HomeMy WebLinkAbout2000-11-21; City Council; 15964; 1635 Faraday AvenueCITY OF CARLSBAD - AGENLJA BILL ‘W +g
AB# s9-u T’TLE: EXERCISE OF PURCHASE OPTION ON THE DEPT HD.
MTG. 11121100 PROPERTY LOCATED AT 1635 FARADAY AVENUE CITY ATTY. -zE
DEPT. m AND APPROPRIATING FUNDS CITY MGR. +‘=
RECOMMENDED ACTION:
1. Approve Resolution No. a!w.d authorizing the Mayor to take whatever actions are necessary to
exercise the purchase option for the office building at 1635 Faraday Avenue, as specified in the lease
agreement with Faraday Business Plaza, LLC, and appropriating funds.
2. Approve resolution No.~~~~~declaring the City’s intention to reimburse expenditures from the
proceeds of obligations to be issued by the City, and directing certain actions.
ITEM EXPLANATION:
In October of 1998, Council approved a IO-year lease agreement for the Faraday Center located at
1635 Faraday Avenue. The lease commenced on November 15, 1999, which was the completion
date for the building. The agreement calls for lease payments at the rate of $74,8j6.50 per month,
adjusted upward by 3.5% per year. This puts the rent at $77,435, as of November 15, 2000. The
lease also contains an option to purchase the building for $9.1 million. The option can be exercised
anytime between November 16,2000, and November 15,200l.
In order to evaluate the reasonableness of the option purchase price in today’s market, an appraisal
of the property was requested from the Tagg Company. The report (on file with the City Clerk) shows
a market value for the property of $12 million, with a date of value of October 16, 2000.
Thus, at this point in time, there are two options available to Council. You may continue to lease the
building for another nine years under the current lease agreement. This option has a present value
cost of $7.3 million (calculated as the present value of the future lease payments). The other option is
for Council to exercise the purchase option. The cost of this option is approximately $4.1 million
assuming a residual value of the property at the end of nine years of $8.5 million. Staff
recommendation is to exercise the purchase option as it is the least cost alternative and gives the City
more control over its future office space solutions.
As part of the original lease agreement, Council has already approved the Purchase Agreement and
Escrow Instructions (the Agreement) to be used if the option is exercised (document attached). The
terms of the option require the City to execute the Agreement and open escrow within five days of
giving the owner notice that the City will be exercising its option. The Agreement contemplates
closing escrow no more than 30 days later.
In order to be able to refinance the property with tax-exempt debt, Council will also need to adopt the
second resolution attached to this agenda bill. This resolution declares the City’s it-&t to reimburse
itself for the purchase using the proceeds of tax-exempt debt. The maximum amount stated in the resolution is $12 million. This amount is greater than the purchase price of $9.1 million as it must also
cover issuance costs and a reserve fund, if needed. The actual amount of debt will be determined
when the refinancing occurs.
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FISCAL IMPACT:
Public facility fees (PFF) in the amount of $900,000 per year have been programmed in the Capital
Improvement Program for the next nine years to pay for the future lease payments on the Faraday
Center. If the purchase option is exercised, staff would recommend using public facility fees to pay
for the building and then refinancing the purchase shortly thereafter. There are sufficient PFF funds
available to finance the entire purchase for a short period of time. When the building is refinanced, the money will be returned to the PFF fund.
Once refinanced, the debt payments are expected to be only slightly higher than the lease payments
currently shown in the CIP and, thus, are not expected to impact the timing or development of any
other PFF project. Based on current interest rates, annual debt payments may range between
$950,000 and $1.3 million depending upon the term of the issue.
The refinancing can be achieved either through a public bond offering (such as a Certificate of Participation) or through a private placement. A public bond offering is the traditional method of debt
financing where an official statement is written describing the debt and the bonds are offered for sale
to the public at large. A private placement is a method usually used only for smaller debt issues (under $15 million) where the entire issue is sold to one investor, usually a bank or financial
institution. Both of these methods can use competitive bidding to ensure the lowest cost. Once the
purchase has been approved, further analysis will be done to determine the least-cost financing
vehicle for the City. At that time, all documents will be brought before Council for approval.
EXHIBITS:
1. Resolution No.aq authorizing the Mayor to take whatever actions are necessary to
exercise the purchase option for the office building at 1635 Faraday Avenue, as specified in the
lease agreement with Faraday Business Plaza, LLC, and appropriating funds.
2. Resolution No. ab&%3?aeclaring intention to reimburse expenditures from the proceeds of
obligations to be issued by the City, and directing certain actions.
3. Purchase Agreement and Escrow Instructions.
4. Appraisal Report for 1635 Faraday Avenue dated October 24, 2000 (on file with the City Clerk).
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RESOLUTION NO. 2000-344
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF CARLSBAD, CALIFORNIA AUTHORIZING
THE MAYOR TO TAKE WHATEVER ACTIONS
ARE NECESSARY TO EXERCISE THE PURCHASE
OPTION FOR THE OFFICE BUILDING AT
1635 FARADAY AVENUE AS SPECIFIED IN THE
LEASE AGREEMENT WITH FARADAY BUSINESS
PLAZA, LLC, AND APPROPRIATING FUNDS
WHEREAS, on October 15, 1998, the City of Carlsbad
entered into a lease agreement with Faraday Business Plaza, LLC, for the lease
of the building located at 1635 Faraday Avenue; and,
WHEREAS, the aforementioned lease agreement contains
an option to purchase the property for $9.1 million, which can be exercised
anytime between the thirteenth and the twenty-fourth month of the lease; and,
WHEREAS, the lease agreement provides a Purchase
Agreement and Escrow Instructions to be used for the exercise of the option; and,
WHEREAS, the period in which the option can be exercised
began on November 16,200O; and,
WHEREAS, there are sufficient funds available in the Public
Facilities Fees fund to purchase the building.
NOW, THEREFORE, BE IT RESOLVED by the City Council
of the City of Carlsbad, California, as follows:
1. That the above recitations are true and correct.
2. That the Finance Director is authorized to give notice to
Faraday Business Plaza, LLC, of the City’s intent to exercise the option as
outlined in the lease agreement.
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3. That the Mayor is authorized to sign the Purchase
2 Agreement and Escrow Instructions as contained in the lease agreement between
3 Faraday Business Plaza, LLC, and the City of Carlsbad, as well as any and all
4 other documents necessary to complete the purchase of the building.
5 4. That an appropriation of $ 9.1 million is authorized from
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Public Facilities fees for the purchase of the building and the Finance Director is
authorized to transfer funds to the Escrow Account as required under the Purchase
Agreement and Escrow Instructions.
PASSED, APPROVED, AND ADOPTED at a regular meeting of
the Carlsbad City Council held on the 21st day of November ,200O by
the following vote, to wit:
AYES: Council Members Lewis, Hall, Finnila, Nygaard and Kulchin.
NOES: None
ABSENT: None
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VRAINEF. WOOD, City Clerk
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(SEAL)
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RESOLUTION NO. 2000-345
A RESOLUTION DECLARING INTENTION
TO REIMBURSE EXPENDITURES FROM
THE PROCEEDS OF OBLIGATIONS TO BE
ISSUED BY THE CITY, AND DIRECTING
CERTAIN ACTIONS
WHEREAS, the City proposes to undertake the project referenced
below, to enter into a long term financing lease, which may, if financially advantageous to
the City, be participated out through Certificates of Participation (in either case, the
“Obligations”) to finance such project and use a portion of the proceeds of the
Obligations to reimburse expenditures made for the project prior to the issuance of the
Obligations; and
WHEREAS, United States Income Tax Regulations section 1 .I 50-
2 provides generally that proceeds of tax-exempt obligations are not deemed to be
expended when such proceeds are used for reimbursement of expenditures. made prior
to the date of issuance of such obligations unless certain procedures are followed, one of
which is a requirement that (with certain exceptions), prior to the payment of any such
expenditure, the issuer declares an intention to reimburse such expenditure; and
WHEREAS, it is in the public interest and for the public benefit that
the City declares its official intent to reimburse the expenditures referenced herein.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Carlsbad, California, as follows:
1. The City intends to issue the Obligations for the purpose of
paying the costs of acquiring the two-story, 68,000 square office building presently being
leased by the City, located at 1635 Faraday Avenue in the City of Carlsbad (the
“Project”).
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2. The City hereby declares that it reasonably expects (i) to pay
certain costs of the Project prior to the date of issuance of the Obligation and (ii) to use a
portion of the proceeds of the Obligations for reimbursement of expenditures for the
Project that are paid before the date of issuance of the Obligations.
3. The maximum principal amount of the Obligations is
$12,000,000.
PASSED, APPROVED AND ADOPTED at a regular meeting of City
Council on the 21st day of November I 2000, by the following vote, to wit:
AYES: Council Members Lewis, Hall, Finnila, Nygaard and Kul&in
NOES: None
ABSENT: None
ATTEST:
(SEAL)
f-:. EXHIBIT 3
PURCHASE AGREEMENT
AND
ESCROW INSTRUCTIONS
FARADAY BUSINESS ENTER
CARLSBAD, SAN DEGO COUNTY, CA
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INDEX
PURdASE AGREEMENT AND ESCROW INSTRUCTIONS
Section
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Pace
Recitals ........................................................
Definitions ......................................................
Agreement of Sale, Purchase Price and Payment ..........................
Opening of Escrow; Additionai Escrow Instructions .......................
The Closing Date; Termination Rights .................................
Conditions Precedent to Closing ......................................
Pre-Closing Obligations and Covenants ................................
Representations and Warranties of Seller and Purchaser .....................
Post-Closing Obligations of Buyer and Seller ............................
Deliveries to Escrow ..............................................
Prorations, Fees and Deposits ..... : ..................................
‘TheClosing .....................................................
Failure of Escrow to Close and Remedies ...............................
Additional Provisions ..............................................
EXHIBITS
Exhibit A - Legal Description of the Property
Exhibit B - Seller’s Deed
, .
Purchase Agreement
and
Escrow Instructions
This Purchase Agreement and Escrow Instructions (the “Agreement”) is entered into at
San Diego, California, on (insert date of exercise of Ootion) , 1998 (the Y‘Effective Date”)
between FAR4DAY BUSINESS PLAZA, LLC, a California limited liability company (the
“Seller”), and the CITY OF CARLSBAD, a , (the “Purchaser”), with
reference to the recitals set forth in Section 1 below and constitutes (i) a contract for purchase
and sale between the parties, and (ii) escrow instructions to Commonwealth Land Title
Company, 1455 Frazee Road, San Diego, California, 92108, (the “Escrow Agent”), the consent
of which appears at the end of this Agreement.
For good and valuable consideration, the receipt and adequacy of which is acknowledged,
Seller and Purchaser (collectively the “Parties”) agree as follows:
Section 1. Recitals
1.1 Seiler owns certain developed real property in the County of San Diego, State of
California, commonly known as 1635 Faraday Avenue, Carlsbad, California, more specifically
described in attached Exhibit “A” (the “Property”).
1.2 Purchaser desires to purchase the Property, and Seller desires to sell the Property
on the terms and conditions set forth in this Purchase Agreement. The term “Property” also
includes all easements, interests and rights appurtenant to the Property, together with all
contractual rights, land use entitlements and other intangible rights relating to the Property.
1.3 Purchaser is purchasing the Property pursuant to Purchaser’s exercise of an option
to purchase the Property granted from Seller to Purchaser in a lease agreement dated October
- 1998 (“Lease Agreement”). through which Purchaser has leased the Property from Seller.
From the date set forth in the Lease Agreement as the Commencement Date, Purchaser has been
in actual, exclusive possession of the Property.
1.4 Pursuant to the Lease Agreement, Purchaser has made certain decisions relating to
the design of the shell of the building on the Property, and Purchaser has made all decisions
relating to the interior, tenant improvement related design of the building on the Property. Prior
to the Closing, Purchaser has investigated, and will continue to investigate and review to its
satisfaction, all facts and circumstances deemed necessary by it relating to the physical, legal,
environmental, land use and developmental condition of the Property and the economic burdens
and feasibility of developing the Property for the purposes envisioned by Purchaser. Except as
expressly provided in this Agreement, Purchaser will accept and acquire the Property in an “AS-
IS-WHERE-IS” condition.
1.5 Seller may seek to qualify this transaction as a time delayed tax deferred exchange
under Section 103 1 of the Internal Revenue Code of 1986, as amended.
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Section 2. Definitions.
Unless the context otherwise indicates, whenever used in this Agreement, the following
capitalized terms shall have the following meanings:
2.1 “Agreement” is defined as this agreement executed by Seller and Purchaser, and all
Exhibits attached hereto.
2.2
holiday.
“Business Day” shall be any day other than a Saturday, Sunday or legal national
2.3 “Cash” means immediately available funds consisting of either (i) United States
currency, (ii) a cashier’s or certified check(s) currently dated, issued by a bank or savings and loan
with offices in California, payable to the required payee, and honored upon presentation for
payment, or (iii) an amount credited by wire-transfer into the required payee’s bank account.
2.4 “City” means the City of C&bad, California.
2.5 “Close of Escrow;‘Closing; Closing Date” is defined in Section 5.1.
2.6 “County” means the County of San Diego.
2.7 “Deposit” is defined in Section 3.2.1.
2.8 “Effective Date” is the date first written above.
2.9 “Environmental Laws” are defined in Section 8.2.3.2.
2.10 “Escrow Agent” is First American Title Company, located at 1455 Frazee Road,
San Diego, California 92 108.
2.11 “Hazardous Materials” is defined in Section 8.2.3.2.
2.12 “Opening of Escrow” is defined in Section 4.1.
2.13 “Permitted Exceptions” is defined in Section 6.1.4.
2.14 “Preliminary Report” is defined in Section 6.1.3.
2.15 “Property” is defined in Section 1.1.
2.16 “Purchaser” is the City of Carlsbad, a
2.17 “Purchase Price” is defined in Section 3.1.
2.18 “Review Documents” is defined in Section 7.5.
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2.19 “Title Insurer” is defined in Section 6.1.3.
2.20 “Title Policy” is defined in Section 6.1.4.
Section 3. Aseement of Purchase and Sale. Purchase Price and Payment.
3.1 Purchase Price. On the terms set forth in this Agreement,.Seller agrees to sell
and Purchaser agrees to purchase the Property, free and clear of all liens and encumbrances
except for the Permitted Exceptions and except for the leasehold interest of the current tenant
located therein, through Escrow, for a purchase price of Nine Million, One Hundred Thousand
Dollars ($9,100,000) (the “Purchase Price”).
3.2 Deoosit of Purchase Price. The Purchase Price shall be deposited in Escrow as
follows and paid to Seller at Closing:
3.2.1 Upon the Opening of Escrow, Purchaser shall deliver to Escrow Agent
a deposit (the “Deposit”) of One Hundred Thousand Dollars ($100,000) in Cash.
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the Closing Date, Purchaser shall deliver to Escrow Agent Cash in the amount of the balance
of the Purchase Price.
3.3 Deposit of Funds. All funds delivered by Purchaser to Escrow Agent shalI be
deposited in a federally insured interest bearing account. All interest earned on the funds shall
accrue to the benefit of Purchaser.
3.4 Failure of Escrow to Close. If the transaction fails to close, Purchaser’s
Deposit, plus accrued interest, shall be returned to Purchaser or distributed to Seller as
liquidated damages in accordance with the provisions of Section 13. of this Agreement.
Section 4. OueninP of Escrow: Additional Escrow Instructionq.
4.1 Qoening of Escrow. Within two (2) Business Days following execution of this
Agreement, the Parties shall deliver to Escrow Agent a duplicate original of this Agreement,
which shaii serve as escrow instructions for this transaction. Escrow Agent shall indicate its
consent and agreement to act as Escrow Agent by executing the Consent of Escrow Agent at
the end hereof. The term “Opening of Escrow” shall mean the date Escrow Agent executes
such Consent.
4.2 Additional Escrow Instructions. Seller and Purchaser shall execute additional
escrow instructions reasonably required by Escrow Agent to consummate this transaction.
Such additional escrow instructions shall not modify the provisions of this Agreement, unless
such modifications are specifically identified as such and are initialed by Seller and Purchaser.
Escrow Agent shall not be liable for any of its acts or omissions unless the same shall
constitute negligence or willful misconduct.
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Section 5. The Chine Date: Termination Rights.
5.1 Closing Date. The date for the Closing of Escrow is sometimes referred to
herein as the “Closing Date”. The Closing Date for this transaction shall be on or before the
thirtieth (30th.) day following the Opening of Escrow, or the next business day thereafter,
unless extended by written instructions executed by Purchaser and Seller prior to such date.
As used herein, the terms “Closing” or “Close of Escrow” shall mean the date Seller’s Deed is
recorded with the County Recorder of San Diego County.
5.2 Termination Riehts. If the Close of Escrow does not occur on the Closing
Date, a party who is not then in default hereunder shall have the right to terminate this
Agreement and Escrow by delivering a written notice of such termination to the other party
and Escrow Agent.
Section 6. Conditions Precedent to Closing.
6.1 Conditions to Obligations to Purchaser. Purchaser’s obligation to purchase the
Property is conditioned upon satisfaction of each of the following conditions, all or any of
which may be waived by Purchaser:
6.1.1 Representations and Warranties True at Closing. The representations
and warranties made by Seller in this Agreement shall be true and correct in all material
respects at the Closing, with the same effect as if such representations and warranties had been
made on and as of such date.
6. I .2 Oblipations Performed bv Seller. Seller shall have performed all
material obligations required to be performed by it hereunder on or before the Closing.
6. I .3 Apnroval of Title Reoort. No later than ten (10) days following
Opening of Escrow, Seller shall deliver to Purchaser a Preliminary Report, including copies of
all matters deemed an “Exception” to title therein (the “Preliminary Report”), dated no earlier
than Opening of Escrow, issued by First American Title Insurance Company (the “Title
Insurer”). On or before the twentieth (20th.) day following its receipt of the Preliminary
Report, Purchaser shall have approved the Preliminary Report. If Purchaser gives written
notice to Seller disapproving any exception prior to the expiration of such twenty (20) day
period, Sellershall have ten (10) days following Seller’s receipt of Purchaser’s objections to
give written notice to Purchaser agreeing to eliminate such disapproved exception prior to the
Close of Escrow. If Seller fails to give such notice or delivers a notice that it will not cure
certain disapproved Exceptions, Purchaser may either terminate this transaction or waive its
disapproval of the Exceptions which Seller has not agreed to cure by written notice delivered
to Seller within seven (7) days following the earlier of the expiration of Seller’s ten (10) day
period or Seller’s delivery of written notice to Purchaser.
6.1.4 Title Policy. As of the Close of Escrow, the Title Insurer shall issue, or
be committed to issue, to Purchaser a CLTA Standard Coverage Policy of Title Insurance or,
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if requested by Purchaser, an ALTA Owner’s Extended Coverage Policy of Title Insurance
(the “Title Policy”), with liability in the amount of the Purchase Price, insuring that fee title to
the Property vests in Purchaser, subject only to the following permitted exceptions (the
“Permitted Exceptions”): (i) then current, non-delinquent real estate taxes, assessments,
bonds and other governmental or quasi-governmental charges applicable to the Property; (ii)
the lien of supplemental taxes assessed pursuant to Chapter 3.5, commencing with Section 75,
of the California Revenue & Taxation Code; (iii) the exceptions set forth in the Preliminary
Report which are approved or waived by Purchaser and such additional exceptions, if any, as
may be set forth in a Supplement to the Preliminary Report thereafter issued by the Title
Insurer and approved by Purchaser; (iv) any other exceptions to title created or approved in
writing by Purchaser; and (v) all matters excepted or excluded From coverage by the printed
terms of the standard form Title Policy.
6.1.5 General Feasibility Approval. On or before the thirtieth (30th.) day
following Opening of Escrow, Purchaser shall have approved the physical, environmental,
legal,. developmental and land use condition of the Property and the economic burdens and
feasibility of the Property for the purposes envisioned by Purchaser.
6.2 Conditions to Obligations of Seller. Seller’s obligation to sell the Property is
expressly conditioned upon satisfaction of each of the following conditions, all or any of which
may be waived by Seller:
6.2.1 Representations and Warranties True at Closinq; The representations
and warranties made by Purchaser in this Agreement shall be true and correct in all material
respects at the Closing, with the same effect as if such representations and warranties had been
made on and as of such date.
6.2.2 Oblieations Performed bv Purchaser. Purchaser shall have performed all
material obligations required to be performed by it hereunder on or before the Closing.
6.3 Satisfaction of Conditions: Right to Terminate. Purchaser and Seller each .
agrees to proceed with diligence and good faith to satisfy the conditions set forth herein on its
part to be satisfied. Except as specifically otherwise provided herein, in any instance where
the approval or disapproval of a condition by Purchaser or Seller is required to be given by a
specified date, such approval or disapproval shall be evidenced by a written notice delivered to
the other partyand the failure of Purchaser or Seller to give such written notice of approval or
disapproval by such date shall constitute a disapproval by Purchaser or Seller, as the case may
be, and a failure to satisfy the condition precedent. If any condition set forth in Section 6.1 or
6.2 above is neither satisfied nor waived in the manner specified, a party who is not then in
default hereunder shall have the right to terminate this Agreement and this Escrow by delivery
of written termination notice to the other party and Escrow Agent. The right to terminate shall
be optional, not mandatory, and shall cease as to each condition if the condition is satisfied or
waived prior to the delivery of written termination notice to the other party and Escrow Agent.
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Section 7. Pre-Chsinz Oblieations and Covenants.
7.1 Escrow Agent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in this paragraph.
7.2 Insoection and Testing Bv Purchaser. Purchaser and its employees, agents or
independent contractors may conduct such inspections, reviews, examinations and tests upon
the Property as Purchaser deems necessary or desirable to investigate the physical condition
and the developmental and economic feasibility of the Property for the purposes envisioned by
Purchaser. Such inspections, reviews, examinations and tests shall be conducted at
Purchaser’s sole cost and expense. Purchaser shall indemnify and hold Seller, its members and *
their respective officers, directors, employees, agents, managers, shareholders, attorneys,
representatives and successors in interest, and the Property harmless from and against any
mechanic’s liens or claims of lien or claims of injury to person or property resulting from the
activities conducted by Purchaser or its agents or contractors relating to the Property.
Promptly following the completion of its activities on the Property, Purchaser, at its sole cost
and expense, shall return the Property as nearly as is practicable to its present physical
condition and shall repair any physical damage resulting from its activities thereon. The
obligations of Purchaser set forth in this provision shall survive the termination of this
Agreement.
7.3 Contact With Governmental Agencies and Other Persons. If Purchaser is the
original Lessee under the Lease Agreement, the provisions of this sub-section shall not apply.
During the term of Escrow, Purchaser and its employees, agents or independent contractors
shall have the right to (i) meet with all City, County, district, and other governmental entities
and agencies and with all persons or other entities with whom Seller or others havecontractual
arrangements in connection with or relating to the Property; and (ii) discuss with any such
entities, agencies, or persons the terms of this Agreement, the terms of any contractual
arrangements relating to the Property entered into by Seller or the prior owners of the
Property, provided that any fees required to be paid to such persons or agencies shall be paid
by Purchaser.. Purchaser shall not represent itself as an agent or employee of Seller, and shall
fully disclose to any such governmental entities and agencies that Purchaser is the prospective
purchaser of the Property.
7.4 Delivery of Documents. Reoorts and Information Rdeardiw Prooerty Onor .
before the fifth (5th.) day following Opening of Escrow, Purchaser shall submit to Seller a
written list of those documents Purchaser desires to review in contemplation of Purchaser’s
General Feasibility Approval set forth in Section 6.1.5 above (the “Review Documents”).
Within ten (10) days following its receipt of Purchaser’s list of the desired Review Documents,
Seller shall deliver to Purchaser those review documents in Seller’s possession. If requested
by Purchaser, Seller will contact the professionals who prepared the Review Documents and
author&e such persons to discuss’ the contents of the plans and reports with Purchaser;
provided that any fees required to be paid to such persons shall be paid by Purchaser. As
more fully set forth in Section 9.2 of this Agreement, Purchaser acknowledges that Seller
makes no representation or warranty as to the accuracy or completeness of the other Review
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Documents or any additional information communicated to Purchaser by the persons who
prepared the Review Documents.
Section 8. Rewesentations and Warranties of Seller and Purchaser
8.1 Escrow Agent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in ihis paragraph.
8.2 Reoresentations and Warranties of Seller. As used in this Agreement, the
phrase “to Seller’s knowledge” or other references to Seller’s knowledge shall mean the actual
knowledge of Seller. The phrase “to Seller’s knowledge” shall not imply that Seller has
conducted a due diligence investigation with respect to the subject matter covered by the
representation in which the phrase appears. Seller makes the following representations and
warranties to Purchaser:
8.2.1 Oreanization and Standing. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of California.
8.2.2 Authoritv. This Agreement and all documents executed or to be
executed in connection with this Agreement have been or will be duly authorized, executed
and delivered, and each constitutes or shall constitute a legal, valid and binding agreement
enforceable against Seller in accordance with its terms. No consents, orders or approvals of
any person that have not been obtained are required in connection with the execution of this
Agreement or the transfer of the Property to Purchaser. The transfer of the Property to
Purchaser will not breach any contract, mortgage, deed of trust or other obligation of Seiler.
8.2.3 Hazardous Materials.
8.2.3.1 Except as to anything caused by Purchaser or subtenants
of Purchaser, to Seller’s knowledge, (i) rhe Seller’s Property does not contain or incorporate
and is not threatened with contamination from Hazardous Materials; (ii) the Seller’s Property
has never been used in connection with the handling, storage or disposal of Hazardous ’
Materials; (iii) there have been no releases and there are no threatened releases of Hazardous
Materials on, under, in or about the Seller’s Property; (iv) all current and past uses of the
Property comply with applicable Environmental Laws; and (v) no’ governmental authority has
notified Seller of the need to take any remedial or corrective action under Environmental Laws
with respect to any Hazardous Materials on, under, in or about the Seller’s Property.
8.2.3.2 Definition of Hazardous Materials and Environmental
Laws. As used in this Agreement, the term “Hazardous Materials” means any substance that
is now or may hereafter be regulated as a toxic or hazardous waste or substance under
applicable federal, state or local statute, rule, regulation, ordinance, order, action, policy or
common law (hereafter collectively referred to as “Environmental Laws”) and shall include,
without limitation, any substance: (i) the presence of which requires investigation,
remediation or disclosure under any Environmental Law; (ii) which is or becomes defined as a
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hazardous waste, hazardous substance, pollutant or contaminant under any Environmental
Law; (iii) which is toxic, explosive, corrosive, tlammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or pecomes regulated by any
governmental authbrity, agency, department, commission, board, agency or instrumentality of
the United States, the State of California or any political subdivision thereof; (iv) the presence
of which on the Property causes or threatens to cause a nuisance upon the Watt Homes Los or
to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons
on or about the Property: (v) the presence of which on adjacent properties would constitute a
trespass; (vi) which contains gasoline, diesel fuel or other petroleum hydrocarbons; (vii)
which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam
insulation; or (viii) which contains radon gas.
8.2.4 Litigation. Seller has received no notice of any pending or threatened
litigation, administrative proceeding, or other legal or governmental action with respect to the
Property.
8’2.5 Possession. Except as to Purchaser or subtenants of Purchaser, to Seller’s
knowledge, as of Close of Escrow there are no parties in possession of any portion of the
Property as lessees, tenants at sufferance, or trespassers.
8.2.6 Condemnation. Seller has received no written notice of any pending or
threatened condemnation affecting the Property, or any part thereof, nor to Seller’s actual
knowledge is any such condemnation proceeding contemplated by any governmental authority.
8.2.7 Other Options. There is no right of first refkal, option to purchase,
Purchase Agreement or other prior right of any pany to purchase any portion of the Property,
either recorded or unrecorded, superior in right to that of Purchaser pursuant to this Purchase
Agreement.
8.3 Representations and Warranties of Purchaser. Purchaser makes the following
representations and warranties to Seller:
8.3.1 Purchaser Status. Purchaser has undertaken all actions legally required
for Purchaser to consummate this transaction, and has the legal right and ability to purchase
the Property.
8.3.2 Authoritv. This Agreement and all documents executed or to be
executed in connection with this Agreement have been or will be duly authorized, executed
and delivered, and each constitutes or shall constitute a legal, valid and binding agreement
enforceable against Purchaser in accordance with its terms. No consents, orders or approvals
of any person that have not been obtained are required in connection with the execution of this
Agreement or the transfer of the Property to Purchaser.
8.3.3 Purchaser’s Exoertise. Purchaser has the expertise and ability to perform
its obligations pursuant to this Agreement in a timely manner and in accordance with the
requirements of this Agreement.
Section 9. “AS-IS.” Canditian. Release of Claims and Tndemnitv APreement.
9.1 Escrow Agent. Escrow Agent shall have no concern with, or liability or
responsibility for, the agreements of Purchaser and Seller contained in this paragraph.
9.2 “AS-IS” Condition of Pronertv. Purchaser acknowledges that it will investigate
and review to its satisfaction all facts and circumstances deemed necessary by it relating to the
physical, environmental, legal, land use and developmental condition of the Property and the
economic burdens and feasibility of developing the Property for the purposes envisioned by
Purchaser. Purchaser will not rely upon the accuracy or completeness of information
contained in any reports or other information relating to the Property delivered to it by Seller,
including the Review Documents. Purchaser acknowledges that it has not been induced by or
relied upon any representation, warranty or statement, whether express or implied, made by
Seller or any agent, employee or other representative of Seller or by any broker or any other
person representing or purporting to represent Seller, which is not expressly set forth in this
Agreement. Subject to the express representations and warranties of Seller set forth in Section
8.2 of this Agreement and Seller’s obligation to improve the Property to a Finished Lot
condition, Purchaser agrees that it will purchase and acquire the Property at Closing in an
“AS-IS, WHERE-IS” condition and “WITH ALL FAULTS,” known and unknown, and
without any representation or warranty, expressed, implied or statutory. Purchaser
acknowledges that Seller makes no warranty that the Property are fit for any particular
purpose.
Section 10. Deliveries to Escrow.
IO. 1 Deliveries bv Seller. Seller shall deliver to Escrow Agent, in time for delivery
at or before the Closing Date, the following:
10.1.1 A Grant Deed in the form attached hereto as Exhibit “B” (the “Seller’s
Deed”) conveying Seller’s entire interest in Property to Purchaser, executed and acknowledged
by Seller and/or such other persons as the Title Insurer may require in order to issue the Title
Policy.
10.1.2 A duly executed and acknowledged Certificate of Non-Foreign Status
certifying that Seller is not a foreign person or a foreign corporation as defined in the Foreign
Investment and Real Property Tax Act, in a form satisfactory to Purchaser and Escrow Agent
and in full compliance with the requirements of such Act.
10.1.3 A duly executed Withholding Exemption Certificate (California
Franchise Tax Board Form 590) establishing to the satisfaction of Purchaser and Escrow Agent
that the withholding requirements of the California Revenue and Taxation Code are not
applicable to this transaction.
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10.1.4 Such other documents as Purchaser or Escrow Agent reasonably
requires for the consummation of this transaction.
10.2 Deliveries bv Purchaser. Purchaser shall deliver to Escrow Agent, in time for
delivery at or before the Closing Date, the following:
10.2.1 Cash in the amount of the balance of the Purchase Price not previously
deposited in Escrow by Purchaser, together with such additional amounts as required to be
paid by Purchaser under this Agreement for prorations, fees and costs.
10.2.2 A duly executed Preliminary Change of Ownership Report form.
10.2.3 Such other documents as Seller or Escrow Agent reasonably requires
for the consummation of this transaction.
10.3 Failure to Make Deliveries. The failure of Purchaser or Seller to make, or
cause to be made, any delivery described in Section 10.1 or 10.2 above on or before the date
such delivery is required to be made shall constitute a material breach of this Agreement by
Purchaser or Seller, as the case may be, unless such delivery is excused by reason of a default
by the other Party.
Section 11. Prorations. Fees and Deuosits.
The following prorations and deductions described in this provision shall be made by
Escrow Agent as of the Close of Escrow. Any amounts due from Seller shall be deducted
from the proceeds payable to Seller. Any amounts due from Purchaser shall be deposited by
Purchaser into Escrow before the Close of Escrow. All prorations shall be made on the basis
of a thirty (30) day month.
11.1 All real property taxes and assessments payable with respect to the Property
shall be prorated based upon the latest tax bill.
11.2 Prepaid Rent from Purchaser to Seller.
11.3 Such additional items, if any, as are typically prorated between Purchasers and
sellers in real property transactions in San Diego County. Such proration may occur at or
following the Closing. Escrow Agent is not to be concerned with any such proration unless it
receives additional written instructions from the parties.
11.4 Seller shall pay (i) Documentary Transfer Tax in the amount Escrow Agent
determines to be required by law, (ii) the premium for a standard CLTA policy of title
insurance, (iii) one half of Escrow Agent’s fee, and (iv) the usual seller’s document drafting
and recording charges.
11.5 Purchaser shali pay (i) one half of Escrow Agent’s fee, (ii) the additional
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premium charged by the Title Insurer to issue an ALTA extended coverage policy of title
insurance, and (iii) the. usual purchaser’s document drafting and recording charges.
Section 12. The Closing.
12.1 Escrow Agent shall close Escrow on the Closing Date by (i) filing for record
Seller’s Deed and immediately thereafter such other documents, if any, as may be required to
be recorded by the terms of this Agreement or as the Title Insurer may require in order to
issue the Title Policy, and (ii) delivering funds and documents as set forth in Section 12.3
below, IF AND ONLY IF each of the following conditions has been satisfied:
12.1.1 All funds and documents described in Section 10 have been delivered
to Escrow Agent.
12.1.2 Escrow Agent has obtained from the Title Insurer either the Title
Policy, or the commitment of the Title Insurer to issue the Title Policy, required by Section
6.1.4.
12.2 If the conditions set forth in Section 12.1 above become satisfied at a date earlier
than the Closing Date, Escrow Agent shall close Escrow in the manner described in Section
12.1 above as of such earlier date if so instructed by the Parties. If Escrow Agent cannot close
the Escrow on or before the Closing Date, it will, nevertheless, close the same when all
conditions have been satisfied or waived, notwithstanding that one or more of such conditions
has not been timely performed, unless after said date and prior to the Closing, Escrow Agent
receives a written notice to terminate the Escrow and this Agreement from a party who at the
time such notice is delivered is not in default hereunder. If Escrow closes pursuant to*this
provision at a date earlier or later than the Closing Date set forth.in Section 5.1, then such
earlier or later date shall be deemed the Closing Date for all purposes under this Agreement.
12.3 Escrow Agent shall deliver funds and documents as follows:
12.3.1 Escrow Agent shall cause the County Recorder of San Diego County to
mail Seller’s Deed (and each other document which is herein required to be, or by general
usage is, recorded) after recordation to Purchaser, beneficiary, or such other person (i)
acquiring rights under said document, or (ii) for whose benefit said document was acquired.
12.3.2 Escrow Agent shall, following the Close of Escrow, deliver to
Purchaser and Seller a copy (conformed to show recording date) of Seller’s Deed, and Escrow
Agent shall deliver the Title Policy to Purchaser.
12.3.3 Escrow Agent shall, at Close of Escrow, deliver to Purchaser,
Purchaser’s funds remaining after the payment of all fees and prorations, as instructed by
Purchaser prior to Close of Escrow.
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’ Section 13. Failure of Escrow to CIase and Remedies.
13.1 If Escrow fails to close and such failure does not constitute a breach of this
Agreement by either party, then Purchaser or Seller, as the case may be, shall have the
immediate right to terminate this Agreement, each party shall be entitled to the immediate
return of all funds and documents previously deposited by it, and, except as expressly provided
herein, the parties shall have no further liabilities to each other relating to the transactions
described in this Agreement. Purchaser and Seller each shall pay one-half (X) of all escrow
and title charges if escrow fails to close pursuant to this provision.
Section 14. Additional Provisions.
14.1 Authoritv to Sinn. For any act or action, including any amendments to Escrow or
this Purchase Agreement, if any, required to be authorized by Seller, Purchaser and Escrow
Holder are authorited to accept the signature of William A. Shirley to act on behalf of Seller. For
any act or action, including any amendments to Escrow or this Contract, if any, required to be
authorized by Purchaser, Seller and Escrow Holder are authorized to accept and may rely upon,
the signature of to act on behalf of Purchaser.
14.2 Rieht to Exchange. Seller shall have the right to elect to effect a tax deferred
exchange under Section 103 1 of the Internal Revenue Code at any time during the Escrow
period or, if an exchange cannot be accomplished within the term of the Escrow, Seller shall
have the right to enter into a deIayed exchange transaction to be consummated following the
Close of Escrow. As an accommodation to Seller, Purchaser agrees to cooperate with Seller to
accomplish an exchange, provided the following terms and conditions are satisfied:
14.2.1 Ac least five (5) days prior to the Closing Date, Seller shall give
written notice to Purchaser that it has arranged such an exchange and the terms thereof. As
soon as reasonably possible thereafter, Seller and Purchaser, and such other parties as may be
necessary to effect the exchange, shall execute any and all documents satisfactory to the parties
and their respective legal counsel which are reasonably necessary to effect the exchange.
14.2.2 Purchaser shall not be required to take title to any exchange property,
nor shall Purchaser incur any additional liabilities, potential liabilities, expenses or costs as a
result of or connected with the exchange. Seller agrees to indemnify, defend and hold
Purchaser harmless from any liabilities, damages, or costs that may arise from Purchaser’s
cooperation in the exchange.
14.2.3 Seller and Purchaser agree that the consummation of the sales
transaction between Purchaser and the Seller is not predicated or conditioned on completion of
an exchange. In no event shall the Closing Date of this transaction be extended if Seller is
unable to arrange an acceptable concurrent or delayed exchange by the scheduled Closing
Date.
14.3 Possession. Exclusive possession of the Property, subject to any subleases or
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. assignments granted by Purchaser, shall be delivered to Purchaser at the Close of Escrow.
14.4 Brokers. Seller has employed the brokerage services of Business Real Estate
Brokerage Company located in San Diego, California, and will be solely responsible for the
payment any commission to same pursuant to an independent listing agreement. Seller warrants
that Seller has not employed any other broker or agent which will make any claim on Purchaser
for any brokerage commissions, and Seller will hold Purchaser harmless, including reasonable
attorney’s fees incurred in the defense of same, from any claims for commissions against
Purchaser resulting from Seller’s actions. Purchaser warrants that Purchaser has not employed
any broker or agent which will make any claim on Seller for any brokerage commissions, and
Purchaser will hold Seller harmless, including reasonable attorney’s fees incurred in the defense of
same, From any claims for commissions against Seller resulting from Purchaser’s actions.
14.5 Attomev Fees. In the event of any “Legal Proceeding” arising out of this
Agreement, the “Prevailing Party“ in such action shall have the right to recover reasonable
attorney’s fees and costs from the non-prevailing Party or Parties, to be fixed by the court in the
same.action. The term “Legal Proceeding” shall include, but is not limited to, appeals from a
lower court judgment as well as proceedings in the Federal Bankruptcy COUR (“Bankruptcy
Court”), whether or not they are adversary.proceedings or contested matters. The “Prevailing
Party” (a) as used in the context of proceedings in the Bankruptcy Court, shall mean the
prevailing party in an adversary proceeding or contested matter, or any other actions taken by the
non-bankrupt Party which are reasonably necessary to protect its rights under this Agreement;
and (b) as used in the context of proceedings in any court other than the Bankruptcy Coun, shall
mean the Party that prevails in obtaining a remedy or relief which most nearly reflects the remedy
or relief which the Party sought (e.g., the Prevailing Party may be a Party which is ordered to pay
$100.00 where the obligation to pay $80.00 was undisputed and the claiming Party claimed that it
was entitled to $l,OOO.OO).
14.6 Notices. All notices to be given under this Purchase Agreement shall be in
writing and sent by:
14.6.1 cenified mail, return receipt requested, in which case notice shall be
deemed delivered one business days after deposit, postage prepaid in the United States Mail; or
14.6.2 a nationally recognized overnight courier, in which case notice shall be
deemed delivered one (1) business day after deposit with that courier.
addresses:
14.6.3 All notices shall be sent to the following persons at the following
To Seller: attn: WiIliam A. Shirley with copy to:
FARADAY BUSINESS PLAZA, LLC Dietmar E. Schott, Esq.
8799 Balboa Avenue, Ste. 270 8799 Balboa Ave., Ste. 265
San Diego, CA 92 123 San Diego, CA 92 123
tel. (6 19) 265-890 1 tel. (6 19) 5 14-4225
fax. (6 19) 265-0337 fax. (619) 268-0337
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To Purchaser: attn: with copy to:
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92005
tel. (760)
fax. (760)
or to such other address as the Parties may designate by written notice to the other.
14.7 Entire Purchase Agreement. This Purchase Agreement contains the entire
Purchase Agreement between the Parties and shall not be modified in any manner except by an
instrument in writing executed by the parties 0; their respective successors in interest.
14.8 Severabilitv. If any term or provision ofthis Purchase Agreement shall, to any
extent, be held invalid or unenforceable, the remainder of this Purchase Agreement shall not be
affected.
14.9 Waivers. A waiver or breach of covenant or provision in this Purchase Agreement
shall not be deemed a waiver of any other covenant or provision in this Purchase Agreement, and
no waiver shall be valid unless in writing and executed by the waiving party. An extension of time
for performance of any obligation or act shall not be deemed an extension of the time for
performance of any other obligation or act.
14.10 $Zonstruction. The section headings and captions of this Purchase Agreement are,
and the arrangement of this instrument is, for the sole convenience of the parties to this Purchase
Agreement, and no third party shall have any rights against any Party pursuant to this Purchase
Agreement. The section headings. captions, and arrangement of this instrument do not in any way
affect, limit, amplify, or modify the terms and provisions of this Purchase Agreement. The
singular form shall include plural, and vice versa. This Purchase Agreement shall not be construed
as if it had been prepared by one of the parties, but rather as if both parties have prepared it.
Unless otherwise indicated, all references to sections are to this Purchase Agreement. All exhibits
referred to in this Purchase Agreement are attached to it and incorporated in it by this reference.
14.11 Time of the Essence. Time is of the essence in this Purchase Agreement.
14.12 Successors. This Purchase Agreement shall inure to the benefit of and shall be
binding upon the parties to this Purchase Agreement and their respective heirs, successors, and
assigns.
14.13 Governing Law. This contract shall be construed under and in accordance with
the laws of the State of California, and ail obligations of the parties created by this contract are
performed in San Diego County, California.
14.14 Eaual Interpretation. This Purchase Agreement was prepared through the joint
efforts and/or negotiations of both Parties, and it is intended by the Parties that in the event any
term herein is deemed vague or ambiguous, that such term shall not be interpreted in favor for or
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V IITE IT - DON’T SAY . .‘!
Date 12/l/00 Xl&
To FILE Cl Reply Wanted
From DEBRA D q No Reply Necessary
EXHIBIT 3, PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS, WAS RECEIVED WITH
ONLY 14 PAGES. SPOKE WITH AGENDA BILL INITIATOR, LISA HILDABRAND ON
11/29/00 AND SHE WAS UNABLE TO LOCATE PAGE 15, WHICH SHE INDICATED WAS THE
SIGNATURE PAGE. I WAS UNABLE TO LOCATE THE PAGE IN THE VAULT NOR IN THE DMS
SYSTEM.
DEBRA
RESTRICTED APPRAISAL REPORT
FOR
MS. LISA HILDABRAND, FINANCE DIRECTOR
CITY OF CARLSBAD
REGARDlNG
A 2-STORY OFFICE BUILDING PROPERTY
LOCATED AT 1635 FARADAY AVENUE
CITY OF CARLSBAD
OURFLLEN0.00137
DATE OF VALUATION
OCTOBER 16,200O
DATE OF REPORT
OCTOBER 24,200O
BY
THE TAGG COMPANY
8321 LEMON AVENUE
LA MESA, cALlFoRNTA 9 194 1
(619) 462-4753
FAX (619) 462-2156
THE TAGG COMPANY
"
i
n I & I
THE TAGG COMPANY
RANDY A. TAGG. MAI
CERT/F/W GENERAL
REAL ESTATE APPRAISER NQ AGO0970
8321 Lemon Avenue
La Mesa, California 91941-5287
(619) 462-4753
FAX (619) 462-2156
October 24,200O
Ms. Lisa Hildabrand, Finance Director
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92008
RE: Valuation of 1635 Faraday Avenue, C&bad
/ Our File No. 00137
Date of Valuation: October 16,200O
‘Market Value Conclusion: %12,000,000
Interest Valued: Fee Simple
Dear Ms. Hildabrand,
Pursuant to your request, I have completed an appraisal on the above-referenced property,
(land and building) located at 1635 Faraday Avenue within the Carlsbad Research Center,
city of Carlsbad. The subject property is a *68,000 square foot office building on k4.07 usable acres
completed in November 1999 and currently occupied by the city of Carlsbad under a lo-year lease,
plus options. As requested, my findings are submitted in the following Restricted AppraisaZ Report format.
Additional information upon which these findings are based will be retained in office files and is available
upon request. This correspondence is meant for internal use to serve a specific client need relating to a
purchase decision and is meant for no other purpose. I would direct the readers attention specifically to
Item Nos. 6 & 7 in the Limiting Conditions section.
i I Purpose and Function of the Appraisal
1 Purpose and function of this appraisal is to provide a current market value estimate, regarding a
purchase decision by the city of Carlsbad. Date of valuation is October 16,200O.
r DeJinition of Market Value
See Exhibit I
Scope of the Appraisal
n
R
C
Scope of the appraisal encompasses valuation of the ownership involved. I have completed all
necessary investigation to arrive at an unbiased opinion of value in accordance with the Ethical
Rules and Standards of Professional Practice of the Appraisal Institute. This is a Restricted
Appraisal Report which is intended to comply with the reporting requirements set forth under
Standards Rule 2-2 of the Uniform Standards of Professional Appraisal Practice (USPAP).
As such, it presents only a summary discussion of the appraisal process, market data, reasoning,
analysis and conchsion. This is a valuation of land and building including tenant improvements.
I have considered all three traditional approaches to value including Replacement Cost, Direct
Sales Comparison, and Income capitalization.
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City of Carlsbad
October 24,200O
Page 2
Properq Rights Appraised
This is an appraisal of the fee simple interest.
IdentiJcation of the Property
A formal legal description was not provided for appraiser review. The property is generally
described as Lot 106 of Carlsbad Tract No. 84-24, Unit No. 5 Carlsbad Research Center.
The San Diego County Assessor refers to the property as AP. No. 212- 130-3 1. Owner of record is
Faraday Business Plaza LLC! c/o Spectrum Property Management, 8799 Balboa Avenue Suite
260, SanDiego, CA. 92123
Thomas Bros. Page 1127, B-l
Limiting Conditions and Assumptions
See Exhibit II
Cert$cate of Appraisal
See Exhibit III
History of Acquisition
A formal chain of title investigation was not conducted by the appraiser. The property (land on@
was purchased by Faraday Business Plaza LLC per deed recorded July 7,199s as Document No.
419383. Transaction price was reported to be $2,216,000.
Neighborhood Description
In briec the property which is the subject of this report is located within the &560-acre Carlsbad
Research Center, a mixed-use business park neighborhood near Palomar Airport in central
Carlsbad. This area is in the growth phase of the neighborhood lifecycle. There was considerable
industrial/R&D development in this general area during the late 1980’s which has resumed in a big
way since 1996, the result of an improving economy and business expansion. During 1999, about
1.1 million square feet of new industrial/R&D space was completed in the city. The 50,000 square
foot Island @ Carlsbad project recently opened within the Carlsbad Research Center, along Van
Allen Way. This mixed-use center brings retail, service, food, office, and service
station/convenience store space to the surrounding business park.
A demographic profile is one useful indicator of the economic health of a community.
In turn, a community’s economic health directly infhxnces property value. Carlsbad is part of the
San Diego North County West (NCW) statistical area and includes neighboring cities of Oceanside,
Solana Beach, and De1 Mar. Of the &222,272-acres in this statistical area, about 89% is developed.
By 2020, about 94% of the area will be developed.
THE TAGG COMPANY
City of Carlsbad
October 24,200O
Page 3
County population growth was *68,000 residents in 1997; followed by *65,000 residents in 1998;
.with an increase in 1999 of &70,000 residents. Most of this increase is in-migration resulting from
the healthy economy. The coun~‘s population is anticipated to increase by 1 million residents by
- 2020, and the North County West area will absorb about 15% of this increase.
Carlsbad’s population grew a phenomenal 78% between census years 1980 and 1990, an average
annual growth ofjust under 8%. Consistent with the county as a whole, population growth within
the community slowed during the recessionary early 1990’s. The January 1997 population stood at
about 70,100 residents, a modest 2.8% increase from January 1996. Current estimated population
is about 82,000 residents. SANDAG projection for Carlsbad is a population increase to 132,000
residents by 2020. Median household income in Carlsbad is about $56,383, well above the county
median. (Source: SANDAG 1999) The city with the highest median family income is De1 Mar at
$66,937; followed by Sohma Beach at $64,860.
The city’s economic base is healthy and diverse. At the end of 1996, when the most recent figures
are available, there were more than 2,210 business establishments within the city. With respect to
employment, there are over 150 mantiacturing plants, mainly electronics, computer components,
golf medical, and other high-tech manufacturers. Carlsbad has evolved as a hub of high-tech and
biotech research and manufacturing, with over 100 companies. About 26 golf-related companies,
including industry leaders Callaway and Taylor Made have made Carlsbad the center of the nations
$16 billion annual golfing industry.
In summary, the economic outlook for Carlsbad is excellent. New development activity has been
very strong, especially in the industrial/R&D/office and residential sectors, as job and population
growth continues. This environment puts upward pressure on property values, as developable land
becomes more scarce. The addition of LegoLand; Four Seasons Resort Aviara; and the Grand
Pacific Palisades Resort & Hotel, will serve to make Carlsbad a recreational venue, adding to the
economic vitality of the community. Well-located development sites are expected to continue
appreciating in value over time. Negatively, land availability and cost will impact business decisions
of industry in the future. Inadequate infrastructure and lack of affordable housing may be an
additional deterrent.
Specifically, the subject property is located along Faraday Avenue west of College Boulevard at
Camino Hills Drive, within the Carlsbad Research Center. Surrounding land use is
office/R&D/industrial development. There are a few vacant sites available for development in the
immediate vicinity, while office/R&D construction is currently underway or proposed on other
nearby sites. Located immediately east at College Boulevard are an extended stay hotel and
recently completed Island @ Carlsbad convenience mixed-use/retail project. Faraday Avenue is a
primary east/west arterial serving the Palomar Airport business park area, with an ADT of about
5,000 vehicles. Faraday Avenue was recently extended westerly to connect with Cannon Road,
improving access convenience to Interstate 5.
THE TAGG COMPANY
[ Plat Map 1
6 12
MN’ 1315 - CARLSBil’3 ?CT N3 65-24
City of Car&bad
October 24,200O
Page 4
Oflee Market
The San Diego County oflce market is currently robust, with more leasing activity occurring than
at any time over the past 20 years. The county office market comprises about 42 million square
feet. Rental rates have increased about 14% over the past 12 months. An overall increase of about
10% is anticipated during 2000. Current rental rates for Class A space in the major suburban office
markets range from about $2.00 to $2.45 per-square-foot fbll service. According to TURI
Commercial Services, overall office-vacancy countywide is down to about 6%, with 2.3 million
square feet under construction, and another 3 million square feet in the planning phase. Nearly one-
third of the space under construction is pre-leased. There was 1 million square feet of net
absorption during the Second quarter 2000, reducing office space vacancy countywide by 25%
over the previous quarter. The Carlsbad submarket experienced the largest decline in available
space (32%). Office vacancy in the Carlsbad market in 1999 was in double digits, a result of
considerable new office space construction over the past few years.
Additional office space is under construction or proposed in the Carlsbad market. The g-building
k102,OOO square foot Genesis Corporate Center is currently under construction on Priestly Drive.
A two-building project is under construction on Wright Place. Smaller projects are proposed on
Faraday and Aston Avenues. The Kelly Corporate Center is proposed along Palomar Airport Road.
Vacant land available for new industrial/R&D/office development is becoming more scarce in the
city, with additional land inventory about 5 years in the future.
According to a Second Quarter 2000 report by TURI Commercial Services, Carlsbad is a 3.26
million square foot office market with a year-to-date absorption of about 357,000 square feet, and
vacancy of about 10%. (Second Quarter 1999 vacancy was about 19%) A recent report by
Burnham Real Estate Services shows a lower absorption and higher vacancy for this submarket.
TURTreports about 92,250 square feet currently under construction, and about 588,000 square feet
proposed during the next two years.
Subject Property - Site Description
Triangular-shaped site as depicted by the facing graphic, containing 7.24-acres gross and &4.07-
acres (*177,280 square feet) of usable area. This is a level pad well above street grade. Elevation
provides some view amenity. Site access is provided from Faraday Avenue which is 2-lane, fully
paved including curb/sidewalks and publicly-maintained. All customary municipal utilities are available.
Present Use/improvements
Currently improved/utilized as a city administrative office building, completed in November 1999.
In brief this is a 2-story building of concrete tilt-up construction over steel reinforced concrete
foundation, containing &68,000 square feet. Building height is 35 feet.
THE TAGG COMPANY
City of Carlsbad
October 24,200O
Page 5 I
There is a built-up roof system with plywood sheathing; R- 11 batt insulation vertically and R- 19
horizontally; concrete shear walls; fire sprinklers throughout; single elevator; 2 interior stairways of
Lightweight concrete construction; ahrmhmm Series W40 windows and ahuninum swing exterior
doors.
Interior finish is gypsum board over 24 gauge metal studs; R- 11 sound insulation; and solid core
stained wood entry doors. Drop ceiling height is 9 feet, with Armstrong acoustical tile and recessed
flourescent fixtures. Interior wall coverings include paint; ceramic tile; reinforced fibreglass; plastic
laminates; clear glass; or mirrored glass. Floor covering throughout is primarily carpet or tile.
Containing *34,454 square feet, the groundfloor is subdivided into approximately 3 1 office suites
typically 10’ x 14.5’ in size; 3 large open office areas; 2 entry lobby’s; 3 conference rooms; large
meeting room with retractable wall; 4 public restrooms; 2 showers; fitness room; large central file
area; library; and 4 cashier booths; in addition to electrical/telephone switching, small storage,
coffee, mail, copy/blueprint rooms. Containing %33,546 square feet, the secondfloor is subdivided
into approximately 49 office suites; 3 large open office areas; and 4 public restrooms; in addition to
conference, training, and storage rooms.
HVAC in the buildmg is provided by several (Carrier) package A./C and split system heat pump
units from 48,000 to 120,000 BTU, according to plans. An additional feature of the building is an
emergency power source.
Yard improvements include approximately 2.3-acres of paved vehicle parking area including
striping and bumpers; 2.4%acres of native landscape; and 1.1 l-acres of improved landscape.
There is parking provided for 275 vehicles, indicating a ratio of 4: 1,000.
Effective age of these improvements is one year, and condition is good.
Zoning/General Plan
Under Land use jurisdiction of the City of Car&bad, zoning on this property is C-M,
Commercial. General Plan is Planned Industrial. Existing improvements are consistent with this
zone.
Highest and Best Use
Office building, as improved.
The Appraisal Process
Purpose of this appraisal assignment is to provide a current market value estimate for the herein
described subject property. The property is currently under a lo-year lease, with a purchase option.
This is a valuation of the fee simple interest.
THE TAGG COMPANY
Cii of Carlsbad
October 24,200O
Page 6
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Estimating market value of property involves a systematic process in which the valuation problem
is defhted, work necessary to solve the problem is planned, and required data is gathered, classified,
analyzed and interpreted into an estimate of value. The approaches appraisers use in arriving at
value conclusions are commonly class%ed under three headings --- usually labeled Cost; Income;
and Market, or Direct Sales Comparison, Analyses.
The Cost Approach is utihzed where significant structural improvements have been created
consistent with highest and best use of the site. This follows the principle of contribution, whereby
improvements add value to the underlying site. The Income Approach is utihzed in valuing
property which has the capability to produce rental income or the equivalent, which the appraiser
may convert into an indicated value.
The Market, or Direct Sales Comparison approach, is based on the premise that transactions
between independent parties, buying, selling, developing and utihzing real estate are evidence of
value. This valuation method involves a comparison and contrasting of the subject property with
similar property which has sold on or about the date of valuation.
Comparable properties are compared and contrasted with the subject with regard to differences and
sim&uities in date of sale, location, access, physical characteristics, conditions tiuencing the sale,
and similar factors. Notable differences in comparable properties are adjusted to indicate a value
range for the property being appraised. When suBGent data is available, these adjustments are best
determined by the actions of typical buyers and sellers in the marketplace. The value range, as
indicated by the adjusted comparable properties, is correlated into a vahze indication for the subject
property by this valuation method.
In the final correlation, the appraiser weighs the relative significance, defensibility and applicability
of each approach, in view of the quantity and quality of data available and, with consideration given
to the type of property being appraised. Consideration has been given to all three approaches.
As improvements age, a Cost Approach becomes less useful as a value “yardstick”. Because the
subject property includes improvements which are essentially new, and consistent with highest and
best use, a Cost approach is useful in this analysis.
Cost Approach
A Cost approach is based on comparison and recognizes that market participants sometimes relate
value to cost. In this approach the appraiser estimates the cost to construct a reproduction of
subject structural and site improvements, then deducts all forms of accrued depreciation from the
cost new estimate. Adding land value results in an indication of value.
In arriving at a value indication by a Cost Approach, the appraiser follows a sequence of steps as
follows: b Estimate subject site value b Estimate reproduction cost of existing structural and site improvements b Estimate amount of accrued depreciation in the improvements b Land value is then added to total depreciated reproduction cost to provide a value
indication by a Cost Approach.
THE TAGG COMPANY
-
City of Carlsbad
October 24,200O
Page 7
In this approach the land is valued as though vacant and available for development consisent with
highest and best use. The combination of legal (ie: zoning), physical, and economic factors
infhrencing this property suggests a highest and best use, as if vacant, to be office or office/R&D
development.
There are various land valuation techniques inchxling direct sale comparison; land residual;
extraction; and ground rent capitalization. The direct sale comparison approach is most common,
and the preferred method when suflicient comparable sales are available. The best indication of
subject land value is actual market data involving similar sites in the property’s market area. In this
appraisal, I was fortunate to have a s&i&m number of vacant land transactions in the immediate
vicinity to provide a supportable estimate of subject land value. An individual summary of these
supporting land transactions is included in the Addenda section as Market Data - Item Nos.
1 thlu4.
Again, the vacant subject site was purchased in July 1998 for $2,216,000 or $12.50 per-square-
foot of usable site area. (See ItemNo. 2) Land values have increased since 1998.
A review/analysis of land transactions available and submitted suggests a current land vaZue
contribution of $2,400,000 or about $13.50 per-square-foot ofusable site area.
Next step in the Cost approach is an estimate of reproduction cost new for structural and site
improvements. This is essentially a new building, and primary cost new source was actual cost
figures from the city of Carlsbad (tenant) and owner/builder, with support from the Marshall
Valuation Service. Hard costs as well as soft costs in&ding construction financing, architect, fees
and permits were also considered. Contingency fees and developers profit must also be considered.
A reproduction cost new estimate follows.
Reproduction Cost New Estimate
Occupancy Type
Construction type
Exterior walls
Building Height
Building area
d Cost
Shell, TI’s, yard imps., etc.
sofi cost
Construction linancing, fees, permits 1,080,000
Contingency fee (5%) 356,091
Plus: Developers profit (15%) 1,283,685
Total Reproduction Cost
Office
V (Non-rated); fire sprinklered
Concrete tilt-up
35 feet ; 2-story
68,000 square feet
$7,121,815
$9,841,591
THE TAGG COMPANY
-
City of Carlsbad
October 24,200O
Page 8
It is important to note that “cost new” is not synonymous with market value. An estimate of
accrued depreciation must also be considered. It is defined as: the difference between an
improvements reproduction or replacement cost, and it’s market value as of the date of the
appraisal
This value difference may be a result of physical deterioration; functional obsolescence; external
obsolescence; or a combination of these sources. Physical deterioration is evidenced by wear and
tear, while functional obsolescence is caused by internal property characteristics such as improper
ceiling height. External obsolescence is caused by conditions outside the property such as changing
demand for a particular property type. Each element is quantified in terms of dollars, and the
amount is deducted from cost new, resulting in depreciated cost of improvements. Because this is
essentially new construction consistent with highest and best use, and built to a current market
standard, I do not believe that any accrued depreciation is applicable.
A summary of the Cost Approach, follows.
Cost Approach Summary
Estimated Reproduction Cost $ 9,841,591
Less: Accrued Depreciation -o-
Plus: Estimated site v&e $ 2,400.OOO
Indicated Vale by Cost Approach $12,241,591
Rounded to . . . . . . . . . . $12,240,000
Direct Sale Comparison
The Direct Sales Comparison or Market Approach, is based on the premise that market value of a
particular property is directly related to prices paid for comparable, competitive properties within the
subjects market. Basic to this approach are the appraisal principles of supply and demand, and substitution.
The value of a property tends to be set by the prices paid to acquire a substitute property, of similar utility
and desirability. This approach is useful and applicable to all types of real property interests, when there are
su&ient transactions available to indicate value patterns in the market.
In this approach, units of comparison are used in the analysis process. Unit of comparison useful in the
valuation of office properties is price-per-square-foot of rentable area, including land vahre.
Locational differences are sometimes compensated for by extracting a land value contribution, and
comparing price-per-square-foot of improvements only, and then adding back an appropriate land value. A
direct comparison between properties as a whole is also considered. A review of
San Diego County office transactions over the past few years, indicates the following:
No. of Sales
Avg. price per S.F.
1998 1999 2000 (thru Sept)
97 130 74
$117.51 $122.06 $118.83
(Source: Camps Inc. - includes all classes and sizes)
THE TAGG COMPANY
City of Carlsbad
October 24,200O
- Page 9
There have been 14 office building sales within the Carlsbad submarket reported by Comps Inc.
since January 1998. The average price per-square-foot was $147.26 in 1998; and $158.65 in 1999,
each year indicating a higher average unit-price than the county as a whole.
In arriving at a market value estimate for the subject property, utilizjng Direct Sale Comparison,
I have conducted a search throughout the Carlsbad submarket for recent acquisition of comparable
office properties. Due to the limited number of recent and reasonably comparable transactions in
the Carlsbad submarket involving this property type, I- have expanded the chronological and
geographic search parameter. Office building sales within coastal North County communities and
greater San Diego have also been considered. Within this expanded search parameter, there was a
suflicient pool of comparable transactions available for analysis to provide a supportable current
market value estimate for the subject office property. The chart on the facing page summar&es
those transactions, among others, considered useful as value indicators. An individual summary of
each transaction is included in the Addenda section as Market Data - Item Nos. 5 thru 12.
Transactions submitted occurred between February 1998 and March 2000, and provide a unit-price
range from $102.58 to $168.40 per-square-foot. Property values and rents have been increasing
over this time frame requiring an upward market conditions adjustment when analyzing this data,
to reflect the October 2000 date of valuation in this report. Five (5) of these transactions are
located in the Carlsbad submarket. All comparables are low rise, Class A and B, typically multi-
tenant office buildings of concrete/steel/glass/masonry construction, i?om new to +~15 years of age.
One of these buildings was new and vacant on the date of purchase, and one was single-tenant.
I believe an upper value limit for the subject property is provided by Item No. 12, indicating
$13,250,000. This is a fairly recent (March 2000) transaction involving *78,681 square feet of
office space in two; 3-story buildings. Indicated unit-price is $168.40 per-square-foot.
Construction is concrete/steel/glass, and age is reported to be *15 years. Occupancy was 100% at
purchase. Location of this property is along High BhxlTDrive in the upscale San Diego Corporate
Center, along Interstate 5 in the Carmel Valley area. This office submarket is one of the most active
and expensive in the county. Vacancy rate is low and considerable new space is under construction
nearby. Office product land values in this submarket are in the $20+ per-square-foot range.
In comparison to the subject, overall superior in terms of larger rentable area and Carmel Valley
location.
Another upper value limit is provided by Item No. 5, indicating $13,850,000. This is an older
(February 1998) transaction, requiring an upward market conditions (time) adjustment, however it
is located in the Carlsbad submarket at Palomar Oaks Way and Palomar Airport Road.
The property consists of two; 3-story multi-tenant office buildings of steel/glass construction about
10 years of age and containing *89,034 square feet. Reported to be 94% leased on date of sale.
Indicated unit-price is $155.56 per-square-foot. A market conditions adjustment snggests a higher
unit-price is applicable to the subject. In comparison to the subject, overall superior in terms of
much larger rentable area and Palomar Airport Road frontage.
THE TAGG COMPANY
City of Carlsbad
October 24,200O
Page 10
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A lower value limit is provided by Item No. 6, indicating $7,550,000. This is another older
(February 1998) transaction located in the Car&bad submarket, requiring an upward market
conditions (time) adjustment. This 3-story office structure is much smaller than the subject,
at rt49,OSO square feet. Indicated unit-price is $153.83 per-square-foot. Location is along Avenida
Encinas, with visibility and convenient access to Interstate 5. Tenants include Coldwell Banker, and
Chicago Title. This is a small business park area which includes several restaurants.
Overall inferior to the subject in terms of much smaller rentable area and parcel size.
Value Indicator -Direct Sale Comparison
There was no recent sale of a directly comparable (new; 2-story; *68,000 s.E) office building in
the Carlsbad submarket available for comparison. There are very few office buildings currently for
sale in this submarket. However, there was suflicient data available for review, within a broader
chronological and geographic search parameter, to suggest a narrow range within which a
conclusion of subject property value is appropriate.
This is a new structure which is fully built-out with tenant improvements; climate controlled; fire
sprinklered; elevator; and upgrades which include an emergency generator. After appropriate
adjustments (ie: market conditions) comparable transactions submitted suggest a unit-price of
$170.00 to $180.00 per-square-foot of rentable area (including land) to be reasonable and
supportable. This indicates a value range for the subject property of $11,560,000 to $12,240,000.
Income Approach
A third analysis given consideration in providing a value estimate for the subject property is an
Income Approach. Widely applied in appraising income producing property the Income Approach
is based (in part) on the principle of anticipation, which aflirms that value is created by the
expectation of future benefits to be derived from ownership. Real property value is, therefore,
defined as the present worth of future benefits, as anticipated by typical prospective market
purchasers. When marketed to an investor/purchaser, the function sold is “the ability of the
property to produce a de&able rate of return commensurate with the risk”.
A typical method of valuing income producing property is to convert an anticipated income stream
into value, using direct capitalization. This procedure anticipates first-year benefits in terms of
dollars, and processes them to present worth at a capitalization rate which is attracting purchase
capital to similar investment alternatives. The market has shown a direct relationship between a
property’s income, and it’s value.
Basic steps in this approach include, estimating potential gross income; vacancy & collection loss;
and property operating expenses. A net operating income (NOI) is then capitalized at a rate
appropriate to the investment providing a value indicator by an Income Approach.
THE TAGG COMPANY
LEASE S-Y
LEASE DATED October 15,199s
LESSOR Faraday Business Plaza, UC
LESSEE City of Carlsbad
LEASED PREMISES 1635 Faraday Avenue, Car&bad; land and building
USE OF PREMISES City admit&ration, or reasonably comparable legal use.
LEASE TERM The term of this lease is 10 (ten) years, commencing November 2,
1999.
Option to extencJ (Addendum 50): Two (2) periods of f?ve (5)
years each, subject to all provisions of this lease. Minimum rent
shall be no less than the annual miuimumrent the year immediately
preceding the option period
BASE RENT Initial rent is $74,816.50 per month, payable on the first daybf
each month.
Annual adjtrtment to base rent (Addendum 55): Annual base rent
shall be increased at the beginning of the 13* month following the
Commencement Date, and every twelve (12) month period of the
term thereafter (inchu3.ing extension periods) by three and one-half
percentage points (3.5%) over the ammal Base Rent immediately
preceding such rent adjustment.
REAL ESTATE TAXES
AND ASSESSMENTS
Lessee expense
UTlLITIES Lessee expense
REPAIR&MAIW. Lessee expense
LIABILITY INSURANCE Lessee expense
BUILDING INSURANCE Lessee expense
PURCHASE OPTION (Addendum 56) Lessee has one (1) option to purchase the Premises
within a window period between twelve (12) and twenty four (24)
months following the Lease Commencement Date. The total
purchase price is $9,100,000.
City of Carlsbad
October 24,200O
Page 11 I
In determining an appropriate “economic rent” for the property, current “contract rent” is
considered. Contract rent is the amount that is actually being paid at the time of the appraisal.
An economic rent is the amotmt the property would likely command on the open market.
“Market value” is quant@ed using an economic rent.
This is essentially a new building which is currently under a lo-year lease to the city of Carlsbad.
(See Lease Summary on the &zing page) Commencement date of this lease was November 2,
1999. Initial rent is $74,816.5Oper month. There are annual a@stments of 3.5% over the annual
Base Rent immediately preceding such rent adjustments. (Option period included) For example,
beginning in December 2000, monthly rent will increase to $77,435. ($74,816.50 x 3.5%) This is a
net lease, whereby in addition to Base Rent the Lessee is responsible for all operating expenses
relating to the property including utilities, taxes, repair/maintenance and insurance. This December
2000 contract rent equates to about $1.14 per-square-foot of rentable area.
A survey of office space in the Carlsbad submarket for the Second Quarter 2000 by
TURT Commercial Services indicate current rents in the $1.10 to $2.35 range. Higher rents reflect
newer or Class A space, while lower rates reflect older Class B or C buildings. Rents are typically
quoted on a gross plus utilities basis. Offiw rental rates have increased by double digits during the
past 12 months, and further increase is anticipated. (The subject lease provides for a 3.5% increase
annually.) On a gross plus utilities basis, I believe a current economic rent for the subject property
is about $1.65. On a triple net basis, this is $1.35 to $1.40 per-square-foot. As such, current
contract rent is about $0.25 below an economic rent for the building.
Next step in the Income Approach is to determine an applicable vacancy factor. Considerable office
inventory came on line in this stibmarket over the past 24 months, as evidenced by the 19%
vacancy reported by TUBI during the Second Quarter 1999. However, absorption of space in this
submarket has led the county during the past year, and current vacancy is near single digits,
depending on source. Considerable new office space is proposed or under construction, however a
healthy absorption rate is continuing. Over the holding period an investor would anticipate some
rent loss. In this analysis, I have used a 5% vacancy and collection loss factor. I have also used a
triple net rent in this analysis, whereby all operating expenses related to the building are a Lessee
responsibility.
Capitalization rate information is available from comparable data submitted, local and regional
sources, in addition to active local brokers. According to Comps Inc., the average capital&ion
rate reflected by San Diego County office building sales was 8.89% in 1998; and 9.3% in 1999.
Thru September 2000 the average cap rate on office building sales in the county is 8.9%.
According to a regional source, the average cap rate for office building sales on the west coast is
currently 9%. A review of transactions submitted reflect rates of 7.3% to 10.2%. Capitalization
rates reflect a variety of value characteristics such as location; age/condition of improvements;
quality of income stream (ie: credit worthiness of tenant); prevailing interest rates; alternative
investments; up-side potential, and similar factors. The subject property provides a new building
in a healthy/active market and annual rent increases.
A summary of the Income Approach follows.
THE TAGG COMPANY
City of Carlsbad
October 24,200O
Page 12
Potential Annual Gross Income ’ $1,101,600
(68,000 s.E @ $1.35 net)
Less: Vacancy and collection loss (5%)
Net Operating Income
55,080
$1,046,520
Capital&d @ 8.50%
Capitalized @ 9.0%
$12,312,000
$11,628,000
Value indicated by snhzcome Approach (rounded) . . . . . . . $11,630,000 to $12,300,000
Value Conclusion - Fee Simple Interest
A review of appraisal indicators generated fi-om the three approaches to value utilized in this report
provide the following:
Cost Approach ............................................. $12,240,000
Direct Sales Approach ................................. $11,560,000 to $12,240,000
Income Approach ........................................... $11,630,000 to $12,300,000
Concluding step in the appraisal process is weighing of the indications of value, considering the
quantity and quality of data available, reliability of each approach, and type of property being
valued. In effect, an “appraisal” is made of each approach. The defensibility of each is considered,
and a final correlated value is then determined. In this analysis, the three approaches suggest a fairly
narrow range and support a value conclusion for thefee simple interest of
. . . . . . . . %12,000,000 . . . . . . . .
Note: The subject property is subject to a long-term lease obligation, with a current contract rent
that is below an economic rent. Thefee simple value of $12 million may be allocated between
Zeasedfee and leasehold interests. In the event the Lessee (City of Car&bad) exercises their
purchase option, the lease would terminate and the leasedfee - leasehold interests would likewise
terminate.
I hereby certify that I have no interest in the property appraised, present or prospective, and that my
opinions are in no way contingent upon the basis of employment. I further certify that to the best of my
knowledge and belief the statements and opinions contained in this appraisal are correct, subject to the
limiting conditions expressed herein, and that this appraisal has been made in conformity with the Uniform
Standards of Professional Appraisal Practice of the Appraisal Foundation and the Rules of Professional
Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. I appreciate the
opportunity to be of professional service.
Real Estate Appraiser No. AGO05 170 THE TAGG COMPANY
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ADDENDA
THE TAGG COMPANY
Exhibit I
PURPOSE OF THE APPRAISAL
- The purpose and function of this appraisal is to estimate current market value of the herein
described and identified property based on a fee simple interest and subject to the assumptions
and limiting conditions as set forth in this report.
SCOPE OF THE APPRAISAL
Scope of this appraisal encompasses valuation of the ownership involved. Your appraiser has
completed all necessary investigation to arrive at an unbiased opinion of value in accordance with
Ethical Rules and Standards of Professional Appraisal Practice of the Appraisal Institute and
Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation.
The opinions and findings contained herein are intended to result in an “appraisal assignment”
as defined by the Institute. This assignment involves the valuation of an office building property.
The appraiser has considered all three traditional approaches to value.
In the process of appraising the property, pertinent information was gathered, confirmed and is
reported herein, or is available in the appraiser’s work file for the client’s review.
Property information collected and confirmed usually includes a physical inspection, field notes
and photographs, building measurements and land use regulations. Individual assignments may
require additional information including, but not limited to building plans and permits, use
permits, mapping, topographical maps, hazard maps and consulting studies (e.g. biological,
hazardous materials, civil engineering, etc.). Financial information such as income statements,
leases and rent schedules are gathered and confirmed when appropriate to the assignment.
When possible, property owners are interviewed to gather additional information such as purchase
history, property maintenance/repairs, development plans, and other items pertinent to the task.
The information gathered depends on the nature of the appraisal assignment. Market information
is gathered from a variety of primary and secondary sources in order to appraise the property.
The appraiser researches public data sources such as COMPS, Experian, multiple listing services,
California Market Data Cooperative, Lease Beat, Marshall & Swift, Urban Land Institute,
newspapers, periodicals and government publications for general economic trends and conditions
and specific market data which assist in the appraisal process. These data sources report sales
activity and prices, market and development trends, operating statistics, lease and rental rates and
financial rates of return, among others. Sales information from secondary sources is confirmed to
the extent possible with participants to the transactions including buyers, sellers and brokers.
The appraisal report includes references to sources of information used in the valuation process.
Further discussion of the appraisal process is included in following sections.
EXPOSURE TIME
The opinion of market value expressed in this report presumes a preceding ‘exposure time’ on the
open market, during which the property has been competently marketed and pertinent information
has been made available to prospective buyers.
THE TAGG COMPANY
USPAP APPRAISAL REPORT FORMAT
-
The Uniform Standards of Professional Appraisal Practice (USPAP) requires each written
appraisal report to be prepared using either a Self-Contained, Summary or Restricted Appraisal
Report format. A Self-Contained Appraisal Report includes a comprehensive level of detail in the
presentation of information. A Summary Appraisal Report includes a more concise presentation of
information. A Restricted Appraisal Report includes minimal presentation of information, along
with restrictions on the use of the report. This appraisal is presented in a Restricted Appraisal
Report format.
USPAP DEPARTURE RULE
USPAP permits limited departures from specific, non-binding guidelines under certain conditions
whereby:
1. the appraiser has determined that the appraisal or consulting process to be
performed is not so limited that the resulting assignment would tend to mislead
or confuse the client or the intended users of the report;
2. the appraiser has advised the client that the assignment calls for something less
than, or d.i.@erent from, the work required by the specific requirements and that
the report will clearly identify and explain the departure(s); and
3. the client has agreed that the performance of a limited appraisal or consulting
service would be appropriate.
An appraisal that invokes the Departure Rule is referred to as a Limited Appraisal An appraisal
which complies with the non-binding USPAP guidelines is referred to as a Complete Appraisal.
This appraisal does not invoke the Departure Rule and is a Complete Appraisal.
USPAP JURISDICTIONAL EXCEPTION RULE
USPAP contains a Jurisdictional Exception Rule which provides a saving or severability clause
intended to preserve the balance of USPAP if one or more of its parts are determined as contrary
to law or public policy of a jurisdiction. The appraiser is required to identify the part or parts of
USPAP disregarded and the legal authority justifying the action in the appraiser’s report ifthe
Jurisdictional Exception Rules is applied. This appraisal report does not invoke the Jurisdictional
Exception rule.
USPAP COMPETENCY RULE
USPAP requires that the appraiser have the knowledge and experience to complete the appraisal
assignment competently or, alternatively, to 1) disclose the lack of knowledge and/or experience
to the client before accepting the assignment, 2) take all steps necessary to complete the
assignment competently and 3) describe the steps taken in the appraisal report. The appraiser has
previously acquired the necessary knowledge and experience to complete the present appraisal
assignment in a competent manner.
THE TAGG COMPANY
DEFINITION OF MARKET VALUE
The most probable price in terms of money which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, with buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the con summation of a sale as of a specified date and the passing of
title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed and well advised, and each acting in what they
consider their own best interest;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in cash or its equivalent;
5. Financing, if any, is on terms generally available in the co mmunity at the
specified date and typical for the property type in its locale; and
6. The price represents a normal consideration for the property sold, unaffected
by special financing amounts and/or terms, services, fee, costs, or
credits incurred in the transaction.
DEFINITION OF HIGHEST AND BEST USE
The term “highest and best usage” as used herein is the legal use which produces the highest net
return to the land during a reasonable period of time and for which there is an existing and future
expected demand sufliciently strong to affect the real estate market. Possible uses,
as distinguished from reasonably probable uses, have not been considered.
DATE OF VALUATION
October 16,200O
THE TAGG COMPANY
Exhibit II
LIMITING CONDITIONS AND ASSUMPTIONS
In the preparation of this report, certain basic assumptions have been relied upon. There are also
certain limiting conditions which circumscribe the scope of this report.
1.
2.
.-
It is assumed that information and data, including maps and engineering estimates,
furnished by our client and others are substantially correct.
That no guarantee is made as to the correctness of estimates or opinions furnished by
others and which have been used in making this appraisal That no liabilities be assumed
on account of inaccuracies in such estimates or opinions.
3.
4.
5.
6.
7.
-
8.
-
A title report has not been furnished and title of the property appraised is assumed to be
marketable and free of all liens and encumbrances inchuling easements, rights-of-way,
restrictions and reservations of record which could adversely affect its value.
That no liability is assumed on account of matters of a legal nature affecting this property,
such as title defects, liens, encroachments, overlapping boundaries, et cetera.
Maps, photo and plats furnished by this appraiser are not based on a survey but are
furnished as an aid to the reader in visualizing the property.
The existence of hazardous material, which may or may not be present on the property,
was not observed by the appraiser. The appraiser, however, is not qualified to detect such
hazards. In addition, the presence of substances such as hydrocarbons, asbestos, urea-
formaldehyde foam insulation, or other potentially hazardous materials may affect the
value of the property. No responsibility is assumed for any such conditions, or for any
expertise or engineering knowledge required to discover them The client is urged to
retain an expert in this field, if desired. Clean-up of hazardous waste, soil contamination
and the like is considered a seller expense.
The American’s with Disabilities Act (ADA) became effective in January 1992. I have not
made a specific compliance survey and analysis of this property, to determine whether or
not it is in compliance with the various requirements of the ADA. It is possible that a
compliance, together with a detailed analysis of the requirements under ADA , could
reveal that the property is not in compliance with specific requirements. If so, this non-
compliance may have a negative impact on the value of the property. Because I have no
direct evidence relating to this issue, I have not considered possible non-compliance with
the requirements of the ADA in estimating the value of this property.
The triangular-shaped subject site is composed of one (1) tax parcel and containing &7.24-
acres gross and 4.07-acres net. Reader/user of this report may wish to further verzjj site
area calculation. Contained herein is a valuation of the real property only. I have neither
inventoried nor valued on-site fixtures and equipment.
THE TAGG COMPANY
Size and description of structural improvements described in this appraisal are based on a
visual/on-site inspection and review of construction plans provided by the city.
The property is under a lo-year lease. Lessee is the iSty of Carlsbad. Existing lease
information was also client-provided. Provided in this appraisal is a value of thefee simple
interest. Current contract rent under the lease is below a current economic rent.
Therefore, thefee simple value ($12 million) may be allocated between leasehold and
leasedfee interests. However, this lease includes a purchase option within a window
period between 12 months and 24 months following the lease commencement date.
Price is $9,100,000. Should the city exercise their option to purchase the property the
existing lease (leasehold and leased fee interests) will become null and void. With respect
to these issues, the appraiser reserves the right to review/revise stated value estimate,
should additional or conflicting information be forthcomiug.
9. The projections included in this report are utihzed to assist in the valuation process and
are based on current market conditions, anticipated short term supply and demand factors,
Therefore, the projections are subject to changes in fhture conditions that cannot be
accurately predicted by the appraiser and could affect future value projections.
10. Disclosure of the contents of this appraisal report is governed by the By-Laws and
Regulations of the Appraisal Institute. Neither all nor any part of the contents of this
report (especially any conclusions as to value, the identity of the appraiser or the firm with
which he is connected, or any Appraisers or to the MAI or SRA designation) shall be
disseminated to the public through advertising media, public relations media, news media,
sales media or any other public means of commuui cation without the prior written consent
aud approval of The Tagg Company.
THE TAGG COMPANY
Exhibit lII
CERTIFICATE OF APPRAISAL
I certify that to the best of my knowledge and belief
The statements of fact contained in this appraisal are true and correct.
The reported analyses, opinions, and conclusions are limited only by the reported
assumptions and limiting conditions, and are my personal, unbiased professional analyses,
opinions and conclusions.
I have no present or prospective interest in the property that is the subject of this report,
and I have no personal interest or bias with respect to the parties involved.
Compensation is not contingent on an action or event resulting from the analyses,
opinions, or conclusions in, or the use of this report.
My analysis, opinions and conclusions were developed, and this report has been prepared,
in conformity with the Uniform Standards of Professional Appraisal Practice.
I have made a personal inspection of the property that is the subject of this report.
No one other than the undersigned provided significant professional assistance to the
person(s) sighing this’report.
The reported analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics and
Standards of Professional Practice of the Appraisal Institute.
I certify that the use of this report is subject to the requirements of the Appraisal Institute
relating to review by its duly authorized representatives.
As of the date of this report, Randy A. Tagg, MAI has completed the requirements of the
continuing education program of the Appraisal Institute.
The real estate which is the subject of this appraisal was valued as of October 16,200O. /7
Real Estate Appraiser, No. AGO05 170
THE TAGG COMPANY
PHOTOGRAPHS
Subject property - 1635 Faraday Avenue, Carlsbad.
Triangulakhaped parcel well above street grade. Contains *4.07-acres usable.
Faraday Avenue - Subject is on the left.
Photo’s taken October 2000 by appraiser.
THE TAGG COMPANY
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Formal parking provided for 275 vehicles, per plans. Ratio is about 4: 1,000.
THE TAGG COMPANY
Northeast elevation - Maiu entrance.
2-story, concrete tilt-up construction.
I
I
I
I I
Southerly elevation.
Building contains *68,000 square feet. Age is one year.
THE TAGG COMPANY
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Southeasterly elevation.
Northwesterly elevation.
THE TAGG COMPANY
MARKET DATA - ITEM NO. 1
(Land Sale)
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
SlZEANDSHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING/GENERAL PLAN
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
COMMENTS
INDICATOR
212-130-32 :
Page 1127, B-l
South side of Faraday Avenue, opposite Newton Drive in
the Carlsbad Research Center, City of Carlsbad.
Lot 107 of Carlsbad Tract No. 85-24, Unit No. 5 Carlsbad
Research Center, City of Car&bad, Map No.. 12815.
Rectangular-shaped interior parcel containing S.O-acres
gross and 4.07-acres usable.
Level pad, substantially above grade of Faraday Avenue.
Faraday Avenue is 2-lane, fully paved inchnling
curb/sidewalks.
All customary municipal utilities available at the site.
City of Carlsbad; C-M, Commercial
General Plan is Planned Industrial.
Hermann Enterprises, LLC.
Stephen Hoflkran
Deed Dated:
Recorded:
Instrument No.
$2,216,000 cash
May 18, 1998
May 19,199s
29475 1
Inspection; public records; file data.
00137
This property is located in the Carlsbad Research Center,
north of Palomar Airport. A k68,OOO square foot 2-story
office building anticipated at time of purchase. Indicated
FAR is 38%. No plans submitted to date. Some view
amenity. Sold as finished site. Well above street grade.
Price-per-square-foot: $12.50
THE TAGG COMPANY
MARKET DATA - ITEM NO. 2
(Land Sale)
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
212-130-31
Page 1127, B-l /
South side of Faraday Avenue, near Newton Drive in the
Carlsbad Research Center, City of Carlsbad.
LEGAL DESCRIPTION Lot 106 of Carlsbad Tract No. 85-24, Unit No. 5 Carlsbad
Research Center, City of Carlsbad, Map No. 12815.
SIZE AND SHAPE Triangular-shaped interior parcel containing 7.24-acres
gross and 4.07-acres usable.
TOPOGRAPHY
STREET IMPROVEMENTS
Level pad, substantially above grade of Faraday Avenue.
Faraday Avenue is 2-lane, fblly paved including
curb/sidewalks.
UTILITIES
ZONING/GENERAL PLAN
All customary municipal utilities available at the site.
City of Car&bad; C-M, Commercial
General Plan is Planned Industrial.
GRANTOR
GRANTEE
TRANSACTION
CAC Associates, LLC
Faraday Business Plaza, UC
PRICE
SOURCE
FILE NO.
coMIl4mJTs
Deed Dated:
Recorded:
Instrument No.
$2,216,000
June 29,199s
July 7,199s
419383
Inspection; public records; Andy Melzer, broker; buyer
00137
This property is located in the Carlsbad Research Center.
A h68,OOO square foot 2-story building subsequently
completed. Sold as finished site. Indicated FAR is 3 8%.
Triangular-shape somewhat diminishes utility. Well above
street grade. Buyer indicated sale price was based on $12.50
per-square-foot of usable site area. College Boulevard (97-
1) assessment amounting to about $SS,OOO outstanding at
time of sale. This property was purchased in October 1997
for $5.50 per-square-foot. Indicated appreciation rate is
about 14.1% per month (straight line) over the 9 month
holding period.
INDICATOR Pric2~&~:~$$!~#zt: $12.50
MARKET DATA - ITEM NO. 3
(Land Sale)
307-452-23
Page 1208, B-4
South side of West Ocean Air Drive, east of Interstate 5
in the Sorrento Hills area, City of San Diego.
Parcel 11 of Parcel Map 18045, City of San Diego, filed
June 11, 1998.
Generally rectangular-shaped interior parcel containing
4.24-acres gross, and 2.24-acres usable.
Terraced, level pad, at street grade. Considerable grade
change along west and south property boundary.
West Ocean Air Drive is 2-lane, paved, curb/sidewalks.
All customary municipal utilities available.
City of San Diego; IP-2- 1, Industrial Park
Westbrook Torrey Hills, LP
Torrey View Associates LP
Deed Dated:
Recorded:
Instrument No.
$2,200,000 cash
October 29,1999
October 29,1999
726127
Inspection; public records; Jim Purvis, buyer
00137
A 75,000 square foot office building (Torrey View
Corporate Center) under construction. This community in
the beginning growth phase of the neighborhood lifecycle.
Surrounding area is largely undeveloped. View amenity.
Not freeway convenient. Asking rents in pre-leasing,
$2.35 s.E, plus utilities. No assessment liens.
Price-per-square-foot: $22.5 5 usable
ASSESSMENT. PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
COMMENTS
INDICATOR
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
SIZEANDSHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
COMMENTS
Deed Dated:
Recorded:
Instrument No.
$2,625,000 cash
May 17,200O
June 30,200O
346570
Inspection; public records; Kent Moore, broker
00137
Two, 87,000 square foot office buildings proposed.
This community in the growth phase of the neighborhood
lifecycle. Future golf course view amenity. Not freeway
convenient.
INDICATOR Price-per-square-foot:
MARKET DATA - ITEM NO. 4
(Land Sale)
212-120-07
,
Page 1127, B-2
West terminus of Aston Avenue, west of College Boulevard
in the Carlsbad Research Center, city of Carlsbad.
Lot 69 of Carlsbad Tract No. 85-24, Unit No. 4 Map
11811, city of Carlsbad.
Generally rectangular-shaped interior parcel containing
8.7-acres gross, and 4.70-acres usable.
Level pad, at street grade. Unusable slope area.
Aston Avenue is 2-lane, paved, curb/sidewalks. Cul de sac.
All customary municipal utilities available.
City of Carlsbad; PI, Planned Industrial
BTIN-VIII, LLC
Aston Views, LLC
$12.82 usable
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 5
(Office building sale)
,
212-091-1s
Page 1127, C-3
1921-25 Palomar Oaks Way at Palomar Airport Road,
City of Carlsbad.
Lots 13 & 14 of Carlsbad Tract 81-46 Unit No. 1, City of
Carlsbad.
Rectangular-shaped comer parcel containing 5.19-acres.
Level, at street grade. Appears mostly usable. Above grade
of Palomar Airport Road.
Palomar Oaks Way is 2-lane, paved, curb/sidewalks.
Customary municipal utilities are available in the street.
City of Carlsbad; General Plan is Planned Industrial
Two; three-story office buildings of steel frame/glass
construction containing a combined *89,034 square feet.
Multi-tenant. About 9 years of age in good condition.
Attractive perimeter landscape. Open and covered parking,
4: 1,000. FAR 39%.
JJB Land Company, LLC
Prentiss Properties Acquisition Partners L.P.
Deed Dated: January 30,199s
Recorded: February 5,199s
Instrument No: 059501
$13,850,000 cash
Inspection; public records; file data.
00137
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. 94% leased at purchase. Multi-tenant.
Surrounding land use is business park.
Price-per-square-foot’of improvements,
includillg land: $155.56
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 6
(Office building sale)
2 10-090-36
Page 1126, G-2
5050 Avenida Encinas, near Cannon Road and fronting I-5,
City of Carlsbad.
Parcel 14 in the city of Carlsbad, Book of Parcel Maps at
Page 11457.
Rectangular-&aped interior parcel containing 2.00-acres.
Level, at street grade. Appears mostly usable.
Avenida En&as is hlly paved, curb/sidewalks.
Customary municipal utilities are available in the street.
City of Carlsbad; General Plan is Planned Industrial
One; three-story office building of steel fixme construction
and concrete pavers containing h49,OSO square feet. Multi-
tenant. About 11 years of age iu good condition. Attractive
perimeter landscape. Open parking, 3.57: 1,000. FAR 56%.
Jacob and Jeanette Brouwer, Co-trustees
Prentiss Properties Acquisition Partners L.P.
Deed Dated: JanuaIy30,1998
Recorded: February 5,199s
Instrument No: 059500
$7,550,000 cash
Inspection; public records; file data.
00137
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. 100% leased at purchase. Coldwell
Banker and Chicago Title tenants. Surrounding land use is
business park and restaurants. Interstate 5 visible and
convenient.
Price-per-square-foot of improvements,
inchding land: $153.83
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR TB Investors, Ltd.
GRANTEE Kih-oy Realty, LP.
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 7
(Office buildiug sale)
2 12-070- 19
Page 1127, D-2
2231 Rutherford Road, at Geiger Court in the Carlsbad
Research Center, City of Carlsbad.
Lot 25 of Carlsbad Tract 81-10 Unit No. 2-A, City of
Carlsbad.
Rectangular-shaped comer parcel containing 1.96-acre,
or B5,33S square feet.
Level, at street grade. Appears mostly usable.
Rutherford Road is 2-lane, paved, curb/sidewalks, good
condition. Geiger Court is a cul-de-sac.
Customary municipal utilities are available in the street.
City of Car&bad; General Plan is Planned Industrial.
Single, two-story office building of concrete tilt-up and
glass construction containing &38,677 square feet. Single
tenant. About 11 years of age in average condition.
Attractive perimeter landscape, Parking is 3.41/1,000.
FAR is 45%.
Deed Dated:
Recorded:
Instrument No:
June 9,199s
June 11,199s
352906
$5,125,000 cash
Inspection; public records; file data.
00137
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. Fully leased through August 2001.
Single tenant. Surrouffdiug land use is business park.
Sold at 10.2% cap.
Price-per-square-foot of improvements,
including land: $132.51
THE TAGG COMPANY
MARKET DATA - ITEM NO. 8
(Office sale)
/
3X5-390-28
Page 1249, B-3
3750-60 Convoy Street at Interstate 805 in the Kearny
Mesa area, city of San Diego.
Lot 3 of Keamy Mesa - Dunn Business Park Unit No. 1,
Map 8732, City of San Diego.
Slightly irregular-shaped corner parcel containing
6.42-acres.
Level, at street grade. Appears mostly usable.
Convoy Street is multi-lane, raised median and lily paved.
Signal&d intersections.
Customary municipal utilities are available in the street.
City of San Diego; IL
Two, three-story Class B office buildings of concrete
steel/glass construction containing &126,243 square feet.
About 16 years of age in average condition. Attractive
perimeter landscape. Parking is 3.96/1,000. FAR is 45%.
John Hancock Mutual Life Insurance Company
Brookwood Keamy Mesa Investors, LLC
Deed Dated: May 3,1999
Recorded: May 7,1999
Instrument No: 313153
$12,950,000
Inspection; public records; file data
00137
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. 92% occupied at purchase by 25
tenants. Sold at 9.09% cap. Includes a comer pad leased to
Burger King. ’
Price-per-square-foot of improvements,
including land: $102.58
THE TAGG COMPANY
-
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 9
(Office building sale)
,
212-093-13
Page 1127, D-3
5845 Owens Avenue, at Camino Vida Roble in the Car&bad
Airport Centre, City of Car&bad.
Parcel 1 of Parcel Map No. 17886, City of Carlsbad.
Slightly irregular-shaped comer parcel containing
1.75-acre, or &76,230 square feet.
Level, at street grade. Appears mostly usable. Above grade
of Camino Vida Roble.
Owens Avenue is 2-lane, paved, curb/sidewalks, good
condition. Cul de sac. Access from Owens Avenue.
Customary municipal utilities are available in the street.
City of Carlsbad; General Plan is Planned Industrial.
Single, two-story Class B office building of decorative
concrete tilt-up construction containing *27,782 square
feet. New building. Attractive perimeter landscape. Parking
is 3.6/1,000. FAR is 36%. Built-out with 90% office, about
10% unfinished warehouse. One grade level truck door.
Ayman Suleiman and Mazen M. Suleiman
O.C.I. Partners, LLC.
Deed Dated: May 19, 1999
Recorded: May 28,1999
Instrument No: 370008
$3,275,000
Inspection, public records, Tucker Hohenstein, broker
00137
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. Vacant at time of sale. Asking rate
$1.70 gfoss, plus utilities. This equates to about $1.35
lWN. Surrounding lahd use is business park, and a
Courtyard Suite under construction. Vacant site (under this
building) sold in December 1997 for $8.89 per-square-foot.
Price-per-square-foot of improvements,
including land: $117.88
THE TAGG COMPANY
-
-
-
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
uTIL1TlEs
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 10
(Office building sale)
369-192-18
Page 1249, E-l
9665 Chesapeake Drive at Clairemont Mesa Boulevard in
the Keamy Mesa area, city of San Diego.
Lot 38 of Hazard Commercial Park Map 8503, City of San
Diego.
Rectangular-shaped corner parcel containing
3. lo-acres.
Level, at street grade. Appears mostly usable.
Each street frontage is fully paved including curb/sidewalks.
Clairemont Mesa Boulevard has raised median. Right in/out
only.
Customary municipal utilities are available in the street.
City of San Diego; IL
One, four-story Class B office building of concrete
steel/glass construction containing &92,865 square feet.
About 16 years of age in average condition. Attractive
perimeter landscape. Parking is 3.7/1,000. FAR is 69%.
Eastrich No. 178 Corporation
Chesapeake Partners, LLC
Deed Dated: July 30,1999
Recorded: July 30,1999
Instrument No: 526503
$13,200,000 cash
Inspection; public records; file data
00137
THE TAGG COMPANY
-
COMMENTS
INDICATORS
Investor purchaser. 100% occupied at purchase by 15
tenants. Sold at 8.8%’ cap.
Price-per-square-foot of improvements,
including land: $142.14
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET IMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FILE NO.
MARKET DATA - ITEM NO. 11
(Office building sale)
I
212-091-19 thru 22
Page 1127, C-3
1902 - 03 Wright Place just north of Palomar Airport Road,
city of Carlsbad.
Generally described as a portion of Lots 7,8 and 11 of
Car&bad Tract 8 l-46 Unit No. 1 Map 11287
Irregular-shaped tract composed of contiguous tax parcels
and containing 14.19-acres.
Level, at street grade. Appears mostly usable.
Wright Place is fully paved, curb/sidewalks. Cul de sac.
Palomar Oaks Way is also fully paved. Intersection not
signalized,
Customary municipal utilities are available in the street.
City of Carlsbad; Planned Industrial
Two, three-story Class A office buildings of concrete
steel/glass construction containing a combined klO4,OOO
square feet. One year old at purchase in good condition.
Attractive perimeter landscape. Parking is 4.92/1,000.
FAR is about 3 1% excluding excess land, see comments.
Robert C. Kronick, Trustee
The Realty Associates Fund V, LP
Deed Dated: November 2,1999
Recorded: November 3,1999
Instrument No: 735294
$20,450,11 leash
Inspection; public records; file data
00137
THE TAGG COMPANY
COMMENTS
IJWICATORS
Investor purchaser. 80% occupied at purchase. Includes
two additional tax assessor parcels containing *6.46-acres.
Two office buildings currently under construction.
Price-per-square-foot of improvements,
exchding excess land: $161.05
THE TAGG COMPANY
ASSESSMENT PARCEL NO.
THOMAS BROS.
LOCATION
LEGAL DESCRIPTION
PARCEL SIZE AND SHAPE
TOPOGRAPHY
STREET lMPROVEMENTS
UTILITIES
ZONING
IMPROVEMENTS
GRANTOR
GRANTEE
TRANSACTION
PRICE
SOURCE
FlLE NO.
MARKET DATA - ITEM NO. 12
(Of&e building sale)
304-101-02
Page 1127, F-2
1265 1-71 High BhrffDrive, and being part of the “San
Diego Corporate Center” along Interstate 5 south of De1
Mar Heights Road, city of San Diego.
Lot 14 of Employment Center Development Unit No. 2A,
Map 10394, city of San Diego.
Rectangular-shaped interior parcel containing 3.53-acres.
Level, at street grade. Appears mostly usable.
High BhtfFDrive is &lly paved, curb/sidewalks.
Customary municipal utilities are available in the street.
City of San Diego; EC, Employment Center
Two; three-story office buildings of steel/glass construction
containing a combined &78,681 square feet. Multi-tenant.
About 15 years of age in average/good condition. Attractive
perimeter landscape. Open parking, 3.75:1,000. FAR 51%.
TSI, L.P.
RB. Income Properties
Deed Dated: March 24,200O
Recorded: March 24,200O
Instrument No: 149273
$13,250,000
TD: Bank of America: $11,350,000
Inspection; public records; file data.
00137
THE TAGG COMPANY
COMMENTS
INDICATORS
Investor purchaser. 100% leased at purchase. Surrounding
land use is upscale business park. Interstate 5 convenient.
Sold at 7.3% cap rate:
Price-per-square-foot of improvements,
inchlding land: $168.40
THE TAGG COMPANY
City of Carlsbad
1635 Faraday Av Carlsbad, CA 92008
- 1 on 3/2000 Certificate of Occupancy Cert of Occ#:CO990056
- Permit Type: COFO Related Bldg Permit& CB991603
Bldg Address: 1635 FARADAY AV CBAD
Parcel No: 2121303100
Occupant Name: CITY OF CARLSBAD
Contact Name: JOHN CAHILL
- Building Owner:
FARADAY BUSINESS PLAZA L L C
SUITE 104
1947 CAMINO VIDA ROBLE
- CARLSBAD CA 92008
Phone#: 760/438-l 161
Phone#: 760/438-0894
Phone#: 760/431-7612
Description of Use:ADMINISTRATIVE OFFICES
I certify that this building or portion complies with the Uniform Building Code for the group and division of
occupancy and the use for which the proposed occupancy is classified. The above information is true and correct, and I make this statement under penalty of perjury.
Signature of Building Official Date
FOR DEPARTMENTAL USE ONLY
Date Routed
Use Zone
Inspected By
Occupancy Group: B
Date
Construction Type: VN
Approved - Disapproved -
Inspected By Date Approved - Disapproved -
Inspected By Date Approved - Disapproved -
Comments:
c,
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-
-