Future of TOD

What does the future look like for development? Consider that U.S. Census Bureau projections indicate that population growth between now and the year 2025, in the seven western states CPC has targeted, will add 15 to 21 million new residents. CPC's immediate target market is a 600-mile radius of Portland, Oregon (an estimated commute time of approximately two hours by auto, charter aircraft, or scheduled air service). Projected population growth for this immediate target market is approximately 8 million new residents by 2025. At an average of 2.3 persons per household, 3.5 million new households will be formed by 2025, which means the future looks very bright, indeed.

In addition to the above statistics, the market demand in CPC's immediate 600 mile target area, based on the 30% homebuyers who are dissatisfied with their current subdivision location described above, would be over 1 million new residences in Master Planned communities in the next twenty years. At an average density of 8 units per acre (substantially lower than average densities preferred by "New Urbanism" standards), the population growth projections justify a minimum of 125,000 acres, or approximately 1,000 new neighborhoods, within Master Planned communities designed with an emphasis on Traditional Neighborhood Design and the principles of New Urbanism. A market share of just 10% of this type of product within Costa Pacific's 600-mile target market would mean 84 new projects the size of CPC's Orenco Station (148 acres) in the next 20 years.

Costa Pacific's brand is synonymous with Smart Growth. That helps enormously, because in growth controlled environments, where the supply of land for new development is constrained by growth management strategies such as Urban Growth Boundaries (UGB) and System Development Charges (SDC's), our political and community planning skills enable us to obtain entitlement approvals efficiently and quickly.

With the heightened national awareness of the effect of urban sprawl on the nation's health*, Costa Pacific Communities' specialty of creating Complete Communities, utilizing the tenets of New Urbanism, Traditional Neighborhood Design, and Smart Growth, will continue to grow in demand. We will use this heightened awareness to achieve greater national visibility and impact.

National researchers recently concluded "homebuyers are willing to spend 15.5 percent more money on their homes to live in New Urbanist-style housing developments that emphasize mixed-use neighborhoods, multi-modal transportation and architecture designed to foster social interaction."* They cited two examples - and both are Costa Pacific Communities master planned developments: Orenco Station and Villebois.

Costa Pacific's reputation is superb, the demand for our products and services is extremely strong, and we are prepared to expand our market share. The Company's success in master planning and developing successful communities has resulted in significant credibility and helped provide the opportunity to secure options on large parcels in the Western U.S.

In order to take advantage of these opportunities, the Company is seeking strategic partners that share our vision and recognize the incredible potential for our Complete Communities specialty (combining the principles of New Urbanism, Traditional Neighborhood Design and Smart Growth with the tenets unique to each community such as sustainability, diversity and connectivity). And most importantly, we see partners who understand the patient and significant capital needs of successful master planning and development. A strategic partner will enable Costa Pacific Communities to restructure its current funding, secure additional parcels (in both its current projects and potential projects which have been offered to the Company), and begin master planning and development on multiple projects.