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�' � � � II. NATURE OF THE ASSIGNMENT .� A. Purpose of the ValuaUon The purpose of this reuse valuation is to estimate a fair consideration to be paid by the Developer W the Agency for �e air rights parcel on Block 1, based upon the covenants and the conditions included in the Disposition and Development Agreement ("DDA"). The DDA restrictions and guidelines affect the charaderistics of the physical development and other features and impose certain requirements relating as to how the Project will be developed, to the operetion of the Project and to the transferability of the Developers interest. The covenants and conditions strongty affed the development economics of the Project and hence the ability of the Developer to pay for air rights. The reuse value specifically requires compliance with the limiting conditions and assumptions of this report as stated in Section VI. B. Definition oiVa/ue Fair reuse value is the fair market value in accordance with covenants, conditions, and - easements goveming the sale of the property (or air rights thereo� as contained in the DDA. it is the highest price in dollar terms which the property would be expected to bring for the specified purpose in a competitive and open market under the tertns and conditions in the DDA established by the Agency, with the buyer (Developer) and seller (Redevelopment Agency) each acting prudentiy and knowledgeably, assuming the price is rtot affected by undue stimulus. Also essential to an estimate of a fair market value is the notion that the conveyance of the property will resutt in near-term development, not speculation. Implicit in this definition is the consummation of a sale as of a spec�ed date under conditions whereby: 1. Both parties are well informed and well advised, and are each acting prudently in what R considers its own best interest. 2. Financing, if any, is on terms generally available to this Developer for the use proposed at the date the property is ready for construction. The reuse value represents a normal consideration for the property sold, unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the financing transaction. 3. The definition of reuse value is further augmented due to certain conditions imposed by the Agency, and assumptions as follows: Keyeer Mareton Associates, Inc. 18610.001\077•023.doc Page 3