Lincoln Boulevard Property-Based Assessment District Final Engineer s Report

Lincoln Boulevard Property-Based Assessment District Final Engineer s Report Santa Monica, California March 2015 Prepared by: Kristin Lowell Inc. Prepared pursuant to the State of California Property and Business Improvement District Law of 1994 And Article XIIID of the California Constitution to create a property based assessment district

TABLE OF CONTENTS ENGINEER S STATEMENT... 1 ENGINEER S REPORT: SECTION A: Legislative and Judicial Review... 2 SECTION B: Improvements and Activities... 4 SECTION C: Benefitting Parcels... 6 SECTION D: Proportional Benefits... 7 SECTION E: Special and General Benefits... 9 SECTION F: Cost Estimate... 13 SECTION G: Apportionment Method... 14 SECTION H: Assessment Roll... 16

Engineer s Report Page 1 of 17 ENGINEER S STATEMENT This Report is prepared pursuant to Article XIIID of the California State Constitution (Proposition 218) and the State of California Property and Business Improvement District Law of 1994 as amended. The Lincoln Boulevard Property-Based Assessment District (the Lincoln PBAD ) will provide funding for enhanced maintenance, safety, and marketing activities, above and beyond those provided by the City of Santa Monica. Every individual assessed parcel within the Lincoln PBAD receives special benefit from the activities identified under Section B of this Report. Only those individual assessed parcels within the Lincoln PBAD receive the special benefit of the proposed activities; parcels contiguous to and outside the Lincoln PBAD and the public at large may receive a general benefit, as outlined in Section E. The cost to provide general benefits, if any, will be funded from sources other than special assessments. The duration of the proposed Lincoln PBAD is thirteen (13) years, commencing January 1, 2016 and continuing through December 31, 2028. This term will coincide with the existing Downtown PBAD allowing for the zone and the Downtown PBAD to explore formal consolidation of services in 2028. An estimated budget for the Lincoln PBAD improvements and activities is set forth in Section D. The annual budget may increase no more than 5% per year consistent with the increase in consumer price index (CPI) and increases in program costs. The determination of annual budget adjustments and assessment rates will be subject to the review and approval of the board of Downtown Santa Monica Inc. (DTSM). Funding for the Lincoln PBAD improvements and activities shall be derived from a property-based assessment of each specially benefitted parcel in the Lincoln PBAD. A detailed description of the methodology for determining the proportional special benefit each individual assessable parcel receives from the activities and the assessment for each parcel is set forth in Section F. I hereby certify to the best of my professional knowledge that each of the identified assessable parcels located within the Lincoln PBAD will receive a special benefit over and above the benefits conferred to those parcels outside of the Lincoln PBAD boundary and to the public at large and that the amount of the proposed special assessment is proportional to, and no greater than the special benefits received. Respectfully submitted, Terrance E. Lowell, P.E.

Engineer s Report Page 2 of 17 SECTION A: LEGISLATIVE AND JUDICIAL REVIEW Property and Business Improvement District Law of 1994 The Property and Business Improvement District Law of 1994 (the State Law ) is the legislation that authorizes the City to levy assessments upon real property for the purposes of providing improvements and activities that specially benefit each individual assessed parcel in the PBAD. The purpose of the PBAD is to encourage commerce, investment, and business activities. In order to meet these goals PBADs typically fund activities and improvements, such as, enhanced safety and cleaning. Unlike other assessment districts which fund the construction of public capital improvements or maintenance thereof, PBADs provide activities and improvements to promote the economic revitalization and physical maintenance of the business districts of its cities in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (Streets and Highways Code Section 36601(b)). The improvements and activities funded through the PBAD are over and above those already provided by the City within the PBAD s boundaries. Each of the PBAD activities or improvements is intended to increase building occupancy and lease rates, to encourage new business development, attract businesses that serve the community, and improve the quality of life. Specifically, the State Law defines Improvements and Activities as follows: "Improvement" means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years 1 "Activities" means, but is not limited to, all of the following: (a) Promotion of public events which benefit businesses or real property in the district. (b) Furnishing of music in any public place within the district. (c) Promotion of tourism within the district. (d) Marketing and economic development, including retail retention and recruitment. (e) Providing safety, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Activities which benefit businesses and real property located in the district. 2 Article XIIID of the State Constitution In 1996, California voters approved Proposition 218, codified in part as Article XIIID of the State Constitution. Among other requirements, Article XIIID changes the way local agencies enact local taxes and levy assessments on real property. It states, in relevant part, that: (a) An agency which proposes to levy an assessment shall identify all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed. The proportionate special benefit derived by each identified parcel shall be determined in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the property related service being provided. No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and an agency shall separate the general benefits 1 California Streets and Highways Code, Section 36610. 2 California Streets and Highways Code, Section 36613.

Engineer s Report Page 3 of 17 from the special benefits conferred on a parcel. Parcels within a district that are owned or used by any agency, the State of California or the United States shall not be exempt from assessment unless the agency can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. (b) All assessments shall be supported by a detailed engineer's report prepared by a registered professional engineer certified by the State of California. 3 "Special benefit" means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does not constitute "special benefit." 4 Judicial Guidance Since the enactment of Article XIIID, the courts have rendered opinions regarding various aspects of Article XIIID. The notable portions of cases that apply to assessment districts in general and this Lincoln PBAD in particular are noted below. The engineer s report describes the services to be provided by the PBID [i.e. the PBAD]; (1) security, (2) streetscape maintenance (e.g., street sweeping, gutter cleaning, graffiti removal), and (3) marketing, promotion, and special events. They are all services over and above those already provided by the City within the boundaries of the PBID. And they are particular and distinct benefits to be provided only to the properties within the PBID, not to the public at large they affect the assessed property in a way that is particular and distinct from [their] effect on other parcels and that real property in general and the public at large do not share. 5 separating the general from the special benefits of a public improvement project and estimating the quantity of each in relation to the other is essential if an assessment is to be limited to the special benefits. 6 the agency must determine or approximate the percentage of the total benefit conferred by the service or improvement that will be enjoyed by the general public and deduct that percentage of the total cost of the service or improvement from the special assessment levied against the specially benefitted property owners. 7 even minimal general benefits must be separated from special benefits and quantified so that the percentage of the cost of services and improvements representing general benefits, however slight, can be deducted from the amount of the cost assessed against specially benefitting properties. 8 The contents of this Engineer s Report are prepared in compliance with the above noted authorizing legislation, the State Constitution and the judicial opinions. 3 Section 4, Article XIIID of the State Constitution. 4 Section 2 (i), Article XIIID of the State Constitution. 5 Dahms v. Downtown Pomona Property and Business Improvement District (2009) 174 Cal.App. 4th 708, 722. 6 Beutz v. County of Riverside (2010) 184 Cal. App. 4th 1516, 1532. 7 Golden Hill Neighborhood Association, Inc. v. City of San Diego (2011) 199 Cal.App. 4th 416, 438. 8 Golden Hill Neighborhood Association, Inc. v. City of San Diego (2011) 199 Cal.App. 4th 416, 439.

Engineer s Report Page 4 of 17 SECTION B: IMPROVEMENTS AND ACTIVITIES The Lincoln Boulevard PBAD Steering Committee collectively determined the priority for improvements and activities to be delivered by the business improvement district. The primary needs as determined by the property owners are both Environmental Enhancements as well as Marketing activities. The Environmental Enhancements include activities such as maintenance, public safety, and beautification. Specifically, the Lincoln PBAD shall provide the following activities. Environmental Enhancements Maintenance, Safety & Hospitality Ambassadors Lincoln Boulevard s Maintenance and Safety & Hospitality Ambassador program was developed based upon services currently being provided in the Downtown PBAD and DTSM s contractor. It provides for a level of service that is comparable to the existing Downtown PBAD Zone 3 maintenance and safety coverage, plus enhancements given the higher vehicular and pedestrian frequencies along the Lincoln corridor. The Lincoln PBAD s maintenance and safety budget is based upon the following deployment: Maintenance Team Frequency Hours of Deployment per Week 56 Average Weekly Coverage 8 hours per day/7 days per week Litter Removal/Pan & Broom Daily Pressure Washing As needed Graffiti Removal Daily as needed Light Landscape/Weeds Daily as needed Emergency Spot Cleaning As needed Maintenance of PBAD funded As needed beautification elements Safety & Hospitality Team Hours of Deployment per Week 112 Coverage 1 to 2 Ambassadors Monday thru Friday 7:00 a.m. to 9:30 p.m. 1 to 3 Ambassadors Saturday and Sunday 10:00 a.m. to 9:30 p.m. Foot Patrol Daily Visitor services, safety escorts, motorist Daily assist, homeless outreach Beautification Beautification funds support enhancements that improve the visual appearance of Lincoln Boulevard and may include: Wayfinding signage Seasonal decorations Flower planters Street furniture and amenities

Engineer s Report Page 5 of 17 Feasibility analyses and plans for design, streetscape and other physical improvements Other activities and improvements that visibly enhance the Lincoln Boulevard environment. Annual recommendations regarding the allocation of beautification will be developed by a Lincoln PBAD committee and then forwarded to the DTSM Board of Directors. The ENVIRONMENT activities account for 88% of the proposed PBAD budget. Economic Enhancements Marketing Activities aimed at working with property owners to improve Lincoln Boulevard s overall image, increase sales and building occupancies are part of the Lincoln PBAD Management Plan. Marketing programs and activities will aim to improve the overall image of Lincoln Boulevard with the goal of integrating Lincoln Boulevard into the overall marketing and promotion of Downtown Santa Monica, which will ultimately attract consumers, visitors and businesses to the Lincoln corridor. Examples of marketing activities include adding Lincoln Boulevard to downtown kiosks and directories and including Lincoln Boulevard businesses in applicable downtown promotions and events. The ECONOMIC activities account for 12% of the proposed PBAD budget. Administration An administrative cost of 10% has been included within the Lincoln PBAD budget. Examples of these costs include: Accounting and annual financial reports, Program support costs including supplies, equipment and rent, Communications to keep all Lincoln Boulevard stakeholders informed of policies, issues, challenges and opportunities, The City of Santa Monica s PBAD administration fee, Other administration costs associated with the overhead and administrative support of programs. To reduce administrative costs, increase leveraging of funds and to avoid duplication of enhanced services, the Lincoln PBAD will be managed by DTSM to deliver day-to-day services. DTSM can leverage Lincoln PBAD assessments with additional revenues, including sponsorship revenues, contracts, grants and earned income.

Engineer s Report Page 6 of 17 SECTION C: BENEFITTING PARCELS PBAD Boundary Description The Lincoln PBAD will encompass approximately 5 blocks of the core of the Lincoln Boulevard corridor which includes properties along Lincoln Boulevard from Wilshire Boulevard to the Interstate 10 Freeway. A map of the proposed district boundary is below.

Engineer s Report Page 7 of 17 SECTION D: PROPORTIONAL BENEFITS Methodology Article XIIID Section 4(a) of the State Constitution states that The proportionate special benefit derived by each identified parcel shall be determined in relationship to the entirety of the capital cost of the public improvement, the maintenance and operation expenses of a public improvement, or the cost of the property related service being provided. Determining the proportionate special benefit among the parcels of real property within the proposed assessment district which benefit from the proposed improvements, services, and activities is the result of a four-step process: 1. Defining the proposed activities, 2. Determining which parcels specially benefit from the proposed activities, 3. Determining the amount of special benefit each parcel receives, 4. Determining the proportional special benefit a parcel receives in relation to the amount of special benefit all other parcels in the PBAD receive. Each identified parcel within the Lincoln PBAD will be assessed based upon each parcel s unique characteristics in relationship to all other specially benefitted parcels characteristics. Due to the proportionate special benefits received by each parcel from the PBAD services, each parcel will be assessed a rate which is commensurate with the amount of special benefits received. Special Benefit Factor The method used to determine proportional special benefits are measured by each parcel s lot square footage or building square footage compared to the total assessable footages of all parcels in the district boundary. Building or Lot Square Footage: The greater of lot or building square footage for each parcel of real property are the primary assessment variables for all properties within the Lincoln PBAD. Benefits from all PBAD activities are designed to improve cleanliness, public safety, image, occupancy and sales, benefits that are distributed for all real property within the district. Developed parcels receive the greatest benefit from the proposed improvements and activities for the tenants, employees and pedestrians. For undeveloped parcels and parking lots, lot square footage acknowledges the benefits of these services to the ground level of property.

Engineer s Report Page 8 of 17 Property Use Considerations All parcels in the Lincoln PBAD benefit from the Environmental activities. However, parcels with residential and non-profit uses do not specially benefit from the Marketing activities. In order to ensure proportionality, these parcels will be assessed based on the following methodology: Treatment of Residential and Non-Profit Property: All residential and non-profit parcels receive the same level of service and special benefit from Environmental activities (i.e. clean and safety) as all other parcels in the Lincoln PBAD by making each of these parcels cleaner and safer. Specifically, these parcels specially benefit from PBAD activities, such as removing graffiti from their buildings, patrolling their sidewalks, cleaning up any debris and power washing their sidewalks. Thus, each of these parcels is assessed for the special benefits received from the Environmental activities services. However, these parcels will not receive special benefit from Marketing activities because those uses are not engaged in commercial or customer attraction activities, and will not specially benefit from the increased economic activities. Therefore, they will not be assessed for the Marketing activities. New assessments for a Change in Land Use: If any parcel within the Lincoln PBAD changes land use during the life of the Lincoln PBAD, it will be subject to the assessment rate consistent with the assessment methodology for the new land use.

Engineer s Report Page 9 of 17 SECTION E: SPECIAL and GENERAL BENEFITS State Law, Proposition 218, and judicial opinions require that assessments be levied according to the estimated special benefit each assessed parcel receives from the activities and improvements. Article XIIID Section 4(a) of the California Constitution in part states that only special benefits are assessable, which requires that we separate the general benefits, if any, from the special benefits provided by the proposed activities and improvements. As of January 1, 2015, the State Legislature amended the State Law to clarify and define both special benefit and general benefit as they relate to the improvements and activities these districts provide. Specifically, the amendment (Section 36615.5 of the Streets and Highways Code) defines special benefit as follows: Special benefit means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. In addition, the amendment (Section 36609.5 of the Streets and Highways Code) defines general benefit as follows: General benefit means, for purposes of a property-based district, any benefit that is not a special benefit as defined in Section 36615.5. Furthermore, the amendment (Section 36601(h)(2)) states: Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed. Therefore, for special benefits to exist as a separate and distinct category from general benefits, the incidental or collateral effects of those special benefits are inherently part of those special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. Special Benefit Analysis All special benefits derived from the assessments outlined in this Report are for property-related activities that are specifically intended for and directly benefiting each individual assessed parcel in the PBAD. The special benefit must affect the individual assessable parcel in a way that is particular and distinct from its effect on other parcels and that real property in general and the public at large do not share. No parcel s assessment shall be greater than the special benefits received. Streets and Highways Code Section 36601(e) states that Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits: (1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied. (2) Job creation. (3) Business attraction. (4) Business retention. (5) Economic growth. (6) New investments.

Engineer s Report Page 10 of 17 The Lincoln PBAD s goal is to fund activities and improvements to provide a cleaner, safer and more attractive and economically vibrant environment as outlined in Section B. The goal of improving the economic vitality is to improve the safety, cleanliness, marketing and appearance of each specially benefitted parcel in an effort to increase commerce, to increase building occupancy and lease rates and to attract more customers, employees, tenants and investors. Each parcel will specially benefit from: Cleaner sidewalks, streets and common areas Real and perceived public safety improvements Greater pedestrian traffic Enhanced rental incomes Improved business climate New business and investment Well managed programs and services Specifically, each parcel benefits from each of the PBAD activities as defined below. Safety The enhanced safety activities make the area more attractive for businesses, customers, and residents, and ultimately private investment. When business location decisions are made, lower levels of public safety lead to increased uncertainty in decision making and can be perceived as a signal of a socio-institutional environment unfavorable for investment. Uncertainty affects the investment environment in general. But in particular, it increases the fear of physical damage to investment assets (or to people) or their returns Almost universally, places with lower crime rates are perceived as more desirable. 9 Once economic investment occurs within the district, pedestrian traffic and commercial activity will increase. The special benefit to assessed parcels from these services is the likelihood of increased lease rates and tenant occupancy due to the increase of commercial activity and an increase in customers that follow from having a safer environment. In addition, each specially benefitted parcel benefits from: increased security patrol, removing graffiti from their buildings, connecting the homeless to available resources, reducing the number of trips and falls by repairing the grout in the sidewalks in front of their parcel, picking up trash that pedestrians leave behind, and power washing their sidewalks. Maintenance and Beautification The maintenance and beautification activities benefit each assessed parcel within the Lincoln PBAD by providing a clean and aesthetically appealing environment. This is achieved through sidewalk sweeping and power washing, removing litter and graffiti, and trash removal. In addition, the beautification activities benefit each assessed parcel by providing an aesthetically appealing environment through wayfinding signage, sidewalk benches, holiday décor, planters, etc. These activities create the environment needed to achieve the PBAD goals. 9 Accelerating economic growth and vitality through smarter public safety management IBM Global Business Services Executive Report, September 2012, pg. 2

Engineer s Report Page 11 of 17 Marketing The Marketing activities are tied to and will specially benefit each commercial parcel by encouraging business development and investment that generates customer traffic, which directly relates to increases in commercial activity, filling of vacant storefronts and offices and ultimately, increased lease rates for retail and office space. Neither residential nor non-profit parcels will receive special benefit from the Marketing activities as they are not engaged in commercial or customer attraction activities. Therefore, they will not be assessed for the Marketing portion of the PBAD budget. Special Benefit Conclusion Based on the special benefits each assessed parcel receives from the PBAD activities we conclude that each of the proposed activities provides special benefits to the real property within the district and that each parcel s assessment is in direct relationship to and no greater than the special benefits received. The special benefit to parcels from the proposed PBAD activities and improvements described in this Report are equal to or exceeds the total amount of the proposed assessment. Each individual assessed parcel s assessment is no greater than the special benefit it receives from the PBAD activities. General Benefit Analysis As required by the State Constitution Article XIIID Section 4(a), the general benefits of an assessment district must be quantified and separated out so that the cost of the activities that are attributed to general benefit are deducted from the cost assessed against each specially benefitted parcel. General benefits are benefits from the PBAD activities and improvements that are not special in nature, are not particular and distinct and are not over and above the benefits that other parcels receive. This analysis will evaluate and determine the level of general benefits that (1) parcels outside of the Lincoln PBAD, and (2) the public at large may receive. General Benefit to Parcels Outside of the Lincoln PBAD All the PBAD activities and improvements are provided solely to each of the individual assessed parcels in the Lincoln PBAD boundary. Each of the PBAD activities is provided to the public rights-of-way (streets, sidewalks) adjacent to all specially benefitted parcels in the PBAD. In the case of the Lincoln Boulevard PBAD the surrounding parcels are either primarily residential or are parcels that are currently in the existing Downtown PBAD that already receive services. In either case, none of the surrounding parcels will directly receive any of the PBAD activities. Any benefits these parcels may receive are incidental to providing special benefits to the assessed parcels, and thus any cost associated to the incidental benefits are not reduced from the cost of providing special benefit. General Benefit to the Public At Large In addition to the general benefit analysis to the parcels outside of the Lincoln PBAD boundary, we also quantify the general benefits to the public at large, i.e., those people that are either in the Lincoln PBAD boundary and not specially benefitted from the activities or people outside of the Lincoln PBAD boundary that may benefit from the PBAD activities. In the case of the Lincoln PBAD the public at large are those people that are within the Lincoln PBAD boundary that do not pay an assessment and do not specially benefit from the PBAD activities.

Engineer s Report Page 12 of 17 To calculate the general benefit the public at large may receive we determine the percentage of each PBAD activity budget that may benefit the general public. In this case, the Safety activities may generally benefit the public as the general public may appreciate the enhanced level of security as it passes through the Lincoln PBAD. The Maintenance, Beautification and Marketing activities are tailored to benefit the physical characteristics of the parcels, buildings and sidewalks or the tenants of each parcel and are not intended to benefit the general public. If there are any public benefits, they are incidental and collateral to providing special benefits to the assessed parcels. The table below shows the budget for the Safety program and its respective percentage of the total PBAD budget. We then apply a Relative Benefit factor to this activity. The relative benefit factor is a basic unit of measure that compares the benefit the general public receives compared to the public that specially benefits (employees, tenants, customers) from each activity. Since the specially benefitted public receives 100% of the activities it is assigned a relative benefit factor of 1.0 for the Safety activity, and the general public is assigned a relative benefit factor of 0.25. This takes into consideration that this is a coastal community in which pedestrian traffic may be passing through the district onto another destination, e.g. 3 rd Street Promenade, the beach, or in the near future the Metro light rail station. The relative benefit factor is then multiplied by the PBAD activity s budget percentage to determine the overall benefit factor. The following table illustrates this calculation. PBAD Activity A B C D E Budget Amount % of Budget General Benefit Factor General Benefit Percent (B x C) General Benefit Allocation (A x D) Safety $157,667 34.54% 0.25 8.63% $13,614 This analysis indicates that 8.63% for Safety activities may be attributed to general benefit to the public at large, equaling a total of $13,614 that must be raised from sources other than special assessments. General Benefit Conclusion Using the sum of the two measures of general benefit described above we find that $13,614 may be general in nature and will be funded from sources other than special assessments.

Engineer s Report Page 13 of 17 SECTION F: COST ESTIMATE 2016 Operating Budget The Lincoln PBAD s operating budget takes into consideration: 1. The improvements and activities needed to provide special benefits to each individual parcel within the Lincoln PBAD boundary (Section B), 2. The parcels that specially benefit from said improvements and activities (Section C), and 3. The costs associated with the special and general benefits conferred (Section E). EXPENDITURES Budget Administration 10% TOTAL BUDGET % of Budget Maintenance $121,667 $12,167 $133,833 29.32% Safety & Hospitality $143,333 $14,333 $157,667 34.54% Beautification $100,000 $10,000 $110,000 24.10% Marketing $50,000 $5,000 $55,000 12.05% Total Expenditures $415,000 $41,500 $456,500 100.00% REVENUES Assessment Revenues $442,886 97.02% Other Revenues (1) $13,614 2.98% Total Revenues $456,500 100.00% (1) Other non-assessment funding to cover the cost associated with general benefit. Budget Notations 1. The annual budget may increase no more than 5% per year consistent with the increase in consumer price index (CPI) and increases in program costs. The determination of annual budget adjustments and assessment rates will be subject to the review and approval of the board of Downtown Santa Monica Inc. and the City Council.

Engineer s Report Page 14 of 17 SECTION G: APPORTIONMENT METHOD As previously discussed in Section D, the Lincoln PBAD is segregated and into three land use types that benefit differently from the PBAD activities. The table below summarizes the assessable lot or building square footage for each land use type. Land Use Lot or Building Sq. Ft. Commercial 1,110,000 Residential 66,500 Non-Profit 125,000 Calculation of Assessments Based on the land use type, assessable lot or building square footage and the proposed budget, all of which are discussed above, the first year s maximum annual assessment rate for each parcel follows: Estimated Rates of Assessment Lot or Building Sq. Ft. Maintenance 0.108 Safety & Hospitality 0.116 Beautification 0.089 Marketing 0.050 Total Commercial 0.363 Total Residential 0.313 Total Non-profit 0.157 The following example illustrates how the preceding rates are applied to parcels within the Lincoln PBAD. Property Characteristic Building Sq. Ft. Lot Sq. Ft. Greater of Rate Annual Assessment Commercial 10,000 5000 10,000 0.363 $3,630.00 Residential 2500 1500 2500 0.313 $782.50 Non-profit 1500 3000 3000 0.157 $471.00 The assessment calculation is the same for every parcel in the Lincoln PBAD. Maximum Annual Assessment Adjustments The annual budget may increase no more than 5% per year consistent with the increase in consumer price index (CPI) and increases in program costs. The maximum assessment for each year of the district, based on a maximum 5% annual increase of the budget over the prior year, is shown in the following table.

Engineer s Report Page 15 of 17 Commercial Residential Non-profit Year 1 0.363 0.313 0.157 Year 2 0.381 0.329 0.164 Year 3 0.400 0.345 0.173 Year 4 0.420 0.362 0.181 Year 5 0.441 0.381 0.190 Year 6 0.463 0.400 0.200 Year 7 0.486 0.420 0.210 Year 8 0.510 0.441 0.220 Year 9 0.536 0.463 0.231 Year 10 0.563 0.486 0.243 Year 11 0.591 0.510 0.255 Year 12 0.620 0.535 0.268 Year 13 0.651 0.562 0.281 Budget Adjustment Any annual budget surplus or deficit will be rolled into the following year s PBAD budget. The budget will be set accordingly, within the constraints of the management plan to adjust for surpluses or deficits that are carried forward. Future Development Based on new development in the Lincoln PBAD, the amount of assessable square footage in the Lincoln PBAD may change over time. These changes could modify the total square footage assessed for affected parcels. Therefore, in future years, the assessments levied against Lincoln PBAD parcels may change in accordance with the assessment methodology formula and rates in the Management District Plan and Engineer s Report. Changes to the assessment formula would require the approval of an amendment to the Management Plan.

Engineer s Report Page 16 of 17 SECTION H: ASSESSMENT ROLL The total assessment amount for FY 2015-16 is $442,886 apportioned to each individual assessed parcel, as follows. APN Owner Name Site Address Parcel Assmt 4282009017 1231 LINCOLN NO 173 LLC 1233 LINCOLN BLVD $2,722.51 4282010047 1315 SANTA MONICA LLC 1307 LINCOLN BLVD $8,167.50 4291021003 1414 LINCOLN BLVD LLC 1414 LINCOLN BLVD $2,722.50 4291021005 1424 LINCOLN BLVD LLC 1424 LINCOLN BLVD $2,795.10 4282028009 1547 LINCOLN BLVD ASSOCIATES 1547 LINCOLN BLVD $2,722.50 4290002008 1650 LINCOLN NMS LLC 1650 LINCOLN BLVD $5,887.81 4290002007 1658 LINCOLN NMS LLC 1658 LINCOLN BLVD $2,722.50 4290002006 1660 LINCOLN NMS LLC 1660 LINCOLN BLVD $2,722.50 4291021012 ANDERSON, SUSAN J 1452 LINCOLN BLVD $2,722.50 4282027019 ARIAN, SYLVIA TR 1431 LINCOLN BLVD $2,722.50 4282010020 ARYA LP 1323 LINCOLN BLVD $2,722.50 4282027021 BARCHESTER CALIFORNIA LP 1421 LINCOLN BLVD $2,722.50 4282027029 BARCHESTER CALIFORNIA LP 1411 LINCOLN BLVD $5,445.00 4291007024 BOYS CLUB OF SANTA MONICA 1238 LINCOLN BLVD $6,050.47 4291008008 BRADMORE LINCOLN LLC 1334 LINCOLN BLVD $2,722.50 4282009018 BRAND, CARMELLA TR ET AL 1227 LINCOLN BLVD $2,722.50 4291021015 BRENTWOOD COTTAGE LLC 719 BROADWAY $907.50 4283003010 CA SM NO ONE LP 1669 LINCOLN BLVD $21,065.25 4291007025 CENTENNIAL WILSHIRE L P 720 WILSHIRE BLVD $9,361.41 4282027026 CHECKER BOARD PROPERTIES INC 800 SANTA MONICA BLVD $5,445.00 4282009053 DOUGLAS EMMETT 1997 LLC 808 WILSHIRE BLVD $27,313.21 4290002010 DUNLAP, BRODERICK 1670 LINCOLN BLVD $8,111.09 4282028020 DURLEY PARK MANAGEMENT CORP 1515 LINCOLN BLVD $8,167.50 4291008012 EQUITY ASSOCIATES INC 1352 LINCOLN BLVD $1,996.50 4291008013 EQUITY ASSOCIATES INC 1352 LINCOLN BLVD $726.00 4291008014 EQUITY ASSOCIATES INC 717 SANTA MONICA BLVD $2,991.12 4282009014 FARZAM, MAURICE 1243 LINCOLN BLVD $2,722.50 4282009027 FARZAM, MAURICE AND NOOSHIN 1237 LINCOLN BLVD $2,347.50 4283001001 FSTAR 1601 LLC 1601 LINCOLN BLVD $12,094.98 4283001002 FSTAR 1613 LLC 1613 LINCOLN BLVD $11,702.58 4283002006 FSTAR 1637 LLC 1637 LINCOLN BLVD $13,312.58 4283003012 FSTAR 1641 LLC 1641 LINCOLN BLVD $7,574.27 4282028018 HAIEM LTD PTNSHP NO 2 1533 LINCOLN BLVD $2,722.50 4282028019 HAIEM LTD PTNSHP NO 2 1527 LINCOLN BLVD $2,722.50 4291008003 HAINE, GEORGE A TR 720 ARIZONA AVE $1,017.25 4281035025 HUNT SANTA MONICA PROPERTIES 805 WILSHIRE BLVD $5,445.00 4290001012 JIVANI, ABDULAZIZ AND SAKER 1624 LINCOLN BLVD $8,090.70 4291008015 KARAGHOSSIAN, OSKO 731 SANTA MONICA BLVD $3,630.00 4291008026 KIRKEBY TRUST PROPERTIES 1310 LINCOLN BLVD $10,122.98 4291021028 LINBRO PROPERTIES LLC 723 BROADWAY $3,380.00 4291008011 LINCOLN EQUITIES 1346 LINCOLN BLVD $2,722.50

Engineer s Report Page 17 of 17 APN Owner Name Site Address Parcel Assmt 4291008027 LINCOLN EQUITIES 1340 LINCOLN BLVD $5,445.00 4282027033 LINCOLN WALK STUDIOS LP 1447 LINCOLN BLVD $18,463.40 4291021011 LINCOLNWAY PARTNERS LLC 1448 LINCOLN BLVD $2,722.50 4282027018 LUXE 1441 LINCOLN LLC 1437 LINCOLN BLVD $2,722.50 4282027028 LUXE 1441 LINCOLN LLC 1443 LINCOLN BLVD $4,537.50 4291007003 MAXSER AND CO 1218 1/2 LINCOLN BLVD $2,722.50 4282028010 MORGAN,KATIE P TR 1543 LINCOLN BLVD $2,722.50 4282028016 NAIMI, KAYVAN N AND FARINAZ S 1507 LINCOLN BLVD $2,722.50 4282028017 NAIMI, KAYVAN N AND FARINAZ S 804 BROADWAY $2,722.50 4290001016 NASON, FREDERICK N JR TR ET AL 700 COLORADO AVE $7,943.00 4291007008 NEW 725 ARIZONA AVENUE SM LLC 1260 LINCOLN BLVD $14,375.89 4291021007 NMS 1444 LINCOLN LLC 1432 LINCOLN BLVD $2,722.50 4291021008 NMS 1444 LINCOLN LLC 1438 LINCOLN BLVD $1,361.25 4291021009 NMS 1444 LINCOLN LLC 1440 LINCOLN BLVD $1,361.25 4291021010 NMS 1444 LINCOLN LLC 1444 LINCOLN BLVD $2,722.50 4291022024 NMS 1550 LINCOLN LLC 1560 LINCOLN BLVD $13,612.50 4291008025 NMS1318LINCOLN LLC 1318 LINCOLN BLVD $5,445.00 4291021006 NMS1430LINCOLN LLC 1430 LINCOLN BLVD $2,722.50 4282028011 PERLITER, HAROLD CO TR 1537 LINCOLN BLVD $2,722.50 4282009029 ROBERTS BUILDING WEST LLC 1255 LINCOLN BLVD $5,562.25 4282010024 ROBERTS BUILDING WEST LLC 1303 LINCOLN BLVD $2,722.50 4291022005 SAFEWAY INC 1526 LINCOLN BLVD $2,722.50 4291022006 SAFEWAY INC 1534 LINCOLN BLVD $2,722.50 4290001020 SANTA MONICA AUTO PLAZAS LLC 1626 LINCOLN BLVD $10,094.60 4291007004 SANTA MONICA BOY S CLUB INC 1222 LINCOLN BLVD $1,177.50 4282010015 SHERIDAN FAMILY PARTNERSHIP 801 SANTA MONICA BLVD $8,167.50 4282010016 SHERIDAN FAMILY PARTNERSHIP 1347 LINCOLN BLVD $4,937.53 4282010017 SHERIDAN FAMILY PARTNERSHIP 1343 LINCOLN BLVD $2,722.50 4282010018 SHERIDAN FAMILY PARTNERSHIP 1339 LINCOLN BLVD $2,722.50 4282010019 SHERIDAN FAMILY PARTNERSHIP 1335 LINCOLN BLVD $2,722.50 4290001023 SIEVERS, CHARLES AND CAROL J 718 COLORADO AVE $7,943.00 4291021004 SNYDER, BEVERLIE G AND 1418 LINCOLN BLVD $2,722.50 4282028802 SO CALIF EDISON CO LTD 801 COLORADO AVE $5,445.00 4282027020 SPOLIANSKY, GUSTAVO D TRUST 1427 LINCOLN BLVD $2,722.50 4282009013 SUSKO FAMILY PTNSHP 1247 LINCOLN BLVD $2,722.50 4290001900 U S POSTAL SERVICE 1637 7TH ST $1,524.31 4290001901 U S POSTAL SERVICE 1623 7TH ST $3,149.26 4290002900 U S POSTAL SERVICE 1653 7TH ST $7,805.73 4291022003 VONS COMPANIES INC 1500 LINCOLN BLVD $2,722.50 4291022004 VONS COMPANIES INC 1518 LINCOLN BLVD $2,722.50 4291022025 VONS COMPANIES INC 1500 LINCOLN BLVD $8,167.50 4291008005 WC DEVELOPMENT LLC 1312 LINCOLN BLVD $2,722.50 4291021001 ZUKIN, JEFREY G CO TR ET AL 718 SANTA MONICA BLVD $4,606.47 4291021002 ZUKIN, JEFREY G CO TR ET AL 1410 LINCOLN BLVD $2,722.50 TOTAL ASSESSMENT $442,886