolidation. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 3. Payment of Excess Assessment If a subdivision of a Parcel or consolidation of Parcels results in a reallocated Assessment Part A or Assessment Part B for a Parcel that would exceed the respective Assessment per Equivalent Unit shown in this Service and Assessment Plan for the applicable Land Use Class (the "Maximum Assessment"), the owner shall pay to the Town at the time of the subdivision or consolidation the amount by which the reallocated Assessment for the Parcel exceeds the 25 Maximum Assessment plus, if applicable, accrued interest through the date of such payment. Prepayment Costs, if any, that result from such owner-initiated subdivision or consolidation shall be paid by the owner to the Town at the time of the subdivision or consolidation. The Town Council will not approve for recordation any subdivision plat within the PID until subdivision regulation and platting requirements are fulfilled and the Administrator has notified the Town Council in writing that (a) the plat does not contain any Parcels for which the Assessment exceeds the Maximum Assessment, or (b) the appropriate payment has been received by the Town for any Parcel for which the allocated Assessment would have exceeded the Maximum Assessment. Payments made by an owner pursuant to this section shall be used to reduce the outstanding principal amount of Bonds and reduce the Assessments and Annual installments for the affected Parcels, which reductions shall be calculated by the Administrator in accordance with the applicable Bond Indenture and approved by the Town Council in the next Annual Service Plan Update. If Bonds have not been issued, payments made by an owner pursuant to this section shall be used to reduce the outstanding principal due under the Reimbursement Agreement and reduce the Assessments and Annual Installments for the affected Parcels, which reductions shall be calculated by the Administrator and approved by the Town Council in the next Annual Service Plan Update. C. Mandatory Prepayment of Assessments 1. If at any time the Assessment per Equivalent Unit on a Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan as a result of any changes in Land Use Class, subdivision, consolidation or reallocation of the Assessment authorized by this Service and Assessment Plan and initiated by the owner of the Parcel, then such owner shall pay to the Town prior to the recordation of the document subdividing the Parcel the amount calculated by the Administrator by which the Assessment per Equivalent Unit for the Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan. The Town shall not approve the recordation of a plat or other document subdividing a Parcel without a letter from the Administrator either (a) confirming that the Assessment per Equivalent Unit for any new Parcel created by the subdivision will not exceed the Maximum Assessment for each Parcel, or (b) confirming the payment of the Assessments, plus all Prepayment Costs, as provided for herein. 2. If a Parcel subject to Assessment Part A and/or Assessment Part B is transferred to a party that is exempt from the payment of the Assessments under applicable law, or if an owner causes a Parcel subject to Assessments to become Non-Benefited Property, the owner of such Parcel shall pay to the Town the full amount of the Assessment Part A and/or Assessment Part B on such Parcel, plus all Prepayment Costs, prior to any such transfer or act. 3. The payments required above shall be treated the same as any Assessment that is due and owing under the Act, the Assessment Ordinance, and this Service and Assessment Plan, including the same lien priority, penalties, procedures, and foreclosure specified by the Act. D. Reduction of Assessments 26 1. If after all Authorized Improvements to be funded with a series of Bonds have been completed and Actual Costs for such Authorized Improvements are less than the Actual Costs used to calculate the Assessments securing such series of Bonds, resulting in excess Bond proceeds being available to redeem Bonds of such series, then the Assessment securing such series of Bonds for each Parcel of Assessed Property shall be reduced by the Town Council pro rata such that the sum of the resulting reduced Assessments for all Assessed Properties equals the actual reduced Actual Costs and such excess Bond proceeds shall applied to redeem Bonds of such series. The Assessments shall not be reduced to an amount less than the related outstanding series of Bonds. 2. If all the Authorized Improvements are not undertaken, resulting in excess Bond proceeds being available to redeem Bonds, then the Assessments and Annual Installments for each Parcel shall be appropriately reduced by the Town Council to reflect only the amounts required to repay the Bonds, including interest on the Bonds and Administrative Expenses, and such excess Bond proceeds shall be applied to redeem Bonds. The Town Council may reduce the Assessments and the Annual Installments for each Parcel (i) in amounts that would result in the Assessments and Annual Installments to more accurately reflect the Authorized Improvements provided for each Parcel, (ii) by an equal percentage calculated based on Equivalent Units, or (iii) in another method if the Town Council determines such method would better reflect the benefit received by the Parcels from the Authorized Improvements provided to the Parcels. E. Payment of Assessments 1. Payment in Full (a) The Assessment Part A and/or Assessment Part B for any Parcel may be paid in full at any time. Such payment shall include all Prepayment Costs. If prepayment in full will result in redemption of Bonds, the payment amount shall be reduced by the amount, if any, of reserve funds applied to the redemption under the Trust Indenture, net of any other costs applicable to the redemption of Bonds. (b) If an Annual Installment has been billed prior to payment in full of an Assessment, the Annual Installment shall be due and payable and shall be credited against the payment-in-full amount. (c) Upon payment in full of the Assessment and all Prepayment Costs, the Town shall deposit the payment in accordance with the Trust Indenture; whereupon, the Assessment shall be reduced to zero, and the owner’s obligation to pay the Assessment and Annual Installments thereof shall automatically terminate. (d) At the option of the owner, the Assessment Part A and/or Assessment Part B on any Parcel plus Prepayment Costs may be paid in part at any time. Such prepayment shall include all Prepayment Costs. Upon the payment of such amounts for a Parcel, the respective Assessment for the Parcel shall be reduced, the Assessment Roll shall be updated to reflect such partial payment, and the obligation to pay the respective Annual Installment for such Parcel shall be reduced to the extent the partial payment is made. 27 2. Payment in Annual Installments The Act provides that an Assessment for a Parcel may be paid in full at any time. If not paid in full, the Act authorizes the Town to collect interest, administrative expenses and other authorized charges in Annual Installments. An Assessment for a Parcel that is not paid in full will be collected in Annual Installments each year in the amounts shown in the Assessment Rolls, as updated as provided for herein, which include interest, Administrative Expenses, prepayment reserve and delinquency reserve. Payment of the Annual Installments shall commence with tax bills mailed after the initial issuance of Bonds. Each Assessment shall include an interest component of equal to (i) the actual interest rate paid on the Bonds and (ii) up to 0.5% per annum. The Assessment Roll sets forth for each year the Annual Installment for each Parcel based on an estimated interest rate of 7% on the Series 2015 Bonds, an estimated interest rate of 6.72% on the Reimbursement Agreement and additional interest at the rate of 0.5% for administrative expenses, prepayment reserve and delinquency reserve. Furthermore, the Annual Installments may not exceed the amounts shown on the Assessment Rolls. The Assessment Rolls, to be updated with the actual interest rates on the Bonds and the Reimbursement Agreement once the Bonds are issued and/or the Reimbursement Agreement is executed, are shown as Appendix E. The Annual Installment Part A and Annual Installment Part B shall be reduced in the Service and Assessment Plan or Annual Service Plan Updates to equal the actual costs of repaying the Bonds, the Reimbursement Agreement and actual Administrative Expenses (as provided for in the definitions of such terms), taking into consideration any other available funds for these costs, such as interest income on account balances. The Town reserves and shall have the right and option to refund the Bonds in accordance with Section 372.027 of the PID Act. In the event of such refunding, the Administrator shall recalculate the Annual Installments and , and if necessary, may adjust the amount of the Annual Installments so that total Annual Installments of Assessments will be produced in annual amounts that are required to pay the refunding bonds when due and payable as required by and established in the ordinance and/or the indenture authorizing and securing the refunding bonds, and such refunding bonds shall constitute Bonds for purposes of this Service and Assessment Plan. F. Collection of Annual Installments No less frequently than annually, the Administrator shall prepare, and the Town Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual Installments Part A, Annual Installments Part B and annual Maintenance Assessments, if any. Each Annual Service Plan Update shall include updated Assessment Rolls and calculations of the Annual Installment Part A, Annual Installment Part B and Annual Parcel Maintenance Assessment for each Parcel. Each Annual Installment shall be reduced by any credits applied under the applicable Trust Indenture, such as capitalized interest, interest earnings on any account balances, and any other funds available to the Trustee for such purpose, including any existing deposits for a prepayment reserve. Annual Installments and annual Maintenance Assessments shall be collected by the Town in the same manner and at the same time as ad 28 valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. The Town Council may provide for other means of collecting the Annual Installments and annual Maintenance Assessments to the extent permitted under the PID Act. The Assessments shall have lien priority as specified in the Act. Any sale of property for nonpayment of the Annual Installments shall be subject to the lien established for the remaining unpaid Annual Installments against such property and such property may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non-delinquent Annual Installments against such property as they become due and payable. Any party taking title to a Parcel, including a buyer at a foreclosure sale, shall take title to the Parcel subject to the obligation to pay the Assessment on such Parcel thereafter as provided for herein. If for any reason the Assessment may not be collected thereafter, the Assessment for the Parcel, along with other charges and credits as would apply for a prepayment of the Assessment, shall be due and payable at the time of the transfer without further action required by the Town Council. 29 Section VII THE ASSESSMENT ROLL A. The Assessment Roll Each Parcel within the PID has been evaluated by the Town Council (based on the Zoning Ordinance, developable area, proposed Property Owner Association Property and Public Property, the Authorized Improvements, best and highest use of land, and other development factors deemed relevant by the Town Council) to determine the Assessed Property within each Parcel. The Assessed Property in each Improvement Area will be assessed for the special benefits conferred upon the property as a result of the Authorized Improvements that benefit the property within each Improvement Area of the PID. Table IV-A summarizes the $36,390,000 in special benefit received by the Assessed Property from the Authorized Improvements, the costs of the PID formation, and Bond issuance costs. The total amount of the Bonds and the Reimbursement Agreement is $29,575,000, which is less than the benefit received by the Assessed Property, and as such the total Assessment Part A for Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property is $29,575,000. The total amount of deferred Assessment Part B for Improvement Area #1 Assessed Property is $2,425,000, which shall be collected with annual Administrative Expenses and other authorized charges once levied. The Assessment Part A for each Parcel of Assessed Property in each Improvement Area is calculated based on the allocation methodologies described in Section V.C and Appendix D of this Service and Assessment Plan. The Assessment Rolls for each Improvement Area are attached hereto as Appendix E. B. Annual Assessment Roll Updates The Administrator shall prepare, and shall submit to the Town Council for approval, annual updates to the Assessment Rolls in conjunction with the Annual Service Plan Update to reflect the following matters, together with any other changes helpful to the Administrator or the Town and permitted by the Act: (i) the identification of each Parcel (ii) the Assessment for each Parcel of Assessed Property, including any adjustments authorized by this Service and Assessment Plan or in the PID Act; (iii) the Annual Installment for the Assessed Property for the year (if the Assessment is payable in installments); (iii) the annual Maintenance Assessment the Assessed Property for the year (if any); and (iv) payments of the Assessment, if any, as provided by Section VI.E of this Service and Assessment Plan. Once the Bonds are issued and/or the Reimbursement Agreement is executed, the Assessment Rolls shall be updated, which update may be done in the next Annual Service Plan Update, to reflect any changes resulting from the issuance of the Bonds and/or execution of the Reimbursement Agreement. This update shall reflect the actual interest on the Bonds and/or the Reimbursement Agreement on which the Annual Installments shall be paid, any reduction in the Assessments, and any revisions in the Actual Costs to be funded by the Bonds and/or the Reimbursement Agreement and Developer funds. 30 Section VIII MISCELLANEOUS PROVISIONS A. Administrative Review The Town may elect to designate a third party to serve as Administrator. The Town shall notify Developer in writing at least thirty (30) days in advance before appointing a third party Administrator. To the extent consistent with the Act, an owner of an Assessed Parcel claiming that a calculation error has been made in the Assessment Roll(s), including the calculation of the Annual Installment, shall send a written notice describing the error to the Town not later than thirty (30) days after the date any amount which is alleged to be incorrect is due prior to seeking any other remedy. The Administrator shall promptly review the notice, and if necessary, meet with the Assessed Parcel owner, consider written and oral evidence regarding the alleged error and decide whether, in fact, such a calculation error occurred. If the Administrator determines that a calculation error has been made and the Assessment Roll should be modified or changed in favor of the Assessed Parcel owner, such change or modification shall be presented to the Town Council for approval to the extent permitted by the Act. A cash refund may not be made for any amount previously paid by the Assessed Parcel owner (except for the final year during which the Annual Installment shall be collected or if it is determined there are sufficient funds to meet the expenses of the PID for the current year), but an adjustment may be made in the amount of the Annual Installment to be paid in the following year. The decision of the Administrator regarding a calculation error relating to the Assessment Roll may be appealed to the Town Council. Any amendments made to the Assessment Roll(s) pursuant to calculation errors shall be made pursuant to the PID Act. The decision of the Administrator, or if such decision is appealed to the Town Council, the decision of the Town Council shall be conclusive as long as there is a reasonable basis for such determination. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any other appeal or legal action by such owner. B. Termination of Collection of Assessments Each Assessment shall be extinguished on the date the Assessment is paid in full, including unpaid Annual Installments. After the extinguishment of an Assessment and the collection of any delinquent Annual Installments and Delinquent Collection Costs, the Town shall provide the owner of the affected Parcel a recordable notice of the satisfaction and release of the Assessment. C. Amendments Amendments to the Service and Assessment Plan can be made as permitted or required by the PID Act and under Texas law. The Town Council reserves the right to the extent permitted by the Act to amend this Service and Assessment Plan without notice under the Act and without notice to property owners of Parcels: (i) to correct mistakes and clerical errors; (ii) to clarify ambiguities; and (iii) to provide 31 procedures for the collection and enforcement of Assessments, Prepayment Costs, Collection Costs, and other charges imposed by the Service and Assessment Plan. D. Administration and Interpretation of Provisions The Town Council shall administer the PID, this Service and Assessment Plan, and all Annual Service Plan Updates consistent with the PID Act, and shall make all interpretations and determinations related to the application of this Service and Assessment Plan unless stated otherwise herein or in the Trust Indenture, such determination shall be conclusive. E. Severability If any provision, section, subsection, sentence, clause or phrase of this Service and Assessment Plan or the application of same to an Assessed Parcel or any person or set of circumstances is for any reason held to be unconstitutional, void or invalid, the validity of the remaining portions of this Service and Assessment Plan or the application to other persons or sets of circumstances shall not be affected thereby, it being the intent of the Town Council in adopting this Service and Assessment Plan that no part hereof or provision or regulation contained herein shall become inoperative or fail by reason of any unconstitutionality, voidness or invalidity of any other part hereof, and all provisions of this Service and Assessment Plan are declared to be severable for that purpose. If any provision of this Service and Assessment Plan is determined by a court to be unenforceable, the unenforceable provision shall be deleted from this Service and Assessment Plan and the unenforceable provision shall, to the extent possible, be rewritten to be enforceable and to give effect to the intent of the Town. Draft Appendix A The PID MAP �O c v m 114 �9 OCL O R� - IMPROVEMENT AREA Ee COMMON-TO-ALL ENTRADA TOWN OF WESTLAKE o€ TARRANT COUNTY, TEXAS SUEPLANNING CMEN(ENEEtWG PLATTING CONSULTANTS, LLC q0A UMSII$VH M LANDSCAPEAACMEMM TBPE Finn Na.1798 t t t Hillside Ddve•Lemsvilla TX 75057•P:972.438.9712-F'.972,436 9715 TBPLS Firm 6t0 Byron Nelson Blvd.Ste 114•Roanoke,TX 75262•P:682.831.9712•F:817.8904043 No.10047700 "'a DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 �Q v m LO 1,14 S14 Area #11 a C� / a o � ❑[ so �y �9 O IMPROVEMENT AREA #1 MIXED USE VILLAGE CORE ENTRADA P TOWN OF WESTLAKE TARRANT COUNTY, TEXAS q MEPLANNING CrOLENc�xi PLATTING CONSULTANTS, LLC = MMIN11QVEnNG LANDKAPEARCHUECCM TBPE Firm i No.1]98 111 HiIIsWe No-Lewisville,TX]505]•R 972 43&9712•F:9]2436.9]15 TBPLS Firm 610 Byron Nelson Blvd,Ste 114•Roanoke,TX 76262•P:682,831 9712•F 817 890 4043 No.1004]]00 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 CO Q TEXAS a J � o � `r0 C9 0 IMPROVEMENT AREA #2 WEST RESIDENTIAL ENTRADA e TOWN OF WESTLAKE o TARRANT COUNTY, TEXAS q9MPLANNING CriZENG110MM PLATTING CONSULTANTS, LLC LANDSURVEMG LANDSCAPE ARCMECPORE T6PE Fina Ra No.1798 111 Hillsitle Dnve•Lewisville.T 75057•P:97243&9712 9712-F:972.436.9715 TSPLS Finn 610 Byron Nelson Slvtl.Ste 114.Roanoke.TX 76262.P:682.831.9712•F'.817.890 4043 No.10047700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 121391 � O � n �O v CO _ TEXAS Q ED wl O o � �O C9 O ❑❑� IMPROVEMENT AREA #3 EAST RESIDENTIAL ENTRADA TOWN OF WESTLAKE TARRANT COUNTY, TEXAS UMPLANNING CFMEHGAaMRQAi PLATTING CONSULTANTS, LLC LANDSOYVB M IAND,SCAPEARCHTrECLVRE TBPE Ft. i No.1798 11 t HiIlsiGe Dnve-Lewisville,TX 75057•P:972,436 9712•F:972 436.9715 TSPLS Finn 610 Byron Nelson Blvd,Ste 114•Roanoke,TX 76262•P:682S31.9712•F.817.690 4003 No.10007700 DRAWN BY:JCM DATE: 05/14/2014 SCALE:1"=500' JOB. NO. 12139 Draft Appendix B ESTIMATED COSTS OF AUTHORIZED IMPROVEMENTS Im p r o v e m e n t P r o j e c t B (t o b e t o b e f u n d e d wi t h S e r i e s 2 0 1 5 Bo n d s ) (i n i t i a l l y f u n d e d wi t h R e i m b u r s e m e n t Ag r e e m e n t ) To t a l Im p r o v e m e n t Pr o j e c t A ( D e f e r r e d A s s e s s m e n t s ) Pa v i n g , S t r i p i n g , T r a f f i c s i g n a l $ 4 , 3 8 9 , 9 0 0 $ 3 , 7 6 7 , 4 3 0 $ 6 2 2 , 4 7 0 $ 4 , 3 8 9 , 9 0 0 $ 0 Wa t e r d i s t r i b u t i o n s y s t e m i m p r o v e m e n t s $ 1 , 0 6 1 , 7 2 0 $ 8 9 0 , 0 4 0 $ 1 7 1 , 6 8 0 $ 1 , 0 6 1 , 7 2 0 $ 0 Se w e r c o l l e c t i o n s y s t e m i m p r o v e m e n t s $ 1 , 8 8 1 , 2 9 6 $ 1 , 5 3 1 , 1 9 6 $ 3 5 0 , 1 0 0 $ 1 , 8 8 1 , 2 9 6 $ 0 St o r m d r a i n a g e c o l l e c t i o n s y s t e m i m p r o v e m e n t s $ 1 , 7 3 3 , 8 7 2 $ 1 , 1 5 4 , 3 0 6 $ 5 7 9 , 5 6 6 $ 1 , 7 3 3 , 8 7 2 $ 0 La n d s c a p i n g Pe r i m e t e r l a n d s c a p e b u f f e r i m p r o v e m e n t s $ 1 , 8 3 0 , 5 0 1 $ 1 , 8 3 0 , 5 0 1 $ 0 $ 1 , 8 3 0 , 5 0 1 $ 0 Du c t b a n k i m p r o v e m e n t s Si n g l e d u c t b a n k $ 4 8 6 , 1 8 4 $ 3 9 2 , 5 3 4 $ 9 3 , 6 5 0 $ 4 8 6 , 1 8 4 $ 0 Do u b l e D u c t B a n k $ 2 4 7 , 7 7 0 $ 2 4 7 , 7 7 0 $ 0 $ 2 4 7 , 7 7 0 $ 0 Ot h e r c o s t s $0 Pu b l i c s i d e w a l k s $ 4 3 2 , 0 0 0 $ 4 3 2 , 0 0 0 $ 0 $ 4 3 2 , 0 0 0 $ 0 Re t a i n i n g w a l l + / - 1 0 ' a v e r a g e h t . $ 1 , 8 8 9 , 7 3 0 $ 1 , 8 8 9 , 7 3 0 $ 0 $ 1 , 8 8 9 , 7 3 0 $ 0 Un c l a s s i f i e d e x c a v a t i o n ( c u t b a n k y a r d s ) $ 1 , 1 5 5 , 0 0 0 $ 1 , 1 5 5 , 0 0 0 $ 0 $ 1 , 1 5 5 , 0 0 0 $ 0 St r e e t l i g h t s $ 8 4 , 0 0 0 $ 8 4 , 0 0 0 $ 0 $ 8 4 , 0 0 0 $ 0 Bo l l a r d l i g h t s $ 1 5 0 , 0 0 0 $ 1 5 0 , 0 0 0 $ 0 $ 1 5 0 , 0 0 0 $ 0 Ir o n o r n a m e n t b e n c h e s a n d o t h e r s e a t i n g $ 2 3 8 , 5 0 0 $ 2 3 8 , 5 0 0 $ 0 $ 2 3 8 , 5 0 0 $ 0 Ri g h t - o f - w a y $ 0 $ 0 $ 0 $ 0 $ 0 R. O . W S o d $ 9 , 7 5 8 $ 9 , 7 5 8 $ 0 $ 9 , 7 5 8 Ge o t e c h $ 4 3 0 , 0 0 0 $ 3 8 0 , 0 0 0 $ 5 0 , 0 0 0 $ 4 3 0 , 0 0 0 $ 0 Er o s i o n c o n t r o l $ 2 6 0 , 0 0 0 $ 2 6 0 , 0 0 0 $ 0 $ 2 6 0 , 0 0 0 $ 0 Si g n s $ 7 5 , 0 0 0 $ 7 0 , 0 0 0 $ 5 , 0 0 0 $ 7 5 , 0 0 0 $ 0 La r g e c a p a c i t y w e l l $ 0 $ 0 $ 0 $ 0 $ 0 En g i n e e r i n g , s u r v e y i n g , c o n s t r u c t i o n m a n a g e m e n t $ 1 , 8 8 2 , 8 3 1 $ 1 , 7 6 4 , 4 7 0 $ 1 1 8 , 3 6 1 $ 1 , 8 8 2 , 8 3 1 $ 0 Bo n d s $ 1 8 1 , 3 3 5 $ 1 4 6 , 8 5 9 $ 3 4 , 4 7 6 $ 1 8 1 , 3 3 5 $ 0 In s p e c t i o n f e e s $ 9 2 2 , 0 7 8 $ 8 1 3 , 0 3 0 $ 1 0 9 , 0 4 8 $ 9 2 2 , 0 7 8 $ 0 Co n t i n g e n c y & p u b l i c p a r k i n g $ 9 8 4 , 5 2 3 $ 8 0 2 , 2 7 6 $ 1 8 2 , 2 4 7 $ 9 8 4 , 5 2 3 $ 0 S u b t o t a l : O t h e r c o s t s $ 8 , 6 9 4 , 7 5 5 $ 8 , 1 9 5 , 6 2 3 $ 4 9 9 , 1 3 2 $ 8 , 6 9 4 , 7 5 5 $ 0 Pa r k i n g f a c i l i t y i m p r o v e m e n t s $ 6 , 1 6 0 , 0 0 0 $ 0 $ 0 $ 0 $ 6 , 1 6 0 , 0 0 0 $2 6 , 4 8 5 , 9 9 8 $ 1 8 , 0 0 9 , 4 0 0 $ 2 , 3 1 6 , 5 9 8 $ 2 0 , 3 2 5 , 9 9 8 $ 6 , 1 6 0 , 0 0 0 Es t i m a t e d B o n d i s s u a n c e c o s t s Ca p i t a l i z e d I n t e r e s t $ 4 , 0 7 2 , 5 0 0 $ 3 , 6 6 4 , 5 0 0 $ 2 3 8 , 0 0 0 $ 3 , 9 0 2 , 5 0 0 $ 1 7 0 , 0 0 0 De b t S e r v i c e R e s e r v e F u n d $ 2 , 8 0 8 , 1 0 0 $ 2 , 2 2 5 , 6 0 0 $ 3 4 0 , 0 0 0 $ 2 , 5 6 5 , 6 0 0 $ 2 4 2 , 5 0 0 Ot h e r b o n d i s s u e c o s t s $ 3 , 0 2 3 , 4 0 2 $ 2 , 2 7 5 , 5 0 0 $ 5 0 5 , 4 0 2 $ 2 , 7 8 0 , 9 0 2 $ 2 4 2 , 5 0 0 Su b t o t a l : E s t i m a t e d B o n d i s s u a n c e c o s t s $9 , 9 0 4 , 0 0 2 $ 8 , 1 6 5 , 6 0 0 $ 1 , 0 8 3 , 4 0 2 $ 9 , 2 4 9 , 0 0 2 $ 6 5 5 , 0 0 0 Gr a n d T o t a l A u t h o r i z e d I m p r o v e m e n t C o s t s $ 3 6 , 3 9 0 , 0 0 0 $ 2 6 , 1 7 5 , 0 0 0 $ 3 , 4 0 0 , 0 0 0 $ 2 9 , 5 7 5 , 0 0 0 $ 6 , 8 1 5 , 0 0 0 Le s s : D e v e l o p e r f u n d e d c o s t s ( $ 4 , 3 9 0 , 0 0 0 ) $ 0 $ 0 $ 0 ( $ 4 , 3 9 0 , 0 0 0 ) $3 2 , 0 0 0 , 0 0 0 $ 2 6 , 1 7 5 , 0 0 0 $ 3 , 4 0 0 , 0 0 0 $ 2 9 , 5 7 5 , 0 0 0 $ 2 , 4 2 5 , 0 0 0 No t e s : S e e a t t a c h e d e n g i n e e r i n g e s t i m a t e s f o r d e t a i l e d l i n e i t e m b u d g e t s . Th e p a r k i n g f a c i l i t i e s i m p r o v e m e n t c o s t s a r e e s t i m a t e d b y t h e d e v e l o p e r a t $ 1 4 , 0 0 0 p e r p a r k i n g s p a c e f o r a p p r o x i m a t e l y 4 4 0 p a r k in g s p a c e s . Ap p e n d i x B - S u m m a r y o f E s t i m a t e d A u t h o r i z e d I m p r o v e m e n t C o s t s Im p r o v e m e n t P r o j e c t A Au t h o r i z e d I m p r o v e m e n t To t a l i m p r o v e m e n t c o s t s Ro a d i m p r o v e m e n t s Wa t e r i m p r o v e m e n t s To t a l E s t i m a t e d Au t h o r i z e d Im p r o v e m e n t C o s t s Sa n i t a r y s e w e r i m p r o v e m e n t s St o r m d r a i n a g e i m p r o v e m e n t s To t a l A u t h o r i z e d I m p r o v e m e n t s F u n d e d Dr a f t B‐1 PID Common to All 5,439,422$                       Improvement Area #1 9,089,967$                       Improvement Area #2 2,677,735$                       Improvement Area #3 (Future)2,134,351$                       Current Area 1, 2, & Common to AllPID Water 890,040$                          Sewer 1,531,196$                       Storm 1,154,306$                       Paving, Signs, Lights 4,353,430$                       Unclassified Excavation / Wall / Erosion 3,304,730$                       R.O.W. Sod 9,758$                                Duct Bank 640,304$                          Landscaping 2,219,001$                       Engineering, Surv, CA, & Geotech 2,144,470$                       Contingency & Public Parking 802,276$                          Bonds & Inspection Fees 959,890$                          Total 18,009,400$                     Future Area #3PID Water 171,680$                          Sewer 350,100$                          Storm 579,566$                          Paving 627,470$                          Duct Bank 93,650$                             10% Contingency & Escalation 182,247$                          Remaining  Surv, CA, & Geotech 168,361$                          Bonds & Inspection Fees 143,524$                          Total 2,316,598$                       Entrada ‐ PID Budget Summary PID Water406,585$                          Sewer910,910$                          Storm861,975$                          Paving & 1‐Traffic Signal Intersection1,603,070$                       Unclassified Excavation (Cut Bank Yards)350,000$                          Double Duct Bank 247,770$                          Geotech60,000$                             Erosion Control40,000$                             Signs5,000$                               Engineering, Surveying, Construction Management 613,243$                          Bonds 75,651$                             Inspection Fees265,219$                          TOTAL 5,439,422$                       ENTRADA COMMON TO ALL Item No.UnitDescriptionQtyUnit PriceTotal 1LSFurnish and install connection to the Existing 12-inch waterlines, complete and in place, per lump sum 51,500.00$ 7,500.00$ 2LFFurnish and install 12-inch PVC waterline, includes valves, taps and fittings, complete and in place, per linear foot 1084030.00$ 325,200.00$ 3LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 49523.00$ 11,385.00$ 4EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 113,500.00$ 38,500.00$ 5EAFurnish and install single service water line, complete and in place, per each 10800.00$ 8,000.00$ 6EAFurnish and install 12" blow-off valves, complete and in place, per each 28,000.00$ 16,000.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1EAFurnish and install lift station and wet well, complete and in place, per each 1287,000.00$ 287,000.00$ 2EAFurnish and install TRA meter station and injection connection to the existing sanitary sewer force main, complete and in place, per each 1362,000.00$ 362,000.00$ 3LFFurnish and install 4-inch force main sanitary sewer line, complete and in place, per linear foot 130020.00$ 26,000.00$ 4LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 448525.00$ 112,125.00$ 5EAFurnish and install Manhole, complete and in place, per each 323,500.00$ 112,000.00$ 6EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 8750.00$ 6,000.00$ 7LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 57851.00$ 5,785.00$ Total Sanitary Sewer Line Improvements: ENTRADA COMMON TO ALL $910,910.00 $406,585.00 WATER LINE IMPROVEMENTS SANITARY SEWER LINE IMPROVEMENTS Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 354050.00$ 177,000.00$ 2EAFurnish and install Junction Box, complete in place, per each 152,500.00$ 37,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 193,000.00$ 57,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 24251.00$ 2,425.00$ 5LFFurnish and install retaining wall around perimeter of Lake, complete and in place, per each 619095.00$ 588,050.00$ Storm Sewer Improvements Total: Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 8-inch 4200 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 1290036.00$ 464,400.00$ 2SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 2622530.00$ 786,750.00$ 3SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 275352.00$ 55,070.00$ 4SYFurnish and install 10-inch Stabilized Subgrade, complete and in place, per square yard 138002.25$ 31,050.00$ 5TON Furnish and install Lime, complete and in place, per ton 460130.00$ 59,800.00$ 6LSFurnish Traffic Contol 120,000.00$ 20,000.00$ 7EATraffic Signal at Davis and Solana Blvd 1176,000.00$ 176,000.00$ 8LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: $861,975.00 $3,782,540.00 $1,603,070.00 PAVING AND STRIPING IMPROVEMENTS STORM SEWER IMPROVEMENTS Item No.UnitDescriptionQtyUnit PriceTotal 1CYUnclassified excavation (cut bank yards)100000 3.50$               350,000.00$ 2LFDouble Duct Bank 4955 50.00$             247,769.50$ 3LSGeotech 1 60,000.00$     60,000.00$ 4LSErosion Control 1 40,000.00$     40,000.00$ 5LSSigns 1 5,000.00$       5,000.00$ 6LSEngineering, Surveying, Construction Management 1 613,243.33$   613,243.33$ 7LSBonds @ 2%1 75,650.80$     75,650.80$ 8LSInspection Fees @ 6%1 265,218.57$  265,218.57$ Miscellaneous Improvements Total:$1,656,882.20 MISC. PID Water207,750$                            Sewer242,916$                            Storm177,300$                            Paving 1,750,100$                         Perimeter Landscaping Buffer Improvements1,830,501$                         Public Sidewalks 4" 3600 PSI Reinforced w/ #3 Bars 432,000$                            Retaining Wall +/‐ 5' Average Height 125,550$                            Retaining Wall +/‐ 10' Average Height 1,090,980$                         Unclassified Excavation (Cut Bank Yards)805,000$                            R.O.W. Sod 3,212$                                 Street lights 84,000$                              Bollard lights 150,000$                            Iron Ornamental Benches and Other Seating 238,500$                            Single Duct Bank 201,609$                            Geotech160,000$                            Erosion Control120,000$                            Signs45,000$                              Engineering, Surveying, Construction Management 958,966$                            Bonds 47,561$                              Inspection Fees419,022$                            TOTAL9,089,967$                         ENTRADA IMPROVEMENT AREA #1 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 425023.00$ 97,750.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 203,500.00$ 70,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 50800.00$ 40,000.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 330025.00$ 82,500.00$ 2EAFurnish and install Manhole, complete and in place, per each 333,500.00$ 115,500.00$ 3EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 50750.00$ 37,500.00$ 4LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 74161.00$ 7,416.00$ Total Sanitary Sewer Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 230050.00$ 115,000.00$ 2EAFurnish and install Junction Box, complete in place, per each 62,500.00$ 15,000.00$ 3EAFurnish and install curb inlet complete and in place, per each 153,000.00$ 45,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 23001.00$ 2,300.00$ Storm Sewer Improvements Total: ENTRADA IMPROVEMENT AREA #1 WATER LINE IMPROVEMENTS $207,750.00 SANITARY SEWER LINE IMPROVEMENTS $242,916.00 STORM SEWER IMPROVEMENTS $177,300.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 1394030.00$ 418,200.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 149002.00$ 29,800.00$ 3TON Furnish and install Lime, complete and in place, per ton 170130.00$ 22,100.00$ 4EAPlaza Bridge 1840,000.00$ 840,000.00$ 5EAMercado Ricardo Pedestrian Bridge 1425,000.00$ 425,000.00$ 6LSFurnish Traffic Contol 15,000.00$ 5,000.00$ 7LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: Item No.UnitDescriptionQtyUnit PriceTotal 1LSIrrigation along Davis Blvd. and Solana Blvd. 198,709.00$ 98,709.00$ 2LS Vineyards / Plantings along Davis Blvd. and Solana Blvd. 1146,731.00$ 146,731.00$ 3LSTrees along Davis Blvd. and Solana Blvd.1330,003.00$ 330,003.00$ 4LSRubble Walls along Davis Blvd. and Solana Blvd. 1128,700.00$ 128,700.00$ 5LSWalks along Davis Blvd. and Solana Blvd.1110,880.00$ 110,880.00$ 6LSRest Areas along Davis Blvd. and Solana Blvd.1176,977.00$ 176,977.00$ 7LSIrrigation along 114 Frontage 1117,800.00$ 117,800.00$ 8LS Vineyards / Plantings along 114 Frontage 1274,866.00$ 274,866.00$ 9LSTrees along 114 Frontage 147,120.00$ 47,120.00$ 10LS Rubble Walls along 114 Frontage 178,533.00$ 78,533.00$ 11LS Rest Areas along 114 Frontage 139,182.00$ 39,182.00$ 12LS Four small wells (25 gmp each)462,000.00$ 248,000.00$ 13LS Lake bubblers (3) for aeriation 311,000.00$ 33,000.00$ Perimeter Landscape Buffer Improvements Total:$1,830,501.00 $2,378,066.00 PERIMETER LANDSCAPE BUFFER IMPROVEMENTS PAVING AND STRIPING IMPROVEMENTS $1,750,100.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYPublic Sidewalks 4" 3600 PSI reinforced w/ #3 bars 12000 36.00$                432,000.00$ 2LFRetaining wall +/‐ 5' average ht.1674 75.00$                125,550.00$ 3LFRetaining wall +/‐ 10' average ht.5510 198.00$              1,090,980.00$ 4CYUnclassified excavation (cut bank yards)230000 3.50$                   805,000.00$ 5SFR.O.W. Sod 10705 0.30$                   3,211.50$ 6EAStreet lights 21 4,000.00$           84,000.00$ 7EABollard lights 60 2,500.00$           150,000.00$ 8EAIron ornamental benches and other seating 45 5,300.00$           238,500.00$ 9LFSingle Duct Bank 5760 35.00$                201,609.45$ 10LS Geotech 1 160,000.00$       160,000.00$ 11LS Erosion Control 1 120,000.00$       120,000.00$ 12LS Signs 1 45,000.00$         45,000.00$ 13LS Engineering, Surveying, Construction Management 1 958,965.70$       958,965.70$ 14LS Bonds @ 2%1 47,561.32$         47,561.32$ 15LS Inspection Fees @ 6%1 419,022.39$       419,022.39$ Miscellaneous Improvements Total:$4,881,400.36 MISC. PID Water275,705$                            Sewer377,370$                            Storm115,031$                            Paving 414,260$                            Retaining Wall +/‐ 10' Average Height 673,200$                            R.O.W. Sod 6,546$                                 Single Duct Bank 190,925$                            Geotech160,000$                            Erosion Control100,000$                            Signs20,000$                              Engineering, Surveying, Construction Management 192,261$                            Bonds 23,647$                              Inspection Fees128,789$                            TOTAL2,677,735$                         ENTRADA IMPROVEMENT AREA #2 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 513523.00$ 118,105.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 163,500.00$ 56,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 127800.00$ 101,600.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 412025.00$ 103,000.00$ 2EAFurnish and install Manhole, complete and in place, per each 503,500.00$ 175,000.00$ 3EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 127750.00$ 95,250.00$ 4LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 41201.00$ 4,120.00$ Total Sanitary Sewer Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 148150.00$ 74,050.00$ 2EAFurnish and install Junction Box, complete in place, per each 52,500.00$ 12,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 93,000.00$ 27,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 14811.00$ 1,481.00$ Storm Sewer Improvements Total: $377,370.00 ENTRADA IMPROVEMENT AREA #2 WATER LINE IMPROVEMENTS $275,705.00 SANITARY SEWER LINE IMPROVEMENTS STORM SEWER IMPROVEMENTS $115,031.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 1165530.00$ 349,650.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 124552.00$ 24,910.00$ 3TON Furnish and install Lime, complete and in place, per ton 190130.00$ 24,700.00$ 6LSFurnish Traffic Contol 15,000.00$ 5,000.00$ 7LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: PAVING AND STRIPING IMPROVEMENTS $414,260.00 $1,182,366.00 Item No.UnitDescriptionQtyUnit PriceTotal 1LFRetaining wall +/‐ 10' average ht.3400 198.00$           673,200.00$ 2SFR.O.W. Sod 21820 0.30$               6,546.00$ 3LFSingle Duct Bank 5455 35.00$             190,925.00$ 4LSGeotech 1 160,000.00$   160,000.00$ 5LSErosion Control 1 100,000.00$   100,000.00$ 6LSSigns 1 20,000.00$     20,000.00$ 7LSEngineering, Surveying, Construction Management 1 192,260.74$   192,260.74$ 8LSBonds @ 2%1 23,647.32$     23,647.32$ 9LSInspection Fees @ 6%1 128,789.46$   128,789.46$ Miscellaneous Improvements Total: MISC. $1,495,368.52 PID Water171,680$                           Sewer350,100$                           Storm579,566$                           Paving & 2‐Offsite Traffic Light Intersections622,470$                           Single Duct Bank 93,650$                             Geotech50,000$                             Signs5,000$                                Engineering, Surveying, Construction Management 118,361$                           Bonds 34,476$                             Inspection Fees109,048$                           TOTAL2,134,351$                        ENTRADA IMPROVEMENT AREA #3 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 316023.00$ 72,680.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 103,500.00$ 35,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 80800.00$ 64,000.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1EAFurnish and install lift station and wet well, complete and in place, per each 1125,000.00$ 125,000.00$ 2LFFurnish and install 4-inch force main sanitary sewer line, complete and in place, per linear foot 155020.00$ 31,000.00$ 3LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 267525.00$ 66,875.00$ 4EAFurnish and install Manhole, complete and in place, per each 183,500.00$ 63,000.00$ 5EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 80750.00$ 60,000.00$ 6LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 42251.00$ 4,225.00$ Total Sanitary Sewer Line Improvements: ENTRADA IMPROVEMENT AREA 3 WATER LINE IMPROVEMENTS $171,680.00 SANITARY SEWER LINE IMPROVEMENTS $350,100 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 74150.00$ 37,050.00$ 2EAFurnish and install Junction Box, complete in place, per each 12,500.00$ 2,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 123,000.00$ 36,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 7411.00$ 741.00$ 5LSCulvert Crossing & Waterfall 1100,000.00$ 100,000.00$ 6LFFurnish and install retaining wall around perimeter of Lake, complete and in place, per each 4,24595.00$ 403,275.00$ 7LStwo small wells (25 gmp each)262,000.00$ 124,000.00$ 8LSLake bubblers (2) for aeriation 211,000.00$ 22,000.00$ Storm Sewer Improvements Total: Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 7,95030.00$ 238,500.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 8,5102.00$ 17,020.00$ 3TON Furnish and install Lime, complete and in place, per ton 115130.00$ 14,950.00$ 4EATraffic Signal at Solana Blvd & at 114 pending warrant 2176,000.00$ 352,000.00$ Paving and Striping Improvements Total: Total Wet Utilities & Paving STORM SEWER IMPROVEMENTS 579,566 PAVING AND STRIPING IMPROVEMENTS 622,470 1,723,816 Item No.UnitDescriptionQtyUnit PriceTotal 1LFSingle Duct Bank 2676 35.00$             93,650.20$ 2LSGeotech 1 50,000.00$     50,000.00$ 3LSSigns 1 5,000.00$       5,000.00$ 4LSEngineering, Surveying, Construction Management 1 118,361.00$   118,361.00$ 5LSBonds @ 2%1 34,476.32$     34,476.32$ 6LSInspection Fees @ 6%1 109,047.97$   109,047.97$ Miscellaneous Improvements Total: MISC. $410,535 Draft Appendix C DIAGRAM OF THE AUTHORIZED IMPROVEMENTS Draft Appendix D LAND USE CLASSS, EQUIVALENT UNITS AND ALLOCATION OF ASSESSMENTS DRAFT D - 1 v6.2 Appendix D Land Use Classes, Equivalent Units and Allocation of Assessments For purposes of allocating the Assessments, the Assessed Property in each Improvement Area has been classified in one of thirteen Land Use Classes. The following table shows the proposed residential and non-residential development planned within the PID. Table D-1 Proposed Development within the PID – All Improvement Areas Land Use Class Description Proposed Development Residential Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 322 Units Non-Residential    Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total – Non-residential 1,158,299 Sq. Ft The following table shows the proposed residential and non-residential Land Use Classes within Improvement Area #1 of the PID. DRAFT D - 2 v6.2 Table D-2 Proposed Development within the PID – Improvement Area #1 (Mixed-Use Core) Land Use Class Description Proposed Development Residential Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Total - Residential 115 Units Non-Residential    Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total – Non-residential 1,158,299 Sq. Ft The following table shows the proposed residential Land Use Classes within Improvement Area #2 of the PID. Table D-3 Proposed Development within the PID – Improvement Area #2 (West Residential) Land Use Class Description Proposed Development Residential Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Total - Residential 127 Units The following table shows the proposed residential Land Use Classes within Improvement Area #3 of the PID. DRAFT D - 3 v6.2 Table D-4 Proposed Development within the PID – Improvement Area #3 (East Residential) Land Use Class Description Proposed Development Residential Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 80 Units The Land Use Classes shown in the above tables are defined as follows: “Land Use Class 1” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having more than 3,600 square feet area with structured parking provided. “Land Use Class 2” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having between 2,500 and 3,600 square feet area with structured parking provided. “Land Use Class 3” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having 1,800 to 2,500 square feet area with structured parking provided. “Land Use Class 4” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having more than 3,600 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 5” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 6” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 7” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single DRAFT D - 4 v6.2 family residential units, having more than 3,600 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 8” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 9” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 10” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for retail purposes that may be comprised of a single tenant or multiple tenants that make up a retail establishment and are generally located on the ground floor of buildings or in a single building. “Land Use Class 11” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for office purposes that may include a group of offices or a single office and are generally located in a single building, on one or more floors, or multiple buildings. “Land Use Class 12” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally a building or group of buildings designed and occupied for hospitality uses. “Land Use Class 13” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used institutional purposes such as assisted living, nursing and other similar residential uses that are either on the water or on the central plaza. As explained under Section V, for purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of the Authorized Improvements to be financed with the Bonds shall be allocated to the Assessed Property by spreading the entire Assessment across the Parcels based on the estimated Equivalent Units. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property in each Improvement Area spreading the entire Assessment across the Parcels of Assessed Property in each Improvement Area on the basis of the Direct Improvement Costs and Common Improvement Costs excluding estimated right-of–way costs, as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. Table D-5 below shows the allocation of the Common Improvement DRAFT D - 5 v6.2 Costs to each Improvement Area and the resulting ratio for allocating Assessment Part A to each Improvement Area. Table D-5 Allocation of Common Improvement Costs and Calculation of Assessment Part A Allocation Ratio Improvement Area Description Estimated Cost CIC Allocation Ratio Allocation of CIC Total Estimated Costs Assessment Allocation Ratio All Common Improvement Costs (CIC) $6,241,698 -100.0%($6,241,698) $0 1 Direct Improvement Costs $9,089,967 64.5%$4,028,374 $13,118,34264.5% 2 Direct Improvement Costs $2,677,735 19.0%$1,186,684 $3,864,41919.0% 3 Direct Improvement Costs $2,316,598 16.4%$1,026,640 $3,343,23816.4% Subtotal: Part A $20,325,998 100.0%$0 $20,325,999100.00% 1 Parking Garage $6,160,000 $0 $6,160,000100.00% Subtotal: Part B $6,160,000 $0 $6,160,000 Total $26,485,998 $0 $26,485,998 For purposes of this Service and Assessment Plan, the Town Council has determined that the Assessment Part A allocated to the Assessed Property in each Improvement Area based on the above calculated Assessment allocation ratio is spread to each Land Use Class on the basis of the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. The estimated Equivalent Units will be calculated based on the relative average construction cost per unit of each Land Use Class as shown herein. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. Upon subsequent divisions of any Parcel, the Assessment applicable to it will then be apportioned pro rata based on the Equivalent Units of each newly created Parcel. Equivalent Units – Improvement Area #1 Having taken into consideration the matters described above, the Town Council has determined that allocating the Assessments among Parcels based on estimated average construction cost per unit is best accomplished by creating classifications of benefited Parcels in each Improvement Area based on the “Land Use Class” defined above. These classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 1 in Improvement Area #1 are set forth in Table D-6 below. The total Assessment Part A allocated to Improvement Area #1 is spread to each Land DRAFT D - 6 v6.2 Use type in Improvement Area #1 on the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #1 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 1 in Improvement Area #1 to 1.0. The Equivalent Unit factor for Land Use Class 2 is calculated to be 0.62 ($468,350 ÷ $756,210 = 0.62). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #1 is calculated accordingly and shown in Table D-6. Table D-6 Estimated Equivalent Units – Improvement Area #1 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 1 3,601 $210 $756,210 1.00 per dwelling unit Land Use Class 2 2,755 $170 $468,350 0.62 per dwelling unit Land Use Class 3 1,800 $250 $450,000 0.60 per dwelling unit Land Use Class 10 1,000 $165 $165,000 0.22 per 1,000 sq. ft Land Use Class 11 1,000 $150 $150,000 0.20 per 1,000 sq. ft Land Use Class 12 1,000 $161 $161,000 0.21 per 1,000 sq. ft Land Use Class 13 1,000 $141 $141,000 0.19 per 1,000 sq. ft The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 7 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #1. Table D-7 Total Equivalent Units – Improvement Area #1 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 1 38 1.00 38.00 Land Use Class 2 71 0.62 44.02 Land Use Class 3 6 0.60 3.60 Land Use Class 10 (in 1,000 sq. ft) 372.1 0.22 81.86 Land Use Class 11 (in 1,000 sq. ft) 266.1 0.20 53.22 Land Use Class 12 (in 1,000 sq. ft) 255.5 0.21 53.66 Land Use Class 13 (in 1,000 sq. ft) 264.6 0.19 50.27 Total 324.63 DRAFT D - 7 v6.2 Equivalent Units – Improvement Area #2 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 4 in Improvement Area #2 are set forth in Table D-8 below. The total Assessment Part A allocated to Improvement Area #2 is spread to each Land Use type in Improvement Area #2 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #2 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 4 in Improvement Area #2 to 1.0. The Equivalent Unit factor for Land Use Class 5 is calculated to be 0.68 ($485,280 ÷ $708,750 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #2 is calculated accordingly and shown in Table D-8. Table D-8 Estimated Equivalent Units – Improvement Area #2 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 4 4,050 $175 $708,7501.00 per dwelling unit Land Use Class 5 2,696 $180 $485,2800.68 per dwelling unit Land Use Class 6 2,069 $178 $368,2820.52 per dwelling unit The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 9 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #2. Table D-9 Total Equivalent Units – Improvement Area #2 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 4 42 1.00 42.00 Land Use Class 5 16 0.68 10.88 Land Use Class 6 69 0.52 35.88 Total 127 88.76 DRAFT D - 8 v6.2 Equivalent Units – Improvement Area #3 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 7 in Improvement Area #3 are set forth in Table D-10 below. The total Assessment Part A allocated to Improvement Area #3 is spread to each Land Use type in Improvement Area #3 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #3 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 7 in Improvement Area #3 to 1.0. The Equivalent Unit factor for Land Use Class 8 is calculated to be 0.68 ($464,112 ÷ $681,596 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #3 is calculated accordingly and shown in Table D-10. Table D-10 Estimated Equivalent Units – Improvement Area #3 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 7 4,106 $166 $681,5961.00 per dwelling unit Land Use Class 8 2,637 $176 $464,1120.68 per dwelling unit Land Use Class 9 2,054 $184 $377,9360.55 per dwelling unit The total estimated Equivalent Units for Improvement Area #3 of the PID are shown in Table D- 11 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #3. Table D-11 Total Equivalent Units – Improvement Area #3 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 7 21 1.00 21.00 Land Use Class 8 23 0.68 15.64 Land Use Class 9 36 0.55 19.80 Total 80 56.44 Allocation of Assessments As shown in Section IV of this Service and Assessment Plan, the total amount of the Series 2015 Bonds and the Reimbursement Agreement for Improvement Project A, which represents the total DRAFT D - 9 v6.2 Assessment Part A to be allocated on all Parcels within the PID, is $29,575,000. As shown in Table D-5 above, the Assessment Part A allocation ratio for Improvement Area #1, Improvement Area #2 and Improvement Area #3 are 64.5%, 19.0% and 16.4%, respectively. As a result, the total Assessment Part A allocated to Improvement Area #1 is calculated to be $19,087,620.54 ($29,575,000 × 64.5% = $19,087,620.54), the total Assessment Part A allocated to Improvement Area #2 is calculated to be $5,622,857.55 ($29,575,000 × 19.0% = $5,622,857.55) and the total Assessment Part A allocated to Improvement Area #3 is calculated to be $4,864,521.90 ($29,575,000 × 16.4% = $4,864,521.90). Improvement Area #1 As described above, the total amount of Assessment Part A allocated to Improvement Area #1 is $19,087,620.54. As shown in Table D-7 above, there are a total of 324.63 estimated Equivalent Units in Improvement Area #1 of the PID, resulting in an Assessment Part A per Equivalent Unit of $58,797.94 ($19,087,621 ÷ 324.63 = $58,797.94). The Assessment Part A for each Parcel in Improvement Area #1 is calculated as the product of (i) $58,797.94 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 1 (Condo Residential – more than 3,600 square feet) dwelling unit is $58,797.94 (i.e. $58,797.94 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 1 would, therefore, have an Assessment of $58,797.94. Table D-12 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #1. Table D-12 Assessment Part A per Unit – Improvement Area #1 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Total $19,087,620.54 DRAFT D - 10 v6.2 Improvement Area #2 As described above, the total amount of Assessment Part A allocated to Improvement Area #2 is $5,622,857.55. As shown in Table D-9 above, there are a total of 88.76 estimated Equivalent Units in Improvement Area #2 of the PID, resulting in an Assessment Part A per Equivalent Unit of $63,349.00 ($5,622,858 ÷ 88.76 = $63,349.00). The Assessment Part A for each Parcel in Improvement Area #2 is calculated as the product of (i) $63,349.00 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 4 (Villa West – more than 3,600 square feet) dwelling unit is $63,349.00 (i.e. $63,349.00 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 4 would therefore have an Assessment of $63,349.00. Table D-13 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #2. Table D-13 Assessment Part A per Unit – Improvement Area #2 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Total 127 $5,622,857.55 Improvement Area #3 As described above, the total amount of Assessment Part A allocated to Improvement Area #3 is $4,864,521.90. As shown in Table D-11 above, there are a total of 56.44 estimated Equivalent Units in Improvement Area #3 of the PID, resulting in an Assessment Part A per Equivalent Unit of $86,189.26 ($4,864,521.90 ÷ 56.44 = $86,189.26). The Assessment Part A for each Parcel in Improvement Area #3 is calculated as the product of (i) $86,189.26 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 7 (Villa East – more than 3,600 square feet) dwelling unit is $86,189.26 (i.e. $86,189.26 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 7 would therefore have an Assessment of $86,189.26. DRAFT D - 11 v6.2 Table D-14 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #3. Table D-14 Assessment Part A per Unit – Improvement Area #3 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Total 80 $4,864,521.90 Draft Appendix E ASSESSMENT ROLL DRAFT v6.0 Parcel All Assessment Part A $29,575,000 Maintenance Assessment Other Administrative Expenses 1$1,128,797$279,324$10,000$30,000$1,448,121 2$1,963,125$245,480$10,200$30,600$2,249,405 3$2,238,125$246,480$10,404$31,212$2,526,221 4$2,237,500$250,408$10,612$31,836$2,530,356 5$2,240,375$254,047$10,824$32,473$2,537,719 6$2,236,375$257,397$11,041$33,122$2,537,935 7$2,235,875$261,458$11,262$33,785$2,542,380 8$2,238,500$265,159$11,487$34,461$2,549,606 9$2,238,875$269,498$11,717$35,150$2,555,240 10$2,237,000$273,404$11,951$35,853$2,558,208 11$2,237,875$271,343$12,190$36,570$2,557,978 12$2,236,125$275,395$12,434$37,301$2,561,255 13$2,236,750$279,955$12,682$38,047$2,567,435 14$2,239,375$283,954$12,936$38,808$2,575,073 15$2,238,625$289,391$13,195$39,584$2,580,795 16$2,239,500$294,126$13,459$40,376$2,587,461 17$2,236,625$299,159$13,728$41,184$2,590,695 18$2,240,000$304,420$14,002$42,007$2,600,429 19$2,238,875$309,838$14,282$42,847$2,605,843 20$2,238,250$315,344$14,568$43,704$2,611,866 21$2,237,750$320,867$14,859$44,578$2,618,055 22$2,237,000$327,337$15,157$45,470$2,624,963 23$2,240,625$332,613$15,460$46,379$2,635,078 24$2,237,875$339,697$15,769$47,307$2,640,648 25$2,238,750$346,376$16,084$48,253$2,649,463 26$2,237,500$352,581$16,406$49,218$2,655,705 27$2,238,750$360,241$16,734$50,203$2,665,928 28$2,236,750$368,147$17,069$51,207$2,673,172 29$2,236,125$375,157$17,410$52,231$2,680,923 30$2,236,125$384,202$17,758$53,275$2,691,361 31$2,236,000$0$18,114$15,275$3,632,420 Total$67,989,797$9,032,798$405,681$1,217,042$76,409,318 (1) Interest rates on the 2015 Bonds are estimated at coupon rate of 7.5% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 6.72% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Principal and Interest2 Principal and Interest1Year Annual Installment Part A Administrative Expenses3 Assessment Roll All Improvement Areas E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $19,087,621 Maintenance Assessment Other Administrative Expenses 1$728,522$180,275$6,910$19,362$935,069 2$1,266,995$158,432$7,048$19,749$1,452,224 3$1,444,479$159,077$7,189$20,144$1,630,890 4$1,444,076$161,612$7,332$20,547$1,633,568 5$1,445,932$163,961$7,479$20,958$1,638,330 6$1,443,350$166,123$7,629$21,377$1,638,479 7$1,443,027$168,745$7,781$21,805$1,641,358 8$1,444,722$171,133$7,937$22,241$1,646,032 9$1,444,964$173,933$8,096$22,686$1,649,678 10$1,443,753$176,454$8,258$23,139$1,651,605 11$1,444,318$175,124$8,423$23,602$1,651,467 12$1,443,189$177,739$8,591$24,074$1,653,593 13$1,443,592$180,682$8,763$24,556$1,657,593 14$1,445,286$183,263$8,938$25,047$1,662,534 15$1,444,802$186,772$9,117$25,548$1,666,239 16$1,445,367$189,828$9,299$26,059$1,670,553 17$1,443,511$193,076$9,485$26,580$1,672,653 18$1,445,690$196,472$9,675$27,111$1,678,948 19$1,444,964$199,969$9,869$27,654$1,682,454 20$1,444,560$203,522$10,066$28,207$1,686,355 21$1,444,237$207,087$10,267$28,771$1,690,362 22$1,443,753$211,262$10,473$29,346$1,694,834 23$1,446,093$214,668$10,682$29,933$1,701,376 24$1,444,318$219,239$10,896$30,532$1,704,985 25$1,444,883$223,550$11,114$31,142$1,710,689 26$1,444,076$227,555$11,336$31,765$1,714,732 27$1,444,883$232,499$11,563$32,401$1,721,345 28$1,443,592$237,601$11,794$33,049$1,726,035 29$1,443,189$242,125$12,030$33,710$1,731,053 30$1,443,189$247,963$12,270$34,384$1,737,805 31$1,443,108$0$12,516$9,858$1,465,482 32$0$0$0$0$0 33$0$0$0$0$0 34$0$0$0$0$0 Total$43,880,421$5,829,742$292,822$795,334$50,798,318 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #1 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $5,622,858 Maintenance Assessment Other Administrative Expenses 1$214,609$53,106$1,889$5,704$275,308 2$373,233$46,671$1,927$5,818$427,649 3$425,517$46,861$1,966$5,934$480,278 4$425,398$47,608$2,005$6,053$481,064 5$425,945$48,300$2,045$6,174$482,463 6$425,184$48,937$2,086$6,297$482,504 7$425,089$49,709$2,128$6,423$483,349 8$425,588$50,413$2,170$6,552$484,722 9$425,659$51,238$2,213$6,683$485,793 10$425,303$51,980$2,258$6,816$486,357 11$425,469$51,588$2,303$6,953$486,313 12$425,137$52,359$2,349$7,092$486,936 13$425,255$53,226$2,396$7,234$488,111 14$425,754$53,986$2,444$7,378$489,562 15$425,612$55,020$2,493$7,526$490,650 16$425,778$55,920$2,543$7,676$491,917 17$425,232$56,877$2,593$7,830$492,532 18$425,873$57,877$2,645$7,987$494,382 19$425,659$58,907$2,698$8,146$495,411 20$425,541$59,954$2,752$8,309$496,556 21$425,445$61,004$2,807$8,475$497,732 22$425,303$62,234$2,863$8,645$499,045 23$425,992$63,237$2,921$8,818$500,968 24$425,469$64,584$2,979$8,994$502,026 25$425,636$65,854$3,039$9,174$503,702 26$425,398$67,033$3,099$9,357$504,888 27$425,636$68,490$3,161$9,545$506,831 28$425,255$69,993$3,225$9,735$508,208 29$425,137$71,326$3,289$9,930$509,681 30$425,137$73,045$3,355$10,129$511,665 31$425,113$0$3,422$2,904$431,439 32$0$0$0$0$0 33$0$0$0$0$0 34$0$0$0$0$0 Total$12,926,355$1,717,333$80,063$234,291$14,958,042 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #2 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $4,864,522 Maintenance Assessment Other Administrative Expenses 1$185,665$45,944$1,201$4,934$237,745 2$322,897$40,377$1,225$5,033$369,532 3$368,129$40,541$1,250$5,134$415,054 4$368,026$41,187$1,275$5,236$415,725 5$368,499$41,786$1,300$5,341$416,926 6$367,841$42,337$1,326$5,448$416,952 7$367,759$43,005$1,353$5,557$417,673 8$368,190$43,614$1,380$5,668$418,852 9$368,252$44,327$1,407$5,781$419,768 10$367,944$44,970$1,436$5,897$420,246 11$368,088$44,631$1,464$6,015$420,198 12$367,800$45,297$1,494$6,135$420,726 13$367,903$46,047$1,524$6,258$421,731 14$368,334$46,705$1,554$6,383$422,977 15$368,211$47,599$1,585$6,511$423,906 16$368,355$48,378$1,617$6,641$424,991 17$367,882$49,206$1,649$6,774$425,511 18$368,437$50,071$1,682$6,909$427,100 19$368,252$50,962$1,716$7,048$427,978 20$368,149$51,868$1,750$7,189$428,956 21$368,067$52,776$1,785$7,332$429,961 22$367,944$53,841$1,821$7,479$431,084 23$368,540$54,709$1,857$7,629$432,734 24$368,088$55,874$1,894$7,781$433,637 25$368,232$56,972$1,932$7,937$435,073 26$368,026$57,993$1,971$8,095$436,085 27$368,232$59,253$2,010$8,257$437,752 28$367,903$60,553$2,050$8,423$438,929 29$367,800$61,706$2,091$8,591$440,188 30$367,800$63,194$2,133$8,763$441,890 31$367,779$0$2,176$2,512$372,468 32$0$0$0$0$0 33$0$0$0$0$0 34$0$0$0$0$0 Total$11,183,021$1,485,722$50,910$202,693$12,922,346 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #3 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 APPRAISAL REPORT OF WESTLAKE ENTRADA A Master-Planned Mixed-Use Development to be Located at the Southeast Corner of SH-114 and Precinct Line Road/Davis Boulevard Town of Westlake, Tarrant County, Texas Prepared For: JEFFERIES, LLC Mr. Mark A. Curran Managing Director Public Finance 300 Crescent Court, Suite 500 Dallas, Texas 75201 Mr. Thomas E. Brymer Town Manager Town of Westlake #3 Village Circle, Suite 202 Westlake, Texas 76226 Prepared By: JACKSON CLABORN, INC. Real Estate Consulting and Appraisal Services 5800 W. Plano Parkway, Suite 220 Plano, Texas 75093 Headquarters: 5800 W. Plano Parkway  Suite 220  Plano, Texas 75093  (972) 732-0051  FAX (972) 733-1403 Jackson Claborn, Inc.  Real Estate Consulting and Appraisal Services   Plano, Texas  www.jacksonclaborn.com Jimmy H. Jackson, MAI David Ray, SRA Allen W. Gardiner, SRA November 15, 2014 Mr. Mark A. Curran Mr. Thomas E. Brymer Managing Director Public Finance Town Manager Jefferies, LLC Town of Westlake 300 Crescent Court, Suite 500 #3 Village Circle, Suite 202 Dallas, Texas 75201 Westlake, Texas 76226 RE: Appraisal Report of 127 developed residential lots (West Residential Pod), 80 future residential lots parcel (East Residential Pod), and 31 mixed-use/commercial parcels within the project known as Westlake Entrada, a master-planned, mixed- use development to be located at the southeast corner of SH-114 and Precinct Line Road/Davis Boulevard, Town of Westlake, Tarrant County; T-11-J/K; JCI File No. 1410085 Dear Mr. Curran and Mr. Brymer: At your request and authorization, Jackson Claborn, Inc. has prepared an Appraisal Report of the market value in the above-referenced real property. The subject was physically inspected on November 1, 2014. The date of the report is November 15, 2014. Per the request of the client, we have provided the fee simple estate values for the subject property as follows:  Prospective Value of 127 completed residential lots (West Residential Pod) on 12.510 acres upon completion of development as of September 1, 2015  Prospective Value of 80 proposed lots (East Residential Pod) on 9.490 acres upon completion of development as of September 1, 2015  Prospective value of 31 Commercial Parcels upon completion of development as of September 1, 2015 Mr. Curran and Mr. Brymer November 15, 2014 Page Two Data, information, and calculations leading to the value conclusion are incorporated in the report following this letter. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. Any special assumptions and limiting considerations are noted in Section 2 of this report. Your attention is directed to these "General Assumptions and Limiting Conditions" which are part of this report. We suggest that you thoroughly read and familiarize yourself with these, since the appraisal is based upon these assumptions. The following report sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions, and conclusions were developed based upon, and this report has been prepared in conformance with, our interpretation of the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP) and the requirements of the Code of Professional Ethics and Standards of Professiona l Appraisal Practice of the Appraisal Institute. It must be noted that our opinions of value are subject to the following extraordinary assumptions and hypothetical conditions. In addition, within the confines of our extraordinary assumptions and hypothetical conditions shown below, we may also have included scope of work issues which may or may not necessarily be extraordinary assumptions and hypothetical conditions, yet could contribute to and influence our assignment results:  All information relative to the remaining developed and undeveloped property located within the Town of Westlake Series 2015 PID, including land areas, lot amounts, lot and tract sizes, maximum home and building sizes, and other pertinent data that was provided by G & A Consultants , LLC (site planning, civil engineering, platting, land surveying, landscape architecture ), Michael Beaty, the Town of Westlake, and the Tarrant Appraisal District is assumed to be correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  As the subject represents a proposed construction project, this report contains prospective opinions of value. As such, we have assumed that the market conditions as discussed and considered within this report will be similar on the prospective valuation date. Further, we cannot be held responsible for unforeseeable events that alter market conditions prior to this prospective effective date. The prospective market value date is approximately 10 months from the effective date of this appraisal, due to the development of Phase I taking approximately 10 months to complete. Mr. Curran and Mr. Brymer November 15, 2014 Page Three  The valuations found herein are subject to the Town of W estlake approving and authorizing the creation of the “Town of Westlake Series 2015 Public Improvement District” to finance the costs of certain public improvements for the benefit of property in the district. Thus, as the district is developed, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain development expenses. The property in the district totals 85.921 acres and upon completion of developmen t will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Commercial Parcels. Proceeds from the bond sales will finance improvements that benefit all of the property. Assessments will be imposed on all property within the “Town of Westlake Series 2015 PID” for the improvements that benefit the entire PID with the public improvements to be provided relative to each phase. This has been assumed in our valuation. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  Our “Prospective Value” opinions relative to the subject are based upon the specific site plan that was approved by the Town of Westlake in November 2013. This site plan specifically details the number of residential lots as well as the maximum building sizes for the entire development. Our values are also based upon the assumption that the development described herein is complete by September 1, 2015. Development includes the interior streets and utilities for the 127 residential lots, as well as the completion of water, sewer, and storm drainage and road construction to the borders of the pod allowing 80 future residential lots (East Residential Pod) as well as the 31 Commercial Parcels. It is assumed this information is correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  It is noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in the Dallas/Fort Worth Market area. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. We have valued the 31 mixed -use pods based on the exhibits provided that show the allowed building size allowable in conjunction with the individual pods location, land size and potential highest and best use. Mr. Curran and Mr. Brymer November 15, 2014 Page Four  Local and regional lending institutions appear to remain active within the subject’s market for specific projects. Therefore, we specifically assume that the financial markets will continue to function in a competitive, efficient fashion. However, we cannot be held responsible for unforeseeable events that alter market conditions. Jackson Claborn, Inc. does not authorize the out-of-context quoting from or partial reprinting of this Appraisal Report. Further, neither all nor any part of this report shall be disseminated to the general public by the use of media for public communication without the prior written consent of the appraiser signing this report. Based upon an inspection of the property and the information and analysis provided in the following report, it is our opinion that the “Prospective Value” of the fee simple interest in the subject’s individual pods upon completion of development on September 1, 2015 will be: Parcel No.Land Size /Acres Land Size /SF Building Size /SF Land Value /SF Building Value /SF Opinions of Values West 12.510 544,855 127 lots $33.95 N/A $18,500,000 East 9.490 413,240 80 lots $24.20 N/A $10,000,000 1 0.289 12,600 6,000 $59.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,500,000 3 0.861 37,500 25,000 $53.33 $80.00 $2,000,000 4 1.409 61,360 47,200 $65.19 $84.75 $4,000,000 5 1.515 66,000 44,000 $30.30 $45.45 $2,000,000 6 0.482 21,000 14,000 $71.43 $107.14 $1,500,000 7 1.951 85,000 N/A N/A N/A N/A 8 0.189 8,250 7,500 $60.61 $66.67 $500,000 9 0.510 22,220 20,200 $60.76 $66.83 $1,350,000 10 2.936 127,888 61,500 $12.51 $26.02 $1,600,000 11 0.859 37,400 33,312 $24.06 $27.02 $900,000 12 0.200 8,700 5,800 $83.33 $125.00 $725,000 13A 1.334 58,110 29,800 $39.58 $77.18 $2,300,000 13B Included in 13A Included in 13A 22,509 Included in 13A $26.66 $600,000 14 0.754 32,850 21,900 $60.88 $91.32 $2,000,000 15A 1.033 45,000 30,000 $51.11 $76.67 $2,300,000 15B Included in 15A Included in 15A 10,004 Included in 15A $27.49 $275,000 16 1.136 49,500 33,000 $18.69 $28.03 $925,000 17 0.758 33,000 22,000 N/A N/A N/A 18A 1.302 56,700 37,800 $28.22 $42.33 $1,600,000 18B Included in 18A Included in 18A 60,024 Included in 18A $27.07 $1,625,000 19 1.791 78,000 48,000 $25.64 $41.67 $2,000,000 19B Included in 19A Included in 19A 86,424 Included in 19A $27.19 $2,350,000 20 0.832 36,250 25,000 $30.34 $44.00 $1,100,000 21 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 22 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,500,000 24 0.172 7,500 2,100 $26.00 $92.86 $195,000 25A 0.620 27,000 18,000 $55.56 $83.33 $1,500,000 25B Included in 25A Included in 25A 30,012 Included in 25A $26.66 $800,000 26A 0.413 18,000 6,000 $41.67 $125.00 $750,000 26B Included in 26A Included in 26A 15,006 Included in 26A $27.32 $410,000 27A 0.517 22,500 15,000 $75.56 $113.33 $1,700,000 27B Included in 27A Included in 27A 43,212 Included in 27A $27.19 $1,175,000 28 1.180 51,412 11,000 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,900 $47.72 $114.53 $2,050,000 30A 0.337 14,694 36,000 $119.10 $48.61 $1,750,000 30B Included in 30A Included in 30A 32,400 Included in 30A $27.16 $880,000 31 1.240 54,000 36,000 $27.78 $41.67 $1,500,000 FEE SIMPLE MARKET VALUES - ENTRADA Mr. Curran and Mr. Brymer November 15, 2014 Page Five Please refer to the attached Appraisal Report, plus exhibits, for documentation of these value opinions contained herein. It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if Jackson Claborn, Inc. can be of further service, please contact us. Respectfully submitted, JACKSON CLABORN, INC. Ernest E. Gatewood, III Jimmy H. Jackson, MAI Vice President - Commercial Division President/CEO TX-1324355-G TX-1324004-G Expiration: December 31, 2014 Expiration: November 30, 2016 ernestg@jacksonclaborn.com jimmyj@jacksonclaborn.com Shelley M. Sivakumar Staff Appraiser TX-1333354-L Expiration: February 29, 2016 shelleys@jacksonclaborn.com TABLE OF CONTENTS SECTION 1 — Summary of Salient Facts 1 SECTION 2 — Certification and Limiting Conditions 6 Certification 6 General Assumptions and Limiting Conditions 8 SECTION 3 — Premises of the Appraisal 15 SECTION 4 — Presentation of Data Collected 23 Metropolitan Area Data 23 Neighborhood Data 50 Site Analysis 69 SECTION 5 — Highest and Best Use Analysis 77 SECTION 6 — Valuation of the Subject 93 Value Conclusions 241 SECTION 7 — Addendums 243 1 SECTION 1 — SUMMARY OF SALIENT FACTS Property File Number: 1410085 General Property Type: Mixed-Use Specific Property Type: Proposed mixed-use development General Property Location Southeast corner of SH-114 and Precinct Line Road/Davis Boulevard, Town of Westlake, Tarrant County Mapsco: T-11-J/K School District: Carroll ISD/Westlake Academy (small portion in Northwest ISD) Format: Appraisal Report Date of Appraisal Report: November 15, 2014 Date of Values: September 1, 2015 Date of Inspection: November 1, 2014 Real Estate Interest Appraised: Fee Simple Function of the Appraisal: To provide an opinion of value for the underwriting of development bonds Zoning Designation: PD 1-2 “Planned Development 1, Planning Area 2” Highest & Best Use: As proposed, a mixed-use development 2 Completed Lot Summary, (West Residential Pod): Total Lot Size Total Lots (SF)SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5,066 70,924 127 73,552 445,073 Average 3,505 Entrada, West Residential Pod 3 Land Area Summary/Future Parcels: Parcel No.Block Physical Location Land/Gross Acres Land/Gross SF Max Building Size in SF Highest and Best Use West H, I, J, L, M, O North side of Solana Boulevard 12.51 544,855 127 lots Residential East E South side of Ciudad Real, east of Santilla del Mar 9.49 413,240 80 lots Residential 1 A SEQ SH 114 and Davis Boulevard 0.29 12,600 6,000 Retail 2 A SEQ SH 114 and Davis Boulevard 1.93 84,000 112,000 Office 3 B E/Q Santilla del Mar and Elche 0.86 37,500 25,000 Retail 4 B E/Q Santilla del Mar and Elche 1.41 61,360 47,200 Retail 5 B E/Q Santilla del Mar and Elche 1.52 66,000 44,000 Office 6 B South & west side Santilla del Mar at Fondon 0.48 21,000 14,000 Retail 7 B W/Q Fondon and Elche 1.95 85,000 N/A Public Parking Garage 8 B S/S Elche, northeast of Santilla del Mar 0.19 8,250 7,500 Office 9 C NEQ Fondon and Elche 0.51 22,220 20,200 Retail 10 C NEQ Fondon and Elche 2.94 127,888 61,500 Institutional 11 C NEQ Fondon and Elche 0.86 37,400 33,312 Institutional / Condos 12 D S/S Fondon, east of Elche 0.20 8,700 5,800 Retail 13A D E/Q Fondon and Elche 1.33 58,110 29,800 Retail 13B D E/Q Fondon and Elche Included in 13A Included in 13A 22,509 Condos 14 D E/C Santilla del Mar and Fondon 0.75 32,850 21,900 Retail 15A D E/S Santilla del Mar, north of Ciudad Real 1.03 45,000 30,000 Retail 15B D E/S Santilla del Mar, north of Ciudad Real Included in 15A Included in 15A 10,004 Condos 16 D East of Ciudad Real roundabout, east of future Luarca 1.14 49,500 33,000 Institutional 17 D N/S Ciudad Real roundabout, east of future Luarca 0.76 33,000 22,000 Town Hall 18A D N/S Ciudad Real roundabout, east of future Luarca 1.30 56,700 37,800 Office 18B D N/S Ciudad Real roundabout, east of future Luarca Included in 18A Included in 18A 60,024 Condos 19A D N/S Ciudad Real roundabout at future Luarca 1.79 78,000 48,000 Office 19B D N/S Ciudad Real roundabout at future Luarca Included in 19A Included in 19A 86,424 Condos 20 F SEC Santilla del Mar and Galisteo 0.83 36,250 25,000 Office 21 F NWC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 22 F NEC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 23 F N/C Ciudad Real and Galisteo 2.23 97,312 231,600 Institutional 24 I NEC Davis Boulevard and Santilla del Mar 0.17 7,500 2,100 Office 25A N SEC Davis Boulevard and Santilla del Mar 0.62 27,000 18,000 Retail 25B N SEC Davis Boulevard and Santilla del Mar Included in 25A Included in 25A 30,012 Condos 26A N E/C Davis Boulevard and Sloana Boulevard 0.41 18,000 6,000 Retail 26B N E/C Davis Boulevard and Sloana Boulevard Included in 26A Included in 26A 15,006 Condos 27A N E/C Davis Boulevard and Sloana Boulevard 0.52 22,500 15,000 Retail 27B N E/C Davis Boulevard and Sloana Boulevard Included in 27A Included in 27A 43,212 Condos 28 O South end of Arta, south of Santilla del Mar 1.18 51,412 11,000 Retail 29 Q SEQ SH 114 and Davis Boulevard 0.99 42,960 17,900 Retail 30A Q SEQ SH 114 and Davis Boulevard 0.34 14,694 36,000 Office 30B Q SEQ SH 114 and Davis Boulevard Included in 30A Included in 30A 32,400 Condos 31 R N/S Elche, east of Santilla del Mar 1.24 54,000 36,000 Office SUMMARY OF PODS - ENTRADA 4 Value Indications: “Prospective Values, “Upon Completion of Development”: Parcel No.Land Size /Acres Land Size /SF Building Size /SF Land Value /SF Building Value /SF Opinions of Values West 12.510 544,855 127 lots $33.95 N/A $18,500,000 East 9.490 413,240 80 lots $24.20 N/A $10,000,000 1 0.289 12,600 6,000 $59.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,500,000 3 0.861 37,500 25,000 $53.33 $80.00 $2,000,000 4 1.409 61,360 47,200 $65.19 $84.75 $4,000,000 5 1.515 66,000 44,000 $30.30 $45.45 $2,000,000 6 0.482 21,000 14,000 $71.43 $107.14 $1,500,000 7 1.951 85,000 N/A N/A N/A N/A 8 0.189 8,250 7,500 $60.61 $66.67 $500,000 9 0.510 22,220 20,200 $60.76 $66.83 $1,350,000 10 2.936 127,888 61,500 $12.51 $26.02 $1,600,000 11 0.859 37,400 33,312 $24.06 $27.02 $900,000 12 0.200 8,700 5,800 $83.33 $125.00 $725,000 13A 1.334 58,110 29,800 $39.58 $77.18 $2,300,000 13B Included in 13A Included in 13A 22,509 Included in 13A $26.66 $600,000 14 0.754 32,850 21,900 $60.88 $91.32 $2,000,000 15A 1.033 45,000 30,000 $51.11 $76.67 $2,300,000 15B Included in 15A Included in 15A 10,004 Included in 15A $27.49 $275,000 16 1.136 49,500 33,000 $18.69 $28.03 $925,000 17 0.758 33,000 22,000 N/A N/A N/A 18A 1.302 56,700 37,800 $28.22 $42.33 $1,600,000 18B Included in 18A Included in 18A 60,024 Included in 18A $27.07 $1,625,000 19 1.791 78,000 48,000 $25.64 $41.67 $2,000,000 19B Included in 19A Included in 19A 86,424 Included in 19A $27.19 $2,350,000 20 0.832 36,250 25,000 $30.34 $44.00 $1,100,000 21 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 22 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,500,000 24 0.172 7,500 2,100 $26.00 $92.86 $195,000 25A 0.620 27,000 18,000 $55.56 $83.33 $1,500,000 25B Included in 25A Included in 25A 30,012 Included in 25A $26.66 $800,000 26A 0.413 18,000 6,000 $41.67 $125.00 $750,000 26B Included in 26A Included in 26A 15,006 Included in 26A $27.32 $410,000 27A 0.517 22,500 15,000 $75.56 $113.33 $1,700,000 27B Included in 27A Included in 27A 43,212 Included in 27A $27.19 $1,175,000 28 1.180 51,412 11,000 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,900 $47.72 $114.53 $2,050,000 30A 0.337 14,694 36,000 $119.10 $48.61 $1,750,000 30B Included in 30A Included in 30A 32,400 Included in 30A $27.16 $880,000 31 1.240 54,000 36,000 $27.78 $41.67 $1,500,000 FEE SIMPLE MARKET VALUES - ENTRADA 5 Marketing Periods: 127 Lots, West Residential Pod: 23.3± months for the subject’s 127 lots after a 10-month construction period 80 Future Lots, East Residential Pod: 16.3± months for the subject’s future 80 lots after completion in April 2017 Parcels 1 – 31: Three to nine months as vacant land Exposure Periods: Three to nine months as bulk sale of lots Three to nine months as vacant land Market Observations: The neighborhood is situated in close proximity to one of the fastest growing suburban communities of the Dallas/Fort Worth Metroplex and is readily accessible to various employment centers. Schools, hospitals, neighboring shopping, recreation area, and cultural activities are in the immediate area or located nearby. Single-family, multifamily, and retail development should continue in the general area. Development by both the private and public sector along with sound land-use planning will help provide orderly development within the neighborhood in the future as the neighborhood becomes more mature. No adverse influences or conditions were noted that would affect values within the neighborhood. Thus, the future long- term outlook for the general area appears to be promising. 6 SECTION 2 — CERTIFICATION AND LIMITING CONDITIONS We certify 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 our personal, impartial and unbiased professional analyses, opinions, and conclusions.  We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.  Our engagement in this assignment was not contingent upon developing or reporting predetermined results. Furthermore, this appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.  Our compensation for completing this assignment is n ot 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 rel ated to the intended use of this appraisal.  Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with requirements of the State of Texas and also conforms to the requirements of the Financial Institution s Reform, Recovery, and Enforcement Act of 1989 (FIRREA).  The reported analysis, 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 Profession al 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, Jimmy H. Jackson, MAI has complet ed the requirements of the continuing education program of the Appraisal Institute.  As of the date of this report, Ernest E. Gatewood, III has completed the Standards and Ethics Education Requirements for Practicing Affiliates of the Appraisal Institute. 7  Ernest E. Gatewood, III has made a personal inspection of the property that is the subject of this report. Jimmy H. Jackson, MAI and Shelley M. Sivakumar have not made a personal inspection of the property that is the subject of this report.  We have performed three prior appraisals, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.  No one provided significant real property appraisal assistance to the persons signing this report.  Ernest E. Gatewood, III and Jimmy H. Jackson, MAI are currently certified in the State of Texas, and Shelley M. Sivakumar is currently licensed in the State of Texas. Ernest E. Gatewood, III, Jimmy H. Jackson, MAI, and Shelley M. Sivakumar have completed the continuing education requirements set forth with the State of Texas.  Although other appraisers may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy are maintained at all times with regard to this assignment without conflict of interest.  Ernest E. Gatewood, III, Jimmy H. Jackson, MAI, and Shelley M. Sivakumar are in compliance with the Competency Provision in the USPAP as adopted in FIRREA 1989 and have sufficient educatio n and experience to perform an appraisal of the subject property. Ernest E. Gatewood, III Jimmy H. Jackson, MAI Vice President - Commercial Division President/CEO TX-1324355-G TX-1324004-G Expiration: December 31, 2014 Expiration: November 30, 2014 ernestg@jacksonclaborn.com jimmyj@jacksonclaborn.com Shelley M. Sivakumar Staff Appraiser TX-1333354-L Expiration: February 29, 2016 shelleys@jacksonclaborn.com 8 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS Information Used  No responsibility is assumed for accuracy of information furnished by others or from others, including the client, its officers and employees, or public records. We are not liable for such information or for the work of contractors, subcontractors and engineers. The comparable data relied upon in this appraisal has been confirmed with one or more parties familiar with the transaction unless otherwise noted; all are considered appropriate for inclusion to the best of my factual judgment and knowledge.  Certain information upon which the opinions and values are based may have been gathered by research staff working with the appraiser. Names, professional qualifications and extent of their participation can be furnished to the client upon request. Legal, Engineering, Financial, Structural/Mechanical, Hidden Components, Soil  No responsibility is assumed for matters legal in character or nature, nor matters of survey, nor of any architectural, structural, mechanical or engineering nature. No opinion is rendered as to the legal nature or condition of the title to the property, which is presumed to be good and marketable. The property is appraised assuming it is free and clear of all mortgages, liens or encumbrances, unless otherwise stated in particular parts of this report.  The legal description is presumed to be correct, but we have not confirmed it by survey or otherwise. We assume no responsibility for the survey, any encroachments or overlapping or other discrepancies that might be revealed thereby.  We have inspected, as far as possible by observation, the land and improvements thereon; however, it was not possible to personally observe conditions beneath the soil or hidden structural, or other components, or any mechanical components within the improvement; as a result, no representation is made herein as to such matters unless otherwise specifically stated. The market value opinion assumes that no such conditions exist that would cause a loss of value. We do not warrant against the occurrence of problems arising from any of these conditions. It is assumed that there are no hidden or unapparent conditions to the property, soil, subsoil or structures, which would render them more or less valuable. No responsibility is assumed for any such conditions or for any expense or engineering to discover them. All mechanical components are assumed to be in operating condition standard for the properties of the subject's type. If applicable, the condition of the heating, cooling, ventilation, electric and plumbing equipment is considered to be commensurate with the condition of the balance of the improvements, unless otherwise stat ed. No judgment is made as 9 to the adequacy of insulation, engineering or energy efficiency of the improvements or equipment.  Information relating to the location or existence of public utilities has been obtained through verbal inquiry to the appropriate utility authority, or has been ascertained from visual evidence. No warranty has been made regarding the exact location or capacities of public utility systems. Subsurface oil, gas or mineral rights were not considered in this report unless otherwise stated. Legality of Use  The appraisal is based on the premise that there is or will be full compliance with all applicable Federal, State and local environmental regulations and laws, unless otherwise stated in the report; and that all appropriate zoning, bui lding and use regulations and restrictions of all types have been or will be complied with and required licenses, consent, permits or other authority, whether local, State, Federal and/or private, have been or can be obtained or renewed for the use intended and considered in the opinion of value. Component Values  The distribution of the total valuation of this report between land and improvements applies only under the proposed program of utilization. The separate valuations of land and buildings must not be used in conjunction with any other appraisal, and are invalid if so used.  A report related to an estate that is less than the whole fee simple estate applies only to the fractional interest involved. The value of this fractional interest, plus the value of all other fractional interests, may or may not equal the value of the entire fee simple estate considered as a whole.  A report relating to the geographic portion of a larger property applies only to such geographic portion and should not be consider ed as applying with equal validity to other portions of the larger property or tract. The value for such geographic portions, plus the value of all other geographic portions, may or may not equal the value of the entire property or tract considered as a single entity.  All valuations in the report are applicable only under the estimated program of the highest and best use and are not necessarily appropriate under other programs of use. 10 Auxiliary and Related Studies  No environmental or impact studies, spe cial market study or analysis, highest and best use analysis study or feasibility study has been requested or made by us unless otherwise specified in this report or in my agreement for services. I reserve the unlimited right to alter, amend, revise or res cind any of these statements, findings, opinions, values, estimates or conclusions upon any subsequent study or analysis or previous study or analysis that subsequently becomes available to us. Dollar Values, Purchasing Power  The opinion of value and the costs used herein are as of the date of the opinion of value. All dollar amounts are based on the purchasing power and price of the United States dollar as of the date of opinion of value. Inclusions  Furnishings and equipment or business operations, exc ept as otherwise specifically indicated, have been disregarded, with only the real estate being considered. Proposed Improvements Conditioned Value  For the purpose of this appraisal, on- or off-site improvements proposed, if any, as well as any repairs required, are considered to be completed in a good and workmanlike manner according to information submitted and/or considered by us. In cases of proposed construction, the report is subject to change upon inspection of the property after construction is co mplete. The opinion of value, as proposed, is as of the date shown, as if completed and operating at levels shown and projected. Value Change, Dynamic Market Influences  The opinion of value is subject to change with market changes over time. Value is highly related to interest rates, exposure, time, promotional effort, supply and demand, terms of sale, motivation and conditions surrounding the offering. The opinion of value considers the productivity and relative attractiveness of the property both physically and economically in the marketplace.  The opinion of value in this report is not based in whole or in part upon race, color or national origin of the present owners or occupants of the properties in the vicinity of the property appraised. 11  In the event this appraisal includes the capitalization of income, the opinion of value is a reflection of such benefits and my interpretation of income and yields and other factors which were derived from general and specific market information. Such opinions of value are made as of the date of the opinion of value. As a result, they are subject to change, as the market is dynamic and may naturally change over time. The date upon which the opinion of value applies is only as of the date of valuation, as stated in th e letter of transmittal. The appraisal assumes no responsibility for economic or physical factors occurring at some later date which may affect the opinion stated herein.  An appraisal is the product of a professionally trained person, but nevertheless is an opinion only, and not a provable fact. As a personal opinion, a valuation may vary between appraisers based upon the same facts. Thus, the appraiser warrants only that the value conclusions are his best opinion as of the date of valuation. There are no guaranties, either written or implied, that the property would sell for the expressed opinion of value. Sales History  Unless otherwise stated, the appraiser has not reviewed an abstract of title relating to the subject property. No title search has been made, and the reader should consult an attorney or title company for information and data relative to the property ownership and legal description. It is assumed that the subject title is marketable, but the title should be reviewed by legal counsel. Any information given by the appraiser as to a sales history is information that the appraiser has researched; to the best of our knowledge, this information is accurate, but not warranted. Management of the Property  It is assumed that the property which is the subject of this report will be under prudent and competent ownership and management over the entire life of the property. If prudent and competent management and ownership are not provided, this would have an adverse effect upon the value of the propert y appraised. Confidentiality  We are not entitled to divulge the material (evaluation or valuation) content of this report and analytical findings or conclusions, or give a copy of this report to anyone other than the client or his designee, as specified in writing, except as may be required by the Appraisal Institute, as they may request in confidence for ethic enforcement, or by a court of law with the power of subpoena. 12  All conclusions and opinions concerning the analyses as set forth herein are prepared by the appraisers whose signatures appear. No change of any item in the report shall be made by anyone other than the appraiser, and the firm shall have no responsibility if any such unauthorized change is made.  Whenever our opinion herein with respect to the existence or absence of fact is qualified by the phrase or phrases "to the best of our knowledge", "it appears" or "indicated", it is intended to indicate that, during the course of our review and investigation of the property, no information has come to our attention which would give us actual knowledge of the existence or absence of such facts.  The client shall notify the appraiser of any error, omission or invalid data herein within 10 days of receipt and return of the report, along with all co pies, to the appraiser for corrections prior to any use whatsoever. Neither our name nor this report may be used in connection with any financing plans which would be classified as a public offering under State or Federal Security Laws. Copies, Publication, Distribution, Use of Report  Possession of this report, or any copy thereof, does not carry with it the right of publication, nor may it be used for other than its intended use. The physical report remains the property of the firm for the use of the cli ent, with the fee being for the analytical services only. This report may not be used for any purpose by any person or corporation other than the client or the party to whom the report is addressed. Additional copies may not be made without the written con sent of an officer of the firm, and then only in its entirety.  Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations effort, news, sales or other media without my prior written consent and approval of the client.  It has been assumed that the client or representative thereof, if soliciting funds for his project, has furnished to the user of this report complete plans, specifications, surveys and photographs of land and improvements, a long with all other information which might be deemed necessary to correctly analyze and appraise the subject property. Trade Secrets  The information found within this report was obtained from Jackson Claborn, Inc. or related companies and/or its individuals and consists of "trade secrets and commercial or financial information" which is privileged and confidential. Notify the appraisers signing the report or an officer of Jackson Claborn, Inc. of any request to reproduce this report in whole or in part. 13 Testimony, Consultation, Completion of Contract for Appraisal Services  A contract for appraisal, consultation or analytical services is fulfilled and the total fee is payable upon completion of the report. The appraisers or those assisting in the preparation of the report will not be asked or required to give testimony in court or hearing because of having made the appraisal in full or in part, nor will they be asked or required to engage in post appraisal consultation with client or third parties except under separate and special arrangement and at an additional fee.  Any subsequent copies of this appraisal report will be furnished on a cost plus expenses basis, to be negotiated at the time of request. Limit of Liability  Liability of the firm and the associates is limited to the fee collected for preparation of the appraisal. There is no accountability or liability to any third party. Fee  The fee for this appraisal or study is for the service rendered, and not for time spent on the physical report. The acceptance of the report by the client takes with it the agreement and acknowledgement that the client will pay the negotiated fee, whether said agreement was verbal or written. The fee is in no way contingent on the value opinion. Special Conditions of Appraisal Report  All information relative to the remaining developed and undeveloped property located within the Town of Westlake Series 2015 PID, including land areas, lot amounts, lot and tract sizes, maximum home and building sizes, and other pertinent data that was provided by G & A Consultants, LLC (site planning, civil engineering, platting, land surveying, landscape architecture ), Michael Beaty, the Town of Westlake, and the Tarrant Appraisal District is assumed to be correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  As the subject represents a proposed construction project, this report contains prospective opinions of value. As such, we have assumed that the market conditions as discussed and considered within this report will be similar on the prospective valuation date. Further, we cannot be held responsible for unforeseeable events that alter market conditions prior to this prospective effective date. The prospective market value date is approximately 10 months from the effective date of this appraisal, due to the development of Phase I taking approximately 10 months to complete. 14  The valuations found herein are subject to the Town of Westlake appro ving and authorizing the creation of the “Town of Westlake Series 2015 Public Improvement District” to finance the costs of certain public improvements for the benefit of property in the district. Thus, as the district is developed with housing, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain development expenses. The property in the district totals 85.921 acres and upon completion of developmen t will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Commercial Parcels. Proceeds from the bond sales will finance improvements that benefit all of the property. Assessments will be imposed on all property within the “Town of Westlake Series 2015 PID” for the improvements that benefit the entire PID with the public improvements to be provided relative to each phase. This has been assumed in our valuation. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  Our “Prospective Value” opinions relative to the subject are based upon the specific site plan that was approved by the Town of Westlake in November 2013. This site plan specifically details the number of residential lots as well as the maximum building sizes for the entire development. Our values are also based upon the assumption that the development described herein is compl ete by September 1, 2015. Development includes the interior streets and utilities for the 127 residential lots, as well as the completion of water, sewer, and storm drainage and road construction to the borders of the pod allowing 80 future residential lots (East Residential Pod) as well as the 31 Commercial Parcels. It is assumed this information is correct. If it is found that the information supplied to us is significantly different than our assumption, our assignment results might be affected.  It is noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in the Dallas/Fort Worth Market area. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. We have valued the 31 mixed -use pods based on the exhibits provided that show the allowed building size allowable in conjunction with the individual pods location, land size and potential highest and best use.  Local and regional lending institutions appear to remain active within the subject’s market for specific projects. Therefore, we specifically assume that the financial markets will continue to function in a competitive, efficient fashion. However, we cannot be held responsible for unforeseeable events that alter market conditions. 15 SECTION 3 — PREMISES OF THE APPRAISAL Purpose of Appraisal The purpose of this appraisal is to provide an opinion of the market values of th e fee simple interest of the prospective market value “upon completion of development”. This includes the prospective value of 127 completed residential lots (West Residential Pod) on 12.510 acres upon completion of development as of September 1, 2015, the prospective value of 80 proposed lots (West Residential Pod) on 9.490 acres upon completion of development as of September 1, 2015, and the prospective value of 31 Commercial Parcels upon completion of development as of September 1, 2015 under the reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), as defined by the Appraisal Foundation. Competency of Appraisers The appraisers' specific qualifications are included within this report. These qualifications serve as evidence of their competence for the completion of this appraisal assignment in compliance with the competency provision contained within the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of the Appraisal Foundation. The appraisers' knowledge and experience, combined with their professional qualifications, are commensurate with the complexity of this assignment based on the following:  Professional experience  Educational background and training  Business, professional, academic affiliations and activities The appraisers have previously provided consultation and opinion of values for various types of similar properties in Texas. Scope of Assignment and Reporting Process This Appraisal is reported in an “Appraisal Report” format which is intended to comply with the reporting requirements set forth under Standards Rule 2 -2 (a) of the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation. The scope of this appraisal has been to collect, confirm, and report data. Other general market data and conditions have been considered. It is noted that the scope of work is stated throughout the report. The appraisal is based on the information gathered by the appraiser from public records, ot her identified sources, inspection of the subject property and neighborhood, and selection of comparable sales, listings, and/or rentals within the subject market area. Any inspection noted herein included the property being appraised as well as the neighborhood in which it is located. During the inspection, an inventory of the property attributes was collected based on visual observation. The purpose of any sketch, plans, 16 building/unit layout, etc. provided is to best determine a reasonable estimation of the size and/or improvement layout of the subject and other notable improvements. This information is for referencing purposes only and may not accurately reflect the size, scale, and/or location of the improvement. A survey and/or architect should be rel ied upon for these purposes. (NOTE: The term “inspection” should not be construed to be a professional engineer’s report concerning the condition of the building, structural integrity, or condition of any mechanical items. If the client has concerns of thi s type, a professional engineer’s inspection and report are recommended. That type of inspection is beyond the scope of work of this assignment and the professional abilities of a certified appraiser. This inspection is made only for observation of propert y attributes). The scope of this Appraisal Report has been to collect, confirm, and report data, while other general market data and conditions have been considered. Consideration and research has been performed regarding the subject property's zoning an d surrounding improvements and neighborhood. We have investigated public records for the property's zoning, flood hazard area classification, and property tax assessor's records for attributes of the property. We have also investigated the subject’s qualit y and condition with available market participants to the sale (i.e., broker, owner, seller, buyer, tenant, etc.) and stated the current use of the subject. Consideration of the highest and best use of the land and property as vacant and improved (if applicable) has been analyzed. If applicable to the assignment, we have collected and analyzed the following as necessary to the assignment:  Researched cost estimates from published and recognized data sources and applied recognized depreciation estimates which would lead to the completion of the Cost Approach.  Researched comparable rents of similar improved properties, made a comparative analysis which would lead to completion of market rent and the Income Approach to Value.  Researched the subject’s historical income and expenses, published and recognized data sources, as well as comparable data of competing properties’ historical income and expenses to project future income and expenses for the subject property which would lead to completion of the Income A pproach to Value.  Researched comparable sales, recognized and published data sources, as well as utilized recognized appraisal techniques to arrive at a supportable capitalization rate and/or discount rate which would lead to completion of the Income Approach to Value.  Researched comparable sales of similar improved and vacant land properties and made a comparative analysis which would lead to completion of the Sales Comparison Approach to Value as improved and/or as vacant land. 17 The original source of the comparables is described in the Data Source section of the market grid along with the source of confirmation, if available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided, the source deemed most reliable has been used. Data believed to be unreliable was not included in the report or used as a basis for the value conclusion. Data obtained during the search for comparables was obtained through recognized private sources as well as public sources (i.e., CoStar, Inc, Multiple Listing Service, LoopNet, Roddy Report, ALN Online, local appraisal districts, county records, etc.) as well as conversations and research with area market participants. It is noted that Texas is a "non-disclosure" state and sales prices are not a part of public record. As Texas is a "non-disclosure state," buyers and sellers of real property are under no legal obligation to disclose prices of transactions. For this reason, although there may have been numerous other actual sales, those included herein are not only deemed most relevant, but are those upon which reliable sale price data are available. Based on location of comparables as well as client requirements, the comparables may or may not have been inspected. However, significant research was performed on each comparable through various data sources (i.e., tax records, aerial mapping systems, city websites and office resources, county websites and office resources, etc.). The extent of research performed was dependent on the complexity of the assignment and detail needed to adequately represent the comparable. Hence, we have relied upon best and common practices in verifying comparable data utilized herein and have assumed it to be accurate and reliable. In reporting the data collected and analyzed, we have summarized the scope of work used to develop the appraisal as well as summarized the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions. Any exclusions of the sales comparison approach, cost approach, or income approach have been explained. We have also stated the use of the property existing as of the date of value and provided an opinion of highest and best use. We have also summarized the support and rationale for that opinion. The data and analysis found herein is summarized. Adequate data and analysis was provided to give the user an explanation of our thought and rationale. It is noted that more detailed information may be available in our work files that was relied upon to arrive at analysis and conclusions contained in this report. The appraiser performed the appraisal in conformity with the Uniform Standards of professional Appraisal Practice and Title XI o f the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and any implementing regulations in effect at the time the appraiser signs the appraiser's certification. Hence, the contents of this report an d the analysis presented herein is written in an effort to comply and meet all applicable Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.) regulations and guideline requirements. However, it is noted that much of these guidelines do not deal directly with the appraisal process and that in the normal course of business we are not expected to be an expert in all of these guidelines. 18 Definition of Value We have been asked to appraise the market value of the subject, which is defined by The Appraisal Foundation in the Uniform Standards of Professional Appraisal Practice, and the Code of Federal Regulators under Chapter 12 C.F.R. Part 34.42(g) as follows: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:  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 with 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. 1 Property Rights The property ownership rights appraised in this appraisal are those known as “fee simple”. Fee Simple Interest “Absolute ownership unencumbered by any other interest or estate; subject to the four powers of government. The four powers of government are eminent domain, escheat, police power, and taxation”.2 Prospective Market Value “A forecast of the value expected at a specified future date. A prospective value opinion is most frequently sought in connection with real estate projects that are proposed, under construction, or under conversion to a new use, or those that have not achieved sellout or a stabilized level of long-term occupancy at the time the appraisal report is written”. 1 12 C.F.R. Part 34.42 (g) and The Dictionary of Real Estate Appraisers 5th Edition, the Appraisal Institute, Chicago, Illinois (U.S. 2010) 2 Ibid. 19 Intended Use of Appraisal It is our understanding that the intended use of the appraisal is to provide an opinion of value for the underwriting of development bonds. Intended User of Appraisal The intended user of this appraisal assignment is identified as Jefferies, LLC and the Town of Westlake. No one other than the stated and specifically identified intended user should rely upon the estimate of value or any other conclusions contained in this appraisal report. Prohibited users include any participants from equity participation and/or debt structured participation, as well as present or future purchasers/lessees or sellers/lessors of the subject property. Jackson Claborn, Inc. assumes no liability to any and all unnamed third party non -intended users who attempt to rely upon this appraisal report for any purposes. Date of Opinion of Value The market value opinions presented in this report are applicable as of September 1, 2015. Date of Property Inspection The subject property was physically inspected by Ernest E. Gatewood, III on November 1, 2014. Identification/Use of the Property The subject’s Phase I represents 127 proposed single-family lots on 12.510 acres (10.2 upa) which is part of an original assemblage of 85.921 acres within contiguous multiple tracts of vacant land. The property is being developed as a master-planned, mixed-use development to be known as Westlake Entrada. The subject of this report also represents the future parcels of commercial land (Parcels 1 thru 31), as well as the residential (east) parcel which is planned with an additional 80 single-family lots on 9.490 acres after completion of Phase I. The subject is further identified as follows: Location: Southeast corner of SH-114 and Precinct Line Road/Davis Boulevard, Westlake, Texas County: Tarrant County Current Owner of Record: Maguire Partners - Solana Land, LP Tax Parcel ID’s: 04319087, 04319109, 05243297, 05243343, 07121202, 40888584, 05243351, 04519329, 40778436, 40778479, and 40778487 20 Legal Description: Being 85.921 acres of land situated in the C. M. Throop Survey, Abstract No. 1510, the W. Medlin Survey, Abstract No. 1958, the William Pea Survey, Abstract No. 1246, the Joseph Henry Survey, Abstract No. 1958, Tarrant County, Texas and the W. Medlin Survey, Abstract No. 1588, the William Pea Survey, Abstract No. 1045, and the Joseph Henry Survey, Abstract No. 528 and 529, Denton County, Texas History of the Property The Uniform Standards of Professional Appraisal Practice requires a statement of the sales history of the subject property for the three years prior to the appraisal date. The subject was acquired by the current owner, Maguire Partners - Solana Land, LP, as part of a larger land purchase in August of 2013 for an undisclosed price. The property owner obtained the site by purchasing the underlying note and subsequent foreclosure. The ownership entity had controlled the site for over three years prior to the purchase of Maguire Partners – Solana Land, LP. It is our understanding that 56 of the single family lots in the West Residential Pod are currently under contract. We have not been provided with the contracts and do not know if the lots were priced individually. However, they are reportedly contracted as follows: CONTRACTED LOTS IN WEST RESIDENTIAL POD # Lots Purchasing Entity Total Price Average/Lot 16 Tresor $2,197,556 $137,347 27 Tresor $5,850,575 $216,688 13 Veranda Designer Homes $2,673,303 $205,639 56 $10,721,434 $191,454 To our knowledge, none of the subject’s proposed commercial tracts are currently under contract. Furthermore, it is our understanding that this valuation will be used in part to assist in establishing future asking prices. 21 Appraisal Analysis and Report Type The Appraisal Standards Board controls the process of making an appraisal of a parcel of real estate. The Board issues rules and guidelines from which all appraisals and resulting reports are made. The process of administration of those rules and guidelines is addressed to the Real Estate Appraiser Commission of each respective state. The Appraisal Standards Board issues the rules and guidelines in the form of a document update published each year by The Appraisal Foundation. That document is entitled “The Uniform Standards of Professional Appraisal Practice” (USPAP). The analysis process is composed of several distinctive steps that appraisers follow to gain a thorough understanding of the property and factors that affect its value. There are two types of reports. They are: Appraisal Report and Restricted Appraisal Report. The following definitions have been adopted for each type of report:  Appraisal Report: A written report prepared under Standards Rule 2 -2 (a)  Restricted Appraisal Report: A written report prepared under Standards Rule 2-2 (b) This appraisal of the subject has been presented in the form of an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2 (a) of the USPAP. Exposure Time Exposure time is the estimated length of time the property would have been offered prior to a hypothetical market value sale on the effective date of appraisal. It is a retrospective estimate based upon an analysis of recent past events, assuming a competitive and open market. It assumes not only adequate, sufficient, and reasonable time but also adequate, sufficient, and reasonable marketing effort. Exposure time is therefore interrelated with appraisal conclusion of value. An estimate of exposure time is not intended to be a prediction of a date of sale or a simple one-line statement. Instead, it is an integral part of the appraisal analysis and is based upon one or more of the following:  statistical information about days on the market  information gathered through sales verification  interviews of market participants. The reasonable exposure period is a function of price, time, and use. It is not an isolated estimate of time alone. Exposure time is different for various types of real estate and under various market conditions. In consideration of these factors, we have analyzed the following: 22  exposure periods of comparable sales revealed during the course of this appraisal;  macroeconomic exposure times for the subject property type across the subject MSA and the entire United States as published in multiple articles and websites.  knowledgeable real estate professionals. Based upon the foregoing analysis, an exposure time of three to nine months is reasonable, defensible, and appropriate. This exposure time assumes the subject would have been competitively priced and aggressively promoted within the market area. Marketing Time Marketing time is the period a prospective investor would forecast to sell the s ubject property immediately after the date of value, at the value opinion. The marketing time is an estimate of the number of months it will require to sell the subject from the date of value, into the future. The anticipated marketing time is essentially a measure of the perceived level of risk associated with the marketability, or liquidity, of the subject property. The marketing time estimate is based upon the data used in estimating the reasonable exposure time, in addition to an analysis of the anticip ated changes in market conditions following the date of appraisal. The future price for the subject (at the end of the marketing time) may or may not equal the value opinion found herein. The future price depends upon unpredictable changes in the physical real estate, demographic and economic trends, real estate markets in general, supply/demand characteristics for the property type, and many other factors. Based upon the premise that present market conditions are the best indicators of future performance, a prudent investor will forecast that, under the conditions described above, the subject will require a marketing time of approximately three to nine months for the future phases and approximately 23.3± months to sell-out of the 127 residential lots within Phase I after a 10-month construction period, approximately 16.3± months for the subject’s future 80 lots within Phase II after completion in April 2017, and approximately three to nine months as a bulk sale as lots. 23 SECTION 4 — PRESENTATION OF DATA Metropolitan Area Data In summary, the interaction of the environmental, governmental, social and economic forces has contributed to the diversified economic base of the Metroplex. The overall real estate market throughout the Metroplex is currently experiencing a moderate upward cycle following market conditions currently transpiring across the United States. Future economic recovery is in process. The recovery of the economy should translate into the continued growth of the local real estate markets. Qua lity of life should continue to remain good due to the abundance of cultural and recreational facilities. Furthermore, the Metroplex is in an excellent position for continued future growth. It has a strong and diverse employment base that enables it to weather economic cycles. Employment and population growth are projected to continue to spur further growth in the real estate market over the next three to five years. Dallas/Fort Worth and the region have excellent accessibility to North America's major markets. DALLAS/FORT WORTH AREA MAP 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NEIGHBORHOOD DATA A neighborhood is a grouping of complementary land uses affected by similar operation of the four forces that affect property value. These four forces include social, economi c, governmental, and environmental forces. The objective of doing an analysis of the neighborhood is to observe and/or quantify data indicating discernible patterns of growth, structure, and change that may detract or enhance property values. The subject property is physically located in the northeastern area of Westlake in Tarrant County, Texas in close proximity to the City of Southlake. The following table is a summary of the subject’s neighborhood boundaries. NEIGHBORHOOD BOUNDARIES North: Grapevine Lake South: Cities of Southlake/Keller Boundary Lines East: DFW International Airport West: US-377 NEIGHBORHOOD MAP 51 General Development General development within the neighborhood consists of rural land with scattered home sites. The defined neighborhood has been dominated by residential rural community uses. Most of the development within close proximity of the subject ranges from new to 50 years old, more or less. Along SH-114, land uses consist of business parks and vacant land. Other land uses within close proximity to the subject include residential housing. Area influences include an emerging residential base. Neighborhood Life Stage The life stage of the neighborhood is growth. Area/Neighborhood Summary: Population Trend: Increasing Range in Improvement Ages: New to 50 years Public Transportation: None Development Built-up: 50% Maintenance/Condition: Average Property Compatibility: Average Appeal/Appearance: Average Protection/Adverse Influence: Average Development Potential: Average Neighborhood Access: Average Police/Fire: Average as compared to other neighborhoods in this market area Supply/Demand: Residential: Vacant lot supply within the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets is estimated to be between 1.7± to 1.9± years which is below the ideal level of two to 2.5 years. 52 Commercial: The vacancy rate for retail development is at 7% and at 14% for office development in the current quarter. Development Trend: Vacant land to residential, commercial, and retail usages Value Trend: Increasing Population Trend: Upward Employment Stability: Average Vacancy Trend: Decreasing Change in Land Use: Vacant land to residential and commercial support facilities 53 DEMOGRAPHIC PROFILE A study prepared by Site to Do Business (STDB) in October 2014, based upon 2010 census data and forecasted figures for 2013 - 2018, analyzes the population within a five-mile radius of the subject property, and includes the majority of the subject neighborhood. The following is a summary of the demographic data . DEMOGRAPHIC PROFILE MAP 54 55 56 57 General Real Estate Trends The Town of Westlake was named “America’s Most Affluent City in the Country” by Forbes magazine in 2011 and tied for the most affluent city in 2012. The city/neighborhood has several high profile developments. The most important are discussed as follows:  Southlake Town Square is a 130-acre “small-town downtown” that serves the City of Southlake, as well as the surrounding area. The square includes retail, office, restaurants, entertainment, housing, a hotel, and civic institutions including a post office, town hall, and library. The first phase of Southlake Town Square was designed by renowned architect David Schwarz to look as if it had evolved naturally over a 100-year period and all phases added have embraced that same underlying design principle. Phase I opened in March of 1999 and consisted of 234,881 square feet of office and retail. A city park and pavilion established Southlake’s first Main Street. Over the next four years, Southlake Town Square grew to 14 restaurants, 58 offices, and 67 retail stores, including most of the nation’s leading retailers. In addition, construction was recently completed for 46,795 square feet of additional retail and office space, in addition to a 14-screen Harkins Southlake Town Center movie theater and a Hilton Hotel.  Forest Park Medical Center is currently under construction on the south side of SH-114 just east of N. White Chapel Boulevard. The proje ct will include an acute care hospital of approximately 140,000 square feet, a medical office building of approximately 80,000 square feet, and a parking garage. This represents the first phase of development of what will ultimately be a 30 acre medical ca mpus encompassing roughly one million square feet of medical uses. The three -level hospital will have 12 operating rooms, two procedure rooms, 46 inpatient rooms, VIP suites, ICU beds, and an emergency room, and will employ about 300 people. A variety of diagnostic and treatment services will be provided at the facility to meet patient needs in the region.  Solana is an internationally acclaimed campus project located in Southlake and Westlake, Texas along the Highway 114 Corridor, eight minutes northwest of Dallas/Fort Worth International Airport. The 900-acre site is being developed in phases as a mixed-use development of low-rise campus office buildings, a Village Center comprised of hotel, retail, restaurant, educational and recreational space, and a single-family residential community. To date, over 2.5 million square feet of office space has been constructed, including the highly acclaimed headquarters for Sabre Holdings.  Bob Jones Park, located on North White Chapel Road, is a 484 -acre park (including a Corps of Engineer’s lease) including a nature center, a six-acre and a two-acre pond with pavilions and docks, equestrian trails with equestrian parking lots, 17 soccer fields (three with lights), six practice ball fields, and an amphitheater providing recreational activities for the area. 58  Royal and Annie Smith Park is a 13-acre park which is proposed to be improved with a paved nature study area.  Southlake Pathways is a master-planned system adopted in May of 2001 recommending a total of 40 miles of multi-use trails including seven miles of cross-country trails and four miles of natural greenway trails. The trails are planned for pedestrian, bicyclist, and equestrian recreational use and are to connect to existing greenbelt trail systems in Westlake, Keller, Colleyville, and Southlake.  Westlake Entrada will provide a new spirit to the town of Westlake. Currently being designed and planned, Westlake Entrada will be a $410,000,000±, master-planned project, built to perfect the ideology of NeoRetroism. The Westlake project will be a development comprising all a resident would need for daily life - commercial, retail, and residential. Westlake Entrada is the closest one can get to living in a true village; it will offer even the very basics, such as a farmers’ market. Westlake Entrada hopes to break ground on Westlake’s first mixed-use development in Summer 2014. The European-style village, featuring Spanish style architecture, will be located at SH-114 and Precinct Line Road/Davis Boulevard and will include up to 322 residences, as well as retail shops, hotels, restaurants, medical offices, entertainment options, an amphitheater, and a large water feature which will include a Venetian -type signature bridge.  Westlake Academy - The Town of Westlake owns and operates Westlake Academy, a prestigious and innovative charter school that offers all three programs of the rigorous International Baccalaureate (IB) curriculum - Primary Years Programme, Middle Years Programme, and the Diploma Programme. Westlake Academy continues to maintain the rating of Exemplary awarded by the Texas Education Agency. Additionally, Westlake Academy has been nationally ranked by US News & World Report, Newsweek, and the Washington Post. All Westlake residents are eligible to enroll at Westlake Academy. Nearly 700 students currently attend the academy in grades K -12th.  Granada is a new, gated, single-family development to be located at the northeast corner of Dove Road and FM-1938 in the Town of Westlake. This development is platted and being developed with 84 lots on approximately 84.28 net acres (1.0 upa) and is planned for homes in the $1.2 million range. Approximately 13 of the lots are located within the Keller ISD boundary lines and the remaining lots in the Carroll ISD boundary lines. 59 Conclusion The neighborhood is characterized as one of the more affluent cities in northeast Tarrant County as well as the United States. The Town of Westlake is comprised of one primary thoroughfare, SH-114 which links it to surrounding cities such as Southlake and Trophy Club, as well as access to other thoroughfares that provide access to neighboring communities of Colleyville, Keller, and North Richland Hills. The neighborhood is comprised of luxurious homes that are support for the large amount of office and light industrial facilities in the general market area. Furthermore, the neighborhood’s central location to the DFW International Airport and Fort Worth Alliance Airport has also fueled growth and development for commercial facilities within the neighborhood. Therefore, the overall social, environmental, and governmental forces currently affecting the neighborhood are generally positive. No significant detrimental influences are noted. 60 WESTLAKE ENTRADA MASTER PLAN 61 WESTLAKE ENTRADA MASTER PLAN - POD LAYOUT 62 WESTLAKE ENTRADA MASTER PLAN – BLOCK DESIGNATIONS 63 PLAT OF EAST RESIDENTIAL POD 64 GENERAL DESCRIPTION OF WESTLAKE ENTRADA The subject property overall totals 85.921 gross acres and has been engineered to be developed as a master-planned, mixed-use community to be known as “Westlake Entrada”. The planned development is intended to promote the compatible mixed -use development of retail, office, hotel, attached and detached residential, vertically- integrated mixed-use buildings, Artisan suites, and core civic uses such as Town Halls, performing arts centers, libraries, and educational facilities in a pattern evocative of small European Village Centers. Also key to Westlake Entrada will be the creation of a large-scale water feature with several signature bridges including one premier pedestrian bridge similar to those found in Venice, Italy. It is expected that several operating boats may be placed on this water feature to operate as a water taxi. Additionally, a focus on water-front development will provide services such as a café, diner, boutique hotel, or other similar curio uses along the harbor’s edge. The community is to be developed around an 8.340-acre lake which will wind throughout the development and will include approximately 9.200 acres of open space. This proposed development will provide a total of 207 residential lots including 127 single-family lots on 12.510 acres (10.2 upa) within the initial phase of development (West Residential Pod). The development will also include the creation of the 31 commercial/mixed-use pods that include 115 residential condominiums as shown on the development plan. Future development work will also include a super pad (East Residential Pod) allowing for an additional 80 single-family lots on 9.490 acres (8.4 upa). The bond development will include all required offsite costs such as the extension of public water and sanitary sewer to the site as well as the creation of the aforementioned lake with concrete walk and 18’ of freeboard that will accommodate the entire development for water detention purposes. This allows for a higher level of development for each of the subject’s commercial/mixed-use pods as well as the residential lots. This will be discussed in more detail later in this report. Development of all interior streets, with the exception of Luarca which serves the proposed single family lots within the East Residential Pod, will be completed as part of the bond development. Finally, all interior street and utility development will be completed to serve the 127 residential lots in Phase I (West Residential Pod). The development will include numerous interior streets providing access to the dif ferent neighborhoods within the development. They include Cuenca, Zafra, Baeza, Carmona, Ronda Mijas, Nerja, Elche, Sitges, Cadaques, Santilla del Mar, Deia, Pedraza, Luarca, Valdes, Foncebadon, Consuerga, Galisteo, Ciudad Real, Fondon, Comillas, and Arta. 65 The main entry to the development from Davis Boulevard will be Santilla del Mar, a two - lane thoroughfare (37’ foot right-of way) extending southeasterly through the development to Ciudad Real at the southern boundary which is also the main entry from Solana Boulevard. Ciudad Real will be a four-lane divided thoroughfare (59 foot right-of way). The remaining roadways will be two-lane thoroughfares (33 foot right-of way) providing secondary access to the interior portions of the property It is noted that the 31 commercial/mixed-use Pods will have varying land sizes. In addition, the parcels also have varying allowance of density (amount of building per land site). We have provided a summary of the parcels in the following exhibit: Parcel No.Block Building Use Site Plan Designation Description Total Building Square Footage Pad Size/Gross SF Size/Gross Acres Zoning - Use 1 A Commercial Corner Retail Bank 1 & Retail 6,000 12,600 0.29 Village-MU 2 Q Office (Commercial)6 Building Complex 2-acres Hillside Office Complex 112,000 84,000 1.93 Village-MU 3 B Commercial Gas Pad Gymnastics / Dance Studios 25,000 37,500 0.86 Village-MU 4 B Commercial Gas Pad Retail Shops & Stores 47,200 61,360 1.41 Village-MU 5 B Office (Commercial)Gas Pad Administrative, Medical Office 44,000 66,000 1.52 Village-MU 6 B Office (Commercial)Gas Pad D-13 Retail 7600 sqft 14,000 21,000 0.48 Village-MU 7 B Public Gas Pad Parking Garage - 200 per floor, 5 floors 85,000 1.95 Village-MU 8 B Commercial Gas Pad Bank 2 - Inline Gas Pad with 2 above 7,500 8,250 0.19 Village-MU 9 C Commercial Coliseum Childrens Theater / Museum / Bakery 20,200 22,220 0.51 Village-MU 10 C Hospitality (Commercial)114 Boutique Hotel on the Hillside - 80 Villas 61,500 127,888 2.94 Village-MU C Public Coliseum Back of House for Coliseum - 4 stories - 37,400 0.86 Village-MU C 12 Condos Condo Residential Coliseum Condos 33,312 - - Village-MU 12 C Commercial Waterfront Chapel Reception Hall - Trogir 5,800 8,700 0.20 Village-MU C Commercial Waterfront Restaurants on the Water 29,800 58,110 1.33 Village-MU C 9 condos Condo Residential 9 Condos over restaurants 22,509 - - Village-MU 14 D Commercial Farmers Market Waterfront Retail 21,900 32,850 0.75 Village-MU D Commercial Waterfront First Floor Retail 30,000 45,000 1.03 Village-MU D 4 Condos Condo Residential Retail Harbor Residential 10,004 - - Village-MU 16 D Institutional Waterfront Assisted Living 33,000 49,500 1.14 Village-MU 17 D Office (Commercial)Waterfront Town Hall - TWO-Story Office 22,000 33,000 0.76 Village-MU D Commercial Waterfront Harbor Retail - First Floor Only 37,800 56,700 1.30 Village-MU D 24 Condos Condo Residential Retail Harbor Residential 60,024 - - Village-MU D Commercial Waterfront Harbor Office Wrap - 48k sqft 48,000 78,000 1.79 Village-MU D 24 Condos Condo Residential Harbor Wrap Condos 86,424 - - Village-MU 20 F Commercial Plaza Nursing Building - First Floor Plaza Retail 25,000 36,250 0.83 Village-MU 21 F Hospitality (Commercial)Plaza Hotel 1 on plaza 120 rooms 97,000 87,500 2.01 Village-MU 22 F Hospitality (Commercial)Plaza Hotel 2 on plaza 120 rooms 97,000 87,500 2.01 Village-MU 23 F Institutional Plaza Nursing - 193 Units at 1200 sqft 231,600 97,312 2.23 Village-MU 24 I Office (Commercial)Corner Office Information Center 2,100 7,500 0.17 Village-MU N Commercial Corner Retail 18,000 sqft Retail 18,000 27,000 0.62 Village-MU N 12 Condos Condo Residential Resi over Retail 30,012 - - Village-MU N Commercial Corner Retail D-13 Retail 1600 sqft 6,000 18,000 0.41 Village-MU N 6 Condos Condo Residential Resi over Retail 15,006 - - Village-MU N Commercial Corner Retail CVS 15,000 22,500 0.52 Village-MU N 12 Condos Condo Residential Resi over Sprouts 43,212 - - Village-MU 28 M Commercial Corner Retail Primrose 11,000 51,412 1.18 Village-MU 29 A Commercial Corner Retail Retail 17,900 42,960 0.99 Village-MU A Office (Commercial)Corner Office Bell Tower Office 36,000 14,694 0.34 Village-MU A 12 Condos Condo Residential Bell Tower Condos 32,400 - - Village-MU 31 R Office (Commercial)Internal Office Office Pad on SH 114 36,000 54,000 1.24 Village-MU ROW 1,491,203 412,078 9.46 Village-MU Lake 372,100 363,258 8.34 Village-MU Open Space / Buffer 266,100 400,734 9.20 Village-MU Parking Deck 255,500 163,881 3.76 Village-MU West Residential 39,184.59$ per Unit of PID Assessment 264,600 544,855 12.51 Village-MU East Residential 413,240 9.49 Village-MU 86.542 SUMMARY OF SUBJECT PARCELS 30 4 c o n d o s ov e r Wa t e r f r o nt R e t a i l 15 Wa t e r f r o nt H a r b o r Re t a i l wi t h 2 4 Co n d o s ab o v e 18 19 25 12 Co n d o s ov e r Re t a i l 26 TOTAL GROSS ACREAGE Si n g l e Bu i l d i n g wi t h 2 4 Co n d o s on 1 . 7 9 Ac r e s 6 co n d o s ov e r Re t a i l 12 Co n d o s In B e l l To w e r Co m p l e x 27 Si n g l e Bu i l d i n g wi t h 1 2 Co n d o s on t h e .8 6 Ac r e s 11 13 Re s t a u r a nt - Co n d o s 12 R e s i Co n d o s ov e r Re t a i l 66 The overall development will be separated into groups of uses, although each grouping actually allows for mixed-use. As such, although a grouping might be planned for a theme of some sort, the pod area might have a variety of usages. The groupings are described individually as follows: Block A will be located at the southeast quadrant of SH-114 and Davis Boulevard and includes Pods 1 and 2. This is a high profile sector which is expected to include both retail and small and large office uses. Pod 1 is projected to include typical retail uses such as strip center and/or retail banking whereas Pod 2 is expected to have a large office use. Block B, to be known as Mesa Park, will be located on the south side of SH-114, east of Davis Boulevard and includes Pods 3, 4, 5, 6, 7, and 8. This block will be highly visible, but is only accessed from internal streets within the development. It is noted that this block has a large existing gas well in the center of the block which is a lower profile sector that is expected to be developed by a variety of retail, office and commercial uses surrounding the existing well head. Pods 3, 4, and 6 are projected to include typical retail and commercial uses such as strip center and/or gymnastic/dance and other semi-retail commercial uses whereas Pod 5 is expected to have large office uses and Pod 8 is expected to have small office uses . Pod 7 is expected to be developed with a public parking garage and is not considered to have any direct value to the dirt/building potential as this area will be shared parking for properties within Block B as well as portions of Block D. Block C will also located on the south side of SH-114, east of Davis Boulevard and includes Pods 9, 10, and 11. This block will be highly visible, but is only accessed from internal streets within the development. Pod 9 is projected to include typical retail uses such as theater, museum or bakery and/or other semi-retail commercial uses whereas Pod 10 is expected to be a small boutique hotel. Pod 11 is expected to be a combination of a public building with approximately 12 condominium units and is to be valued as multifamily. Block D, to be known as the Harbor, will be located on the north, south, and west sides of the proposed lake, south of SH-114 and east of Mesa Park (Block B) and includes Pods 12, 13, 14, 15, 16, 17, 18, and 19. This block will have extensive views on all sides of the adjacent lake and is accessed from Fondon to the north, Ciudad Real to the south, and Santilla del Mar to the west. Pod 12 is projected to be a lakeside Chapel/reception hall which is considered to be high -end retail whereas Pod 13 is expected to be a mixture of restaurants and nine condominiums and is to be valued as a combination of high-end retail and multifamily. Pods 14 and 15 are planned for strip retail such as farmers market type shops and food courts and other typical retail uses. In addition, Pod 15 will also contain four condominium units. Pod 16 is planned for assisted living use with Pod 18 planned for a combination of retail and larg e scale office use as well as 24 condominium units while Pod 19 is planned for a combination of large scale office and 24 condominium units. Pod 17 planned for the cities Town Hall and is expected to be deed to the city. As such, Pod 17 is not valued herei n. 67 Block E is located at the southeast quadrant of the overall development and will be accessed by Ciudad Real. This block will be entirely occupied by future single family residential lots to be known as the East Residential Pod. This pod will contain 9.490± acres (413,384 SF) and is planned to be developed with 80 single-family lots (8.4 upa) as a future phase within the Westlake Entrada development . Although not part of the bond development, the 80 future lots are projected to be completed by the subje ct developer by April 2017 and are planned to be developed with varying lot sizes ranging from 2,375 SF to 5,419 SF and an overall average lot size of 3,436 SF. The 80 future lots are designed for a mixture of front and back entries and are summarized below: Total Lot Size Total Lots (SF)SF 9 2,375 21,375 26 2,625 68,250 1 2,804 2,804 19 3,126 59,394 1 3,745 3,745 3 4,220 12,660 4 4,944 19,776 1 4,975 4,975 3 5,026 15,078 8 5,066 40,528 3 5,250 15,750 1 5,419 5,419 1 5,089 5,089 80 54,664 274,843 Average 3,436 Westlake Entrada - East Residential Pod As it is to be fully developed with single family lots as part of the bond development, the West Residential Pod will be descried in more detail in the following section. Block F, to be known as the Plaza, will be located on the north side of Ciudad Real with frontage on Santilla del Mar and Galisteo and includes Pods 20, 21, 22, and 23. This block will be highly visible as is designed one of the focal points of the development as it will contain a fountain and hotel plaza area along with several parking garages, some of which will be public. Pod 20 is projected to include small office usages whereas Pods 21, 22, and 23 are expected to be a hotels, assisted living and/or nursing home. Block I is located immediately east of Block A with access from Davis Boulevard and visibility from both Davis Boulevard and SH 114 and includes Pod 24. This is a high profile sector which is expected to be a typical office use as it is planned for the project information center. 68 Block N is located at the east quadrant of Davis Boulevard and Solana Boulevard and includes Pods 25, 26, 27. This is a high profile sector which is expected to include both typical and high-end retail uses. Pods 26 and 27 are projected to be typical retail uses while Pod 25 is expected to be high-end retail. Pod 25 will also contain 12 condominium units while Pod 26 will contain six condominium units and Pod 27 will contain 12 condominium units. Block O is located just east of Block N with access from Davis Boulevard and visibility from both Davis Boulevard and Solana Boulevard and includes Pod 28. This is a lower profile sector which is expected to be a retail/commercial use as it is planned for a child care facility. Block Q will be located adjacent to the southeast quadrant of SH-114 and Davis Boulevard and includes Pods 29 and 30. This is a high profile sector which is expected to include both retail and office uses. Pod 29 is projected to include typical retail uses such as strip center whereas Pod 30 is expected to have an office use within a Bell Tower as well as 12 condominium units. Block R will be located adjacent to Block R with visibility from SH 114, but will be access from the interior road system. This block will contain only Pod 31 and planned for office use. 69 PLAT OF WEST RESIDENTIAL POD 70 SITE ANALYSIS - WEST RESIDENTIAL POD (127 LOTS) The “West Residential Pod” is proposed to be developed with 127 single-family lots on land totaling 12.510 acres (10.2 upa) as part of a multiphase, master-planned, mixed- use development to be known as Westlake Entrada. Access to the proposed lots will be provided from two entries/exits. One will be from Ciudad Real on the southern boundary (one of the main thoroughfares of the development that accesses Solana Boulevard) and the other from Santilla del Mar (one of the main thoroughfares of the development that accesses Davis Boulevard). The general characteristics of the subject follow. For a visual of Phase I, see the previous page. The 127 lots are designed for front entry access with the lot sizes summarized below: Total Lot Size Total Lots (SF)SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5,066 70,924 127 73,552 445,073 Average 3,505 Westlake Entrada, West Residential Pod 71 General Site Information Location (Phase I): Northeast side of Solana Boulevard, southeast of SH-114 and Davis Boulevard, Town of Westlake, Tarrant County, Texas Land Size: 12.510± acres (544,855 SF) Frontage: The subject is part of a master-planned mixed-use community which has frontage along SH-114 (northern boundary), the east side of Davis Boulevard (western boundary) and the north and east sides of Solana Boulevard (southwestern boundary). School District: All of the lots in the West Residential Pod are located in Carroll ISD. This district includes Westlake Academy a public charter school accredited by the Texas Education Agency. In addition, the Diploma Programme is authorized by the International Baccalaureate Organization in Geneva, Switzerland and the IBNA. Utilities to Site: The utilities are assumed to be available and of adequate capacity to service the site for moderate density residential and commercial uses. Shape of Tract: Slightly irregular Topography: Rolling to sloping Zoning: PD 1-2 “Planned Development 1, Planning Area 2” This district allows a wide range of high density development including office, retail, residential, and entertainment uses. Access: The subject, as part of a larger assemblage of land, has above-average accessibility and visibility with its visible location fronting SH-114 and access from Davis Boulevard and Solana Boulevard. Easements/Encroachments: According to the general development plan provided, the subject appears to be free from any adverse easements and/or encroachments. Surface Drainage: Appears adequate 72 Soils: A soil analysis for the site has not been provided for the preparation of this appraisal. In the absence of a soil report, it is a specific assumption that the site has adequate soils to support the highest and best use. Subsurface Conditions: It is assumed that there are no hidden or unapparent conditions to the property, soil, or subsoil, which would render them more or less valuable. Subsurface oil, gas, or mineral rights were not considered in this report unless otherwise stated. Nuisances and Hazards: No nuisances or hazards were noted that would adversely affect the use of the property. Adjacent Uses: North: Vacant land South: Granada (single family subdivision) East: Vacant land West: Vacant land Existing Street Improvements: Solana Boulevard is four-lane, divided, with median concrete roadway providing north/southeast access to the subject and to portions of the area. Davis Boulevard is six-lane, divided, with median concrete roadway providing north/southwest access to the subject and to portions of the area. Proposed Street Improvements: Santilla del Mar will be a two-lane thoroughfare (37’ foot right-of way) extending southeasterly through the development to Ciudad Real at the southern boundary. Ciudad Real will be four-lane thoroughfare (59’ foot right-of way) extending northeasterly through the development from Solana Boulevard to the northern boundary. Flood Designation: The subject is located on FEMA Panel 48439C0085K dated September 25, 2009 found on the following page. According to this map as well as additional information provided, by G & A Consultants, LLC (engineers and surveyors), none of subject is located within a floodplain area. 73 Conclusion: Overall, the West Residential Pod is well suited for residential development. All utilities are assumed to be available and there will be no easements, restrictions, or encumbrances that appear to negatively affect the value or marketability of the subject’s 127 proposed residential lots. 74 FLOOD MAP 75 ZONING AND DEED RESTRICTIONS As discussed, the subject is zoned PD 1-2 “Planned Development 1, Planning Area 2” by the Town of Westlake which permits development as shown on the exhibits herein. This “PD Ordinance” was adopted to establish a superior quality mixed -use development with design features and planning elements reminiscent of a European pedestrian-scaled village. The “Ordinance” provides for the integration of vertical and horizontal mixed uses that allow commercial, retail, governmental, hotel, and entertainment uses, as well as single-family detached and townhome residential uses on the property bounded by Solana Boulevard to the south, FM-1938 (Davis Boulevard) to the west, and SH-114 to the north, and to provide an appropriate transition between the intensity of the SH-114 Corridor to the north and the existing and anticipated residential development to the south. In the first year of active development the developer is entitled to permit ten (10) initial residential units. After the initial ten (10) units, the developer is then entitled to units eleven (11) through (30) after 45,000 non-residential, air-conditioned square footage are permitted. In the second year of active development, construction shall not exceed an additional sixty (60) units. In the third year of active development , construction shall not exceed an additional eighty (80) residential units. In year four of active development and subsequent years, residential construction will be based upon a “1,500:1” ratio of non- residential use building space for each additional residential unit permitted. It is noted that for commercial development that no FAR limitations are imposed by this Ordinance. Maximum density is a function of the scale, size and scope of each phase of the Village Development as prescribed within Exhibit 3 "Westlake Westlake Entrada Development Standards" and Exhibit 6 "Westlake Westlake Entrada Residential Development Standards," as well as the PD Concept Plan, the PD Site Plans, any Developer Agreements and height restrictions established in this Article. As such with no maximum density and FAR, a minimum lot size of 400 square feet, no minimum lot width, and a maximum height for all structures at 735 feet above mean sea level, the subject will be similar to a major high density urban area. Townhomes shall be built in clusters of no less than two units per contiguous building and no more than 18 units per contiguous bui lding and shall be conveyed on a fee- simple, platted lot. The minimum townhome size is 1,800 square feet with minimum single-family, detached homes from 2,500 square feet. Finally, it is noted that all of the uses that will utilize public supported parkin g areas will be required to apply and receive a special use permit (SUP) from the town. Sup’s are very common in the market area and this fact is not considered to be detrimental to the individual pods or the overall development. Furthermore, this fact has been considered in our valuation. 76 AD VALOREM TAXES Tax Rates The Tarrant Appraisal District does assessments on a countywide basis. Because assessed value is typically the result of a mass appraisal process based more on statistical probability than individual property characteristics, it should be noted that there is frequently a difference between assessed value and market value for an individual property. It is noted that part of the subject is located within the Carroll ISD and part is located within the Northwest ISD. As such, the 2014 tax rates (set in October of each year) for the taxing authorities pertaining to the subject are shown as follows: Authority Tax Rate/$100 Tarrant County $0.264000 Tarrant County Hospital $0.227897 Tarrant County College $0.149500 Town of Westlake $0.156340 Carroll ISD $1.400000 Trophy Club MUD #1 $0.133390 Total Tax Rate $2.331127 2014 TAX RATES/CARROLL ISD Source: Tarrant Appraisal District Authority Tax Rate/$100 Tarrant County $0.264000 Tarrant County Hospital $0.227897 Tarrant County College $0.149500 Town of Westlake $0.156340 Northwest ISD $1.452500 Trophy Club MUD #1 $0.133390 Total Tax Rate $2.383627 2014 TAX RATES/NORTHWEST ISD Source: Tarrant Appraisal District 77 Tax Liability In Texas, real property is required by law to be assessed at 100% of its estim ated market value. The subject is assessed by the Tarrant Appraisal District under eight account numbers within the Carroll ISD (04319087, 04319109, 05243297, 05243343, 07121202, 40888584, 05243351, and 04519329) and under three account numbers within the Northwest ISD (40778436, 40778479, and 40778487) with a total assemblage of only 74.102 acres. It is noted that the acreage sizes determined by appraisal districts frequently differ from actual metes and bounds descriptions on large un-platted land sites. This is the case relative to the subject which is a total assemblage of 85.921 acres. Following is a summary of the subject’s tax assessments: Total 2014 Ag. Exempt Total Tax Rate Total Total Ag. Exempt Acct. No.Ownership Acres Total SF Assessments Assessments Per $100 Taxes Taxes 04319087 Maguire Prtns-Solana Land LP 3.000 130,680 $163,350 $381 $2.331127 $3,808 $9 04319109 Maguire Prtns-Solana Land LP 9.713 423,098 $528,873 $1,234 $2.331127 $12,329 $29 05243297 Maguire Prtns-Solana Land LP 14.770 643,381 $804,226 $804,226 $2.331127 $18,748 $18,748 05243343 Maguire Prtns-Solana Land LP 8.620 375,487 $469,359 $1,095 $2.331127 $10,941 $26 07121202 Maguire Prtns-Solana Land LP 8.710 379,408 $569,111 $569,111 $2.331127 $13,267 $13,267 40888584 Maguire Prtns-Solana Land LP 3.250 141,570 $176,963 $413 $2.331127 $4,125 $10 05243351 Maguire Prtns-Solana Land LP 3.840 167,270 $209,088 $209,088 $2.331127 $4,874 $4,874 04519329 Maguire Prtns-Solana Land LP 13.319 580,176 $580,176 $580,176 $2.331127 $13,525 $13,525 40778436 Maguire Prtns-Solana Land LP 3.160 137,650 $172,062 $401 $2.383627 $4,101 $10 40778479 Maguire Prtns-Solana Land LP 4.220 183,823 $229,779 $229,779 $2.383627 $5,477 $5,477 40778497 Maguire Prtns-Solana Land LP 1.500 65,340 $81,675 $81,675 $2.383627 $1,947 $1,947 Tax District Totals:74.102 3,227,883 $3,984,662 $2,477,579 $93,141 $57,919 Average/Acre $53,773 $33,435 $1,257 $782 Average/SF $1.23 $0.77 $0.03 $0.02 Per Tarrant Appraisal District SUBJECT'S TAX ASSESSMENT SUMMARY The total 2014 assessment for these 11 tracts was $3,984,662 or $1.23/square foot based upon the tax district’s total assemblage of 74.102 acres. As our valuation is based upon smaller developed sub parcels and not the whole site in its present condition, the current assessments have no bearing. Based upon the 2014 assessments and the 2014 tax rates, the applicable taxes for the subject as 74.059 acres are $93,141 or $1,257/acre ($0.03/SF) based upon the districts land size of 74.059 acres. It is noted, the estimated taxes for the subject’s 127 residential lots developed on 12.510 acres within the West Residential Pod and the future 80 lots within the East Residential Pod will be based upon our market value opinions as noted within the discounted cash flow statements within this report. 78 Roll Back Taxes It is also important to note that a portion of the site is presently taxed under an agricultural exemption. As such, under development, the developer of the site is liable for five years of back real estate taxes plus interest annually. This is considered typical of properties located in growth corridors such as the subject and are considered typical for the market. 79 SECTION 5 — HIGHEST AND BEST USE ANALYSIS The principle of highest and best use is defined: Highest and best use is a market-driven concept which identifies the most profitable and competitive use for which a property can be used. It is defined by The Appraisal of Real Estate, Fourteenth Edition (2013) as: The reasonable and probable use of vacant land and or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability.  Permissible Use (Legal) - what uses are permitted by zoning and deed restrictions on the site in question?  Possible Us - to what uses is it physically possible to put the site in question?  Feasible Use - which possible and permissible uses will produce any net return to the owner of the site?  Highest and Best Use - among the feasible uses, which use will produce the highest net return or the highest present worth? The use which is the highest and best use of the property must be physically possible, legally permissible, financially feasible, and maximal ly productive. Following is a discussion of these factors. Implied within these definitions is recognition of the contribution of that specific use to community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is that the determination of highest and best use results from the appraiser's judgment and analytical skill, i.e., that the use determined from analysis represents an opinion, not a fact, to be found. In appraisal practice, the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value) another appropriate term to reflect highest and best use would be most probable use. In the context of investment value an alternative term would be most profitable use. 80 The highest and best use for unimproved property may be different from the highest and best use of improved property. This will be true when the improvement is not an appropriate use and yet makes a contribution to total property value in excess of the value of the site. Physically Possible The physical aspects of the site dictate the first constraint imposed on the possible use of the property. Size, location within a given block, topograph y, and availability of utilities are the most important physical determinants of the highest and best use of a site. Furthermore, the subject, with road frontage and visibility along SH-114, Precinct Line Road/Davis Boulevard, and Solana Boulevard and being 85.921 gross acres in size, is sufficient to allow a wide range of development and most allowed uses could be physically placed on the site without any unreasonable hindrance. Legally Permissible Potential legal restrictions that apply to the subject include public (zoning) and private restrictions (deed restrictions, easements, etc.). As discussed, the subject site is zoned under the PD 1- 2 “Planned Development 1, Planning Area 2” by the Town of Westlake. This zoning allows a wide range of uses within a high density environment. Financially Feasible Financially feasible refers to legal uses which are physically possible and have a sufficient demand to produce a positive return. Once the physically possible and legally permissible potential land uses have been determined, the next step in determining the highest and best use is to isolate which uses are economically feasible. As the subject is zoned for mixed-uses and is surrounded by a combination of commercial and multifamily and single-family development, we have obtained historical data pertaining to office, retail, multifamily, and single-family usages as shown in the following charts and data provided by CoStar, Inc., M/PF Research, and Residential Strategies, Inc. Please note that neighborhood boundaries and market type boundaries are not synonymous as they are based on varying criteria. 81 Office – Westlake/Grapevine 82 As can be seen from the previous graph, the occupancy rate for office space within the subject’s submarket has increase substantially over the past several years. The occupancy rate for the submarket is currently approximately 87.0%. In conjunction with this rise in occupancy, the average lease rate has also risen over the past several years, with a current average of approxim ately $25.05/SF which is higher than the past five-year average. As a result, with a rising average occupancy and lease rate, the implied feasibility for new office development was generally considered to be average to good as of the date of valuation. Retail – Trophy Club/Roanoke/Westlake 83 As can be seen from the previous graph, the occupancy rate for retail space within the subject’s submarket has been relatively stable over the past five years fluctuating between 95% and 99%. The current average occupancy rate is 97.6% which is similar to the five-year average of 97.2%. In response, the average lease rate for retail properties over the past five years has risen dramatically since 2012 and is currently at a four-year high of $17.88/SF. As a result, with a high average occupancy and a rising average lease rate, the implied feasibility for new retail development was generally considered to be average to good as of the date of valuation. 84 Multifamily - Grapevine 85 The Grapevine area apartment market has a substantially higher average rent level of $1,055/month than the average of $801/month for the Metro area. Furthermore, the submarket is currently experiencing one of the highest occupancy rates in the area. The current occupancy rate is 94% with a five-year average increase in rent levels of 2.6%. Thus, new multifamily development is feasible and supported. 86 Single-Family Residential During the past decade, the residential real estate market has seen many positive changes. With the steady increase in multifamily residential rental rates, coupled with the steady decrease in interest rates and the large numbers pertaining to job growth, there has been a trend of individuals choosing to purchase homes rather than to rent apartments and multifamily housing. Furthermore, with the decline in the availability of vacant developable land, population growth has quickly expanded into the suburban areas of the Dallas/Fort Worth area. As such, the proposed absorption of single -family home lots in the subject’s neighborhood will be analyzed using historical absorption data provided by Residential Strategies, Inc., a locally recognized information provider, as well as information obtained from area market participants and developers. It is important to note that our absorption data is based on historical trends. Inasmuch as we are forecasting an economy for this area that is at least equal to recent trends, using these historical trends is felt to be quite justifiable. The subject development is physically located within the Town of Westlake in close proximity to Grapevine, Keller, Southlake, and Trophy Club. Therefore, data obtained from Residential Strategies as of Third Quarter 2014 for the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets, which includes the subject, will be analyzed. A summary of the details are as follows: Combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” Submarkets According to Residential Strategies, Inc., in the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets , According to Residential Strategies for the combined submarkets, 678 homes/lots were absorbed in 2012, increasing to 704 homes lots absorbed in 2012. Absorption continued to increase in 2013 with 704 homes/lots absorbed. Also, Third Quarter 2014 indicates a substantial increase in absorption with 646 homes/lots absorbed (equates to an annual absorption projection of 861 homes/lots). Thus, since 2012 (2.75 years), the annual average of homes/lots absorbed was 737 homes/lots. However, when utilizing a more current 12-month absorption period (September 2013 thru September 2014), the annual average of homes/lots absorbed increases to 808 homes/lots in this submarket. Following is a chart summarizing the historical lot absorption summary from 2012 through 2014 (annualized) for the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets: 87 As shown, the absorption of lots within the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets has been steadily increasing since 2012 and are projected to substantially increase into 2014. According to Residential Strategies, Inc., as of Third Quarter 2014, the existing supply of available housing is currently below above ideal levels in the combined submarkets. The number of vacant developed lots in the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets has increased due to demand from a low of 1,248 lots in Second Quarter 2013 to its current level of 1,364 lots as of Third Quarter 2014. Based upon the Residential Strategies, Inc. absorption figures of the past 2.75 years, there is currently a 22±-month (1,364 lots  737 lots = 1.9±-years) total supply of existing lots available in the combined submarkets. This total supply is considered to be slightly below the lower end of the optimum supply range of 2.0 to 2.5 years. However, when utilizing the more current 12-month absorption average of 808 home/lots (September 2013 thru September 2014 ), the total supply of existing lots available in the subject’s market decreases significantly to only 20±-months (1,364 lots ÷ 808 lots/year = 1.7±-years), which is also significantly below the lower end of the optimum supply level of existing lots in the combined market areas. 88 Thus, the total lot supply within the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets is estimated to be between 1.7± to 1.9± years. Currently, this total lot supply is considered to be below optimum supply levels. In addition, taking into consideration that new developments require a typical 12 -month construction period, with increasing demand and dwindling lot supply, it appears that additional lot product in the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets is feasible at the current time. Having determined the feasibility of new lot construction in the subject’s submarket, our residential analysis will now narrow to specific competing subdivisions in the Dallas/Fort Worth area with somewhat similar attributes relative to the subject. As discussed, the subject’s proposed residential lots are to be developed within a master-planned community designed as a small European Village Center which is atypical of current subdivision developments in the Dallas/Fort Worth area. Furthermore, to attain this “vogue” style, typical lot setbacks (front, side, and rear) are not required. As such, to determine a projected absorption for the subject’s proposed lots, which are to be developed with varying lot dimensions and ranging in size from 2,250 square feet to 5,625 square feet with an overall average lot size of 3,505 square feet , lots in developments with greater dimensions (yet with setbacks) and with similar home price ranges will be utilized. *We will utilize this absorption analysis to project the absorption of the subject’s future East Residential Pod which is planned for completion in April 2017 with 80 residential lots similar in attributes relative to the West Residential Pod lots. 89 Subject Summary – West Residential Pod As discussed, the subject represents the following proposed lots within the West Residential Pod of a master-planned development known as Westlake Entrada: Total Lot Size Total Lots (SF)SF 48 2,625 126,000 21 3,126 65,646 5 2,375 11,875 4 2,250 9,000 1 3,745 3,745 2 4,220 8,440 4 5,026 20,104 1 2,804 2,804 4 4,813 19,252 1 4,975 4,975 2 5,564 11,128 7 4,944 34,608 3 5,089 15,267 1 3,386 3,386 4 2,500 10,000 1 5,419 5,419 4 5,625 22,500 14 5,066 70,924 127 73,552 445,073 Average 3,505 Westlake Entrada, West Residential Pod Subject Summary – Future East Residential Pod As discussed, the subject also represents the following future proposed lots planned within the East Residential Pod of the Westlake Entrada development. These lots are projected to be completed in April 2017. 90 Total Lot Size Total Lots (SF)SF 9 2,375 21,375 26 2,625 68,250 1 2,804 2,804 19 3,126 59,394 1 3,745 3,745 3 4,220 12,660 4 4,944 19,776 1 4,975 4,975 3 5,026 15,078 8 5,066 40,528 3 5,250 15,750 1 5,419 5,419 1 5,089 5,089 80 54,664 274,843 Average 3,436 Westlake Entrada - East Residential Pod The following subdivisions presented for comparison are believed to more accurately reflect the potential demand/absorption for the subject’s 127 proposed lots within the West Residential Pod as well as the 80 future lots within the East Residential Pod. The similarities considered to be most important are lot size, home price range, and amenity features. Thus, the tables that follow detail only the active subdivisions that are considered to conceivably compete with the subject’s proposed lots. Competitive Supply As discussed, the subject is located within the Town of Westlake in Tarrant County, Texas and represents 127 proposed single-family lots in the West Residential Pod which are planned to be developed with lot sizes ranging 2,250 square feet to 5,625 square feet with varying lot dimensions (overall average lot size of 3,505 square feet). Also, the subject’s future lots within the East Residential Pod are also planned with similar lot sizes with an overall average of 3,436 SF. Furthermore, home prices are projected to range from $550,000 to $1,000,000. As such, the comparables presented are believed to accurately reflect the potential demand/absorption for the subject’s proposed lots. The similarities considered to be most important are lot size, home price range, and amenity features. The tables that follow detail the active subdivisions that are considered to compete with the subject’s 127 proposed residential lots in the West Residential Pod and the future 80 lots in the East Residential Pod per Residential Strategies, Inc. as of Third Quarter 2014 and developers. 91 Home Prices Typical Typical TH Subdivisions (000's)Available Lots*Lot Dimensions Lot SF Shady Oaks $667-$1,995 41 100' x 140'/150'14,000-15,000 Phases 1A, 2A, 2B, 2C, 2F, 2G, & 3 125' x 160'20,000 Lewisville, Texas Carillon $500-$910 230 47'/50' x 110'5,170-5,500 Phases 1A, 2A, 3A, 4, 4B, 4C, 5A, 5B, & 5C 65' x 120'7,800 Southlake, Texas 70'/90' x 130'9,100-11,700 100' x 135'/140'/150'13,500-14,000-15,000 120' x 190'/200'22,800-24,000 Vaquero $980-$4,000 74 80' x 180'14,400 Westlake, Texas 220' x 220'48,400 Lakes of Las Colinas $533-$897 35 55' x 110'6,050 Irving-Las Colinas, Texas 60' x 115'6,900 80'/90' x 125'10,000-11,250 Avignon Windhaven $570-$840 11 75' x 75'5,625 Phases 1, 2, & 3 80' x 80'6,400 Plano, Texas 75' x 130'9,750 Lone Star Ranch (Preserve)$510-$613 40 60' x 115'6,900 Frisco, Texas Newman Village, Phase 2B $591-$809 51 69' x 130'8,970 Frisco, Texas 80'/90' x 140'11,200-12,600 Phillips Creek Ranch $512-$733 28 75' x 120'/125'9,000-9,375 Riverton & Sheridan 84' x 120'10,080 TOTAL 510 Subject: 127 Proposed Lots, West Residential Pod; 2,250 - 5,625 (3,505 SF Avg.) Subject: 80 Future Lots, East Residential Pod; 2,375 - 5,419 (3,436 SF Avg.) COMPETITIVE SUPPLY *Source: Residential Strategies, Inc. as of Third Quarter 2014 The competitive supply presented above recognizes eight subdivisions which are located in the surrounding Dallas/Fort Worth area with similar demographics relative to the subject. The lot sizes, home prices, and amenities in the su bdivisions shown are somewhat similar relative to the subject, as proposed. Thus, the eight subdivisions are considered to be the immediate competition for the subject’s proposed lots and are believed to accurately reflect the potential absorption levels f or the subject’s lots at this time. Having addressed the immediate competition, we will determine the approximate absorption time frame for the subject by analyzing absorption trends of the previously shown developments. 92 Absorption Analysis The following table outlines the monthly absorption of the eight subdivisions listed in the competitive supply. It should be noted that all data is as of Third Quarter 2014. Available Building No.Units/Months Subdivisions Lots Starts*Months Month Supply Shady Oaks 41 66 21 3.1 13.2 Carillon 230 173 33 5.2 44.2 Vaquero 74 40 21 1.9 38.9 Lakes of Las Colinas 35 142 33 4.3 8.1 Avignon Windhaven 11 129 33 3.9 2.8 Lone Star Ranch (Preserve)40 29 6 4.8 8.3 Newman Village, Phase 2B 51 45 6 7.5 6.8 Phillips Creek Ranch 28 147 21 7.0 4.0 TOTALS/AVERAGE 510 771 37.7 13.5 AVERAGE UNITS/MONTH 4.7 *Source: Residential Strategies, Inc. as of Third Quarter 2014 Subject: 127 Proposed Lots, West Residential Pod; 2,250 - 5,625 (3,505 SF Avg.) Subject: 80 Future Lots, East Residential Pod; 2,375 - 5,419 (3,436 SF Avg.) MONTHLY ABSORPTION PERFORMANCE Based on the number of available lots and average absorption per month, the 510 lots remaining within the eight subdivisions shown indicate only a 13.5-month supply (1.1± years). This appears to be representative of a substantial under -supply of lots within the subject’s projected price/lot size range. Additionally, it is also important to note that at the absorption rates presented, six of the eight subdivisions shown are projected to be sold out within approximately 13.2± months near the projected substantial completion of the subject’s lots, as proposed (September 2015). Thus, it is reasonable that the subject, upon development within 10 months, may capture a portion of the demand that these projects currently enjoy. Overall, the eight subdivisions shown indicate an absorption range of 1.9 units to 7.5 units per month, with an overall average of 4.7 units per month. In summary, it is important to note the following facts:  The total lot supply within the combined “Westlake, Grapevine, Keller, Southlake, and Trophy Club” submarkets is estimated to be between 1.7± to 1.9± years which is below equilibrium levels of 2.0 to 2.5 years.  The subject’s competitive supply is considerable under-supplied with only a 13.5±-month lot supply (1.1± years). 93  Six of the eight subdivisions shown are projected to be sold out within approximately 13.2± months near the projected substantial completion of the subject’s lots, as proposed (10 months). Absorption Projection – West Residential Pod Based upon the preceding, we have projected a laddered absorption on a quarterly basis beginning at 4.0 units per month within the first two quarterly periods, increasing to 5.0 units per month in the third and fourth quarterly periods, increasing to 6.0 units per month in the fifth and sixth quarterly periods, and finally increasing to 7.0 units per month thereafter. Our absorption projection is slightly above the overall average of the competitive supply (4.7 upm), yet is considered reasonable with dwindling lot supplies in the subject’s immediate area as well as the lack of lots with the unique qualities of the subject lots as proposed. Following is a summary of our quarterly absorption projection: Sep-15 Mar-16 Jun-16 Sep-16 Dec-18 Jul-18 Jan-19 # OF LOTS 12 15 15 18 18 21 16 127 Lots PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Dec-15 12 23.3± Months Thus, the overall absorption projection for the subject’s 127 proposed single-family lots within Westlake Entrada, Phase I is estimated to be 23.3± months, or 1.9± years (overall average of 5.5 upm). Our absorption projection is considered reasonable based upon the comparables utilized. Absorption Projection – Future East Residential Pod Based upon the preceding, we have projected a laddered absorption on a quarterly basis beginning at 4.0 units per month within the first two quarterly periods, increasing to 5.0 units per month in the third and fourth quarterly periods, increasing to 6.0 units per month thereafter for the 80 lots planned within the future East Residential Pod. Our absorption projection (4.9 upm) is slightly above the overall average of the competitive supply (4.7 upm), yet is considered reasonable with dwindling lot supplies and the unique qualities of the subject, as proposed. Following is a summary of our quarterly absorption projection beginning in April 2017, the expected completion date of the future lots within the East Residential Pod: Apr-17 Oct-17 Jan-18 Apr-18 Jul-18 # OF LOTS 12 15 15 18 8 80 Lots PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Jul-17 12 16.3± Months 94 Thus, the overall absorption for the subject’s 80 proposed single-family lots within the future Westlake Entrada, East Residential Pod is estimated to be 16.3± months, or 1.4± years (overall average of 4.9 upm). Our absorption projection is considered reasonable based upon the comparables utilized. Highest and Best Use Summary The neighborhood should continue to exhibit moderate growth due to residential demand within the area created by the existence of major employers located in close proximity. New residential development with supportive commercial development should continue to grow with the increase in population and economic growth. As discussed, the subject is located in a developing area and is not limited by its shape, location, and size. As such, it is our opinion that the highest and best use of the subject is to be utilized for mixed-use development. 95 SECTION 6 — VALUATION OF THE SUBJECT The valuation process is defined as: "The systematic set of procedures an appraiser follows to provide answers to a client’s questions about real property value.”3 Valuation is a term used interchangeably with appr aisal. Real estate markets are a function of the location in which they are located. The overall market environment can have a profound effect on the manner in which buyers and sellers perform the act of transferring property rights. Considerations made by the participants are generally based on certain fundamental principles. Those principles and their definitions are as follows: Anticipation: “The perception that value is created by the expectation of benefits to be derived in the future. Value is created by the anticipation of future benefits. Change: The result of the cause and effect relationship among the forces that influence real property value. Supply and Demand: In economic theory, the principle of supply and demand states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately with supply. Thus, an increase in the supply of an item or decrease in the demand for an item tends to reduce the equilibrium price; the opposite conditions produce an opposite effect. The relationship between supply and demand may not be directly proportional, but the interaction of these forces is fundamental to economic theory. The interaction of suppliers and demanders, or sellers and buyers, constitutes a market. Competition: Between purchasers or tenants, the interactive efforts of two or more potential buyers or tenants to make a sale or secure a lease; between sellers or landlords, the interactive efforts of two or more potential sellers or landlords to complete a sale or lease; among competitive properties, the level of productivity and amenities or benefits characteristic of each property considering the advantageous or disadvantageous position of the property relative to the competitors. Substitution: The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price attracts the greatest demand and widest distribution. Th is is the primary principle upon which the cost and sales comparison approaches are based. 3 The Appraisal of Real Estate, 14th Edition, the Appraisal Institute, Chicago, Illinois (U.S., 2013) 96 Balance: The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium. Contribution: The concept that the value of a particular component is measured in terms of its contribution to the value of the whole property or as the amount that its absence would detract from the value of the whole. Surplus Productivity: The net income that remains after the cost of various agents of production has been paid. Conformity: The appraisal principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market. Externalities: The principle economies outside a property have a positive effect on its value while diseconomies outside a property have a negative effect upon its value.”4 The Cost Approach, wherein the land is appraised as if vacant and available for development to its highest and best use. To this result is added the improvements estimated cost of reproduction new less depreciation accruing from all causes. The Income Approach, which requires a study of the earnings capacity of the real estate, and the conversion of such ne t income into value by means of a capitalization process. The Sales Comparison Approach, involving an analysis of the sale of other property having similar attributes and/or improvements, and a comparison of such data with the property appraised, giving due consideration to the elements of dissimilarity. Historical Background: “The appraisal procedures that are now identified as the three approaches to value were developed after the stock market crash of 1929. The economic crisis that ensued had an immediate impact on the appraisal practices of the time. The collapse of the real estate market in the 1930s seemed to discredit the notion that market price is central to value”.5 There are several accepted methods which can be used to provide an opinion of the value of land. However, only the Sales Comparison Approach is considered to be applicable in this instance. The Sales Comparison Approach is a method that involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sa les prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the o ther methods when comparable sales are available. 4 The Appraisal of Real Estate, 14th Edition, the Appraisal Institute, Chicago, Illinois (U.S., 2013) 5 Ibid. 97 SUMMARY OF VALUATION TECHNIQUES There are several accepted methods that can be used to value land. For the valuation of the subject pods we have utilized two approaches to value, the Sales Comparison Approach and the Lot Development Approach. The Sales Comparison Approach will be utilized for the valuation of the 31 mixed-use pods as well as to value the subject’s 127 proposed lots within the West Residential Pod as well as the 80 future lots planned as the East Residential Pod. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. Under the Lot Development Approach, the subject is assumed to be developed into a subdivision, with the individual lots being sold over a projected period of time. Expenses that are incurred are deducted from the proceeds of the lot sales and the resulting income stream is discounted into a present value. This will be u tilized for the value of the 127 proposed lots within the West Residential Pod that are projected to be complete on the date of valuation. In addition, we have utilized this approach to value the East Residential Pod due to the lack of similar zoned vacant land tracts that have the same zoning allowance as this pod. The following sections provide the rationale and assumptions inherent in the Sales Comparison Approach as well as the Lot Development Approach. As discussed, we will utilize the Sales Comparison Approach to value the 31 mixed -use pods while we will use the Lot Development Approach to value to provide a bulk or wholesale value for the subject’s 127 proposed lots within the West Residential Pod, as well as the value of the East Residential Pod which is platted for 80 future lots and is projected for completion in April 2017. It is also noted that the 31 mixed-use pods have a very unique zoning in that they allow for a substantially higher density of development than any other parcels found in th e Dallas/Fort Worth Market area. As such, a typical valuation utilizing the sales price per square foot of land does not properly account for this superior and unique zoning. We have valued the 31 mixed-use pods based on the exhibits provided that show the allowed building size allowable in conjunction with the individual pods location, land size and potential highest and best use. As such, the comparables presented herein are all user sites in which we have been able to verify the buildin g sized planned or constructed. The 31 pods are subdivided into three distinct highest and best use groupings. They are retail, office, and institutional/multi-family (including hotel/motel, assisted living nursing home and apartment/condominiums). All of these comparables are in the subject’s general market area. The following page summarizes the pertinent information for the 31 mixed -use pods. 98 Parcel No.Block Physical Location Land/Gross Acres Land/Gross SF Max Building Size in SF Highest and Best Use West H, I, J, L, M, O North side of Solana Boulevard 12.51 544,855 127 lots Residential East E South side of Ciudad Real, east of Santilla del Mar 9.49 413,240 80 lots Residential 1 A SEQ SH 114 and Davis Boulevard 0.29 12,600 6,000 Retail 2 A SEQ SH 114 and Davis Boulevard 1.93 84,000 112,000 Office 3 B E/Q Santilla del Mar and Elche 0.86 37,500 25,000 Retail 4 B E/Q Santilla del Mar and Elche 1.41 61,360 47,200 Retail 5 B E/Q Santilla del Mar and Elche 1.52 66,000 44,000 Office 6 B South & west side Santilla del Mar at Fondon 0.48 21,000 14,000 Retail 7 B W/Q Fondon and Elche 1.95 85,000 N/A Public Parking Garage 8 B S/S Elche, northeast of Santilla del Mar 0.19 8,250 7,500 Office 9 C NEQ Fondon and Elche 0.51 22,220 20,200 Retail 10 C NEQ Fondon and Elche 2.94 127,888 61,500 Institutional 11 C NEQ Fondon and Elche 0.86 37,400 33,312 Institutional / Condos 12 D S/S Fondon, east of Elche 0.20 8,700 5,800 Retail 13A D E/Q Fondon and Elche 1.33 58,110 29,800 Retail 13B D E/Q Fondon and Elche Included in 13A Included in 13A 22,509 Condos 14 D E/C Santilla del Mar and Fondon 0.75 32,850 21,900 Retail 15A D E/S Santilla del Mar, north of Ciudad Real 1.03 45,000 30,000 Retail 15B D E/S Santilla del Mar, north of Ciudad Real Included in 15A Included in 15A 10,004 Condos 16 D East of Ciudad Real roundabout, east of future Luarca 1.14 49,500 33,000 Institutional 17 D N/S Ciudad Real roundabout, east of future Luarca 0.76 33,000 22,000 Town Hall 18A D N/S Ciudad Real roundabout, east of future Luarca 1.30 56,700 37,800 Office 18B D N/S Ciudad Real roundabout, east of future Luarca Included in 18A Included in 18A 60,024 Condos 19A D N/S Ciudad Real roundabout at future Luarca 1.79 78,000 48,000 Office 19B D N/S Ciudad Real roundabout at future Luarca Included in 19A Included in 19A 86,424 Condos 20 F SEC Santilla del Mar and Galisteo 0.83 36,250 25,000 Office 21 F NWC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 22 F NEC Santilla del Mar and Ciudad Real 2.01 87,500 97,000 Institutional 23 F N/C Ciudad Real and Galisteo 2.23 97,312 231,600 Institutional 24 I NEC Davis Boulevard and Santilla del Mar 0.17 7,500 2,100 Office 25A N SEC Davis Boulevard and Santilla del Mar 0.62 27,000 18,000 Retail 25B N SEC Davis Boulevard and Santilla del Mar Included in 25A Included in 25A 30,012 Condos 26A N E/C Davis Boulevard and Sloana Boulevard 0.41 18,000 6,000 Retail 26B N E/C Davis Boulevard and Sloana Boulevard Included in 26A Included in 26A 15,006 Condos 27A N E/C Davis Boulevard and Sloana Boulevard 0.52 22,500 15,000 Retail 27B N E/C Davis Boulevard and Sloana Boulevard Included in 27A Included in 27A 43,212 Condos 28 O South end of Arta, south of Santilla del Mar 1.18 51,412 11,000 Retail 29 Q SEQ SH 114 and Davis Boulevard 0.99 42,960 17,900 Retail 30A Q SEQ SH 114 and Davis Boulevard 0.34 14,694 36,000 Office 30B Q SEQ SH 114 and Davis Boulevard Included in 30A Included in 30A 32,400 Condos 31 R N/S Elche, east of Santilla del Mar 1.24 54,000 36,000 Office SUMMARY OF PODS - ENTRADA 99 VALUATION OF POD 1 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The followi ng table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 1 SEQ SH 114 and Davis Boulevard Village PD/Retail 6,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 100 COMPARABLE LAND SALES MAP 101 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 1 SEQ SH 114 and Davis Boulevard Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:6,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 100%10%10%-10% 0%0%0%0% 0%0%0%0% 100%20%-10%-10% 116.67$ 124.80$ 120.00$ 130.84$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 102 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sa le prices of comparable properties. The analysis indicates an adjusted value range of $104.00 to $133.33 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the developm ent. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $116.67 $700,016 $130.84 $785,060 Jackson Claborn, Inc. $750,000 $125.00 Value Indication By Market Approach: X Adjusted Value/SF 6,000 6,000 6,000 Subject Total Square Feet of Building Based on the preceding, our opinion of value for Pod 1 is $750,000, or $125.00 per square foot of allowed building space. 103 VALUATION OF POD 2 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 2 SEQ SH 114 and Davis Boulevard Village PD/Retail 112,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 104 COMPARABLE LAND SALES MAP 105 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 2 SEQ SH 114 and Davis Boulevard North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:112,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 20%25%-10%20%-20% 0%-20%-20%-50%-40% 0%0%0%0%0% 0%0%0%0%0% 20%5%-30%-30%-60% 31.88$ 30.09$ 34.47$ 36.17$ 34.89$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. Howeve r, this site is similar in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. However, this site is small/superior in overall building size. This site is generally similar in all other respects. 106 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Boulevard, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. This site is also smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east s ide of Cherry Lane, north of SH-114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is substantially smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is substantially smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, f ive comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $30.09 to $36.17 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $30.09 $3,369,775 $36.17 $4,050,667 112,000 112,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $3,500,000 $31.25 Value Indication By Market Approach: X Adjusted Value/SF 112,000 Based on the preceding, our opinion of value for Pod 2 is $3,500,000, or $31.25 per square foot of allowed building space. 107 VALUATION OF POD 3 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 3 E/Q Santilla del Mar and Elche Village PD/Retail 25,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale p rice from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior f eatures. A summary of the adjustments that are made is shown at the end of this section. 108 COMPARABLE LAND SALES MAP 109 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the sub ject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 3 E/Q Santilla del Mar and Elche Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:25,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-30%-30%-50% 0%0%0%0% 0%0%0%0% 50%-20%-50%-50% 87.50$ 83.20$ 66.67$ 72.69$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 110 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development . Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $66.67 $1,666,667 $87.50 $2,187,550 25,000 25,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,000,000 $80.00 Value Indication By Market Approach: X Adjusted Value/SF 25,000 Based on the preceding, our opinion of value for Pod 3 is $2,000,000, or $80.00 per square foot of allowed building space. 111 VALUATION OF POD 4 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparab le sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on comme rcial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 4 E/Q Santilla del Mar and Elche Village PD/Retail 47,200 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 112 COMPARABLE LAND SALES MAP 113 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 4 E/Q Santilla del Mar and Elche Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:47,200 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 30%-40%-40%-60% 0%0%0%0% 0%0%0%0% 30%-30%-60%-60% 75.84$ 72.80$ 53.33$ 58.15$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 114 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $53.33 to $75.84 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development . Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $53.33 $2,517,333 $75.84 $3,579,414 47,200 47,200 Subject Total Square Feet of Building Jackson Claborn, Inc. $3,000,000 $63.56 Value Indication By Market Approach: X Adjusted Value/SF 47,200 Based on the preceding, our opinion of value for Pod 4 is $3,000,000, or $63.56 per square foot of allowed building space. 115 VALUATION OF POD 5 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 5 E/Q Santilla del Mar and Elche Village PD/Retail 44,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 116 COMPARABLE LAND SALES MAP 117 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 5 E/Q Santilla del Mar and Elche North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:44,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 30%10%10%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 40%35%0%-20%-40% 37.19$ 38.68$ 49.25$ 41.33$ 52.33$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respect s. 118 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH-114 in Southlake, Texas. This site is considered infer ior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $37.19 $1,636,323 $52.33 $2,302,667 44,000 44,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,000,000 $45.45 Value Indication By Market Approach: X Adjusted Value/SF 44,000 Based on the preceding, our opinion of value for Pod 5 is $2,000,000, or $45.45 per square foot of allowed building space. 119 VALUATION OF POD 6 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The follow ing table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 6 South & west side Santilla del Mar at Fondon Village PD/Retail 14,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 120 COMPARABLE LAND SALES MAP 121 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 6 South & west side Santilla del Mar at Fondon Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:14,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 80%0%0%-20% 0%0%0%0% 0%0%0%0% 80%10%-20%-20% 105.00$ 114.40$ 106.67$ 116.31$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 122 Sale No. 1 is located southeast of the subject at the southwest corner of E. Sou thlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comp arable properties. The analysis indicates an adjusted value range of $105.00 to $116.31 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $105.00 $1,470,033 $116.31 $1,628,273 14,000 14,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,500,000 $107.14 Value Indication By Market Approach: X Adjusted Value/SF 14,000 Based on the preceding, our opinion of value for Pod 6 is $1,500,000, or $107.14 per square foot of allowed building space. 123 VALUATION OF POD 8 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 8 S/S Elche, northeast of Santilla del Mar Village PD/Retail 7,500 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 124 COMPARABLE LAND SALES MAP 125 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 8 S/S Elche, northeast of Santilla del Mar North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:7,500 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 150%100%100%20%20% 0%0%0%0%0% 0%0%0%0%0% 160%125%90%20%0% 69.07$ 64.47$ 93.57$ 62.00$ 87.22$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered infe rior in location due to its non-corner location and minor corner road frontage. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. 126 Sale No. 3 is located southeast of the subject at the southwest corner of SH 114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH 114 in Southlake, Texas. This site is considered somewhat similar in location due to its lack of direct highway exposure. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $62.00 to $93.57 per square foot of building space. The lower end of the range is considere d reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $62.00 $465,000 $93.57 $701,801 7,500 7,500 Subject Total Square Feet of Building Jackson Claborn, Inc. $500,000 $66.67 Value Indication By Market Approach: X Adjusted Value/SF 7,500 Based on the preceding, our opinion of value for Pod 8 is $500,000, or $66.67 per square foot of allowed building space. 127 VALUATION OF POD 9 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 9 NEQ Fondon and Elche Village PD/Retail 20,200 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 128 COMPARABLE LAND SALES MAP 129 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 9 NEQ Fondon and Elche Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:20,200 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-30%-30%-50% 0%0%0%0% 0%0%0%0% 50%-20%-50%-50% 87.50$ 83.20$ 66.67$ 72.69$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 130 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In add ition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $66.67 $1,346,667 $87.50 $1,767,540 20,200 20,200 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,350,000 $66.83 Value Indication By Market Approach: X Adjusted Value/SF 20,200 Based on the preceding, our opinion of value for Pod 9 is $1,350,000, or $66.83 per square foot of allowed building space. 131 VALUATION OF POD 10 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 10 NEQ Fondon and Elche Village PD/Retail 61,500 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 132 COMPARABLE LAND SALES MAP 133 Where possible, we have used the paired data s et analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 10 NEQ Fondon and Elche Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:61,500 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 134 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comp arisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $1,553,310 $29.08 $1,788,380 61,500 61,500 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,600,000 $26.02 Value Indication By Market Approach: X Adjusted Value/SF 61,500 Based on the preceding, our opinion of value for Pod 10 is $1,600,000, or $26.02 per square foot of allowed building space. 135 VALUATION OF POD 11 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 11 NEQ Fondon and Elche Village PD/Retail 33,312 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 136 COMPARABLE LAND SALES MAP 137 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 11 NEQ Fondon and Elche Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:33,312 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 138 Sale No. 1 is located southeast of the subject at the northeast corner of SH-114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH-121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development . Thus, the calculation of our land value opinion for the subject property is as f ollows: Final Value Analysis - Sales Comparison Approach $25.26 $841,364 $29.08 $968,691 33,312 33,312 Subject Total Square Feet of Building Jackson Claborn, Inc. $900,000 $27.02 Value Indication By Market Approach: X Adjusted Value/SF 33,312 Based on the preceding, our opinion of value for Pod 11 is $900,000, or $27.02 per square foot of allowed building space. 139 VALUATION OF POD 12- RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The f ollowing table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 12 S/S Fondon, east of Elche Village PD/Retail 5,800 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 140 COMPARABLE LAND SALES MAP 141 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 12 S/S Fondon, east of Elche Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:5,800 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 100%10%10%-10% 0%0%0%0% 0%0%0%0% 100%20%-10%-10% 116.67$ 124.80$ 120.00$ 130.84$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 142 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $116.67 to $130.84 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $116.67 $676,682 $130.84 $758,891 5,800 5,800 Subject Total Square Feet of Building Jackson Claborn, Inc. $725,000 $125.00 Value Indication By Market Approach: X Adjusted Value/SF 5,800 Based on the preceding, our opinion of value for Pod 12 is $725,000, or $125.00 per square foot of allowed building space. 143 VALUATION OF POD 13A - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, th e most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 13A E/Q Fondon and Elche Village PD/Retail 29,800 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 144 COMPARABLE LAND SALES MAP 145 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 13A E/Q Fondon and Elche Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:29,800 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-30%-30%-50% 0%0%0%0% 0%0%0%0% 50%-20%-50%-50% 87.50$ 83.20$ 66.67$ 72.69$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 146 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However , this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location du e to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $66.67 $1,986,667 $87.50 $2,607,559 29,800 29,800 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,300,000 $77.18 Value Indication By Market Approach: X Adjusted Value/SF 29,800 Based on the preceding, our opinion of value for Pod 13 A is $2,300,000, or $77.18 per square foot of allowed building space. 147 VALUATION OF POD 13B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 13B E/Q Fondon and Elche Village PD/Retail 22,509 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 148 COMPARABLE LAND SALES MAP 149 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 13B E/Q Fondon and Elche Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:22,509 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 150 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $568,512 $29.08 $654,547 22,509 22,509 Subject Total Square Feet of Building Jackson Claborn, Inc. $600,000 $26.66 Value Indication By Market Approach: X Adjusted Value/SF 22,509 Based on the preceding, our opinion of value for Pod 13 B is $600,000, or $26.66 per square foot of allowed building space. 151 VALUATION OF POD 14- RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The followin g table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 14 E/C Santilla del Mar and Fondon Village PD/Retail 21,900 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 152 COMPARABLE LAND SALES MAP 153 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 14 E/C Santilla del Mar and Fondon Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:21,900 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-10%-10%-30% 0%0%0%0% 0%0%0%0% 50%0%-30%-30% 87.50$ 104.00$ 93.33$ 101.77$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 154 Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is substantially smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $87.50 to $104.00 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $87.50 $1,916,293 $104.00 $2,277,600 21,900 21,900 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,000,000 $91.32 Value Indication By Market Approach: X Adjusted Value/SF 21,900 Based on the preceding, our opinion of value for Pod 14 is $2,000,000, or $91.32 per square foot of allowed building space. 155 VALUATION OF POD 15A - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 15 E/S Santilla del Mar, north of Ciudad Real Village PD/Retail 30,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 156 COMPARABLE LAND SALES MAP 157 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 15 E/S Santilla del Mar, north of Ciudad Real Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:30,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-30%-30%-50% 0%0%0%0% 0%0%0%0% 50%-20%-50%-50% 87.50$ 83.20$ 66.67$ 72.69$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 158 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. Howe ver, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This s ite is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $66.67 to $87.50 per square foot of building space. The middle of the range is consider ed reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $66.67 $2,000,000 $87.50 $2,625,059 30,000 30,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,300,000 $76.67 Value Indication By Market Approach: X Adjusted Value/SF 30,000 Based on the preceding, our opinion of value for Pod 15 A is $2,300,000, or $76.67 per square foot of allowed building space. 159 VALUATION OF POD 15B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 13B E/S Santilla del Mar, north of Ciudad Real Village PD/Retail 10,004 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 160 COMPARABLE LAND SALES MAP 161 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 13B E/S Santilla del Mar, north of Ciudad Real Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:10,004 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 162 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $252,672 $29.08 $290,910 10,004 10,004 Subject Total Square Feet of Building Jackson Claborn, Inc. $275,000 $27.49 Value Indication By Market Approach: X Adjusted Value/SF 10,004 Based on the preceding, our opinion of value for Pod 1 5B is $275,000, or $27.49 per square foot of allowed building space. 163 VALUATION OF POD 16 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. Th e following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 16 East of Ciudad Real roundabout,east of future Luarca Village PD/Retail 33,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 164 COMPARABLE LAND SALES MAP 165 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 16 East of Ciudad Real roundabout, east of future Luarca Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:33,000 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 166 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $833,484 $29.08 $959,618 33,000 33,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $925,000 $28.03 Value Indication By Market Approach: X Adjusted Value/SF 33,000 Based on the preceding, our opinion of value for Pod 16 is $925,000, or $28.03 per square foot of allowed building space. 167 VALUATION OF POD 18A - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuati on and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subjec t’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites sim ilar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing th e location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 18A N/S Ciudad Real roundabout,east of future Luarca Village PD/Retail 37,800 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 168 COMPARABLE LAND SALES MAP 169 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one r espect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgm ent must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 18A N/S Ciudad Real roundabout, east of future Luarca North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:37,800 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 30%10%10%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 40%35%0%-20%-40% 37.19$ 38.68$ 49.25$ 41.33$ 52.33$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road a ccess points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 170 Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH 114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and W estwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $37.19 $1,405,750 $52.33 $1,978,200 37,800 37,800 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,600,000 $42.33 Value Indication By Market Approach: X Adjusted Value/SF 37,800 Based on the preceding, our opinion of value for Pod 18A is $1,600,000, or $42.33 per square foot of allowed building space. 171 VALUATION OF POD 18B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 18B N/S Ciudad Real roundabout,east of future Luarca Village PD/Retail 60,024 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 172 COMPARABLE LAND SALES MAP 173 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 18B N/S Ciudad Real roundabout, east of future Luarca Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:60,024 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 174 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is gen erally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the ca lculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $1,516,031 $29.08 $1,745,459 60,024 60,024 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,625,000 $27.07 Value Indication By Market Approach: X Adjusted Value/SF 60,024 Based on the preceding, our opinion of value for Pod 18B is $1,625,000, or $27.07 per square foot of allowed building space. 175 VALUATION OF POD 19A - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 19 N/S Ciudad Real roundabout at future Luarca Village PD/Retail 48,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 176 COMPARABLE LAND SALES MAP 177 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 19 N/S Ciudad Real roundabout at future Luarca North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:48,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 30%10%10%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 40%35%0%-20%-40% 37.19$ 38.68$ 49.25$ 41.33$ 52.33$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 178 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH 114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $37.19 $1,785,079 $52.33 $2,512,000 48,000 48,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,000,000 $41.67 Value Indication By Market Approach: X Adjusted Value/SF 48,000 Based on the preceding, our opinion of value for Pod 19A is $2,000,000, or $41.67 per square foot of allowed building space. 179 VALUATION OF POD 19B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 19B N/S Ciudad Real roundabout at future Luarca Village PD/Retail 86,424 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summa ry of the adjustments that are made is shown at the end of this section. 180 COMPARABLE LAND SALES MAP 181 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using t his analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 19B N/S Ciudad Real roundabout at future Luarca Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:86,424 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 182 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $2,182,818 $29.08 $2,513,154 86,424 86,424 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,350,000 $27.19 Value Indication By Market Approach: X Adjusted Value/SF 86,424 Based on the preceding, our opinion of value for Pod 19B is $2,350,000, or $27.19 per square foot of allowed building space. 183 VALUATION OF POD 20 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative difference s such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 20 SEC Santilla del Mar and Galisteo Village PD/Retail 25,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferi or characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 184 COMPARABLE LAND SALES MAP 185 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar proper ties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 20 SEC Santilla del Mar and Galisteo North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:25,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 30%10%10%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 40%35%0%-20%-40% 37.19$ 38.68$ 49.25$ 41.33$ 52.33$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 186 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east side of Cherry Lane, north of SH 114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $37.19 $929,729 $52.33 $1,308,333 25,000 25,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,100,000 $44.00 Value Indication By Market Approach: X Adjusted Value/SF 25,000 Based on the preceding, our opinion of value for Pod 20 is $1,100,000, or $44.00 pe r square foot of allowed building space. 187 VALUATION OF POD 21 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 21 NWC Santilla del Mar and Ciudad Real Village PD/Retail 97,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 188 COMPARABLE LAND SALES MAP 189 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 21 NWC Santilla del Mar and Ciudad Real Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:97,000 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 75%75%0%-20% 20%20%20%20% 0%0%0%0% 95%95%20%0% 24.63$ 28.35$ 26.44$ 28.24$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject at the northeast corner of SH-114 and Grace Lane, Southlake, Texas. This site is considered generally similar in loc ation. However, this site is substantially larger/inferior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. 190 Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. It is noted that this tract will be able to utilize a public parking facility located off-site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH-121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. However, this site is smaller/superior in overall building size . It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $24.63 to $28.35 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development . Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $24.63 $2,388,688 $28.35 $2,750,179 97,000 97,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,650,000 $27.32 Value Indication By Market Approach: X Adjusted Value/SF 97,000 Based on the preceding, our opinion of value for Pod 21 is $2,650,000, or $27.32 per square foot of allowed building space. 191 VALUATION OF POD 22 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subje ct, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 22 NEC Santilla del Mar and Ciudad Real Village PD/Retail 97,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 192 COMPARABLE LAND SALES MAP 193 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 22 NEC Santilla del Mar and Ciudad Real Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:97,000 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 75%75%0%-20% 20%20%20%20% 0%0%0%0% 95%95%20%0% 24.63$ 28.35$ 26.44$ 28.24$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject at the northeast corner of SH-114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building si ze. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. 194 Sale No. 2 is located northeast of the subject at th e southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH-121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. However, this site is smaller/superior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $24.63 to $28.35 per square foot of building space. The middle to upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $24.63 $2,388,688 $28.35 $2,750,179 97,000 97,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,650,000 $27.32 Value Indication By Market Approach: X Adjusted Value/SF 97,000 Based on the preceding, our opinion of value for Pod 22 is $2,650,000, or $27.32 per square foot of allowed building space. 195 VALUATION OF POD 23 - INSTITUTIONAL There are several accepted methods that can be used to value land. However, only t he Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveye d, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot . The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 23 N/C Ciudad Real and Galisteo Village PD/Retail 231,600 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 196 COMPARABLE LAND SALES MAP 197 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 23 N/C Ciudad Real and Galisteo Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:231,600 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%-40%-50% 20%20%20%20% 0%0%0%0% 20%20%-20%-30% 15.15$ 17.45$ 17.63$ 19.77$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Sale No. 1 is located southeast of the subject at the northeast corner of SH-114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. It is noted that this tract will be able to utilize a public parking facility located off-site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. 198 Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is consid ered generally similar in location. In addition, this site is generally similar in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is smaller/superior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off -site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH-121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. However, this site is smaller/superior in overall building size. It is noted that this tract will be able to utilize a public parking facility located off-site. As such, this sale is inferior in site utility. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as compariso ns for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $1 5.15 to $19.77 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $15.15 $3,509,724 $19.77 $4,578,485 231,600 231,600 Subject Total Square Feet of Building Jackson Claborn, Inc. $4,500,000 $19.43 Value Indication By Market Approach: X Adjusted Value/SF 231,600 Based on the preceding, our opinion of value for Pod 23 is $4,500,000, or $19.43 per square foot of allowed building space. 199 VALUATION OF POD 24 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 24 NEC Davis Boulevard and Santilla del Mar Village PD/Retail 2,100 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 200 COMPARABLE LAND SALES MAP 201 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 24 NEC Davis Boulevard and Santilla del Mar North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:2,100 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 200%200%100%50%20% 0%0%0%0%0% 0%0%0%0%0% 210%225%90%50%0% 82.35$ 93.13$ 93.57$ 77.50$ 87.22$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. 202 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east s ide of Cherry Lane, north of SH-114 in Southlake, Texas. This site is considered somewhat similar in location due to its lack of direct highway exposure. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of com parable properties. The analysis indicates an adjusted value range of $77.50 to $93.57 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $77.50 $162,750 $93.57 $196,504 2,100 2,100 Subject Total Square Feet of Building Jackson Claborn, Inc. $195,000 $92.86 Value Indication By Market Approach: X Adjusted Value/SF 2,100 Based on the preceding, our opinion of value for Pod 24 is $195,000, or $92.86 per square foot of allowed building space. 203 VALUATION OF POD 25A - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 25A SEC Davis Boulevard and Santilla del Mar Village PD/Retail 18,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 204 COMPARABLE LAND SALES MAP 205 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 25A SEC Davis Boulevard and Santilla del Mar Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:18,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 50%-20%-20%-50% 0%0%0%0% 0%0%0%0% 50%-10%-40%-50% 87.50$ 93.60$ 80.00$ 72.69$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 206 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $72.69 to $93.60 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $72.69 $1,308,434 $93.60 $1,684,800 18,000 18,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,500,000 $83.33 Value Indication By Market Approach: X Adjusted Value/SF 18,000 Based on the preceding, our opinion of value for Pod 25 A is $1,500,000, or $83.33 per square foot of allowed building space. 207 VALUATION OF POD 25B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing s ales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 25B SEC Davis Boulevard and Santilla del Mar Village PD/Retail 30,012 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments a re required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 208 COMPARABLE LAND SALES MAP 209 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 25B SEC Davis Boulevard and Santilla del Mar Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:30,012 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 210 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $758,016 $29.08 $872,729 30,012 30,012 Subject Total Square Feet of Building Jackson Claborn, Inc. $800,000 $26.66 Value Indication By Market Approach: X Adjusted Value/SF 30,012 Based on the preceding, our opinion of value for Pod 25B is $800,000, or $26.66 per square foot of allowed building space. 211 VALUATION OF POD 26A - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Ana lysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 26A E/C Davis Boulevard and Sloana Boulevard Village PD/Retail 6,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 212 COMPARABLE LAND SALES MAP 213 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 26A E/C Davis Boulevard and Sloana Boulevard Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:6,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 100%10%10%-10% 0%0%0%0% 0%0%0%0% 100%20%-10%-10% 116.67$ 124.80$ 120.00$ 130.84$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 214 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. In addition, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered superior in location due to its E. Southlake Boulevard frontage and corner access. However, this site is slightly larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparabl e properties. The analysis indicates an adjusted value range of $116.67 to $130.84 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $116.67 $700,016 $130.84 $785,060 6,000 6,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $750,000 $125.00 Value Indication By Market Approach: X Adjusted Value/SF 6,000 Based on the preceding, our opinion of value for Pod 26 A is $750,000, or $125.00 per square foot of allowed building space. 215 VALUATION OF POD 26B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 26B E/C Davis Boulevard and Sloana Boulevard Village PD/Retail 15,006 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 216 COMPARABLE LAND SALES MAP 217 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 26B E/C Davis Boulevard and Sloana Boulevard Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:15,006 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 218 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered r easonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $379,008 $29.08 $436,365 15,006 15,006 Subject Total Square Feet of Building Jackson Claborn, Inc. $410,000 $27.32 Value Indication By Market Approach: X Adjusted Value/SF 15,006 Based on the preceding, our opinion of value for Pod 26B is $410,000, or $27.32 per square foot of allowed building space. 219 VALUATION OF POD 27A - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 27A E/C Davis Boulevard and Sloana Boulevard Village PD/Retail 15,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 220 COMPARABLE LAND SALES MAP 221 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 27A E/C Davis Boulevard and Sloana Boulevard Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:15,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 80%0%0%-20% 0%0%0%0% 0%0%0%0% 80%10%-20%-20% 105.00$ 114.40$ 106.67$ 116.31$ Jackson Claborn, Inc. Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning 222 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. However, this site is generally similar in overall building size. This site is gene rally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard front age and corner access. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $105.00 to $116.31 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $105.00 $1,575,036 $116.31 $1,744,578 15,000 15,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,700,000 $113.33 Value Indication By Market Approach: X Adjusted Value/SF 15,000 Based on the preceding, our opinion of value for Pod 27A is $1,700,000, or $113.33 per square foot of allowed building space. 223 VALUATION OF POD 27B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 27B E/C Davis Boulevard and Sloana Boulevard Village PD/Retail 43,212 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 224 COMPARABLE LAND SALES MAP 225 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 27B E/C Davis Boulevard and Sloana Boulevard Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:43,212 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 226 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in location. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of c omparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $1,091,409 $29.08 $1,256,577 43,212 43,212 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,175,000 $27.19 Value Indication By Market Approach: X Adjusted Value/SF 43,212 Based on the preceding, our opinion of value for Pod 27B is $1,175,000, or $27.19 per square foot of allowed building space. 227 VALUATION OF POD 28 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 28 South end of Arta, south of Santilla del Mar Village PD/Retail 11,000 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 228 COMPARABLE LAND SALES MAP 229 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 28 South end of Arta, south of Santilla del Mar Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:11,000 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 80%0%0%-20% 0%0%0%0% 0%0%0%0% 80%10%-20%-20% 105.00$ 114.40$ 106.67$ 116.31$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 230 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the s outhwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $105.00 to $116.31 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $105.00 $1,155,026 $116.31 $1,279,357 11,000 11,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,160,000 $105.45 Value Indication By Market Approach: X Adjusted Value/SF 11,000 Based on the preceding, our opinion of value for Pod 28 is $1,160,000, or $105.45 per square foot of allowed building space. 231 VALUATION OF POD 29 - RETAIL There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, co nsidering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas 1/7/2014 PD 126,100 $58.33 2 Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas 5/21/13 O-1 12,500 $104.00 3 Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas 10/26/2012 SP-1 12,000 $133.33 4 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 4,000 $145.38 Subject Pod 29 SEQ SH 114 and Davis Boulevard Village PD/Retail 17,900 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $58.33 to $145.38 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 232 COMPARABLE LAND SALES MAP 233 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the su bject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 29 SEQ SH 114 and Davis Boulevard Southwest corner of E Southlake Boulevard and N Kimball Avenue, Southlake, Texas Southeast side of E Southlake Boulevard, west of Miron Drive, Southlake, Texas Southwest corner of E Southlake Boulevard and S Nolen Drive, Southlake, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas Sale/List Price:N/A $7,356,000 $1,300,000 $1,600,000 $581,526 Zoning/Use Village PD/Retail PD O-1 SP-1 SP-2 Sale Date:N/A 1/7/2014 5/21/13 10/26/2012 Pending Building Size:17,900 126,100 12,500 12,000 4,000 Price/SF N/A $58.33 $104.00 $133.33 $145.38 Sale #1 Sale #2 Sale #3 Sale #4 58.33$ 104.00$ 133.33$ 145.38$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 58.33$ 104.00$ 133.33$ 145.38$ 0%10%-20%0% 80%0%0%-20% 0%0%0%0% 0%0%0%0% 80%10%-20%-20% 105.00$ 114.40$ 106.67$ 116.31$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 234 Sale No. 1 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and N. Kimball Road, Southlake, Texas. This site is considered similar in location due to its E. Southlake Bo ulevard frontage and corner access. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Texas. This site is considered slightly inferior in location due to its non-corner location on E. Southlake Boulevard. However, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of E. Southlake Boulevard and S. Nolen Drive, Southlake, Texas. This site is considered similar in location due to its E. Southlake Boulevard frontage and corner access. Howe ver, this site is generally similar in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue in Southlake, Texas. This site is considered similar in location due to its highway exposure and two road access. However, this site is slightly smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $105.00 to $116.31 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $105.00 $1,879,543 $116.31 $2,081,863 17,900 17,900 Subject Total Square Feet of Building Jackson Claborn, Inc. $2,050,000 $114.53 Value Indication By Market Approach: X Adjusted Value/SF 17,900 Based on the preceding, our opinion of value for Pod 29 is $2,050,000, or $114.53 per square foot of allowed building space. 235 VALUATION OF POD 30A - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this ins tance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comp arison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 30A SEQ SH 114 and Davis Boulevard Village PD/Retail 36,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 pe r square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 236 COMPARABLE LAND SALES MAP 237 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, a djustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 30A SEQ SH 114 and Davis Boulevard North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:36,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 30%10%10%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 40%35%0%-20%-40% 37.19$ 38.68$ 49.25$ 41.33$ 52.33$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to its lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 238 Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east s ide of Cherry Lane, north of SH-114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of co mparable properties. The analysis indicates an adjusted value range of $37.19 to $52.33 per square foot of building space. The upper end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $37.19 $1,338,810 $52.33 $1,884,000 36,000 36,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,750,000 $48.61 Value Indication By Market Approach: X Adjusted Value/SF 36,000 Based on the preceding, our opinion of value for Pod 30 A is $1,750,000, or $48.61 per square foot of allowed building space. 239 VALUATION OF POD 30B – MULTI-FAMILY There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 Northeast corner of SH 114 and Grace Lane, Southlake, Texas Pending NR-PUD 277,150 $12.63 2 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas 6/6/2014 CBD 309,498 $14.54 3 North of SH 114 and west of N Kimball Avenue, Southlake, Texas 5/29/2014 SP-2 118,000 $22.03 4 West side of SH 121,south of Gateway Drive, Colleyville, Texas 9/4/2014 CC-2 45,000 $28.24 Subject Pod 30B SEQ SH 114 and Davis Boulevard Village PD/Retail 32,400 SUMMARY OF LAND SALES Comp No. The four comparables utilized ranged in sale price from $12.63 to $28.24 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 240 COMPARABLE LAND SALES MAP 241 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Location: Pod 30B SEQ SH 114 and Davis Boulevard Northeast corner of SH 114 and Grace Lane, Southlake, Texas Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas North of SH 114 and west of N Kimball Avenue, Southlake, Texas West side of SH 121, south of Gateway Drive, Colleyville, Texas Sale/List Price:N/A $3,500,000 $4,500,000 $2,600,000 $1,270,860 Zoning/Use Village PD/Retail NR-PUD CBD SP-2 CC-2 Sale Date:N/A Pending 6/6/2014 5/29/2014 9/4/2014 Building Size:32,400 277,150 309,498 118,000 45,000 Price/SF N/A $12.63 $14.54 $22.03 $28.24 Sale #1 Sale #2 Sale #3 Sale #4 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 0%0%0%0% 0%0%0%0% 0%0%0%0% 12.63$ 14.54$ 22.03$ 28.24$ 0%0%0%0% 100%100%25%0% 0%0%0%0% 0%0%0%0% 100%100%25%0% 25.26$ 29.08$ 27.54$ 28.24$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: 242 Sale No. 1 is located southeast of the subject at the northeast corner of SH 114 and Grace Lane, Southlake, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located northeast of the subject at the southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Texas. This site is considered generally similar in location. However, this site is substantially larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 3 is located southeast of the subject, north of SH 114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered generally similar in loc ation. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the west side of SH 121, north of Gateway Drive in Colleyville, Texas. This site is considered generally similar in location. In addition, this site is generally similar in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, four comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $25.26 to $29.08 per square foot of building space. The middle of the range is consid ered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $25.26 $818,329 $29.08 $942,171 32,400 32,400 Subject Total Square Feet of Building Jackson Claborn, Inc. $880,000 $27.16 Value Indication By Market Approach: X Adjusted Value/SF 32,400 Based on the preceding, our opinion of value for Pod 3 0B is $880,000, or $27.16 per square foot of allowed building space. 243 VALUATION OF POD 31 - OFFICE There are several accepted methods that can be used to value land. However, only the Sales Comparison Approach is considered to be applicable in this instance. This method involves analyzing and comparing sales of sites that are similar to the subject and adjusting the sale prices for relative differences such as property rights conveyed, financing terms, conditions of sale, marketing conditions, location, and physical characteristics. This method is the most common technique of land valuation and is preferential to the other methods when comparable sales are available. As discussed earlier in the Highest and Best Use Analysis, the physical characteristics of the subject are best suited for commercial development. Thus, considering the subject’s highest and best use, our emphasis is placed on commercial-zoned land in the valuation of the subject. The sale comparables must be reduced to a common unit of comparison, such as price per square foot, price per acre, or price per unit. For sites similar to the subject, the most market-oriented unit of comparison is the sale price per square foot. The following table presents a summary of comparable sales. Detailed sales information on these comparables is located in the Addenda while a map showing the location of the comparables relative to the subject is located on the following page. Date of Size of Location Sale Zoning Building Price/SF 1 North of SH 114 and west of N Kimball Avenue, Southlake, Texas Pending SP-2 110,000 $26.56 2 East side of Merlot Avenue,south of Hughes Road, Grapevine, Texas 3/11/2013 Office 62,704 $28.65 3 Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas 1/1/2014 SP-2 73,000 $49.25 4 East side of Cherry Lane,north of SH 114, Southlake, Texas 8/8/2014 O-1 12,000 $51.67 5 Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas 8/27/2014 C-1 18,000 $87.22 Subject Pod 31 N/S Elche, east of Santilla del Mar Village PD/Retail 36,000 SUMMARY OF LAND SALES Comp No. The five comparables utilized ranged in sale price from $26.56 to $87.22 per square foot of buildable area. Upward adjustments are required to the sale price per square foot of the comparables relative to the subject for inferior characteristics, while downward adjustments are required for superior features. A summary of the adjustments that are made is shown at the end of this section. 244 COMPARABLE LAND SALES MAP 245 Where possible, we have used the paired data set analysis to make adjustments to the sale price of the comparables relative to the subject. In using this analysis, adjustments are made by comparing sales that are similar to the subject in all but one respect. However, because of the narrow sampling of similar properties, it is sometimes difficult to accurately account for the impact of a single factor on value. Consequently, while this type of analysis is theoretically sound and is market derived, judgment must also be used. Land Value - Market Approach to Value Subject Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 Location: Pod 31 N/S Elche, east of Santilla del Mar North of SH 114 and west of N Kimball Avenue, Southlake, Texas East side of Merlot Avenue, south of Hughes Road, Grapevine, Texas Southwest corner of SH 114 and N White Chapel Boulevard, Southlake, Texas East side of Cherry Lane, north of SH 114, Southlake, Texas Southeast corner of E Southlake Boulevard and Westwood Drive, Southlake, Texas Sale/List Price:N/A $2,922,005 $1,796,755 $3,595,192 $620,000 $1,570,000 Zoning/Use Village PD/Retail SP-2 Office SP-2 O-1 C-1 Sale Date:N/A Pending 3/11/2013 1/1/2014 8/8/2014 8/27/2014 Building Size:36,000 110,000 62,704 73,000 12,000 18,000 Price/SF N/A $26.56 $28.65 $49.25 $51.67 $87.22 Sale #1 Sale #2 Sale #3 Sale #4 Sale #5 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 0%0%0%0%0% 26.56$ 28.65$ 49.25$ 51.67$ 87.22$ 10%25%-10%0%-20% 35%15%15%-20%-20% 0%0%0%0%0% 0%0%0%0%0% 45%40%5%-20%-40% 38.52$ 40.12$ 51.71$ 41.33$ 52.33$ Jackson Claborn, Inc. Final Adjusted Price/SF Site Utility Carried Forward Price/SF Property Rights Conveyed Market Conditions Net Other Adjustments Zoning Location Size Sales Adjustment Adj Price/SF Financing Terms Conditions of Sale Land Sales Other Adjustments: Sale No. 1 is located southeast of the subject, north of SH-114 and west of N. Kimball Avenue, Southlake, Texas. This site is considered slightly inferior in location due to i ts lack of direct visibility to either of its road access points. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 2 is located southeast of the subject on the east side of Merlot Avenue, south of Hughes Road, Grapevine, Texas. This site is considered inferior in location due to its non-corner location and minor corner road frontage. In addition, this site is larger/inferior in overall building size. This site is generally similar in all other respects. 246 Sale No. 3 is located southeast of the subject at the southwest corner of SH-114 and N. White Chapel Road, Southlake, Texas. This site is considered slightly superior in location due to its more direct access and proximity to a new hospital. However, this site is larger/inferior in overall building size. This site is generally similar in all other respects. Sale No. 4 is located southeast of the subject on the east s ide of Cherry Lane, north of SH-114 in Southlake, Texas. This site is considered inferior in location due to its lack of direct highway exposure. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Sale No. 5 is located southeast of the subject at the southeast corner of E. Southlake Boulevard and Westwood Drive in Southlake, Texas. This site is considered superior in location due to its more dense surrounding area. However, this site is smaller/superior in overall building size. This site is generally similar in all other respects. Land Value Conclusion In an analysis of comparable properties, five comparables were used as comparisons for the subject site in order to gain market insight into the sale prices of comparable properties. The analysis indicates an adjusted value range of $38.52 to $52.33 per square foot of building space. The lower end of the range is considered reasonable due to the sites specific location within the development. Thus, the calculation of our land value opinion for the subject property is as follows: Final Value Analysis - Sales Comparison Approach $38.52 $1,386,624 $52.33 $1,884,000 36,000 36,000 Subject Total Square Feet of Building Jackson Claborn, Inc. $1,500,000 $41.67 Value Indication By Market Approach: X Adjusted Value/SF 36,000 Based on the preceding, our opinion of value for Pod 31 is $1,500,000, or $41.67 per square foot of allowed building space. 247 LOT DEVELOPMENT APPROACH The first step in the process of providing a market value opinion of the subject, as developed, is to determine the market value of the individual lots (retail value). This will be done by using the Sales Comparison Approach. Retail Lot Price Because of their size and potential uses, the sum of the individual lots in a subdivided parcel is more valuable than the site as a whole. The value of the individual lots is commonly referred to as the "retail value" of the lots, since this is essentially the value of the site to the end-user of the site. As discussed, the subject’s proposed residential lots are to be developed within a master-planned community designed as a small European Village Center which is atypical of current subdivision developments in the Dallas/Fort Worth area. Furthermore, to attain this “vogue” style, typical lot setbacks (front, side, and rear) are not required. As such, lot sales within developments with greater dimensions (yet with setbacks) and with similar home price ranges and demographics will be utilized to estimate the value for the subject’s unique developed lots. These will include two subdivisions in the subject’s submarket area of Westlake, as well as three upscale developments under construction in the Dallas area. The sales that were verified can be found in the following summary. 248 Sale Subdivision Lot Recent No.Subdivisions Amenities Sales Date Amenity Lot Size (SF)MLS #Price/SF Price/Lot 1 Vaquero Golf Course, Lake, 2013 Golf Course View 20,923 11735748 $16.25 $340,000 Westlake, Texas Gated, Guarded, 2013 Golf Course View 22,264 11567918 $15.72 $350,000 Amenity Center,2013 Interior 21,573 11895314 $15.07 $325,000 Jog/Bike Path 2013 Cul-De-Sac 21,420 11969572 $14.01 $300,000 Westlake Academy 2013 Corner 22,341 11912400 $12.98 $290,000 2013 Cul-De-Sac 23,598 11895949 $12.61 $297,500 Listing Lake/Golf Course 61,453 12068098 $32.46 $1,995,000 Listing Interior 24,948 12047711 $17.04 $425,000 Listing Golf Course 20,926 12017872 $34.65 $725,000 Listing Interior 59,634 12163321 $25.15 $1,500,000 Listing Interior 73,181 12090120 $20.50 $1,500,000 Listing Interior 31,911 12129890 $18.80 $600,000 2 Terra Bella Gated, Pond, 20-Ac. 2014 Corner 41,603 11930919 $9.86 $410,000 Westlake, Texas Nature Preserve, 2014 Cul-De-Sac 42,365 11959418 $10.62 $450,000 Creek 2013 Corner 41,152 11903836 $11.30 $465,000 Westlake Academy 2013 Interior 40,575 11930901 $12.94 $525,000 Listing Cul-De-Sac 41,208 13034066 $14.07 $580,000 Listing Greenbelt 40,058 12185520 $14.35 $575,000 Listing Greenbelt 40,194 13046165 $14.31 $575,000 3 Bentley Place None 2014 Interior 3,825 - 4,923 N/A $45.70 - $58.82 $225,000 Proposed Dallas, Texas 4 Lawn at Glen Abbey Gated/Guarded 2014 Interior 5,175 N/A $77.29 $400,000 Proposed Private Lake, Dallas, Texas Water Gardens Fitness Center 5 Crestway Forest Estates Gated 2014 Interior 7,800 - 8,960 N/A $50.22 - $57.69 $450,000 Proposed Dallas, Texas (Preston Hollow area) Subject 127 Lots, West Residential Pod Lake, European 80 Future Lots, East Residential Pod Village Westlake Entrada Westlake, Texas SUMMARY OF COMPARABLE LOT SALES & LISTINGS 2,250 - 5,625 (3,505 SF Average) 2,375 - 5,419 (3,435 SF Average) The lot comparables utilized range in current lot sales prices from $290,000/lot to $1,995,000/lot or from $9.86/SF to $34.65/SF for competitive lots ranging from 3,825 square feet up to 73,181 square feet in size within upscale subdivisions in the subject’s Westlake neighborhood, as well as in three upscale subdivisions in the Dallas area which are currently under construction. As shown, the subject’s Westlake area is developed to date with larger lot types which typically reflect lower prices per square foot relative to smaller lot sizes. This is evident within the Vaquero and Terra Bella subdivisions in Westlake which ranged in lot prices from $9.86/SF to $16.25/SF for lots ranging from 20,923 SF to 42,356 SF while the three smaller lot sized subdivisions ranged in significantly higher lot prices per square foot of $45.70/SF to $77.29/SF for lots ranging from 3,825 SF to 8,960 SF in size. It is noted there is no existing lot supply in the subject’s immediate area with smaller lot sizes similar relative to t he subject, as proposed. Furthermore, all of the subdivisions are influenced by their similar proximity to shopping and employment districts. Finally, factors such as property rights conveyed, financing, conditions of sale, or market conditions did not inf luence the lot sales. 249 To further support the use of the five comparables in the lot sale/listing comparable chart, following is a demographic analysis utilizing 2013 population size and average net worth for the respective zip codes relative to the developments per information obtained from the U.S. Census Bureau as follows: Area 2013 Average Sale No.Subdivisions Zip Code Population Net Worth 1 Vaquero 76262 30,346 $870,294 Westlake, Texas 2 Terra Bella 76262 30,346 $870,294 Westlake, Texas 3 Bentley Place 75209 14,190 $753,742 Proposed Dallas, Texas 4 Lawn at Glen Abbey 75248 34,552 $795,326 Proposed Dallas, Texas 5 Crestway Forest Estates 75230 26,970 $966,868 Proposed (Preston Hollow) Dallas, Texas Subject 127 Lots, West Residential Pod 75262 30,346 $870,294 80 Future Lots, East Residential Pod Westlake Entrada Westlake, Texas *Per 2014 ESRI/U.S. Census Bureau SUMMARY OF LOT COMPARABLE DEMOGRAPHICS As shown, the average net worth and population size is similar in the five comparables relative to the subject. Thus, the five developments are considered to be comparable to the subject in determining a market retail lot price for the subject. 250 A map showing the location of the comparable lots relative to the subject is shown as follows. LOT COMPARABLE MAP Furthermore, as the lot price range is varied, to further determine the retail lot values for the subject’s proposed lots, the following isolated comparables were utilized to determine the building value per square foot of home size based upon the land cost s a shown in the following exhibit. 251 Lot Land Home Land Building Sale No.Subdivisions Sale Date Size (SF)Size (SF)Sales Price Value/SF 1 Terra Bella 7/10/2013 41,151 7,115 $465,000 $65.35 1315 Casa Bella Court Westlake, Texas 2 Terra Bella 6/21/2013 40,575 6,940 $525,000 $75.65 1760 Terra Bella Drive Westlake, Texas 3 Cliffs at Clariden Ranch 1/25/2013 30,564 5,070 $221,000 $43.59 413 Mesa Ranch Court Southlake, Texas 4 465 Randol Mill Ave.1/4/2013 51,944 3,170 $210,000 $66.25 Southlake, Texas 5 300 W. Highland 3/19/2013 49,658 4,910 $210,000 $42.77 Southlake, Texas Subject 127 Lots, West Residential Pod 80 Future Lots, East Residential Pod Westlake Entrada Westlake, Texas SUMMARY OF COMPARABLE LAND COST/HOME SQUARE FOOTAGE 2,250 - 5,625 SF (3,505 SF Average) 2,375 - 5,419 SF (3,435 SF Average) As shown, the building values per square range from $42.77/SF to $75.65/SF relative to the land sales price and home size. The subject’s home sizes are projected to range from 1,800 square feet to 5,020 square feet or an overall average home size of 2,804 square feet. This value range will also be considered in our analysis of the subject’s lot values. Conclusion In summary, the subject’s Westlake area is developed to date with larger lot types which typically reflect lower prices per square foot relative to smaller lot sizes. This is evident within the Vaquero and Terra Bella subdivisions in Westlake which ranged in lot prices from $9.86/SF to $16.25/SF for lots ranging from 20,923 SF to 42,356 SF while the three smaller lot-sized subdivisions ranged in significantly higher lot prices per square foot of $45.70/SF to $77.29/SF for lots ranging from 3,825 SF to 8,960 SF in size. It is noted there is no existing lot supply in the subject’s immediate area with smaller lot sizes similar relative to the subject, as proposed . 252 Based upon the preceding, a lot price of $175,000/lot is considered for the subject’s 127 proposed lots (West Residential Pod) which are projected to be completed by September 2015. Our retail lot value equates to an average overall building value of $62.41/SF which is near the middle of the range of the comparables ($42.77/SF to $75.65/SF). Also, our retail lot value equates to an average overall value per square foot of $49.93/SF which is near the lower end of the comparable range ($45.70/SF to $77.29/SF) for the smaller lot sizes (3,825 SF to 8,960 SF). Thus, our retail lot value is supported by the comparables utilized. Cumulative Retail Lot Value (West Residential Pod) Utilizing an average retail lot value of $175,000/lot for the subject’s 127 lots within the West Residential Pod, the cumulative retail lot value calculation is summarized as follows: Total Typical Lot Average Average Total Cumulative No. Lots Size Range (SF)Square Feet Price/Lot Retail Value Totals 127 2,250 - 5,625 3,505 $175,000 $22,225,000 CUMULATIVE RETAIL LOT VALUE CALCULATION As shown, the cumulative retail lot proceeds for the subject’s 127 lots within the West Residential Pod is $22,225,000 or $175,000 average per lot. The sales proceeds will be received as the lots sell over the projected absorption period. Cumulative Retail Lot Value – (Future East Residential Pod) As discussed, the future East Residential Pod is planned to be developed with 80 residential lots within 29 months with a projected completion date of April 2017. These lots are planned to be developed with a similar lot size range relative to the West Residential Pod lots. Thus, for the purposes of this analysis, we will project an average lot price of $200,000/lot (R) ($175,000/lot for West lots x 6%/year x 29 months) for the East lots. Following is the cumulative retail lot value calculation for the future lots: Total Typical Lot Average Average Total Cumulative No. Lots Size Range (SF)Square Feet Price/Lot Retail Value Totals 80 2,375 - 5,419 3,435 $200,000 $16,000,000 CUMULATIVE RETAIL LOT VALUE CALCULATION As shown, the cumulative retail lot proceeds for the subject’s 80 future lots within the East Residential Pod, as proposed, is $16,000,000 or $200,000 average per lot. 253 SUMMARY OF BULK LOT VALUE CONCLUSION The preceding value was based on a retail lot sale of two to 10 lots at a time. However, frequently entire subdivisions are sold to builders, or other investors, at a discount. These builders will then warehouse the land themselves, or the investors will resell the lots to builders over a longer term takedown schedule. Thus, to determine the appropriate discount for the subject, we have assembled a n umber of bulk sales of other developed subdivision lots located throughout the Dallas/Fort Worth metroplex. The comparables presented represent the bulk sale of developed lots to homebuilders and/or investors. As shown on the following page, the discount for the sales presented ranged from 7.7% to 53.6% of the retail value from 2010 through 2013. Since late 2012, the discounts for bulk lot sales appear to be decreasing in many submarket areas as the economy recovers. Within the subject’s market area, demand is high. Thus, when consideration is given to the marketing period of only 23.3± months to sell the subject’s 127 lots in the West Residential Pod, a net to gross sales price ratio (average bulk sale value per lot/average retail sales price per lot) near the upper end of the range indicated below, or 85% is deemed appropriate and a rate of 65% is considered for the subject’s 80 future lots in the East Residential Pod which are projected to sell out within 16.3± months after their projected completion in April 2017. Our bulk sale comparables from 2010 - 2013 are listed in the following summary table. As shown, the overall net/gross average of bulk sales equate to 71.4% on 18 bulk sales of residential lots of varying dimensions and locations. As such, our e stimate of 85% for the subject’s 127 lots within the West Residential Pod, as well as a rate of 65% for the subject’s 80 future lots in the East Residential Pod, is considered reasonable. 254 Date of Total Number Typical Lot Bulk Retail N/G Subdivision Sale of Lots Dimensions Total SF Price/Lot Price/Lot Ratio Austin Ridge Apr-10 192 55' x 115'6,325 $46,700 $62,500 74.7% Frisco 80' x 125'10,000 Chase Oaks Village (TH)Jul-10 92 25' x 100'2,500 $18,587 $30,000 62.0% Plano Stone River Estates Dec-10 69 65' x 125'8,125 $11,594 $25,000 46.4% Royse City 75' x 125'9,375 Myers Meadows Sep-10 35 65' x 120'7,800 $35,000 $62,000 56.5% Garland Founders Addition Jun-11 38 150' x 320'48,000 $20,000 $40,000 50.0% Kaufman County Williamsburg Nov-11 75 50' x 115'5,750 $30,000 $32,500 92.3% Fate Hidden Creek, Ph. 1 Mar-12 26 70' x 105'7,350 $19,000 $30,141 63.0% Royse City 80' x 105'8,400 Woodland Creek Jul-12 68 60' x 120'7,200 $17,000 $25,000 68.0% Royse City Ovilla Parc Dec-12 50 100' x 200'20,000 $43,200 $50,000 86.4% Ovilla Mission Ridge Estates Jun-12 20 50' x 120'6,000 $12,000 $20,000 60.0% Fort Worth Hunters Field Jun-12 78 50' x 120'6,000 $15,120 $20,000 75.6% Fort Worth Deer Meadows Jun-12 75 50' x 120'6,000 $20,000 $25,500 78.4% Fort Worth Prestwyck Jan-13 90 50'/60' x 110'5,500-6,600 $53,000 $62,500 84.8% McKinney 50'/60' x 120'6,000-7,200 $53,000 $67,500 78.5% Pecan Ridge Estates Feb-13 80 50' x 120'6,000 $40,000 $50,000 McKinney Verandah Feb-13 28 40' x 115'4,600 $22,857 $25,974 88.0% Royse City ETJ 50' x 115'5,750 Canyon West Jul-13 25 200' x 220'44,000 $10,750 $30,000 35.8% Parker County Shiloh Manor Oct-13 49 150' x 350'52,500 $46,857 $54,000 86.8% Midlothian ETJ Lakeridge Townhomes Jul-14 79 20' x 75'1,500 $26,000 $45,000 57.8% Lewisville Totals/Averages 1,169 15,176 $30,037 $42,090 71.4% BULK LOT SALE SUMMARY Source: JCI Appraisals 2010-2014 255 Net/Gross Ratio Market Value – 127 Lots, (West Residential Pod) Based upon the preceding, it is our opinion that the market value for the subject’s 127 proposed residential lots in the West Residential Pod utilizing an overall average retail lot value of $175,000/lot and a net/gross ratio of 85% on September 1, 2015 would be $18,890,000 (R), or an overall average of $148,740 per developed lot as shown in the following table. AVERAGE LOT VALUE TOTAL NO. OF LOTS N/G RATIO %TOTAL MARKET VALUE $175,000 127 85%$18,890,000 NET/GROSS MARKET VALUE SUMMARY Net/Gross Ratio Market Value – 80 Future Lots, (East Residential Pod) Based upon the preceding, it is our opinion that the market value fo r the subject’s 80 future residential lots in the East Residential Pod utilizing an overall average retail lot value of $200,000/lot and a net/gross ratio of 65% on September 1, 2015 would be $10,400,000 (R), or an overall average of $130,000 per developed lot as shown in the following table. AVERAGE LOT VALUE TOTAL NO. OF LOTS N/G RATIO %TOTAL MARKET VALUE $200,000 80 65%$10,400,000 NET/GROSS MARKET VALUE SUMMARY 256 PROSPECTIVE MARKET VALUE –WEST RESIDENTIAL POD Having completed the retail valuation section of the assignment, we will now provide an opinion of the market value of the property to a single purchaser, as of thi s date. Obviously, this value will include a provision for compensating the developer/sponsor, i.e., profit for risk and expenditure of time. This value contemplates that the developer/sponsor of the subject would sell the subject property to another devel oper who would in turn sell the developed lots on a retail basis. This value represents the concept of market value to a single purchaser as of this date, wherein a portion of the overall real property rights or physical asset would typically be sold to it s ultimate users over some future time period. Valuations involving such properties must fully reflect all appropriate deductions and discounts as well as the anticipated cash flows to be derived from the disposition of the asset over time. Appropriate ded uctions and discounts are considered to be those which reflect all expenses associated with the disposition of the realty, as of the date of completion, as well as the cost of capital and entrepreneurial profit. This latter item of entrepreneurial profit i s accounted for herein as part of the discount rate. Based on our experience, profit is not expensed as a line item as it is not realized until the project’s expenses (including debt) are paid. The various assumptions necessary to complete our Discounted Cash Flow Analysis for the subject subdivision are detailed as follows. Absorption Projection: 127 Lots, West Residential Pod Following is a summary of our projected absorption on a quarterly basis for the subject’s 127 lots proposed within the West Residential Pod: Sep-15 Mar-16 Jun-16 Sep-16 Dec-18 Jul-18 Jan-19 # OF LOTS 12 15 15 18 18 21 16 127 Lots PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Dec-15 12 23.3± Months As shown, the overall absorption for the 127 proposed lots in the West Residential Pod is estimated to be 23.3± months (1.9± years) or an overall average l ot absorption of 5.5 units per month. 257 PROSPECTIVE MARKET VALUE – EAST RESIDENTIAL POD Having completed the retail valuation section of the assignment, we will now provide an opinion of the market value of the property to a single purchaser, as of this date. Obviously, this value will include a provision for compensating the developer/sponsor, i.e., profit for risk and expenditure of time. This value contemplates that the developer/sponsor of the subject would sell the subject property to another developer who would in turn sell the developed lots on a retail basis. This value represent s the concept of market value to a single purchaser as of this date, wherein a portion of the overall real property rights or physical asset would typically be sold to its ultimate users over some future time period. Valuations involving such properties mu st fully reflect all appropriate deductions and discounts as well as the anticipated cash flows to be derived from the disposition of the asset over time. Appropriate deductions and discounts are considered to be those which reflect all expenses associated with the disposition of the realty, as of the date of completion, as well as the cost of capital and entrepreneurial profit. This latter item of entrepreneurial profit is accounted for herein as part of the discount rate. Based on our experience, profit i s not expensed as a line item as it is not realized until the project’s expenses (including debt) are paid. The various assumptions necessary to complete our Discounted Cash Flow Analysis for the subject subdivision are detailed as follows. Absorption Projection: 80 Lots, East Residential Pod We have also provided a summary as follows of the projected absorption on a quarterly basis for the subject’s 80 future lots within the East Residential Pod which is projected for completion in April 2017 as follows. Apr-17 Oct-17 Jan-18 Apr-18 Jul-18 # OF LOTS 12 15 15 18 8 80 Lots PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Jul-17 12 16.3± Months Thus, the overall absorption for the subject’s 80 proposed single-family lots within the future East Residential Pod is estimated to be 16.3± months, or 1.4± years (overall average of 4.9 upm). 258 Price/Value Increases Over the Sellout Period Despite overall national recessionary effects on real estate in general, price/values for residential and commercial land in the overall Dallas/Fort Worth marketplace have remained reasonably stable. As can be seen from the following table, the past few years have seen a reduction in previous strong inflation rates. This is due in large part to the federal government’s efforts to curb inflation, as well as the effect of level or declining prices for agricultural goods, petroleum and related manufactured products. TRENDS IN NATIONAL INFLATION AND INTEREST RATES Year U.S. Prime Rate Increase in U.S. CPI Real Rate of Return 2002 4.25% 1.6% 2.65% 2003 4.00% 2.3% 1.70% 2004 5.00% 2.7% 2.30% 2005 7.00% 3.4% 3.60% 2006 8.25% 3.2% 5.05% 2007 7.50% 2.9% 4.60% 2008 4.00% 3.8% 0.20% 2009 3.25% -0.4% 3.65% 2010 3.25% 1.5% 1.75% 2011 3.25% 3.0% 0.25% 2012 3.25% 1.7% 1.55% 2013 3.25% 1.5% 1.75% 6/2014 3.25% 2.2% 1.05% Source: Federal Reserve Bank of St. Louis, U. S. Financial Data; U.S. Department of Commerce, Bureau of Economic Analysis As shown in the preceding table, CPI increases ranged from -0.4% to 3.8% from 2002 through June 2014 with 3.25% to 8.25% prime rates resulting in real annual rates of returns ranging from 0.2% to 5.05% (with the most current real rate of return at 1.05%). Thus, the real rates of return are substantially affected with fluctuations in the prime rates and the increases/decreases in the consumer price index. (The increase is calculated relative to the previous year-to-year December index rates). Historically, in the sales contracts of the volume lot sales in the marketplace, the lot prices are typically adjusted upward at rates ranging from the prime rate to the prime rate, plus one percent (annually). Thus, as the prime rate is cu rrently 3.25%, for valuation purposes herein, we have estimated annual appreciation on the sale of the subject units at six percent per year for the subject’s 127 proposed lots within Westlake Entrada, West Residential Pod as well as the future 80 lots proposed within the East Residential Pod projected for completion in April 2017 . This is considered reasonable given the supply of available housing product in the area, the historical collection of interest carry/appreciation by developers within the Dallas/Fort Worth market area. 259 Expenses Cost of Sales has been estimated at 3.5% of gross sales proceeds for various closing costs and title policies. Taxes are paid by the developer annually. The estimation of taxes paid per period is based upon the premise that taxes are prorated at closing and are paid in arrears. Therefore, we have deducted taxes based upon the estimated retail market value of the unsold lots. The taxes are prorated in each calendar year based upon the projected sales in each period. Base d upon our experience and information gathered from numerous reputable builders/ developers and taxing authorities, this methodology and percentage estimate (2.0%) is well founded. The taxes will be applied individually to the 60’ lots based on their projected absorption. Marketing expense is included in this analysis as all of the subject’s 127 proposed lots within Westlake Entrada, West Residential Pod as well as the 80 future lots proposed within the East Residential Pod are not currently under contracted yet are projected to eventually be contracted to custom homebuilders who will then provide their marketing. As such, a marketing expense of 0.5% is considered appropriate and will be a direct line -item deduction from the gross sales proceeds. HOA - No HOA dues were considered within this report as the fees are to be paid by the future homeowners. Entrepreneurial Coordination/Remuneration: The last major deduction is that for Entrepreneurial (i.e., the developer/sponsor)/ coordination talent expenditure (see Hewitt: Condominium Developed Lot Discounting Concepts...Again; The Real Estate Appraiser and Analyst; SREA, January/February, 1980). Inasmuch as the discount rate will include a provision for return on the equity investment, this deduction will be for actual time and expenses only. Typically, the developer will allow a budgeted line item equal to 0.5% to 2.0%, of sales and/or costs, depending on the size of the project, expertise required and management developmental time involved. Because the site requires planning and development, an expense of 1.0% is deemed appropriate and will be a direct line -item deduction from the gross sales proceeds. 260 261 262 Discount Rate According to the Dictionary of Real Estate Appraisal, Fourth Addition, Discount Rate is defined as “an interest rate used to convert future payments or receipts into present value. The discount rate may or may not be the same as the internal rate of return (IRR), or yield rate, depending on how it is extracted from the market and/or used in the analysis.” Furthermore, Internal Rate of Return (IRR) is defined as “the annualized yield rate or rate of return on capital that is generated or capable of being generated within an investment or portfolio over a period of ownership. The IRR is the rate of discount that makes the net present value of the investment equal to zero. The IRR discounts all returns from the investment, including returns from its reversion, to equal the original capital outlay. This rate is similar to the equity yield rate. As a measure of investment performance, the IRR is the rate of discount that produces a profitability index of one and a net present value of zero. It may be used to measure profitability after income taxes, i.e., the after-tax equity yield rate.” In other words, it is a rate of profit (or loss) or a measure of performance. It is literally, an interest rate. The effective interest rate on a real estate investment is the equity investor's IRR. The yield to maturity on a bond is the bond holder's IRR, when the bond is held for its full term. The IRR is the rate of return on capital expressed as a ratio per unit of time; for example, 10% per annum. The discount rate utilized herein is essentially an anticipated IRR for the subject property, as estimated from investment performance realized by market participants. Although the investment vehicle being analyzed herein is real property, competition for investment dollars in other investment media is intense, and the prudent investment manager must carefully consider all options. Because of the element of risk involved in real estate investment versus alternative investment vehicles, the prudent investment manager must compare rates of return. The performance of real estate is dependent upon and could fluctuate with the degree of quality of management, unexpected competition, disasters, or economic cycles, particularly in the subject's market area. Therefore, it entails a greater degree of risk than instruments such as government-backed bonds or fixed-rate mortgages As of October 24, 2014, the prime rate was 3.25%. Rates for AAA corporate bonds have fluctuated from a low of 3.72% in January 2013 to 3.91% as of October 24, 2014. In addition, the 10-year treasuries have increased to 2.23% from a low of 1.82% in January 2013. One of the more comprehensive surveys of IRR’s for real estate investments is performed within the Korpacz Report, as published by PricewaterhouseCoopers. In its most recent Second Quarter 2014 National Land Yield Study (See the chart on the following page), pretax IRRs for these higher risk properties currently range from 10% to 25%, with an average of 18.15% for mixed-use respondents in regards to vacant land, which has a slightly inferior diminishing return asset as the subject - developed residential lots. The IRRs are down 16 basis points since Fourth Quarter 2013. 263 This is somewhat supported by the IRR rates obtained from actual developments which we have previously appraised. The IRR’s found in the chart below have been abstracted from a large number of subdivision developments that are located throughout the Dallas/Fort Worth market area. These developments have been, or are currently being developed, with the data presented being the projected sales and cost figures at the time of development. Therefore, while these may not represent actual rates of return, they do provide an excellent perspective relative to local developer expectations. The IRR’s are summarized below: INTERNAL RATE OF RETURN SUMMARY Subdivision Date Home Prices (000’s) Net Acres Total Proposed Lots Typical Lot Dimensions Development Costs/Acre Total Investment Costs Average/Lot Value Projected Absorption (Months) IRR Southwest Village (2) Grand Prairie 07/10 $130-146 10.362 44 50’ x 105’ $91,720 $950,403 $27,500 22.8 20.49% Villages of Woodland Springs West (7-4), Ft. Worth 07/10 $125-$250 32.375 103 60’ x 115’ $46,453 $3,048,980 $36,000 19.3 18.87% Rolling Ridge Estates (6) Murphy 03/11 $400-$610 22.380 53 85’ x 140’ $70,343 $3,729,381 $100,000 26.5 25.45% Hillside on the Lake, (1) Garland 01/12 $200-$250 6.510 30 64’ x 110’ $136,921 $1,499,676 $60,000 24 15.98% Breezy Hill (1) Rockwall 02/12 $360-$500 61.261 27 90’ x 250’ $69,232 $1,878,549 $90,185 20 22.56% The Highlands at Trophy Club (6-3B), Trophy Club 07/11 $270-$500 37.578 98 80’ x 125’ 90’ x 135’/145’ $84,358 $7,176,045 $89,918 23.2 17.05% AVERAGE 20.07% Source: JCI Based on a six to nine-month development period and 6% annual escalation The local comparables shown in the preceding chart indicate that a discount rate (IRR) between 15.98% and 25.45% (20.07% average). However, the internal rates presented represent the total expected return on a project from land purchase to the last lot sold. Therefore, the subject’s discount rate should be less than a typical land project, as the value to be determined is for a fully developed project that is available for immediate resale and which will ultimately possess less risk than that of the total development process. Therefore, a “risk-adjusted discount rate” is deemed appropriate herein. The 264 Fifth Edition of the Dictionary of Real Estate Appraisal defines this term as “a discount rate that is adjusted to offset one or more risk factors, i.e., when a future downswing in the business cycle is likely, the risk associated with a project may increase near the end of its term, necessitating a special adjustment to the discount rate. Such discount rates include all of the elements of risk associated with an income stream for a specified period adjusted to offset additional term risk”.6 Thus, it is our opinion that a potential purchaser would expect to receive a much lower return on his investment for a completed project similar to the subject, which has a purchaser of the end product relative to that of a vacant tract of land awaiting eventual development (higher risk of escalating costs to site development and of the eventual timing of completion). Based upon the preceding, an IRR that is slightly below the middle of the range as indicated in the National Land Yield Study as of Second Quarter 2014 (10% - 25%; 18.15% average) and which is supported by the returns indicated by the local comparables presented (15.98% to 25.45% or 20.07% average) is considered appropriate. Hence, taking into consideration the low supply and high demand levels within the subject’s submarket area, we have selected a discount rate of 15% for the subject’s 127 lots within the West Residential Pod which also takes into consideration the degree of risk, developer profit, and the liquidity inherent in a project such as the subject, as well as the current market conditions. It should be noted that our cash flow also deducts a straight 1.0% entrepreneurial coordination/remuneration (management cost) from all sales proceeds, which effectively increases the discount rate to approximately 16% for the subject’s West Residential Pod lots. To be consistent with the timing of the cash flows, the annual income stream is discounted quarterly. With each of the required elements now identified, we are able to analyze the subject’s 127 developed lots in the West Residential Pod within the DCF analysis as shown on the following page. 6 The Dictionary of Real Estate Appraisal, Fifth Edition, the Appraisal Institute, Chicago, Illinois 265 Sh e l l e y S i v a k u m a r 12 7 Sc e n a r i o : Qu a r t e r l y Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . $1 7 5 , 0 0 0 12 $1 7 7 , 6 2 5 12 $1 8 0 , 2 8 9 15 $1 8 2 , 9 9 4 15 $1 8 5 , 7 3 9 18 $1 8 8 , 5 2 5 18 $1 9 1 , 3 5 3 21 $1 9 4 , 2 2 3 16 $2 3 , 5 4 3 , 4 5 6 12 7 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 Ap p r e c i a t i o n - - > 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % Re v e n u e s $2 , 1 0 0 , 0 0 0 12 . 0 $2 , 1 3 1 , 5 0 0 12 . 0 $2 , 7 0 4 , 3 4 1 15 . 0 $2 , 7 4 4 , 9 0 6 15 . 0 $3 , 3 4 3 , 2 9 5 18 . 0 $3 , 3 9 3 , 4 4 5 18 . 0 $4 , 0 1 8 , 4 0 4 21 . 0 $3 , 1 0 7 , 5 6 6 16 . 0 $2 3 , 5 4 3 , 4 5 6 12 7 Ex p e n s e s Pe r i o d 1 Pe r i o d 2 Pe r i o d 3 Pe r i o d 4 Pe r i o d 5 Pe r i o d 6 Pe r i o d 7 Pe r i o d 8 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1 1 1 , 1 2 5 $1 0 2 , 1 3 4 $9 2 , 8 4 9 $8 0 , 5 1 7 $6 7 , 7 9 5 $5 1 , 8 4 4 $3 5 , 4 0 0 $1 5 , 5 3 8 $5 5 7 , 2 0 2 3. 5 % $7 3 , 5 0 0 $7 4 , 6 0 3 $9 4 , 6 5 2 $9 6 , 0 7 2 $1 1 7 , 0 1 5 $1 1 8 , 7 7 1 $1 4 0 , 6 4 4 $1 0 8 , 7 6 5 $8 2 4 , 0 2 1 0. 5 % $1 0 , 5 0 0 $1 0 , 6 5 8 $1 3 , 5 2 2 $1 3 , 7 2 5 $1 6 , 7 1 6 $1 6 , 9 6 7 $2 0 , 0 9 2 $1 5 , 5 3 8 $1 1 7 , 7 1 7 1. 0 % $2 1 , 0 0 0 $2 1 , 3 1 5 $2 7 , 0 4 3 $2 7 , 4 4 9 $3 3 , 4 3 3 $3 3 , 9 3 4 $4 0 , 1 8 4 $3 1 , 0 7 6 $2 3 5 , 4 3 5 To t a l E x p e n s e s $2 1 6 , 1 2 5 $2 0 8 , 7 0 9 $2 2 8 , 0 6 6 $2 1 7 , 7 6 2 $2 3 4 , 9 6 0 $2 2 1 , 5 1 6 $2 3 6 , 3 2 0 $1 7 0 , 9 1 6 $1 , 7 3 4 , 3 7 5 Ne t I n c o m e $1 , 8 8 3 , 8 7 5 $1 , 9 2 2 , 7 9 1 $2 , 4 7 6 , 2 7 5 $2 , 5 2 7 , 1 4 3 $3 , 1 0 8 , 3 3 5 $3 , 1 7 1 , 9 2 8 $3 , 7 8 2 , 0 8 4 $2 , 9 3 6 , 6 4 9 $2 1 , 8 0 9 , 0 8 1 An n u a l D i s c o u n t R a t e : 15 . 0 0 % 0. 9 6 3 8 6 0. 9 2 9 0 2 0. 8 9 5 4 4 0. 8 6 3 0 7 0. 8 3 1 8 8 0. 8 0 1 8 1 0. 7 7 2 8 3 0. 7 4 4 9 0 Di s c o u n t e d V a l u e $1 , 8 1 5 , 7 8 3 $1 , 7 8 6 , 3 0 6 $2 , 2 1 7 , 3 5 1 $2 , 1 8 1 , 1 1 0 $2 , 5 8 5 , 7 5 5 $2 , 5 4 3 , 2 8 3 $2 , 9 2 2 , 9 0 3 $2 , 1 8 7 , 4 9 6 $1 8 , 2 3 9 , 9 8 7 Ne t P r e s e n t V a l u e 3. 7 5 % Ro u n d e d P o w e r e d b y @ V a l u e S o f t w a r e ~ w w w . a t v a l u e . c o m $1 8 , 2 4 0 , 0 0 0 Pr o j e c t T o t a l s Pe r i o d 7 Pe r i o d 8 Pe r i o d 3 Pe r i o d 4 Pe r i o d 5 Pe r i o d 6 De c - 2 0 1 6 Se p - 2 0 1 6 $1 8 , 2 3 9 , 9 8 7 Ma r - 2 0 1 7 De c - 2 0 1 5 Ma r - 2 0 1 6 Ju n - 2 0 1 6 Ju n - 2 0 1 7 CO S T O F S A L E S In v e n t o r y Lo t S a l e s Se p - 2 0 1 5 MA R K E T I N G MA N A G E M E N T F E E TA X E S - D E V E L O P E D L O T S We s t l a k e E n t r a d a , W e s t We s t l a k e , T e x a s As C o m p l e t e Ca s h F l o w s B e g i n n i n g Pr e p a r e d B y : Nu m b e r o f U n i t s : Pe r i o d s : 266 Reconciliation of West Residential Pod In the previous sections, we have provided an opinion of the market value of the fee simple interest in the subject’s 127 lots in the West Residential Pod (12.510 acres) utilizing the Sales Comparison Approach, the Land Development Approach, and the Net/Gross ratio analysis. Following is a summary of the values indicated by these approaches. SUMMARY OF VALUE INDICATIONS (127 Lots - West Residential Pod) Net/Gross Ratio (Bulk Value) $18,890,000 Discounted Cash Flow Analysis $18,240,000 The first approach used was the Sales Comparison Approach. This approach is based upon the theory of substitution, and implies that a purchaser would pay no more for a property than it would cost to buy, or build, a substitute property. This approach is the base technique for valuing a proposed subdivision, as it recognizes the developm ent issues that unique to each tract of vacant land. In addition, we also utilized the Land Development Approach, which is based on the assumption that the subject is developed into a residential subdivision, with the individual lots sold to builders to va lue the subject, upon completion of development. Furthermore, the Net/Gross ratio analysis, as well as the Discounted Cash Flow analysis, forms a fairly tight range. Thus, we have reconciled our final value at $18,500,000 for the subject’s 127 lots in the West Residential Pod. 267 PROSPECTIVE MARKET VALUE – EAST RESIDENTIAL POD We have also utilized the following “Discounted Cash Flow” analysis incorporating the subject’s development costs, absorption projections, and retail lot values to determine the “as is” land value for the subject’s 9.490 gross acres in the East Residential Pod which is projected for completion in April 2017. The “Discounted Cash Flow” analysis will include a provision for compensating the developer/sponsor, i.e., profit for risk and expenditure of time. This value contemplates that the developer/sponsor of the subject would sell the subject property to another developer who would in turn sell the developed lots on a retail basis. This value represents the concept of market value to a single purchaser as of this date, wherein a portion of the overall real property rights or physical asset would typically be sold to its ultimate users over some future time period. Valuations involving such properties must fully reflect all appropriate deductions and discounts as well as the anticipated cash flows to be derived from the disposition of the asset over time. Appropriate deductions and discounts are considered to be those which reflect all expenses associated with the disposition of the realty, as of the date of completion, as well as the cost of capital and entrepreneurial profit. This latter item of entrepreneurial profit is accounted for herein as part of the discount rate. Based on our experience, profit is not expensed as a line item as it is not realized until the project’s expenses (including debt) are paid. The various assumptions necessary to complete our Discounted Cash Flow Analysis for the future 80 residential lots on 9.490 acres are as follows:  The subject’s land is planned to be developed with 80 residential lots with within 29 months (April 2017). For the purposes of this analysis, we will project absorption based upon quarterly periods with an average lot price of $200,000/lot (R) ($175,000 x 6%/year x 29 months).  Utilizing the market absorption analysis (found within the “Highest and Best Use Analysis” section of this report), the projected quarterly absorption for the subject’s 80 lots is summarized as follows: Apr-17 Oct-17 Jan-18 Apr-18 Jul-18 # OF LOTS 12 15 15 18 8 80 Lots PROJECTED QUARTERLY LOT ABSORPTION SUMMARY Jul-17 12 16.3± Months  Infrastructure development costs totaling $2,200,000 will be deducted within the first three quarterly periods at $733,333/period. (See itemized development costs in the addenda of this report).  A Discounted Rate of 17% will be utilized. 268  The annual ad valorem tax has been calculated utilizing information provided by the Tarrant Appraisal District at $11,896 for the year ($53,773/acre x 9.490 acres x $2.331127/$100). Thus, a total of $2,974/quarterly period will be deducted.  Cost of sales is estimated at 3.5%.  A marketing expense of 0.5% will be deducted as all o f the subject’s 80 lots are not currently under contract.  A management fee of 1% will be deducted. 269 Sh e l l e y S i v a k u m a r 80 Sc e n a r i o : Qu a r t e r l y Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . Un i t S a l e s No . $2 0 0 , 0 0 0 0 $2 0 0 , 0 0 0 0 $2 0 0 , 0 0 0 0 $2 0 0 , 0 0 0 12 $2 0 3 , 0 0 0 12 $2 0 6 , 0 4 5 15 $2 0 9 , 1 3 6 15 $2 1 2 , 2 7 3 18 $2 1 5 , 4 5 7 8 $1 6 , 6 0 8 , 2 7 3 80 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 Ap p r e c i a t i o n - - > 0. 0 0 % 0. 0 0 % 0. 0 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % 1. 5 0 % Re v e n u e s $0 0 $0 0 $0 0. 0 $2 , 4 0 0 , 0 0 0 12 . 0 $2 , 4 3 6 , 0 0 0 12 $3 , 0 9 0 , 6 7 5 15 $3 , 1 3 7 , 0 3 5 15 $3 , 8 2 0 , 9 0 9 18 $1 , 7 2 3 , 6 5 4 8 $1 6 , 6 0 8 , 2 7 3 80 Ex p e n s e s Pe r i o d 1 Pe r i o d 2 Pe r i o d 3 Pe r i o d 4 Pe r i o d 5 Pe r i o d 6 Pe r i o d 7 Pe r i o d 8 Pe r i o d 9 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $7 3 3 , 3 3 3 $7 3 3 , 3 3 3 $7 3 3 , 3 3 3 $0 $0 $0 $0 $0 $0 $2 , 1 9 9 , 9 9 9 $2 , 9 7 4 $2 , 9 7 4 $2 , 9 7 4 $0 $0 $0 $0 $0 $0 $8 , 9 2 2 $0 $0 $0 $8 0 , 0 0 0 $6 9 , 0 2 0 $5 7 , 6 9 3 $4 2 , 8 7 3 $2 7 , 5 9 5 $8 , 6 1 8 $2 8 5 , 7 9 9 3. 5 % $0 $0 $0 $8 4 , 0 0 0 $8 5 , 2 6 0 $1 0 8 , 1 7 4 $1 0 9 , 7 9 6 $1 3 3 , 7 3 2 $6 0 , 3 2 8 $5 8 1 , 2 9 0 0. 5 % $0 $0 $0 $1 2 , 0 0 0 $1 2 , 1 8 0 $1 5 , 4 5 3 $1 5 , 6 8 5 $1 9 , 1 0 5 $8 , 6 1 8 $8 3 , 0 4 1 1. 0 % $0 $0 $0 $2 4 , 0 0 0 $2 4 , 3 6 0 $3 0 , 9 0 7 $3 1 , 3 7 0 $3 8 , 2 0 9 $1 7 , 2 3 7 $1 6 6 , 0 8 3 To t a l E x p e n s e s $7 3 6 , 3 0 7 $7 3 6 , 3 0 7 $7 3 6 , 3 0 7 $2 0 0 , 0 0 0 $1 9 0 , 8 2 0 $2 1 2 , 2 2 7 $1 9 9 , 7 2 5 $2 1 8 , 6 4 0 $9 4 , 8 0 1 $3 , 3 2 5 , 1 3 4 Ne t I n c o m e ($ 7 3 6 , 3 0 7 ) ($ 7 3 6 , 3 0 7 ) ($ 7 3 6 , 3 0 7 ) $2 , 2 0 0 , 0 0 0 $2 , 2 4 5 , 1 8 0 $2 , 8 7 8 , 4 4 8 $2 , 9 3 7 , 3 1 0 $3 , 6 0 2 , 2 6 8 $1 , 6 2 8 , 8 5 4 $1 3 , 2 8 3 , 1 4 0 An n u a l D i s c o u n t R a t e : 17 . 0 0 % 0. 9 5 9 2 3 0. 9 2 0 1 3 0. 8 8 2 6 2 0. 8 4 6 6 3 0. 8 1 2 1 2 0. 7 7 9 0 1 0. 7 4 7 2 5 0. 7 1 6 7 9 0. 6 8 7 5 7 Di s c o u n t e d V a l u e ($ 7 0 6 , 2 9 0 ) ($ 6 7 7 , 4 9 6 ) ($ 6 4 9 , 8 7 6 ) $1 , 8 6 2 , 5 9 5 $1 , 8 2 3 , 3 5 3 $2 , 2 4 2 , 3 4 3 $2 , 1 9 4 , 9 1 3 $2 , 5 8 2 , 0 6 7 $1 , 1 1 9 , 9 4 7 $9 , 7 9 1 , 5 5 7 Ne t P r e s e n t V a l u e 4. 2 5 % Ro u n d e d Po w e r e d b y @ V a l u e S o f t w a r e ~ w w w . a t v a l u e . c o m $9 , 7 9 1 , 5 5 7 $9 , 8 0 0 , 0 0 0 Pr o j e c t T o t a l s Pe r i o d 7 Pe r i o d 8 Pe r i o d 9 Pe r i o d 3 Pe r i o d 4 Pe r i o d 5 Pe r i o d 6 Ju l - 2 0 1 8 Ap r - 2 0 1 8 Oc t - 2 0 1 8 Ja n - 2 0 1 9 Ap r - 2 0 1 9 CO S T O F S A L E S MA R K E T I N G MA N A G E M E N T F E E DE V E L O P M E N T C O S T S TA X E S O N V A C A N T L A N D TA X E S O N D E V E L O P E D L O T S In v e n t o r y AV E R A G E / L O T S A L E S Ap r - 2 0 1 7 Ju l - 2 0 1 7 Oc t - 2 0 1 7 Ja n - 2 0 1 8 We s t l a k e E n t r a d a ( E a s t ) We s t l a k e , T e x a s As I s Ca s h F l o w s B e g i n n i n g Pr e p a r e d B y : Nu m b e r o f U n i t s : Pe r i o d s : 270 Reconciliation of Land Value Conclusion - East Residential Pod In the previous sections, we have provided an opinion of the market value of the fee simple interest in the subject’s future 80 lots in the East Residential Pod (9.490 acres) utilizing the Sales Comparison Approach, the Land Development Approach, and the Net/Gross ratio analysis. Following is a summary of the values indicated by these approaches. SUMMARY OF VALUE INDICATIONS (80 Lots - East Residential Pod) Net/Gross Ratio (Bulk Value) $10,400,000 Discounted Cash Flow Analysis $9,800,000 The first approach used was the Sales Comparison Approach to value the subject property. This approach is based on the theory of substitution, and implies that a purchaser would pay no more for an individual property/lot than it would cost to buy, or build, a substitute property. This approach is the most common technique for valuing land, and it is the preferred method when comparable sales are available and is considered to provide a very good indication of value. The second approach used was the “Discounted Cash Flow” analysis utilizing a projection of the future individual lot sales upon the developm ent of 80 lots and deducting development costs, taxes on the vacant land and on the developed lots, costs of sales, marketing, and management expenses. In conclusion, the discounted cash flow analysis is considered to provide a good indication of value for the subject on an as is basis. Thus, we have reconciled our final “as is” value for the 9.490 acres of land within the East Residential Pod at $10,000,000 or $24.19 per square foot ($125,000/unit). 271 RECONCILIATION AND FINAL OPINIONS OF VALUES In the previous sections, we have provided an opinion of the market value of the fee simple interest in the subject’s 127 lots in the West Residential Pod on 12.510 acres and the 80 future lots in the East Residential Pod on 9.490 acres utilizing the Sales Comparison Approach, the Land Development Approach, and the Net/Gross ratio analysis. Following is a summary of the values indicated by these approaches. West Residential Pod – 127 Residential Lots: SUMMARY OF VALUE INDICATIONS 127 Lots - West Residential Pod Net/Gross Ratio (Bulk Value) $18,890,000 Discounted Cash Flow Analysis $18,240,000 East Residential Pod – 80 Residential Lots: SUMMARY OF VALUE INDICATIONS 80 Lots - East Residential Pod Net/Gross Ratio (Bulk Value) $10,400,000 Discounted Cash Flow Analysis $9,800,000 The first approach used was the Sales Comparison Approach. This approach is based on the theory of substitution, and implies that a purchaser would pay no more for a property than it would cost to buy, or build, a substitute property. This approach is the base technique for valuing a proposed subdivision, as it recognizes the development issues that unique to each tract of vacant land. In addition, we also utilized the Land Development Approach, which is based on the assumption that the subject is developed into a residential subdivision, with the individual lots sold to builders to value the subject, upon completion of development. Furthermore, the Net/Gross ratio analysis, as well as the Discounted Cash Flow analysis, forms a fairly tight range. Thus, we have reconciled our final value at $18,500,000 for the 127 developed lots in the West Residential Pod and at $10,000,000 for the subject’s 80 future lots in the East Residential Pod. It is noted that the West Residential Pod represents 127 fully developed residential lots on 12.510 acres; whereas, the 31 mixed-use Pods and the East Residential Pod represents only vacant land that has road access and all utilities in place. 272 Based upon an inspection of the property and the information a nd analysis provided in the following report, it is our opinion that the “Prospective Value” of the fee simple interest in the subject’s individual pods upon completion of development on September 1, 2015 will be: Parcel No.Land Size /Acres Land Size /SF Building Size /SF Land Value /SF Building Value /SF Opinions of Values West 12.510 544,855 127 lots $33.95 N/A $18,500,000 East 9.490 413,240 80 lots $24.20 N/A $10,000,000 1 0.289 12,600 6,000 $59.52 $125.00 $750,000 2 1.928 84,000 112,000 $41.67 $31.25 $3,500,000 3 0.861 37,500 25,000 $53.33 $80.00 $2,000,000 4 1.409 61,360 47,200 $65.19 $84.75 $4,000,000 5 1.515 66,000 44,000 $30.30 $45.45 $2,000,000 6 0.482 21,000 14,000 $71.43 $107.14 $1,500,000 7 1.951 85,000 N/A N/A N/A N/A 8 0.189 8,250 7,500 $60.61 $66.67 $500,000 9 0.510 22,220 20,200 $60.76 $66.83 $1,350,000 10 2.936 127,888 61,500 $12.51 $26.02 $1,600,000 11 0.859 37,400 33,312 $24.06 $27.02 $900,000 12 0.200 8,700 5,800 $83.33 $125.00 $725,000 13A 1.334 58,110 29,800 $39.58 $77.18 $2,300,000 13B Included in 13A Included in 13A 22,509 Included in 13A $26.66 $600,000 14 0.754 32,850 21,900 $60.88 $91.32 $2,000,000 15A 1.033 45,000 30,000 $51.11 $76.67 $2,300,000 15B Included in 15A Included in 15A 10,004 Included in 15A $27.49 $275,000 16 1.136 49,500 33,000 $18.69 $28.03 $925,000 17 0.758 33,000 22,000 N/A N/A N/A 18A 1.302 56,700 37,800 $28.22 $42.33 $1,600,000 18B Included in 18A Included in 18A 60,024 Included in 18A $27.07 $1,625,000 19 1.791 78,000 48,000 $25.64 $41.67 $2,000,000 19B Included in 19A Included in 19A 86,424 Included in 19A $27.19 $2,350,000 20 0.832 36,250 25,000 $30.34 $44.00 $1,100,000 21 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 22 2.009 87,500 97,000 $30.29 $27.32 $2,650,000 23 2.234 97,312 231,600 $46.24 $19.43 $4,500,000 24 0.172 7,500 2,100 $26.00 $92.86 $195,000 25A 0.620 27,000 18,000 $55.56 $83.33 $1,500,000 25B Included in 25A Included in 25A 30,012 Included in 25A $26.66 $800,000 26A 0.413 18,000 6,000 $41.67 $125.00 $750,000 26B Included in 26A Included in 26A 15,006 Included in 26A $27.32 $410,000 27A 0.517 22,500 15,000 $75.56 $113.33 $1,700,000 27B Included in 27A Included in 27A 43,212 Included in 27A $27.19 $1,175,000 28 1.180 51,412 11,000 $22.56 $105.45 $1,160,000 29 0.986 42,960 17,900 $47.72 $114.53 $2,050,000 30A 0.337 14,694 36,000 $119.10 $48.61 $1,750,000 30B Included in 30A Included in 30A 32,400 Included in 30A $27.16 $880,000 31 1.240 54,000 36,000 $27.78 $41.67 $1,500,000 FEE SIMPLE MARKET VALUES - ENTRADA 273 SECTION 7 — ADDENDUMS 274 AERIAL PHOTOGRAPHS 275 276 LAND SALE COMPARABLES – RETAIL 277 LAND SALE NO. 1 Property Identification Record ID 7575 Property Type Commercial Address Southwest corner of E. Southlake Boulevard and N. Kimball Avenue, Southlake, Tarrant County, Texas Tax ID 04486854, 04437357, 04437365 Mapsco T-26-M School District Carroll ISD Legal Description John A. Freeman Survey, A-529, Tract 1B Sale Data Grantor Southlake Plaza 11 Ltd Partners Grantee SPC Kimball Oaks, LTD and Church of Christ our King Sale Date January 15, 2014 Deed Book/Page D214010491/D21010493 Property Rights Fee Simple Financing Cash to Seller Verification Jerry Quicksall; 817-232-5055, November 03, 2014 Sale Price $7,356,000 Land Data Zoning B1/CS, Community Service Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Investment Improvement at DOS None Land Size Information Gross Land Size 14.709 Acres or 640,676 SF Front Footage 485 ft Kimball Boulevard;465 ft Southlake Boulevard Indicators Sale Price/Gross Acre $500,139 Sale Price/Gross SF $11.48 278 Southwest corner of E. Southlake Boulevard and N. Kimball Avenue, Southlake, Tarrant County, Texas Continued Remarks This sale is an assemblage of two acquisitions that took place on the same day (2.1879 acres for $3,000,000 and 12.52 acres for $4,356,000). The entire site has been planned as a 126,100 square foot multi-building shopping center. This equates to a price of $58.33 SF of building. 279 LAND SALE NO. 2 Property Identification Record ID 7574 Property Type Commercial Address Southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Tarrant County, Texas Tax ID 41424476 Mapsco T-26-L School District Carroll ISD Legal Description Lot 20R, Block 1, Gorbutt Addition Sale Data Grantor 1575 E. Southlake, LLC Grantee Jefflyn Properties VI Ltd. Sale Date May 21, 2013 Deed Book/Page 213134282 Property Rights Fee Simple Financing Cash to Seller Verification Paul Blight; 214-637-4300, October 22, 2013 Sale Price $1,300,000 Land Data Zoning O-1 Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Investment Improvement at DOS None of Value Land Size Information Gross Land Size 1.460 Acres or 63,598 SF Front Footage E. Southlake Boulevard Indicators Sale Price/Gross Acre $890,411 Sale Price/Gross SF $20.44 280 Southeast side of E. Southlake Boulevard, west of Miron Drive, Southlake, Tarrant County, Texas Continued Remarks This property was purchased for investment purposes and the buyer has started construction of a 10,400 SF retail oriented office building. This equates to a price of $104.00/SF. Construction is scheduled to be complete in December 2013. 281 LAND SALE NO. 3 Property Identification Record ID 7328 Property Type Land Address Southwest corner E. Southlake Boulevard (FM- 1709) and S. Nolen Drive, Southlake, Tarrant County, Texas Tax ID 41606825 Mapsco T-027-J School District Grapevine-Colleyville ISD Legal Description Lot 1R, Block 1, Nolen Center Sale Data Grantor Loyalty Holdings, LP & Central Harwood Properties, LLC Grantee DCTN 3 373 Southlake TX, LLC Sale Date October 26, 2012 Deed Book/Page 212265153 Property Rights Fee Simple Financing Cash to Seller Verification Dustin R. Renfro; 817-739-3606, April 04, 2013 Sale Price $1,600,000 Land Data Zoning SP-1, Commercial Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Shopping Center Improvement at DOS None Land Size Information Gross Land Size 1.648 Acres or 71,787 SF Front Footage E. Southlake Boulevard; S. Nolen Drive Indicators Sale Price/Gross Acre $970,874 Sale Price/Gross SF $22.29 282 Southwest corner E. Southlake Boulevard (FM-1709) and S. Nolen Drive, Southlake, Tarrant County, Texas Remarks A 12,000 SF multi-tenant shopping center is under construction (100% pre-leased). This equates to a price of $133.33/SF of building. Tenants include a dentist, Starbucks, nail salon, Mattress Firm, Pie 5, and Jersey Mikes. 283 PENDING LAND SALE NO. 4 Property Identification Record ID 7773 Property Type Commercial Address North of SH-114 and west of N. Kimball Avenue, Southlake, Tarrant County, Texas Tax ID 06901492 Mapsco T-26-H School District Carroll ISD Legal Description Lot 4, Kimball Park Addition (Proposed) Sale Data Grantor MDP Southlake LLC Grantee FC Southlake LLC Closing Date Pending Deed Book/Page D214113073 Property Rights Fee Simple Financing Cash to Seller Verification Jeff Medici; 214-784-1617, November 07, 2014 Contract Price $581,526 Land Data Zoning SP-2 Topography Level Utilities All Available Shape Irregular Flood Info None Intended Use Family Style Restaurant Improvement at DOS None Land Size Information Gross Land Size 0.890 Acres or 38,768 SF Front Footage SH-114;N. Kimball Avenue Indicators Sale Price/Gross Acre $653,400 Sale Price/Gross SF $15.00 284 North of SH-114 and west of N. Kimball Avenue, Southlake, Tarrant County, Texas Continued Remarks This site is part of a larger planned development that will include an office building and a full service hotel. This sale is subject to seller providing all utilities as well as access roads to provide access to both SH-114 and N. Kimball Avenue. This site is to be developed into a family style restaurant containing 4,000 SF. This equates to a price of $145.38/SF of building 285 LAND SALE COMPARABLES – OFFICE 286 PENDING LAND SALE NO. 1 Property Identification Record ID 8106 Property Type Office Address North of SH-114 and west of N. Kimball Avenue, Southlake, Tarrant County, Texas Tax ID 06901492 Mapsco T-26-H School District Carroll ISD Legal Description Lot 3, Kimball Park Addition (Proposed) Sale Data Grantor MDP Southlake LLC Grantee Confidential Closing Date Pending Property Rights Fee Simple Financing Cash to Seller Verification Jeff Medici; 214-784-1617, November 07, 2014 Contract Price $2,922,005 Land Data Zoning SP-2 Topography Level Utilities All Available Shape Irregular Flood Info None Intended Use Office Building Improvement at DOS None Land Size Information Gross Land Size 5.160 Acres or 224,770 SF Front Footage SH-114;N. Kimball Avenue Indicators Sale Price/Gross Acre $566,280 Sale Price/Gross SF $13.00 287 North of SH-114 and west of N. Kimball Avenue, Southlake, Tarrant County, Texas Continued Remarks This site is part of a larger planned development that will include office and retail/restaurant uses. This sale is subject to seller providing all utilities as well as access roads to provide access to both SH-114 and N. Kimball Avenue. This site is planned for a four story office building containing 110,000 SF. This equates to a sales price of $26.56/SF of building. 288 LAND SALE NO. 2 Property Identification Record ID 7505 Property Type Office Address East side of Merlot Avenue, south of Hughes Road, Grapevine, Tarrant County, Texas 76051 Tax ID 40333248 Mapsco Grapevine-Colleyville ISD School District FW41L Legal Description Lot 4, Block 2, Delaney Vineyards Addition Sale Data Grantor Delaney Family LP Grantee Health Care REIT, Inc Sale Date March 11, 2013 Deed Book/Page 213071255 Property Rights Fee Simple Financing Cash to Seller Verification MLS #11685726; September 13, 2013; Maya Baggett, 817-937-3503, September 13, 2013; Other sources: Tax records, Confirmed by Allen Gardiner Sale Price $1,796,755 Land Data Zoning PO, Office Topography Basically level Utilities All Available Shape Rectangular Flood Info None Intended Use Speculative/future office User 7 None Land Size Information Gross Land Size 5.322 Acres or 231,839 SF Front Footage Merlot Avenue 289 East side of Merlot Avenue, south of Hughes Road, Grapevine, Tarrant County, Texas 76051 Continued Indicators Sale Price/Gross Acre $337,590 Sale Price/Gross SF $7.75 Remarks This site has been improved with a 62,704 SF medical office building. This equates to $28.65/SF of building. 290 LAND SALE NO. 3 Property Identification Record ID 7774 Property Type Commercial Address Southwest corner of SH-114 and North White Chapel Boulevard, Southlake, Tarrant County, Texas Tax ID 06335896, 03941728 Mapsco T-11-Z School District Carroll ISD Legal Description Being a tract of land situated within the Thomas Mahan Survey, Abstract 1039 Sale Data Grantor Greenway-White Chapel LP Grantee Horizon Investors LLC Sale Date January 01, 2014 Deed Book/Page D213312767 Property Rights Fee Simple Financing Cash to Seller Verification Confidential; April 07, 2014 Sale Price $3,595,192 Land Data Zoning SP-2 (C-3), Commercial Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Medical Office Improvement at DOS None Land Size Information Gross Land Size 6.229 Acres or 271,335 SF Front Footage SH-114;North White Chapel Boulevard Indicators Sale Price/Gross Acre $577,170 Sale Price/Gross SF $13.25 291 Southwest corner of SH-114 and North White Chapel Boulevard, Southlake, Tarrant County, Texas Continued Remarks This site is planned for 73,000 SF of medical office space within two buildings. This equates to $49.25/SF of building. Lease space is being offered at $25.00/SF NNN. 292 LAND SALE NO. 4 Property Identification Record ID 8107 Property Type Office Address East side of Cherry Lane, north of SH-114, Southlake, Tarrant County, Texas Tax ID 00278416 & 00278424 Mapsco T-26-H School District Southlake ISD Legal Description Lots 2 and 3, Block A, Briarwood Estates Sale Data Grantor T2T Property Holdings LLC Grantee Cherry Lane Partners LP Sale Date August 08, 2014 Deed Book/Page D214170875 Property Rights Fee Simple Financing Cash to Seller Verification Steve Shrum; 214-637-4300, November 03, 2014 Sale Price $620,000 Land Data Zoning O-1 Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Office Improvement at DOS None Land Size Information Gross Land Size 1.836 Acres or 79,976 SF Front Footage Cherry Lane Indicators Sale Price/Gross Acre $337,691 Sale Price/Gross SF $7.75 293 East side of Cherry Lane, north of SH-114, Southlake, Tarrant County, Texas Continued Remarks This property was purchased for the construction of two office buildings totaling 12,000 SF. This equates to $51.67/SF of building. 294 LAND SALE NO. 5 Property Identification Record ID 8108 Property Type Office Address Southeast corner of E. Southlake Boulevard and Westwood Drive, Southlake, Tarrant County, Texas Tax ID 06679900 Mapsco T-26-L School District Carroll ISD Legal Description Lot 25R1, Block 1, Woodland Heights Addition Sale Data Grantor Bootstrap Real Estate INV Inc. Grantee Southlake Professional Park LLC Sale Date August 27, 2014 Deed Book/Page D214192792 Property Rights Fee Simple Financing Cash to Seller Verification Jim Kelly; 817-909-7875, November 10, 2014 Sale Price $1,570,000 Land Data Zoning C-1 Topography Level Utilities All Available Shape Slightly Rectangular Flood Info None Intended Use Office Improvement at DOS None Land Size Information Gross Land Size 2.070 Acres or 90,165 SF Front Footage E. Southlake Boulevard; Westwood Drive Indicators Sale Price/Gross Acre $758,491 Sale Price/Gross SF $17.41 295 Southeast corner of E. Southlake Boulevard and Westwood Drive, Southlake, Tarrant County, Texas Continued Remarks This property was purchased to build three medical office buildings totaling 1 8,000 SF (6,000 SF each). This equates to a price of $87.22/SF of building. 296 LAND SALE COMPARABLES – INSTITUTIONAL 297 PENDING LAND SALE NO. 1 Property Identification Record ID 8109 Property Type Commercial Address Northeast corner of SH-114 and Grace Lane, Southlake, Tarrant County, Texas Tax ID 41502329 Mapsco T-26-D School District Carroll ISD Legal Description Lot 1, Block 4, Gateway Church-114 Campus Sale Data Grantor Gateway Church Grantee Confidential Closing Date Pending Property Rights Fee Simple Financing Cash to Seller Verification Nelson Somerville; nbsomerville@sbcglobal.net, November 05, 2014 Contract Price $3,500,000 Land Data Zoning NR - Planned Development Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Hotel Improvement at DOS None Land Size Information Gross Land Size 6.830 Acres or 297,515 SF Front Footage SH-114; Grace Lane Indicators Sale Price/Gross Acre $512,445 Sale Price/Gross SF $11.76 298 Northeast corner of SH-114 and Grace Lane, Southlake, Tarrant County, Texas Continued Remarks This site was purchased to build a Westin Hotel containing 277,150 SF of space including lodging, meeting space, retail and food service. This equates to $12.63 /SF of building. 299 LAND SALE NO. 2 Property Identification Record ID 8110 Property Type Multi-family Address Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Denton County, Texas Tax ID 636007, 636008, and 636009 Mapsco D/C-627-F School District Lewisville ISD Legal Description Tracts 5-1, 5-2, 5-3, Lot 2r1, Block A, The River Walk At Central Park Sale Data Grantor CADG Riverwalk LLC Grantee SWBC Flower Mound LP Sale Date June 04, 2014 Deed Book/Page 2014-53219 Property Rights Fee Simple Financing Cash to Seller Verification Mehrdad Moayedi; 469-892-7200, October 22, 2014 Sale Price $4,500,000 Land Data Zoning CBD Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use 377 Unit Multi-Family Complex Improvement at DOS None Land Size Information Gross Land Size 9.568 Acres or 416,782 SF Front Footage Park Avenue;3rd Avenue; Morriss Road Indicators Sale Price/Gross Acre $470,318 Sale Price/Gross SF $10.80 300 Southeast corner of Park Avenue and 3rd Avenue, Flower Mound, Denton County, Texas Remarks This property was purchased to be the site of the River Walk at Central Park, a 12 - building multi-family complex totaling 309,498 SF. This equates to $14.54/SF of building. 301 LAND SALE NO. 3 Property Identification Record ID 8111 Property Type Commercial Address North of SH-114, west of N. Kimball Avenue, Southlake, Tarrant County, Texas Tax ID N/A Mapsco T-26-H School District Carroll ISD Legal Description Lot 1, Kimball Park Addition (Proposed) Sale Data Grantor MDP Southlake LLC Grantee FC Southlake LLC Sale Date May 29, 2014 Pending Deed Book/Page D214113073 Property Rights Fee Simple Financing Cash to Seller Verification Jeff Medici; 214-784-1617, November 07, 2014 Sale Price $2,600,000 Land Data Zoning SP-2 Topography Level Utilities All Available Shape Irregular Flood Info None Intended Use 175 Room Hotel Improvement at DOS None Land Size Information Gross Land Size 3.590 Acres or 156,380 SF Front Footage SH-114; N. Kimball Avenue Indicators Sale Price/Gross Acre $724,234 Sale Price/Gross SF $16.63 302 North of SH-114, west of N. Kimball Avenue, Southlake, Tarrant County, Texas Continued Remarks This site is part of a larger planned development that will include office and retail/restaurant uses. This sale is subject to seller providing all utilities as well as access roads to provide access to both SH-114 and N. Kimball Avenue. Buyer is building a 125 room hotel including 118,000 SF. The hotel will be four stories in height and include a 9,000 SF conference room and a full service restaurant, as well as an outdoor pool. This equates to $22.03/SF of building. 303 LAND SALE NO. 4 Property Identification Record ID 8112 Property Type Commercial Address West side of SH-121, southeast of Gateway Drive, Colleyville, Tarrant County, Texas Tax ID 03833380 Mapsco T-41-K School District Grapevine/Colleyville ISD Legal Description Tracts 6B3A & 6B3A2, Abstract 352, Elizabeth Cox Survey Sale Data Grantor Shorecrest FLP Grantee Colleyville Lodging Sale Date September 04, 2014 Deed Book/Page D214194886 Property Rights Fee Simple Financing Cash to Seller Verification John Lucas; 817-328-2323, November 03, 2014; Jack Godhwani, 972-693-3286 Sale Price $1,270,860 Land Data Zoning CC-2 Topography Level Utilities All Available Shape Rectangular Flood Info None Intended Use Hotel Improvement at DOS None Land Size Information Gross Land Size 1.940 Acres or 84,506 SF Front Footage SH-121 Indicators Sale Price/Gross Acre $655,082 Sale Price/Gross SF $15.04 304 West side of SH-121, southeast of Gateway Drive, Colleyville, Tarrant County, Texas Continued Remarks This property was purchased to build a 45,000 SF motel. This equates to $28.24 /SF of building. 305 SUBDIVISION/LOT SALE COMPARABLES 306 SUBDIVISION COMPARABLE NO. 1 Computer ID Number: RDV14-11-069 Mapsco: T-10-R Development Name: Vaquero Location: Southwest quadrant of W. Dove Road and Precinct Line Road, Westlake, Tarrant County, Texas School District: Keller Independent School District Developer: WB Texas Resort Communities Home Builders: Calais Custom Homes, Simmons Estate Homes, Mark Molthan Homes, William Manning Company, and various custom homebuilders Total Platted Lots: 295 Number of Available Lots: 74 lots* Lots Sold to Date: 221 lots Estimated Lot Absorption: 47 lots from 01/12 to 09/14 = 1.4 upm Typical Lot Sizes: 14,400 SF – 48,400 SF Typical Lot Dimensions: 80’ x 180’; 220’ x 220’ Home Prices: $980,000 - $4,000,000 Amenities: Golf Course, lake, gated and guarded entrance, amenity center, jogging/bike path Representative Lot Sales/Listings: Subdivision Lot Recent Subdivisions Amenities Sales Date Amenity Lot Size (SF)MLS #Price/SF Price/Lot Vaquero Golf Course, Lake, 2013 Golf Course View 20,923 11735748 $16.25 $340,000 Westlake, Texas Gated, Guarded, 2013 Golf Course View 22,264 11567918 $15.72 $350,000 Amenity Center,2013 Interior 21,573 11895314 $15.07 $325,000 Jog/Bike Path 2013 Cul-De-Sac 21,420 11969572 $14.01 $300,000 Westlake Academy 2013 Corner 22,341 11912400 $12.98 $290,000 2013 Cul-De-Sac 23,598 11895949 $12.61 $297,500 Listing Lake/Golf Course 61,453 12068098 $32.46 $1,995,000 Listing Interior 24,948 12047711 $17.04 $425,000 Listing Golf Course 20,926 12017872 $34.65 $725,000 Listing Interior 59,634 12163321 $25.15 $1,500,000 Listing Interior 73,181 12090120 $20.50 $1,500,000 Listing Interior 31,911 12129890 $18.80 $600,000 307 Vacqero - Southwest quadrant of W. Dove Road and Precinct Line Road, Westlake, Tarrant County, Texas Continued Survey Date: 05/26/2014 Verified by: Jeff Watson – 817-501-1923 Comments: *All absorption data per Residential Strategies as of Third Quarter 2014 This development is gated and guarded with additional amenities including a Tom Fazio designed golf course, private lake, amenity center, jogging/bike path, and admission to Westlake Academy school. Premium golf course lots include membership to the Country Club. The Vaquero Club consists of 385 equity memberships. Ownership of an equity membership entitles the membership owner and immediate family Club privileges. Equity memberships are available by direct application through the Club. Golf memberships provide complete Club privileges while Social memberships, available only to property owners, include all non-golf Club privileges. 308 SUBDIVISION COMPARABLE NO. 2 Computer ID Number: RDV14-11-070 Mapsco: T-11-N Development Name: Terra Bella Location: North side of W. Dove Road, east of Precinct Line Road (Randol Mill Avenue), Westlake, Tarrant County, Texas School District: Carroll Independent School District Developer: Terra Land Development Home Builders: Calais Custom Homes, Ken Singleton Estate Homes, Maykus Custom Homes, Will Steed Homes, and various custom homebuilders Total Platted Lots: 28 Number of Available Lots: 17 lots* Lots Sold to Date: 11 lots Estimated Lot Absorption: 8 lots from 01/12 to 09/14 = 0.2 upm Typical Lot Sizes: 44,000 SF Typical Lot Dimensions: 200’ x 220’ Home Prices: $700,000 - $1,200,000 Am enities: Gated entrance with water features, walking trails, pond, creek Representative Lot Sales/Listings: Subdivision Lot Recent Subdivisions Amenities Sales Date Amenity Lot Size (SF)MLS #Price/SF Price/Lot Terra Bella Gated, Pond, 20-Ac. 2014 Corner 41,603 11930919 $9.86 $410,000 Westlake, Texas Nature Preserve, 2014 Cul-De-Sac 42,365 11959418 $10.62 $450,000 Creek 2013 Corner 41,152 11903836 $11.30 $465,000 Westlake Academy 2013 Interior 40,575 11930901 $12.94 $525,000 Listing Cul-De-Sac 41,208 13034066 $14.07 $580,000 Listing Greenbelt 40,058 12185520 $14.35 $575,000 Listing Greenbelt 40,194 13046165 $14.31 $575,000 309 Terra Bella – North side of W. Dove Road, east of Precinct Line Road, Westlake, Tarrant County, Texas Continued Survey Date: 11/07/2014 Verified by: Perry Moore – 817-992-9856 (11/7/2014) Comments: *All absorption data per Residential Strategies as of Third Quarter 2014 This is an exclusive residential development on one-acre estate sites. This development has an elegant gated entrance, fountains, and Italian-inspired architecture. . 310 PROPOSED SUBDIVISION COMPARABLE NO. 3 Computer ID Number: RDV14-11-071 Mapsco: D-34-H Development Name: Bentley Place Location: West side of Inwood Road, north of University Boulevard, Dallas, Dallas County, Texas School District: Dallas Independent School District Developer: Inwood Chateaux LTD Home Builders: Affiliate of Inwood Chateaux LTD Total Platted Lots: 8 Number of Available Lots: Proposed Estimated Lot Absorption: Proposed Typical Lot Sizes: 3,825 SF to 4,923 SF with varying lot dimensions Typical Lot Dimensions: Frontages range from 50’ to 67’ Home Prices: $800,000 to $1,500,000 Amenities: None Representative Lot Sales: $225,000/lot ($45.70/SF - $58.82/SF) Survey Date: 10/30/2014 Verified by: JCI Appraisal Comments: This is a proposed upscale patio-home development. 311 PROPOSED SUBDIVISION COMPARABLE NO. 4 Computer ID Number: RDV14-11-072 Mapsco: D-5-S Development Name: The Lawn at Glen Abbey Location: North side of Keller Springs Road, east of Green Park Drive, Dallas, Dallas County, Texas School District: Dallas Independent School District Developer: Folsom Properties Home Builders: Bob Thompson Homes and Hawkins Welwood Homes Total Platted Lots: 77 Number of Available Lots: Proposed Estimated Lot Absorption: Proposed Typical Lot Sizes: 5,175 SF Typical Lot Dimensions: 45’ x 115’ Home Prices: $1,200,000 - $2,200,000 Amenities: Gated and guarded entrance, a fitness center, lake, water gardens, treed and views of White Rock Creek and Bent Tree golf course Representative Lot Sales: $400,000/lot ($77.29/SF) Survey Date: 10/30/2014 Verified by: Folsom Developers and JCI Appraisal Comments: This is a proposed phase within an existing exclusive, upscale development which is gated and guarded with additional amenities including a private lake and water gardens with cascading waterfalls. 312 PROPOSED SUBDIVISION COMPARABLE NO. 5 Computer ID Number: DV14-11-073 Mapsco: D-15-Y Development Name: Crestway Forest Estates No. 2 Location: Northwest corner of Forest Lane and Creekway Drive, Dallas, Dallas County, Texas School District: Dallas Independent School District Developer: Centurion American Home Builders: Crescent Custom Estate Homes Total Platted Lots: 18 (Proposed) Number of Available Lots: Proposed Lots Sold to Date: Proposed Estimated Lot Absorption: Proposed Typical Lot Sizes: 7,800 SF – 8,960 SF Typical Lot Dimensions: 65’ x 120’; 70’ x 128’ Home Prices: $1,800,000 - $2,250,000 Amenities: Private gated entrance Representative Lot Sales: $450,000/lot ($50.62/SF - $57.69/SF) Survey Date: 04/24/2014 Verified By: JCI Appraisal Comments: This proposed development is to be located within the exclusive Preston Hollow area. 313 LEGAL DESCRIPTION WHOLE SITE 314 315 316 TAX DATA 317 318 319 320 321 322 323 324 325 326 327 328 QUALIFICATIONS AND STATE CERTIFICATIONS 329 EXPERIENCE AND QUALIFICATIONS OF ERNEST E. GATEWOOD III Education Richland Junior College, Dallas, Texas University of North Texas, Denton, Texas MAI Required Appraisal Institute Courses Real Estate Appraisal Principles (I A-1) (1988) Basic Valuation Procedures (IA-2) (1988) Capitalization Theory and Technique Part A (1 B-A) (1989) Various Seminars See Attached – Education Transcript Professional Licenses and Memberships Licensed Real Estate Salesman in the State of Texas (Number 277705-32) State Certified General Real Estate Appraiser (Certificate No. TX 1324355-G) Professional History 1993-Present Jackson Claborn, Inc. Vice President - Commercial Division 1990-1993 Heartland Real Estate Group Director of Acquisitions 1980-1990 Crosson Dannis, Inc. Appraiser Areas of Special Competence Real estate appraisal, consulting and feasibility for income-producing properties including office buildings, shopping centers, apartment complexes, industrial properties, mixed-use developments, single-family subdivisions, and free-standing retail buildings. Also experienced in the appraisal of single-family residences, vacant land, right-of-way valuation and expert witness testimony for real estate. Additional expertise in market research, data analysis, feasibility coordination, site planning, purchase and sale negotiations, engineering coordination for single-family subdivisions. 330 331 332 333 334 EXPERIENCE AND QUALIFICATIONS OF JlMMY H. JACKSON, MAI Education Texas Tech University, Lubbock, Texas Bachelor of Business Administration in Real Estate Finance - May 1984 Appraisal Institute Courses Real Estate Appraisal Principles (1A-1) 1986) Basic Valuation Procedures (1A-2) (1986) USPAP Standards of Prof. Practice (1989, 1996, 2000, 2002, 2004, 2006, 2008, 2010, 2012) Capitalization Theory & Technique (A & B) ( 1988) Valuation Analysis and Report Writing (2-2) (1989) Case Studies in Real Estate Valuation (2-1) (1989) Advanced Applications (Course 550) (1997) Various Seminars/Courses: See Attached AI Continuing Education Cycle (Since 2007) FHA/HUD Residential Appraisal Course (1994) Dynamics of Office Building Valuation (2001) Appr. of Nursing Home/Cong. Care Facilities (1997) Online Residential Design and Funct. Utility (2002) The Internet and Appraising (1997) Online Analyzing Operating Expenses (2002) The Appraisal of High End/Historical Homes (1997) Mark-to-Market: The Next FIRREA (2002) Small Hotel/Motel Valuation (1997) Valuation of Detrimental Conditions in RE (2002) Environ. Site Analysis – Impact on RE Trans. (1997) Fannie Mae and the Appraisal Process (2002) Dallas/Fort Worth Apartment Operating (1997) Roddy’s Barometer for Vacant Land Market (2004) TX Property Tax Law – Taxpayer Remedies (1998) Using Your HP-12C (2004) The FHA and the Appraisal Process (1999) Online Appraising from Blueprints (2004) Rebuilding the Inner City Neighborhoods (1999) Feasibility, Market Value, Inv. (2004) Networking Opportunities (2000) Subdivision Valuation Seminar (2006) Use of GIS Technology in RE Mkt. Research (2000) Scope of Work Seminar (2006) New Tech. for the Residential Appraiser (2001) Forecasting Revenue Seminar (2006) Appraisal of Local Retail Properties (2001) Business Practices and Ethics (2006) Texas Appraisal Licensing & Certification (2001) Analyzing Distressed Real Estate (2006) The Dallas/Fort Worth Apartment Market (2001) Professional Licenses, Licenses Memberships, & Office Held Member of Appraisal Institute (MAI) State Certified General Appraiser (No. TX-1324004-G) Member of Region 8 Ethics and Counseling Regional Panel (1992-1995) Chair – Public Relations North Texas Chapter (2003, 2004) Co-Chair – Public Relations North Texas Chapter (2005) Board Member – North Texas Chapter (2005-2007) Professional History 1/93-Present Jackson Claborn, Inc. President/CEO 08/91-12/92 Travis, Wolff Consulting, Inc. Vice President, Real Estate Advisory Services 5/84-08/91 Crosson Dannis, Inc. Senior Appraiser (7 Years) Areas Of Special Competence Real estate appraisal, consulting and feasibility for income-producing properties including hotels/motels, office buildings, shopping centers, apartment complexes, industrial properties, mixed-use developments, subdivisions, nursing homes, and free-standing retail buildings. Also experienced in appraisal of single-family residences. 335 Program Title End Date Type Hours State of the State 05/13/2014 Standard 2.0 Redevelopment of Midtown Dallas District 03/11/2014 Standard 2.0 Advertising and Promotion of Expert Appraisal Services 02/11/2014 Standard 2.0 Texas’ Appraisal Industry Update 11/12/2013 Standard 2.0 How to Deal with an Aggressive Attorney at Deposition/Trial 09/10/2013 Program 2.0 Texas' Water Crisis 05/14/2013 Program 2.0 Metropolitan Transportation Update 03/12/2013 Program 2.0 Downtown Dallas: Urban Life Realized 02/12/2013 Program 2.0 The Trinity River Project-Today and the Future 01/08/2013 Program 2.0 Using MYRETA.COM as a Tool in Valuing Commercial RE 11/13/2012 Program 2.0 7-Hour National USPAP Update Course 10/12/2012 Classroom 7.0 Factoring Sustainability into Asset Valuation 09/11/2012 Program 2.0 The Parks Dallas & Data Center Real Estate Industry Trends 05/01/2012 Program 2.0 Online Business Practices and Ethics 05/15/2012 Online 7.0 Unusual Appraisal Challenges for IRS 02/14/2012 Program 2.0 Land Development in the DFW Metroplex and 2012 Outlook 01/10/2012 Program 2.0 3rd Annual North Texas Realty Symposium 12/07/2011 Program 8.0 Residential Green and Energy Efficient Addendum 11/17/2011 Online 2.0 The TALCB Complaint Process -The Defense Perspective 11/08/2011 Program 2.0 Understanding the Impact of the Interagency Appraisal and Evaluation Guidelines for Appraisers and Lenders 10/26/2011 Online 2.0 Appraisal Curriculum Overview (2-day General) 09/16/2011 Program 15.0 Real Estate Appraiser Enforcement & Discipline 09/13/2011 Program 2.0 Highest & Best Use/Expert Witnesses in Eminent Domain Cases 05/10/2011 Program 2.0 Loss Prevention Seminar 03/08/2011 Program 2.0 Regulatory Update: GSE, Dodd-Frank & Interagency Guidelines 02/08/2011 Program 2.0 Using MLS Data as a Tool in Valuing Properties 01/11/2011 Program 2.0 Recreational and Agricultural Land Value in North Texas 11/09/2010 Program 2.0 7-Hour National USPAP Update Course 10/14/2010 SPP 7.0 Economic Conditions in the Dallas/Fort Worth Region 05/11/2010 Program 2.0 Legislative Update for Appraisers 03/09/2010 Program 2.0 Expert Witness Testimony for Appraisers 02/09/2010 Program 2.0 Condemnation for Electric Power Lines 01/12/2010 Program 2.0 Real Estate Capital Gains Taxes 11/17/2009 Program 2.0 Cowboy Stadium Complex Development Project 10/13/2009 Program 2.0 Current Conditions in the Hospitality Market/Mkt. Adjust for Vacant Lands 09/15/2009 Program 2.0 Affects of IRS Filings on Cons. Easements & Appraisers/Dallas RED 02/10/2009 Program 2.0 2009 Economic Outlook: Impact on Valuation Issues 01/13/2009 Program 2.0 2008 Commercial Real Estate Trends and 2009 Projections 11/11/2008 Program 2.0 336 Appraiser Liability: How to Avoid Litigation 10/14/2008 Program 2.0 7-Hour National USPAP Update Course 10/02/2008 SPP 7.0 Appraiser Independence, What Do HVCC and Reg. Z Mean to Me? 09/09/2008 Program 2.0 Overview of Appraisal Regulations from a Lender's Perspective 05/13/2008 Program 2.0 Barnett Shale: Truth and Consequences 03/11/2008 Program 2.0 Changes to USPAP for 2008 02/12/2008 Program 2.0 Committee CE Credit - Chapter level 12/31/2007 Meetings 7.0 Apartment Market Trends and Review 09/11/2007 Program 2.0 DFW Signposts to the Real Estate Market 05/10/2007 Program 2.0 Victory Dev. Update/Real Estate Development in Downtown Dallas 03/08/2007 Program 2.0 Conservation Easements, Land Trusts, and Appraisals 01/11/2007 Program 2.0 337 338 EXPERIENCE AND QUALIFICATIONS OF Shelley M. Sivakumar Education University of Texas at Dallas, Dallas, Texas Bachelor of Science – Business & Public Administration – 12/1978 University of North Texas, Denton, Texas – 1977-1978 Marshall University, Huntington, West Virginia Associate in Science – 12/1974 Appraisal Institute Courses Residential Report Writing – 2014 Modern Green Building Concepts - 2014 Ad Valorem Tax Consultation – 2014 The Dirty Dozen - 2011 Essential Elements of Disclosure & Disclaimers - 2011 Land & Site Valuation - 2011 Commercial Clients Want Appraisers to Know - 2009 Basic Income Capitalization - 2006 Market Analysis/STD - 2005 Environmental Issues - 2005 Fair Housing - 2005 Texas Real Estate Agency - 2004 Texas Real Estate Contracts - 2004 Modern Real Estate Practice in Texas - 2004 Income Property Appraisal - 2003 Appraising Residential Properties - 2003 Real Estate Appraisal – 2002 Uniform Standards of Professional Appraisal Practices – 2002, 2005, 20070, 2009, 2010, 2012, 2013 Appraisal Seminars Texas’ Appraisal Industry Update - 2013 Parks Dallas & Data Center R.E. Industry Trends - 2012 Factoring Sustainability into Asset Valuation - 2012 Valuation Models & Your Future - 2012 The TALCB Complaint Process - 2011 GSE, Dodd-Frank & Interagency Guidelines - 2011 Using MLS Data in Valuing Properties - 2011 New Residential Market Conditions Form - 2009 Effects of IRS Rulings on Conservation Easements -2009 Parks Dallas & Data Center R.E. Industry Trends - 2012 Challenges of Easements, Eminent Domain, ROW - 2006 Professional License State Licensed Real Estate Appraiser (No. TX-1333354-L) Professional History 2000 - Present Jackson Claborn, Inc., Plano, Texas Commercial Real Estate Appraiser 1991-2012 Wyngate Development Corporation, Dallas, Texas Vice President/Asset Management 1978-1980 Adelstein, McBee & Co., CPA’s, Dallas, Texas Tax Accountant 1976-1978 Republic National Bank, Dallas, Texas Administrative Assistant – Metropolitan Corporate Group Areas of Special Competence Real estate appraisal, consulting and feasibility for income -producing properties including office buildings, shopping centers, apartment complexes, industrial properties, mixed-use developments, subdivisions, schools, and free-standing retail buildings. 339 F, estlake Town Council TYPE OF ACTION Regular Meeting — Action Item Westlake Town Council Regular Meeting Monday, December 15, 2014 TOPIC: Consideration of a Resolution Approving the Preliminary Official Statement for Distribution Related to the Planned Sale and Issuance of Bonds to Finance Construction of Certain Authorized Improvements to be Financed by the Solana Public Improvement District. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high - quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: December 15, 2014 Funding Amount: To be Funded by PID Bonds Status - ® Not Funded Until PID Bond Issuance Source — PID Bonds EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY) Previously this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1 -2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan Page 1 of 3 component of the Town's Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development's name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re- zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 1 lth, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time the Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be made. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General's Office would provide a preliminary approval. The developer's team discussed this at the Town Council's January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in Page 2 of 3 July 2014. But, these agreements were subsequently reassigned back to the original Developer (Mehrdad Moayedi) by the Council on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer's PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. Consideration of this resolution is one of the next steps in the PID bond issuance process. RECOMMENDATION Recommend approval of this resolution authorizing issuance of a Preliminary Operating Statement (POS) related to the planned issuance of bonds for the Solana PID. ATTACHMENTS 1. Resolution and Exhibits including draft Preliminary Operating Statement (POS) for issuance of PID Bonds for Entrada PID. 2. Issuance calendar. NOTE: THERE IS STILL LANGUAGE BEING DRAFTED FOR SOME OF THESE DOCUMENTS AND ISSUES RELATED TO THIS PID REMAINING TO BE RESOLVED AS OF THE TIME OF PREPARATION OF THE TOWN COUNCIL PACKET. STAFF WILL SPEAK TO THIS AT THE WORKSHOP. Page 3 of 3 TOWN OF WESTLAKE RESOLUTION NO. 14 -45 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, APPROVING THE FORM AND AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT FOR "TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT)" WHEREAS, this Town Council (the "Council ") of the Town of Westlake, Texas (the "Town ") has adopted a resolution authorizing the creation of the Solana Public Improvement District (the "District "); and WHEREAS, this Council intends to issue "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds "), to fund public improvements within the District; and WHEREAS, there has been presented to this Council a Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement "); and WHEREAS, this Council fmds and determines that it is necessary and in the best interests of the Town to approve the form and content of the Preliminary Official Statement and authorize the use of the Preliminary Official Statement in the offering and sale of the Bonds by the Underwriter of the Bonds, Jefferies, LLC; and WHEREAS, the Council finds that the passage of this Resolution is in the best interest of the citizens of the Town. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That this Council hereby approves the form and content of the Preliminary Official Statement and deems the Preliminary Official Statement final, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2 -12 under the Securities Exchange Act of 1934, with such changes, addenda, supplements or amendments as may be approved by the Town Manager. The Town hereby authorizes the Preliminary Official Statement to be used by the Underwriter in connection with the marketing and sale of the Bonds. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions Resolution 14 -45 Page 1 of 2 Resolution 14-45 Page 2 of 2 hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this Resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 15TH DAY OF DECEMBER 2014. ATTEST: _____________________________ Laura L. Wheat , Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer , Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney NEW ISSUE NOT RATED PRELIMINARY OFFICIAL STATEMENT DATED DECEMBER , 2014 In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. $26,175,000* TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Dated: Date of Delivery Due: September 1, as shown on the inside cover The Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the "Bonds "), are being issued by the Town of Westlake, Texas (the "Town "). The Bonds will be issued in fully registered form, without coupons, in authorized denominations of $25,000 of principal amount and any integral multiple of $5,000 in excess thereof. The Bonds will bear interest at the rates set forth on the inside cover, calculated on the basis of a 360 -day year of twelve 30 -day months, and will be payable on each March 1 and September 1, commencing September 1, 2015, until maturity or earlier redemption. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ( "DTC "), New York, New York. No physical delivery of the Bonds will be made to the beneficial owners thereof. For so long as the book -entry only system is maintained, the principal of and interest on the Bonds will be paid from the sources described herein by U.S. Bank National Association, as trustee (the "Trustee "), to Cede & Co. as the registered owner thereof, which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "APPENDIX G — BOOK -ENTRY ONLY SYSTEM." The Bonds are being issued by the Town pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code, as amended (the "PID Act "), an ordinance adopted by the Town Council of the Town (the "Town Council ") on January 15, 2015, and an Indenture of Trust, dated as of February 1, 2015 (the "Indenture "), entered into by and between the Town and the Trustee. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indenture. Proceeds of the Bonds will be used to provide funds for (i) the payment of a portion of the costs of construction, acquisition and purchase of certain roadway, water, wastewater, drainage, landscape and public park improvements (the "Improvement Project A Improvements ") within Improvement Area #1, Improvement Area #2 and Improvement Area #3 (each as described herein) that benefit the entire Solana Public Improvement District, a public improvement district of the Town (the "District "), (ii) the funding of the Reserve Fund in the amount of the Reserve Fund Requirement for the Bonds, (iii) the payment of a portion of the costs incidental to the organization of the District, (iv) the funding of capitalized interest on the Bonds, and (v) the payment of the costs of issuance of the Bonds. See "THE IMPROVEMENT PROJECT A IMPROVEMENTS" and "APPENDIX A — FORM OF INDENTURE." The Bonds, when issued and delivered, will constitute valid and binding special obligations of the Town payable solely from and secured by the Pledged Revenues and other funds comprising the Trust Estate, consisting primarily of special assessments levied for Improvement Project A Improvements against assessable property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District (the "Assessments ") in accordance with a Service and Assessment Plan, all to the extent and upon the conditions described herein. See "SECURITY FOR THE BONDS; THE INDENTURE." The Bonds are subject to redemption at the times, in the amounts, and at the redemption prices more fully described herein under the sub - caption "DESCRIPTION OF THE BONDS — Redemption Provisions." The Bonds involve a degree of risk and are not suitable for all investors. See `BONDHOLDERS RISKS" and "SUITABILITY FOR INVESTMENT." Prospective purchasers should carefully evaluate the risks and merits of an investment in the Bonds, should consult with their legal and financial advisors before considering a purchase of the Bonds, and should be willing to bear the risks of loss of their investment in the Bonds. The Bonds are not credit enhanced or rated and no application has been made for a rating with respect to the Bonds. THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN'S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. This cover page contains certain information for quick reference only. It is not a summary of the Bonds. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision. Preliminary; subject to change. HOU:3437814.7 HOU:3437814.7 The Bonds are offered for delivery when, as, and if issued by the Town and accepted by the Underwriter, subject to, among other th ings, the approval of the Bonds by the Attorney General of Texas and the receipt of the opinion of McCall, Parkhurst & Horton L.L.P ., Bond Counsel, as to the validity of the Bonds and the excludability of interest thereon from gross income for federal income tax purposes. See “APPENDIX C – Form of Opinion of Bond Counsel.” Certain legal matters will be passed upon for the Underwriter by its counsel, Andrews Kurth LLP, and for the Developer by its counsel, Miklos Law, PLLC. It is expected that the Bonds will be delivered in book-entry form through the facilities of DTC on or about February 5, 2015. JEFFERIES i HOU:3437814.7 MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES, YIELDS , AND CUSIP NUMBERS CUSIP Prefix: 96048P $26,175,000* TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) $__________ __% Term Bonds, Due __________, Priced to Yield __%; CUSIP Suffix ___(a) (b) (c) $__________ __% Term Bonds, Due ___________, Priced to Yield __%; CUSIP Suffix ___(a) (b) (c) $__________ __% Term Bonds, Due ___________, Priced to Yield __%; CUSIP Suffix ___(a) (b) (c) (a) The Bonds are subject to redemption, in whole or in part, prior to stated maturity, at the option of the Town, on any date on or after September 1, 2021, at the prices described herein under “DESCRIPTION OF THE BONDS – Redemption Provisions.” (b) The Bonds are also subject to mandatory sinking fund redemption and extraordinary optional redemption as described herein under “DESCRIPTION OF THE BONDS – Redemption Provisions.” (c) CUSIP numbers are included solely for the convenience of owners of the Bonds. CUSIP is a registered trademark of the America n Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. None of the Town, the Town’s Financial Advisor or the Underwriter takes any responsibility for the accuracy of such numbers. * Preliminary; subject to change. ii HOU:3437814.7 TOWN OF WESTLAKE, TEXAS TOWN COUNCIL Name Title Term Expires (May) Laura Wheat Mayor 2016 Carol Langdon Clifton Cox Mayor Pro Tem Councilmember 2015 2016 Michael Barrett Councilmember 2016 Wayne Stoltenberg Councilmember 2015 Rick Rennhack Councilmember 2015 TOWN MANAGER FINANCE DIRECTOR TOWN SECRETARY TOWN ATTORNEY Tom Brymer Debbie Piper Kelly Edwards Boyle & Lowry LLP SERVICE AND ASSESSMENT PLAN CONSULTANT Municap, Inc. FINANCIAL ADVISOR TO TOWN Lawrence Financial Consulting LLC BOND COUNSEL McCall, Parkhurst & Horton L.L.P. UNDERWRITER’S COUNSEL Andrews Kurth LLP iii HOU:3437814.7 MAPS SHOWING LOCATION OF THE DISTRICT WITHIN GREATER DALLAS/FORT WORTH AREA iv HOU:3437814.7 MAP SHOWING BOUNDARIES OF DISTRICT, IMPROVEMENT AREA #1, IMPROVEMENT AREA #2 AND IMPROVEMENT AREA #3 v HOU:3437814.7 FOR PURPOSES OF COMPLIANCE WITH RULE 15C2 -12 OF THE SECURITIES AND EXCHANGE COMMISSION, THIS DOCUMENT CONSTITUTES AN OFFICIAL STATEMENT OF THE TOWN WITH RESPECT TO THE BONDS THAT HAS BEEN DEEMED “FINAL” BY THE TOWN AS OF ITS DATE EXCEPT FOR THE OMISSION OF NO MORE THAN THE INFORMATION PERMITTED BY RULE 15C2 -12. NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE TOW N OR THE UNDERWRITER TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER OF THE FOREGOING. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY AND THERE SHALL BE NO OFFER, SOLICITATION OR SALE OF THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE UNITED STATES FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION. THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE TOWN AND OBTAINED FROM SOURCES, INCLUDING THE DEVELOPER, WHICH ARE BELIEVED BY THE TOWN AND THE UNDERWRITER TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCUR ACY OR COMPLETENESS, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF THE UNDERWRITER. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TOWN OR THE DEVELOPER SINCE THE DATE HEREOF. NEITHER THE TOWN NOR THE UNDERWRITER MAKE ANY REPRESENTATION AS TO THE ACCURACY, COMPLETENESS, OR ADEQUACY OF THE INFORMATION SUPPLIED BY THE DEPOSITORY TRUST COMPANY FOR USE IN THIS OFFICIAL STATEMENT. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIAN CE UPON EXEMPTIONS CONTAINED IN SUCH LAWS. THE REGISTRATION OR QUALIFICATION OF THE BONDS UNDER THE SECURITIES LAWS OF ANY JURISDICTION IN WHICH THEY MAY HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF SUCH JURISDICTIONS, OR ANY OF THEIR AGENCIES, HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS OFFICIAL STATEMENT CONSTITUTE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, SECTION 21E OF THE UNITED STATES EXCHANGE ACT OF 1934, AS AMENDED, AND SECTION 27A OF THE SECURITIES ACT. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY THE TERMINOLOGY USED SUCH AS “PLAN,” “EXPECT,” “ESTIMATE,” “PROJECT,” “ANTICIPATE,” “BUDGET” OR OTHER SIMILAR WORDS. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE TOWN DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER “CONTINUING DISCLOSURE” HEREIN. vi HOU:3437814.7 TABLE OF CONTENTS INTRODUCTION .................................................... 1 PLAN OF DEVELOPMENT AND FINANCE ....... 1 Development Plan ............................................. 1 Financing of Public Improvements .................... 2 DESCRIPTION OF THE BONDS ........................... 3 General Description ........................................... 3 Redemption Provisions ...................................... 3 SECURITY FOR THE BONDS; THE INDENTURE ........................................................................... 5 General .............................................................. 5 Pledged Revenues .............................................. 5 Collection and Deposit of Assessments ............. 6 Unconditional Levy of Assessments ................. 7 Perfected Security Interest ................................. 7 Pledged Revenue Fund ...................................... 7 Reserve Fund ..................................................... 8 Prepayment Reserve Account of the Reserve Fund .............................................. 8 Delinquency Reserve Account of the Reserve Fund .............................................. 9 Use of Reserve Accounts to Pay Debt Service ........................................................ 9 Administrative Fund is Not Security for the Bonds .................................................... 9 Defeasance......................................................... 9 Events of Default ............................................. 10 Remedies in Event of Default .......................... 11 Restriction on Owner’s Actions ...................... 11 Application of Revenues and Other Moneys After Event of Default ................ 12 Investment or Deposit of Funds ....................... 13 Additional Bonds ............................................. 13 SOURCES AND USES OF FUNDS ...................... 14 DEBT SERVICE REQUIREMENTS .................... 16 OVERLAPPING TAXES AND DEBT .................. 17 ASSESSMENT PROCEDURES ............................ 18 General ............................................................ 18 Assessment Methodology ................................ 19 Collection and Enforcement of Assessments ............................................. 20 Assessment Amounts....................................... 21 Prepayment of Assessments ............................ 22 Priority of Lien ................................................ 22 Foreclosure Proceedings .................................. 22 THE TOWN ........................................................... 23 Background ..................................................... 23 Town Government ........................................... 23 Major Employers ............................................. 23 THE DISTRICT ..................................................... 23 General ............................................................ 23 Powers and Authority ...................................... 24 THE IMPROVEMENT PROJECT A IMPROVEMENTS ......................................... 24 General ............................................................ 24 Maintenance of Improvements ........................ 25 THE DEVELOPMENT .......................................... 25 Overview ......................................................... 25 Expected Home Prices and Anticipated Build-out .................................................. 26 Development Plans .......................................... 26 Zoning/Permitting ........................................... 27 Environmental ................................................. 27 Utilities ............................................................ 27 THE DEVELOPER ................................................ 28 Description of the Developer ........................... 28 Executive Biography ....................................... 29 History and Financing of the Development ............................................ 30 THE DEVELOPMENT CONSULTANTS ............ 30 THE SPECIAL ASSESSMENT CONSULTANT . 31 APPRAISAL OF PROPERTY WITHIN THE DISTRICT ....................................................... 31 The Appraisal .................................................. 31 Value to Assessment Burden Ratio ................. 32 BONDHOLDERS’ RISKS ..................................... 32 Assessment Limitations ................................... 33 Risks Related to the Current Real Estate Market ...................................................... 34 Competition ..................................................... 34 Loss of Tax Exemption ................................... 35 Bankruptcy ...................................................... 35 Direct and Overlapping Indebtedness, Assessments and Taxes ............................ 35 Depletion of Reserve Fund .............................. 35 Hazardous Substances ..................................... 35 Regulation ....................................................... 36 Bondholders’ Remedies and Bankruptcy ............................................... 36 No Acceleration ............................................... 37 Bankruptcy Limitation to Bondholders’ Rights ....................................................... 37 Management and Ownership ........................... 37 General Risks of Real Estate Investment and Development ...................................... 38 Dependence Upon Developer .......................... 38 Agricultural Use Valuation and Redemption Rights ................................... 38 TAX MATTERS .................................................... 39 Opinion ............................................................ 39 Federal Income Tax Accounting Treatment Of Original Issue Discount ................................................... 40 Collateral Federal Income Tax Consequences ........................................... 41 State, Local And Foreign Taxes ...................... 41 Future and Proposed Legislation ..................... 41 LEGAL MATTERS ............................................... 42 Legal Proceedings ........................................... 42 vii HOU:3437814.7 Legal Opinions ................................................ 42 Litigation – The Town ..................................... 42 Litigation – The Developer.............................. 43 SUITABILITY FOR INVESTMENT .................... 43 ENFORCEABILITY OF REMEDIES ................... 43 NO RATING .......................................................... 43 CONTINUING DISCLOSURE .............................. 43 The Town ........................................................ 43 The Developer ................................................. 44 UNDERWRITING ................................................. 44 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE ........................................ 44 LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS.......... 45 INVESTMENTS .................................................... 45 INFORMATION RELATING TO THE TRUSTEE ......................................................................... 47 SOURCES OF INFORMATION ........................... 47 General ............................................................ 47 Source of Certain Information ......................... 48 Experts ............................................................. 48 Updating of Official Statement ........................ 48 FORWARD-LOOKING STATEMENTS .............. 48 AUTHORIZATION AND APPROVAL ................ 49 APPENDIX A FORM OF INDENTURE APPENDIX B SERVICE AND ASSESSMENT PLAN APPENDIX C FORM OF OPINION OF BOND COUNSEL APPENDIX D-1 FORM OF TOWN’S DISCLOSURE AGREEMENT APPENDIX D-2 FORM OF DEVELOPER’S DISCLOSURE AGREEMENT APPENDIX E APPRAISAL APPENDIX F FINANCING AGREEMENT APPENDIX G BOOK-ENTRY ONLY SYSTEM 1 HOU:3437814.7 [This page is intentionally left blank.] 1 HOU:3437814.7 OFFICIAL STATEMENT $26,175,000* TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) INTRODUCTION The purpose of this Official Statement, including the cover page, inside cover and App endices hereto, is to provide certain information in connection with the issuance and sale by the Town of Westlake, Texas (the “Town”), of its $26,175,000* aggregate principal amount of Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”). PROSPECTIVE INVESTORS SHOULD BE AWARE OF CERTAIN RISK FACTORS, ANY OF WHICH, IF MATERIALIZED TO A SUFFICIENT DEGREE, COULD DELAY OR PREVENT PAYMENT OF PRINCIPAL OF AND/OR INTEREST ON THE BONDS. THE BONDS ARE NOT A SUITABLE INVESTMENT FOR ALL INVESTORS. See “BONDHOLDERS’ RISKS” and “SUITABILITY FOR INVESTMENT.” The Bonds are being issued by the Town pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code, as amended (t he “PID Act”), an ordinance enacted by the Town Council on January 15, 2015 (the “Bond Ordinance”), and an Indenture of Trust, dated as of February 1, 2015 (the “Indenture”), entered into by and between the Town and the Trustee. The Bonds will be secured by special assessments (the “Assessments”) levied against assessable property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the Solana Public Improvement District (the “District”) pursuant to a separate ordinance enacted by the Town Council on January 15, 2015 (the “Assessment Ordinance”). See “PLAN OF FINANCE” and “THE DEVELOPMENT.” Reference is made to the Indenture for a full statement of the authority for, and the terms and provisions of, the Bonds. All capitalized terms used in this Official Statement that are not otherwise defined herein shall have the meanings set forth in the Indenture. See “APPENDIX A – FORM OF INDENTURE.” Set forth herein are brief descriptions of the Town, the District, the Bond Ordinance, the Asses sment Ordinance, the Service and Assessment Plan (defined herein), Maguire Partners – Solana Land, L.P. (the “Developer”), and the Developer Consultants (defined herein), together with summaries of terms of the Bonds and the Indenture and certain provisions of the PID Act. All references herein to such documents and the PID Act are qualified in their entirety by reference to such documents or such PID Act and all references to the Bonds are qualified by reference to the definitive forms thereof and the information with respect thereto contained in the Indenture. Copies of these documents may be obtained during the period of the offering of the Bonds from the Underwriter, Jefferies LLC, 300 Crescent Court, Suite 500, Dallas, Texas 75201, telephone number (9 72) 701-3037. The full text of the Indenture appears in APPENDIX A and the full text of the Service and Assessment Plan appears as APPENDIX B. The information provided under this caption “INTRODUCTION” is intended to provide a brief overview of the infor mation provided in the other captions herein and is not intended, and should not be considered, fully representative or complete as to the subjects discussed hereunder. PLAN OF DEVELOPMENT AND FINANCE Development Plan The District encompasses approximately 85 acres being developed as a master-planned mixed-use development known as “Westlake Entrada” that is expected to include, among other things, condominiums, residential villas, hotels, office, retail, commercial, institutional and hospitality uses, and a wedding event center (the * Preliminary; subject to change. 2 HOU:3437814.7 “Development”). The development of the Development will begin with the construction of public improvements in three improvement areas that comprise the entire 85 -acre District. Improvement Area #1 (the Mixed -Use Core) consists of approximately __ acres. Improvement Area #2 (West Residential) consists of the approximately __ acres. Improvement Area #3 (East Residential) consists of approximately __ acres. The boundaries of the District, Improvement Area #1, Improvement Area #2 and Improvement Area #3 are shown on page iv. Maguire Partners – Solana Land, L.P. (the “Developer”) plans to develop over a period of approximately five years the public infrastructure to serve and benefit the entire District (the “Improvement Project A Improvements”) as well as additional public infrastructure to serve and benefit only Improvement Area #1 (the “Improvement Project B Improvements”). The Developer expects to develop the remainder of the Development in phases over a 7- to 10-year period of time. See “THE DEVELOPMENT.” Financing of Public Improvements Pursuant to the Construction, Funding, and Acquisition Agreement (the “Financing Agreement”), between the Town and the Developer, the Town has agreed to pay or reimburse the Developer for th e costs of the construction, acquisition or purchase of certain public improvements within the District and the Developer has agreed to convey and dedicate certain public improvements to the Town. Proceeds of the Bonds will be used to finance a portion of the costs of Improvement Project A Improvements. Payment of the Bonds is secured by a pledge of and a lien upon the Pledged Revenues, consisting primarily of the Assessments, and other funds comprising the Trust Estate, all to the extent and upon the con ditions described herein and in the Indenture. The Bonds shall never constitute an indebtedness or general obligation of the Town, the State of Texas (the “State”) or any other political subdivision of the State, within the meaning of any Constitutional p rovision or statutory limitation whatsoever, but the Bonds are limited or special obligations of the Town payable solely from the Trust Estate as provided in the Indenture. Neither the faith and credit nor the taxing power of the Town, the State or any other political subdivision of the State is pledged to the payment of the Bonds. See “SECURITY FOR THE BONDS; THE INDENTURE,” “ASSESSMENT PROCEDURES” and “THE IMPROVEMENT PROJECT A IMPROVEMENTS.” A portion of the proceeds of the Bonds will be used to provide funds for the payment of a portion of the costs of construction, acquisition and purchase of the Improvement Project A Improvements. Proceeds of the Bonds will also provide funds for (i) the funding of the Reserve Fund in the amount of the Reserve Fund R equirement for the Bonds, (ii) the payment of a portion of the costs incidental to the organization of the District, (iii) the funding of capitalized interest on the Bonds, and (iv) the payment of the costs of issuance of the Bonds. See “SOURCES AND USES OF FUNDS” and “THE IMPROVEMENT PROJECT A IMPROVEMENTS.” The balance of the costs of the Improvement Project A Improvements will initially be borne by the Developer and reimbursed to the Developer over time pursuant to the Reimbursement Agreement dated as o f January 15, 2015 (the “Reimbursement Agreement”) between the Town and the Developer. The Town expects that it will, but is under no obligation to, issue Additional Bonds in 2017 to finance its payment obligations under the Reimbursement Agreement (see "SECURITY FOR THE BONDS; THE INDENTURE - Additional Bonds" for details on the criteria which must be met before the Town will be required to issue Additional Bonds). All bonds issued to finance the costs of the Improvement Project A Improvements, includin g the Bonds, and the Town’s payment obligations under the Reimbursement Agreement with respect to the Improvement Project A Improvements, will be secured by the Assessments. Any bonds issued to finance the costs of the Improvement Project B Improvements will be secured by special assessments levied against assessable property in Improvement Area #1 only. See “SECURITY FOR THE BONDS; THE INDENTURE – Additional Bonds,” “THE IMPROVEMENT PROJECT A IMPROVEMENTS” and “THE DEVELOPMENT.” When compared to the estimated aggregate retail value of the taxable property in the District ($78,580,000), the principal amount of the Bonds has an estimated value to assessment burden ratio of 3* to 1. See “APPRAISAL OF PROPERTY WITHIN THE DISTRICT – Value to Assessment Burden Ratio.” 3 HOU:3437814.7 DESCRIPTION OF THE BONDS General Description The Bonds will mature on the dates and in the amounts set forth in the inside cover page of this Official Statement. Interest on the Bonds will accrue from their date of delivery to the Underwriter, wi ll be computed on the basis of a 360-day year of twelve 30-day months and will be payable on each March 1 and September 1, commencing September 1, 2015 (each an “Interest Payment Date”), until maturity or prior redemption. U.S. Bank National Association is the initial Trustee, Paying Agent and Registrar for the Bonds. The Bonds will be issued in fully registered form, without coupons, in authorized denominations of $25,000 of principal amount and any integral multiple of $5,000 in excess thereof (“Authoriz ed Denominations”). Upon initial issuance, the ownership of the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), and purchases of beneficial interests in the Bonds will be made in book-entry only form. See “APPENDIX G – BOOK-ENTRY ONLY SYSTEM” and “SUITABILITY FOR INVESTMENT.” Redemption Provisions Optional Redemption. The Town reserves the right and option to redeem the Bonds before their scheduled maturity dates, in whole or in part, on September 1, 2021, or on any date thereafter, such redemption date or dates to be fixed by the Town, at the prices shown below (expressed as a percentage of par), plus accrued interest to the redemption date. Redemption Date Redemption Price September 1, 2021 – August 31, 2022 103% September 1, 2022 – August 31, 2023 102 September 1, 2023 – August 31, 2024 101 September 1, 2024 and thereafter 100 See “SECURITY FOR THE BONDS; THE INDENTURE – Pledged Revenues” and “– Additional Bonds” for an explanation of the Town’s expectations with respect to the periodic issuance of Additional Bonds. Extraordinary Optional Redemption. The Bonds are subject to extraordinary optional redemption prior to their scheduled maturity on the first day of any month after the required notice of redemption at a redemption price equal to 100% of the principal amount of the Bonds, or portions thereof, to be redeemed plus accrued interest to the redemption date from voluntary prepayments of Assessments by property owners (“Prepayments”), including related transfers to the Redemption Fund. See “ASSESSMENT PROCEDURES – Prepayment of Assessments” for the definition and description of “Prepayments.” Notwithstanding the fo regoing, the Trustee will not be required to make an extraordinary optional redemption of Bonds unless it has at least $25,000 available in the Redemption Fund with which to redeem Bonds. No redemption shall be made which results in a Bond remaining outst anding in a principal amount less than an Authorized Denomination. See “APPENDIX A – FORM OF INDENTURE.” Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part at a price of 100% of the principal amount thereof, plus accrued interest to the redemption date, from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to the Indenture, on the dates a nd in the respective principal amounts as set forth in the following schedules: TERM BONDS DUE SEPTEMBER 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ 4 HOU:3437814.7 September 1, 20__† TERM BONDS DUE SEPTEMBER 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__† TERM BONDS DUE SEPTEMBER 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__† At least thirty (30) days prior to each mandatory sinking fund redemption date, the Trustee will select a principal amount of Bonds equal to the sinking fund installment amount for such date of such maturity of Bonds to be redeemed, will call such Bonds for redemption on such scheduled mandatory sinking fund redemption date, and shall give notice of such redemption, as provided in the Indenture. The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date shall be reduced, at the option of the Town, by the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date shall be reduced on a pro rata basis among sinking fund installments for each maturity of Bonds by the principal amount of any Bonds which, at least 30 days prior to the mandatory sinkin g fund redemption date, shall have been redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of Redemption. Notice of any redemption shall be given by the Trustee at least thirty (30) days prior to the redemption date by giving written notice to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register by first-class mail, postage prepaid. Any such notice shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Notice of redemption having been given as provided in the Indenture, the Bonds or portions thereof called for redemption shall become due and pay able on the date fixed for redemption provided that funds for the payment of the redemption price of such Bonds to the date fixed for redemption are on deposit with the Trustee; thereafter, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. The Town has the right to rescind any optional redemption or extraordinary optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of redemption was originally provided. † Stated maturity. 5 HOU:3437814.7 Additional Provisions with Respect to Redemption . Bonds may be redeemed in increments of $5,000 provided that no redemption shall cause the principal amount of any Bond to be less than the minimum Authorized Denomination. If less than all of the Bonds are to be redeemed, the Bonds to be redeemed shall be selected by any method selected by the Trustee that results in a random selection, and treating each minimum Authorized Denomination of the Bonds as a single Bond for such purposes. Upon surrender of any Bond in part, the Trustee, in accordance with the provisions of the Indenture, shall authenticate and deliver in exchange thereof a Bond or Bonds of like tenor, maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond or Bonds so surrendered. SECURITY FOR THE BONDS; THE INDENTURE General THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN’S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. The principal of, premium, if any, and interest on the Bonds are secured by a pledge of and a lien upon the Pledged Revenues, consisting primarily of the Assessments, which will be levied against assessable property within Improvement Area #1 of the District (the “Improvement Area #1 Assessed Parcels”), Improvement Area #2 of the District (the “Improvement Area #2 Assessed Parcels”) and Improvement Area #3 of the District (the “Improvement Area #3 Assessed Parcels”), and other funds comprising the Trust Estate, all to the extent and upon the conditions described herein and in the Indenture. In accordance with the PID Act, the Town has caused the preparation of a Service and Assessment Plan (as amended and supplemented, the “Service and Assessment Plan”), which describes, among other things, the special benefit received by the property within Improvement Area #1, Improvemen t Area #2 and Improvement Area #3 by virtue of the construction of the Improvement Project A Improvements, provides the basis and justification for the determination of special benefit on such property, establishes the methodology for the levy of the Assessments and provides for the allocation of Pledged Revenues for payment of principal of, premium, if any, and interest on the Bonds. The Service and Assessment Plan is reviewed and updated annually for the purpose of determining the annual budget for impro vements and the Annual Installments (as defined below) of Assessments due in a given year. The determination by the Town of the assessment methodology set forth in the Service and Assessment Plan is the result of the discretionary exercise by the Town Cou ncil of its legislative authority and governmental powers and is conclusive and binding on all current and future owners and landowners within the District. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Pledged Revenues The Town is authorized by the PID Act, the Assessment Ordinance and other provisions of law to finance the Improvement Project A Improvements by levying the Assessments upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. For a description of the assessment methodology and the amounts of the Assessments anticipated to be levied in Improvement Area #1, Improvement Area #2 and Improvement Area #3, see “ASSESSMENT PROCEDURES” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Pursuant to the Indenture, “Pledged Revenues” consist of (i) Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan), (ii) moneys held in the Pledged Funds, and (iii) any additional revenues that the Town may pledge to the payment of the Bonds and Additional Bonds. “Assessment 6 HOU:3437814.7 Revenues” means the revenues received by the Town from the collection of Assessments and Annual Installments, including Foreclosure Proceeds. “Annual Installment” means, with respect to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel, each annual pa yment of the Assessments as shown on the Assessment Roll attached as Exhibit E to the Service and Assessment Plan. Assessments also include any supplemental assessments levied in accordance with Sections 372.019 and 372.020 of the PID Act. The Town will covenant in the Indenture that it will take and pursue all reasonable actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof to be enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments; provided that the Town is not required to expend funds for collection and enforcement of the Assessments other than funds on deposit in the Administrative Fund. See “S ECURITY FOR THE BONDS; THE INDENTURE – Pledged Revenue Fund,” “APPENDIX A – FORM OF INDENTURE” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” The PID Act provides that the Assessments (including any reassessment, with interest, the expense of collection and reasonable attorney’s fees, if incurred) are a first and prior lien (the “Assessment Lien”) against the property assessed, superior to all other liens or claims, except liens and claims by the State, counties, school districts, or municipalities for ad valorem taxes, and are a personal liability of and charge against the owners of property, regardless of whether the owners are named. Pursuant to the PID Act, the Assessment Lien is effective from the date of the Assessment Ordinance until the Assessments are paid, and is enforceable by the Town Council in the same manner that an ad valorem property tax levied against real property may be enforced by the Town Council. See “ASSESSMENT PROCEDURES.” If homestead rights are properly claimed by a property own er prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. As of the date of adoption of the Assessment Ordinance, no such homestead rights will have been claimed on property within Improvement Area #1, Improvement Area #2 or Improvement Area #3. See “BONDHOLDERS’ RISKS – Assessment Limitations.” Collection and Deposit of Assessments The Assessments shown on the Assessment Roll for Improvement Area #1, Improvement Area #2 and Improvement Area #3, together with the interest thereon, shall be applied to the payment of the principal of and interest on the Bonds as and to the extent provided in the Service and Assessment Plan and the Indenture. The Assessments levied to pay the principal amount of the Bonds, together with interest thereon, are payable in Annual Installments established by the Assessment Ordinance and the Service and Assessment Plan to correspond, as nearly as practicable, to the debt service requirements for the Bonds (except for the portions of the interest rate component that are allocated for deposit to the Prepayment Reserve Account and the Delinquency Reserve Account of the Reserve Fund, as further described herein). An Assessment to pay debt service on the Bonds has been made payable in the Assessment Ordinance in each fiscal year preceding the date of final maturity of the Bonds which, if collected, will be sufficient to pay the princ ipal of and interest on the Bonds. Each Annual Installment is payable as provided in the Service and Assessment Plan and the Assessment Ordinance. A record of the Assessments on each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel which are to be collected in each year during the term of the Bonds is shown on the Assessment Roll. Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan) shall be deposited into the Pledged Revenue Fund, except that (i) amounts received as Prepayments shall be deposited into the Redemption Fund and (i i) the portions of the interest rate component of the Assessments that are allocated for deposit to the Prepayment Reserve Account and the Delinquency Reserve Account of the Reserve Fund shall be deposited to such accounts. Any portions of Assessments collected to pay Administrative Expenses shall be deposited in the Administrative Fund and shall not constitute Pledged Revenues. 7 HOU:3437814.7 Unconditional Levy of Assessments The Town has imposed Assessments on the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 to pay the principal of and interest on the Bonds scheduled for payment from Pledged Revenues as described in the Indenture and in the Service and Assessment Plan and coming due during each Fiscal Year. The Assessments are effective from the date, and strictly in accordance with the terms, of the Assessment Ordinance. Each Assessment may be paid immediately in full or in periodic Annual Installments over a period of time equal to the term of the Bonds, which installments shall include interest on the Assessments. Each Annual Installment, including the interest on the unpaid amount of an Assessment, shall be assessed on October 1 of each year and shall be due by January 31 of the following year. Each Annual Installment together wi th interest thereon shall be delinquent if not paid prior to February 1 of the following year. The initial Annual Installments will be due on October 1, 2015. As authorized by Section 372.003(b)(14) of the PID Act, the Town has levied, assessed, and will collect, each year while the Bonds are Outstanding and unpaid, commencing October 1, 2015, Assessments to pay Administrative Expenses. The Assessments to pay Administrative Expenses shall remain in effect from year to year until all Bonds are finally paid or until the Town adjusts the levy after an annual review in any year pursuant to Section 372.015(d) of the PID Act. The Assessments to pay Administrative Expenses shall be due in the manner set forth in the Assessment Ordinance on October 1 of each year and shall be delinquent if not paid prior to February 1 of the following year. Assessments levied to pay Administrative Expenses do not secure repayment of the Bonds. There will be no split payment of Assessments or discount for the early payment of Asse ssments; provided, however, that in the event a property owner elects to prepay such property owner's Assessments in full, such property owner will only be required to pay interest accrued on the Assessments to the date of such prepayment, in essence providing such property owner a discount on the interest portion of the Assessments (see "SECURITY FOR THE BONDS; THE INDENTURE - Reserve Fund" and "SECURITY FOR THE BONDS; THE INDENTURE - Prepayment Reserve Account of the Reserve Fund"). Failure to pay an Annual Installment when due shall not accelerate the payment of the remaining Annual Installments of the Assessments and such remaining Annual Installments (including interest) shall continue to be due and payable at the same time and in the same amount and ma nner as if such default had not occurred. Perfected Security Interest Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of the Pledged Revenues and such pledges are, therefore, valid, effective, and perfected. The Town will covenant in the Indenture that, should Texas law be amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the pledge of such revenues is subject to the filing requirements of Chapter 9, Texas Busi ness & Commerce Code, in order to preserve to the registered owners of the Bonds a security interest in such pledge, the Town will take such measures as it determines are reasonable and necessary to enable a filing of a security interest in said pledge to occur. See “APPENDIX A – FORM OF INDENTURE.” Pledged Revenue Fund The Town has created under the Indenture a Pledged Revenue Fund held by the Trustee. Immediately upon receipt thereof, the Town shall deposit or cause to be deposited the Pledged Revenues into the Pledged Revenue Fund. From time to time as needed to pay the obligations relating to the Bonds, but no later than five business days before each Interest Payment Date, the Trustee shall withdraw from the Pledged Revenue Fund, and transfer to the Principal and Interest Account of the Bond Fund, an amount, taking into account any amounts then on deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to the Principal and Interest Account, such that the amount on deposit in the Principal and Interest Account equals the principal (including any sinking fund installments) and interest due on the Bonds on the next Interest Payment Date . 8 HOU:3437814.7 If, after the foregoing transfers and any transfer from the Rese rve Fund as described under “Reserve Fund” below, there are insufficient funds to make the payments provided in the preceding paragraph, the Trustee shall apply the available funds in the Principal and Interest Account first to the payment of interest, the n to the payment of principal (including any sinking fund installments) on the Bonds. The Trustee shall transfer Prepayments to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. The Trustee shall transfer Foreclosure Proceeds relating to Assessments first to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the Improvement Area #1 Assessed Parcel(s), the Improvement Area #2 Assessed Parcel(s) and an Improvement Area #3 Assessed Parce l(s) to which the Foreclosure Proceeds relate, and second, to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. Any Pledged Revenues remaining after no Bonds are Outstanding may be used for any lawful purpose for which Assessments may be used under the PID Act. Reserve Fund Pursuant to the Indenture, a Reserve Account will be created within the Reserve Fund for the benefit of the Bonds Similarly Secured (consisting of Outstanding Bonds and Additional Bonds) and held b y the Trustee and will be funded with proceeds of the Bonds in the amount of the Reserve Fund Requirement. Pursuant to the Indenture, the “Reserve Fund Requirement” for the Bonds Similarly Secured shall be an amount equal to the least of (i) Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, (ii) 125% of average Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, and (iii) 10% of the proceeds of the Bonds Similarly Secured; provided, however, that such amount shall be reduced by the amount of any transfers made in connection with an extraordinary optional redemption as described in the next following paragraph; and provided further that as a result of an optional redemption, the Reserve Fund Req uirement shall be reduced by a percentage equal to the principal amount of Bonds Similarly Secured redeemed by such optional redemption divided by the total principal amount of the Outstanding Bonds Similarly Secured prior to such redemption. As of the da te of delivery of the Bonds, the Reserve Fund Requirement equals $___________, which is an amount equal to [the Maximum Annual Debt Service on the Bonds, and such amount will be fully funded with Bond proceeds]. Whenever, on any Interest Payment Date, or on any other date at the request of a Town Representative, the amount in the Reserve Account of the Reserve Fund exceeds the Reserve Fund Requirement, the Trustee must provide written notice to the Town Representative of the amount of the excess and transfe r such excess to the Pledged Revenue Fund. In the event of an extraordinary optional redemption of Bonds from the proceeds of a Prepayment, the Trustee, pursuant to written directions from the Town, shall transfer from the Reserve Account of the Reserve Fund to the Redemption Fund the amount specified in such directions, which shall be an amount equal to the principal amount of Bonds to be redeemed multiplied by the lesser of (i) the amount required to be in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption, and (ii) the amount actually in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption. If after such transfer, and after a pplying investment earnings on the Prepayment toward payment of accrued interest, there are insufficient funds to pay the principal amount plus accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a resu lt of such Prepayment, the Trustee shall transfer an amount equal to the shortfall from the Prepayment Reserve Account to the Redemption Fund to be applied to the redemption of the Bonds. Prepayment Reserve Account of the Reserve Fund Pursuant to the Indenture, a Prepayment Reserve Account will be created within the Reserve Fund and held by the Trustee for the benefit of the Bonds. The Trustee will transfer funds from the Pledged Revenue Fund to the Prepayment Reserve Account on a semi-annual basis to accumulate and maintain on deposit therein an amount equal to the Prepayment Reserve Requirement. The Prepayment Reserve Requirement is $__________. The Town has allocated 0.20% of the interest rate component of the Annual Installments for such purpose. See “APPENDIX A – FORM OF INDENTURE” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” 9 HOU:3437814.7 Money deposited in the Prepayment Reserve Account will be used and withdrawn by the Trustee for the purpose of making transfers to the Bond Fund, pursuant to, and at the time s specified in, the Indenture to pay a portion of the accrued interest on Bonds being redeemed pursuant to an extraordinary optional redemption from Prepayments. The amount to be transferred shall be an amount, for each Prepayment, equal to the amount of any shortfall, after transfers from the Reserve Account of the Reserve Fund as described above and application of investment earnings on the Prepayment toward payment of accrued interest, in funds necessary to pay the principal amount plus accrued interest on such Bonds to be redeemed as a result of the Prepayment. Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the value of cash and Value of Investment Securities on deposit in the Prepayment R eserve Account exceeds the Prepayment Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess to the Pledged Revenue Fund. Delinquency Reserve Account of the Reserve Fund Pursuant to the Indenture, a Delinquency Reserve Account will be created within the Reserve Fund and held by the Trustee for the benefit of the Bonds. The Trustee will transfer funds from the Pledged Revenue Fund to the Delinquency Reserve Account on a semi-annual basis to accumulate and maintain on deposit therein an amount equal to the Delinquency Reserve Requirement. The Delinquency Reserve Requirement is $_________. The Town has allocated 0.30% of the interest rate component of the Annual Inst allments for such purpose. See “APPENDIX A – FORM OF INDENTURE” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Delinquency Reserve Account exceeds the Delinquency Reserve Requirement, the Trustee shall transfer such excess to the Pledged Revenue Fund to redeem Bonds. Use of Reserve Accounts to Pay Debt Service If, on any Interest Payment Date, the amount on deposit in the Bond Fund is insufficient to pay the debt service on the Bonds Similarly Secured due on such date, the Trustee shall transfer first from the Delinquency Reserve Account of the Reserve Fund, second from the Reserve Account of the Reserve Fund and third from the Prepayment Reserve Account to the Bond Fund the amounts necessary to cure such deficiency. Administrative Fund is Not Security for the Bonds The Town has created under the Indenture an Administrative Fund held by the Trustee. Upon receipt, the Town shall deposit or cause to be deposited to the Administrative Fund the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan. Monies in the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and administered under the Indenture and may be used as directed by Town Order solely for the purposes set forth in the Service and Assessment Plan, i ncluding payment of Administrative Expenses and Delinquent Collection Costs. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” The Administrative Fund is not part of the Trust Estate and does not constitute security for the Bonds. Defeasance All Outstanding Bonds shall prior to the Stated Maturity or redemption date thereof be deemed to have been paid and to no longer be deemed Outstanding within the meaning of the Indenture (“Defeased Debt”), when payment of the principal of, premium, if any, on such De feased Debt, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise), either (1) shall have been made in accordance with the terms thereof, or (2) shall have been provided by irrevocably depositing with the Trustee, in trust, and irrevocably set aside exclusively for such payment, (A) money sufficient to make such payment or (B) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as t o principal and interest in such amount and at such times as will insure the availability, without reinvestment, of 10 HOU:3437814.7 sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. Neither Defeasance Securities nor such moneys deposited with the Trustee nor principal or interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance Securities de posited with the Trustee, if not then needed for such purpose, shall be reinvested in Defeasance Securities as directed by the Town maturing at times and in amounts sufficient to pay when due the principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof, as the case may be. Any payment for Defeasance Securities purchased for the purpose of reinvesting cash as aforesaid shall be made only against delivery of such Defeasance Securities. Furthermore, all rights of the Town to initiate proceedings to call the Defeased Debt for redemption or take any other action amending the terms of the Defeased Debt are extinguished; provided, however, that the right to call the Bonds for redemption is not extinguished if the Town: (i) in the proceedings providing for such defeasance, expressly reserves the right to call the Defeased Debt for redemption; (ii) gives notice of the reservation of that right to the owners of the Defeased Debt immediately following the defeasance; (iii) directs that notice of the reservation be included in any defeasance or redemption notices that it authorizes; and (iv) at or prior to the time of the redemption, satisfies the conditions of the preceding paragraph with respect to such Defeased Debt as thoug h it was being defeased at the time of the exercise of the option to redeem the Defeased Debt, after taking the redemption into account in determining the sufficient of the provisions made for the payment of the Defeased Debt. “Defeasance Securities” means Investment Securities then authorized by applicable law for the investment of funds to defease public securities. “Investment Securities” means those authorized investments described in the Public Funds Investment Act, Chapter 2256, Texas Government Code , as amended, which are, at the time made, included in and authorized by the Town’s official investment policy as approved by the Town Council from time to time. Under current State law, Investment Securities that are authorized for the investment of fund s to defease public securities are (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state tha t have been refunded and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Bonds. Because the Indenture does not contractually limit such investments, Owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or that for any other Defeasance Security will be maintained at any particular rating category. Events of Default Each of the following occurrences or events constitutes an “Event of Default” under the Indenture: (i) the failure of the Town to deposit the Pledged Revenues to the Pledged Revenue Fund; (ii) the failure of the Town to enforce the collection of the Assessments including the prosecution of foreclosure proceedings; and (iii) default in the performance or observance of any covenant, agreement or obligation of the Town under the Indenture and the continuation thereof for a period of ninety (90) days after written notice specifying such default and requiring same to be remedied shall have been given to the Town by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the 11 HOU:3437814.7 Owners of not less than 51% in principal amount of the Bonds Similarly Secured then Outstanding; provided, however, if the default stated in the notice is capable of cure but cannot reasonably be cured within the applicable period, the Town shall be entitled to a further extension of time reasonably necessary to remedy such default so long as corrective action is instituted by the Town within the applicable period and is diligently pursued until such failure is corrected, but in no event for a period of time of more than one hundred eighty (180) days after such notice. Remedies in Event of Default Upon the happening and continuance of any Event of Default, then and in every such case the Trustee may proceed, and upon the written request of the Owners not less than 51% in principal amount of the Bonds Similarly Secured then Outstanding under the Indenture shall proceed to protect and enforce the rights of the Owners under the Indenture by action seeking mandamus or by other suit, action, or special proceeding in equity or at law in any court of competent jurisdiction for any relief to the extent permitted by Applicable Laws including, but not limited to, the specific performance of any covenant or agreement contained in the Indenture, or injunction; provided, however, that no action for money damages against the Town may be sought or will be permitted. THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY CIRCUMSTANCES. If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds Similarly Secured, in the selection of Trust Estate assets to be used in the payment of Bonds Similarly Secured due in an Event of Default, the Town shall determine, in its absolute discretion, and shall instruct the Trustee by Town Order, which Trust Estate assets shall be applied to such payment and shall not be l iable to any Owner or other Person by reason of such selection and application. In the event that the Town shall fail to deliver to the Trustee such Town Order, the Trustee shall select and liquidate or sell Trust Estate assets as provided in the followin g paragraph, and shall not be liable to any Owner, or other Person, or the Town by reason of such selection, liquidation or sale. Whenever moneys are to be applied pursuant to the Indenture following an Event of Default, irrespective of and whether other remedies authorized under the Indenture shall have been pursued in whole or in part, the Trustee may cause any or all of the assets of the Trust Estate, including Investment Securities, to be sold. The Trustee may so sell the assets of the Trust Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more parts, at any such place or places, and at such time or times and upon such notice and terms as the Trustee may deem appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of the Indenture. Upon such sale, the Trustee may make and deliver to the purchaser or purchasers a good and sufficient assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the Town and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or regularity of any such sale. Nevertheless, if so requested by the Trustee, the Town shall ratify and confirm any sale or sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be necessary or, in the judgment of the Trustee, proper for the purpose which may be designated in such request. Restriction on Owner’s Actions No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the enforcement of the Indenture or for the execution of any trust thereof or any other remedy thereunder, unless (i) a default has occurred and is continuing of which the Trustee has been notified in writing or of which it is deemed to have notice, (ii) such default has become an Event of Default and the Owners of 51% of the aggregate principal amount of the Bonds Similarly Secured then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to proceed to exercise the powers grant ed or to institute such action, suit or proceeding in its own name, (iii) the Owners have furnished to the Trustee indemnity as provided in the Indenture, (iv) the Trustee has for sixty (60) days after such notice failed or refused to exercise the powers g ranted, or to institute such action, suit, or proceeding in its own name, (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Owners of 51% of the aggregate principal amount of the Bonds 12 HOU:3437814.7 Similarly Secured then Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee; however, no one or more Owners of the Bonds Similarly Secured shall have any right in any manner whatsoever to affect, disturb, or prejudice the Indenture by its, his or their action or to enforce any right thereunder except in the manner provided in the Indenture, and that all proceedings at law or in equity shall be instituted and maintained in the manner provided in the Indenture and for the equal benefit of the Owners of all Bonds Similarly Secured then Outstanding. The notification, request and furnishing of indemnity shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of the Indenture and to any action or cause of action for the enforcement of the Indenture or for any other remedy thereunder. Subject to provisions of the Indenture with respect to certain liabilities of the Town, nothing in the Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and after the maturity thereof, or on the date fixed for redemption or the obligation of the Town to pay each Bond issued thereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed therein and in the Bonds. In case the Trustee or any Owners of Bonds Similarly Secured shall have proceeded to enforce any right under the Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owners of Bonds Similarly Secured, then and in every such case the Town, the Trustee and the Owners of Bonds Similarly Secured shall be restored to their former positions and rights thereunder, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Application of Revenues and Other Moneys After Event of Default All moneys, securities, funds and Pledged Revenues and the income therefrom r eceived by the Trustee pursuant to any right given or action taken under the provisions of the Indenture with respect to Events of Default shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the expenses (including its counsel), liabilities, and advances incurred or made by the Trustee and the fees of the Trustee in carrying out the Indenture, be applied by the Trustee, on behalf of the Town, to the payment of interest and principal or Redemption Price then due on Bonds Similarly Secured, as follows: FIRST: To the payment to the Owners entitled thereto all installments of interest then due in the direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Owners entitled thereto, without any discrimination or preference; and SECOND: To the payment to the Owners entitled thereto of the unpa id principal of Outstanding Bonds Similarly Secured, or Redemption Price of any Bond Similarly Secured which shall have become due, whether at maturity or by call for redemption, in the direct order of their due dates and, if the amounts available shall no t be sufficient to pay in full all the Bonds Similarly Secured due on any date, then to the payment thereof ratably, according to the amounts of principal due and to the Owners entitled thereto, without any discrimination or preference. Within thirty (30) days of receipt of such good and available funds, the Trustee may fix a record date and a payment date for any payment to be made to Owners of Bonds Similarly Secured. In the event that funds are not adequate to cure an Event of Default, the available fund s shall be allocated to the Bonds Similarly Secured that are Outstanding in proportion to the quantity of Bond Similarly Secured that are currently due and in default under the terms of the Indenture. The restoration of the Town to its prior position after any and all defaults have been cured, as provided above, shall not extend to or affect any subsequent default under the Indenture or impair any right consequent thereon. 13 HOU:3437814.7 Investment or Deposit of Funds Money in any Fund or Account established pursuant to t he Indenture (other than the Reserve Account) will be invested by the Trustee as directed by the Town pursuant to a Town Order filed with the Trustee in Investment Securities; provided that all such deposits and investments shall be made in such manner tha t the money required to be expended from any Fund or Account will be available at the proper time or times. Money in the Reserve Account shall be invested in such Investment Securities as directed by the Town pursuant to a Town Order filed with the Trustee, provided that the final maturity of any individual Investment Security shall not exceed 270 days and the average weighted maturity of any investment pool or no -load money market mutual fund shall not exceed 90 days. Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, subject, however, to the requirements of the Indenture for transfer of interest earnings and profits resulting from investment of amounts in Funds and Accounts. Whene ver in the Indenture any moneys are required to be transferred by the Town to the Trustee, such transfer may be accomplished by transferring a like amount of Investment Securities. Additional Bonds The Town expects, but is under no obligation, to issue (i) Additional Bonds on parity with the Bonds in 2017 or thereafter to finance its payment obligations under the Reimbursement Agreement with respect to the balance of the costs of Improvement Project A Improvements, consisting primarily of improvements withi n Improvement Area #3 (East Residential) and (ii) bonds secured by assessments against only Improvement Area #1 Assessed Parcels in 2017 or thereafter to finance its payment obligations under the Reimbursement Agreement with respect to the costs of the Improvement Project B Improvements within Improvement Area #1 (the Mixed -Use Core) (such bonds the “Improvement Project B Bonds”). The total aggregate principal amount of Bonds, Additional Bonds, and Improvement Project B Bonds issued may not exceed $32,000,000. In the Assessment Ordinance, the Town will levy the Assessments against all Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels to pay the costs of the Improvement Project A Improvements and separate assessments against only the Improvement Area #1 Assessed Parcels to pay the costs of the Improvement Project B Improvements. Any Additional Bonds issued to finance the costs of Improvement Project A Improvements will be parity obligations with the Bonds. Because the Improvement Project B Bonds will be secured by separate assessments levied against the Improvement Area #1 Assessed Parcels only, such bonds will not constitute “Additional Bonds” under the Indenture. However, the issuance of such Improvement Project B Bonds is subject to satisfaction of certain requirements under the Indenture as described below. [Additional Bonds. The Town reserves the right to issue Additional Bonds for any purpose permitted by the Act and in accordance with the conditions set forth below: 1. A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture; 2. The Developer, through an authorized representative, shall certify that: a. it is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Financing Agreement; b. at least 75% of the residential lots within Improvement Area #3 (East Residential) to be financed are under contract with merchant homebuilders unaffiliated with the Developer; and c. construction has commenced or been completed on at least 33% of the single -family homes located within Improvement Area #2 (West Residential) 14 HOU:3437814.7 3. The appraised value of the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels, assuming completion of all Improvement Project A Improvements, is equal to at least three (3) times the principal amount of any outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued; provided, however, that the aggregate principal amount of such Additional Bonds shall not exceed $[___________]; 4. The principal of and interest on the Additional Bonds, must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which each principal or interest are scheduled to be paid or mature [with a final maturity date no more than thirty (30) years fr om their date of issuance]; 5. There shall be deposited to the Reserve Fund an amount equal to the Reserve Fund Requirement taking into account the Outstanding Bonds Similarly Secured and the Additional Bonds then proposed to be issued; and Improvement Project B Bonds. The Town reserves the right to issue Improvement Project B Bonds for any purpose permitted by the Act and in accordance with the conditions set forth below: 1. A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture; 2. The Developer, through an authorized representative, shall certify that: a. at least one major parking facility of at least ___ spaces has b een constructed within Improvement Area #1 (Mixed-Use Core). b. Of the approximately 1.1 million square feet of building development planned for Improvement Area #1 (Mixed-Use Core), at least 350,000 square feet of building development has been completed. 3. The Developer shall provide the Town with a certificate or report from an independent certified appraiser or appraisal firm that the appraised value of the Improvement Area #1 Assessed Parcels, assuming completion of the Improvement Project A Improvements and the Improvement Project B Improvements, is equal to at least four (4) times the principal amount of such Improvement Project B Bonds; provided, however, that the aggregate principal amount of such Improvement Project B Bonds shall not exceed $[___________]; 4. The principal of and interest on the Improvement Project B Bonds must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which each principal or interest are scheduled to be paid or mature [with a final maturity date no more than thirty (30) years from their date of issuance]; 5. There shall be deposited to the reserve fund for the Improvement Project B Bonds an amount equal to the reserve fund requirement for the Improvement Project B Bonds. In addition, the Town has reserved the right to issue bonds secured by and payable from Pledged Revenues so long as such pledge is subordinate to the pledge of Pledged Revenues securing payment of the Bonds.] SOURCES AND USES OF FUNDS The table that follows summarizes the expected sources and uses of proceeds of the Bonds: Sources of Funds: Principal Amount $ Total Sources $ Use of Funds: 15 HOU:3437814.7 Deposit to Improvement Account of Project Fund $ Deposit to Capitalized Interest Account of Bond Fund Deposit to Reserve Account of Reserve Fund Costs of Issuance(1) Total Uses $ (1) Includes Underwriter’s discount, structuring fee and costs to create the District. 16 HOU:3437814.7 DEBT SERVICE REQUIREMENTS The following table sets forth the debt service requirements for the Bonds: Year Ending (September 30) Principal Interest* Total* 2015 $ $ $ 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Total $ $ $ *Totals may not add due to rounding. 17 HOU:3437814.7 OVERLAPPING TAXES AND DEBT The land within the District has been, and is expected to continue to be, subject to taxes and/or assessments imposed by governmental entities other than the Town. Such taxes are payable in addition to the Assessments. In addition to the Assessments described above, the Developer anticipates that each property owner will pay a property owner’s association fee to a homeowner’s association. In addition, the Town, Tarrant County, the Tarrant County College District, the Tarrant County Hospital District, Trophy Club Municipal Utility District #1 and either Carroll Independent School District or Northwest Independent School District may each levy ad valorem taxes upon land in the District for payment of debt incurred by such governmental entities and/or for payment of maintenance and operations expenses. The Town has no control over the level of ad valorem taxes or special assessments levied by such other taxing authorities. The following table reflects the overlapping ad valorem tax rates currently levied on property located in the District. Taxing Entity Ad Valorem Tax Rate* Fiscal Year Ending 9/30/2014 Tarrant County $0.264000 Town 0.156340 Tarrant County College District 0.149500 Tarrant County Hospital District 0.227897 Trophy Club MUD #1 0.133390 Carroll Independent School District(1) 1.400000 Total $2.331127 ______________________ * Per $100 taxable appraised value as of 9/30/2014. (1) Approximately [__] acres within the District are located within the Northwest Independent School District (“Northwest ISD”). The most recently adopted ad valorem tax rate for Northwest ISD was $1.45250 per $100 taxable appraised value, for a total overlapping tax rate within Northwest ISD of $2.383627. Source: Tarrant Appraisal District As noted above, the District includes territory located in other governmental entities that may issue or incur debt secured by the levy and collection of ad valorem taxes. Set forth below is an overlapping debt table showing the outstanding indebtedness payable from ad valorem taxes with respect to property within the District, as of September 30, 2014, and Town debt secured by ad valorem taxes and the Assessments: Taxing or Assessing Entity Gross Debt Outstanding Estimated % Applicable(1) Direct and Estimated Overlapping Debt The Town (Assessments) $ 26,175,000* 100.00% $ 26,175,000* The Town (ad valorem taxes) (2) 29,304,000 100.00 29,304,000 Tarrant County 317,820,000 0.78 2,478,996 Tarrant County College District 7,935,000 0.78 61,893 Tarrant County Hospital District 24,425,000 0.78 190,515 Trophy Club MUD #1(3) 5,520,000 18.76 1,035,552 Carroll Independent School District(4) 226,024,791 5.26 11,888,904 $637,203,791 $71,134,860 (1) Based upon ratio of acreage of the District to total acreage of the taxing entity. (2) The Town is currently using sales tax revenues in lieu of ad valorem taxes to pay debt service on all of its debt to which ad valorem taxes are pledged, except for its Combination Tax and Revenue Certificates of Obligation, Series 2011, which had an outsta nding balance of $1,824,000 as of September 30, 2014. (3) Trophy Club MUD #1 is scheduled to deliver an additional $5,765,000 in bonds on or about December 23, 2014. (4) Approximately [__] acres within the District is located within Northwest ISD. As of September 30,2014, Northwest ISD had $737,438,319 principal amount of debt outstanding. 18 HOU:3437814.7 Source: Municipal Advisory Council of Texas (taxes) and the Town (Assessment) If land is devoted principally to agricultural use, the landowner can apply for an agric ultural valuation on the property and pay ad valorem taxes based on the land’s agricultural value. Approximately 27.75 acres within the District is currently subject to an agricultural valuation with respect to its ad valorem taxes. Agricultural use includes production of crops or livestock. It also can include leaving the land idle for a government program or for normal crop or livestock rotation. If land qualified for an agricultural valuation and the land use changes to a non -agricultural use, “rollback taxes” are assessed for each of the previous 5 years in which the land received the lower agricultural valuation. The rollback tax is the difference between taxes paid on land’s agricultural value and the taxes that the land owner would have paid if the land had been taxed on a higher market value plus interest charged for each year from the date on which taxes would have been due. If the land use changes to a non-agricultural use on only a portion of a larger tract, the land owner can fence off the remaining land and maintain the agricultural valuation on the remaining land. In this scenario, the land owner would only be responsible for rollback taxes on that portion of the land where use changed and not the entire tract. It is expected that rollback taxes will be paid by the Developer or purchasers from the Developer during development of the District and prior to purchase of parcels or lots by homeowners. The Developer expects that the agricultural use valuations within the District will be terminated in 2015, affecting tax rolls beginning in 2015. ASSESSMENT PROCEDURES General As required by applicable law, when the Town determines to defray a portion of the costs of Improvement Project A Improvements through the levy of the Assessments, it must adopt a resolution generally describing the Improvement Project A Improvements and the land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District to be subject to the Assessments to pay the cost thereof. The Town has cau sed an assessment roll to be prepared (the “Assessment Roll”), which Assessment Roll shows the land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 to be assessed, the amount of the benefit to and the Assessment against each Improve ment Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel and the number of Annual Installments into which the Assessment is divided. The Assessment Roll was filed with the Town Secretary and is available fo r public inspection. Statutory notice was given to the owners of the property to be assessed and a public hearing was conducted to hear testimony from affected property owners as to the propriety and advisability of undertaking the Improvement Project A Improvements and funding a portion of the same with the Assessments. The Town expects to proceed to levy the Assessments and adopt the Assessment Ordinance immediately prior to adopting the Bond Ordinance. After such adoption, the Assessment Lien will become a legal, valid and binding lien upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. Under the PID Act, the costs of Improvement Project A Improvements may be assessed by the Town against the assessable property in Improvement Area #1, Improvement Area #2 and Improvement Area #3 so long as the special benefit conferred upon the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels by the Improvement Project A Improvements equals or exceeds the Assessments. The costs of Improvement Project A Improvements may be assessed using any methodology that results in the imposition of equal shares of cost on assessed property simil arly benefited. The allocation of benefits and assessments to the benefitted land within Improvement Area #1, Improvement Area #2 and Improvement Area #3 is presented in the Service and Assessment Plan, which should be read in its entirety. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” 19 HOU:3437814.7 Assessment Methodology The Service and Assessment Plan describes the special benefit received by the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels as a result of Improvement Project A Improvements, provides the basis and justification for the determination that such special benefit exceeds the Assessments being levied, and establishes the methodology by which the Town allocates the special benefit of Improvement Project A Improvements to the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels in a manner that results in equal shares of costs being apportioned to parcels similarly benefited. As described in the Service and Assessment Plan, a portion of the costs of Improvement Project A Improvements are being funded with proceeds of the Bonds, which are payable from and secured by Pledged Revenues, including Assessment Revenues. As set forth in the Service and Assessment Plan, the benefits received by Improvement Project A Improvements are currently spread among the Assessed Parcels within each Improvement Area based on the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. As the existing parcels are subsequently divided, the Assessments will be further apportioned pro rata to the resulting parcels based on the Equivalent Units of each newly created parcel. For residential lots, when final residential building sites are platted, the Assessments will be apportioned proportionately among each Land Use Class based on the ratio of the Equivalent Unit applicable to each Land Use Class at the time lots are platted to the total Equivalent Units of all lots in the platted parcel, as determined by the Administrator and confirmed by the Town Council. “Equivalent Units” means, as to any parcel within each Improvement Area, the number of units by lot type expected to be built on the parcel multiplied by the factors shown below: Assessment Part A per Unit Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Improvement Area #1 Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Subtotal: Improvement Area #1 $19,087,620.54 Improvement Area #2 Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Subtotal: Improvement Area #2 $5,622,857.55 Improvement Area #3 Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Subtotal: Improvement Area #3 $4,864,521.90 Grand Total Assessment Part A $29,575,000.00 The Town has determined that such method of allocation will result in the imposition of equal shares of the Assessments on parcels similarly situated. The Assessments and the interest thereon are expected to be paid in Annual Installments as described above. The determination by the Town of the assessment methodology set forth in the Service and Assessment Plan is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer, all other current owners of 20 HOU:3437814.7 property within the District and all future owners and developers within the District. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Collection and Enforcement of Assessments Under the PID Act, the Annual Installments may be collected in the same manner and at the same time as regular ad valorem taxes of the Town. The Assessments may be enforced by the Town in the same manner that an ad valorem tax lien against real property is enforced. Delinquent ins tallments of the Assessments incur interest, penalties and attorney’s fees in the same manner as delinquent ad valorem taxes. Under the PID Act, the Assessment Lien is a first and prior lien against the property assessed, superior to all other liens and c laims except liens or claims for State, county, school district or municipal ad valorem taxes. If homestead rights are properly claimed by a property owner prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. As of the date of adoption of the Assessment Ordinance, no such homestead rights will have been claimed on property within Improvement Area #1, Improvement Area #2 or Improvement Area #3. For additional information, see “BONDHOLDERS’ RISKS – Assessment Limitations” herein. The Town will covenant in the Indenture to collect, or cause to be collected, Assessments as provided in the Assessment Ordinance. No less frequently than annually, the Town staff shall prepare, and the Town Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual Installments. Each Annual Service Plan Update shall include an updated Assessment Roll for Improvement Area #1, Improvement Area #2 and Improvement Area #3 and a calculation of the Annual Installment for each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parc el. Administrative Expenses shall be allocated among Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels in proportion to the amount of the Annual Installments for the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. The Town will covenant, agree and warrant in the Indenture that, for so long as any Bonds are Outstanding, it will take and pursue all actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments. To the extent permitted by law, notice of the Annual Installments will be sent by, or on behalf of, the Town to the affected property owners on the same statement or such other mechanism that is used by the Town, so that such Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. The Town will determine or cause to be determined, no later than February 15 of each year, whether or not any Annual Installment is delinquent and, if such delinquencies exist, the Town will order and cause to be commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing, the Town shall not be required under any circumstances to pay the delinquent Assessment or the purchase the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel or Improvement Area #3 Assessed Parcel. The Town will implement the basic timeline and procedures for Assessment collections and pursuit of delinquencies set forth in Exhibit C of the Continuing Disclosure Agreement set forth in APPENDIX D and to comply therewith to the extent that the Town reasonably determines that such compliance is the most appropriate timeline and procedures for enforcing the payment of delinquent Assessments. See “APPENDIX D – FORMS OF DISCLOSURE AGREEMENTS.” A committee of not less than 25% of the Owners or Beneficial Owners may request a meeting with the Town Manager of the Town to discuss the Town’s actions in pursuing the payment of any Assessment delinquencies 21 HOU:3437814.7 in the event that (i) on or after March 1 in any year, based on Assessment Revenues collected to such date and the available money on deposit in the various funds and accounts under the Indenture, money in the Reserve Account of the Reserve Fund has been or will be required to be used to pay all or a portion of the principal or interest payments to be made on the Bonds during such year, or (ii) in any year, the aggregate amount of de linquent payments of Assessments is more than five percent (5%) of aggregate amount of Assessments due in such year. The Town shall not be required under any circumstances to expend any funds for Delinquent Collection Costs or Administrative Expenses in connection with its covenants and agreements under the Indenture or otherwise other than funds on deposit in the Administrative Fund. Annual Installments will be paid to the Town or its agent. Annual Installments are due on October 1 of each year, and become delinquent on February 1 of the following year. In the event that Assessments are not timely paid, there are penalties and interest as set forth below: Date Payment Received Cumulative Penalty Cumulative Interest Total February 6% 1% 7% March 7% 2% 9% April 8% 3% 11% May 9% 4% 13% June 10% 5% 15% July 12% 6% 18% After July, the penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, an attorney’s collection fee equal to 20% of the Annual Installment may be added to the total penalty and interest charge. In general, property subject to lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. An automatic stay by creditors or other en tities, including governmental units, could prevent governmental units from foreclosing on property and prevent liens for post - petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In most cases, post-petition Assessments are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. Assessment Amounts Assessment Amounts. The maximum amounts of the Asse ssments have been established by the methodology described in the Service and Assessment Plan. The Assessments will be levied against the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels as indicated on the Assessment Roll. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN” and “APPENDIX F – FINANCING AGREEMENT.” Method of Apportionment of Assessments. For purposes of the Service and Assessment Plan, the Town Council has determined that within each Improvement Area, the Assessments will initially be allocated among Assessed Parcels based on the ratio of the Equivalent Units of each parcel to the total Equivalent Units within each Improvement Area. As the existing parcels are subsequently divided, the Assessments will be further apportioned based on the ratio of the Equivalent Units of the newly created parcels. See “ASSESSMENT PROCEDURES – Assessment Methodology” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” The total Assessments per Equivalent Unit in Improvement Area #1, Improvement Area #2 and Improvement Area #3 are $58,797.94, $63,349.00 and $86,189.26, respectively. The Assessment for each Assessed Parcel is calculated as the product of the total Assessment per Equivalent Unit multipl ied by the applicable Equivalent Unit value for the Land Use Class to be developed on each Parcel. The Bonds are secured by a first lien on and pledge of Pledged Revenues, including the Assessment Revenues. See “SECURITY FOR THE BONDS ; THE INDENTURE” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” 22 HOU:3437814.7 Prepayment of Assessments Pursuant to the PID Act and the Indenture, the owner of any property assessed may voluntarily prepay (a “Prepayment”) all or part of any Assessment levied against any lot or parcel, tog ether with accrued interest to the date of payment, at any time. Upon receipt of such Prepayment, such amounts will be deposited into the Pledged Revenue Fund and then transferred to the Redemption Fund and applied towards the redemption or payment of the Bonds. Amounts received at the time of a Prepayment which represent a payment of principal, interest, or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment, but rather are to be treated as payment of regularly scheduled Assessments. Priority of Lien The Assessments or any reassessment, the expense of collection, and reasonable attorney’s fees, if incurred, constitute a first and prior lien against the property assessed, superior to all other liens and claims excep t liens or claims for State, county, school district or municipality ad valorem taxes, and are a personal liability of and charge against the owners of the property regardless of whether the owners are named. The lien is effective from the date of the Assessment Ordinance until the Assessment is paid, and may be enforced by the Town in the same manner as an ad valorem tax levied against real property may be enforced by the Town. The owner of any Improvement Area #1 Assessed Parcel may pay the entire Asses sment levied against such parcel, together with accrued interest to the date of payment, at any time. Foreclosure Proceedings In the event of delinquency in the payment of any Annual Installment, except for unpaid Assessments on homestead property (unless the lien associated with the assessment attached prior to the date the property became a homestead), the Town is empowered to order institution of an action in state district court to foreclose the lien of such delinquent Assessment. In such action the real property subject to the delinquent unpaid Assessment may be sold at judicial foreclosure sale for the amount of such delinquent installments, plus penalties and interest. If homestead rights are properly claimed by a property owner prior to the attachment of the Assessment Lien, the Assessment Lien may not be foreclosed upon; however, any unpaid Assessment or Annual Installment will be an unsecured personal liability of such property owner. Currently, all of the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3 is owned by the Developer, which is not an entity entitled to claim homestead rights. See “BONDHOLDERS’ RISKS – Assessment Limitations.” Any sale of property for nonpayment of an installment or installments of an Assessment will be subject to the lien established for remaining unpaid installments of the Assessment against such property and such property may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non - delinquent installments of the Assessments against such property as they become due and payable. Judicial foreclosure proceedings are not mandatory. In the event a foreclosure is necessary, there could be a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the Town of the proceeds of the foreclosure sale. It is possible that no bid would be received at the foreclosure sal e, and in such event there could be an additional delay in payment of the principal of and interest on Bonds or such payment may not be made in full. The Town is not required under any circumstance to pay the delinquent Assessment or purchase the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel or Improvement Area #3 Assessed Parcel. The Town will covenant in the Indenture to take and pursue all actions permissible under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments, provided that the Town is not required to expend any funds for collection and enforcement of Assessments other than funds on deposit in the Administrative Fund. See “APPENDIX A – FORM OF INDENTURE. “ See also “APPENDIX D – FORMS OF DISCLOSURE AGREEMENTS” for a description of the expected timing of certain events with respect to collection of delinquent Assessments. The Town will create the Delinquency Reserve Account under the Indenture and will fund such account from 0.30% of the interest rate component of Annual Installments to offset possible delinquent payments. The 23 HOU:3437814.7 Town will not be obligated to fund foreclosure proceedings out of any funds other than in the Administrative Fund. If Pledged Revenues are insufficient to pay foreclosure costs, the Owners of the Bonds may be required to pay amounts necessary to continue foreclosure proceedings. See “SECURITY FOR THE BONDS ; THE INDENTURE – Delinquency Reserve Account of the Reserve Fund,” “APPENDIX A – FORM OF INDENTURE” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” THE TOWN Background The Town of Westlake occupies approximately 7 square miles and is located in Denton and Tarrant Counties, Texas. The Town was incorporated in 1956 and operates as a Type A general law city under the laws of the State. The Town’s 2010 census population was 992, a 37% increase since 2000. Town Government The current members of the Town Council and their respective expiration of terms of office are as follows: Council Member Term Expires (May) Laura Wheat, Mayor 2016 Carol Langdon, Mayor Pro Tem 2015 Clifton Cox Michael Barrett 2016 2016 Wayne Stoltenberg 2015 Rick Rennhack 2015 The principal administrators of the Town include the following: Name Position Tom Brymer Town Manager Debbie Piper Finance Director Kelly Edwards Town Secretary Boyle & Lowry LLP Town Attorney Major Employers The major employers in the Town are set forth in the table below. Employer Product or Service Employees Fidelity Investments Financial Services 4,500 Corelogic Solutions Inc. Analytics and Financial Services 1,790 TD Auto Finance Financial Services 950 Solana Business Complex Various Business Services 3,600 Source: The Town THE DISTRICT General The PID Act authorizes municipalities, such as the Town, to create public improvement districts within their boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay for certain public improvements. The District was created by resolution of the Town in accordance with the 24 HOU:3437814.7 PID Act (the “Creation Resolution”) for the purpose of, among others, funding the Improvement Project A Improvements. The District is not a separate political subdivision of the State and is governed by the Town Council. A map of the property within the District is included on page iv hereof. Powers and Authority Pursuant to the PID Act, the Town may establish and create the District and undertake, or reimburse a developer for the costs of, public improvement projects that confer a special benefit on property located within the District, whether located within the Town limits or the Town’s extraterritorial jurisdiction. The District is located entirely within the boundaries of the Town. The PID Act provides that the Town may levy and collect assessments on property in the District, payable in periodic installments based on the benefit conferred by a public improvement project, to pay all or part of its cost. Pursuant to the PID Act and the Creation Resolution, the Town has the power to undertake the acquisition, construction or improvement of Improvement Project A Improvements. See “THE IMPROVEMENT PROJECT A IMPROVEMENTS.” Pursuant to the authority granted by the PID Act and the Creation Resolution, the Town has determined to undertake, or reimburse the Developer for the costs of, the co nstruction, acquisition or purchase of certain roadway, water, wastewater, drainage, landscaping and public park improvements within and outside of the District comprising the Improvement Project A Improvements and to finance a portion of the costs thereof through the issuance of the Bonds. The Town has further determined to provide for the payment of debt service on the Bonds through the Pledged Revenues. See “ASSESSMENT PROCEDURES” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” THE IMPROVEMENT PROJECT A IMPROVEMENTS General The Improvement Project A Improvements consist of the construction, acquisition or purchase of certain roadway, water, wastewater, drainage, landscape and park improvements that benefit Improvement Area #1, Improvement Area #2 and Improvement Area #3, which encompasses the entire District. See “THE DEVELOPMENT – Development Plan – Improvement Project A Improvements.” A portion of the costs of the construction of Improvement Project A Improvements in the approximate amount of $[18,009,400] will be funded with proceeds of the Bonds, with the remainder of the costs of Improvement Project A Improvements to be funded with proceeds of Additional Bonds, from the Reimbursement Agreement, from Assessment Revenues over time, or some combination thereof. See “PLAN OF DEVELOPMENT AND FINANCE – Financing of Public Improvements,” “SECURITY FOR THE BONDS; THE INDENTURE – Additional Bonds” and “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” The Developer is responsible for ensuring that construction of Improvement Project A Improvements is completed and it or its designee will act as construction manager. The Appraisal (defined herein) estimates that the value of the property within the District after construction of the Improvement Project A Improve ments to be financed with the Bonds is $78,580,000. See “APPRAISAL OF PROPERTY WITHIN THE DISTRICT.” The cost of all of the Improvement Project A Improvements is expected to be approximately $[20,325,998]. Of that total, approximately $[18,009,400] is e xpected to be paid with proceeds of the Bonds. The following table reflects the expected costs of Improvement Project A Improvements and the portion thereof expected to be paid with proceeds of the Bonds. Pursuant to the Reimbursement Agreement, the costs of the Improvement Project A Improvements that are not paid or reimbursed from proceeds of the Bonds will be reimbursed by the Town to the Developer over time. The Town expects, but is under no obligation, to finance its obligations under the Reimbursement Agreement through the issuance of Additional Bonds in 2017. See “PLAN OF DEVELOPMENT AND FINANCE – Financing of Public Improvements” and “SECURITY FOR THE BONDS; THE INDENTURE – Additional Bonds.” 25 HOU:3437814.7 Type of Improvement Total Cost Proceeds of the Bonds Reimbursement Agreement Roadway $4,389,900 $3,767,430 $622,470 Water 1,061,720 890,040 171,680 Wastewater 1,881,296 1,531,196 350,100 Drainage 1,733,872 1,154,306 579,566 Landscape/Parks 1,830,501 1,830,501 0 Duct bank improvements 733,954 640,304 93,650 Other costs (see “APPENDIX B – SERVICE AND ASSESSMENT PLAN” for details) 8,694,755 499,132 8,195,623 Total $20,325,998 $18,009,400 $2,316,598 Maintenance of Improvements The cost of operating, maintaining and repairing the Improvement A Projects, except for the water distribution system improvements, sanitary sewer system improvements and duct bank extension improvements, will be included in the Administrative Expenses of the District. The Town will be responsible for the maintenance and repair of the water distribution system improvements, sanitary sewer system improvements and duct bank extension improvements. The Annual Installments of the Assessments may include a Mai ntenance Assessment to pay such operation and maintenance expenses, as outlined in the Service and Assessment Plan. The Town may enter into an agreement (a "Maintenance Agreement") with a property owners' Association ("POA") wherein the POA agrees to operate, maintain and repair the applicable Improvement Projects A Projects in accordance with the standards set forth in the Maintenance Agreement. In the event the POA fails to operate, maintain and repair the applicable Improvement Project A Improvements in accordance with the standards set forth in the Maintenance Agreement, the Town may operate, maintain and repair the improvements or contract with another third party to operate, maintain and repair the improvements. THE DEVELOPMENT The following information has been provided by the Developer. Certain of the following information is beyond the direct knowledge of the Town, and the Town has no way of guaranteeing the accuracy of such information. The Developer has reviewed this Official Statement and warrants and represents that to the best of its knowledge, neither (i) the information under the caption “THE DEVELOPMENT” nor (ii) the information relating to the Developer’s plan for developing the Development under the sub-caption “BONDHOLDERS’ RISKS – Dependence on the Developer” contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made herein, in the light of the circumstances under which they are made, not misleading. Overview The District encompasses approximately 85 acres being developed as a master -planned mixed-use development known as “Westlake Entrada” that is expected to include, among other things, condominiums, residential villas, hotels, office, retail, commercial, institutional and hospitality uses, and a wedding event center (the “Development”). The development of the Development will begin with the construction of public improvements in three improvement areas. Improvement Area #1 (the Mixed -Use Core) consists of approximately __ acres. Improvement Area #2 (West Residential) consists of the approximately __ acres. Improvement Area #3 (East Residential) consists of approximately __ acres. The boundaries of the District, Improvement Area #1, Improvement Area #2 and Improvement Area #3 are shown in the “MAP SHOWING BOUNDARIES OF DISTRICT” on page iv. Maguire Partners – Solana Land, L.P. (the “Developer”) plans to develop over a period of approximately five years the public infrastructure to serve and benefit the entire District (the “Improvement Project A Improvements”) as well as public infrastructure to serve and benefit only Improvement Area #1 (the “Improvement 26 HOU:3437814.7 Project B Improvements”). The Developer expects to develop the remainder of the Development in phases ov er a 7- to 10-year period of time. Expected Home Prices and Anticipated Build-out The estimated average base home prices in Improvement Area #1, based on discussions with ___________, are shown in the following table: ESTIMATED HOME PRICES Home Sizes Base Lot Price Average Base Home Price 1200 sq. ft. Condos $ $ 1800-2500 sq. ft. Trevis $ $ 2501-3600 sq. ft. Casitas $ $ 3600+ sq. ft. Villas $ $ The Developer’s current expectations regarding the build-out of the Development are shown in the following table: EXPECTED BUILD-OUT SCHEDULE Phase Single-Family Lots Expected Construction Completion Date Expected Final Sale Date 1 127 September 2015 September 2018 2 80 September 2017 September 2020 Total 207 Development Plans The initial development of the Development is proceeding with the construction the Improvement Project A Improvements to serve the entire District and construction of the Improvement Project B Improvements to serve Improvement Area #1. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Improvement Project A Improvements. Improvement Project A Improvements includes roadway, water, wastewater, drainage, landscape and park improvements that benefit the entire District and are located inside a nd outside the District. All improvements will be constructed in accordance with Town requirements. Roadway Improvements. The roadway improvements provide for the traffic circulation within the District, allowing access to and from the adjacent roadways to each parcel. The roadway improvements include approximately 49,116 square yards of 6 -inch reinforced concrete pavement, 34,506 square yards of 8 -inch reinforced concrete pavements, 89,500 square yards of 8-inch treated sub-grade compacted to 95% SPD, striping, street signage and signals, turn lanes and bridges. Water Improvements. The water improvements create the grid for the water line system for the District. The water distribution system improvements consist of approximately 15,640 linear feet of 12-inch water lines, approximately 6,149 linear feet of 8-inch water lines, fire hydrants and trench safety procedures. 27 HOU:3437814.7 Wastewater Improvements. The wastewater improvements create the grid for the wastewater collection system for the District. The sanitary sewer collection system improvements consist of approximately 14,554 linear feet of 8-inch PVC, including sewer laterals, manholes and trench safety procedures. Drainage Improvements. The drainage improvements collect and control the runoff created on each parcel in the District and convey the runoff to the large central lake (described below), which also serves as a storm water detention pond for the District. The drainage improvements consist of approximately 6,014 linear feet of various sized RCP pipes, manholes, junction boxes, inlets, headwalls and trench safety procedures. All storm sewer collection system improvements will be constructed according to the Town requirements. Landscaping/Park Improvements. Landscaping, which includes public park improvements, include the creation of a 12-acre central lake, vineyards, trees, rubble stone walls and pathways on approximately nine acres, installation of over 2½ miles of 8-12’ wide concrete paths with seating areas, public art and public lighting det ails, including bollards, gathering area lighting and street lighting. Duct Bank Extension. The duct bank extension improvements include 4,955 linear feet of double conduit with pull boxes and 13,891 linear feet of single conduit with pull boxes that run parallel to the street network and to be used by franchise utilities such as cable and fiber. Improvement Project B Improvements. The Improvement Project B Improvements consist of a parking structure with approximately 440 parking spaces to benefit all of the property within Improvement Area #1, with an estimated total cost of $6,160,000. See “APPENDIX B – SERVICE AND ASSESSMENT PLAN.” Zoning/Permitting Pursuant to the ____________ Agreement (the “_________ Agreement”) between the Developer and the Town, the Developer secured planned development district (“PDD”) zoning, which allows flexibility for the Development to be developed as a mixture of residential, commercial and open space uses within the Development in conformity with the limitations and conditions set forth in the ____________ Agreement and the PDD zoning ordinance. In addition, the PDD zoning provides for tailored design regulations within the Development. Copies of the ____________ Agreement and the PDD zoning ordinance are available from t he Town. Environmental A Phase One Environmental Site Assessment (“Phase One ESA”) of the property within the District was completed on April 30, 2013. Based on the information presented in the Phase One ESA, there was no evidence that the Development was under environmental regulatory review or enforcement action. The site reconnaissance, regulatory database review and historical source review revealed no evidence of recognized environmental conditions involving the site. According to the website for the United States Fish and Wildlife Service, the Whooping Crane and the Least Tern are endangered species in Tarrant County. The Developer is not aware of any endangered species located on District property. Utilities The Town will provide both water and wastewater service to the Development. See “THE IMPROVEMENT PROJECT A IMPROVEMENTS.” The Developer expects additional utilities to be provided by: (1) Phone/Data – AT&T; (2) Electric – Tri- County Electric; (3) Cable – AT&T; and (4) Natural Gas – Atmos Energy. 28 HOU:3437814.7 THE DEVELOPER The following information has been provided by the Developer. Certain of the following information is beyond the direct knowledge of the Town, the Town’s Financial Advisor and the Underwriter, and none of the Town, the Town’s Financial Advisor or the Underwriter have any way of guaranteeing the accuracy of such information. The Developer has reviewed this Official Statement and warrants and represents that neither (i) the information herein under the caption “THE DEVELOPER” nor (ii) the info rmation relating to the Developer under the sub-caption “BONDHOLDERS’ RISKS – Dependence on the Developer” contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made herein, in the ligh t of the circumstances under which they are made, not misleading. Description of the Developer Mr. Mehrdad Moayedi the managing partner of Maguire Partners – Solana Land, L.P. (the “Developer”). Mr. Moayedi is also the owner of Centurion American Development Group (“Centurion”). Since 1990, Centurion has developed over 10,000 single -family lots in dozens of communities surrounding North Texas. It has worked closely with investors, land -owners, financial institutions, and vendors to acquire over 15,000 acres of land inventory for a diverse mix of developments in size and scope. Centurion’s communities include amenities such as parks, golf courses, water parks themes, and hiking and biking trails. Over the past twenty years, Centurion has demonstrated the ability to successfully deliver master-planned communities that have been recognized in the real estate industry. Centurion maintains a staff of approximately 25 employees. Centurion creates single -asset limited liability companies to own development sites and contracts with developers and other professionals in the delivery of its communities. See “THE DEVELOPMENT CONSULTANTS.” In addition, Centurion works closely with local municipalities, commercial developers, and public school systems as part of its overall master plan. Centurion works with North Texas’ top builders to deliver the latest concepts ranging from upscale, luxury homes in secluded neighborhoods to affordable housing communities for first-time home buyers. Centurion purchases and develops land in prime locations with the right mix of natural land settings, strong job growth, good school systems and access to local community shopping. A detailed snapshot of the communities Centurion has developed is presented below. Name County Property Type Starting Home Price River Walk at Central Park Denton Mixed Use $ ______ The Villas at Twin Creeks Collin Single Family $230,000 Kensington Gardens Dallas Single Family $500,000 Water’s Edge at Hogan’s Glen Denton Single Family $480,000 Montalcino Estates Denton Single Family $700,000 Estancia Estates Denton Single Family $400,000 Highlands Glen Denton Single Family $300,000 The Highlands at Trophy Club Denton Single Family $250,000 Water’s Edge Denton Single/Multifamily $300,000 Williamsburg Rockwall Single Family $150,000 Crestview at Prosper Creek Collin Single Family $250,000 Palomar Estates Tarrant Single Family $750,000 Estancia Tarrant Single Family $450,000 Verandah Rockwall Single Family $100,000 Terracina Denton Single Family $350,000 The Resort on Eagle Mountain Lake Tarrant Single/Multifamily $250,000 Travis Ranch Kaufman Single Family $150,000 Carter Ranch Collin Single Family $150,000 Frisco Hills Denton Single Family $200,000 Rolling Meadows Tarrant Single Family $100,000 Waterfront at Enchanted Bay Tarrant Single Family $150,000 29 HOU:3437814.7 Name County Property Type Starting Home Price Thornbury Travis Single Family $100,000 Rough Hollow Travis Single Family $550,000 Lexington Parke Travis Single Family $100,000 Villages of Woodland Springs Tarrant Single Family $150,000 Spring Creek Tarrant Single Family $100,000 Silver Ridge Tarrant Single Family $150,000 Sendera Ranch Tarrant Single Family $100,000 Rosemary Ridge Tarrant Single Family $100,000 Llano Springs Tarrant Single Family $150,000 Hills of Lake Country Tarrant Single Family $150,000 Garden Springs Tarrant Single Family $100,000 Dominion Estates Tarrant Single Family $100,000 Deer Creek North Tarrant Single Family $100,000 Creekside of Crowley Tarrant Single Family $100,000 Bonds Ranch Tarrant Single Family $150,000 Crown Valley Parker Single Family $150,000 Windmill Farms Kaufman Single Family $100,000 Knox Ranch Hood Mixed Use $450,000 Windsor Hills Ellis Single Family $250,000 Saddlebrook Ellis Mixed Use $100,000 The Villas of Indian Creek Denton Single Family $150,000 Valencia on the Lake Denton Single/Multifamily $100,000 Shale Creek Wise Single Family $100,000 Shahan Prairie Denton Single Family $150,000 Frisco Ranch Denton Single Family $150,000 Brookfield Denton Single Family $100,000 Sweetwater Crossing Collin Single Family $100,000 Prestwyck Collin Mixed Use $190,000 Oak Hollow Collin Single Family $100,000 Northpointe Crossing Collin Single Family $100,000 McKinney Greens Collin Single Family $150,000 The Dominion Dallas Multifamily $250,000 Three Thousand Flora Dallas Multifamily $250,000 Residences at the Stoneleigh Dallas Multifamily $750,000 Mountain Creek Dallas Single Family $350,000 Chateaus of Coppell Dallas Single Family $350,000 The Bridges at Preston Crossings Parker Single Family $250,000 Executive Biography Mehrdad Moayedi is the managing partner of the Developer and the President and Chief Executive Officer of Centurion. Mr. Moayedi has more than twenty-five years of direct experience in the development industry. With a background in construction and real estate, Mr. Moayedi employs a comprehensive approach to each Centurion development. Mr. Moayedi has extensive knowledge of the interconnection of all parts of residential real estate development, which provides Centurion with a unique advantage over other residential developers. By forming JBM Development in 1986, Mr. Moayedi completed several construction and fee development projects in Northeast Tarrant County, Texas subdivisions as well as various construction and remodeling projects. JBM Development, along with Centurion American Custom Homes, formed Centurion in 1990. The company has become broadly diversified, with residential developments ranging from upscale high -rise residential towers to affordable housing communities for first-time home buyers. 30 HOU:3437814.7 History and Financing of the Development The land comprising the District was acquired by the Developer as part of a purchase of ____ total acres in ____. In ____, the Developer began defaulting on certain financings entered into in connection with such purchase. In August 2013, Mr. Moayedi brought current notes in the amount of $25.2 million payable to CLG Hedge Fund in Plano, became managing partner of the Developer and thereby took control of 285 undeveloped acres, approximately 85 acres of which constitutes the District. THE DEVELOPMENT CONSULTANTS Lenart Development Company, LLC Lenart Development Company, L.L.C. (“Lenart”) is a real estate development and consulting firm focused primarily on single family and light commercial development. The firm provides fee development services for projects across the Dallas-Fort Worth Metroplex along with consulting services regarding entitlement, financing, special districts, construction, and due diligence. Lenart was formed in November of 2006. Mr. Steve Lenart, the founder and manager of the company, has over twenty-one years of experience in the real estate development industry. Mr. Lenart’s experience encompasses all aspects of the business, including both homebuilding and development. He spent fourteen years with a “Big Three” public builder, where he held the executive positions of Director of Construction and then Land Division President. In his six years as Division President he managed all as pects of land and lot acquisition and development in the DFW area. Lenart currently manages the development of over thirty residential developments in the Dallas -Fort Worth area. The projects vary from simple municipal jurisdictions to public improvement d istricts. The firm’s responsibilities include managing all of the day-to-day operations of the development. This includes site evaluation, plan review and management, contracting, and payment of contracts. The firm’s team of experienced project managers oversees the project subcontractors on a daily basis to effectively and efficiently deliver completed infrastructure and finished lots per approved plans. The firm also performs feasibility studies for projects along with entitlement, zoning, platting, and financial analysis. Building Villages, LLC Building Villages, LLC (“Building Villages”), a Dallas, Texas based real estate development and investment firm that brings together the experience, expertise and financial knowledge necessary to succeed in the complex mixed-use development real estate industry. The Developer has partnered with Building Villages specifically to master plan and develop the Entertainment Area portion of The River Walk property, then assist in the administration, execution and implementation of a development plan. Building Villages’ core team has completed numerous major successful projects over the last 32 years and has a demonstrable track record of success in both residential and commercial developments that employ a reverse - engineering method of planning where the needs of the people are first identified and the development is then planned and created to meet those needs. Currently, Building Villages is developing four (4) distinct greenfield “villages” across the State of Texas with a total combined value in excess of $1,600,000,000. Jeff Blackard, Founding Partner of Building Villages and CEO of Blackard Global, has over 30 years of experience in real estate development, including the development of over 15,000 single family lot s. Mr. Blackard is a graduate of Northwestern University. Michael Beaty, PhD ABD, Founding Partner of Building Villages and President of Mooreland Development, has over 22 years of experience in the real estate development and construction fields, with a dditional work in civil and structural engineering. Mr. Beaty’s doctoral work focused on ERP database programing as it specifically relates to the residential construction industry. Mr. Beaty is a graduate with honors from the Via College of Civil Engineering at Virginia Tech. 31 HOU:3437814.7 THE SPECIAL ASSESSMENT CONSULTANT Prior to delivery of the Bonds, the City will enter into an Agreement for administration of the District (the “MuniCap Agreement") with MuniCap, Inc. (“MuniCap”) to provide specialized services relate d to the administration of the District needed to support the issuance of the Bonds. The MuniCap Agreement will include seven general types of services provided by MuniCap: (i) administrative support services related to the Assessments, (ii) delinquency management, (iii) prepayment of Assessments, (iv) arbitrage rebate services, (v) continuing disclosure services, (vi) accounting and audit coordination, and (vii) IRS compliance monitoring. MuniCap is a public finance consulting firm with a specialized consulting practice providing services related to the formation and administration of special tax and special assessment districts. MuniCap currently acts as the administrator for 135 special assessment and taxing districts in 17 states, including 13 public improvement districts in Texas (including the District). APPRAISAL OF PROPERTY WITHIN THE DISTRICT The Appraisal General. Jackson Claborn, Inc. (the “Appraiser”), prepared an appraisal report for the Town, dated November 15, 2014, based upon a physical inspection of the District conducted on November 1, 2014 (the “Appraisal”). The Appraisal was prepared at the request of the Town. The description herein of the Appraisal is intended to be a brief summary only. The Appraisal is attached hereto as APPENDIX E and should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, hypothetical conditions and qualifications, which are set forth therein. See “APPENDIX E – APPRAISAL.” Value Estimates. The Appraiser estimated the aggregate retail value of the fee simple interest in the District under the hypothetical condition that the portion of Improvement Project A Improvements to be financed with the Bonds (“Series 2015 Improvement Project A Improvements”) have been completed. See “THE IMPROVEMENT PROJECT A IMPROVEMENTS.” The Appraisal does not reflect the as -is condition of the District as the Series 2015 Improvement Project A Improvements have not yet been constructed. Moreover, the Appraisal d oes not reflect the value of the District as if sold to a single purchaser in a single transaction. See “APPENDIX E – APPRAISAL.” The value estimate for the property within the District using the methodologies described in the Appraisal and subject to the limiting conditions and assumptions set forth therein as of September 1, 2015 is $77,580,000. Assumptions and Limiting Conditions. The Appraisal is based upon a number of extraordinary assumptions (defined as assumptions, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions) and hypothetical conditions (factors t hat are known to be false but are presumed to be true for purposes of the appraisal). The extraordinary assumptions and hypothetical conditions which may affect the estimates as to value include, among others, the following: Extraordinary Assumptions and Hypothetical Conditions:  All information relative to the remaining developed and undeveloped property located in the District, including land and lot areas and other pertinent data provided by G & A Consultants, LLC (site planning, civil engineering, platting, land surveying, landscape architecture), the Developer, the Town, and the Tarrant Appraisal District is assumed to be correct.  The market conditions as discussed and considered within the Appraisal will be similar on the prospective valuation date. The prospective market value date is approximately 10 months from the effective date of the Appraisal.  The Town of Westlake will approve and authorize the creation of the District to finance the costs of certain public improvements for the benefit of property in the District. Thus, as the district is developed with housing, the corresponding tax base increases to a level which allows bonds to be sold. Proceeds from the bond sales are then used to reimburse the developers for certain 32 HOU:3437814.7 development expenses. The property in the district totals 85.921 acres and upon completion of development will contain 127 residential lots (West Residential Pod), a developed pod allowing 80 future residential lots (East Residential Pod) and the 31 Commercial Parcels. Proceeds from the bond sales will finance improvements that benefit all of the property. Assessments will be imposed on all property within the District for the improvements that benefit the entire District with the public improvements to be provided relative to each phase.  The prospective opinions of value are based upon the acreage sizes and maximum home/building sizes found in the Appraisal and are based on the assumption that all of the Improvement Project A Improvements to be financed with the Bonds are in place by September 1, 2015.  The financial markets will continue to function in a competitive, efficient fashion. Value to Assessment Burden Ratio The primary security for the Bonds will consist of Pledged Revenues (which, in turn, primarily consist of the Annual Installments of the Assessments). Subject to the assumptions and limiting conditions stated therein, the Appraisal sets forth the estimated aggregate retail value of the District to be $78,580,000. As noted above, the estimated aggregate retail value of the property within the District assumes (among other matters) completion of that portion of Improvement Project A Improvements to be financed with the proceeds of the Bonds. See “THE DEVELOPMENT.” The principal amount of the Bonds is $26,175,000.* When compared to the estimated aggregate retail value of the taxable property ($78,580,000), the principal amount of the Bonds has an estimated value to assessment burden ratio of approximately 3* to 1. In comparing the appraised value of the real property within the District and the aggregate principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Assessment can be foreclosed upon, and the real property within the District cannot be foreclos ed upon as a whole to pay delinquent Assessments of the owners of such parcels within the District unless all of the property is subject to a delinquent Assessment. In any event, individual parcels may be foreclosed upon separately to pay delinquent Assess ments levied against such parcels. Other public entities whose boundaries overlap those of the District currently impose ad valorem taxes on the property within the District and will likely do so in the future. Such entities could also impose assessment li ens on the property within the District. Liens created on the property within the District through the levy of ad valorem taxes as well as liens created through the levy of the Assessments are a first and prior lien superior to all others. For example, construction loans may be obtained by the Developer or home loans may be obtained by ultimate homeowners. The deeds of trust securing such debt on property within the District, however, will be in a junior position to ad valorem tax and assessment liens. See “OVERLAPPING TAXES AND DEBT” and “ASSESSMENT PROCEDURES.” BONDHOLDERS’ RISKS Before purchasing any of the Bonds, prospective investors and their professional advisors should carefully consider all of the risk factors described below which may create p ossibilities wherein interest may not be paid when due or that the Bonds may not be paid at maturity or otherwise as scheduled, or, if paid, without premium, if applicable. The following risk factors (which are not intended to be an exhaustive listing of all possible risks associated with an investment in the Bonds) should be carefully considered prior to purchasing any of the Bonds. Moreover, the order of presentation of the risks summarized below does not necessarily reflect the significance of such investment risks. THE BONDS ARE SPECIAL OBLIGATIONS OF THE TOWN PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE TOWN AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE 33 HOU:3437814.7 TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE; AND, NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE TOWN’S TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE TOWN SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE TOWN OTHER THAN THE TRUST ESTATE. The ability of the Town to pay debt service on the Bonds as it becomes due is subject to various factors that are beyond the Town’s control. These factors include, among others, (a) the ability or willingness of property owners within the District to pay the Assessments levied by the Town, (b) cash flow delays associated with the institution of foreclosure and enforcement proceedings against property within the District, (c) general and local economic conditions which may impact real property values, the ability to liquidate real property holdings and the overall value of real property development projects, and (d) gen eral economic conditions which may impact the general ability to market and sell the lots within the District, it being understood that poor economic conditions within the Town, State and region may slow the assumed pace of sales of such lots. The rate of development of the property in the District is directly related to the vitality of the residential housing industry. In the event that the sale of the lands within the District should proceed more slowly than expected and the Developer is unable to pay Assessments, only the value of the lands, with any then-completed improvements, will be available for payment of the debt service on the Bonds, and such value can only be realized through the foreclosure or expeditious liquidation of the lands within the Dis trict. There is no assurance that the value of such lands will be sufficient for that purpose, and the expeditious liquidation of real property through foreclosure or similar means is generally considered to yield sales proceeds in a lesser sum than might otherwise be received through the orderly marketing of such real property. The Bonds, which are limited, special revenue obligations of the Town and are not the obligation of Denton County, Tarrant County, the State, or any other political subdivision thereof, are secured solely by the Pledged Revenues and other funds comprising the Trust Estate. The Underwriter is not obligated to repurchase any of the Bonds, and no representation is made by the Underwriter or the Town that a market for the Bonds will develop and be maintained in the future. If a market does develop, no assurance can be given regarding future price maintenance of the Bonds. The Town has not applied for or received a rating on the Bonds. The absence of a rating could affect the future marketability of the Bonds. There is no assurance that a secondary market for the Bonds will develop or that holders who desire to sell their Bonds prior to the stated maturity will be able to do so. Assessment Limitations Annual Installments of Assessments are billed to property owners in the District. Annual Installments are due and payable, and bear the same penalties and interest for non -payment, as for ad valorem taxes as set forth under “ASSESSMENT PROCEDURES” herein. Additionally, Annual Installme nts established by the Service and Assessment Plan correspond in number and proportionate amount to the number of installments and principal amounts of Bonds maturing in each year and the annual Administrative Expenses for such year. See “ASSESSMENT PROCEDURES” herein. The unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Annual Installment payments in the future. In order to pay debt service on the Bonds, it is necessary that Annual Installments are paid in a timely manner. Due to the lack of predictability in the collection of Annual Installments in the newly created District, the Town has established a Reserve Account in the Reserve Fund, to be funded from the proceeds of the Bonds, to cover delinquencies. The Annual Installments are secured by the Assessment Lien. However, there can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Account and delay in payments of debt service on the Bonds. See “BONDHOLDERS’ RISKS – Remedies and Bankruptcy” herein. 34 HOU:3437814.7 Upon an ad valorem tax lien foreclosure event of a property within the District, any Assessment that is also delinquent will be foreclosed upon in the same manner as the ad valorem tax lien (assuming all necessary conditions and procedures for foreclosure are duly satisfied). To the extent that a foreclosure sale results in insuffi cient funds to pay in full both the delinquent ad valorem taxes and the delinquent Assessments, any remaining unpaid balance of the delinquent Assessments would then be an unsecured personal liability of the property owner. Based upon the language of Texas Local Government Code, § 372.017(b), case law relating to other types of assessment liens and opinions of the Texas Attorney General, the Assessment Lien as it relates to installment payments that are not yet due should remain in effect following an ad va lorem tax lien foreclosure, with future installment payments not being accelerated. Texas Local Government Code § 372.018(d) supports this position, stating that an Assessment Lien runs with the land and the portion of an assessment payment that has not yet come due is not eliminated by foreclosure of an ad valorem tax lien. The Assessment Lien is superior to any homestead rights that first arise and are subsequently claimed by a property owner after the adoption of the Assessment Ordinance. The Assessment Lien would be subordinate to any homestead rights to the extent properly claimed by a property owner prior to the adoption of the Assessment Ordinance, thus precluding foreclosure of the Assessment Lien on such pre-existing homestead property. Under Texas law, in order to establish homestead rights, the claimant must show a combination of both overt acts of homestead usage and intention on the part of the owner to claim the land as a homestead. Mere ownership of the property alone is insufficient and the intent to use the property as a homestead must be a present one, not an intention to make the property a homestead at some indefinite time in the future. As of the date of adoption of the Assessment Ordinance, no such homestead rights had been claimed. Furthermore, the Developer is not eligible to claim homestead rights and the Developer has represented that it owns all property within the District as of the date of the Assessment Ordinance. Failure by owners of the parcels to pay Annual Installments when due, depletion of the Reserve Fund, delay in foreclosure proceedings, or the inability of the Town to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Assessments levied agai nst such parcels may result in the inability of the Town to make full or punctual payments of debt service on the Bonds. THE ASSESSMENTS CONSTITUTE A FIRST AND PRIOR LIEN AGAINST THE PROPERTY ASSESSED, SUPERIOR TO ALL OTHER LIENS AND CLAIMS EXCEPT LIENS AN D CLAIMS FOR STATE, COUNTY, SCHOOL DISTRICT OR MUNICIPAL AD VALOREM TAXES AND IS A PERSONAL OBLIGATION OF AND CHARGE AGAINST THE OWNERS OF PROPERTY LOCATED WITHIN THE DISTRICT. Risks Related to the Current Real Estate Market During recent years, the real e state market has experienced significant slowing of new home sales and new home closings due in part to the subprime mortgage crisis involving adjustable rate mortgages and other creative mortgage financing tools that allowed persons with higher credit risk to buy homes. The economic crisis that resulted from higher interest rates, at a time when many subprime mortgages were due to reset their interest rates, has served to reduce the availability of mortgages to many potential home buyers, making entry int o the real estate market difficult. These downturns in the real estate market and other factors beyond the control of the Developer, including general economic conditions, may impact the timing of lot and home sales within the District. There have been reports of various public-private efforts to relieve the subprime mortgage crisis but as of yet no one can predict with certainty when the real estate market will rebound. Competition The housing and commercial development industries in the Dallas-Fort Worth area are very competitive, and none of the Developer, the Town, the Town’s Financial Advisor or the Underwriter can give any assurance that the building programs which are planned for the Development will ever commence. The competitive position of the Developer in the sale of developed parcels or of any homebuilder in the construction and sale of single -family residential units is affected by most of the factors discussed in this section, and such competitive position is directly related to maintenance of market values in the District. 35 HOU:3437814.7 Loss of Tax Exemption The Indenture contains covenants by the Town intended to preserve the exclusion from gross income of interest on the Bonds for federal income tax purposes. As discussed under the caption “TAX MATTERS” herein, interest on the Bonds could become includable in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Town in violation of its covenants in the Indenture. Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. Bankruptcy The payment of Assessments and the ability of the Town to foreclose on the lien of delinquent unpaid Assessments may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. Although bankruptcy proceedings would not cause the Assessments to become extinguished, bankruptcy of a property owner in all likelihood would result in a delay in prosecuting foreclosure proceedings. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds, and the possibility that delinquent Assessments might not be paid in full. Direct and Overlapping Indebtedness, Assessments and Taxes The ability of an owner of property within the District to pay the Assessments could be affected by the existence of other taxes and assessments imposed upon the property. Public entities whose boundari es overlap those of the District currently impose ad valorem taxes on the property within the District and will likely do so in the future. Such entities could also impose assessment liens on the property within the District. The imposition of additional liens, or for private financing, may reduce the ability or willingness of the landowners to pay the Assessments. Depletion of Reserve Fund Failure of the owners of property within the District to pay the Assessments when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of property upon a foreclosure or otherwise or delinquency redemptions after a foreclosure sale, if any. There could be a default in payments of the principal of and interest on the B onds if sufficient amounts are not available in the Reserve Fund. The Indenture provides that if, after a withdrawal from the Reserve Fund, the amount in the Reserve Fund is less than the Reserve Fund Requirement, the Trustee shall transfer an amount from the Pledged Revenue Fund to the Reserve Fund sufficient to cure such deficiency, as described under “SECURITY FOR THE BONDS; THE INDENTURE – Reserve Fund” herein. Hazardous Substances While governmental taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to the assessment is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or “Superfund Act,” is the most well known and widely applicable of these laws. It is likely that, should any of the parcels of land located in the District be affected by a hazardous substance, the marketability and value of parcels would be reduced by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. 36 HOU:3437814.7 The value of the land within the District does not take into account the possible liability of th e owner (or operator) for the remedy of a hazardous substance condition of the parcel. The Town has not independently verified, and is not aware, that the owner (or operator) of any of the parcels within the District has such a current liability with respect to such parcel; however, it is possible that such liabilities do currently exist and that the Town is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the District resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could signific antly affect the value of a parcel that is realizable upon a delinquency. See “THE DEVELOPMENT – Environmental” for a discussion of previous Phase I Environmental Site Assessments. Regulation Development within the District may be subject to future federal, state and local regulations. Approval may be required from various agencies from time to time in connection with the layout and design of development in the District, the nature and extent of public improvements, land use, zoning and other matter s. Failure to meet any such regulations or obtain any such approvals in a timely manner could delay or adversely affect development in the District and property values. Bondholders’ Remedies and Bankruptcy In the event of default in the payment of principal of or interest on the Bonds or the occurrence of any other Event of Default under the Indenture, and upon the written request of the Owners of the Bonds of not less than a majority in principal amount of the Outstanding Bonds, the Trustee shall proceed to protect and enforce its rights and the rights of the owners of the Bonds under the Indenture by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for manda mus or the specific performance of any covenant or agreement contained therein or in aid or execution of any power granted or for the enforcement of any proper legal or equitable remedy, as the Trustee shall deem most effectual to protect and enforce such rights. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance of the Bonds or the Indenture and the Town’s obligations are not uncertain or disputed. The remedy of mandamus is controlled by eq uitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Owners of the Bonds cannot themselves foreclose on property within the District or sell property within the District in order to pay the principal of and interest on the Bonds. The enforceability of the rights and remedies of the Owners of the Bonds further may be limited by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions such as the District. In this regard, should the Town file a petition for protection from creditors under federal bankruptcy laws, the remedy of mandamus or the right of the Town to seek judicial foreclosure of its Assessment Lien would be automatically stayed and could not be pursued unless authorized by a federal bankruptcy judge. See “BONDHOLDERS’ RISKS – Bankruptcy Limitation to Bondholders’ Rights” herein. Any bankruptcy court with jurisdiction over bankruptcy proceedings initiated by or against a taxpayer within the District pursuant to the Federal Bankruptcy Code could, subject to its discretion, delay or limit any attempt by the Town to collect delinquent ad valorem taxes or Assessments against such taxpayer. In addition, in 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) (“Tooke”) that a waiver of sovereign immunity must be provided for by statute in “clear and unambiguous” language. In so ruling, the Court declared that statutory language such as “sue and be sued”, in and of itself, did not constitute a clear and unambiguous waiver of sovereign immunity. In Tooke, the Court noted the enactment in 2005 37 HOU:3437814.7 of sections 271.151-.160, Texas Local Government Code (the “Local Government Immunity Waiver Act”), which, according to the Court, waives “immunity from suit for contract claims a gainst most local governmental entities in certain circumstances.” The Local Government Immunity Waiver Act covers cities and relates to contracts entered into by cities for providing goods or services to cities. The Town is not aware of any Texas court c onstruing the Local Government Immunity Waiver Act in the context of whether contractual undertakings of local governments that relate to their borrowing powers are contracts covered by the Act. Because it is unclear whether the Texas legislature has effectively waived the Town’s sovereign immunity from a suit for money damages in the absence of Town action, the Trustee or the Owners of the Bonds may not be able to bring such a suit against the Town for breach of the Bonds or the Indenture covenants. As noted above, the Indenture provides that Owners of the Bonds may exercise the remedy of mandamus to enforce the obligations of the Town under the Indenture. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in Tooke, and i t is unclear whether Tooke will be construed to have any effect with respect to the exercise of mandamus, as such remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of mandamus may be issued to require public officials to perform ministerial acts that clearly pertain to their duties. Texas courts have held that a ministerial act is defined as a legal duty that is prescribed and defined with a precision and certainty that leaves nothing to the exercise of discretion or judgment, though mandamus is not available to enforce purely contractual duties. However, mandamus may be used to require a public officer to perform legally -imposed ministerial duties necessary for the performance of a valid contract to which the State or a political subdivision of the State is a party (including the payment of monies due under a contract). No Acceleration The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Bankruptcy Limitation to Bondholders’ Rights The enforceability of the rights and remedies of the owners of the Bonds may be limited by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions such as the Town. The Town is authorized under Texas law to voluntarily proceed under Chapter 9 of the Federal Bankruptcy Code, 11 U.S.C. 901 -946. The Town may proceed under Chapter 9 if it (1) is generally not paying its debts, or unable to meet its debts, as they become due, (2) desires to effect a plan to adjust such debts, and (3) has either obtained the agreement of or negotiated in good faith with its creditors, is un able to negotiate with its creditors because negotiation is impracticable, or reasonably believes that a creditor may attempt to obtain a preferential transfer. If the Town decides in the future to proceed voluntarily under the Federal Bankruptcy Code, the Town would develop and file a plan for the adjustment of its debts, and the Bankruptcy Court would confirm the plan if (1) the plan complies with the applicable provisions of the Federal Bankruptcy Code, (2) all payments to be made in connection with the plan are fully disclosed and reasonable, (3) the Town is not prohibited by law from taking any action necessary to carry out the plan, (4) administrative expenses are paid in full, (5) all regulatory or electoral approvals required under Texas law are obtained and (6) the plan is in the best interests of creditors and is feasible. The rights and remedies of the Owners of the Bonds would be adjusted in accordance with the confirmed plan of adjustment of the Town’s debt. Management and Ownership The management and ownership of the Developer and related property owners could change in the future. Purchasers of the Bonds should not rely on the management experience of such entities. There are no assurances that such entities will not sell the subject property or that officers will not resign or be replaced. In such circumstances, a new developer or new officers in management positions may not have comparable experience in residential homebuilding. 38 HOU:3437814.7 General Risks of Real Estate Investment and Development Investments in developing real estate are generally considered to be speculative in nature and to involve a high degree of risk. The Development will be subject to the risks generally incident to real estate investments and development. Many factors that may a ffect the Development, as well as the operating revenues of the Developer, including those derived from the Development, are not within the control of the Developer. Such factors include changes in national, regional and local economic conditions; changes in long and short term interest rates; changes in the climate for real estate purchases; changes in demand for or supply of competing properties; changes in local, regional and national market and economic conditions; unanticipated development costs, market preferences and architectural trends; unforeseen environmental risks and controls; the adverse use of adjacent and neighboring real estate; changes in interest rates and the availability of mortgage funds to buyers of the homes to be built in the Development, which may render the sale of such homes difficult or unattractive; acts of war, terrorism or other political instability; delays or inability to obtain governmental approvals; changes in laws; moratorium; acts of God (which may result in uninsured losses); strikes; labor shortages; energy shortages; material shortages; inflation; adverse weather conditions; contractor or subcontractor defaults; and other unknown contingencies and factors beyond the control of the Developer. Furthermore, the operating revenues of the Developer may be materially adversely affected if specific conditions in the lot purchase contracts are not met. Failure to meet the lot purchase contract’s conditions allows the applicable lot purchaser to terminate its obligation to pu rchase lots from the Developer and obtain its earnest money deposit back. See “THE DEVELOPMENT – Expected Home Prices and Anticipated Build-Out” herein. The Development cannot be initiated or completed without the Developer obtaining a variety of governmental approvals and permits, some of which have already been obtained. Certain permits are necessary to initiate construction of each phase of the Development and to allow the occupancy of residences and to satisfy conditions included in the approvals and permits. There can be no assurance that all of these permits and approvals can be obtained or that the conditions to the approvals and permits can be fulfilled. The failure to obtain any of the required approvals or fulfill any one of the conditions coul d cause materially adverse financial results for the Developer. Dependence Upon Developer The Developer, as the owner of all of the parcels comprising the Development, currently has the only obligation for payment of the Assessments. The ability of the Developer to make full and timely payment of the Assessments will directly affect the ability of the Town to meet its debt service obligations with respect to the Bonds. The source of funding for future land development activities and infrastructure constru ction to develop the remaining lots proposed for the Development also consists of proceeds from special assessment revenue bonds for subsequent phases and proceeds of lot sales, as well as possible bank financing and equity contributions by the Developer. There can be no assurances given as to the financial ability of the Developer to advance any funds to the Town to supplement revenues from the Assessments if necessary, or as to whether the Developer actually will advance such funds. Agricultural Use Valuation and Redemption Rights Approximately 27.75 acres in the District is currently entitled to valuation for ad valorem tax purposes based upon its agricultural use. Under Texas law, an owner of land that is entitled to an agricultural valuation has the right to redeem such property after a tax sale for a period of two years after the tax sale by paying to the tax sale purchaser a 25% premium, if redeemed during the first year, or a 50% premium, if redeemed during the second year, over the purchase price paid at the tax sale and certain qualifying costs incurred by the purchaser. Although Assessments are not considered a tax under Texas law, the PID Act provides that the lien for Assessments may be enforced in the same manner as a lien for ad valorem taxes. This shared enforcement mechanism raises a possibility that the right to redeem agricultural valuation property may be available following a foreclosure of a lien for Assessment, though there is no indication in Texas law that such redemption rights w ould be available in such a case. The Developer expects that the agricultural use valuations within the District will be terminated in 2015, affecting tax rolls beginning in 2015. 39 HOU:3437814.7 The Developer will execute an Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation (the “Redemption Agreement”) with the Town pursuant to which the Developer will convey to the Trustee for the benefit of the Owners of the Bonds its right to redeem any agricultural valuation property and require any subsequent purchaser to execute a similar conveyance. In addition, the Developer will deliver, and require any subsequent purchaser to deliver, into escrow with the Trustee a waiver of agricultural valuation, which the Trustee will be authorized to release and file with the Tarrant County Tax Assessor/Collector in the event that the subsequent owner has not paid ad valorem taxes or the special assessments due in respect of agricultural valuation property within 60 days of their due date. The Redemption Agreement will be enforceable by the Trustee on behalf of the Owners of the Bonds. Although the Redemption Agreement is intended to protect the Town and the bondholders against potential redemption rights of the Developer in the context of a for eclosure proceeding, because there is currently no case law with respect to waiver of redemption rights or an agricultural valuation, it is unclear whether the Redemption Agreement is enforceable under Texas law. Because the enforceability of the Redemption Agreement is not certain, as additional protection against the occurrence of a tax sale for non-payment of ad valorem taxes and the associated risk of redemption rights arising, the Developer will pay to the Trustee prior to delivery of the Bonds, and ma intain at all times while there exists property in the District that is entitled to valuation based on its agricultural use, an amount equal to the estimated ad valorem taxes assessed against agricultural valuation property to become due in the next two ye ars. Such funds will be held by the Trustee and used to pay delinquent ad valorem taxes on agricultural valuation property and thereby potentially avoid the possibility of a sale for non-payment of ad valorem taxes and the associated risk of redemption rights arising. In the event such funds are used to pay delinquent ad valorem taxes, the Developer will be required to replenish such funds previously held by the Trustee. A proportionate amount of such deposit will be returned to the Developer upon termination of agricultural valuation. TAX MATTERS Opinion On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel to the Town, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof (“Existing Law”), (1) interest on the Bonds for federal income tax purposes will be excludable from the “gross income” of the holders thereof and (2) the Bonds will not be treated as “specified private activity bonds” the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the “Code”). Except as stated above, Bond Counsel to the Town will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See Appendix C -- Form of Opinion of Bond Counsel. In rendering its opinion, Bond Counsel to the Town will rely upon (a) certain information and representations of the Town, including information and representations contained in the Town’s federal tax certificate, and (b) covenants of the Town contained in the Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the property financed or refinanced therewith. Failure by the Town to observe the aforementioned representations or covenants could cause the interest on the Bonds to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel to the Town is conditioned on compliance by the Town with such requireme nts, and Bond Counsel to the Town has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel’s opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel’s opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that 40 HOU:3437814.7 Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the Town with respect to the Bonds or the property financed or refinanced with proceeds of the Bonds. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Bonds, or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Town as the taxpayer and the Bondholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. Federal Income Tax Accounting Treatment Of Original Issue Discount The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of one year (the “Original Issue Discount Bonds”). In such event, the difference between (i) the “stated redemption price at maturity” of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The “stated redemption price at maturity” means the sum of all payments to be made on the bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under existing law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defi ned in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax co nsequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six -month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner’s basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redempti on, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determ ined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. 41 HOU:3437814.7 Collateral Federal Income Tax Consequences The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and ca sualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with Subchapter C earnings and profits, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium assistance credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax -exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS. Interest on the Bonds will be includable as an adjustment for “adjusted current earnings” to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a “market discount” and if the fixed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to “market discount bonds” to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A “market discount bond” is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the “revised issue price” (i.e., the issue price plus accrued original issue discount). The “accrued market discount” is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. State, Local And Foreign Taxes Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. Future and Proposed Legislation Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax -exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. 42 HOU:3437814.7 LEGAL MATTERS Legal Proceedings Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attorney General to the effect that the Bonds are valid and legally binding obligations of the Town under the Constitution and laws of the State, payable from the proceeds of the Pledged Revenues and, based upon their examination of a transcript of certified proceedings relating to the issuance and sale of the Bonds, the legal opinion of Bond Counsel, to a like effect. McCall, Parkhurst & Horton L.L.P. serves as Bond Counsel to the Town. Andr ews Kurth LLP serves as Underwriter’s Counsel. The legal fees paid to Bond Counsel and Underwriter’s Counsel are contingent upon the sale and delivery of the Bonds. Legal Opinions The Town will furnish the Underwriter a transcript of certain certified pro ceedings incident to the authorization and issuance of the Bonds. Such transcript will include a certified copy of the approving opinion of the Attorney General of Texas, as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect that the Bonds are valid and binding special obligations of the Town. The Town will also furnish the legal opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, to the effect that, based upon an examination of such transcript, the Bonds are valid and binding special obligations of the Town under the Constitution and laws of the State. The legal opinion of Bond Counsel will further state that the Bonds, including principal of and interest thereon, are payable from and secured by a pledge of and lien on the Pledged Revenues. Bond Counsel will also provide a legal opinion to the effect that interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described above under the caption “TAX MATTERS,” including the alternative minimum tax consequences for corporations. A copy of the opinion of Bond Counsel is attached hereto as “APPENDIX C – FORM OF OPINION OF BOND COUNSEL.” Except as noted below, Bond Counsel did not take part in the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capac ity as Bond Counsel, such firm has reviewed the information describing the Bonds in the Official Statement under the captions and sub -captions “PLAN OF DEVELOPMENT AND FINANCE – Financing of Public Improvements” (with respect to the first two paragraphs on ly), “DESCRIPTION OF THE BONDS,” “SECURITY FOR THE BONDS; THE INDENTURE,” “TAX MATTERS,” “LEGAL MATTERS – Legal Proceedings” (with respect to first paragraph only), “LEGAL MATTERS – Legal Opinions,” “CONTINUING DISCLOSURE” (first paragraph only), “LEGAL IN VESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS,” “REGISTRATION AND QUALIFICATION OF BONDS FOR SALE” and APPENDIX A and such firm is of the opinion that the information relating to the Bonds, the Bond Ordinance and the Indenture contained therein fairly and accurately describes the laws and legal issues addressed herein and, with respect to the Bonds, such information conforms to the Bond Ordinance and the Indenture. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Litigation – The Town At the time of delivery and payment for the Bonds, the Town will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or overtly threatened against the Town affecting the existence of the District, 43 HOU:3437814.7 or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof, in accordance with the Indenture, or the collection or application of the Assessments securing the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Assessment Ordinance, the Indenture, any action of the Town contemplated by any such documents, or the collection or applicati on of the Pledged Revenues, or in any way contesting the completeness or accuracy of this Official Statement, or contesting the powers of the Town or its authority with respect to the Bonds or any action of the Town contemplated by any documents relating to the Bonds. Litigation – The Developer At the time of delivery and payment for the Bonds, the Developer will certify that, except as disclosed herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any co urt, regulatory body, public board or body pending, or, to the best knowledge of the Developer, threatened against or affecting the Developer wherein an unfavorable decision, ruling or finding would have a material adverse effect on the financial condition or operations of the Developer or its co -general partners or would adversely affect (1) the transactions contemplated by, or the validity or enforceability of, the Bonds, the Indenture, the Bond Ordinance, the Service and Assessment Plan, the Financing Agreement, the Redemption Agreement or the Bond Purchase Agreement, or otherwise described in this Official Statement, or (2) the tax-exempt status of interest on the Bonds. SUITABILITY FOR INVESTMENT Investment in the Bonds poses certain economic risks. No dealer, broker, salesman or other person has been authorized by the Town or the Underwriter to give any information or make any representations, other than those contained in this Official Statement, and, if given or made, such other information or repres entations must not be relied upon as having been authorized by either of the foregoing. Additional information will be made available to each prospective investor, including the benefit of a site visit to the Town and the opportunity to ask questions of the Developer, as such prospective investor deems necessary in order to make an informed decision with respect to the purchase of the Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Bonds upon an event of default under the Inde nture are in many respects dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including the federal bankruptcy code, the remedies specified by the Indenture and the Bonds may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors and enacted before or after such delivery. NO RATING No application for a rating on the Bonds has been made to any rating agency, nor is there any reason to believe that the Town would have been successful in obtaining an investment grade rating for the Bonds had application been made. CONTINUING DISCLOSURE The Town Pursuant to Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”), the Town and the Trustee (as dissemination agent) will enter into a Continuing Disclosure Agreement (the “Town’s Disclosure Agreement”) for the benefit of the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates prescribed in the Town’s Disclosure Agreement, certain financial information and operating data relating to the Town (collectively, the “Town Reports”). The specific nature of the information to be contained in the Town Reports is set forth in “APPENDIX D-1 — Form of Town’s Disclosure Agreement.” Under 44 HOU:3437814.7 certain circumstances, the failure of the Town to comply with its obligations under the Town’s Disclosure Agreement constitutes an event of default thereunder. Such a default will not co nstitute an event of default under the Indenture, but such event of default under the Town’s Disclosure Agreement would allow the Owners of the Bonds (including owners of beneficial interests in the Bonds) to bring an action for specific performance. During the last five years, the Town has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. The Town has agreed to update information and to provide notices of certain specified events only as provided in the Town’s Disclosure Agreement. The Town has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided in this Official Statement, except as provided in the Town’s Disclosure Agreement. The Town makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell the Bonds at any f uture date. The Town disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of the Town’s Disclosure Agreement or from any statement made pursuant to the Town’s Disclosure Agreement. The Developer The Developer and the Trustee (as dissemination agent) will enter into a Continuing Disclosure Agreement (the “Developer’s Disclosure Agreement”) for the benefit of the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates prescribed in the Developer’s Disclosure Agreement, certain financial information and operating data relating to the Developer (collectively, the “Developer Reports”). The specific nature of the information to be contained in the Developer Reports is set forth in “APPENDIX D-2 — Form of Developer’s Disclosure Agreement.” Under certain circumstances, the failure of the Developer to comply with its obligations under the Developer’s Disclosure Agreement constitutes an event of default thereunder. Su ch a default will not constitute an event of default under the Indenture, but such event of default under the Developer’s Disclosure Agreement would allow the Owners of the Bonds (including owners of beneficial interests in the Bonds) to bring an action for specific performance. The Developer has agreed to update information and to provide notices of certain specified events only as provided in the Developer’s Disclosure Agreement. The Developer has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided in this Official Statement, except as provided in the Developer’s Disclosure Agreement. The Developer makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell the Bonds at any future date. The Developer disclaims any contractual or tort liability for damages resulting in whole o r in part from any breach of the Developer’s Disclosure Agreement or from any statement made pursuant to the Developer’s Disclosure Agreement. UNDERWRITING Jefferies LLC (the “Underwriter”) has agreed to purchase the Bonds from the Town at a purchase price of $_____________ (the par amount of the Bonds, less a reoffering discount of $______________ less an underwriting discount of $________________). The Underwriter’s obligations are subject to certain conditions precedent and if obligated to purchase any of the Bonds the Underwriter will be obligated to purchase all of the Bonds. The Bonds may be offered and sold by the Underwriter at prices lower than the initial offering prices stated on the inside cover page hereof, and such initial offering prices may be changed from time to time by the Underwriter. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any other jurisdiction. The Town assumes no respons ibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, 45 HOU:3437814.7 hypothecated or otherwise transferred. This disclaimer of responsibility for qualifi cation for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS The PID Act and Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Government Code, as amended) provide that the Bonds are negotiable instruments and investment securities governed by Chapter 8, Business and Commerce Code, as amended, and are legal and authorized in vestments for insurance companies, fiduciaries, trustees, or for the sinking funds of municipalities or other political subdivisions or public agencies of the State. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State, the Public Funds Investment Act, Chapter 2256, Government Code, as amended, requires that the Bonds be assigned a rating of at least “A” or its equivalent as to investment quality by a national rating agency. See “NO RATING” above. In addition, the PID Act and various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. The Bonds are eligible to secure deposits to the extent of their market value. No review by the Town has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. No representation is made that the Bonds will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The Town made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes. INVESTMENTS The Town invests its funds in investments authorized by Texas law in accordance with investment policies approved by the Town Council. Both Texas law and the Town’s investment policies are subject to change. Under Texas law, the Town is authorized to invest in (1) obligations, including letter of credit, of the United States or its agencies and instrumentalities, (2) direct obligations of the State or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which is guaranteed or insur ed by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equival ent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit and share certificates meeting the requirements of the Texas Public Funds Investment Act (Chapter 2256, Texas Government Code, as amended (the “PFIA”)) that are issued by or through an institution that either has its main office or a branch office in Texas, and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for Town deposits, or are invested by the Town through a broker or depository institution that has its main office or a branch office in the State and oth erwise meet the requirements of the PFIA, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by a combination of cash and obligations described in clause (1), and are placed through a primary government s ecurities dealer or a financial institution doing business in the State, (9) certain bankers’ acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-l or P-1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no - load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each 46 HOU:3437814.7 share, and (12) no-load mutual funds registered with the Securities and Exchange Co mmission that have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not l ess than AAA or its equivalent. If specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA -m or an equivalent by at least one nationally recognized rating service. The Town may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b -1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds or other funds under its control for a term up to two years, but the Town retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a contract, the Town must do so by order, ordinance, or resolution. The Town is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage -backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Political subdivisions such as the Town are authorized to implement securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (6) of the first paragraph under this sub -caption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than “A” or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (10) through (12) of the first paragraph under this sub-caption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited at the time the investment is made with the Town or a third party designated by the T own; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. Under Texas law, the Town is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Town funds, the maximum allowable stated maturity of any individual investment, the maximum average dollar -weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acq uired with public funds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All Town funds must be invested consistent with a formally adopted “Investment Strategy Statement” that specifically addresses each funds’ investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under Texas law, Town investments must be made “with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for investment, considering the probable safety of capita l and the probable income to be derived.” At least quarterly the investment officers of the Town shall submit an investment report detailing: (1) the investment position of the Town, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, the ending market value and the fully accrued interest for the reporting period of each pooled fund group, (4) the book value and market value of each separately listed asset at the end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it 47 HOU:3437814.7 relates to: (a) adopted investment strategy statements and (b) state law. No person may invest Town funds without express written authority from the Town Council. Under Texas law the Town is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or re solution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) require any investment off icers’ with personal business relationships or relatives with firms seeking to sell securities to the Town to disclose the relationship and file a statement with the Texas Ethics Commission and the Town Council; (4) require the registered principal of firm s seeking to sell securities to the Town to: (a) receive and review the Town’s investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the Town and the business organization that are not authorized by the Town’s investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the Town’s entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the Town’s investment policy; (6) provide specific investment training for the officers of the Town; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (8) restrict the investment in no -load mutual funds in the aggregate to no more than 15% of the entity’s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the Town. INFORMATION RELATING TO THE TRUSTEE The Town has appointed U.S. Bank National Association, a national banking association organized under the laws of the United States, to serve as Trustee. The Trustee is to carry out those duties assignable to it under the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the contents, accuracy, fairness or completeness of the information set forth in this Official Statement or for the recitals contained in the Indenture or the Bonds, or for the validity, sufficiency, or legal effect of any of such documents. Furthermore, the Trustee has no oversight responsibility, and is not accountable, for the use or application by the Town of any of the Bo nds authenticated or delivered pursuant to the Indenture or for the use or application of the proceeds of such Bonds by the Town. The Trustee has not evaluated the risks, benefits, or propriety of any investment in the Bonds and makes no representation, and has reached no conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for the Bonds, the technical or financial feasibility of the Development, or the investment quality of the Bonds, about all of which t he Trustee expresses no opinion and expressly disclaims the expertise to evaluate. Additional information about the Trustee may be found at its website at www.usbank.com. Neither the information on the Trustee’s website, nor any links from that website, i s a part of this Official Statement, nor should any such information be relied upon to make investment decisions regarding the Bonds. SOURCES OF INFORMATION General The information contained in this Official Statement has been obtained primarily from the T own’s records, the Developer and its representatives and other sources believed to be reliable. In accordance with its responsibilities under the federal securities law, the Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of the transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement or any sale hereunder will create any implication that there 48 HOU:3437814.7 has been no change in the financial condition or operations of the T own described herein since the date hereof. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opin ions or that they will be realized. The summaries of the statutes, resolutions, ordinances, indentures and engineering and other related reports set forth herein are included subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Source of Certain Information The information contained in this Official Statement relating to the description of the Improvement Project A Improvements generally and, in particular, the information included in the sections captioned “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT,” “THE DEVELOPER,” “BONDHOLDERS’ RISKS” (only as it pertains to the Developer and the Development) and “LEGAL MATTERS – Litigation – The Developer” has been provided by the Developer. Experts The information regarding the Service and Assessment Plan in this Official Statement has been provided by Municap, Inc., and has been included in reliance upon the authority of such firm as experts in the field of development planning and finance. The information regarding the Appraisal in this Official Statement has been provided by Jackson Claborn, Inc., Real Estate Consulting and Appraisal Services, and has been included in reliance upon the authority of such firm as experts in the field of the appraisal of real property. Updating of Official Statement If, subsequent to the date of the Official Statement, the Town learns, through the ordinary course of business and without undertaking any investigation or examination for such purposes, or is notified by the Underwriter, of any adverse event which causes the Official Statement to be materially misleading, and unless the Underwriter elects to terminate its obligation to purchase the Bonds, the Town will promptly prepare and supply to the Underwriter an appropriate amendment or supplement to the Official Statement satisfactory to the Underwriter; provided, however, that the obligation of the Town to so amend or supplement t he Official Statement will terminate when the Town delivers the Bonds to the Underwriter, unless the Underwriter notifies the Town on or before such date that less than all of the Bonds have been sold to ultimate customers; in which case the Town’s obligat ions hereunder will extend for an additional period of time (but not more than 90 days after the date the Town delivers the Bonds) until all of the Bonds have been sold to ultimate customers. FORWARD-LOOKING STATEMENTS Certain statements included or incorporated by reference in this Official Statement constitute “forward- looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, a nd Section 27A of the Securities Act. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “anticipate,” “budget” or other similar words. THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE TOWN DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS, 49 HOU:3437814.7 CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENT S ARE BASED OCCUR, OTHER THAN AS DESCRIBED UNDER “CONTINUING DISCLOSURE” HEREIN. AUTHORIZATION AND APPROVAL The Town Council has approved by resolution the form and content of this Preliminary Official Statement and has authorized this Preliminary Official Statement to be used by the Underwriter in connection with the marketing and sale of the Bonds. HOU:3437814.7 APPENDIX A FORM OF INDENTURE HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK.) HOU:3437814.7 APPENDIX B SERVICE AND ASSESSMENT PLAN HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK) HOU:3437814.7 APPENDIX C FORM OF OPINION OF BOND COUNSEL HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK) HOU:3437814.7 APPENDIX D-1 FORM OF TOWN’S DISCLOSURE AGREEMENT HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK) HOU:3437814.7 APPENDIX D-2 FORM OF DEVELOPER’S DISCLOSURE AGREEMENT HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK) HOU:3437814.7 APPENDIX E APPRAISAL HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK) HOU:3437814.7 APPENDIX F FINANCING AGREEMENT HOU:3437814.7 (THIS PAGE IS INTENTIONALLY LEFT BLANK.) HOU:3437814.7 APPENDIX G BOOK-ENTRY ONLY SYSTEM This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited b y The Depository Trust Company (“DTC”), New York, New York, while the Bonds are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as t his Official Statement. The Town and the Underwriter believe the source of such information to be reliable, but neither the Town nor the Underwriter takes responsibility for the accuracy or completeness thereof. The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bon ds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities a nd Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member o f the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitate s the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book - entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for p hysical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its registered subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+”. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Dire ct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such HOU:3437814.7 other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Partic ipants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and propose d amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all Bonds of the same maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant of such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Town as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds a re credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Town or Paying Agent/Registrar, on the payment date in accordance with their respective holdings shown on DTC’s records. Payments by Part icipants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, the Paying Agent/Registrar, or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, the Paying Agent/Registrar or the Town, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Town or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The Town may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. Thereafter, Bond certificates may be transferred and exchanged as described in the Indenture. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof. NEITHER THE TOWN NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEE WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, THE INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE BONDS. THE TOWN CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC, THE DTC PARTICIPANTS O R OTHERS WILL DISTRIBUTE PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS PAID TO DTC OR ITS NOMINEE, AS THE REGISTERED OWNER, OR PROVIDE ANY NOTICES TO THE HOU:3437814.7 BENEFICIAL OWNERS OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC. 12/8/2014 SMTWThFSSMTWThFSSMTWThFSSMTWThFS 1123456 1 231234567 234567878910111213 45678910891011121314 91011121314151415 161718192011121314 15 161715 16 1718192021 16 17 181920212221222324 25 262718 19 202122232422232425262728 2324252627 28 292829303125262728293031 30 Town Council Special MeetingTown Council Special MeetingHoliday: Market Closed Date:Action: ●PID Kick-Off meeting to discuss Bond documents and financing schedule ●Distribution of 1st updated draft of the CFA and Bond Indenture ●Distribution of 1st updated draft of the Service and Assessment Plan ("SAP") ●Comments due on 2nd draft of CFA & SAP ●Distribution of updated draft of the Preliminary Official Statement ("POS") ●Comments Due on updated draft of POS ●Distribution of CFA and 2nd draft of POS ●Draft appraisal expected values received ●Distribution of 1st draft of the appraisal ●Group call to discuss draft appraisal and provide status updates on other bond documents ●Distribution of 3rd Draft of POS ●Distribution of Final Appraisal ●Comments due on 3rd draft of POS ●Distribution of "Final" POS ●Deadline to have documents to Town for inclusion in the Dec. 15 Council Meeting Agenda Town Council Meeting to: ●Approve preliminary SAP, ●Approve release of POS ●Set date for PH on levying of PID assessments ●Instruct publication & mailing of notices for PH on PID reassessments ●Instruct filing of proposed reassessment roll with Town Secretary ●Posting of the POS subject to Staff, BC and FA approval ●Bond pre-marketing commences December 18, 2014 November 17, 2014 October 16, 2014 October 20, 2014 November 25, 2014 December 2, 2014 October 24, 2014 November 20, 2014 December 19, 2014 February-15November-14December-14January-15 Town of Westlake, Texas Entrada Improvement District Special Assessment Revenue Bonds, Series 2015 Financing Schedule December 15, 2014 December 5, 2014 October 8, 2014 October 13, 2014 November 19, 2014 November 3, 2014 November 24, 2014 Page 1 12/8/2014 SMTWThFSSMTWThFSSMTWThFSSMTWThFS 1123456 1 231234567 234567878910111213 45678910891011121314 91011121314151415 161718192011121314 15 161715 16 1718192021 16 17 181920212221222324 25 262718 19 202122232422232425262728 2324252627 28 292829303125262728293031 30 Town Council Special MeetingTown Council Special MeetingHoliday: Market Closed Date:Action: February-15November-14December-14January-15 Town of Westlake, Texas Entrada Improvement District Special Assessment Revenue Bonds, Series 2015 Financing Schedule ●Last day to mail notice to residents and post notice in newspaper of public hearing on levying of PID assessments ●Bond Pricing Special Town Council Meeting to: ●Approve Bond Sale ●Public Hearing on PID Assessment ●Approve Assessment PID Ordinance with Final SAP ●Approve Reimbursement Agreement ●Approve Bond Documents and sale of PID Bonds ●Bond ClosingFebruary 5, 2015 December __, ____ Jan 14 p.m. or Jan 15 a.m. January 14, 2015 Page 2 EXECUTIVE SESSION a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners -Solana Land, L.P., related to Centurion’s development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settl ement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 Town of Westlake Item # 7 – Executive Session Town of Westlake Item # 8 – Reconvene Meeting The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners-Solana Land, L.P., related to Centurion’s development known as Entrada and Granada b. Section 551.087 Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Carlyle Development c. Section 551.071 (2) Consultation with Attorney on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with the Chapter including but are not limited to the following: Town of Westlake Certificate of Convenience & Necessity (CCN) for water and sewer service. d. Section 551.071(2) Consultation with Attorney - to seek advice of counsel on legal matters involving pending or contemplated litigation, settlement offers, or other legal matters not related directly to litigation or settlement. Pending or contemplated litigation and settlement offers include but are not limited to the following: Trophy Club Municipal District Number 1 Town of Westlake Item # 9 – Take any Necessary Action, if necessary FUTURE AGENDA ITEMS: Any Council member may request at a workshop and / or Council meeting, under “Future Agenda Item Requests”, an agenda item for a future Council meeting. The Council Member making the request will contact the Town Manager with the requested item and the Town Manager will list it on the agenda. At the meeting, the requesting Council Member will explain the item, the need for Council discussion of the item, the item’s relationship to the Council’s strategic priorities, and the amount of estimated staff time necessary to prepare for Council discussion. If the requesting Council Member receives a second, the Town Manager will place the item on the Council agenda calendar allowing for adequate time for staff preparation on the agenda item. - None Town of Westlake Item #10 - Future Agenda Items  Westlake Town Council Workshop & Meeting Monday, December 15, 2014; 5:00 p.m. Westlake Town Hall-Council Chambers  2014 IB Diploma Ceremony & Alumni Reunion Thursday, December 18, 2014; 1:30 p.m. (Please note time change) Location – WA Gym  Westlake Academy closed for Winter Break Weeks of December 22, 2014 – January 5, 2015 (Monday, January 5 is a Teacher Professional Day & students’ holiday only)  Westlake Municipal Offices closed in observance of the Christmas holidays Wednesday, December 24 – Thursday, December 25, 2014  Westlake Municipal Offices closed in observance of the New Year’s Day holiday Thursday, January 1, 2015  Coffee & Conversation with the Mayor Monday, January 5, 2015; 8 – 9:30 a.m. Marriott Solana – Living Room  Westlake Academy Board of Trustees Workshop & Meeting Monday, January 12, 2015  Westlake Employee Appreciation & Awards Celebration Saturday, January 24, 2014; 7:00 p.m. Marriott Solana Town of Westlake Item # 11 – Council Calendar Town of Westlake Item # 12 – Adjournment Back up material has not been provided for this item.