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Home My WebLink About2024-07-24 - Agenda Packet Historic Preservation Commission and Planning Commission Meeting Agenda Rancho Cucamonga Civic Center COUNCIL CHAMBERS July 24, 2024 10500 Civic Center Drive Rancho Cucamonga, CA 91730 7:00 PM A. CALL TO ORDER AND PLEDGE OF ALLEGIANCE ROLL CALL: Chairman Morales Vice Chairman Boling Commissioner Dopp Commissioner Daniels Commissioner Diaz B. PUBLIC COMMUNICATIONS This is the time and place for the general public to address the Planning/Historic Commission (“Planning Commission”) on any Consent Calendar item or any item not listed on the agenda that is within the Commission’s subject matter jurisdiction. The Planning Commission may not discuss any issue not included on the agenda, but may set the matter for discussion during a subsequent meeting. C. CONSENT CALENDAR C1. Consideration to adopt Regular Meeting Minutes of July 10, 2024. D. PUBLIC HEARINGS D1. DESIGN REVIEW – FOOTHILL LOFTS, LLC – A request to construct a mixed-use development comprising 385 residential units and approximately 6,216 square feet of commercial lease area on approximately 8.41 acres of land at the southeast corner of Foothill Boulevard and Elm Avenue. The project area has a General Plan land use designation of City Corridor – High. Pursuant to Section 15183 of the California Environmental Quality Act Guidelines, a Compliance Memorandum has been prepared for this project. APN: 0208-961-05, -06, and -07 (DRC2022-00162). This item was continued from May 8, 2024. At the property owner’s request, the public hearing for this item will not be conducted and no further action will be taken on the application. E. GENERAL BUSINESS E1. Presentation from Empire Economics Inc. on the City’s Annual Employment and Housing Trends Study and Analysis of the Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. This item is not a project as defined by the California Environmental Quality Act (CEQA) and is therefore exempt from CEQA review. F. DIRECTOR ANNOUNCEMENTS G. COMMISSION ANNOUNCEMENTS H. ADJOURNMENT TO ADDRESS THE PLANNING COMMISSION The Planning Commission encourages free expression of all points of view. To allow all persons to speak, given the length of the agenda, please keep your remarks brief. If others have already expressed your position, you may simply indicate that you agree with a previous speaker. If appropriate, a spokesperson may present the views of your entire group. To encourage all views and promote courtesy to others, the audience should refrain from clapping, booing or shouts of approval or disagreement from the audience. If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477-2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired. The public may address the Planning Commission on any agenda item. To address the Planning Commission, please come forward to the podium. State your name for the record and speak into the microphone. After speaking, please complete a speaker card located next to the speaker’s podium. It is important to list your name, address (optional) and the agenda item letter your comments refer to. Comments are generally limited to 3 minutes per individual. If you wish to speak concerning an item not on the agenda, you may do so under “Public Communications.” As an alternative to participating in the meeting you may submit comments in writing to Elizabeth.Thornhill@cityofrc.us by 12:00 PM on the date of the meeting. Written comments will be distributed to the Commissioners and included in the record. AVAILABILITY OF STAFF REPORTS Copies of the staff reports or other documentation to each agenda item are available at www.CityofRC.us. APPEALS Any interested party who disagrees with the City Planning Commission decision may appeal the Commission’s decision to the City Council within 10 calendar days. Any appeal filed must be directed to the City Clerk’s Office and must be accompanied by a fee of $3,526 for all decisions of the Commission. (Fees are established and governed by the City Council). Please turn off all cell phones while the meeting is in session. I, Elizabeth Thornhill, Executive Assistant of the City of Rancho Cucamonga, or my designee, hereby certify that a true, accurate copy of the foregoing agenda was posted Seventy-Two (72) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. HPC/PC MINUTES – July 10, 2024 Page 1 of 5 Draft 2 8 3 1 Historic Preservation Commission and Planning Commission Agenda July 10, 2024 Draft Minutes Rancho Cucamonga, CA 91730 7:00 p.m. The regular Joint meeting of the Historic Preservation Commission and Planning Commission was held on July 10, 2024. The meeting was called to order by Chairman Morales at 7:00 p.m. A. Roll Call Planning Commission present: Chairman Morales, Vice Chairman Boling, Commissioner Daniels, Commissioner Diaz, and Commissioner Dopp. Staff Present: Serita Young, Assistant City Attorney; Jennifer Nakamura, Deputy Director of Planning; Sean McPherson, Principal Planner; Tabe van der Zwaag, Assistant Planner; Elizabeth Thornhill, Executive Assistant. B. Public Communications Chairman Morales opened the public communications. Hearing no comments, Chairman Morales closed the public communications. C. Consent Calendar C1. Consideration to adopt Regular Meeting Minutes of June 26, 2024. Motion: Moved by Commissioner Diaz; seconded by Vice Chairman Boling, to approve Minutes as presented. Motion carried 4-1. Abstain - Commissioner Dopp. D. Public Hearings D1. MASTER PLAN, DESIGN REVIEW AND MINOR EXCEPTION – WESTERN SPIRE – Recommendation to the City Council for a request for a site plan and design review of a mixed-use development on 1.8 acres of land consisting of 176 residential units (including 2 live-work units), 7,870 square feet of commercial lease area, and 1,400 square feet of live-work commercial lease area with a related Master Plan to reduce the required non- residential floor area ratio and a Minor Exception for a reduction in the required on-site parking at the northwest corner of Red Oak Street and Spruce Avenue in the Center 2 (CE2) Zone. The City Council is the final decision- making authority on this item and a separate public hearing before that body will be scheduled at a later date. APN: 0208-353-18 (Design Review DRC2023-00154, Master Plan DRC2023-00346) and Minor Exception DRC2023- 00280. The project qualifies as a Class 32 exemption under State CEQA Guidelines Section 15332 – Infill Development Projects. Page 3 HPC/PC MINUTES – July 10, 2024 Page 2 of 5 Draft 2 8 3 1 Associate Planner Tabe van der Zwaag presented a PowerPoint presentation (copy on file). Commissioner Daniels asked what was the reason for the roundabout. Planner van der Zwaag answered that it was directed by the Engineering department to efficiently handle traffic rather than a four-way stop. Commissioner Daniels stated that when parking spaces for commercial are not being used, there will be additional parking available to the residents. Chairman Morales opened the public hearing. Applicant Comments: Gerald Hammer Public comments by Vatsal and Nilan Mody expressed parking concerns for their business and requested to increase parking allotment. Chairman Morales closed the public hearing. Chairman Morales asked staff to respond to the property owners concern regarding their parking issue. Deputy Director of Planning Nakamura suggested for the property owners to contact the Planning department to resolve and navigate their issue. She asked for the Applicant’s input on how they would resolve the parking issue. Shane Green, LLG Engineers, replied to create two Committees; One for Retail/Commercial and another one for Residential and have them both discuss any issues and figure out a solution to resolve it. He stressed how important it is for the two Committees to communicate for it to work. Commissioner Dopp inquired if there will be timed parking for any of the units. Green answered they would have to wait for tenants to get a better idea on timed parking. Commissioner Dopp expressed his concern to make sure there is no overlap. Commissioner Daniels inquired if the applicant feels it is an adequate number of parking for how it will be utilized. Green confirmed. Vice Chairman Boling asked where employees will park. Green answered that employees would park on the second level as indicated on the Parking Management Plan. Commissioner Diaz stated the City has goals to Live, Work and Play and she asked if they have any incentive for people to live in the building. Green responded there will not be one. Vice Chairman Boling asked if there are any thoughts of the type of tenants they plan to bring in for the non- residential commercial retail. Page 4 HPC/PC MINUTES – July 10, 2024 Page 3 of 5 Draft 2 8 3 1 Serafin Maranan, Architects Orange, answered that it is too early in the process to identify perspective tenants. Vice Chairman Boling asked what they have seen be successful in the live, work environment. Maranan responded that they have seen financial services, accounting, and architects be successful in the Live, Work environment. Commissioner Dopp stated there is a lot to like about this project such as creative use of the outdoor space for the residents and accents on the balcony. He expressed he is not thrilled about the parking spaces. Commissioner Daniels concurred with Commissioner Dopp and said regarding the parking reduction, he does not have a problem with the deficiency because of the mixed-use. He said there will be times when parking will be in high demand and times when it will not. He expressed the only problem he does have is that drive to the north and recommended the City talk to the property owners because the road is in poor condition and very narrow. He said he supports the project and likes the design. Commissioner Diaz stated that this is a beautiful project. She likes they are using the roof top and that the amenities are going to be very popular with the tenants. She encourages they do more with Live, Work and see how they can make it happen for the residents they will have in the building and surrounding area. Vice Chairman Boling stated the density, 98 units to the acre, is something we have not seen within the city and commends the applicant for embracing the City Council’s desire to have higher density. It’s important that we plan for, and the developers provide a wide variety of housing units, types, styles, and pricing for all our residents, both current and perspective. He said this addresses a market demand for quality housing in Rancho Cucamonga and in regard to the parking reduction, it is being addressed by the Parking Management Plan. He said in response to public comments, he encourages them to lean on staff’s expertise to help provide suggestions and recommendations. He asked staff to clarify for the public, with the number of units at this property site, some of the community may be concerned with school overcrowding and he asked to explain how the City ensures school impact fees are paid as determined by the effected school districts and not the city. Deputy Director of Planning Nakamura explained how each school district determines their development impact fees. Vice Chairman Boling stated that in the Conditions of Approval being proposed by Engineering, there is a requirement for the developer to install high-speed fiber and in the long run, it will serve residents well. Chairman Morales stated he is glad staff invited the property owners to contact the Planning department to discuss their parking issue. He said he is impressed with the design of the building and likes the roundabout in the middle. Motion: Moved by Commissioner Daniels; seconded by Vice Chair Boling to adopt Resolution 24-20, Design Review DRC2023-00154, Resolution 24-21 Master Plan DRC2023-00346 and 24-22 Minor Exception DRC2023-00280, with modification to the Condition of Approval Parking Management Plan. Motion carried 5-0. E. General Business E1. Review of Pedestrian Access from Arabian Drive to Heritage Park. Deputy Director of Planning Nakamura presented a PowerPoint presentation (copy on file). Page 5 HPC/PC MINUTES – July 10, 2024 Page 4 of 5 Draft 2 8 3 1 Commissioner Diaz mentioned that it seems the main issue stands from Little League parking and asked if the other Little League Park locations have residents in those areas and if they experienced similar issues and if so, what has staff done to resolve those issues. Deputy Director of Planning Nakamura answered not that she is aware of. Commissioner Daniels inquired if a property owner contacted staff about this and was it one person. Deputy Director of Planning Nakamura confirmed it was one individual. Vice Chairman Boling clarified what prompted this was one individual contacting the City inquiring about the opportunity of opening the gate in order to provide additional access to the park. Deputy Director of Planning Nakamura confirmed that they questioned who has access via keys and why only some have access and others do not. The following persons commented on the project: Lorraine Greer, Sergio Valdez, Larry Greet, Susan Benson- Massagli, Rick Givens and Mike Villarreal. The comments included the following concerns: Traffic, damage to property, safety for children, trespassing, trash, crime and street repair needed. For the record, it is noted that the following correspondences were received after the preparation of the agenda packet and the following general concerns are noted. The actual correspondence should be referred to for details: •Correspondence from Judith Brennan is opposed to opening the gate. •Email from Martin Yapur expressed traffic and trash concerns. •Email from Frank Pinkerton is opposed to the removal of the gate. •Email from Jara Winters expressed noise concerns, security, and safety. •Email from William Sweet expressed loss of security and children safety. •Email from Susan Massagli-Benson expressed traffic and trash concerns. •Email from Susan Benson against opening the gate. •Email from Karlyn Sweet is concerned with traffic, safety, and crime if gate is removed. •Email from Laurie Torella opposed to opening the gate. •Email from Julie Bessert against opening the gate due to traffic. After discussion with Commissioners, Vice Chairman Boling stated that Arabian is a public street, and the public has the right to park on a public street. He said from a policy perspective, restricting use of a public street should only be done under limited circumstances. His recommendation is to remove the gate and install a permanent fence so there is no pedestrian access and access for all would be through Mustang Drive and to take away the keys. Commissioners Dopp and Diaz agreed with Commissioner Boling’s solution. Commissioner Daniels stated that he was agreeable to leaving the gate as is. Chair Morales stated that the gate should be grandfathered in. Commissioner Diaz appreciated Commissioner Boling’s suggestion but could also see leaving the gate as is. Page 6 HPC/PC MINUTES – July 10, 2024 Page 5 of 5 Draft 2 8 3 1 Chair Morales asked if staff has been provided enough feedback. Deputy Director Nakamura asked the commission to come to consensus and make a formal recommendation to the Council. Commissioner Dopp made a motion to recommend two options. Option 1 was to remove the gate and lock and install permanent fencing. Option 2 was to leave the gate as is. Commissioner Diaz felt that the options should be prioritized in the opposite order. Motion: Moved by Commissioner Dopp; seconded by Vice Chairman Boling to recommend to City Council replace the gate with a permanent fence or leave the gate as is Motion carried 3-2. (Commissioners Morales and Diaz opposed to the order of the options). F. Director Announcements – None G. Commission Announcements Commissioner Daniels thanked the residents for coming out tonight. He said it is nice for the Commission to hear from the residents. Vice Chairman Boling also thanked the residents for coming out. Commissioner Daniels requested to have the Historical Structure Survey brought before the Commission as it is part of their responsibility to look at. Deputy Director of Planning Nakamura replied they are actively working on getting information in the near future to the Commission on the status of the historic preservation efforts. H. Adjournment Motion: Moved by Commissioner Diaz, seconded by Vice Chairman Boling to adjoin the meeting. Hearing no objections, Chairman Morales adjourned the meeting at 9:00 p.m. Respectfully submitted, Elizabeth Thornhill, Executive Assistant Planning and Economic Development Department Approved: Page 7 DATE:July 24, 2024 TO:Chairman and Members of the Planning Commission FROM:Matt Marquez, Director of Planning and Economic Development INITIATED BY:Sean McPherson, AICP, Principal Planner SUBJECT:DESIGN REVIEW – FOOTHILL LOFTS, LLC – A request to construct a mixed-use development comprising 385 residential units and approximately 6,216 square feet of commercial lease area on approximately 8.41 acres of land at the southeast corner of Foothill Boulevard and Elm Avenue. The project area has a General Plan land use designation of City Corridor – High. Pursuant to Section 15183 of the California Environmental Quality Act Guidelines, a Compliance Memorandum has been prepared for this project. APN: 0208-961-05, -06, and -07 (DRC2022-00162). This item was continued from May 8, 2024. At the property owner’s request, the public hearing for this item will not be conducted and no further action will be taken on the application. BACKGROUND: The proposed project, consisting of 385 residential unit and approximately 6,216 square feet of commercial space included an SB 330 preliminary application which was submitted on April 20, 2022, and which was followed by a timely full application for review. This application submittal package also included a Property Owner Declaration Form which was signed by the property owner of record, Kuo Hsi Tsai, and which was dated April 10, 2022. This Property Owner Declaration Form is included as Exhibit A. Subsequently, the application was reviewed by the Design Review Committee on March 19, 2024, and was scheduled for a public hearing by the Planning and Historic Preservation Commission on May 8, 2024. Mailed notices were sent to all property owners (39 recipients) within 660-feet on April 24, 202. Similarly, a notice was published in the Inland Valley Daily Bulletin on April 24, 2024, and the site was posted on April 25, 2024. On May 2, 2024, city staff received a request in writing from the applicant’s legal counsel requesting that the item be continued to a date certain of July 24, 2024, on behalf of the applicant, Foothill Lofts, LLC. On May 8, 2024, the Planning Commission voted 4-0, with one member absent (Boling), to continue the item to a date certain of July 24, 2024. See Exhibit B for this request to continue the item, and the May 8, 2024, staff report which was prepared in response to that request for continuance. On July 11, 2024, city staff received a request in writing from the property owner of record, Kuo Hsi Tsai, revoking property owner authorization and which stated, in part, that, effective immediately, Foothill Lofts, LLC no longer had property owner permission to “…access, obtain permit, design review, building planning, entitlement, any and all activities.” Upon receiving this request, that same day staff forwarded this letter to the applicant, Foothill Lofts, LLC, affording them an opportunity to respond to this letter so as to inform staff of their position on the matter and obtain an update as to the status of the project from their perspective. As of the writing of this staff report, staff has not received any response from the applicant, Foothill Lofts, LLC, despite multiple attempts to reach them. See Exhibit C for the property owner’s revocation of authorization. Development Code Section 17.14.030.1 establishes that an application can only be accepted as complete once Page 8 Page 2 of 2 2 4 5 7 all submittal requirements have been satisfied. Section 1 of the Planning Department’s Submittal Checklist requires that applications include a signed Property Owner Declaration Form. FISCAL IMPACT: None. COUNCIL MISSION / VISION / VALUE(S) ADDRESSED: None. EXHIBITS: Exhibit A – Property Owner Authorization Dated April 10, 2022 Exhibit B – Applicant’s Request for Continuance and May 8th Planning Commission Staff Report Exhibit C – Property Owner’s Revocation of Authorization Page 9 Exhibit A Page 10 Page 1 of 1 2 3 4 1 DATE:May 8, 2024 TO:Chairman and Members of the Planning Commission FROM:Matt Marquez, Director of Planning and Economic Development INITIATED BY:Sean McPherson, AICP, Principal Planner SUBJECT:DESIGN REVIEW – FOOTHILL LOFTS, LLC – A request to construct a mixed-use development comprising 385 residential units and approximately 6,216 square feet of commercial lease area on approximately 8.41 acres of land at the southeast corner of Foothill Boulevard and Elm Avenue. The project area has a General Plan land use designation of City Corridor – High. APN: 0208-961-05, -06, and -07 (DRC2022-00162). RECOMMENDATION: Staff recommends that the Planning and Historic Preservation Commission continue the hearing to July 24, 2024. BACKGROUND: The proposed project, consisting of 385 residential units and approximately 6,216 square feet of commercial space was submitted for review on April 20, 2022. The project was reviewed by the Design Review Committee on March 19, 2024. The item was set for a public hearing by the Planning and Historic Preservation Commission for May 8, 2024. Mailed notices were sent to all property owners (39 recipients) within 660-feet on April 24, 2024. Similarly, a notice was published in the Inland Valley Daily Bulletin on April 24, 2024, and the site was posted on April 25, 2024. ANALYSIS: On May 2, 2024, city staff received a request in writing (Exhibit A) from the applicant’s legal counsel requesting that the item be continued to a date certain of July 24, 2024, on behalf of the applicant, Foothill Lofts, LLC. FISCAL IMPACT: None by this continuance. COUNCIL MISSION / VISION / VALUE(S) ADDRESSED: None by this continuance. EXHIBITS: Exhibit A – Written request for Continuance. Exhibit B Page 11 From:Ryan.Leaderman@hklaw.com To:McPherson, Sean Cc:Darrin Olson (dolson@realmre.com); CADWELL, T. (tcadwell@realmre.com); Chuck Buquet - Charles Joseph Associates (chuck@charlesjoseph.biz) Subject:DRC2022-0162/Foothill Lofts Continuance Request Date:Thursday, May 2, 2024 10:42:25 AM CAUTION: This email is from outside our Corporate network. Do not click links or open attachmentsunless you recognize the sender and know the content is safe. Hi Sean, Thank you so much for all the hard work in processing the entitlement applications for DRC2022- 0162/Foothill Lofts. On behalf of Foothill Lofts LLC, the Applicant of the housing development project, I respectfully request a continuance of the Planning Commission hearing for the Foothill Lofts project to July 24, 2024. The Applicant needs additional time to prepare and process the City-requested engineering exhibit(s). The Applicant team will need time to review draft conditions of approval, City staff report, and we will need time to respond as appropriate. I will be travelling in parts of May and June, and it will be necessary for me to attend the hearing. As such, we respectfully request a continuance to the July 24, 2024 Planning Commission meeting. Please confirm the receipt of the Applicant-requested continuance. Best, Ryan Ryan Leaderman | Holland & Knight Partner Holland & Knight LLP 400 South Hope Street, 8th Floor | Los Angeles, California 90071 Phone 213.896.2405 | Fax 213.896.2450 ryan.leaderman@hklaw.com | www.hklaw.com ________________________________________________ Add to address book | View professional biography From June 2, 2024 to June 8, 2024 I will be out of the office and riding my bike 545 miles from San Francisco to Los Angeles as part of the California AIDS Lifecycle to help end AIDS. Please consider donating: https://giving.aidslifecycle.org/index.cfm?fuseaction=donorDrive.participant&participantID=40527. NOTE: This e-mail is from a law firm, Holland & Knight LLP ("H&K"), and is intended solely for the use of the Exhibit A Page 12 individual(s) to whom it is addressed. If you believe you received this e-mail in error, please notify the sender immediately, delete the e-mail from your computer and do not copy or disclose it to anyone else. If you are not an existing client of H&K, do not construe anything in this e-mail to make you a client unless it contains a specific statement to that effect and do not disclose anything to H&K in reply that you expect it to hold in confidence. If you properly received this e-mail as a client, co-counsel or retained expert of H&K, you should maintain its contents in confidence in order to preserve the attorney-client or work product privilege that may be available to protect confidentiality. Page 13 Page 14 DATE:July 24, 2024 TO:Chairman and Members of the Planning Commission FROM:Matt Marquez, Director of Planning and Economic Development INITIATED BY:Matt Burris, AICP, LEED AP, Deputy City Manager – Community & Economic Development Matt Marquez, Planning & Economic Development Director SUBJECT:Presentation from Empire Economics Inc. on the City’s Annual Employment and Housing Trends Study and Analysis of the Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. This item is not a project as defined by the California Environmental Quality Act (CEQA) and is therefore exempt from CEQA review. RECOMMENDATION: Staff recommends that the Planning Commission receive a presentation from Dr. Joe Janczyk of Empire Economics Inc. on the City’s Annual Employment and Housing Trends Study and Analysis of the Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. BACKGROUND: Over the years, the City has worked with Empire Economics to develop an annual forecast of Rancho Cucamonga’s economic and housing growth and conditions. Additionally, different supplemental analyses are prepared on an as-needed basis. Factors impacting the City’s economy and housing market change regularly, and there is a need to understand the reasons behind these changes and the impacts they have on the community. On February 15, 2023, the City Council approved a professional services agreement with Empire Economics for the main purpose of continuing to prepare these annual studies. The agreement approved by Council covers a three-year period. This year, Empire was tasked with not only producing an Employment and Housing Trends Study, but also an analysis of Economic Impacts of Brightline West High-Speed Rail and Potential for Nearby Development Opportunities. The Empire team has completed their work and presented their findings to the City Council on July 17, 2024. ANALYSIS: As the City continues to grow and evolve, understanding changes to its economy and housing market remain key for future planning efforts. Listed below are the information categories covered in this year’s Employment and Housing Trends Study, along with key information or findings for each category: 1. Overview of the Federal Reserve Board’s (FRB) Inflation Policy: The study’s forecasting is based on the impacts of the FRB goal for inflation of 2%. Near term restrictive policies will/have resulted in significantly higher mortgage rates as well as slightly higher unemployment rates. Additionally, stabilization policies once a desired inflation rate is attained will result in lower financial interest rates. Therefore, although the short-term impacts of federal policies will adversely impact employment as well Page 15 Page 2 of 4 2 4 4 4 as the housing market, the eventual result will generally be lower interest rates that will allow for the economy and housing market to recover. 2. Expected Impacts on the Economy/Employment: The City’s economy has recovered from the impacts of the Covid 19 pandemic. Certain sectors performed better than others as the economy has evolved and reshaped itself. Among the relatively strong sectors, administrative and support services is performing at a much higher rate than pre-Covid 19 conditions. The Administrative and Support services category now makes up approximately 38% of the jobs in the City. Alternatively, the manufacturing sector has been weaker than pre-Covid 19 levels. Policies at the federal level will continue to impact the City’s economy over the next several years and cause even more restructuring. It is anticipated that the real estate and finance sectors will be impacted due higher mortgage and interest rates overall. Additionally, employment growth was roughly 4,100 jobs in 2021 and 5,200 jobs in 2022, which was a new peak level. In 2023, employment was estimated to have increased by 500 jobs, a more moderate growth rate. It is anticipated that future employment growth between 2024 and 2030 will rise gradually by 1,800 jobs a year on average. 3. Expected Impacts on the Housing Market: Near term policies at the Federal level have significantly increased mortgage rates and this recent surge has significantly increased mortgage payments. For example, with a 30-year fixed rate for a mortgage loan of $800,000: •For a 2.9% mortgage rate, the mortgage interest on the loan would be about $400,000. •For a mortgage rate of 7.7% (recent peak level), mortgage interest on the loan exceeds $1,200,000. While homeowners have recently purchased or refinanced their mortgage loans at historically low rates, they have become reluctant to purchase another home with a much higher new mortgage rate. Many who are trying to purchase new homes will likely have a much higher mortgage rate than their existing homes and will also need to find a buyer for their current home who will be able to afford a higher mortgage rate. Eventually, when inflation lowers, mortgage rates will decline, and a more normal housing market should return. 4. Market Conditions for Apartment Units: The housing stock in Rancho Cucamonga has recently undergone a significant shift from primarily for-sale homes to multi-family apartment rentals. Apartment rents surged in 2021 by 20%, but have since moderated to a rate of about 4%. Average rents in the City are now around $2,700/month which is approximately $300 more than San Bernardino County. The new active and forthcoming apartments have a sufficient supply to support absorption of about 500 units annually during the foreseeable future. 5. Current State of Warehouse/Distribution Market in Rancho Cucamonga: The current vacancy rate is roughly 3.5% for the City and 4.87% for the Inland Empire. A year ago, the City’s vacancy rate was at 1.6%. The current lease rate amounts to $1.75 per square foot in the City, which is approximately $0.30 higher than the rest of the Inland Empire. As discussed earlier in this report, in previous years the City has asked Empire Economics to conduct additional or supplemental analysis of other factors impacting the local economy. This year, staff requested they prepare an analysis of the Brightline West High Speed Rail Economic Impacts and Potential Nearby Development Opportunities. Based on extensive international research, it was determined that High Speed Rail (HSR) can and will likely promote extensive two-way tourism. It is estimated that annually 560,000 riders from Las Vegas will utilize Page 16 Page 3 of 4 2 4 4 4 Brightline West (BLW) to visit Southern California. Of these, 60,000 may decide to use accommodations near Cucamonga Station as a launching point for tourism activities in Southern California. Service and offerings at Cucamonga Station need to be carefully orchestrated to capture the benefits of the Brightline West service, as being a node or gateway to Southern California will be crucial to attracting Las Vegas residents. Brightline is gaining valuable experience from the service they provide in Florida. There are opportunities in Rancho Cucamonga to entice passengers to ride the train while providing some essential amenities like restaurants, micro-stores, art exhibits, live music, coffee shops and more. Tourism facilities could also be developed, along with an enhanced transit accessibility, while the demand for new hotel accommodations is expected to increase with the roughly 6 million passengers that are expected to travel on Brightline West annually. BLW is expected to have several direct impacts on employment. Approximately 1,900 construction jobs will be created starting in Mid/Late-2024 and continuing through the latter part of 2028. For operations purposes, 275 jobs would be created, mostly in administrative and support services. Following a decline in 2020, employment in the City increased by 4,100 jobs in 2021 and by 5,200 in 2022 to exceed pre-Covid levels. In 2023, employment is estimated to have increased by roughly 500 jobs, representing a moderate growth rate. With the BLW project, employment in the City is expected to rise by 13,000 from 2023 to 2028. Empire Economics identified eleven international high speed rail projects that are recreation oriented. Of these, six were regarded as being the most comparable to BLW. These include stations along the TGV line in France with Disneyland Paris being a major destination, the Shinkansen line in Japan where the Mount Fuji area is a major destination, as well as others in London, Madrid, Rome, and China. There are roughly 10 million tourists traveling annually between the TGV Paris Station and the station for Disneyland Paris. Disneyland Paris funded one-third of the $126.5 million euros needed to build the station and they acknowledge that at least 60% of their guests use high speed rail. Additionally, when comparing the estimated ridership of 6 million for BLW to other major domestic rail stations, Cucamonga Station would rank third in total ridership behind New York’s Penn Station (8 million) and Washington Union Station (3.3 million). An algorithm was formulated to estimate the number of visitors that would utilize BLW and stay overnight in the City. As stated earlier in this report, over 60,000 people are estimated to travel from Las Vegas and stay overnight in Rancho Cucamonga. Based on this number, the City envisions the demand for two to three new hotels as well as these visitors supporting local restaurants and retail locations in the vicinity of Cucamonga Station and throughout the City. Findings from a study on how property values were impacted by Brightline service in Florida were published in July of 2023. For each of the stations in Florida, changes in property values were analyzed before, as well as after, public announcement of future train service, beginning of construction on rail lines, and opening of the stations. The overall results reflected an approximate 9% premium for property values that were located closest to each of the stations. In conclusion, BLW is expected to begin operations with as many as 6 million passengers between Cucamonga Station and Las Vegas annually. Roughly 60,000 visitors from Las Vegas are expected to utilize BLW for access to tourism activities in Southern California. The City has a sizeable opportunity to capitalize on this increase in visitors and develop new hospitality uses and amenities. Property values around Cucamonga Station are expected to increase with the implementation of the BLW project and new jobs will also be created as a result of the project. Cucamonga Station will service more riders than many other major rail stations in the Country making it a major draw for the City and the region. FISCAL IMPACT: There is no fiscal impact associated with this presentation to the Planning Commission. The cost for the annual forecast and supplemental analysis was budgeted for in Fiscal Year 2023-2024. Page 17 Page 4 of 4 2 4 4 4 COUNCIL MISSION / VISION / VALUE(S) ADDRESSED: This item addresses the City’s Core Values of “Intentionally embracing and anticipating the future”, and “Equitable prosperity for all” by ensuring that Rancho Cucamonga’s vibrant economy ensures prosperity and opportunities now and in the future. EXHIBITS: Exhibit A - Employment and Housing Trends Study Exhibit B - Addendum to Employment and Housing Trends Study Exhibit C - Brightline West Hight Speed Rail Economic Impacts and Potential Nearby Development Opportunities Page 18 CITY OF RANCHO CUCAMONGA ANNUAL ECONOMIC AND HOUSING STUDY *** DRAFT *** UNIQUE ABERRATIONS FROM FEDERAL RESERVE’S GOAL OF 2% INFLATION STRONG EMPLOYMENT GROWTH BUT LOWER INFLATION HIGHER MORTGAGE RATES BUT HOUSING APPRECIATION NEW FOR-SALE HOMES MINIMAL BUT NEW APARTMENTS ROBUST WAREHOUSE/DISTRIBUTION SOFTENING BUT STRONG IN CITY PREPARED BY EMPIRE ECONOMICS, INC. JOSEPH T. JANCZYK, PH.D. FEBRUARY 20, 2024 (REVISED: JUNE 20, 2024; NEW RESIDENTIAL AND APARTMENT PROJECTS) 1 Exhibit A Page 19 EXECUTIVE SUMMARY - PAGE 1 OVERVIEW EMPIRE ECONOMICS (EMPIRE) ANNUAL STUDY PROVIDES A FORECAST OF RANCHO CUCAMONGA’S (RC) EMPLOYMENT AND HOUSING CONDITIONS, WHICH INCORPORATES THE IMPACTS OF THE FEDERAL RESERVE BOARD (FRB/FED) GOAL OF ATTAINING A 2.0% INFLATION RATE. EMPIRE COMPILED PRIMARY DATA SPECIFICALLY FOR RANCHO CUCAMONGA WHICH INCLUDES EMPLOYMENT BY FIRMS IN THE CITY, NEW APARTMENT PROJECTS AND NEW WAREHOUSE/DISTRIBUTION FACILITIES. FEDERAL RESERVE BOARD POLICIES THE FRB TARGET OF 2.0% INFLATION UTILIZES THE CORE PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX (PCE-PI) THIS REACHED A PEAK LEVEL OF 7.1% IN JUNE 2022, AND HAS DECLINED TO 2.6% IN DECEMBER 2023. ALTHOUGH FINANCIAL MARKETS ARE EXPECTING THE FED TO CUT RATES, THE FED PERSPECTIVE AS OF JANUARY 31, 2024 IS CAUTIONARY: “THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT” EMPLOYMENT: RECENT TRENDS AND FORECASTS THE CITY’S AGGREGATE LEVEL OF EMPLOYMENT IS ALMOST +10% ABOVE ITS PRE-COVID LEVELS AND ITS UNEMPLOYMENT RATE IS ONLY 3.7%. ABOUT 38% OF JOBS ARE IN ADMINISTRATIVE/SUPPORT SERVICE , GOVERNMENT AND RESTAURANT/HOTELS. COMPARING 2023-EST. TO. 2019: THE STRONGEST SECTOR WAS ADMINISTRATIVE/SUPPORT +1,443 WHILE THE WEAKEST WAS MANUFACTURING -1,320. AVERAGE SALARY LEVELS OVER THE PAST YEAR ROSE MOST FOR TRANSPORTATION/WAREHOUSE (+13%) AND MANAGEMENT SERVICES (+12%) . EMPLOYMENT IS FORECASTED TO RISE MODERATELY DURING 2024-2030 BY ~1,830 JOBS/ YR./AVG. FROM 79,413 IN 2023 TO ABOUT 92,216 IN 2030. THE PRIMARY DRIVERS ARE THE ADMINISTRATIVE AND SUPPORT SERVICES AS WELL AS TRANSPORTATION AND WAREHOUSING (2,800 NEW JOBS) COMPARING EMPLOYMENT DATA FROM FIRMS AND HOUSEHOLDS, ABOUT A NET OF 18.5% OF THE CITY’S RESIDENTS COMMUTE TO JOBS ELSEWHERE 2 Page 20 EXECUTIVE SUMMARY – PAGE 2 FED POLICIES CAUSED SIGNIFICANT FLUCTUATION IN MORTGAGE RATES FED POLICIES TO STIMULATE THE COVID-19 ECONOMY REDUCED MORTGAGE RATES TO 2.8% IN DEC. 2020 AND REMAINED AT/BELOW 3.2% TO DEC. 2021. THEN, DUE TO FED POLICIES TO REDUCE INFLATION, MORTGAGE RATES ROSE TO A PEAK LEVEL OF 7.7% IN OCTOBER 2023, BUT RECENTLY FELL TO 6.7%. THE MAJORITY OF HOMEOWNERS PURCHASED/REFINANCED THEIR MORTGAGE LOANS AT HISTORICALLY LOW RATES DURING MID-2020 TO LATTER 2021. MORTGAGE RATE FLUCTUATIONS CREATED SUBSTANTIAL IMPACTS ON THE HOUSING MARKET CHANGES IN ANNUAL HOUSING PAYMENTS (MORTGAGE PRINCIPAL, INTEREST RATES AND PROPERTY TAXES) DEMONSTRATE THESE IMPACTS. 2019-2021: LOWER RATES OFFSET HOUSING APPRECIATION, PAYMENTS OF $40,000/YR. 2022-23: HIGHER PRICES AND HIGHER MORTGAGE RATES DROVE PAYMENTS HIGHER WITH PEAK PAYMENTS OF $60,000/YR. MOST HOMEOWNERS PURCHASED/REFINANCED MORTGAGE LOANS AT HISTORICALLY LOW RATES ARE STAYING IN THEIR HOMES THEY ARE RELUCTANT TO MOVE SINCE THEIR NEW MORTGAGES WOULD HAVE A SIGNIFICANTLY HIGHER INTEREST RATE. AN ESTIMATED 68% OF HOMEOWNERS HAVE RATES AT/BELOW 4.0%, SIGNIFICANTLY LESS THAN THE CURRENT RATE OF 6.7%. THE MARKET FOR EXISTING HOMES IS EXPERIENCING EXCESS DEMAND THAT IS DRIVING HOME PRICES HIGHER. THE LEVEL OF DEMAND HAS BEEN REDUCED SOMEWHAT DUE TO HIGH MORTGAGE RATES BUT THE LEVEL OF SUPPLY HAS BEEN REDUCED EVEN MORESO. FOR RC, DURING JANUARY 2015 TO DECEMBER 2021, SALES OF DETACHED HOMES AMOUNTED TO ABOUT 120-140 PER MONTH, BUT SINCE JANUARY 2022 SALES DECLINED TO 75/MO., A DECLINE OF ALMOST 50%. AS THE FED CUTS RATE AND MORTGAGE RATES WILL DECLINE, HOMEOWNERS WILL START TO SELL THEIR HOMES AND PURCHASE OTHER HOMES. FOR ANNUAL PAYMENTS TO RETURN TO 2019-2021 LEVELS BY DECEMBER 2025, PRICES NEED TO DECLINE BY -11% AND MORTGAGES RATES DECLINE TO 4.5%. NEW HOME SALES PEAKED IN 2021 AND PROJECTS CLOSED OUT IN EARLY 2022; THERE ARE CURRENTLY NO NEW HOME PROJECTS ON THE MARKET. 3 Page 21 EXECUTIVE SUMMARY – PAGE 3 MARKET CONDITIONS FOR APARTMENTS AND NEW APARTMENT PROJECTS RC’S EXISTING APARTMENT MARKET RENTS INCREASED FROM $1,727 IN 2015 TO $2,707 RECENTLY, + 57%; SOME 5.1% ANNUALLY. SINCE APRIL 2023, EXISTING APARTMENTS RENTS INCREASED ONLY SOME 2 TO 3% ANNUALIZED. FOR A PROJECT OFFERING NEW APARTMENTS, RENTS DECLINED BY SOME -8.8% DURING THE PAST YEAR. THE CHARACTERISTICS OF RC’S TEN APARTMENT PROJECTS WITH 3,580 PLANNED UNITS ARE AS FOLLOWS: CURRENTLY ACTIVE: 3 PROJECTS WITH 1,191 PLANNED UNITS OF WHICH 528 HAVE BEEN LEASED UNDER CONSTRUCTION: 4 PROJECTS WITH 1,186 UNITS FUTURE - STILL IN THE PLANNING PROCESS: 3 PROJECTS WITH 1,203 UNITS THE LIVING AREAS RANGE FROM 938 SQ.FT/AVG. FOR WESTBURY TO A HIGH OF 1,082 SQ.FT../AVG. FOR THE HOMECOMING. RENTS RANGE FROM $2,819/AVG. PER MONTH FOR WESTBURY TO $3,161/AVG. PER MONTH FOR HOMECOMING. FOR ALL OF THE NEW APARTMENT PROJECTS, RENTS INCREASE AS THE SIZE OF LIVING AREA INCREASES. FURTHERMORE, FOR UNITS WITH SIMILAR SIZES OF LIVING AREA, THE RENTS AMONG THE VARIOUS PROJECTS TEND TO BE GENERALLY SIMILAR. THE REMAINING 3,052 UNITS ARE EXPECTED TO BE LEASED DURING 2024 TO 2029+, BASED UPON A SUSTAINABLE TARGETED LEASE-UP OF 500/YR./AVG. SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION. MARKET CONDITIONS FOR WAREHOUSE/DISTRIBUTION FACILITIES FOR RC, THE CURRENT VACANCY RATE AMOUNTS TO 3.5%, SOMEWHAT HIGHER THAN THE YEAR AGO RATE OF 1.6%. THE CURRENT ASKING LEASE RATE AMOUNTS TO $1.75/SQ.FT WHILE A YEAR AGO RC WAS $1.50/SQ.FT. THIS CAN BE ATTRIBUTED TO THE NEW BUILDINGS THAT HAVE SOME 2.6 MILLION SQ.FT. 12434- 4TH STREET BUILDINGS WITH 2,000,000 SQ.FT. RECENTLY LEASED! THE NAPA/ETIWANDA WITH 651,000 SQ.FT. HAS BEEN BUILT AND IS BEING LEASED. 4 Page 22 TABLE OF CONTENTS PREVIEW: KEY QUESTIONS FOR RANCHO CUCAMONGA……….………..............................................6 EMPIRICAL FOUNDATION: DATA COMPILED SPECIFICALLY FOR RANCHO CUCAMONGA.......7 I. OVERVIEW OF THE FEDERAL RESERVE BOARD (FRB) GOAL OF 2% INFLATION…………........8 II. EXPECTED IMPACTS ON THE ECONOMY/EMPLOYMENT………………………………………….12 III. EXPECTED IMPACTS ON THE HOUSING MARKET……………………………………………….….21 IV. MARKET CONDITIONS FOR APARTMENT UNITS……………………………………………….......33 V. CURRENT STATE OF WAREHOUSE/DISTRIBUTION MARKET IN RANCHO CUCAMONGA…...44 CREDENTIAL/QUALIFICATIONS OF EMPIRE ECONOMICS…………….……………….……….……..46 5 Page 23 PREVIEW: KEY QUESTIONS FOR RANCHO CUCAMONGA FEDERAL RESERVE GOALS AND STRONG ECONOMIC GROWTH: •HOW MUCH LONGER WILL IT TAKE THE FEDERAL RESERVE BOARD TO ATTAIN ITS GOAL OF 2% INFLATION? •WILL RECENT STRONG EMPLOYMENT GROWTH KEEP INFLATION HIGHER THAN THE 2% GOAL? •WHEN WILL THE FEDERAL RESERVE BOARD START TO REDUCE INTEREST RATES? HOUSING PAYMENT, INVENTORY AND PRICE OUTLOOK: •HOW HAVE ANNUAL HOUSING PAYMENTS FOR NEW HOMEOWNERS CHANGED SINCE 2018? •HOW IS HOUSING INVENTORY IMPACTED BY EXISTING HOMEOWNERS NOT MOVING DUE TO HIGHER INTEREST RATES? •HOW MUCH MIGHT PRICES / MORTGAGE RATES NEED TO DECLINE FOR THE MARKET TO RETURN TO NORMAL BY END OF 2025? LOCAL HOUSING TYPE SHIFT AND ABSORPTION: •THE HOUSING MARKET HAS SHIFTED FROM NEW FOR-SALE PROJECTS TO NEW MULTIFAMILY APARTMENT RENTALS • HOW LONG WILL IT TAKE THE FORTHCOMING NEW APARTMENT UNITS TO BE ABSORBED IN THE MARKETPLACE? WAREHOUSE/DISTRIBUTION FACILITIES: RECENT MARKET CONDITIONS AND NEW ABSORPTION: WHY IS RANCHO CUCAMONGA EXPERIENCING STRONG ABSORPTION, DESPITE THE OVERALL MARKET MODERATING? 6 Page 24 EMPIRICAL FOUNDATION: SPECIFIC DATA FOR RANCHO CUCAMONGA *PRIMARY DATA COMPILED BY EMPIRE ECONOMICS SPECIFICALLY FOR THE CITY* EMPLOYMENT AND PAYROLL DATA SPECIFICALLY FOR THE CITY EMPLOYMENT BY FIRMS LOCATED IN THE CITY – INCLUDES CITY HOUSEHOLDS AND THOSE COMMUTING INTO THE CITY EMPLOYMENT FOR HOUSEHOLDS RESIDING IN THE CITY – EITHER FOR FIRMS IN THE CITY OR ELSEWHERE TOTAL EMPLOYMENT, RECENT TRENDS AND PATTERNS FOR EACH ECONOMIC SECTOR, PAYROLL LEVELS AND RECENT EMPLOYMENT CHANGES MARKET SURVEYS OF APARTMENT PROJECTS IN THE CITY ACTIVE-LEASING, UNDER CONSTRUCTION, GRADING AND PLANNING DEPARTMENT – APPROVAL STATUS FOR ACTIVE-LEASING, RENT LEVELS AND LEASING STATUS SITE VISITS FOR WAREHOUSE/DISTRIBUTION PROJECTS CURRENT DEVELOPMENT CONDITION OF THE PROPERTIES STATUS OF DEVELOPMENT APPROVALS – CITY PLANNING DEPARTMENT 7 Page 25 I. OVERVIEW OF THE FEDERAL RESERVE BOARD (FRB) GOAL OF 2% INFLATION EMPIRE ECONOMICS (EMPIRE) ANNUAL ECONOMIC AND HOUSING MARKET STUDY FOR FORECASTING RANCHO CUCAMONGA’S EMPLOYMENT AND HOUSING IS BASED UPON THE IMPACTS OF THE FEDERAL RESERVE BOARD (FRB/FED) GOAL OF 2% INFLATION. TO IDENTIFY AND QUANTIFY THE IMPACTS OF THE FED’S POLICIES, EMPIRE COMPILED PRIMARY DATA SPECIFICALLY FOR RANCHO CUCAMONGA (RC) WHICH INCLUDES EMPLOYMENT BY SECTOR AS WELL AS THE MARKETS FOR NEW APARTMENTS AND NEW WAREHOUSE/DISTRIBUTION FACILITIES. EMPIRE FORMULATED A MACROECONOMIC MODEL SPECIFICALLY FOR RANCHO CUCAMONGA TO FORECAST THE EMPLOYMENT- HOUSING IMPACTS FROM THE FED’S POLICY OF ATTAINING/APPROACHING A 2% INFLATION RATE NEAR-TERM FED RESTRICTIVE POLICIES HAVE/WILL RESULT IN SIGNIFICANTLY HIGHER MORTGAGE/FINANCIAL RATES AS WELL AS A SLIGHTLY HIGHER UNEMPLOYMENT RATE. INTERMEDIATE-TERM FED STABILIZATION POLICIES ONCE THE 2% INFLATION RATE IS ATTAINED/APPROACHED WILL RESULT IN LOWER FINANCIAL INTEREST RATES. JANUARY 31, 2024 THE FED’S OPEN MARKET COMMITTEE STATEMENT: “THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT” THEREFORE, ALTHOUGH THE SHORT RUN IMPACTS OF THE FED POLICY HAVE SOME ADVERSE EMPLOYMENT IMPACTS AS WELL AS SIGNIFICANT IMPACTS ON THE HOUSING MARKET, THE EVENTUAL RETURN TO AN INFLATION RATE OF 2% WILL RESULT IN GENERALLY LOWER INTEREST RATES THAT WILL ENABLE THE ECONOMY AND HOUSING MARKET TO RECOVER. 8 Page 26 •CONSUMER PRICE INDEX (CPI) MEASURES THE CHANGE IN THE PRICE OF A FIXED BASKET OF GOODS AND SERVICES DECLINED FROM A PEAK OF 9.1% IN JUNE 2022 TO 3.4% IN DECEMBER 2023. •THE FRB TARGET OF 2.0% INFLATION UTILIZES THE CORE PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX (PCE-PI) WHICH CAPTURES A CHANGING BASKET OF GOODS AND SERVICES, REFLECTING CONSUMER BEHAVIOR TO PRICE CHANGES. DECLINED FROM A PEAK OF 7.1% IN JUNE 2022 TO 2.6% IN DECEMBER 2023. RECENT TRENDS/PATTERNS FOR INFLATION RATES 1.9% 5.3% 7.5% 8.5% 9.1% 8.2% 7.1% 6.4% 5.0% 4.0% 3.0% 3.7%3.2%3.4% 2.1% 4.7% 6.1% 6.8%7.1% 6.6% 5.9%5.5% 4.4% 4.0%3.2% 3.4%2.9%2.6% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2 0 2 1 - Q 1 2 0 2 1 - Q 2 2 0 2 1 - Q 3 2 0 2 1 - Q 4 2 0 2 2 - J a n . 2 0 2 2 - F e b . 2 0 2 2 - M a r . 2 0 2 2 - A p r . 2 0 2 2 - M a y 2 0 2 2 - J u n e 2 0 2 2 - J u l y 2 0 2 2 - A u g . 2 0 2 2 - S e p t . 2 0 2 2 - O c t . 2 0 2 2 - N o v . 2 0 2 2 - D e c . 2 0 2 3 - J a n . 2 0 2 3 - F e b . 2 0 2 3 - M a r . 2 0 2 3 - A p r . 2 0 2 3 - M a y . 2 0 2 3 - J u n e 2 0 2 3 - J u l y 2 0 2 3 - A u g . 2 0 2 3 - S e p t . 2 0 2 3 - O c t . 2 0 2 3 - N o v . 2 0 2 3 - D e c . I N F L A T I O N I N D E X - Y E A R O V E R Y E A R C H A N G E B Y Q U A R T E R A N D M O N T H L Y COMPARISON OF INFLATION RATES INFLATION IS LOWER THAN ITS JUNE PEAK AND IS NEARING IT'S 2% TARGET CPI - INFLATION RATE (MOST FAMILIAR)PCE-PI INFLATION RATE (FED)9 Page 27 CURRENT FRB MONETARY POLICIES EXPECTED TO REDUCE CORE INFLATION TO THE 2% GOAL BY 2026 SOURCE: FEDERAL OPEN MARKET COMMITTEE, ECONOMIC PROJECTIONS, DECEMBER 13, 2023 TABLE 1 MEDIAN 2.1% 4.1% 4.7% 5.9% 6.8% 7.1% 6.6% 5.5% 4.0% 3.2%3.4% 2.6%2.4%2.2%2.0% 0% 1% 2% 3% 4% 5% 6% 7% 8% 2 0 2 1 - Q 1 2 0 2 1 - Q 2 2 0 2 1 - Q 3 2 0 2 1 - Q 4 2 0 2 2 - J a n . 2 0 2 2 - F e b . 2 0 2 2 - M a r . 2 0 2 2 - A p r . 2 0 2 2 - M a y 2 0 2 2 - J u n e 2 0 2 2 - J u l y 2 0 2 2 - A u g . 2 0 2 2 - S e p t . 2 0 2 2 - O c t . 2 0 2 2 - N o v . 2 0 2 2 - D e c . 2 0 2 3 - J a n . 2 0 2 3 - F e b . 2 0 2 3 - M a r . 2 0 2 3 - A p r . 2 0 2 3 - M a y . 2 0 2 3 - J u n e 2 0 2 3 - J u l y 2 0 2 3 - A u g . 2 0 2 3 - S e p t . 2 0 2 3 - O c t . 2 0 2 3 - N o v . 2 0 2 3 - D e c . 2 0 2 4 2 0 2 5 2 0 2 6 I N F L A T I O N M E A S U E E S - Y E A R O V E R Y E A R C H A N G E B Y Q U A R T E R , M O N T H L Y , A N D F O R E A C S T E D INFLATION -PERSONAL CONSUMPTION EXPENDITURE PRICE INDEX AND CORE PCE FED FORECAST DECLINED BUT STILL HIGHER THAN THE FED'S TARGET OF 2.0% PCE-PI INFLATION RATE (FED)FED FORECAST PROBABLE - CORE PCE INFLATION RECENT TRENDS MAY POSSIBLY RESULT IN 2.0% SOONER 10 Page 28 FEDERAL FUNDS RATE IS CURRENTLY ABOUT 5.3% UNEMPLOYMENT RATE EXPECTED TO PEAK AT ABOUT 4.1% DURING 2024– 2026 SOURCE: FEDERAL OPEN MARKET COMMITTEE, ECONOMIC PROJECTIONS, DECEMBER 13, 2023 TABLE 1 MEDIAN RATE CUTS EXPECTED BUT SPECIFIC TIMING DEPENDS ON MORE EVIDENCE OF INFLATION APPROACHING 2% 4.4% 5.4% 4.6% 3.6% 2.9% 2.5% 0% 1% 2% 3% 4% 5% 6% FEDERAL FUNDS RATE FORECAST SCENARIOS HIGHER FED FUND RATE INCREASES MORTGAGE RATES PROBABLE - FED RATE 3.6%3.8% 4.1%4.1%4.1%4.1% 0% 1% 2% 3% 4% 5% 6% FEDERAL FUNDS RATES AND UNEMPLOYMENT FORECAST SCENARIOS HIGHER UNEMPLOYMENT RATE REDUCES HOUSING DEMAND PROBABLE UNEMPLOY % IN JAN 2023 AND APRIL 2023, UNEMPLOYMENT RATE REACHED A LOW OF 3.4% JANUARY 31, 2024 THE FED’S OPEN MARKET COMMITTEE STATEMENT: “THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY TOWARD 2 PERCENT” 11 Page 29 II. EXPECTED IMPACTS ON THE ECONOMY/EMPLOYMENT THE CITY’S ECONOMY HAS RECENTLY RECOVERED FROM THE IMPACTS OF COVID, AND THIS HAS RESULTED IN A RESTRUCTURING OF THE ECONOMIC SECTORS: AMONG THE RELATIVELY STRONG SECTORS, ADMINISTRATIVE/SUPPORT IS MUCH HIGHER THAN PRE-COVID AMONG THE RELATIVELY WEAK SECTORS, MANUFACTURING IS MUCH LOWER THAN PRE-COVID THE FED’S POLICIES WILL HAVE ANOTHER RESTRUCTURING IMPACT DURING THE NEXT SEVERAL YEARS, WITH THE SECTORS THAT WERE THE MOST IMPACTED, SUCH AS: REAL ESTATE DUE TO SIGNIFICANTLY HIGHER MORTGAGE RATES, BUT MORTGAGES RATES WILL DECLINE FINANCE DUE TO HIGHER INTEREST RATES OVERALL, BUT OVERALL RATES ARE EXPECTED TO DECREASE ACCORDINGLY, BASED UPON THE COMPOSITION OF THE CITY’S ECONOMIC BASE, EMPIRE IDENTIFIES THE DEGREE TO WHICH SPECIFIC SECTORS WILL BE IMPACTED AS WELL AS THE AGGREGATE LEVELS OF EMPLOYMENT: POTENTIAL CHANGES IN THE LEVELS OF EMPLOYMENT BY SECTORS FORECASTS OF AGGREGATE EMPLOYMENT CHANGES, ANNUALLY 12 Page 30 RECENT EMPLOYMENT TRENDS BY VARIOUS GEOGRAPHIC AREAS •SINCE MARCH 2020, COVID-19 HAS DRAMATICALLY IMPACTED THE ECONOMY/EMPLOYMENT IN UNIQUE WAYS •APRIL 2020: EMPLOYMENT DECLINED SIGNIFICANTLY, BY -18% FOR THE CITY •STARTING IN MAY OF 2020, EMPLOYMENT HAD A RECOVERY, SURPASSING ITS PRE-COVID LEVELS IN NOVEMBER 2021 •AS OF DECEMBER 2023, THE CITY IS ALMOST +10% ABOVE ITS PRE-COVID LEVELS •THE CITY'S EMPLOYMENT RECOVERY HAS BEEN SIMILAR TO RIV-SB BUT STRONGER THAN CALIFORNIA 80% 82% 84% 86% 88% 90% 92% 94% 96% 98% 100% 102% 104% 106% 108% 110% J a n . - F e b . 2 0 2 0 2 0 - A p r 2 0 - J u n 2 0 - A u g 2 0 - O c t 2 0 - D e c 2 1 - F e b 2 1 - A p r 2 1 - J u n 2 1 - A u g 2 1 - O c t D e c - 2 1 F e b - 2 2 A p r - 2 2 J u n - 2 2 A u g - 2 2 O c t - 2 2 D e c - 2 2 F e b - 2 3 A p r - 2 3 J u n - 2 3 A u g - 2 3 O c t - 2 3 D e c - 2 3 % T O T A L N O N F A R M E M P L O Y M E N T V S . P R E - C O V I D L E V E L S ( J A N . - F E B . 2 0 2 0 ) NONFARM EMPLOYMENT % BY MONTH VS. PRE-COVID (JAN.-FEB 2020) BASELINE: RANCHO CUCAMONGA, CALIFORNIA, AND RIV-SB Rancho Cucamonga Riverside-San Bernardino MSA California Empire Economics PRECIPITOUS DECLINE RECOVERING NEW HIGHS 13 Page 31 UNEMPLOYMENT RATES: HISTORICALLY AND RECENTLY UNEMPLOYMENT RATES BY GEOGRAPHIES (DEC. 2023) •RANCHO CUCAMONGA HAD AN UNEMPLOYMENT RATE (3.7%) BELOW THAT OF SAN BERNARDINO COUNTY (5.0%) BUT SLIGHTLY ABOVE THAT OF THE UNITED STATES (3.5%) •THE CITY’S RELATIVELY LOW UNEMPLOYMENT RATE REDUCES THE SUPPLY OF ITS AVAILABLE WORKERS RANCHO CUCAMONGA MONTHLY UNEMPLOYMENT RATES (JANUARY 2010 – DECEMBER 2023) •CITY’S RATE DECLINED FROM 10% IN 2010 TO 2.6% IN DEC. 2019 •COVID-19 CAUSED THE RATE TO RISE TO 12.9% IN MAY 2020 •AS THE ECONOMY RECOVERED, THE RATE WAS 2.6% IN MAY 2022 •MOST RECENTLY, THE RATE WAS 3.7% IN DEC. 2023 3.7% 5.0% 3.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Rancho Cucamonga San Bernardino County United States RECENT UNEMPLOYMENT RATES -RANCHO CUCAMONGA, SAN BERNARDINO COUNTY AND UNITED STATES (DEC. 2023 -PRELIMINARY) 10.1% 2.6% 12.9% 2.6% 3.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 2 0 1 0 - J a n 2 0 1 0 - J u l 2 0 1 1 - J a n 2 0 1 1 - J u l 2 0 1 2 - J a n 2 0 1 2 - J u l 2 0 1 3 - J a n 2 0 1 3 - J u l 2 0 1 4 - J a n 2 0 1 4 - J u l 2 0 1 5 - J a n 2 0 1 5 - J u l 2 0 1 6 - J a n 2 0 1 6 - J u l 2 0 1 7 - J a n 2 0 1 7 - J u l 2 0 1 8 - J a n 2 0 1 8 - J u l 2 0 1 9 - J a n 2 0 1 9 - J u l 2 0 2 0 - J a n 2 0 2 0 - J u l 2 0 2 1 - J a n 2 0 2 1 - J u l 2 0 2 2 - J a n 2 0 2 2 - J u l y 2 0 2 3 - J a n 2 0 2 3 - J u l y CITY OF RANCHO CUCAMONGA: MONTHLY UNEMPLOYMENT RATE (JANUARY 2010 -DECEMBER 2023) Dec. 2019 May 2020 May 2010 Dec. 2023 May 2022 14 Page 32 COMPOSITION OF RANCHO CUCAMONGA EMPLOYMENT BY SECTOR (2023-EST.) •ABOUT 38% OF JOBS ARE IN ADMINISTRATIVE SUPPORT SERVICES, GOVERNMENT AND RESTAURANT/HOTELS •ABOUT 20% OF JOBS ARE IN RETAIL TRADE AND MANUFACTURING Administrative-Support Services, 13.1% Restaurants/Hotels, 12.2% Government, 12.4% Retail Trade, 9.9%Manufacturing, 9.9% Health Care, 8.7% Construction, 7.2% Wholesale Trade, 6.4% Professional Services, 5.0% Transportation/Warehouse, 4.1% Finance & Insurance, 3.6% Real Estate, 2.4% Other Services, 2.6% Educational Services, 1.1%Arts, Entertainment, 0.7% Management Services, 0.4% Information, 0.4% RANCHO CUCAMONGA: SHARES OF EMPLOYMENT BY ECONOMIC SECTORS IN 2023-EST. (SECTOR EMPLOYMENT / TOTAL EMPLOYMENT) 15 Page 33 RANCHO CUCAMONGA EMPLOYMENT BY SECTORS: COVID RESTRUCTURING IMPACTS (2023-EST. VS. 2019 PRE-COVID) •SECTOR WITH BIGGEST JOB ADDITIONS FOR 2023-EST. VS. 2019: ADMINISTRATIVE SUPPORT +1,443 •SECTOR WITH BIGGEST JOB LOSES FOR 2023-EST. VS. 2019: MANUFACTURING -1,320 1,443 837 645 638 90 -203 -245 -254 -1,320 990 640 354 198 9 -89 -392 -416 -2,000 -1,500 -1,000 -500 0 500 1,000 1,500 2,000 CORE SECTORS (+1,631) Administrative-Support Services Wholesale Trade Restaurants/Hotels Professional Services Information Transportation/Warehouse Construction Management Services Manufacturing SUPPORT SECTORS (+1,294) Government Health Care Real Estate Educational Services Arts, Entertainment Other Services Finance & Insurance Retail Trade RANCHO CUCAMONGA: CHANGE IN LEVELS OF EMPLOYMENT FROM 2019 TO 2023-EST. BY ECONOMIC SECTOR 16 Page 34 RANCHO CUCAMONGA EMPLOYMENT BY SECTORS (2023-EST. VS. 2022 SALARIES) •OVERALL AVERAGE SALARY FOR 2023: 0.4% INCREASE FROM 2023-EST. VS. 2022 •SECTORS WITH HIGHEST GROWTH IN WAGE : TRANSPORTATION/WAREHOUSE, MANAGEMENT SERVICES, AND RESTAURANTS/HOTELS •SECTORS WITH HIGHEST DECLINES IN WAGE: ART AND ENTERTAINMENT, CONSTRUCTION, AND INFORMATION 0.4% 12.7% 12.3% 6.8% 4.8% 2.1% -0.9% -2.2% -7.2% -8.7% 6.3% 5.2% 4.8% 4.7% 1.8% 0.2% -1.9%-31.9% -35%-30%-25%-20%-15%-10%-5%0%5%10%15% Overall - Avg. CORE SECTORS Transportation/Warehouse Management Services Restaurants/Hotels Administrative-Support Services Wholesale Trade Manufacturing Professional Services Information Construction SUPPORT SECTORS Educational Services Retail Trade Government Finance & Insurance Real Estate Other Services Health Care Arts, Entertainment RANCHO CUCAMONGA: AVERAGE PAYROLL CHANGE PER EMPLOYEE BY ECONOMIC SECTOR IN 2023-EST. VS. 2022 % PAYROLL CHANGE: 2023-EST. VS. 2022 17 Page 35 RANCHO CUCAMONGA VS. CALIFORNIA: EMPLOYMENT RECOVERY BY SECTORS OVERALL, RANCHO CUCAMONGA AGGREGATE TOTAL NONFARM EMPLOYMENT IS ABOVE PRE-COVID-19 LEVELS DEC. 2023 RANCHO CUCAMONGA SECTORS AHEAD OF CALIFORNIA •INFORMATION •EDUCATION •PROFESSIONAL •ADMINISTRATIVE •GOVERNMENT •ACCOMMODATION AND FOOD SERVICE •WHOLESALE TRADE •REAL ESTATE •RETAIL TRADE DEC. 2023 RANCHO CUCAMONGA SECTORS BEHIND CALIFORNIA •HEALTHCARE •TRANSPORTATION AND WAREHOUSING •CONSTRUCTION •ARTS, ENTERTAINMENT, RECREATION •OTHER SERVICES •MANUFACTURING •FINANCE / INSURANCE •MANAGEMENT WAREHOUSE/DISTRIBUTION EMPLOYMENT WILL INCREASE SIGNIFICANTLY IN 2024 DUE TO NEW FACILITIES 25%22%19%15%13%11%10%9%8%8%7%5%4%3% -4%-5% -22% -34%-40% -30% -20% -10% 0% 10% 20% 30% 40% CALIFORNIA AND ORANGE COUNTY EMPLOYMENT RECOVERY -SECTORS DEC 2023 EMPLOYMENT LEVEL VS. PRE-COVID (JAN.-FEB. 2020) RANCHO CUCAMONGA (DEC. 2023 vs. JAN.-FEB. 2020) CALIFORNIA (DEC. 2023 vs. JAN.-FEB. 2020)RED- RANCHO CUCAMONGA GREEN – CALIFORNIA 18 Page 36 RANCHO CUCAMONGA - RECENT AND FORECASTED AGGREGATE LEVELS OF EMPLOYMENT (2000-2023-EST. RECENT & 2024-2030 FORECAST) *WITHOUT HIGH SPEED RAIL* •FOLLOWING THE DECLINE IN 2020, EMPLOYMENT INCREASED BY ~4,100 IN 2021 AND BY ~6,800 IN 2022 TO EXCEED ITS PRE-COVID LEVEL •IN 2023-EST., EMPLOYMENT IS ESTIMATED TO HAVE INCREASED BY ~500 JOBS, A MORE MODERATE GROWTH RATE. •FOR 2024-2030, BASELINE FORECAST IS FOR EMPLOYMENT TO RISE GRADUALLY BY ~1,830 JOBS / YR./AVG. TO ~92,200 IN 2030. •THE PRIMARY DRIVERS ARE THE ADMINISTRATIVE SUPPORT SERVICES AS WELL AS TRANSPORTATION/WAREHOUSING (2,800 NEW JOBS) 3 6 , 8 3 0 4 1 , 1 2 4 4 5 , 5 0 3 5 2 , 4 9 6 5 6 , 5 4 5 6 0 , 5 9 1 6 5 , 1 3 9 6 4 , 3 5 8 6 2 , 9 7 4 5 9 , 0 5 4 5 8 , 2 1 0 6 1 , 1 8 8 6 3 , 8 8 4 6 6 , 1 8 8 7 1 , 2 5 3 7 3 , 2 6 2 7 5 , 1 5 9 7 5 , 3 8 3 7 5 , 6 1 1 7 4 , 4 4 5 6 8 , 0 4 0 7 2 , 1 2 2 7 8 , 9 0 1 7 9 , 4 1 3 8 1 , 9 4 3 8 4 , 0 1 1 8 5 , 8 9 8 8 7 , 3 2 2 8 8 , 8 4 7 9 0 , 4 7 7 9 2 , 2 1 6 0 20,000 40,000 60,000 80,000 100,000 120,000 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY *BASELINE -WITHOUT HIGH SPEED RAIL* 19 Page 37 LOCATION OF EMPLOYMENT VS. AFFORDABILITY OF HOUSING *WITHOUT HIGH SPEED RAIL* •RANCHO CUCAMONGA’S HOUSEHOLDS WITH JOBS (BLUE LINE) EXCEED THE NUMBER OF JOBS BY FIRMS IN THE CITY (GREEN LINE) •ABOUT 18,000 (NET) CITY RESIDENTS COMMUTE TO JOBS OUTSIDE THE CITY, TYPICALLY AT HIGHER SALARIES THAT ENABLE THEM TO AFFORD HOUSING IN THE CITY. •THE GAP IS EXPECTED TO DECREASE TO ~13,000 BY 2030 (THIS EXCLUDES THE HIGH SPEED RAIL EMPLOYMENT) . 73,575 85,816 77,411 93,100 87,900 97,000 102,220 105,460 36,830 65,139 58,210 74,445 68,040 79,413 87,322 92,216 0 20,000 40,000 60,000 80,000 100,000 120,000 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: EMPLOYMENT BY FIRMS AND HOUSEHOLDS *BASELINE -WITHOUT HIGH SPEED RAIL* Working Households Residing in Rancho Cucamonga Firms - Employees Located in Rancho Cucamonga 20 Page 38 III. EXPECTED IMPACTS ON THE HOUSING MARKET NEAR-TERM: RESTRICTIVE FED POLICIES HAVE SIGNIFICANTLY INCREASED MORTGAGE RATES. RECENT SURGES IN MORTGAGE RATES HAVE SUBSTANTIALLY INCREASED MORTGAGE PAYMENTS FOR HOME PURCHASERS. FOR EXAMPLE, WITH A 30 YEAR FIXED RATE FOR A MORTGAGE LOAN AMOUNT OF $800,000: FOR A 2.9% MORTGAGE RATE, THE MORTGAGE INTEREST ON THE LOAN WOULD BE ABOUT $400,000. FOR A MORTGAGE RATE OF 7.7% (RECENT PEAK LEVEL), MORTGAGE INTEREST ON THE LOAN EXCEEDS $1,200,000. THE MAJORITY OF HOMEOWNERS THAT HAVE PURCHASED/REFINANCED THEIR MORTGAGE LOANS AT HISTORICALLY LOW RATES ARE NOW RELUCTANT TO PURCHASE ANOTHER HOME WITH A MUCH HIGHER NEW MORTGAGE RATE. PURCHASERS OF HOMES WILL LIKELY HAVE A MUCH HIGHER MORTGAGE RATE. FURTHERMORE, MOVE-UP PURCHASERS WILL ALSO NEED TO FIND A BUYER FOR THEIR CURRENT HOME THAT CAN AFFORD A HIGHER MORTGAGE RATE. EVENTUALLY AS INFLATION RETURNS TO 2% AND MORTGAGE RATES DECLINE, THE MARKET FOR HOME SALES WILL RECOVER. FINANCIAL MARKETS WILL REACT POSITIVELY TO THE FED BEING ON A SUSTAINED PATH TO SUCCESSFULLY ACCOMPLISH THE 2% INFLATION TARGET. SUCH LOWER INFLATION RATES, IN TURN, SHOULD RESULT IN LOWER MORTGAGE RATES. THE HOUSING MARKET WILL RECOVER AND EVENTUALLY RETURN TO A NORMAL LEVEL OF SALES. 21 Page 39 CONSUMER SENTIMENT (JAN. 2013 – JAN. 2024) •CONSUMER SENTIMENT WAS BETWEEN ~75 AND 100 FROM 2013 THROUGH 2019 •SENTIMENT FELL FROM JANUARY 2020 AT 101 TO A RECENT MINIMUM OF 50 IN JUNE 2022 •SINCE THEN SENTIMENT HAS RISEN TO 79 AS OF JAN. 2024 (PRELIMINARY) 101 50 79 0 20 40 60 80 100 120 2 0 1 3 - 0 1 - 0 1 2 0 1 3 - 0 7 - 0 1 2 0 1 4 - 0 1 - 0 1 2 0 1 4 - 0 7 - 0 1 2 0 1 5 - 0 1 - 0 1 2 0 1 5 - 0 7 - 0 1 2 0 1 6 - 0 1 - 0 1 2 0 1 6 - 0 7 - 0 1 2 0 1 7 - 0 1 - 0 1 2 0 1 7 - 0 7 - 0 1 2 0 1 8 - 0 1 - 0 1 2 0 1 8 - 0 7 - 0 1 2 0 1 9 - 0 1 - 0 1 2 0 1 9 - 0 7 - 0 1 2 0 2 0 - 0 1 - 0 1 2 0 2 0 - 0 7 - 0 1 2 0 2 1 - 0 1 - 0 3 2 0 2 1 - 0 7 - 0 8 2 0 2 2 - 0 1 - 1 0 2 0 2 2 - 0 7 - 0 1 2 0 2 3 - 0 1 - 0 1 2 0 2 3 - 0 7 - 0 1 J a n . 2 0 2 4 ( P r e l i m ) UNITED STATES CONSUMER SENTIMENT INDEX (JAN. 2020 = 100) 22 Page 40 TRENDS/PATTERNS FOR U.S. MORTGAGE RATES SINCE 2018 •MORTGAGE RATES ARE A SECONDARY DRIVER OF HOUSING DEMAND; EMPLOYMENT GROWTH IS TYPICALLY THE PRIMARY DRIVER. •MORTGAGE RATES IN NOVEMBER 2018 HAD A PRIOR PEAK OF 4.9%. •RATES THEN DECLINED TO THEIR LOWEST LEVEL OF 2.8% IN DECEMBER 2020, DUE TO FED POLICIES TO STIMULATE THE ECONOMY. •RATES REMAINED AT HISTORICALLY LOW LEVELS, BELOW 3.2%, THROUGH DECEMBER 2021. •DUE TO FED POLICIES TO REDUCE INFLATION, MORTGAGE RATES ROSE TO 7.7% IN OCTOBER 2023, BUT RECENTLY FELL TO 6.7%. 4.9% 3.7% 2.8%3.2% 6.9% 7.7% 6.7% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% J a n u a r y 2 0 1 8 A p r i l 2 0 1 8 J u l y 2 0 1 8 O c t o b e r 2 0 1 8 J a n u a r y 2 0 1 9 A p r i l 2 0 1 9 J u l y 2 0 1 9 O c t o b e r 2 0 1 9 J a n u a r y 2 0 2 0 A p r i l 2 0 2 0 J u l y 2 0 2 0 O c t o b e r 2 0 2 0 J a n u a r y 2 0 2 1 A p r i l 2 0 2 1 J u l y 2 0 2 1 O c t o b e r 2 0 2 1 J a n u a r y 2 0 2 2 A p r i l 2 0 2 2 J u l y 2 0 2 2 O c t o b e r 2 0 2 2 J a n u a r y 2 0 2 3 A p r i l 2 0 2 3 J u l y 2 0 2 3 O c t - 2 3 J a n . 2 0 2 4 3 0 - Y E A R F I X E D M O R T G A G E R A T E S UNITED STATES: 30-YEAR FIXED MORTGAGE RATES (JAN. 2018 -JAN 2024 BY MONTH) 23 Page 41 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% 5.50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2 0 1 3 Q 1 2 0 1 3 Q 3 2 0 1 4 Q 1 2 0 1 4 Q 3 2 0 1 5 Q 1 2 0 1 5 Q 3 2 0 1 6 Q 1 2 0 1 6 Q 3 2 0 1 7 Q 1 2 0 1 7 Q 3 2 0 1 8 Q 1 2 0 1 8 Q 3 2 0 1 9 Q 1 2 0 1 9 Q 3 2 0 2 0 Q 1 2 0 2 0 Q 3 2 0 2 1 Q 1 2 0 2 1 Q 3 2 0 2 2 Q 1 2 0 2 2 Q 3 2 0 2 3 Q 1 2 0 2 3 Q 3 A V E R A G E I N T E R E S T R A T E A T T I M E O F O R I G I N A T I O N ( F O R A L L C A L I F O R N I A M O R T G A G E S ) - - - - - * L I N E * C U R R E N T C O N T R A C T I N T E R E S T R A T E ( F O R A L L C A L I F O R N I A M O R T G A G E S ) - - - - * S H A D I N G * CALIFORNIA CURRENT CONTRACT INTEREST RATE FOR ALL MORTAGES BY PERCENT GROUP BY QUARTER (2013Q1 -2023Q3) Below 3%3-4%4-5%5-6%Above 6%Average Interest Rate OUTSTANDING RESIDENTIAL MORTGAGE STATISTICS (2013Q1 – 2023Q3) FROM 2013Q1 TO 2023 Q3, FOR CALIFORNIA HOMEOWNERS CHANGES IN MORTGAGE RATE SHARES MORTGAGE RATES OF 6.0% OR LESS, ROSE TO 73% TO 92% MORTGAGE RATES OF 5.0% OR LESS, ROSE FROM 49% TO 85% MORTGAGE RATES OF 4.0% OR LESS, ROSE FROM 23% TO 68% MORTGAGE RATE OF 3.0% OR LESS, ROSE FROM 3% TO 30% 85% 68% 30% 92% 73% 49% 23% 3% 24 Page 42 RANCHO CUCAMONGA – ANNUAL HOUSING PAYMENTS BY MONTH (JAN. 2018 – DEC. 2025 FORECAST) ANNUAL HOUSING PAYMENTS REPRESENT THE SUM OF MORTGAGE PRINCIPAL, MORTGAGE INTEREST RATES AND PROPERTY TAXES 2019-2021: LOWER RATES OFFSET HOUSING APPRECIATION, PAYMENTS OF $40,000/YR. 2022-23: HIGHER PRICES AND HIGHER MORTGAGE RATES DROVE PAYMENTS HIGHER WITH PEAK PAYMENTS OF $60,000/YR. ANNUAL HOUSING PAYMENT LEVELS 2024-2025: FOR PAYMENTS TO RETURN TO THEIR 2019-2022 LEVELS OF $40,000/YR., HOUSING PRICES WOULD NEED TO DECLINE BY -11% ** AND ** MORTGAGE RATES WOULD NEED TO DECLINE TO 4.5% $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 1 / 1 / 2 0 1 8 5 / 1 / 2 0 1 8 9 / 1 / 2 0 1 8 1 / 1 / 2 0 1 9 5 / 1 / 2 0 1 9 9 / 1 / 2 0 1 9 1 / 1 / 2 0 2 0 5 / 1 / 2 0 2 0 9 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 5 / 1 / 2 0 2 1 9 / 1 / 2 0 2 1 1 / 1 / 2 0 2 2 5 / 1 / 2 0 2 2 9 / 1 / 2 0 2 2 1 / 1 / 2 0 2 3 5 / 1 / 2 0 2 3 9 / 1 / 2 0 2 3 1 / 1 / 2 0 2 4 5 / 1 / 2 0 2 4 9 / 1 / 2 0 2 4 1 / 1 / 2 0 2 5 5 / 1 / 2 0 2 5 9 / 1 / 2 0 2 5 A N N U A L H O U S I N G P A Y M E N T A M O U N T S ( I N 2 0 2 4 $ ) RANCHO CUCAMONGA (JAN. '18 -DEC. '25-F) -ESTIMATED ANNUAL HOUSING PAYMENT COMPONENTS (MORTGAGE INTEREST + MORTGAGE PRINCIPAL + PROPERTY TAXES) PROPERTY TAX MORTG-PRINCIPAL MORTG-INTEREST MORTGAGE INTEREST RATES MORTGAGE PRINCIPAL (HOUSING PRICE APPRECIATION) PROPERTY TAXES (HOUSING PRICE APPRECIATION)EMPIRE ECONOMICS ~$40K + ~50% DEC. 2021 DEC. 2023 DEC. 2025 ~$60K ~$40K DEC 2023 TO DEC. 2025 PRICES -11% WITH MORTGAGE RATES TO 4.5% 25 Page 43 RANCHO CUCAMONGA – SHARE OF ANNUAL HOUSING PAYMENTS BY MONTH (JAN. 2018 – DEC. 2025F) ANNUAL HOUSING PAYMENTS = MORTGAGE PRINCIPAL + MORTGAGE INTEREST + PROPERTY TAXES FOR THE FIRST YEAR •JAN. 2018: MORTGAGE INTEREST PAYMENT SHARE MADE UP ABOUT 34% OF THE TOTAL ANNUAL HOUSING PAYMENT •JAN. 2018 TO DEC. 2020: MORTGAGE INTEREST PAYMENT SHARE DECLINED TO 28%: RATES FELL AND PRINCIPAL SHARE ROSE WITH PRICES •DEC. 2020 TO DEC. 2023: MORTGAGE INTEREST RATE SHARE ROSE TO 49% AS MORTGAGE RATES ROSE •PURCHASERS OF HOMES AT CURRENT RATES HAVE ALMOST TWICE AS MUCH MORTGAGE INTEREST THAN AT THE LOW RATES 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 / 1 / 2 0 1 8 5 / 1 / 2 0 1 8 9 / 1 / 2 0 1 8 1 / 1 / 2 0 1 9 5 / 1 / 2 0 1 9 9 / 1 / 2 0 1 9 1 / 1 / 2 0 2 0 5 / 1 / 2 0 2 0 9 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 5 / 1 / 2 0 2 1 9 / 1 / 2 0 2 1 1 / 1 / 2 0 2 2 5 / 1 / 2 0 2 2 9 / 1 / 2 0 2 2 1 / 1 / 2 0 2 3 5 / 1 / 2 0 2 3 9 / 1 / 2 0 2 3 1 / 1 / 2 0 2 4 5 / 1 / 2 0 2 4 9 / 1 / 2 0 2 4 1 / 1 / 2 0 2 5 5 / 1 / 2 0 2 5 9 / 1 / 2 0 2 5 A N N U A L H O U S I N G P A Y M E N T S H A R E S ( I N 2 0 2 3 $ ) RANCHO CUCAMONGA (JAN. '18 -DEC. '25-F) -ESTIMATED ANNUAL HOUSING PAYMENT COMPONENTS (MORTGAGE INTEREST + MORTGAGE PRINCIPAL + PROPERTY TAXES) PROPERTY TAX MORTG-PRINCIPAL MORTG-INTEREST MORTGAGE PRINCIPAL (HOUSING PRICE APPRECIATION) PROPERTY TAXES (HOUSING PRICE APPRECIATION)EMPIRE ECONOMICS JAN. 2018 DEC 2023 DEC. 2025 MORTGAGE INTEREST RATES 34% DEC 2021 45% 20% 28% 50% 22% 49% 35% 16% 37% 44% 20% DEC 2023 TO DEC. 2025 PRICES -11% WITH MORTGAGE RATES TO 4.5% 26 Page 44 RANCHO CUCAMONGA – MORTGAGE INTEREST PAYMENTS (JAN. 2020– DEC. 2025F) FOR A ~$800,000 HOUSE PURCHASE, HOUSEHOLDS THAT USED A 3% MORTGAGE RATE IN 2021 HAVE MORTGAGE INTEREST RATE PAYMENTS OF ABOUT $11,500 A YEAR IF SUCH A HOUSEHOLD WERE TO PURCHASE A SIMILAR PRICE HOME IN JANUARY 2024, WITH A 6.7% MORTGAGE RATE. THIS PAYMENT WOULD BE +$29,500 A YEAR SO THE HOUSEHOLD HAS A STRONG INCENTIVE TO STAY IN THEIR CURRENT HOME HOWEVER, AS MORTGAGE RATES DECLINE TO 4.5%, THE PAYMENT IN DEC. 2025 WOULD BE ~$17,800 A YEAR (ADJUSTED FOR INFLATION) THEREFORE, AS MORTGAGE RATES DECLINE, THE INCENTIVES FOR HOMEOWNERS TO STAY IN THEIR CURRENT HOMES WITH HISTORICALLY LOW RATES DIMINISHES, AND SO THE SUPPLY OF HOMES FOR-SALE INCREASES. 27 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 1 / 1 / 2 0 2 0 4 / 1 / 2 0 2 0 7 / 1 / 2 0 2 0 1 0 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 4 / 1 / 2 0 2 1 7 / 1 / 2 0 2 1 1 0 / 1 / 2 0 2 1 1 / 1 / 2 0 2 2 4 / 1 / 2 0 2 2 7 / 1 / 2 0 2 2 1 0 / 1 / 2 0 2 2 1 / 1 / 2 0 2 3 4 / 1 / 2 0 2 3 7 / 1 / 2 0 2 3 1 0 / 1 / 2 0 2 3 1 / 1 / 2 0 2 4 4 / 1 / 2 0 2 4 7 / 1 / 2 0 2 4 1 0 / 1 / 2 0 2 4 1 / 1 / 2 0 2 5 4 / 1 / 2 0 2 5 7 / 1 / 2 0 2 5 1 0 / 1 / 2 0 2 5 M O R T G A G E I N T E R E S T P A Y M E N T - A N N U A L L Y RANCHO CUCAMONGA (JAN. '20 -DEC. '25-F) -MORTGAGE INTEREST MORTGAGE HOMEOWNERS WITH HISTORICALLY LOW RATES (~$800K PRICED HOME OVER TIME) MORTG-INTEREST MORTG-INTEREST - ABOVE HISTORICAL LOW MORTGAGE INTEREST PAYMENTS - HISTORICALLY LOW ($11,500) EMPIRE ECONOMICS MORTGAGE INTEREST PAYMENTS -ABOVE HISTORICALLY LOW $11,500/YR. $17,800/YR. $29,500/YR. Page 45 RANCHO CUCAMONGA HOUSING SUPPLY, DEMAND, AND PRICE APPRECIATION (JAN. 2018 – DEC. 2023) A. IN 2018 TO EARLY 2020, THE CITY HOUSING INVENTORY (SUPPLY/RED) WAS HIGHER THAN PENDING SALES (DEMAND/GREEN), NORMAL B. HOWEVER, BEGINNING IN 2ND QUARTER OF 2020, HOUSING DEMAND AND SUPPLY STARTED TO CONVERGE AND MET IN 2021 C. ONCE SUPPLY AND DEMAND CURVES STARTED TO CONVERGE, THIS RESULTED IN A SIGNIFICANT INCREASE IN PRICE APPRECIATION D. DURING 2022, INVENTORY EXCEEDED PENDING SALES, CLOSER TO NORMAL PATTERNS, BUT INVENTORY IS STILL LOW DUE TO HIGH RATES E. DURING 2023, WITH HIGH MORTGAGE RATES, INVENTORY DECLINED TO LEVELS ONLY SLIGHTLY ABOVE SALES 28 3% 30% 41%46% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2 0 1 8 - 0 3 - 0 1 2 0 1 8 - 0 6 - 0 1 2 0 1 8 - 0 9 - 0 1 2 0 1 8 - 1 2 - 0 1 2 0 1 9 - 0 3 - 0 1 2 0 1 9 - 0 6 - 0 1 2 0 1 9 - 0 9 - 0 1 2 0 1 9 - 1 2 - 0 1 2 0 2 0 - 0 3 - 0 1 2 0 2 0 - 0 6 - 0 1 2 0 2 0 - 0 9 - 0 1 2 0 2 0 - 1 2 - 0 1 2 0 2 1 - 0 3 - 0 1 2 0 2 1 - 0 6 - 0 1 2 0 2 1 - 0 9 - 0 1 2 0 2 1 - 1 2 - 0 1 2 0 2 2 - 0 3 - 0 1 2 0 2 2 - 0 6 - 0 1 2 0 2 2 - 0 9 - 0 1 2 0 2 2 - 1 2 - 0 1 2 0 2 3 - 0 3 - 0 1 2 0 2 3 - 0 6 - 0 1 2 0 2 3 - 0 9 - 0 1 2 0 2 3 - 1 2 - 0 1 R A N C H O C U C A M O N G A H O U S I N G P R I C E C H A N G E S I N C E J A N . 2 0 1 8 R A N C H O C U C A M O N G A P E N D I N G L I S T I N G S A N D I N V E N T O R Y RANCHO CUCAMONGA PENDING LISTINGS AND HOUSING INVENTORY, AND CUMULATIVE LAGGED 12 MONTH HOUSING PRICE CHANGE SINCE JAN. 2018 (JANUARY 2018 -DECEMBER 2023) Rancho Cucamonga Housing Price Change Rancho Cucamonga Housing Inventory Rancho Cucamonga Pending Sales AFTER FIRST YEAR OF COVID,INVENTORY FELL CLOSER TO AND EVEN BELOW PENDING SALES 2020 Q2: First Qtr. of Significant COVID EBCDA Page 46 RANCHO CUCAMONGA – HOUSING INVENTORY (SUPPLY) AND PENDING LISTINGS (DEMAND) (2018 –2023) •FOR 2018-2020 (GREEN LINES) FOR-SALE HOMES/INVENTORY WAS HIGHER THAN DEMAND/SALES, NORMAL CONDITIONS •FOR 2022 (BLUE LINES) HIGHER MORTGAGE RATES > DECLINE IN DEMAND (AFFORDABILITY) AND SUPPLY (LOW INVENTORY) •FOR 2023 (RED LINES), WITH EVEN HIGHER MORTGAGE RATES, SUPPLY AND DEMAND FELL TO NEW RECENT LOW •FOR 2023, ALTHOUGH SUPPLY IS HIGHER THAN DEMAND, IT IS ONLY SLIGHTLY HIGHER, SO THE MARKET STILL HAS EXCESS DEMAND. 0 50 100 150 200 250 300 350 400 450 500 R A N C H O C U C A M O N G A P E N D I N G L I S T I N G S A N D I N V E N T O R Y RANCHO CUCAMONGA PENDING LISTINGS (DEMAND) AND INVENTORY (SUPPLY) BY ANNUAL AVERAGE, NOT SEASONALLY ADJUSTED (2018-2020, 2022, AND 2023) 2018-2020 DEMAND/AVG 2022 DEMAND/AVG 2023 DEMAND/AVG 2018-2020 SUPPLY/AVG 2022 SUPPLY/AVG 2023 SUPPLY/AVG FOR 2023, BOTH DEMAND AND SUPPLY WERE SUBSTANTIALLY LOWER THAN NORMAL SUPPLY:2023 AVERAGE DEMAND:2023 AVERAGE 29 Page 47 RANCHO CUCAMONGA: EXISTING/NEW FOR-SALE HOMES RECENT SALES TRENDS •DURING JANUARY 2015 TO DECEMBER 2021, SALES OF DETACHED HOMES AMOUNTED TO ABOUT 120-140 PER MONTH, AND SALES OF ATTACHED HOMES AMOUNTED TO ABOUT 30-40 PER MONTH. •SINCE JANUARY 2022 SALES OF DETACHED HOMES DECLINED FROM 140/MO. TO 75/MO. IN DECEMBER 2023 WHILE THE SALES OF ATTACHED HOMES DECLINED FROM 40/MO. TO 20/MO. DURING THIS TIME PERIOD. •SPECIFICALLY, THE DECLINES CAN BE ATTRIBUTED TO EXISTING HOMEOWNERS NOT PUTTING THEIR HOMES ON THE MARKET SINCE THEY HAVE HISTORICALLY LOW MORTGAGE RATES, AND SO THE INVENTORY OF EXISTING HOMES FOR-SALE WAS CONSTRAINED. 0 20 40 60 80 100 120 140 160 180 200 J a n - 1 5 J u l - 1 5 J a n - 1 6 J u l - 1 6 J a n - 1 7 J u l - 1 7 J a n - 1 8 J u l - 1 8 J a n - 1 9 J u l - 1 9 J a n - 2 0 J u l - 2 0 J a n - 2 1 J u l - 2 1 J a n - 2 2 J u l - 2 2 J a n - 2 3 J u l - 2 3 RANCHO CUCAMONGA -EXISTING/NEW HOME SALES TRENDS MONTHLY AND MOVING AVERAGES DETACHED ATTACHED 30 Page 48 RANCHO CUCAMONGA: EXISTING/NEW FOR-SALE HOMES RECENT PRICE CHANGES •DURING JANUARY 2015 TO DECEMBER 2023, PRICES INCREASED AS FOLLOWS: •DETACHED HOME PRICES INCREASED FROM ABOUT $425,000 TO ABOUT $868,000; FOR A RATE OF 11 .6%/YR./AVG . OVER THE SEVEN YEARS •ATTACHED HOMES PRICES ROSE FROM ABOUT $290,000 TO $530,000; A TOTAL CHANGE OF 73%. FOR A RATE OF 9.3%/YR./AVG . $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 J a n - 1 5 J u l - 1 5 J a n - 1 6 J u l - 1 6 J a n - 1 7 J u l - 1 7 J a n - 1 8 J u l - 1 8 J a n - 1 9 J u l - 1 9 J a n - 2 0 J u l - 2 0 J a n - 2 1 J u l - 2 1 J a n - 2 2 J u l - 2 2 J a n - 2 3 J u l - 2 3 RANCHO CUCAMONGA -EXISTING/NEW HOME PRICE PATTERNS MONTHLY AND MOVING AVERAGES DETACHED ATTACHED 31 Page 49 RECENT SALES AND PRICES FOR NEW HOME PROJECTS •THE MARKET FOR NEW FOR-SALE HOMES PEAKED IN 2021: •SALES AMOUNTED TO 578 HOMES. •THE VALUE RATIO (PRICE/LIVING AREA) SURGED TO $428. •THE REMAINING PROJECT CLOSED OUT IN EARLY 2022. •FOR 2023 AND ALSO CURRENTLY, THERE ARE NO NEW HOME • FOR-SALE PROJECTS ON THE MARKETPLACE. 214 104 112 189 197 305 272 316 63 67 295 308 578 17 $173 $142 $179 $174 $206 $217 $236 $241 $253 $287 $290 $300 $428 0 100 200 300 400 500 600 700 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CITY OF RANCHO CUCAMONGA NEW RESIDENTIAL PROJECTS: SALES TRENDS AND PRICE PATTERNS Sale Rate - Annually Value Ratio-Avg. 32 RANCHO CUCAMONGA: NEW FOR-SALE HOMES RECENT PRICE PATTERNS AND SALES TRENDS RICHLAND TRACT: FORTHCOMING NEW HOME PROJECT SOURCE: RANCHO CUCAMONGA PLANNING DEPARTMENT “Originally approved in 2004, a development project consisting of 151 acres of land located north of Wilson Ave . between Etiwanda Ave . and East Ave . recently received approval of grading plans. The plans allow the developer to begin the grading of pads for 358 single- family homes and 22 new streets/roadways. The grading work will include the excavation of the site and the exporting and importing of soils to build the pads for the single-family homes. The grading work is expected to begin early in the first quarter of 2024 and will take some months to complete. Lot sizes will vary, with an average lot size of 11 ,000 square feet. Home designs have not yet been submitted to the City or approved by the City. Designs will be subject to review and a public hearing held by the City’s Planning Commission. Signage will be posted at the site after the application for home designs is submitted.” Page 50 IV.MARKET CONDITIONS FOR APARTMENT RENTALS THE COMPOSITION OF THE RANCHO CUCAMONGA HOUSING MARKET HAS RECENTLY UNDERGONE A SIGNIFICANT SHIFT FROM NEW FOR-SALE HOMES TO NEW APARTMENT RENTALS. RANCHO CUCAMONGA APARTMENT MARKET HAS EXPERIENCED ROBUST ACTIVITY, WITH THREE PROJECTS ON THE MARKET AND ANOTHER FOUR UNDER CONSTRUCTION/GRADING; FURTHERMORE, THREE MORE PROJECTS ARE IN THE PLANNING PROCESS. APARTMENT RENTS SURGED IN 2021 BY +20%, BUT HAVE SINCE MODERATED TO A RATE OF ABOUT 4%. WITH REGARDS TO THE HOMECOMING PROJECT, ITS RENTS DECLINED BY SOME -8.8% DURING THE PAST YEAR. THE NEW ACTIVE AND FORTHCOMING APARTMENTS HAVE A SUFFICIENT SUPPLY TO SUPPORT ABSORPTION OF ABOUT 500 UNITS ANNUALLY DURING THE FORESEEABLE FUTURE. 33 Page 51 OVERVIEW OF APARTMENT RENTAL RATE TRENDS RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY •RANCHO CUCAMONGA RENTS INCREASED FROM $1,727 IN EARLY 2015 TO $2,707 RECENTLY, + 57%. •WHILE SAN BERNARDINO COUNTY (SBC) RENTS INCREASED FROM AROUND $1,308 IN EARLY 2015 TO $2,402 RECENTLY, +84%. •SO RANCHO CUCAMONGA RENT LEVELS ARE HIGHER THAN SBC BUT THEIR PERCENTAGE CHANGE DURING 2015-2023 WAS LOWER. $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000 1 / 1 / 2 0 1 5 7 / 1 / 2 0 1 5 1 / 1 / 2 0 1 6 7 / 1 / 2 0 1 6 1 / 1 / 2 0 1 7 7 / 1 / 2 0 1 7 1 / 1 / 2 0 1 8 7 / 1 / 2 0 1 8 1 / 1 / 2 0 1 9 7 / 1 / 2 0 1 9 1 / 1 / 2 0 2 0 7 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 7 / 1 / 2 0 2 1 1 / 1 / 2 0 2 2 7 / 1 / 2 0 2 2 1 / 1 / 2 0 2 3 7 / 1 / 2 0 2 3 RECENT APARTMENT RENTAL TRENDS -EXISTING APARTMENTS RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY Rancho Cucamonga San Bernardino County 34 Page 52 OVERVIEW OF APARTMENT RENTAL APPRECIATION RATES RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY •SAN BERNARDINO COUNTY (SBC) APARTMENTS EXPERIENCED APPRECIATION OF 7.6%/AVG. ANNUALLY FROM 2016 TO 2023. •BUT FOR RANCHO CUCAMONGA (RC), APPRECIATION AMOUNTED TO 5.1%/AVG. ANNUALLY, SOMEWHAT LOWER. •IN SUMMER 2021 SBC AND RC BOTH EXPERIENCED PEAK APPRECIATION RATES OF ABOUT ~20%/yr. •HOWEVER, SINCE JANUARY 2023, BOTH SBC AND RC EXPERIENCED LOWER APPRECIATION, LESS THAN 4%/YR. •SINCE APRIL 2023, RC’S APPRECIATION RATE HAS BEEN 2-3%/YR. 0% 5% 10% 15% 20% 25% 1 / 1 / 2 0 1 6 7 / 1 / 2 0 1 6 1 / 1 / 2 0 1 7 7 / 1 / 2 0 1 7 1 / 1 / 2 0 1 8 7 / 1 / 2 0 1 8 1 / 1 / 2 0 1 9 7 / 1 / 2 0 1 9 1 / 1 / 2 0 2 0 7 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 7 / 1 / 2 0 2 1 1 / 1 / 2 0 2 2 7 / 1 / 2 0 2 2 1 / 1 / 2 0 2 3 7 / 1 / 2 0 2 3 RECENT APARTMENT RENTAL APPRECIATION -EXISTING APARTMENTS RANCHO CUCAMONGA AND SAN BERNARDINO COUNTY Rancho Cucamonga San Bernardino County 35 Page 53 RANCHO CUCAMONGA – NEW APARTMENT PROJECTS APPROXIMATE LOCATIONS A B CEFD G I H J< 36 Page 54 CHARACTERISTICS OF THE NEW APARTMENT PROJECTS CURRENTLY ACTIVE-LEASING, UNDER CONSTRUCTION & FUTURE (SOURCES: CITY OF RANCHO CUCAMONGA & EMPIRE ECONOMICS) 37 PROJECT MAP CODE LOCATION PLANNED UNITS COMMERCIAL SQ.FT.DESCRIPTION UNITS LEASED/ OCCUPIED DEVELOPMENT - PLANNING STATUS CURRENTLY ACTIVE Homecoming at the Resort A The Resort 867 5,000 867 Apartments with commercial component 492 Actively Leasing La Mirage/The Core B NWC of Foothill and East 193 3,246 193 Unit Mixed Use Development with 3,246 square feet of Commercial 25 Started Leasing November 2023 Westbury C West Side of East Avenue North of Foothill 131 1,500 133 Unit Mixed Use Project 11 Started Leasing October 2023 1,191 UNDER CONSTRUCTION Alta Curvee D SEC of Foothill Blvd and Etiwanda Ave 260 2,253 260-Unit Mixed-Use Apartments.0 Expected Opening Fall 2024 Haven and Arrow G SWC Haven and Arrow 248 23750 Mixed-use project with 248 units, 23,750 sf ground floor commercial 0 Expected Opening 2025 508 FUTURE Alexan at Victoria Gardens H Vicinity of Victoria Gardens 385 No Commercial 0 Plan Check Not Yet Grading Harvest at Terra Vista E NWC of Foothill Blvd and Milliken Ave 660 20,841 660-Unit Mixed Use Apartments with 20,841 SF of commercial 0 Entitled; Not Yet Grading Foothill Landing J NE of Foothill & Etiwanda 367 7300 Mixed-use project with 367 units, 7,300 sf. commercial 0 Entitled; Not Yet Grading 33 North F SEC of Foothill and Haven Avenue 311 16,000 311 Unit Mixed Use Development 0 Entitled; Not Yet Grading Leap Development I SW Corner Carnelian & Foothill 158 No Commercial 0 Entitled; Not Yet Grading 1,881 TOTALS 3,580 79,890 528 Page 55 RANCHO CUCAMONGA NEW APARTMENT PROJECTS CURRENTLY ACTIVE/LEASING, UNDER CONSTRUCTION AND FUTURE THERE ARE A TOTAL OF TEN ACTIVE/LEASING, UNDER CONSTRUCTION AND FUTURE APARTMENT PROJECTS THAT HAVE ENTITLEMENTS FOR 3,580 UNITS; OF THESE, 528 HAVE BEEN LEASED/OCCUPIED CURRENTLY ACTIVE 3 PROJECTS WITH 1,191 PLANNED UNITS OF WHICH 528 HAVE BEEN LEASED UNDER CONSTRUCTION; 2 PROJECTS WITH 508 UNITS FUTURE: STILL IN THE PLANNING PROCESS; 5 PROJECTS WITH 1,881 UNITS 38 867 193 131 260 248 385 660 367 311 158 0 100 200 300 400 500 600 700 800 900 1000 RANCHO CUCAMONGA NEW APARTMENT PROJECTS CURRENT PROJECT STATUS TOTAL UNITS LEASED Page 56 OVERVIEW OF RENTS FOR CURRENTLY ACTIVE NEW COMPARABLE APARTMENT PROJECTS • RANCHO CUCAMONGA APARTMENTS • THE TYPICAL/AVERAGE LIVING AREAS RANGE FROM 938 SQ.FT. FOR WESTBURY TO 1,082 SQ.F.T. FOR THE HOMECOMING •THE TYPICAL/AVERAGE RENTS RANGE FROM $2,803 PER MONTH FOR VASARI TO $3,161 PER MONTH FOR HOMECOMING •THE TYPICAL/AVERAGE RENTS/SQ.FT. RANGE FROM $2.75 FOR THE CORE TO $3.01 FOR WESTBURY FONTANA, VASARI VENTANA IS A NEW APARTMENT PROJECT LOCATED IN NORTH FONTANA, BY ROUTE 14 AND DUNCAN 1,082 1,057 938 1,025 967 $3,161 $2,958 $2,819 $2,979 $2,803 $2.92 $2.75 $3.01 $2.89 $2.90 -$5.00 -$4.00 -$3.00 -$2.00 -$1.00 $0.00 $1.00 $2.00 $3.00 $4.00 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 HOMECOMING THE CORE WESTBURY RANCHO CUCAMONGA VASARI VENTANA RANCHO CUCAMONGA & FONATNA NEW APARTMENT PROJECTS OVERVIEW OF RENTS AND SQUARE FOOTAGES LIVING AREA RENT RENT/SQ.FT.39 Page 57 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 RANCHO CUCAMONGA NEW ACTIVE APARTMENT PROJECTS APARTMENT UNIT SIZES AND RENTAL LEVELS EXCLUDING LIVE-WOK UNITS (ALSO INCLUDED VASARI IN FONTANA BUT NEARBY) HOMECOMING CORE WESTBURY VASARI-FONTANA RENTS FOR CURRENTLY ACTIVE NEW COMPARABLE APARTMENT PROJECTS RELATIONSHIP OF MONTHLY RENTS AND SIZES OF LIVING AREAS •FOR ALL OF THE NEW APARTMENT PROJECTS, RENTS INCREASE AS THE SIZE OF LIVING AREA INCREASES. •FURTHERMORE, FOR UNITS WITH SIMILAR SIZES OF LIVING AREA, THE RENTS AMONG THE VARIOUS PROJECTS TEND TO BE GENERALLY SIMILAR. 40 Page 58 RANCHO CUCAMONGA – NEW APARTMENT PROJECTS PRODUCT MIX AND RENTS NAME BEDROOMS LIVING AREA JANUARY 2024 RENTS JANUARY 2024 HOMECOMING PLANNED 867 RANCHO CUCAMONGA LEASED 492 1 825 $2,644 1 827 $2,824 1 777 $2,679 1 819 $2,744 1 821 $2,724 1 817 $2,832 1 912 $2,879 2 1,045 $3,231 2 1,046 $3,227 2 1,092 $3,252 2 1,142 $2,999 2 1,097 $3,284 2 1,112 $3,119 2 1,336 $3,539 2 1,680 $3,874 3 1,438 $3,524 3 1,602 $4,359 OVERALL/AVG.1,082 $3,161 $2.92 NAME BEDROOMS LIVING AREA JANUARY 2024 RENTS JANUARY 2024 THE CORE PLANNED 193 RANCHO CUCAMONGA LEASED 25 1 734 $2,500 1 763 $2,350 2 1,043 $2,875 2 1,127 $2,875 2 1,280 $3,270 3 1,396 $3,559 LIVE-WORK 1,968 $4,515 LIVE-WORK 2,631 $4,200 LIVE-WORK 3,185 $5,750 OVERALL/AVG.1,057 $2,905 EXCLUDING LIVE-WORK $2.75 WESTBURY PLANNED 131 RANCHO CUCAMONGA LEASED 11 1 694 $2,310 1 745 $2,340 1 765 $2,390 2 1,098 $3,070 2 1,035 $3,090 2 1,060 $3,130 2 1,167 $3,405 2 1,098 $3,485 OVERALL/AVG.938 $2,819 $3.01 41 Page 59 •MARKET DEMAND IS ESTIMATED BASED UPON THE CITY’S OVERALL EMPLOYMENT GROWTH WITH SPECIAL CONSIDERATION FOR NEWLY DEVELOPING WAREHOUSE/DISTRIBUTION FACILITIES WITH ~2,800 NEW JOBS. • ABSORPTION AMONG THE PROJECTS IS PRIORITIZED ACCORDING TO THEIR CURRENT DEVELOPMENT APPROVAL STATUS. •THE PACE OF NEW DEVELOPMENT IS EXPECTED TO OCCUR IN A SYNCHRONIZED MANNER TO MAINTAIN STABLE RENTS. •SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION. ESTIMATED ABSORPTION FOR NEW APARTMENT PROJECTS UNDER CONSTRUCTION ALTA CURVEE-260 HAVEN/ARROW-248 FUTURE PROJECTS: ALEXAN- VICTORIA GARDENS: 385 HARVEST TERRA VISTA: 660 FOOTHILL LANDING: 367 33 NORTH-311 LEAP DEVELOPMENT 158 42 208 284 250 125 0 0 0 0 25 68 0 0 0 0 11 90 30 0 0 0 0 0 0 50 0 0 0 0 0 127 121 0 0 0 0 0 329 500 552 0 100 200 300 400 500 600 2022 2023 2024 2025 2026 2027 2028 2029+ N U M B E R O F A P A R T M E N T R E N T A L ' S - A N N U A L L Y RANCHO CUCAMONGA NEW APARTMENT PROJECTS ACTIVE/LEASING, CONSTRUCTION AND FUTURE HOMECOMING THE CORE WESTBURY ALTA CURVEE-260 HAVEN/ARROW:248 FUTURE PROJECTS Page 60 ESTIMATED ABSORPTION SCHEDULES FOR NEW APARTMENT PROJECTS THE PACE OF NEW DEVELOPMENT IS EXPECTED TO OCCUR IN A SYNCHRONIZED MANNER TO MAINTAIN STABLE RENTS. SHOULD EXCESS UNITS ENTER THE MARKETPLACE, RENTS WOULD NEED TO BE LOWERED TO MAINTAIN ABSORPTION. 43 HOMECOMING THE CORE WESTBURY ALTA CURVEE-260 HAVEN/ARROW:248 FUTURE PROJECTS TOTAL PLANNED UNITS 867 193 131 260 248 1,881 3,580 2022 208 N/A N/A N/A N/A N/A 208 2023 284 25 11 N/A N/A N/A 320 2024 250 100 90 60 0 0 500 2025 125 68 30 150 127 0 500 2026 0 0 0 50 121 329 500 2027 0 0 0 0 0 500 500 2028 0 0 0 0 0 500 500 2029+0 0 0 0 0 552 552 TOTAL 867 193 131 260 248 1,881 3,580 Page 61 V. CURRENT STATE OF WAREHOUSE/DISTRIBUTION MARKET IN RANCHO CUCAMONGA THE CHARACTERISTICS OF THE RANCHO CUCAMONGA (RC) INDUSTRIAL MARKET ARE NOW DISCUSSED, AND COMPARED TO THOSE OF THE INLAND EMPIRE (IE) AS A WHOLE. WHILE WAREHOUSE/DISTRIBUTION (W/D) REPRESENTS THE MAJOR COMPONENT OF THE INDUSTRIAL PROPERTY DESCRIPTION, IT ALSO INCLUDES SOME MANUFACTURING AND RESEARCH DEVELOPMENT AS WELL. HOWEVER, SINCE THE SAME INDUSTRIAL METRICS ARE UTILIZED FOR BOTH THE INLAND EMPIRE (IE) AND RANCHO CUCAMONGA (RC) GEOGRAPHIC AREAS, THEN COMPARISONS BETWEEN THEM ARE MEANINGFUL. THE CURRENT VACANCY RATE AMOUNTS TO 3.5% FOR RC AND 4.87% FOR IE; A YEAR AGO FOR RC WAS 1.6% THE CURRENT ASKING LEASE RATE AMOUNTS TO $1.75/SQ.FT. FOR RC AND $1.41/SQ.FT. FOR IE; ABOUT A YEAR AGO RC WAS $1.50/SQ.FT THE HIGHER LEASE RATE REFLECTS THE LEASE UP ON NEWLY CONSTRUCTED BUILDINGS 44 1.6% 3.5% 0% 1% 1% 2% 2% 3% 3% 4% 4% 2022 Q4 2023 Q4 I V A C A N C Y R A T E RECENT VACANCY RATE TRENDS FOR WAREHOUSE/DISTRIBUTION SPACE IN RANCHO CUCAMONGA $1.50 $1.75 $1.35 $1.40 $1.45 $1.50 $1.55 $1.60 $1.65 $1.70 $1.75 $1.80 2023 Q1 2023 Q4 L E A S E R A T E / S Q . F T . RECENT LEASE RATE TRENDS FOR WAREHOUSE/DISTRIBUTION SPACE IN RANCHO CUCAMONGA Page 62 THE TOTAL NUMBER OF BUILDINGS AMOUNTS TO 749 FOR RC AND 8,851 FOR THE IE.; RC HAS A SHARE OF 8.5% THE AMOUNT OF SPACE AMOUNTS TO 43,128,230 SQ.FT. FOR RC AND 660,295,978 SQ.FT. FOR IE; RC HAS A SHARE OF 6.5% THE AMOUNT OF SPACE UNDER CONSTRUCTION AMOUNTS TO 761,687 FOR RC AND 27,449,208 FOR I.E: RC HAS A SHARE OF 2.7% THE RECENT GROSS ABSORPTION AMOUNTS TO 2,978,129 FOR RC AND 12,391,000 FOR I.E: RC HAS A SHARE OF 24% 12434- 4TH STREET WAREHOUSE/DISTRIBUTION WITH TWO BUILDINGS HAS 2,000,000 SQ.FT. THAT HAVE BEEN LEASED! THE NAPA/ETIWANDA WAREHOUSE/DISTRIBUTION WITH 651,000 SQ.FT. HAS BEEN BUILT AND IS BEING LEASED 2,000,000 651,000 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 NEWLY LEASED BUILT-LEASING B U I L D I N G S Q . F T . RECENT OCCUPANCY AND COMPLETION OF WAREHOUSE/DISTRIBUTION SPACE IN RANCHO CUCAMONGA 45 Page 63 Resume: Joseph T. Janczyk, Ph.D. President of Empire Economics Education: University of California, Riverside, Ph.D. in Economics, Completed in 1976 Specializations in Urban Economics, Mathematical Modeling and Econometric Analysis State University of New York at Buffalo, Bachelors, Completed in 1970 Dual Majors: Economics and Psychology Prior Employment: California State University, Tenured Economics Professor: 1976-1985 Courses Taught: Microeconomics, Macroeconomics, Urban Economics, Regional, Computer Modeling, Econometrics, among others Empire Economics: Chairman and President: 1986-Present •Perform Independent Real Estate Consulting Services Primarily for Land Secured Financings •Work for Public Entities including Counties, Cities, School Districts and Water Districts •Long-term Relationships with Many Clients, 25+ years •Well Established Relationships with Numerous Professionals in the Municipal Finance Industry •Performed 500+ Studies on behalf of Public Entities for $15B+ in municipal financing oLand Secured Financings for Planned Communities, Business Parks and Retail Centers for 400+ CFDs/ADs for $7.5B bonds Price Point Study – Establish Special Taxes that conform to public entities’ policies Market Absorption Studies - Provide timelines for phasing infrastructure Homeowner Equity Studies and Forecasts of Assessed Values Economic Forecasting Studies: Forecast Employment and Housing Demand •Socioeconomic Studies Orange County Transportation Corridors: 2 studies $2.75B bonds oDesignated as Municipal Bond Issue of the Year for 1999 oRating Agency and Bond Insurer Presentations – Trips to New York City •Mortgage Revenue Bond Issues: Lower Mortgage Rates 50+ studies for $1.7B bonds •Other Municipal Bond Issues: 35+ studies $2B+ bonds; Certificates of Participation, others •Forthcoming Bond Issues: 25+ studies for $400M+ future bond sales Industry Contributions – Regular Speaker/Panelist at Following Events: •State Treasurer, Mr. John Chiang: Council of Economic Advisors: January 2015 – December 2018 oBi-annual meetings and published articles in the Treasurer’s Newsletter, Intersections •UCLA Municipal Bond Financing Seminars (10+ times, as Featured Speaker) •Bond Buyer Conference •League of Cities •Municipal Bond Industry Association •Best Practices for Continuing Disclosure •Appraisal Standards for Land Secured Financing by CDIAC •Meetings with Municipal Bond Funds Dedicated to Public Sector: Certifications Provided in each Study: Empire has not performed any consulting services for the CFD/AD property owners nor the developers/builders, during the past thirty years. •Empire will not perform any consulting services for the CFD/AD property owners nor the developers/builders, during the next five years. 46 Page 64 CITY OF RANCHO CUCAMONGA ANNUAL ECONOMIC AND HOUSING STUDY ADDENDUM I ADDITIONAL BACKGROUND ON RANCHO CUCAMONGA FORECASTED EMPLOYMENT GROWTH BY SECTOR PREPARED BY EMPIRE ECONOMICS, INC. JOSEPH T. JANCZYK, PH.D. MAY 28, 2024 1 Exhibit B Page 65 Methodology •Overall, for 2024-F to 2030-F, the total nonfarm Rancho Cucamonga employment is calculated as the sum of the 14 sectors (plus a small residual employment not captured in these). The forecast is without the high speed rail and reflects total nonfarm employees by firms located in the city •From 2018-2023-est., total nonfarm employment grew about 1.5% per year and it is expected to range per year starting from 3.2% per year and declining 1.7%-1.9% per year for 2024 / 2023-Est.to 2030-F / 2029-F. •Most of the 14 sectors are expected to grow from 2023-Est. to 2030-F at the 2018-2023-Est. average change per year with 5 exceptions as follows: •For the three sectors (real estate, education, and admin)with the three highest positive gross 2018-2023-Est. average annual rate change, these were slightly moderated ---(real estate 7%/yr. down to 4%/yr.), (education 7%/yr. down to 5%/yr.), and (admin 8%/yr. down to 6%/yr.) respectively ---to account for unusually high growth over this time period.For forecasting, this regresses the biggest outliers closer to the mean via a more conservative approach. •For management, given its lower base amount,as it gets closer to minimum base level, it’s forecast to decline much more slowly (from -13% to -3%). This regresses the highest negative outlier closer to the mean via a more conservative approach. •For transportation and warehousing, the additional expected warehousing growth gross numbers were added in (an additional 2,800 jobs in total), and this was given a base rate closer to flat (-5%/yr. up to 10%/yr.). Page 66 Total Employment and Growth by Year •Collectively, total employment is expected to rise ~12,800 from 2023-Est. to 2030-F •Forecasted total employment is the sum of the forecasted growth of the 14 primary sectors plus a small residual of the others •Overall, growth per year is expected to moderate from 3.2% in 2024-F / 2023-Est. down to a range of 1.7-1.9% for 2027-F-2030-F •Note: all forecasts are without the high speed rail and reflect total nonfarm employees by firms located in the city 7 4 , 5 5 0 7 5 , 3 6 9 6 8 , 0 4 0 7 2 , 1 2 2 7 8 , 3 8 8 7 9 , 4 1 3 8 1 , 9 4 3 8 4 , 0 1 1 8 5 , 8 9 8 8 7 , 3 2 2 8 8 , 8 4 7 9 0 , 4 7 7 9 2 , 2 1 6 0 20,000 40,000 60,000 80,000 100,000 120,000 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY FOR 2018-2030-F WITHOUT HIGH SPEED RAIL 1 . 1 % - 9 . 7 % 6 . 0 % 8 . 7 % 1 . 3 % 3 . 2 % 2 . 5 % 2 . 2 % 1 . 7 % 1 . 7 % 1 . 8 % 1 . 9 % -15% -10% -5% 0% 5% 10% 2 0 1 9 / 2 0 1 8 2 0 2 0 / 2 0 1 9 2 0 2 1 / 2 0 2 0 2 0 2 2 / 2 0 2 1 2 0 2 3 - E s t . / 2 0 2 2 2 0 2 4 - F / 2 0 2 3 - E s t . 2 0 2 5 - F / 2 0 2 4 - F 2 0 2 6 - F / 2 0 2 5 - F 2 0 2 7 - F / 2 0 2 6 - F 2 0 2 8 - F / 2 0 2 7 - F 2 0 2 9 - F / 2 0 2 8 - F 2 0 3 0 - F / 2 0 2 9 - F CITY OF RANCHO CUCAMONGA: TOTAL EMPLOYMENT CHANGE PER YEAR OVER PRIOR YEAR THROUGH 2030 FORECASTED WITHOUT HIGH SPEED RAIL Page 67 Forecasted Change for the Historically Most Stable Sectors •Least volatile: From 2018-2023, nine sectors changed between -4% and +5% per year (four sectors declining and five sectors rising) •Continuance of trend expected: The growth rates for 2018-2023-Est. are expected to continue for 2023-Est.-2030-F •Collectively, these are expected to add over 3,000 jobs through 2030-F -3.7% -3.1% -1.7%-1.5% 1.2% 2.7%2.8% 3.8% 4.5% -3.7% -3.1% -1.7%-1.5% 1.2% 2.7%2.8% 3.8% 4.5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% Manufacturing Finance & Insurance Retail Trade Construction Accommod. & Food Health Care & Social Assist. Government Prof., Scientific & Tech. Wholesale Trade CITY OF RANCHO CUCAMONGA: SECTOR EMPLOYMENT CHANGE/YEAR FOR 2018 TO 2023-Est. AND 2023-Est. TO 2030-F FOR THE HISTORICALLY MORE STABLE SECTORS W/2018-23-Est. CHANGE/YR. FROM -4% TO +5% WITHOUT HIGH SPEED RAIL 2018-2023 Est. Avg. Change/Yr. 2023 Est.-2030-F Avg. Change/Yr. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY HISTORICALLY MORE STABLE SECTORS WITHOUT HIGH SPEED RAIL Finance & Insurance Professional, Scientific, Tech. Construction Manufacturing Wholesale Trade Retail Trade Health Care & Social Assist. Accommodation & Food Government Page 68 Forecasted Change for Sectors for the Historically Larger Changing Sectors The five sectors with the historically largest annual changes (-13% to -5% or +7-8% from 2018-2023-Est.) had customized forecasts: •Management: Expected to have more moderate declines as reaches closer to a "floor“ minimum (just ~300 in 2023-Est.) •Transportation and Warehouse: Additional growth of +2,800 jobs forecasted on top of a structurally positive shift in base growth •Real estate, education, and administrative: highest growth sectors expected to conservatively regress closer to the mean •Collectively, these five sectors are expected to add over 9,000 jobs through 2030-F -13% -5% 7%7%8% -3% 10% 4%5%6% -15% -10% -5% 0% 5% 10% 15% Management of Companies Transportation & Warehousing Real Estate, Rental, Leasing Educational Services Administrative & Support CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY FOR THE HISTORICALLY LARGEST CHANGING SECTORS W/2018-23-Est. CHANGE/YR. OF -5% OR MORE OR INCREASES OF 5%+ WITHOUT HIGH SPEED RAIL 2018-2023 Est. Avg. Change/Yr. 2023 Est.-2030-F Avg. Change/Yr. 0 5,000 10,000 15,000 20,000 25,000 30,000 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY HISTORICALLY LARGEST CHANGING SECTORS WITHOUT HIGH SPEED RAIL Management of Companies Educational Services Real Estate, Rental, Leasing Transportation & Warehousing Administrative & Support Page 69 Prior and Forecast Sector Growth Composition Change 2018 to 2030-F: (+) Highest share gains: -Administrative and support services (+8%) -Transportation and warehousing (+2%) -Wholesale (+2%) (-) Greatest share losses: -Manufacturing (-6%) -Retail trade (-4%) -Construction (-3%) -Finance and Insurance (-2%) Note: Changes rounded to nearest % 13%10%7% 13%13% 12% 12%13% 13% 12%10% 8% 10%14% 18% 8%7%6% 8%9% 9% 6%4%7% 6%7%8% 5%4%3% 4%5%6% 2%2%3%1%<1%<1%1%1%1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2 0 1 8 2 0 2 3 - E s t . 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY SECTOR NONFARM SHARE FOR 2018, 2023-Est., AND 2030-F WITHOUT HIGH SPEED RAIL Educational Services Management of Companies Real Estate, Rental, Leasing Professional, Scientific, Tech. Finance & Insurance Wholesale Trade Transportation & Warehousing Health Care & Social Assist. Construction Administrative & Support Retail Trade Government Accommodation & Food Manufacturing Page 70 1 PREPARED BY EMPIRE ECONOMICS, INC. JOSEPH T. JANCZYK, PH.D. FEBRUARY 26, 2024 (REVISED RIDERSHIP NUMBERS: MAY 28, 2024) BRIGHTLINE WEST HIGH SPEED RAIL ECONOMIC IMPACTS AND POTENTIAL NEARBY DEVELOPMENT OPPORTUNITIES Exhibit C Page 71 TABLE OF CONTENTS INTRODUCTION……………………………………………………………………………………………………………………….........................................3 KEY CONCEPT #1 OVERVIEW OF POTENTIAL OPPORTUNITIES FOR RANCHO CUCAMONGA FROM BW-HSR KEY CONCEPT #2 CRITICAL COMPONENTS: ESSENTIALS, ENTICEMENT, AND EXPANSION KEY CONCEPT #3 CRITICAL QUESTIONS TO BE RESEARCHED/ANSWERED PART I ECONOMIC-EMPLOYMENT IMPACTS OF BRIGHTLINE WEST HIGH SPEED RAIL…………………….………….................................................8 CONSTRUCTION PHASE 2024-2028 OPERATION OF THE STATION 2028+ PART II POTENTIAL DEVELOPMENT OPPORTUNITIES AT THE RANCHO CUCAMONGA STATION FROM LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM ACTIVITIES………………………………………………………………………….……..14 A.OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL AND THEIR RECREATIONAL DESTINATIONS.. B.CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL – FLORIDA C. OVERVIEW OF DOMESTIC RAIL WITH RECREATIONAL DESTINATIONS D.EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES: PORTLAND AIRPORT E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION F.RC STATION AREA – CURRENTLY LACK OF AMENITIES REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE G. RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS H. POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS COMING TO THE BW-HSR STATION FOR TOURISM I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS PART III CONCLUSIONS AND RECOMMENDATIONS……………………………………………………………………………………………………...............…33 SUPPLEMENTAL REMARKS POTENTIAL OTHER SOURCES OF DEMAND FOR BW-HSR RC-STATION………………………………......…..34 APPENDIX A: INTERNATIONAL HIGH SPEED RAIL EXAMPLES…………………………………………………………………………………….....35 APPENDIX B: DOMESTIC RAIL STATION EXAMPLES.……………………………………………………………………………………………….......45 2 Page 72 INTRODUCTION KEY CONCEPT #1 OVERVIEW OF POTENTIAL OPPORTUNITIES FOR RANCHO CUCAMONGA FROM BRIGHTLINE WEST HIGH SPEED RAIL 3 There are significant short-term employment/economic benefits for Rancho Cucamonga (RC) from construction of the Brightline West High Speed Rail (BW-HSR). However, the long-term benefit for RC is the potential for being not only a launching point for Southern California (SC) visitors going to Las Vegas (LV) but furthermore a receiving point for LV visitors coming to SC for tourism activities which will ramp over time. Based on extensive international research, High Speed Rail (HSR) can and will likely promote two-way tourism. •Empire Economics (Empire) estimates that there may be some 560,000 annually that use BW-HSR from LV to the RC-Station to visit Southern California. •Of these, an estimated 60,500 annually may decide to use accommodations near the RC-Station as the launching point base for their SC tourism activities. The RC-Station and its tourism aspects need to be carefully orchestrated to capture the benefits of the BW-HSR. •Given that tourists from Las Vegas will also be flowing to SC through the RC-Station, the City can now start to formulate a strategic plan to identify relevant types of developments in the vicinity of the station. •The RC-Station is not in a traditional urban area or in close proximity to RC’s existing restaurants, lodging, retail, etc. •So, the relevant types of development need to be constructed and/or connected with the existing RC’s amenities. It may take time for demand to ramp-up. •Current land uses in the area may have to be rethought/rezoned to best capture this new asset for RC. •Typical amenities such as a hotel, parking, lounge and some retail are key to success as well as connecting to other retail in the area, perhaps by a shuttle. •Being seen as a “node” or gateway to the Southern California area will be crucial to attracting residents from LV coming to SC for tourism, using the HSR. •Many cities in the Inland Empire, Orange County and Los Angeles areas should have a vested interest in using RC as a hub for tourists/visitors from LV. The success of such a strategic plan is based upon some critical fundamental conditions: •Brightline West HSR starting at a projected level of some 6M passenger trips annually. (Each trip means a person traveling from a departure station to their destination station.) •HSR prices being competitive with alternative modes of transportation such as air, car and bus. •Furthermore, travelers in addition to the direct travel costs, are also likely to consider BW-HSR offering an exciting mode of transit! •Relevant products/services being promoted and providing positive consumer experiences. Page 73 4 PASSENGER TOURISM OCCURS IN BOTH DIRECTIONS SOUTHERN CALIFORNIA VISITORS TO LAS VEGAS- MAJORITY ALSO LAS VEGAS VISITORS TO SOUTHERN CALIFORNIA Page 74 5 ESSENTIALS: BRIGHTLINE HAS EXPERTISE FROM BRIGHTLINE FLORIDA HIGH SPEED RAIL (BF-HSR) •Basic operations: staff, ticketing kiosks, ticketing office, seats, arrival time with/without baggage, restrooms, elevator and vending machines. Technology/Financial: ATM, Wi-Fi, QSR •Amenities: metropolitan lounge, convenience store, coffee shops, bar, and cultural events. •Connections: Transportation hub - connections to other rail as well as car rental, Uber and shuttles. •BW-HSR coach design is expected to include white and blue interiors, roomy seating and WiFi. •Although BW-HSR will compete with alternative modes of transportation, the BW-HSR module has appeal as an exciting adventure. ENTICEMENT: PASSENGERS ENJOY SPENDING TIME AT STATION AND EXCITED ABOUT TRIP TO LV Collaboration Between Brightline and Rancho Cucamonga via amenities at Station and accessible via Shuttle •Restaurants: local eateries, wine tasting, fast food, coffee shops, brew pubs, and sit down restaurants •Potential amenities: shopping at micro-store, kiosks, art exhibits, fitness area quiet spaces, and spa services. •Cultural Options: such as short movies, craft fairs, art exhibits, thematic events, live music, etc. EXPANSION: RANCHO CUCAMONGA: VISITORS FROM LAS VEGAS – DEVELOP TOURISM FACILITIES •Enhanced Transit Hub: Accessibility to Amtrack, Uber, bus, and car rentals. Visitor Information Center. •Initially - During the BW-HSR ramp-up process: Shuttle access to nearby hotels, restaurants and shopping •Passengers 6M-Threshold Future Nearby Development: Hotel accommodations Sit-down restaurants Shopping BW-HSR expects to start with 6,000,000 passengers - estimate about 60,500 visitors to SC from LV to start and then ramp-up. KEY CONCEPT #2 CRITICAL COMPONENTS: ESSENTIALS, ENTICEMENT, AND RIDERSHIP EXPANSION Page 75 6 KEY CONCEPT #2 CRITICAL COMPONENTS: RIDERSHIP EXPANSION DETAILS PLEASE NOTE THAT THE CITY OF RC PROVIDED WITH ANNUAL RIDESHIP NUMBERS (MILLON) FROM BRIGHTLINE. •IN YR. 1, TRAFFIC IS EXPECTED TO START AT 6M IN TERMS OF RIDERSHIP WITH 1/3 OF THE TRAINS RUNNING. •IN YR. 4, TRAFFIC IS EXPECTED TO BE 8M IN TERMS OF RIDERSHIP WITH 2/3 OF THE TRAINS RUNNING. •IN YR. 8, TRAFFIC IS EXPECTED TO BE 8.9M IN TERMS OF RIDERSHIP WITH MOST OF THE TRAINS ANTICIPATED NEEDED. •STARTING IN YR. 11, CAPACITY WILL INCREASED. PLEASE NOTE THESE ESTIMATED TRAFFIC FIGURES ARE RELATIVELY HIGH ANNUAL RIDERSHIP COUNTS FOR US BASED RAIL SERVICE. Page 76 KEY CONCEPTS #3: CRITICAL QUESTIONS TO BE RESEARCHED/ANSWERED 7 Below are some of they key questions that Empire addressed in relation to BW-HSR and the City of RC: How will the BW-HSR construction and operation phases impact the City’s employment growth? What insights does international HSR, domestic rail, Brightline Florida, and other transportation hubs provide for BW-HSR? What types of RC-Station amenities can be supported by LV tourism visitors, including hotels, restaurants, and retail among others? How can the RC-Station serve as a launching point for LV visitors going to various tourist destinations in Southern California? How many LV visitors that come to the RC-Station are likely utilize RC as their embarkation point for SC tourism? How would such ancillary developments impact property values in the vicinity of the RC-Station? Finally, what is a hypothetical timeline for the development of nearby amenities, based upon BW-HSR passenger ramp -up? Initially: During the BW-HSR ramp-up process, shuttles. Future: When passengers 6M-threshold attained, then nearby development. Caveats and Limiting Conditions Empire Economics (Empire), in the process of performing this research has made best efforts to collaborate with the City to compile information on the BW-HSR economic/employment impacts as well as the specific features of the RC-Station. However, since such information is limited at this time, Empire utilized plausible but conservative assumptions; these are subject to revision as more information becomes available and will change over time as HSR usage becomes more commonplace. Page 77 8 PART I ECONOMIC-EMPLOYMENT IMPACTS OF BRIGHTLINE WEST HIGH SPEED RAIL CONSTRUCTION AND OPERATION LOOKING FORWARD, THE HIGH SPEED RAIL IS EXPECTED TO HAVE SEVERAL DIRECT IMPACTS ON EMPLOYMENT: #1) CONSTRUCTION WORKERS - APPROXIMATELY 1,900 JOBS - UNION LABOR: HIGHER PAYING JOBS IN CONSTRUCTION SECTOR - TIMING: “TEMPORARY” POSITIONS STARTING IN MID-2024 AND CONTINUING THROUGH LATTER 2028 #2) OPERATIONS WORKERS - APPROXIMATELY 275 JOBS - LOWER COST LABOR: ADMINISTRATIVE AND SUPPORT SERVICES - TIMING: PERMANENT POSITIONS STARTING IN 2029 AND CONTINUING THEREAFTER FURTHERMORE, THE HIGH SPEED RAIL IS EXPECTED TO HAVE INDIRECT IMPACTS ON EMPLOYMENT: #3) SUPPORT SERVICE JOBS WILL BE GENERATED - THESE ARE SECTORS IN WHICH JOBS ARE ADDED TO SUPPORT CORE SECTORS ABOVE - THESE ARE A MULTIPLIER EFFECT – FOR EVERY 1 CORE JOB ADDED, ABOUT AN ADDITIONAL 0.7 SUPPORT JOBS - MULTIPLE EFFECT of 0.7 IS BASED ON 2023 RATIO OF SUPPORT (~32K) TO CORE (~47K) SECTOR JOBS - THESE POSITIONS WILL BE SPREAD ACROSS VARIOUS SUPPORT SECTORS, EDUCATION AND HEALTHCARE CRITICAL LONG-TERM INSIGHT: THE NEAR TERM BW-HSR CONSTRUCTION/SUPPORT SECTOR JOBS DURING 2024-LATTER 2028 ARE TEMPORARY THE OPERATIONAL/SUPPORT JOBS ARE EXPECTED TO START IN 2029 AND CONTINUE THEREAFTER THE RC-STATION AMENITY RELATED JOBS WHEN THE 6M PASSENGER THRESHOLD IS ATTAINED, CONTINUES THEREAFTER Page 78 RANCHO CUCAMONGA - RECENT AND FORECASTED AGGREGATE LEVELS OF EMPLOYMENT (2000-2023-EST. RECENT & 2024-2030 FORECAST) *WITH HIGH SPEED RAIL* •FOLLOWING THE DECLINE IN 2020, EMPLOYMENT INCREASED BY ~4,100 IN 2021 AND BY ~6,800 IN 2022 TO EXCEED ITS PRE-COVID LEVEL •IN 2023, EMPLOYMENT IS ESTIMATED TO HAVE INCREASED BY ~500 JOBS, A MORE MODERATE GROWTH RATE •WITH HSR, EMPLOYMENT IN THE CITY OF RC IS EXPECTED TO RISE BY ~13,000 FROM 2023-EST. TO 2028 TO REACH ~92,000 IN 2028 AND ~92,700 IN 2030 9 3 6 , 8 3 0 4 1 , 1 2 4 4 5 , 5 0 3 5 2 , 4 9 6 5 6 , 5 4 5 6 0 , 5 9 1 6 5 , 1 3 9 6 4 , 3 5 8 6 2 , 9 7 4 5 9 , 0 5 4 5 8 , 2 1 0 6 1 , 1 8 8 6 3 , 8 8 4 6 6 , 1 8 8 7 1 , 2 5 3 7 3 , 2 6 2 7 5 , 1 5 9 7 5 , 3 8 3 7 5 , 6 1 1 7 4 , 4 4 5 6 8 , 0 4 0 7 2 , 1 2 2 7 8 , 9 0 1 7 9 , 4 1 3 8 3 , 5 6 2 8 7 , 2 5 0 8 9 , 1 3 8 9 0 , 5 6 1 9 2 , 0 8 6 9 0 , 9 4 6 9 2 , 6 8 5 0 20,000 40,000 60,000 80,000 100,000 120,000 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: RECENT/EXPECTED LEVELS OF EMPLOYMENT BY FIRMS LOCATED IN THE CITY *WITH HIGH SPEED RAIL* Page 79 10 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT CHANGE BY YEAR (2000 – 2030 FORECASTED) •HISTORICALLY, EMPLOYMENT HAS GONE THROUGH MAJOR CYCLES BASED ON MACROECONOMIC CONDITIONS •MAJORITY OF YEARS HAVE HAD GROWTH ACROSS THREE MAJOR TIME PERIODS: 2001-2006, 2011-2016, AND 2021-2023 •SEVERAL TIME PERIODS WITH SLOW DOWNS HAVE OCCURRED AS WELL: 2007-2010 AND 2019-2020 4 , 2 9 4 4 , 3 7 9 6 , 9 9 3 4 , 0 4 9 4 , 0 4 6 4 , 5 4 8 - 7 8 1 - 1 , 3 8 4 - 3 , 9 2 0 - 8 4 4 2 , 9 7 8 2 , 6 9 6 2 , 3 0 4 5 , 0 6 5 2 , 0 0 9 1 , 8 9 7 2 2 4 2 2 8 - 1 , 1 6 6 - 6 , 4 0 5 4 , 1 0 0 6 , 7 7 9 5 1 2 4 , 1 5 0 3 , 6 8 8 1 , 8 8 8 1 , 4 2 4 1 , 5 2 5 - 1 , 1 4 0 1 , 7 3 9 -8,000 -6,000 -4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 - E s t . 2 0 2 4 - F 2 0 2 5 - F 2 0 2 6 - F 2 0 2 7 - F 2 0 2 8 - F 2 0 2 9 - F 2 0 3 0 - F CITY OF RANCHO CUCAMONGA: ANNUAL CHANGE IN EMPLOYMENT BY FIRMS LOCATED IN THE CITY *WITH HIGH SPEED RAIL* Page 80 11 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY TYPE (2023-EST. RECENT TO 2030 FORECAST) •HIGH SPEED RAIL PROVIDES DIRECT AND INDIRECT GROWTH: •TEMPORARY FOR CONSTRUCTION POSITIONS – 1,900 TOTAL (STARTING IN 2024 AND ENDING IN 2028) •SUSTAINING LONG TERM OPERATIONS HIGH SPEED RAIL ADMIN/SUPPORT SERVICES – 275 TOTAL STARTING IN 2029 •FURTHER GROWTH: HIGH SPEED GENERATES OTHER SUPPORT SECTOR JOBS AT A MULTIPLER OF AN ADDITIONAL 0.7 PER RAIL JOB •ACCELERATING EMPLOYMENT GROWTH INITIALLY BASED ON HISTORICAL RATIO OF SUPPORT/CORE SECTORS •BUT THEN LOSS OF TEMPORARY JOBS MODERATES EMPLOYMENT IN LATER 2029, THEN BASELINE GROWTH BASED CONTINUES 75,000 79,000 83,000 87,000 91,000 95,000 2023-Est.2024-F 2025-F 2026-F 2027-F 2028-F 2029-F 2030-F CITY OF RANCHO CUCAMONGA: ANNUAL CHANGE IN EMPLOYMENT BY FIRMS LOCATED IN THE CITY BY TYPE (2023-EST TO 2030-FORECAST) -*WITH HIGH SPEED RAIL* TOTAL NONFARM - BASELINE GROWTH BASED HIGH SPEED RAIL - CONSTRUCTION HIGH SPEED RAIL - OPERATIONS (ADMIN AND SUPPORT)HIGH SPEED RAIL - ALL SUPPORT SECTORS THIS GRAPH DOES NOT CURRENTLY INCLUDE ADDITIONAL EMPLOYMENT THAT WOULD BE GENERATED BY THE DEVELOPMENT OF RESTAURANTS, HOTELS AND OTHER FACILITIES IN THE VICINITY OF THE RC STATION Page 81 12 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY SECTOR (2023-EST. RECENT TO 2030 FORECAST) MOST OF RANCHO CUCAMONGA SECTORS ARE FORECASTED TO FOLLOW HISTORICAL GROWTH TRENDS. •TRANSPORTATION & WAREHOUSING IS EXPECTED TO GROW AT A FAST RATE, POTENTIALLY DOUBLING IN SIZE. •CORE SECTORS EXPECTED TO GROW ARE ADMINISTRATIVE & SUPPORT SERVICES AND ACCOMMODATION & FOOD SERVICES. •HOWEVER, MANUFACTURING AND RETAIL TRADE ARE EXPECTED TO DECLINE. -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 CITY OF RANCHO CUCAMONGA: CHANGE IN EMPLOYMENT BY FIRMS LOCATED IN THE CITY BY SECTOR (2023-EST. TO 2030-FORECAST) *WITH HIGH SPEED RAIL* YEAR 2023 - EST.YEAR 2030 - FORECAST 2023 TO 2030 CHANGE Page 82 13 RANCHO CUCAMONGA - RECENT AND FORECASTED LEVELS OF EMPLOYMENT BY SECTOR (2030 FORECAST VS. 2023-EST. RECENT) •TOTAL NONFARM BASELINE GROWTH EXPECTED TO RISE / FALL BY SECTOR, INCLUDING WAREHOUSING, THAT MAKE UP AGGREGATE •SECTOR WITH BIGGEST JOB ADDITIONS 2030 VS. 2023-EST.: ADMINISTRATIVE & SUPPORT SERVICES GAINING +5,457 JOBS •SECTOR WITH BIGGEST JOB LOSES 2030 VS. 2023-EST.: MANUFACTURING LOSING -1,814 JOBS PLEASE NOTE THAT THIS INCLUDES THE IMPACT OF AUTOMATION •CONSTRUCTION SECTOR BENEFITS FROM BW-HSR FROM 2024-2028, BUT TEMPORARY; OPERATIONS SECTOR 2029+ JOBS CONTINUE 5,457 3,183 2,101 1,821 1,415 1,167 596 826 369 110 -40 -96 -65 -538 -572 -819 -1,814 -3,000 -1,000 1,000 3,000 5,000 7,000 Administrative & Support Services Transportation & Warehousing Government Wholesale Trade Health Care & Social Assistance Professional, Scientific & Technical Services Real Estate & Rental & Leasing Accommodation & Food Services Educational Services Information Arts, Entertainment & Recreation Other Services Management of Companies & Enterprises Finance & Insurance Construction Retail Trade Manufacturing RANCHO CUCAMONGA: CHANGE IN LEVELS OF EMPLOYMENT FROM 2023-EST. TO 2030 FORECAST BY ECONOMIC SECTOR *WITH HIGH SPEED RAIL* Page 83 PART II POTENTIAL DEVELOPMENT OPPORTUNITIES AT THE RANCHO CUCAMONGA STATION FROM LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM ACTIVITIES 14 A.OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL AND THEIR RECREATIONAL DESTINATIONS B.CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL – FLORIDA C. OVERVIEW OF DOMESTIC RAIL WITH RECREATIONAL DESTINATIONS D. EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES: PORTLAND AIRPORT E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION F.RC STATION AREA – CURRENTLY LACK OF AMENITIES REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE G. RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS H. POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS COMING TO THE BW-HSR STATION FOR TOURISM I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS Page 84 A. OVERVIEW OF INTERNATIONAL HIGH-SPEED RAIL AND THEIR RECREATIONAL DESTINATIONS 15 EMPIRE IDENTIFIED ELEVEN INTERNATIONAL HIGH SPEED RAIL PROJECTS THAT ARE RECREATION ORIENTED. OF THESE , SIX THAT ARE REGARDED AS BEING THE MOST COMPARABLE; THEIR CHARACTERISTICS ARE AS FOLLOWS: (NOTE: PASSENGER FIGURES REFLECT POST-COVID LEVELS WHICH ARE 40%-60% OF PRE-COVID LEVELS AND GROWING) THE BW-HSR;S DESTINATION IS LAS VEGAS WHICH HAS A SIGNIFICANTLY MORE RECREATIONAL AMENITIES THAN OTHER HSR DESTINATIONS. ABOUT 4.2 MILLION VISITORS FROM CALIFORNIA ANNUALLY WITH ANNUAL CASINO REVENUES OF $8 BILLION -ALONG WITH 150,000+ HOTEL ROOMS, AND 2,700+ RESTAURANTS. High-speed Rail Line Country Departure City Destination/ Recreation Center Estimated Annual Ridership (Millions) Distance (miles) Departure Station Amenities Promotes Tourism: Departure& Destination Key Learning #1 Key Learning #2 1. TGV France Paris Disneyland Paris 10 28 Restaurants hotels, historical sites, office, space Yes HSR boosts tourism to Disneyland HSR can be a node to surrounding areas 2. Eurostar UK London Disneyland Paris 11 307 Luxury, shopping dinning, hotels, residential apartments Yes Decreased air travel More consistency in retail 3. Alta Spain Madrid Seville (historic area)3.2 329 Restaurants, hotels, shopping centers, botanical garden Yes Promotes tourism Cultural/other nearby destinations help drive 4. Frecciarossa Italy Rome Florence (art/history)10 171 Restaurants, shops, hotels, apartments Yes Used as a node Ticket prices have caused low adoption 5. Shinkansen Japan Tokyo Mount Fuji area 13 78 Restaurants, shopping areas, hotels, offices Yes Increased tourism with impact in Yr. 1 Travel mix shifts over Time 6. CHR/CR China Beijing Great Wall at Badaling 10 50 Restaurants, hotels, retailers, residential towers Yes Important that destination be a node/or gateway Local tourism important to ongoing success Page 85 16 MAP OF INTERNATIONAL HSR RAIL SYSTEMS – RECREATIONALLY ORIENTED 1. 2. 3. 4. 5. 6. High Speed Rail Maps Europe High Speed Rail Asia BELOW ARE THE MAPS OF THE SIX MAJOR INTERNATIONAL HSR NETWORKS THAT EMPIRE IDENTIFIED AS BEING RECREATIONALLY ORIENTED, LIKE BW-HSR. THE STRONGEST COMPARABLES ARE #1 TGV BETWEEN PARIS TO DISNEYLAND PARIS AND #2 EUROSTAR BETWEEN LONDON AND DISNEYLAND PARIS. NUMBERS CORRESPOND TO TABLE ON PREVIOUS PAGE Page 86 17 TGV TO DISNEYLAND PARIS •THERE ARE POTENTIALLY 10M TOURISTS TRAVELING BETWEEN THE TGV PARIS STATION AND THE STATION FOR DISNEYLAND PARIS (MARNE-LA- VALLÉE – CHESSY) •DISNEYLAND PARIS FUNDED ONE THIRD OF $126.5 MILLION OF EUROS NEEDED TO BUILD THE STATION. •DISNEY ACKNOWLEDGES THAT HSR IS A POPULAR MEANS TO REACH THE PARK AND AT LEAST 60% OF THE GUESTS USE HSR. CHARACTERISTICS OF MOST COMPARABLE HSR EXAMPLES EUROSTAR LONDON TO PARIS •THERE ARE OVER 11M PASSENGERS BETWEEN LONDON PARIS •IT TOOK TIME FOR THE TRAIN TRAVEL TO REPLACE THE AIR TRAVEL, AS EXHIBITED BY THE CHARTS BELOW: Page 87 18 B. CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL - FLORIDA SIMILARITIES: WITH REGARDS TO DOMESTIC HSR SYSTEMS ASSOCIATED WITH RECREATIONAL AREA DESTINATIONS, BRIGHTLINE-FLORIDA (BF-HSR) IS REGARDED AS BEING A STRONG COMPARABLE TO BW-HSR WITH REGARDS TO THE FOLLOWING CHARACTERISTICS: DEVELOPER/OPERATOR: BOTH BF-HSR AND BW-HSR HAVE THE SAME DEVELOPER/OPERATOR, THE ONLY PRIVATELY OWNED/OPERATED HSR IN THE UNITED STATES. STATIONS: BF-HSR HAS A DEPARTURE STATION IN MIAMI, WITH INTERIM STATIONS IN FORT LAUDERDALE, WEST PALM BEACH, AVENTURA AND BOCA RATON, AND THEN IN SEPTEMBER 2023 EXTENDED ITS SERVICE TO ORLANDO, DISNEY WORLD WHICH IS COMPARABLE TO SOUTHERN CA. DIRECT SERVICE FROM MIAMI TO ORLANDO IS AVAILABLE ON SOME OF THE TRAINS; OTHER TRAINS MAKE INTERIM STOPS. RAMP-UP TIMING: BF-HSR COMMENCED SERVICE IN JANUARY 2018 FROM MIAMI, FL TO PALM BEACH, FL SO IT HAS EXPERIENCE WITH RAMP-UP AND OTHER OPERATIONAL FACTORS THAT MAY PROVIDE INSIGHT INTO BW-HSR IN TERMS OF RAMP-UP. DIFFERENCES: HOWEVER, THERE ARE EXPECTED TO BE SOME DIFFERENCES BETWEEN BF-HSR AND BW-HSR: DISTANCE AND TIME: BF-HSR COVERS 235 MILES IN 3H-25M COMPARED TO BW-HSR 180 MILES IN AN ESTIMATED 2 HRS 10 MIN (BW-HSR). SPEED: BF-HSR HAS A SPEED OF 69 MPH WHILE BW-HSR WILL HAVE A MUCH HIGHER SPEED OF UP TO 200MPH (BW-HSR). . Page 88 19 SOME OTHER CHARACTERISTICS OF BF-HSR THAT MAY PROVIDE SOME INSIGHT INTO BW-HSR ARE AS FOLLOWS: STATION CONSTRUCTION OF BF-HSR BEGAN IN MIAMI STATION IN MID-2014. THE BF-HSR MIAMI STATION SPANS 9 ACRES WITH 3 MILLION SQ.FT. OF MIXED-USE DEVELOPMENT: RESIDENTIAL, OFFICE, COMMERCIAL AND A RETAIL CONCOURSE WHICH IS UNIQUE THE STATION SERVES AS A HUB WITH METRORAIL, METROMOVER, METROBUS AND THE CITY TROLLEY. RURAL/URBAN: BF-HSR TRAIN TRACKS TRAVERSE URBANIZED AREAS; BY COMPARISON, BW-HSR WILL HAVE TRACK PREDOMINANTLY IN RURAL/DESERT AREAS. AIRPORT ACCESS: BF-HSR TERMINATES AT THE ORLANDO INTERNATIONAL AIRPORT INTERMODAL TERMINAL.  FLY VS. DRIVE: ESTIMATED TRAVEL TIMES BETWEEN MIAMI AND ORLANDO ARE AS FOLLOWS: BF-HSR TRAIN 3.5H, DRIVING W/O TRAFFIC ALSO 3.5H FLYING 3H, WITH A TWO HOUR AIRPORT ARRIVAL AND 1 HOUR FLIGHT TIME. RIDERSHIP: RIDERSHIP HAS INCREASED FROM 579,000 IN 2018 TO 1,230,494 IN 2021, AND THEN 2,053,893 IN 2023 (SOURCE: WIKIPEDIA) - THIS INCLUDES TRIPS BETWEEN THE SIX DIFFERENT STATIONS. AIRPORT ACCESS: SINCE THE MIAMI TO ORLANDO ROUTE JUST OPENED RECENTLY, ANNUAL STATISTICS ARE NOT YET AVAILABLE ON DIRECT TRAINS. BF-HSR SUSPENDED OPERATION DUE TO COVID-19 FROM MARCH 2020 TO NOVEMBER 2021. CHARACTERISTICS OF BRIGHTLINE HIGH SPEED RAIL - FLORIDA Page 89 Station Characteristics Recommended for Rancho Cucamonga Los Angeles Union Station NY Penn Station Washington Union Station 30TH Street Philadelphia, PA Chicago Union Station South Street Boston Projected/2022 Passenger Traffic 6,000,000 928,000 8,008,000 3,631,000 3,058,000 2,359,000 1,216,000 BASIC OPERATIONS Staff Yes Yes Yes Yes Yes Yes Yes Ticketing Kiosks Yes Yes Yes Yes Yes Yes Ticketing Office Yes Yes Yes Yes Yes Yes Arrival suggestion baggage -Minutes TBD 60 45 45 45 60 45 Arrival suggestion non-baggage-Minutes TBD 30 30 30 30 30 30 Restrooms Yes Yes Yes Yes Yes Yes Elevator Yes Yes Yes Yes Yes Vending Machine Yes Yes Yes Yes Yes Yes Yes TECH/FINANCIAL ATM Yes Yes Yes Yes Yes Yes Yes Wifi Yes No Yes No Yes Yes Yes QSR Yes Yes Yes Yes Yes Yes Yes AMENITIES Metropolitan Lounge Yes Yes Yes Yes Yes Yes Yes Convince stores Yes Yes Yes Yes Yes Yes Yes Coffee Shops Yes Yes Yes Yes Yes Yes Yes Bar Yes Yes Yes Yes Yes Yes Yes Cultural Events TBD No No No No No No CONNECTIONS Transit Hub TBD Yes Yes Yes Yes Yes Yes 20 C. OVERVIEW OF BUSY DOMESTIC RAIL STATIONS THE 6M POTENTIAL PASSENGERS A YEAR WOULD PUT THE RC-STATION IN THE TOP 5 BUSIEST COMMUTER PASSENGER STATIONS IN THE US. EMPIRE ANALYZED THE TOP 6 BUSIEST PASSENGER RAIL STATIONS TO UNDERSTAND AMENITIES. SINCE INFORMATION ON THE BW-HSR ARE NOT YET AVAILABLE, EMPIRE PROVIDES SOME PRELIMINARY FEATURES, WITH THE UNDERSTANDING THAT THESE ARE SUBJECT TO REFINEMENT/REVISION. Page 90 21 CURRENT RC TRAIN STATION POTENTIAL FUTURE MIXED-USE DEVELOPMENT AREA OVERVIEW OF THE CURRENT/FUTURE RC STATION RELATIVE TO A BUSY SOUTHERN CALIFORNIA TRAIN STATION LA’S UNION STATION PLEASE NOTE THAT MOST BUSY TRAIN STATIONS ARE LOCATED IN DENSE URBAN AREAS: THE CURRENT RC-STATION IS LOCATED IN AN INDUSTRIAL AREA SIMILAR TO LA’S UNION STATION. POTENTIAL FUTURE DEVELOPMENT AT “THE RESORT” AS WELL AS THE CURRENT COMMERCIAL BUILDINGS COULD BE USED TO SERVICE THE AREA. Page 91 Amme 22 D. EXAMPLE OF AN AIRPORT TERMINAL OFFERING EXTENSIVE AMENITIES PORTLAND AIRPORT SPECIFIC AMENITIES •SEATING – COMFORTABLE SEATS WITH CHARGERS •COMFORTABLE LOUNGE (S) – OPTION FOR TRAVELERS WITH A LONGER LAYOVER •NATURAL LIGHT – MODERN, OPEN AND FULL OF LIGHT •QUALITY AND DIVERSE FOOD OPTIONS - HIGHLIGHT LOCAL VENDORS •PRICES CAP – PRICES ARE PERCEIVED AS REASONABLE •CULTURAL OPTIONS SUCH AS MOVIES, LIVE MUSIC, ETC. •EASE OF ENTRY/EXIST TO OTHER TRANSIT USESSUCH AS METRO ESPECIALLY PUBLIC TRANSIT PORTLAND (PDX) AIRPORT EXAMPLES Page 92 23 E. SUMMARY OF KEY POTENTIAL COMPONENTS OF THE RC-STATION ESSENTIALS: BRIGHTLINE HAS EXPERTISE FROM BF-HSR BASIC OPERATIONS: STAFF, TICKETING KIOSKS, TICKETING OFFICE, ARRIVAL TIME WITH/WITHOUT BAGGAGE, RESTROOMS, ELEVATOR AND VENDING MACHINE. TECHNOLOGY/FINANCIAL: ATM, WI -FI, QSR AMENITIES: METROPOLITAN LOUNGE, CONVENIENCE STORE, COFFEE SHOPS, BAR, AND CULTURAL EVENTS CONNECTIONS: TRANSPORTATION HUB - CONNECTIONS TO OTHER RAIL AS WELL AS CAR RENTAL, UBER AND SHUTTLES. BW-HSR COACH DESIGN IS EXPECTED TO INCLUDE WHITE AND BLUE INTERIORS, ROOMY SEATING AND WIFI. ALTHOUGH BW-HSR WILL COMPETE WITH ALTERNATIVE MODES OF TRANSPORTATION, THE HSR MODULE HAS APPEAL AS AN EXCITING ADVENTURE. ENTICEMENT: PASSENGERS ENJOY SPENDING TIME AT STATION AND EXCITED ABOUT TRIP TO LV COLLABORATION BETWEEN BRIGHTLINE AND RANCHO CUCAMONGA RESTAURANTS: LOCAL EATERIES, WINE TASTING, FAST FOOD, COFFEE SHOPS, BREW PUBS, AND SIT DOWN RESTAURANTS POTENTIAL AMENITIES: SHOPPING AT MICRO-STORE, KIOSKS, ART EXHIBITS, FITNESS AREA AND QUIET SPACES. CULTURAL OPTIONS SUCH AS SHORT MOVIES, CRAFT FAIRS, ART EXHIBITS, THEMATIC EVENTS, LIVE MUSIC, ETC. Page 93 F. RC STATION AREA – CURRENTLY LACK OF AMENITIES REQUIRES NEW DEVELOPMENT AND/OR SHUTTLE SERVICE RETAILRESTAURANTS HOTELS 24 CURRENTLY RANCHO CUCAMONGA’S RESTAURANTS, RETAIL AND HOTELS ARE NOT IN THE VICINITY OF THE BW-HSR RC STATION. • SHUTTLE OPTION: EXISTING RESTAURANTS, RETAIL AND HOTELS COULD BE LEVERAGED. • DEVELOPMENT OPTION: FORMULATE A STRATEGY TO ACCOMMODATE NEW RESTAURANTS, RETAIL AND HOTELS AROUND THE BW-HSR STATION STAR – APPROXIMATE LOCATION OF RC TRAIN STATION TROLLEY STOPS Page 94 F. RC STATION AREA – FUTURE VISION FOR THE STATION PER THE CITY OF RC 25 THE CITY OF RC WEBSITE HAS OUTLINED THE CHANGES THEY WILL MAKE TO HAVE THE CURRENT RC STATION BECOME A LARGE TRANSIT HUB FOR THE INLAND EMPIRE AND GREATER SOUTHERN CALIFORNIA, INCLUDING THE FOLLOWING: •BECOME A MUTLIMODAL HUB FOR TRANSPORTATION WHICH WILL CONNECT AIR, BUS, LOCAL PASSENGER AND HIGH SPEED RAIL IN A SEAMLESS EXPERIENCE THAT WILL ALLOW EACH USE TO INTERACT WITH EACH OTHER. •EFFORT TO BECOME A GREEN TRANSPORTATION HUB INCLUDING A ZERO EMISSIONS TUNNEL BETWEEN THE HSR AND THE AIRPORT WHICH OPENS UP THE ONTARIO AIRPORT AS A GATEWAY TO SOUTHERN CALIFORNIA. •A FULL REMODEL OF THE STATION INCLUDING HIGH DENSITY PARKING AND INTERMODAL ACCESS. •CONNECTION TO THE “HART DISTRICT” WHICH WILL BE A MULTI-USE DEVELOPMENT. HART DISTRICT Located within the new HART District, Cucamonga Station will be a true multi-modal transit center, home to: Metrolink San Bernardino Line – East/west passenger rail travel between Los Angeles, San Bernardino and now Redlands through the new Arrow Line service Omnitrans commuter bus transit services *Omnitrans West Valley Connector Bus Rapid Transit (BRT) and Bus Service – A 19 - mile, 21 station BRT system will connect major employment and activity centers between Pomona and Rancho Cucamonga, complementing existing bus services Omnitrans currently offering ONT Connect Shuttle service to Ontario International Airport (ONT) – ONT between Cucamonga Station, 7 days per week, future SBCTA/ONT plans in development to build *4-mile underground tunnel for vehicle transit direct to terminals Taxis and Ride-share Services – Will continue to be offered at Cucamonga Station Bicycle Accessibility – The City’s 6th Street bicycle track will connect to Cucamonga Station *Brightline West – High-speed rail between Rancho Cucamonga, the High Desert, Las Vegas, a 2-hour trip with speeds up to 200 miles per hour *Future Cucamonga Station connectivity Page 95 EXAMPLES OF CITIES WITH FREE TROLLEY SERVICES 26 THERE ARE QUITE A FEW CITIES IN THE US WITH FREE “TROLLEY”/SHUTTLE SERVICE FOR TOURISM: •BIG BEAR, CA •AVILA BEACH TO PISMO BEACH, CA •MONTEREY BAY, CA •LAGUNA BEACH, CA •MIAMI, FL •CHARLESTON, SC •SAN CLEMENTE, CA Page 96 Theme Park Beaches Cultural Mountains Desert 550K 523K 350K 18K 487K RC IS CENTRALLY LOCATED WITHIN THE INLAND EMPIRE AND IN CLOSE PROXIMITY TO LA, OC AND LESS SO THE DESERTS/SAN DIEGO. BEING LOCATED BY THE I-15 IS CRUCIAL AS THE MAIN ARTERY/ROAD FROM LAS VEGAS. BELOW ARE THE CURRENT DISTRIBUTIONS OF TOURISTS FROM LAS VEGAS TO VARIOUS DESTINATIONS. 27 G. RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS STAR – APPROXIMATE LOCATION OF RC TRAIN STATION Page 97 RANCHO CUCAMONGA AS A GATEWAY TO SOUTHERN CALIFORNIA ATTRACTIONS 28 39 MILES TO DOWNTOWN LA THE BW-HSR RC STATION HAS A FAVORABLE LOCATION FOR LAS VEGAS VISITORS COMING TO SOUTHERN CALIFORNIA FOR TOURISM. TOURISTS COULD UTILIZE AMTRACK, BUSSES AND RENTAL CARS TO PRIMARY ACCESS DOWNTOWN LA AND ANAHEIM – DISNEYLAND. Page 98 6.0M 1.9M 560K 302K 4.1M 1.4M 258K 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 1. Total Domestic vistors --> So Cal Remove Visitors not from LV (67.8%) 2. LV Visitors - -> So CA (32.2%) Remove sc vistors not to IE (90.7%) 3. Estimated number of LV vistors to IE Remove IE vistors not Using Rail 4. Visitors from LV to IE Using BW- HSR ESTIMATED NUMBER OF VISITORS FROM LAS VEGAS TRAVELING TO THE INLAND EMPIRE (BASED UPON PLAUSIBLE BUT CONSERVATIVE ASSUMPTIONS) H. ESTIMATE OF POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS COMING TO THE BW-HSR STATION FOR TOURISM HYPOTHETICAL SCENARIO THERE IS NOT CURRENTLY AVAILABLE DATA THAT PROVIDES AN ESTIMATE OF THE NUMBER OF VISITORS FROM LAS VEGAS (LV) THAT WILL LIKELY COME TO THE INLAND EMPIRE AND THEN UTILIZE THE RC-HSR STATION AS AN EMBARKATION POINT FOR THEIR TOURISM ACTIVITIES. ACCORDINGLY, EMPIRE FORMULATED AN ALGORITHM TO ESTIMATE THE NUMBER OF SUCH LV VISITORS TO THE RC-STATION, SOME 302,263 ANNUALLY. 29 ORIGINS OF VISITORS COMING TO THE INLAND EMPIRE Page 99 ESTIMATE OF POTENTIAL NUMBER OF VISITORS FROM LAS VEGAS THAT WOULD SPEND THE NIGHT IN THE CITY OF RC EMPIRE FORMULATED AN ALGORITHM TO ESTIMATE THE NUMBER VISITORS THAT WOULD SPEND THE NIGHT IN RC. 30 NUMBER OF LV VISITORS TO THE RC-STATION: 302,263 SHARE OF LV VISITORS STAYING IN RC IS ESTIMATED AT 20% ANNUALLY……………………………….. 60,453 DAILY NEW VISITORS ………………….…...166 DAILY WITH OVERLAPS………………….....497 (BASED UPON PEOPLE BEING IN RC FOR 3 NIGHTS) NUMBER OF HOTEL ROOMS ………………..199 (BASED UPON 2.5 PEOPLE PER HOTEL ROOM) *THESE ARE AVERAGES – DAILY AMOUNT WILL VARY DEPENDING UPON SEASONALITY AND WEEKENDS VS WEEKDAYS USING AN ESTIMATE STAY OF 3 NIGHTS, THE NUMBER OF VISITORS WOULD BE 497/DAY THAT WOULD USE RANCHO CUCAMONGA AS THEIR BASE FOR THEIR SC TOURIST ACTIVITIES. THESE PEOPLE WOULD OCCUPY 199 HOTEL ROOMS/AVG. PER DAY AND ALSO SUPPORT RESTAURANTS AND RETAIL IN THE VICINITY OF THE RC-STATION. 199 497 166 60,453 302,263 241,811 0%20%40%60%80%100% 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Hotel Room Equivalents 2.5 per room Total Number - With Overlaps Visitors from LV Staying in RC: 3 Night Trip Visitors from LV Staying in RC: New Daily Visitors from LV Staying in RC: Annually Visitors from LV Not Staying in RC: Annually Visitors from LV to IE Using BW-HSR % Southern California Visitors Captured Annual Vistors ESTIMATED NUMBER OF HOUSEHOLDS FROM LAS VEGAS USING RC AS THEIR BASE FOR SC TOURISM ACTIVITIES (BASED UPON PLAUSIBLE BUT CONSERVATIVE ASSUMPTIONS Would capture 1%of the 6M visitors to Southern California Page 100 I. ECONOMIC BENEFITS OF RAIL – POTENTIAL REAL ESTATE PREMIUMS 31 THE UNIVERSITY OF FLORIDA COLLEGE OF BUSINESS BERGSTROM REAL ESTATE CENTER PERFORMED AN ANALYSIS OF HOW PROPERTY VALUES WERE IMPACTED BY THE BF-HSR AND THEIR RESULTS WERE PUBLISHED IN JULY 2023. FOR EACH OF THE BF-HSR STATIONS, CHANGES IN PROPERTY VALUES WERE ANALYZED BEFORE AS WELL AS AFTER EACH OF THE FOLLOWING EVENTS 1-PUBLIC ANNOUNCEMENT 2-BEGINNING OF CONSTRUCTION 3-OPENING OF THE STATION FURTHERMORE, THESE PROPERTY VALUE CHANGES WERE THEN COMPARED: PROPERTIES CLOSEST TO THE STATION PROPERTIES FURTHEST FROM THE STATION THEN THE DIFFERENCES IN THE CHANGES IN THE PROPERTY VALUES FOR EACH OF THE THREE EVENTS WERE COMPARED FOR PROPERTIES THAT WERE CLOSEST RELATIVE TO THOSE THAT WERE FURTHEST FROM THE BRIGHTLINE STATIONS. ALTHOUGH THE PRICE CHANGES BETWEEN THE CLOSEST VERSUS THE FURTHEST PROPERTIES WERE DIFFERENT FOR EACH OF THE THREE EVENTS, THE OVERALL RESULTS REFLECTED ABOUT A 9% PREMIUM FOR THE RESIDENTIAL PROPERTY VALUES THAT WERE LOCATED CLOSEST TO EACH OF THE BRIGHTLINE STATIONS, AS COMPARED TO THOSE PROPERTIES THAT WERE FURTHEST. . Page 101 RECOMMENDED AMENITY LIST FOR INCOMING PASSENGERS FROM LAS VEGAS RC-STATION IS LIKELY TO CAPTURE A PORTION OF THE LV VISITORS WHO USE THE CITY AS THEIR BASE FOR LAUNCHING DAILY TRIPS. AMENITIES NEED TO BE DESIGNED OR LV TOURISTS HAVING A PLACE TO STAY FOR A FEW NIGHTS WHILE THEY ARE IN THE SC AREA. EMPIRE RECOMMENDS CERTAIN AMENITIES AT THE RC-STATION AND OTHER AMENITIES BE LEVERAGED NEARBY VIA SHUTTLE. 32 J. CONCLUSIONS ON TOURISM POTENTIAL FOR THE RC HSR STATION STATION AND NEARBY AMENITIES PROMOTE TOURISM THE CITY OF RC NEEDS TO WORK WITH THE BOARDS OF TOURISM FOR NEARBY CITIES AND ATTRACTIONS IN ADVANCE OF THE BW- HSR OPENING. CROSS PROMOTING TOURISM AND RC AS A PLACE TO STAY FOR SC, IF USING BW-HSR SHOULD BE A PRIORITY TO CAPTURE ANY TOURISM TRAFFIC. AMMENITY RC STATION INTERIOR RC SHUTTLE ELSEWHERE RC STATION NEARBY DEVELOPMENT AREA PARKING YES NO YES LUGGAGE STORAGE YES NO YES UBER DROP OFF YES YES YES TRANSIT CONNECTION YES NO NO INFO CENTER YES NO NO LOUNGE YES NO YES BAR YES YES YES CONVENIENCE STORE YES YES YES HOTEL No YES YES RESTAURANT YES YES YES Page 102 PART IVCONCLUSIONS AND RECOMMENDATIONS 33 1- KEY CONCLUSIONS THE BW-HSR IS EXPECTED TO START WITH 6,000,000 PASSENGER TRIPS BETWEEN THE RC-HSR STATION AND LAS VEGAS ANNUALLY. FURTHERMORE, SOME HOUSEHOLDS THAT RESIDE IN LV ARE EXPECTED TO USE THE BW-HSR FOR THEIR TOURISM ACTIVITIES IN SC. EMPIRE UTILIZED PLAUSIBLE BUT CONSERVATIVE ASSUMPTIONS TO ESTIMATE THE NUMBER OF SOME 60,500 ANNUALLY WOULD STAY IN RC. ACCORDING RC MAY WANT TO ESTABLISH/PROMOTE ITSELF AS A GATEWAY FOR TOURISM FOR VISITORS COMING FROM LV BY PLANNING FOR DEVELOPMENT THAT WOULD PROVIDE SUCH VISITORS WITH RELATED AMENITIES SUCH AS HOTELS, RESTAURANTS, RETAIL, AMONG OTHERS. 2- HYPOTHETICAL TIMELINE – SUBJECT TO REVISIONS DEPENDING UPON CONDITIONS BEING FULFILLED 2024: DEVELOP A CONCEPTUAL STRATEGIC PLAN FOR ACCOMMODATING VISITORS FROM LAS VEGAS FOR SC TOURISM ACTIVITIES. PART A: PLAN THE CHARACTERISTICS OF THE BW-HSR RC-STATION PART B: PLAN FOR NEARBY DEVELOPMENT: HOTEL, RESTAURANTS, AND RETAIL INCLUDING A LOCAL SHUTTLE AS TRAFFIC RAMPS UP PART C: WORK ON FORMING AN ALLIANCE TO USE THE BW- HSR COMING TO RC AS A DESTINATION STATION 2028: BW-HSR PASSENGER SERVICE COMMENCES BUT NEED TIME TO RAMP-UP TIME TO 6M PASSENGER TRIPS ANNUALLY PHASE 1: OFFER SHUTTLE SERVICE TO NEARBY HOTELS AS WELL AS RESTAURANTS AND RETAIL 2030? ONCE BENCHMARK OF 6M PASSENGER TRIPS IS ATTAINED, THEN PROCEED WITH A STRATEGIC DEVELOPMENT PLAN. PHASE 2: RC-STATION NEARBY DEVELOPMENTS: RESTAURANTS, HOTEL AND RETAIL THE SUCCESS OF SUCH A STRATEGIC PLAN IS BASED UPON SOME CRITICAL FUNDAMENTAL CONDITIONS: BRIGHTLINE WEST HSR ATTAINING ITS PROJECTED LEVEL OF SOME 6M PASSENGER TRIPS ANNUALLY. HSR PRICES BEING COMPETITIVE WITH ALTERNATIVE MODES OF TRANSPORTATION SUCH AS AIR, CAR AND BUS. RELEVANT PRODUCTS/SERVICES BEING PROMOTED AND PROVIDING POSITIVE CONSUMER EXPERIENCES. Page 103 SUPPLEMENTAL REMARKS POTENTIAL OTHER SOURCES OF DEMAND FOR BW-HSR RC-STATION 34 PRIMARY DEMAND FOR BW-HSR AND RC-STATION AMENITIES: RESIDENTS FROM LV COMING TO SC FOR TOURISM THE PRIMARY PURPOSE OF THE TRIP IS TO COME FROM LV TO SC FOR TOURISM. THESE PASSENGERS WILL UTILIZE THE BW-HSR FOR A ROUND TRIP. * THE ANALYSIS OF THE PRIMARY DEMAND CAN BE PERFORMED USING PLAUSIBLE/CONSERVATIVE ASSUMPTIONS, SINCE THERE IS A SUFFICIENT AMOUNT OF DATA AVAILABLE. SECONDARY DEMAND FOR BW-HSR AND RC-STATION AMENITIES: LV VISITORS THEN COMING TO SC FOR TOURISM THE PRIMARY PURPOSE OF THE TRIP IS TO COME TO LV – BUT SOME MAY ALSO WANT TO VISIT SC FOR TOURISM. THESE PASSENGERS WILL MOST LIKELY USE BW-HSR FROM LV TO RC-STAT ION BUT THEN PERHAPS FLY BACK FROM SC. EMPIRE CATEGORIZED THE LV VISITORS INTO THREE CATEGORIES, AS FOLLOWS: #1 VISITORS TO LV FROM THE THROUGHOUT THE UNITED STATES EXCLUDING SC: ESTIMATED FOR 2023: 37,500,000. #2 VISITORS THAT COME FOR CONVENTIONS: ESTIMATED FOR 2023: 6,000,000 THE BW-HSR MAY INDUCE SOME OF THESE TO ENJOY SOME OF THE SC TOURIST ACTIVITIES. #3 INTERNATIONAL VISITORS: ESTIMATED FOR 2023: 4,700,000 VISITORS FROM EUROPE AND ASIA WILL BE COMFORTABLE WITH THE BW-HSR, DUE TO THE PRESENCE OF HSR IN THEIR COUNTRIES. FOR THE SECONDARY DEMAND, THE AVAILABILITY OF DATA ARE COMPLEX SINCE IT INVOLVES TRACKING WHAT SHARE OF VISITORS COMING TO LV AS THEIR MAIN DESTINATION WOULD THEN MAKE A SECOND TRIP ON BW-HSR TO SC. THIS MAY BE A SUBSTANTIAL POTENTIAL OPPORTUNITY FOR RC THAT COULD BE RESEARCHED AT THE APPROPRIATE TIME. Page 104