W E L C O M E to the SB 1022 Real Estate Due Diligence Training SB 1022 Real Estate Due Diligence Training

State of California Real Estate Due Diligence State of California Real Estate Due Diligence The California Environmental Quality Act C.E.Q.A.

BSCC Training – Environmental Components Environmental Due Diligence Documentation Preliminary Site Assessments Compliance with California Environmental Quality Act (CEQA) Standard vs. Exception Mitigation Costs

Environmental Due Diligence Documentation Distinct from “Real Estate Due Diligence” Historical Uses of Property Disclosure of Known and Unknown Hazards Standard Documentation Required by PWB

Preliminary Site Assessments Objective and Purpose of Reports Standard Protocols – ASTM Guidelines Phase I, II, and III; Smart Field Work Must be Contemporary – One Year or Less No Assumption of Risk to Bond Holders or PWB Resources to Prepare Assessments

Environmental Documentation for Financing California Environmental Quality Act Accuracy of Project Description Disclosure of Potential Adverse Effects Agency that Prepares Documentation Types of CEQA Documents Evidence of Completion – Notice of Determination Community Issues Mitigation Measures – No Carpet! Resources: CDCR Environmental Services Branch

Questions?

State of California Real Estate Due Diligence For the SB 1022 Local Jail Construction Financing Programs Financing Programs For the SB 1022 Local Jail Construction Financing Programs Financing Programs

State of California Real Estate Due Diligence State of California Real Estate Due Diligence The investigation and analysis of the status and condition of title as it may impact the financing, use, or occupancy of a proposed project property.

State of California Real Estate Due Diligence State of California Real Estate Due Diligence What Projects Require Due Diligence? All Capital Outlay Projects All Capital Outlay Projects Projects that increase real property assets Projects that increase real property assets Projects that change functionality of property Projects that change functionality of property SB 1022, AB 900, and SB 81 Local Jail Construction Financing Program Project SB 1022, AB 900, and SB 81 Local Jail Construction Financing Program Project Proposals – –Examples: acquisitions, development projects, gifts, foreclosures, offers to dedicate, judicial settlements, etc. What Projects Require Due Diligence? All Capital Outlay Projects All Capital Outlay Projects Projects that increase real property assets Projects that increase real property assets Projects that change functionality of property Projects that change functionality of property SB 1022, AB 900, and SB 81 Local Jail Construction Financing Program Project SB 1022, AB 900, and SB 81 Local Jail Construction Financing Program Project Proposals – –Examples: acquisitions, development projects, gifts, foreclosures, offers to dedicate, judicial settlements, etc.

State of California Real Estate Due Diligence State of California Real Estate Due Diligence When is Due Diligence Conducted? During site acquisition phase During site acquisition phase During the preliminary plan phase of projects on state land During the preliminary plan phase of projects on state land As part of SPWB review As part of SPWB review Before pursuing lease revenue bond financing Before pursuing lease revenue bond financing For SB 1022, AB 900, and SB 81, prior to Project Establishment by the State Public Works Board For SB 1022, AB 900, and SB 81, prior to Project Establishment by the State Public Works Board When is Due Diligence Conducted? During site acquisition phase During site acquisition phase During the preliminary plan phase of projects on state land During the preliminary plan phase of projects on state land As part of SPWB review As part of SPWB review Before pursuing lease revenue bond financing Before pursuing lease revenue bond financing For SB 1022, AB 900, and SB 81, prior to Project Establishment by the State Public Works Board For SB 1022, AB 900, and SB 81, prior to Project Establishment by the State Public Works Board

State of California Real Estate Due Diligence State of California Real Estate Due Diligence The Due Diligence Interdependent Work Group DGS DGS Real Estate Officers Real Estate Officers Legal Counsel Legal Counsel CDCR CDCR Environmental Specialist Environmental Specialist BSCC BSCC Project Directors Project Directors DOF DOF Capital Outlay Analyst Capital Outlay Analyst Legal Counsel Legal Counsel County Staff County Staff The Due Diligence Interdependent Work Group DGS DGS Real Estate Officers Real Estate Officers Legal Counsel Legal Counsel CDCR CDCR Environmental Specialist Environmental Specialist BSCC BSCC Project Directors Project Directors DOF DOF Capital Outlay Analyst Capital Outlay Analyst Legal Counsel Legal Counsel County Staff County Staff

State of California Real Estate Due Diligence State of California Real Estate Due Diligence BSCC – FSOCDCR - ESS BSCC County DGS - OLS DOF AnalystDGS - RPSS DOF – OLS Typical Due Diligence Process Interdependence

State of California Real Estate Due Diligence State of California Real Estate Due Diligence The Real Estate Due Diligence Review Submission Package What are the county’s responsibilities? What are the county’s responsibilities? What are the county’s minimum submission requirements? What are the county’s minimum submission requirements? Initial due diligence package submission documents Initial due diligence package submission documents Additional county deliverables after DGS’ initial review Additional county deliverables after DGS’ initial review Future county deliverables prior to the bond sale Future county deliverables prior to the bond sale The Real Estate Due Diligence Review Submission Package What are the county’s responsibilities? What are the county’s responsibilities? What are the county’s minimum submission requirements? What are the county’s minimum submission requirements? Initial due diligence package submission documents Initial due diligence package submission documents Additional county deliverables after DGS’ initial review Additional county deliverables after DGS’ initial review Future county deliverables prior to the bond sale Future county deliverables prior to the bond sale

State of California Real Estate Due Diligence State of California Real Estate Due Diligence County Due Diligence Responsibilities Appraisal of Proposed Project Site (land-only) Appraisal of Proposed Project Site (land-only) Real estate title due diligence submissions Real estate title due diligence submissions Preliminary report Preliminary report Real property records Real property records Unrecorded rights certifications Unrecorded rights certifications Legal description, legal description plat map & title exceptions map Legal description, legal description plat map & title exceptions map Facilitate site inspections by the State Facilitate site inspections by the State Support or perform mitigation of “issues” Support or perform mitigation of “issues” Support update at time of bond sale Support update at time of bond sale County Due Diligence Responsibilities Appraisal of Proposed Project Site (land-only) Appraisal of Proposed Project Site (land-only) Real estate title due diligence submissions Real estate title due diligence submissions Preliminary report Preliminary report Real property records Real property records Unrecorded rights certifications Unrecorded rights certifications Legal description, legal description plat map & title exceptions map Legal description, legal description plat map & title exceptions map Facilitate site inspections by the State Facilitate site inspections by the State Support or perform mitigation of “issues” Support or perform mitigation of “issues” Support update at time of bond sale Support update at time of bond sale

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Initial County Package Submission Requirements Proposed Project Site Land Appraisal Provide an independent real estate appraisal identifying the Proposed Project’s Site land-only value Provide an independent real estate appraisal identifying the Proposed Project’s Site land-only value Completed by an appraiser with a valid Certified General License issued by the State of California Bureau of Real Estate Appraisers (BREA) Completed by an appraiser with a valid Certified General License issued by the State of California Bureau of Real Estate Appraisers (BREA) Conforming to DGS Appraisal Specifications Conforming to DGS Appraisal Specifications Submit independent appraisal prepared for RFA/RFP response Submit independent appraisal prepared for RFA/RFP response No prior independent appraisal – provide a new appraisal utilizing an October 24, 2013 effective date of value No prior independent appraisal – provide a new appraisal utilizing an October 24, 2013 effective date of value A DGS approved appraisal is required to maintain eligibility in the SB 1022, AB 900, and SB 81 Local Jail Construction Financing Programs A DGS approved appraisal is required to maintain eligibility in the SB 1022, AB 900, and SB 81 Local Jail Construction Financing Programs Initial County Package Submission Requirements Proposed Project Site Land Appraisal Provide an independent real estate appraisal identifying the Proposed Project’s Site land-only value Provide an independent real estate appraisal identifying the Proposed Project’s Site land-only value Completed by an appraiser with a valid Certified General License issued by the State of California Bureau of Real Estate Appraisers (BREA) Completed by an appraiser with a valid Certified General License issued by the State of California Bureau of Real Estate Appraisers (BREA) Conforming to DGS Appraisal Specifications Conforming to DGS Appraisal Specifications Submit independent appraisal prepared for RFA/RFP response Submit independent appraisal prepared for RFA/RFP response No prior independent appraisal – provide a new appraisal utilizing an October 24, 2013 effective date of value No prior independent appraisal – provide a new appraisal utilizing an October 24, 2013 effective date of value A DGS approved appraisal is required to maintain eligibility in the SB 1022, AB 900, and SB 81 Local Jail Construction Financing Programs A DGS approved appraisal is required to maintain eligibility in the SB 1022, AB 900, and SB 81 Local Jail Construction Financing Programs

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Initial County Package Submission Requirements Real Estate Title Due Diligence Review Preliminary Report Preliminary Report Provided by a title company authorized to issue title insurance Provided by a title company authorized to issue title insurance within the State of California is required Dated within three (3) months of submission Dated within three (3) months of submission Real property referred to (covered) in the report Real property referred to (covered) in the report Proposed Project Site Proposed Project Site Greater Parcel Area Greater Parcel Area Preliminary report updates may be necessary Preliminary report updates may be necessary When correcting an error or resolving an issue When correcting an error or resolving an issue Prior to the project’s lease-revenue bond sale Prior to the project’s lease-revenue bond sale Initial County Package Submission Requirements Real Estate Title Due Diligence Review Preliminary Report Preliminary Report Provided by a title company authorized to issue title insurance Provided by a title company authorized to issue title insurance within the State of California is required Dated within three (3) months of submission Dated within three (3) months of submission Real property referred to (covered) in the report Real property referred to (covered) in the report Proposed Project Site Proposed Project Site Greater Parcel Area Greater Parcel Area Preliminary report updates may be necessary Preliminary report updates may be necessary When correcting an error or resolving an issue When correcting an error or resolving an issue Prior to the project’s lease-revenue bond sale Prior to the project’s lease-revenue bond sale

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Initial County Package Submission Requirements Real Estate Title Due Diligence Review Real Property Records Real Property Records Provide copies of all recorded or unrecorded vesting documents, mineral interests, deeds, quit claims, purchase contracts, real estate agreements, title insurance policies, maps, legal descriptions, leases, memorandums of lease, lease termination statements, contracts, UCC filings, and other legal documents affecting the Greater Parcel Area from sources such as: Provide copies of all recorded or unrecorded vesting documents, mineral interests, deeds, quit claims, purchase contracts, real estate agreements, title insurance policies, maps, legal descriptions, leases, memorandums of lease, lease termination statements, contracts, UCC filings, and other legal documents affecting the Greater Parcel Area from sources such as: The title company for documents filed with the County Recorder The title company for documents filed with the County Recorder County files (county facility headquarters, local jail facility office, county archives, pending/active/closed project files, etc.) County files (county facility headquarters, local jail facility office, county archives, pending/active/closed project files, etc.) Provide recorded documents found outside of and in-addition to those recorded documents provided by the title company Provide recorded documents found outside of and in-addition to those recorded documents provided by the title company Assessor’s Parcel Map(s) Assessor’s Parcel Map(s)

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Initial County Package Submission Requirements Real Estate Title Due Diligence Review Real Estate Title Due Diligence Review Unrecorded Rights Certification Letters Unrecorded Rights Certification Letters Identify the existence, or lack thereof, of any and all unrecorded rights that potentially impact the Greater Parcel Area Identify the existence, or lack thereof, of any and all unrecorded rights that potentially impact the Greater Parcel Area Examples of Unrecorded Rights Examples of Unrecorded Rights Contracts, leases, licenses, agreements, memorandums of understanding with public or private entities or persons that affect the use and/or occupancy of the Greater Parcel Area. Contracts, leases, licenses, agreements, memorandums of understanding with public or private entities or persons that affect the use and/or occupancy of the Greater Parcel Area. Any potentially enforceable right another entity or person may claim allows for use, occupancy, or passage over the Greater Parcel Area Any potentially enforceable right another entity or person may claim allows for use, occupancy, or passage over the Greater Parcel Area Two (2) letters are required Two (2) letters are required One (1) letter prepared and signed by the local facility property manager One (1) letter prepared and signed by the local facility property manager One (1) letter prepared and signed by the county property manager One (1) letter prepared and signed by the county property manager Site inspections of the Greater Parcel Area must be performed and certified- to by each county staff member authorized to sign the letters Site inspections of the Greater Parcel Area must be performed and certified- to by each county staff member authorized to sign the letters

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Initial County Package Submission Requirements Real Estate Title Due Diligence Review Real Estate Title Due Diligence Review Title Exceptions Map Title Exceptions Map Identifies the Greater Parcel Area Identifies the Greater Parcel Area Plots and Labels all geographically locatable exceptions reflected on the preliminary report and encumbrances discovered during the on- site inspection Plots and Labels all geographically locatable exceptions reflected on the preliminary report and encumbrances discovered during the on- site inspection Subject to specific production standards Subject to specific production standards

Sample Title Exceptions Map

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Additional County Deliverable Requirements After The DGS’ Initial Review Legal Description & Accompanying Legal Description Plat Map Legal Description & Accompanying Legal Description Plat Map Identifies the proposed project site for facility construction Identifies the proposed project site for facility construction Included as exhibits within multiple lease-revenue bond documents Included as exhibits within multiple lease-revenue bond documents Final determination of the project site is subject to SPWB staff approval Final determination of the project site is subject to SPWB staff approval Subject to specific production standards Subject to specific production standards

Sample Legal Description

Sample Legal Description Plat Map

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Future County Deliverables And Additional Processes State to perform site-inspections State to perform site-inspections Mitigation of due diligence “issues” Mitigation of due diligence “issues” As part of SPWB review As part of SPWB review On a case-by-case basis as an Outstanding Issue on the due diligence On a case-by-case basis as an Outstanding Issue on the due diligence report to SPWB Real estate title due diligence update at bond sale Real estate title due diligence update at bond sale Timing directed by SPWB staff Timing directed by SPWB staff Updated preliminary report covering the Greater Parcel Area Updated preliminary report covering the Greater Parcel Area Updated Unrecorded Rights letters Updated Unrecorded Rights letters Construction location certification letter. Construction location certification letter. Interim management of the project site Interim management of the project site Open & honest communication Open & honest communication

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Getting Started The CRUISE Request For DGS Services The CRUISE Request For DGS Services Coordinated by BSCC Staff Coordinated by BSCC Staff Assignment or Update of DGS Customer Account Number (CAN) Assignment or Update of DGS Customer Account Number (CAN) –DGS Customer Service Managers Michael Cacciari (916) Michael Cacciari (916) Danielle Hand (916) Danielle Hand (916)

State of California Real Estate Due Diligence State of California Real Estate Due Diligence Questions Questions Answers &