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HomeMy WebLinkAbout; Right of Way 869 Square Foot Parcel Licensed Drainage Facility Appraisal Report; LICENSED DRAINAGE FACILITY; 2014-01-31APPRAISAL REPORT RIGHT OF WAY 869 SQ. FT. PARCEL LICENSED DRAINAGE FACILITY CARLSBAD, CALIFORNIA APPRAISED FOR Ms. Beth Freeman Real Estate Coordinator North County Transit District 810 Mission A venue Oceanside, CA 92054 DATE OF VALUATION January 22, 2014 DA TE OF REPORT January 31 , 2014 APPRAISED BY Anderson & Brabant, Inc. 353 West Ninth Avenue Escondido, California 92025 File No. 14-004 January 31, 2014 Ms. Beth Freeman Real Estate Coordinator North County Transit District 810 Mission Avenue Oceanside, CA 92054 ANDERSON & BRABANT, INC. REAL ESTATE APPRAIS~RS AND CONSULTANTS 353 W. NINTH A VENUE ESCONDIDO, CALIFORNIA 92025-5032 TELEPHONE (760) 741-4146 FAX (760) 741-1049 RE: Appraisal of 869 Square Foot Right of Way Licensed Drainage Facility Carlsbad CA 92008 P.O. # 31307-000-OP Dear Ms. Freeman: As requested, we have personally inspected and appraised the above-referenced land parcel which is an 869 square foot Right of Way (ROW) portion of 7.14 acres Assessor Parcel Number 203-054-28-00, owned by the North County Transit District. The ROW parcel is located in the northwest portion of the larger parcel, on the southwest side of the A. T. & S.F. Railroad Tracks, contiguous to the easterly boundary of a property at 2550 Carlsbad Boulevard and the athletic field of the Army & Navy Academy immediately south of that property. The purpose of our analysis is to estimate the fair market value of the ROW parcel to provide a basis for determining an annual license fee for the use of the property rights, based on current estimated market rates of return, as of January 22, 2014. This appraisal Report is intended to comply with the reporting standards as defined by the Uniform standards of Professional Appraisal Practice (USP AP). Based upon our analysis, it is our opinion that the fair market sales value, the fair market annual license fee, and the suggested capitalization rate that would be applicable for the fair market values are shown in the following table. Fair Market Sale Value $37,400 Fair Market License Fee $3,179 Per Year Capitalization Rate 8.50% Anderson & Brabant, Inc. Ms. Beth Freeman January 31, 2014 Page 2 The opinions of value expressed herein are subject to certain assumptions and limiting conditions as set forth in the attached report. A description of the subject and discussions of the data and analyses that support the value conclusions are also included in the report. Respectfully submitted, ANDERSON & BRABANT, lNC. ~~1-Jf~ Brian L. Flannery (/ State Certification No. AGO 17627 /4,~ &/J2.____ William B. Anderson, MAI State Certification No. AG0023 I 5 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................ . ASSUMPTIONS AND LIMITING CONDITIONS ................................................................. 2 APPRAISERS' SIGNED CERTIFICATION........................................................................... 4 INTRODUCTION Identification of the Property................................................................................................... 5 Purpose of the Assignment...................................................................................................... 5 Estimated Exposure Period...................................................................................................... 5 Effective Date of Value Opinion ............................................................................................. 6 Date of Report......................................................................................................................... 6 Intended Use and User............................................................................................................. 6 Property Rights Appraised ...................................................................................................... 6 Extraordinary Assumptions..................................................................................................... 6 Hypothetical Conditions .......................................................................................................... 6 Scope of Work......................................................................................................................... 7 Report Option .......................................................................................................................... 7 Sales History of the Subject Property ...................................................................................... 7 Location Map ............................................................................................................................. 8 Location Description ................................................................................................................. 9 DESCRIPTION OF REAL EST ATE APPRAISED Aerial Photograph of APN 203-054-28-00 ............................................................................. 13 Subject Property Photographs ................................................................................................. 15 Site Description ....................................................................................................................... 18 Description of the Improvements ............................................................................................ 20 Tax and Assessment Data ........................................................................................................ 20 VALUATION Highest and Best Use ............................................................................................................... 21 Valuation Methodology ........................................................................................................... 21 Sales Comparison Approach ................................................................................................... 22 Sales Location Map ................................................................................................................. 23 Summary of Market Data ........................................................................................................ 24 Summary & Conclusion of Value ........................................................................................... 27 Market Lease Value ................................................................................................................. 2 8 ADDENDA Legal Description Qualifications of the Appraisers 869 Square Foot Right of Way Parcel, licensed Drainage Facility, Carlsbad, CA Location: Assessor's Parcel No.: Thos. Bros. Map Code: Owner of Record: Land Description: .Size: Zoning: General Plan: Flood Zone: Seismic Hazard: Topography: Access: Utilities: Improvements: Interest Appraised: Highest and Best Use: Date of Value: Date of Report: Estimated Market Values: Exposure Time: Special Assumptions: Anderson & Brabant, inc. EXECUTIVE SUMMARY North of the easterly terminus of Beech A venue, between the northeasterly boundary of2550 Carlsbad Boulevard and the southwesterly side of the A.T. & S.F. Railroad tracks, Carlsbad, California 92054 Portion of APN 203-054-28-00 1106-D5 North County Transit District 869 Square Feet V-R-Village Review TC -Transportation Corridor, within V -Village Area Zone X, per FEMA Community Map No. 06073C0761G, dated May 16, 2012. None known Moderately sloping (See text) All to site None Fee Simple Licensed Drainage Facility January 22, 2014 January 31 , 2014 Fair Market Sale Value Fair Market License Fee Caoitalization Rate 12 months (see page 2) $37,400 $3, 1 79 Per Year 8.50% 1 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is subject to the following special assumptions and limiting conditions: 1. This is an Appraisal Report which is intended to comply with the reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice (USPAP). As such, it includes discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraisers' opinion of value. Supporting documentation concerning the data, reasoning, and analyses has been retained in our file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. Reliance on this report is limited to the client and it should not be distributed to any party not identified as an intended user. The appraisers are not responsible for unauthorized use of this report. 2. No title report or title information was provided to the appraisers. For purposes of this appraisal, the assumption is made that there are no easements in place that have an adverse effect on the value or use of the subject Right of Way (ROW) land parcel that is the subject of this appraisal in accordance with its highest and best use. 3. The opinions and conclusions included in this report are based on information available and/or discovered as of the date of the report. The appraisers reserve the right to change those opinions and conclusions if additional information which is in any way pertinent, such as items specific to the property or additional market data, becomes available and/or is discovered subsequent to the appraisal report date. This appraisal is subject to the following general assumptions and limiting conditions: 1. It is assumed that information furnished to us by our client, including maps, cost estimates, and legal descriptions, is substantially correct. 2. No responsibility is assumed for matters legal in character, nor do we render an opinion as to title, which interest is assumed to be held as the fee simple estate as of the date of valuation unless otherwise specified. 3. It is assumed that the property is readily marketable, free of all liens and encumbrances except any specifically discussed herein, and under responsible ownership and management. 4. Photographs, plats, and maps furnished in this appraisal are to assist the reader in visualizing the property. No survey of any property has been made and no responsibility has been assumed in this matter. 5. It is assumed that there are no legitimate environmental or ecological reasons that would prevent the continued use of the property or orderly development of the land as though vacant to its highest and best use under economically feasible conditions. 6. We are not qualified to detect hazardous waste and/or toxic materials. Any comment by us that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert in the field of environmental assessment. The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. Anderson & Brabant, inc. 2 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA Our value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. Our descriptions and resulting comments are the result of the routine observations made during the appraisal process. 7. Possession of this report, or a copy thereof, does not carry with it the right of publication. rt may not be used for any purpose by any person other than the party to whom it is addressed and the identified intended users without the written consent of Anderson & Brabant, Inc., and in any event, only with proper written qualification and only in its entirety. 8. 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 reference to the Appraisal Institute or the MAI designation) shall be disseminated to the public through advertising media, public relations media, news media, sales media, or any other public means of communication without prior written consent and approval of Anderson & Brabant, Inc. 9. The submission of this report constitutes completion of the services authorized. It is submitted on the condition that the client will provide the appraiser customary compensation relating to any subsequent required depositions, conferences, additional preparation or testimony. 10. The valuation estimate is of surface rights only and the mineral rights, if any, have been disregarded. No warranty is made as to the seismic stability of the subject property. Anderson & Brabant, inc. 3 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA APPRAISERS' SIGNED CERTIFICATION We do hereby certify that, to the best of our knowledge and belief ... l. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, are our personal, unbiased professional analyses, opinions and conclusions. 3. We have no present or prospective future interest in the property that is the subject of this report, and we have no personal interest or bias with respect to the parties involved. 4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5. We have not performed any services regarding the subject property, as appraisers or in any other capacity, within the three (3) year period immediately preceding acceptance of this appraisal assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the developing or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our 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, which includes the Uniform Standards of Professional Appraisal Practice. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 10. Brian L. Flannery made a personal inspection of the property that is the subject of this report. 11. No one provided significant real property appraisal assistance to the persons signing this certification. ~~nn~Je~ State Certification No. AGO 17627 January 31, 2014 Date 12. As of the date of this report, I have completed the continuing education program of the Appraisal Institute. Anderson & Brabant, Inc. Iv~ t>,,(Q____ William B. Anderson, MAI State Certification No. AG0023 I 5 January 31, 2014 Date 4 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA INTRODUCTION IDENTIFICATION OF THE PROPERTY The appraised property is an 869 Square Foot right-of-way portion of 7 .14 acre Assessor Parcel Number (APN) 203-054-28-00. It lies north of the northeasterly terminus of Beech Avenue, between the northeasterly boundary of a property at 2550 Carlsbad Boulevard, and the Army and Navy Academy athletic fields just south of that property, and the southwesterly side of the A.T. & S.F. Railroad tracks, in Carlsbad, California 92054. Legal Description We were not provided with a title report for the subject right of way parcel, but were provided with Engineering Plat Maps and a legal description of the parcel within which the ROW parcel is located, 203-054-28-00. A copy of the complete legal description, identified as "Exhibit A," is included in the Addenda to this report. Ownership Per the client, title to the subj ect right of way parce.1 is vested as follows: North San Diego County Transit District. PURPOSE OF THE ASSIGNMENT The purpose of this appraisal assignment is to estimate an opinion of a fair market annual license fee for the subject 869 square foot parcel, currently occupied by the NCTD. As used in this report, Fair Market Value is defined as follows: "(a) The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available. (b) The fair market value of property taken for which there is no relevant market is its value on the date of valuation as determined by any method of valuation that is just and equitable." 1 ESTIMATED EXPOSURE PERIOD As a requirement of the Uniform Standards of Professional Appraisal Practice, we have provided an estimate of the exposure period for the subject property. The exposure period or time is the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based upon an analysis of past events assuming a competitive and open market. Exposure time is different for various types of real 1 California Code o/Civil Procedure, Title 7, Sec. 1263.320 and 1263.330 Anderson & Brabant, Inc. 5 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA estate and under various conditions. It is noted that the overall concept of reasonable exposure encompasses not only adequate, sufficient, and reasonable time, but also adequate, sufficient and reasonable effort. The reasonable exposure period is a function of price, time, and property use. To assist us in determining a reasonable estimate of exposure time for the subject property, we attempted to extract the marketing periods of the data used in the Sales Comparison Approach section of this report. We also discussed past marketing periods with local agents and brokers and relied on information from our office in prior reports. Those interviewed indicated that marketing periods could fluctuate from several weeks up to one year or longer, depending on the appeal and characteristics of the property. Based on observed market conditions, it is our opinion that the exposure time for the subject property described in this report would have been up to 12 months if marketed for sale at or near market value. EFFECTIVE DATE OF VALUE OPINION The effective date of the opinion of values expressed herein is January 22, 2014. DA TE OF REPORT The date of this appraisal report is January 31, 2014. INTENDED USE AND USER It is understood that the appraisal report will be used by the client, the North County Transit District (NCTD), for internal purposes and future licensing negotiations. We are not responsible for any unauthorized use of this report. PROPERTY RIGHTS APPRAISED The appraised values pertain to the fee simple interest or estate in the subject property. The definition of fee simple estate is as follows. "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." 2 EXTRAORDINARY ASSUMPTIONS An extraordinary assumption is something that is assumed to be true, but is not certain. No extraordinary assumptions were considered in this analysis. However, this appraisal is subject to certain special and general assumptions as outlined on pages 2 and 3 of this report. HYPOTHETICAL CONDITIONS Hypothetical conditions are known to be false, but are presumed to be true for the purpose of reasonable analysis. No hypothetical conditions were considered in our analysis. 2 The Appraisal of Real Es1a1e, 13th ed. (Chicago: Appraisal Institute, 2008), p. 114 Anderson & Brabant, Inc. 6 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SCOPE OF WORK The indicated value expressed in this appraisal report reflects the property condition as it physically, legally, and economically exists on the effective date of value. In preparing this appraisal, we took the following steps. • The first step in the analysis was to conduct a preliminary survey of the subject property and surrounding area in order to more accurately define the appraisal problem and identify the methods and techniques necessary to accomplish the objective of this appraisal report. Legal aspects of the subject property were investigated regarding its potential uses within the context of its surrounding area. • The general area was inspected for the purpose of identifying those specific boundaries within which data that could be considered relevant to this analysis would most likely be located. The intent of this inspection was also to identify physical conditions, neighborhood development trends, and other factors that affect real property value in the subject area. We have examined the general economy of the region and community to determine trends in population, housing, employment, financing, and market conditions. • A detailed search of the primary market area of the subject was performed in order to collect relevant and comparable sale data. These data have been considered for direct comparison to the appraised property when appropriate. The depth of the analysis was intended to be appropriate in relation to the significance of the appraisal problem. These data have been analyzed and confirmed with principals, their representatives, or agents leading to the value conclusion set forth in this report. The valuation process involved the utilization of all techniques and procedures considered appropriate to the assignment. Sources of data included the County Recorder's office, various market data services, published reports, and personal contacts. • The three traditional approaches to value include the Cost, Sales Comparison, and Income Approaches. Of these three, the Sales Comparison Approach to estimate the fair market land value of the right-of-way parcel was considered to have specific applicability in the valuation of the subject property. Upon determination of highest and best use, reliable market data were analyzed on the basis of their overall degree of comparability to the appraised property. • The final step entailed the organization and drafting of the appraisal report. REPORT OPTION This is an Appraisal Report as defined by the Uniform Standards of Professional Appraisal Practice (USPAP). It presents summary discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraisers' opinion of value. SALES HISTORY OF THE SUBJECT PROPERTY According to public records, the subject right of way parcel has not been involved in a conventional sale transaction within the three year period that precedes the date of value, and has been under the ownership of the North County Transit District since at least December 15, 1992. Anderson & Brabant, inc. 7 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA lhll ,t .t••~lm_cr ___ ~ c,,,,,., Anderson & Brabant, Inc. LOCATION MAP c .. , , ,.., ·- (ll6 ~IFORNIA AREA MAP ••••• v,,,. NEIGHBORHOOD MAP _, (1'' D I e O 0 -·--·--.... -.. --.. ------ \ ,..# ~ \ 8 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA LOCATION DESCRIPTION Region The subject is located in the city of Carlsbad in the northwestern part of San Diego County, California. San Diego County is located in the extreme southwesterly comer of the United States and is bordered by the Pacific Ocean to the west, the California/Mexico border to the south, Orange and Riverside Counties to the north, and Imperial County to the east. San Diego County is the second largest county in the State of California based on population which, as of January l, 2013, was estimated by the California Department of Finance Demographic Research Unit at 3,150,178 persons. This reflects an increase of less than one percent from the January 1, 2012 total ofJ,128,734. The county includes the State's second most populous city and offers such geographic features as mountainous regions of the Cleveland National Forest, the Anza Borrego Desert, the International Border with Mexico, and over 50 miles of Pacific Ocean coastline. These features, and the area's temperate year-round climate, are among the county's major attractions. Most of the county's population is located along the coastal region, inland valleys, and foothills, within approximately 25 to 30 miles of the ocean. The mountains and deserts are only sparsely developed and populated. On a regional basis, San Diego County is served by three major freeways. These include Interstate 5, a coastal route connecting San Diego with Baja California to the south and the states of California, Oregon, and Washington to the north; Interstate 8, a major east-west route connecting San Diego with Arizona and other southwestern states to the east; and Interstate 15, an inland route connecting San Diego with Riverside and San Bernardino Counties and other points to the northeast. There are several important local freeways that provide access within the region. These include Interstate 805 that runs inl.and from and parallel to Interstate 5; State Route 94, parallel to Interstate 8; State Route 163, connecting Interstate 15 with Downtown San Diego; and State Route 78, the major east-west freeway in northern San Diego County. San Diego International Airport (Lindbergh Field) is located to the west of the subject and is close to Downtown San Diego. This airport is serviced by 18 commercial airlines and four scheduled air-freight services. There are an additional eight small public airports located throughout the county. There is little commercial air activity at these facilities. Rail service is provided by San Diego and Arizona Eastern Railroad, Santa Fe Railroad, and Amtrak. Industrial/commercial use of the rail lines for freight carriage has declined in San Diego over the past 15+ years. However, the Amtrak line between San Diego and Los Angeles is popular with commuters. The San Diego Trolley (light rail transit system) has opened several commuter routes in the southern and eastern portions of San Diego County that have proven very popular. Individual transit districts throughout the county provide local bus service. The San Diego region has been impacted by the global financial crisis, considered the worst of its kind since the Great Depression. It became prominently visible in the past decade with the failure, merger or conservatorship of several large United States-based financial firms. The underlying causes leading to the crisis had been reported in business journals with commentary about the financial stability of leading United States and European investment banks, insurance firms and mortgage banks consequent to the subprime mortgage crisis that Anderson & Brabant, Inc. 9 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA commenced in 2007. The failures of large financial institutions in the United States and Europe led to dramatic declines in various stock indexes and significant reductions in the market-value of equities (stock) and commodities worldwide. The crisis has led to a liquidity problem and the de-leveraging of financial institutions, especially in the United States and Europe, which further accelerated the liquidity crisis. World political leaders, national ministers of finance, and central bank directors have coordinated their efforts to reduce fears, but the crisis is ongoing and continues to change. The economic downturn has been reflected in several other important economic indicators. Along with the economic downturn came a marked increase in unemployment. However, optimism as to a growing economy is seen in improving employment statistics. Based on statistical data from the California Employment Development department, the unemployment rate in San Diego County in December 2013 dropped to 6.4 percent from a revised 6.9 percent in November 2013, and well below the year-ago estimate of 8.2 percent. The San Diego County unemployment rate in December 2013 was below the state level of 7 .9 percent and the national rate of 6.5 percent. The University of San Diego publishes an Index of Leading Economic Indicators for the San Diego regional economy. The index had posted positive numbers from April 2003 up to March 2006 when it peaked at 144.2. The Index declined nearly every month thereafter until March 2009 when it reached 100. 7. Since March 2009 the index has increased slightly every month, reaching a recovery high of 128.5 in September 2013, before declining slightly to 128.0 in October 2013, the most recent figure available. The primary source of current economic instability is from Europe. The Greek debt crisis has created concern in international markets for months. As of the date of value, the Greek crisis has lessened to some extent and the current focus of concern is Spain, with 25% unemployment and its banking system in distress. Several major Spanish banks have recently been downgraded by Moody's as the banks attempt to deal with billions in toxic loans leftover from the 2008 real estate market collapse. At the same time, austerity measures enacted across the European Union, led primarily by Germany, have stagnated growth across Europe and several countries in the EU. How this will affect the US economy remains uncertain. Economic news in the US and the San Diego region since the summer of 2011 has been positive and economists are cautiously optimistic about the economy. At the very least, concern over a double dip recession has lessened. There also appears to be increased activity in the real estate market. Recently developers have begun new projects in high demand coastal areas such as Carlsbad and Encinitas, as well as scattered locations throughout the County. How Jong until this increased demand absorbs the existing residential product on the market, and then extends to other areas in San Diego County, remains to be seen. City and Neighborhood The subject larger parcel is located north of the easterly terminus of Beech A venue, abutting the northeasterly boundaries of 2550 Carlsbad Boulevard (The Scandia Motel) and 2500 Carlsbad Boulevard (The Army & Navy Academy Athletic Fields), and the southwesterly side of the A.T. & S.F. Railroad tracks, in Carlsbad. The subject is convenient to coastal beaches, the Anderson & Brabant, Inc. JO 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA central downtown retail/commercial district of Carlsbad, major freeways and other city thoroughfares, as well as to residential districts of the city. The population of Carlsbad, as of January 1, 2013, was 108,246. Retail facilities serving Carlsbad are located at Highway 78 and El Camino Real, (Camino Real Shopping Center) on the north side of the city; along Paseo Del Norte north of Palomar Airport Road (Carlsbad Car Country and Carlsbad Company Stores) to the east of the subject along Interstate 5; in the downtown area toward the northwest corner of the corporate boundaries along Carlsbad Village Drive west of Interstate 5, and in other neighborhood shopping locations throughout the city. Major industrial development in Carlsbad is focused along Palomar Airport Road and the intersection of El Camino Real, in the vicinity of McClellan-Palomar Airport, approximately three miles east of Interstate 5. Industrial development started in this area in 1975 on land near the McClellan-Palomar Airport and was originally oriented to general warehousing. The development of the area was interrupted originally by a Carlsbad sewer moratorium and later by poor economic conditions. However, by the early to mid-1980's, development in the area was progressing rapidly, and the area continues to be a focal point for industrial development in the County today. Significant development can be found in the area to the west of McClellan-Palomar Airport, including projects within the 424 acre Carlsbad Ranch, which incorporates the 128 acre Lego/and California theme park that opened in March 1999. Other projects include the 700 room Pointe Resort, a 280 room hotel, the headquarter facilities for the Gemological Institute of America, 800,000 square feet of office and industrial space, and a specialty retail center. Among the most prominent newer development projects in Carlsbad is Bressi Ranch, a 585-acre mixed use project located at the southeast quadrant of Palomar Airport Road and El Camino Real. As planned, Bressi Ranch will ultimately include approximately 2,160,500 square feet of industrial space on 150 acres; 623 residential units, including 523 single family units and 100 multi-family units; and over 190 acres of open space. In addition to the industrial component of Bressi Ranch, other industrial development in Carlsbad includes Carlsbad Oaks North which will result in development of 23 industrial lots ranging in size from 2.0 acres to 20.7 acres, totaling 143.7 net usable acres, and the Carlsbad Raceway and Palomar Concourse projects. Carlsbad Raceway is located along the north side of Palomar Airport Road. Another element in the future development of Carlsbad is the proposed realignment of Carlsbad Boulevard in South Carlsbad and adjacent to South Carlsbad State Beach. Since the early 1980's the State of California and the city of Carlsbad have envisioned the proposed realignment which would involve the creation of additional recreational areas; improve parking, and expand the South Carlsbad State beach campground, along with several other measures. The City intends to realign Carlsbad Boulevard generally between Cannon Road and Batiquitos Lagoon by exchanging State of California Park properties for city of Carlsbad properties that are primarily within the existing alignment of Carlsbad Boulevard. The vacated portions of existing Carlsbad Boulevard would then be exchanged for State Park lands generally comprised of land located east and west of Carlsbad Boulevard and north of Palomar Airport Road. The land acquired by the State would be incorporated into the South Carlsbad State Beach and the City Anderson & Brabant, Inc. 11 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA acquired lands would provide development opportunities for future City projects. The result would reduce certain portions of Carlsbad Boulevard from two travel lanes in each direction to one travel lane in each direction. Other significant changes would include reconfiguring the Carlsbad Boulevard/Palomar Airport Road. Anderson & Brabant, Inc. 12 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SUBJECT LARGER PARCEL & RIGHT OF WAY AREA The Subject ROW is located within APN 203-054-28 as shown below & on pages 16 thru 18. Anderson & Brabant, Inc. 13 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SUBJECT RIGHT OF WAY DRAJNAGE FACILITY Looking northwesterly at Drainage Facility (fenced area) from NCTD Coaster Parking Lot. Looking westerly at Drainage Facility (fenced area) from NCTD Coaster Parking Lot. Anderson & Brabant, Inc. 14 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA PLAT MAP LARGER PARCEL @ ~~~•h\ ~ \ 1---+----~~'-n----V.i~ '\ ' €D •'\ ,. APN 203-054-28-00 Anderson & Brabant, Inc. ♦ Approximate location of 869 SF subject parcel 15 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA LICENSE PLAT SUBJECT DRAINAGE FACILITY EXHIBIT "B" SCALE t"•JO' 175 ---------7 I SANTA fE PLACE I ____ _, _ _J I I I I I I J\JJJ-\P ------, I 173 I ------i I 172 I l I ~I Z \ ~I tl 1 -----:::-~-~::!'"I-, ► l Fl l ~1 171 I I l l 170 I I I _-I -----I I \ I I I I I I I I 176 f))A DENOTES AREA OF LICENSE ----869 SQ.FT. MORE OR l.£5S Right-Of-Way En(ineerinJ Servkea, Inc. 1116 -lb 'J'remo:,I -• -CA llll064 ('NIO) 837-2'100 FAX ('tel) IIS7•2701 O<O•i"',I rle Nlffl« '$co~-Olo NC--11> [.,_Lct.9 Joo No.: 0712-0106-07 Anderson & Brabant, inc. 203 7 SOUTHEAST CORNER Or LOT \76 TlilS PLAT WAS PREPARED B\' ME OR UNDER MY OIRECllON IN CONF"ORMANCE 'MTH TliE PROFESSIONAL LANO SURVEYOR'S ACT !AICH ,.EL L. S()lLUMPBERGE:R, PLS 7790 CITY OF CARLSBAD LICENSE PLAT 'IESTJNG; OA111 SAN DIEGO COUNlY fflANSll DEVELOPMENT BOARD DATE: NOi/EMBER IJ, 201J SHEET I Of I 16 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA STORM DRAIN PLAT-SUBJECT PARCEL ,·-w Anderson & Brabant, Inc. EXHIBIT "B" aTY OF CARLSBAD ORTH COUNTY TRANSIT DISTRICT STORMDRAIN PLAT 228.9-XXXX-DR-CARL OAlE: NO\OIIEt 13,, 2013 SHEET 1 Of 1 17 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA DESCRIPTION OF REAL EST A TE APPRAISED SITE DESCRIPTION Land Area/Shape As shown in the Plats on pages 16 and 17, the subject property consists of an 869 Square Foot portion of land that is contained entirely within Assessor Parcel Number 203-054-28-00. Topography/Drainage The subject consists of a moderately sloping parcel that extends along and slightly above the grade of the NCTD Coaster tracks to the northeast. Based on our inspection we did not detect any evidence of site drainage concerns. Toxic/Hazardous Substances No Phase I Environmental Site Assessment was furnished that would verify the existence or absence of toxic materials. The final conclusions of value reflect the assumption that there are no toxic wastes on or in the subject land that would negatively impact its value or use. Soils No soils report was provided for this assignment. For purposes of this appraisal, it is assumed that the soil throughout the subject property possesses the potential bearing capacity that would allow for the development of the subject property to its highest and best use. Utilities All public utilities including electrical power, water, and sewer are located on the adjacent properties to the southwest, the Scandia Motel and the Army & Navy Academy. Access There is no direct vehicular access to the subject parcel. The subject parcel is accessible on foot via a dirt pathway along the southwesterly side of the A.T. & S.F. Rail Road tracks that can be accessed from the northeasterly terminus of Beech Street. Easements & Encumbrances We were not provided with a copy of a Title Report, but were provided with two Plat Maps, each identified as Exhibit "B," located on pages 16 and 17, which show that the proposed subject Drainage Facility parcel lies within an existing A.T. & S.F. Railroad right of way. As discussed below, the subject right of way is zoned T-C, Transportation Corridor, with the limited allowable uses already established by the city of Carlsbad. As such, for purposes of this appraisal, the assumption is made that there are no easements in place that have an adverse effect on the value or use of the subject parcel in accordance with its highest and best use. Land Use The Larger Parcel, Assessor Parcel No. 203-054-28, within which the subject ROW parcel is located, is designated as T-C, Transportation Corridor by city of Carlsbad zoning and General Plan. The intent and purpose of the T-C zone is to provide for and ensure the preservation of certain public transportation rights-of-way which will: Anderson & Brabant, Inc. 18 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA 1. Ensure that adequate land area is available for future transportation modes; 2. Insure compatibility of the development with the general plan and the surrounding developments; 3. Insure that due regard is given to environmental factors; 4. Provide for public improvements and other conditions of approval necessitated by the development. Uses permitted by right within the Transportation Corridor zone include: 1. Agriculture, limited to the following uses, and buildings accessory to such agricultural uses: A) Field and seed crops, B) Truck crops, C) Horticultural crops, D) Orchards and vineyards, E) Tree farms, F) Fallow fields. 2. Light-rail transit related facilities consisting of: A) Tracks, B) Energy transmission facilities, including rights-of-way and pressure control or booster stations for gasoline, electricity, natural gas, synthetic natural gas, oil or other forms of energy sources, C) Maintenance/repair facilities, D) Stations. 3. Public streets. 4. Railroad tracks and related facilities. 5. Recreational facilities (public) limited to: A) Passive open space, B) Bicycle paths, C) Pedestrian trails. 6. Signs, except for billboards, subject to the provisions of Chapter 21.41 of the Municipal Code. Zoning uses allowed by Conditional Use Permit (CUP) include Parking lots, Railroad museum, and Recreation use open to the public such as tennis courts, picnic areas and similar temporary uses, each subject to Planning Commission hearing process. There are no permitted Accessory uses. There shall be no minimum lot area established for the T-C zone. The size of the lot shall be dependent upon the existing or proposed use. The General Plan states that "Land uses that would be compatible with the corridors would be temporary and low-intensity in nature, such as passive parks, open space, or agriculture. In this way, corridors would remain available for future transportation needs." This would preclude any independent development of the subject ROW parcel or assemblage with an adjacent property for development on the subject parcel. 1n addition to the limitations imposed by City land use designations, the subject property falls within the purview of multiple agencies that include some or all of the following: the California Coastal Commission, the Army Corps of Engineers, the California Department offish & Game, and the Regional Water Quality Control Board. Flood Zone According to FEMA Map Community Map Panel No. 06073C0761 G, dated May 16, 2012, the subject is located within Flood Zone X, an area determined to be outside of the 500- year floodplain. Anderson & Brabant, Inc. 19 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA Earthg uake Zone The subject property is not within an Alquist-Priolo Earthquake Special Studies Zone. However, the site is located in an area prone to seismic events, a condition shared with other properties located in the Southern California area. DESCRIPTION OF THE IMPROVEMENTS The subject is improved with concrete drainage vaults as shown in the photos on page 14. ASSESSMENT DAT A As the subject site is owned by a public utility it is not assessed by the San Diego County Assessor. Property taxes are determined pursuant to assessments issued by the State Board of Equalization. Upon a sale the subject property would be re-assessed and if the buyer were a private party the subject would be assessed by the County at the applicable tax rate. Anderson & Brabant, Inc. 20 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA VALUATION HIGHEST AND BEST USE Highest and Best Use is an important concept in real estate valuation as it represents the premise upon which value is based. Highest and Best Use is defined as follows. "Highest and Best Use is the reasonably probable and legal use of vacant land or an improved property that is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value." 3 The city of Carlsbad zoning and general plan designations for the subject property are TC, Transportation Corridor. The allowable land uses have previously been summarized on page 19 of this report. The subject ROW parcel is currently not a separate legal parcel that could be independently sold or transferred. It lies within an existing A. T. & S. F. Railroad Right of Way. It is bordered on the northeast by the NCTD Sprinter tracks and to the southwest by a motel and the Army & Navy Academy sports field. Given the subject ROW's location and configuration, its indirect and undeveloped access, as well as use restrictions based on its zoning and agency oversight which precludes any independent development or assemblage with an adjacent property for development, we have valued the subject property utilizing the "across the fence method." This is "A land valuation method typically used to estimate the value of a real estate corridor, including railroad or pipeline rights of way, highways, or other corridor real estate. The price or value of land adjacent to the corridor (i.e., "across the fence'') is considered for the valuation."4 The land adjacent to the corridor is zoned V-R, Village Review and designated in the General Plan as V - Village. These designations address land uses in the heart of "old" Carlsbad in the area commonly referred to as the "downtown." Pennitted land uses may include retail stores, offices, financial institutions, restaurants and tourist-serving facilities. Residential uses can be intennixed throughout the area. The Village Area is regulated by the Carlsbad Village Master Plan. The comparable data selected reflect the predominantly commercial land use emphasis of the V-RN designations. VALUATION METHODOLOGY In this appraisal we have sought land value only. The three common valuation approaches in real estate include the Cost Approach, lncome Approach, and Sales Comparison Approach. Of these three, the Sales Comparison Approach and an Income Approach utilizing a market rate of return analysis on the estimated market value of the subject land parcel were considered to have specific applicability in the valuation of the subject property. The Sales Comparison Approach relies on the concept that a prudent buyer would pay no more for a property than it would cost to acquire a comparable substitute. Sales of similar properties are compared directly to the subject to arrive at an indicated value. The preceding sections of this report provide a description of the subject property, and the following section includes a description and analysis of the data used in the valuation process. 3 The Appraisal of Real Es/ale, 13"' ed. (Chicago: Appraisal Institute, 2008), p. 277 • The Dicliona,y of Real Esrare Appraisal, 4"' ed. (Chicago: Appraisal Institute, 2002), p. 5 Anderson & Brabant, Inc. 21 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SALES COMPARISON APPROACH The reliability of this valuation technique is dependent upon the availability of comparable sales data, the verification of the data, the overall degree of comparability of the data, and the absence of non-typical conditions affecting the sales prices. We have investigated pub)jsbed reports and contacted and interviewed, wherever possible, various local brokers and agents, including the buyers' and/or sellers' representatives. The highly developed and utilized nature of the southern California coastal area limits the potential for land sales. In addition, because of the extremely depressed real estate markets, there have been very few commercial land transactions in the area over the last three years. As a consequence, even though the data selected are considered to be the best available for comparison purposes, they still reflect properties that may vary from the appraised property in many significant ways. In addition, two are older sales, therefore making quantitative analysis difficult and somewhat subjective at times. The typical unit of comparison considered in the analysis of parcels of land suitable for commercial use is the price paid per square foot of land. The comparable sales are summarized in a grid found on the following page. Discussions of the data with aerial photographs of the data follow the summary grid. An adjustment grid that reflects noted diffe~ences between the sales and the subject is found later in this section of the report. Anderson & Brabant, Inc. 22 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SALES LOCATION MAP ""'" 5'<.EN0,4 101S N.Coesttiwy., Pe C /t I C O C I e ~1..SUIJE_CT ____ _, Anderson & Brabant, Inc. 23 869 Square Foot Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA SUMMARY OF COMPARABLE LAND DATA SALE UX:ATION/APN TIIOSBROS SALE OOC.NO. BUYER/SEil.ER PARCEL ZONING/GENERAL COMMEJ-ITS SALE PRICE/SF NO. MAP CODE DATE SIZE(SI') PIAN TOPO PRICE Nonh of Beech SI. & V,RN All Utililics to si1e; West of AT&SF RR Troclts ---/North County Tnmsit SUBJ. Carlsbad 1106-05 ------District 869 City of Carlsbad Sloping Concrete-Drain11gc ··-· Vaults on site Por 203-054-28·00 1044 C,ulsbad Village Dr. Under .. / V-RN Level I Carlsbad 1106-E5 Contract NA Jane Sonneman 60,112 City of Carlsbad Partially AU Utilities to site $3,250,000 $54.07 203-320-32 & 47 Improved Lot 2865 Jefferson St. V-RN All Utilities on site; 2 Carlsbad 1106-E5 N0\••13 736828 Naber Family Trust/ 9.095 City of Carlsbad Level buyer to eventually $645,000 $70.92 Goll Family Trust Older SFR rcde,•clop for 203-110-32 commercial use. 1430 S. Melrose Or. Edward Olson/ CG-PBD/GC Lc,•cl 3 Oceanside 1107-03 Oec-13 736934 Sieve Matsovas 65,340 City of Oceanside Roosf, Graded All Utilities to site Sl,700,000 $26.02 169-011-44 IOISN.Co11StH")'• Judith Edick Trust 9-21-98/ O/Coastal Com'l Level 4 Oceanside 1106-B2 Oct-II 540295 l0,072 City of Oceanside All Utilities to site $275,000 $27.30 143-040-20 Donhy E. S.tten Improved Lot 314 N. Cleveland St. Ardeshir Babaknia/ 0/HR Level 5 OceM.Sido 1086-A 7 Dec-I I 706031 Chcgni family Trust 15,000 City of Oceanside Improved Lot All Utilities to s.itc $460,000 $30.67 147-088-13 & 14 Anderson & Brabant, Inc. 24 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA Land Sale Discussion SaJe No. 1 is the pending sale of a 60,112 square foot level parcel of land, approximately two-thirds of which is asphalt paved with the baJance in raw, undeveloped condition, located at 1044 Carlsbad Village Drive in Carlsbad. The parcel is about one-half mile east of the subject, adjacent to the southbound off ramp of the Interstate 5 freeway. The Listing Agent reported that the property is under contract at a price above the $3,250,000 Listing price, but couldn't reveal the actual saJes price because of confidentiality agreements. For purposes of analysis we have utilized the Listing price which equates to $54.07 per square foot of land. The property has the same zoning and land use designations as the subject. The potential buyer's tentative plans for the property are a mixed-use project, with ground floor retail/office and second level residential. This property was considered superior for location/access/exposure and site condition. It was adjusted upward for its larger size. After adjustments it indicates a land vaJue for the subject of $43.25 per square foot. Sale No. 2 is the November 14, 2013 purchase for $645,000 or $70.92 per square foot of land, of a 9,095 square foot interior parcel located at 2865 Jefferson Street in Carlsbad. The level lot is located about one-quarter mile east of the subject and has the same zoning and land use as the subject. It is currently improved with an older (1957) single-family residence that has been renovated since then. The buyer had no immediate development plans for the property but Anderson & Brabant, Inc. 25 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA acquired it for future commercial redevelopment of either an office building or a small 4 or 5 unit multi-family residential complex, both of which are allowed in Carlsbad's District 7 where the property is located. Downward adjustments were made for this property's better site condition and the contributory value of the single-family residence which can be owner- occupied or leased out pending future redevelopment. After adjustments it indicates a land value for the subject of $49.64 per square foot. Sale No. 3 is the December J 2, 2013 sale of a 65,340 square foot, generally level, land parcel in raw, undeveloped condition located about five miles east of the subject at 1430 S. Melrose Drive in Oceanside. The site is within a Planned Business District. The zoning/land use designation is General Commercial and the proposed use is a future medical office building. The purchase price was $1 ,700,000 or $26.02 per square foot ofland. All utilities are to the site and curbs, gutters and sidewalks are installed. It was adjusted upward for its inferior location and larger size. After adjustments it indicates a land value for the subject of $41.63 per square foot. Sale No. 4 is a 10,072 square foot, level, rectangular shaped parcel located at 1015 N. Coast Highway in Oceanside, about 2.50 miles northwest of the subject property. The property was acquired October 14, 2011 by the adjacent property owner for $275,000 or $27.45 per square foot. The listing/selling agent stated that the buyer paid no additional premium for the Anderson & Brabant, Inc. 26 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA site. The buyer's adjacent property is a light industrial building but the immediate neighborhood is developed with several good hotels and motels, an Oceanside Chamber of Commerce office building, a Carrow's Restaurant, and a nightclub/restaurant. An upward adjustment of approximately five percent per year was made for improving market conditions since the date of sale. An upward adjustment was also made for the subject's better location. After adjustments it indicates a land value for the subject of $37 .54 per square foot. Sale No. 5 is a 15,000 square foot interior parcel located at 314 N. Cleveland Street in Oceanside, about 1.25 miles northwest of the subject. Like the subject it is within easy walking distance of the Ocean, but is considered inferior overall for location. The parcel is zoned Downtown, Mixed-Use (retail/office-residential) and the land use is HR -Harbor Redevelopment, which is considered similar to the subject's Village Review land use. The immediate neighborhood is comprised of small, mixed use, retail-residential properties, beach parking lots, and newer detached townhomes. The property transferred between private parties in December 2011 for $460,000 or $30.67 per square foot. It had previously sold in April 2007 for $675,000 or $39. 70 per square foot. We were unable to contact the principals involved; the information provided was obtained from CoStar, a commercial data source, and public records. An upward adjustment of approximately five percent per year was made for improving market conditions since the date of sale. The site is asphalt paved, very broken and cracked, and was considered inferior for condition. After adjustments this sale indicates a land value for the subject of $42.17 per square foot. Summary and Conclusions of Value: The sale data described in the preceding paragraphs provide a reasonable basis for estimating the current market land value of the subject right of way parcel. Prior to adjustments, the five items of data reported prices between $26.02 and $70.92 per square foot of land area. As can be seen in the summary of adjustments on the following page, the indicated value for the subject was narrowed to a range of $37.54 to $49.64 per square foot. The high indicators are relatively recent Sale No. 2, which reflects the contributory value of an existing single-family home, and pending Sale No. 1, considered superior to the subject for location/access/exposure and site condition. The low indicator, Sale 4, which was adjusted upward for improving market conditions, was considered inferior for location/access/exposure. Anderson & Brabant, Inc. 27 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA .~Criil -L ... SaleDalll Dr.= Pr-~ !l,t.,> c~ ~~e: :-: .. L,o,.,cc l et li:o i,:., J,d,~ P.u :Md \"ll;t ..\.,:,,:r..1, w,,lt:J.9 c...i.,., L"""°'..,_, !,;.:, 1~q of~ c..~ ."4J~"""' &._.,,,,.,... '• 1b90 ."6J:.>,,,_ \:.bo~ l ~40· 000% 0 00-/4 000% 0 OCl'/4 !.!'4.0-" ·10.00¾ 1000¾ 000¾ -10 00¾ OJX>¾ -1000% ·We.! : !,70 91 ow.. 000!~ 000'/4 ow., s·o 91 000% !00% OW-~ ·10.00% -.:..!.00% -3000¾ S"964 ; !.!S.01 0 00!' 000% 000'~\ O.~} 1~5.01 !O..OCl'/4 10.00',, 000-A 000!', 0.00'/4 6000'!,.'; 'S41.9 4 ;:-· ..lO o~; O.C10% IOcOC/% l0.00'/4 SlO.Gl ~CO%: !00% 0.00'/4 -!00¼ 0.00'/4 z ! 0!'/1/4 t,7!4 ! uos 0 00'/4 0.00% 10.00'A 1000% SJ} lj l!.00% !.00% 0.00'/4 !.00% 0.00¾ .:~JXf'~ s,u.1· According less weight to the lowest and highest indicators for the reasons noted on the previous page, the remaining sales express values for the subject ROW parcel of between $41.63 and $43.25 per square foot. It is our opinion that the value of the subject is within this range. All of the data required significant adjustment as each differs from the subject in important characteristics. However, each item of data adds to the understanding of the subject analysis and helps shed light on the value of the appraised property. After consideration of all factors that influence value, it is our opinion that the fair market value of the subject parcel by the Sales Comparison Approach, as of January 27, 2014, is $43.00 per square foot of land area. When applied to the site area of the subject parcel of 869 square feet, the estimated fair market value by this technique is $37,400 (869 square feet x $43.00 per square foot = 37,367, rounded to $37,400). THIRTY SEVEN THOUSAND FOUR HUNDRED DOLLARS ($37,400) MARKET LICENSE FEE Rate of Return We have also been requested to provide an estimate of the annual "fair market license fee" for the subject parcel. The result is based on the assumption that the land is subject to a long-term ground lease. In this analysis, the rental value of the subject site has been estimated based on the value of the land and an appropriate rate of return on the land value. The terms of the lease are presumed to be gross. Rates of return vary from property to property and jurisdiction to jurisdiction based on use and in most instances, negotiations between lessor and lessee usually results in some middle ground agreement that effectively changes any rates established by policy. The current rates sought by numerous entities, based on current inquiries we've made in the course of this appraisal, are summarized below. Port District of San Diego Port of Long Beach, CA City of Los Angeles/Harbor District Port of San Francisco San Francisco Int. Airport California State Lands Commission Local Interviews Anderson & Brabant, Inc. 9.5% 10% 10% 10% 8.5%-9% 9% 8.5% to 10% 28 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA These rates reflect not only the most recent lease negotiations, but many relate to long- standing policies without changes for many years, and in the case of the California State Lands Commission, are mandated by the legislature to never be less than 9%, regardless of current land values. The higher rates are generally for industrial uses while some of the lower rates at airports are for commercial uses. The Port of Long Beach utilizes a stabilized (undisclosed) land value per square foot and uniformly applies a 10% rate of return to the resulting land value, rather than attempt to '~uggle" rates up or down to keep pace with the often wildly fluctuating land values of adjacent properties over the past 20 years. None of the remaining rates listed above reflect the rapidly changing current market and we suspect that any new lease deal would be at or near the bottom of these rates. Per local market participant Mr. David Sandoval at the City of San Diego, the optimum sought rate of return for the City is ten percent; however, given current market conditions they would be willing to negotiate leases in the 9.0 to 9.5 percent range. Given the subject's small size and configuration, its indirect and undeveloped access, as well as available information regarding use restrictions and agency oversight affecting the parcel, we have concluded that a lessor would need to offer a rate of 8.5% in order to attract long term interest in the appraised property. Ground Rent -Direct Comparison Leases of local land in this value range are limited. However, we discovered and verified several sales of parcels in different parts of the County that are subject to ground leases from which we could extract effective return rates. A summary of those ground lease sales is shown below. SALES OF GROUND LEASED PROPERTIES Conl) Location Sale Date Parcel Sile SaleA..isting Price/SF Annual Rate/SF/ Rate ol' Conu icnts No. Size (SF) Conddion Price Land Area NOi Year Retllll Frontage on 3 comers. In1)rovcd A 4112 Market St Mar-1 3 23,601 Finisl>M $750,000 $31.78 $70,000 $2.97 9.33% with older billboard siiPt Annual San Diego Renl/SF/Year represents the aski,g lease rate at time of sale. B Rock Sp~ Road Jtu-11 248,292 Fiiishcd $10,650,000 $42.89 $760,000 $3.06 7.14% Leased to auto sales user lor 15 years F..scondido Pad \>ath I 0% increases cve,y 5 years Zoning allow.; corrmercial and 1rixcd C 2045 Pacific Hwy San Mar-09 58,370 Fiiisl>M $7,000,000 SI 19.92 $482,644 $8.27 6.89% lfiCS. Lease sOOjcct to increase within Diego Pad less tmn 5 years of the sale date ~n excrc5ing of opti:m D 1606 Grand Ave. San Sep-09 12,502 Finisred Diego Pad $2,600,000 $207.97 $236,665 $18.93 9.l0% Leased to lendi,g il'ltitttion ullil 2016 E 246 Town Cc,•cr Pkwy Oct-08 26,136 Finished $1,050,000 $40.17 $67,500 $2.58 6.43% Leased to medical user for 30 years Sru1.cc Pad \>ath 2, 5-ycar options The sales of ground leases produced rates of return ranging from 6.43 to 9.33 percent. Comparable A is the March 2009 sale of a 1.34 acre parcel of leased land located in the Little Italy neighborhood of Downtown San Diego at 2045 Pacific Highway at a price of $7,000,000 or $119.92 per square foot. The annual income from ground rents at the time of the sale was $482,544, thus the return rate to the buyer computed to 6.89 percent. The lease was subject to an option within five years of the sale date, and all involved parties expected a notable increase in Anderson & Brabant, Inc. 29 869 Sq. Ft. Right of Way Parcel, licensed Drainage Facility, Carlsbad, CA the lease rate upon exercising the option. This is justification for a return rate that is below seven percent. Overall, this property is significantly superior to the subject. Comparable B is the September 2009 sale of a smaller site in the Pacific Beach area of San Diego with seven years remaining on a ground lease. The effective return rate for this investment was 9.10 percent. Sale C is the sale of a commercial site leased on a long term basis to a medical user, and the reported return rate was 6.43 percent. Comparable D is a more recent sale of a larger parcel with a newly negotiated lease to CarMax that reflects a return rate of 7.14 percent. All of these properties were significantly superior to the subject. Comparable E is a current listing of a level, 23,601 square foot parcel of land located at 4112 Market Street in San Diego. The site is improved with an old house (of no value) and a billboard sign, and the broker stated that the income from the sign was nominal. The site is currently availabl.e for sale at the asking price of $750,000 or $31. 78 per square foot, or it is offered for lease at the asking rate of $70,000 per year ($0.247 per square foot per month). The asking lease rate reflects a return rate of 9.33 percent if the asking lease rate is applied to the asking purchase price. Conclusion Upon review of all known factors, it is our opinion that a market rate of return of 8.5 percent is appropriate for the subject when estimating a market license fee. When this rate is applied to the estimated market value of the subject of $37,400, the result is an estimate of a fair market license fee for the land, as of the date of value, of $3,179 per year, or $0.305 per square foot per month based on the subject's area of 869 square feet. RECAPITULATION RENTAL ANALYSIS ROW Land Area (Sq.Ft.) Estimated Land Value Per Square Foot Value Annual Rate of Return Annual Rent Monthly Rent/Square Foot Monthly Rent 869 $37,400 $43.04 8.5% $3,179 $0.305 $265 The following is a swnmary of our conclusions of the fair market sale value and fair market license fee for the subject, as of January 22, 2014. Fair Market Sale Value $37,400 Fair Market License Fee $3,179 Per Year Capitalization Rate 8.50% Anderson & Brabant, Inc. 30 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA ADDENDA Anderson & Brabant, inc. 869 Sq. Ft. Right of Way Parcel, Licensed Drainage Facility, Carlsbad, CA LEGAL DESCRIPTION APPRAISAL EXHIB IT EXHIBIT"A" LEGAL DC CRIPTION \\~~S~ORS PARCEL 'LMBER : 203-054-28 VF.S1 l'\G: 'ORnl /\. DIEGO C"Ol. \lTY lRA1'SI I DEVELOPMENT BOARD ,-\LL rHAT PORTION OF ·1 HA I PARCEL I 'THE CITY OF CARL BAD, CO 'TY OF A Dlt-.GO. STA TE OF CALI FOR NIA. A DESCRIBED 1N TI'IA T QLlTCLAl\1 OF.ED RF.CORDED Df.n\1BER 15.1992 AS DOCUME T 'O 1992-011,()2209 IN Tim OFFIC"F.OFTHF c o 1 Y RECORDER or AID('OL,Nl-Y, DESCRIBED AS FOLLOW : COMMENCll'IG A 1 ntE SOUTI-tEA T COR1'ER OF LOT 176 OF GRANVIU.F. PARK '10. 2 A SHOW',! 0~ \1AP 2037 RF.CORDED JUNE 18. 1927 A rlLE 1'0. 36270 11, I HI:. Of't'IC-£ 01' rHt: rou,TY RECORDClt Of SAID COUNTY: THC'l,CE ALO\IG TI~E NORTHEASTERLY LINE Of SAID LOT 176 NORiH 41°58'00"' WE 1 . 57.0J FEET TO l llE TRl E POINT Of' BEGI '~INC: Tl IEl\('I: COl\ TINUING AL.ONO AID :-IOR1HF.AS n·.RI. Y L11'E !\ORTH 41 °.S8'00" WEST. 19.30 l'Elr: Tll[NCl-.1,F.AVI 'G SAID 'IIORT1IL:. 1 ERi Y UNI' NORTli /15"W"56 .. WE T. 25.72 FEET: TH Lt.CE !'-OR rH 4°20·0,1-\\ EST 13.0 I FEET: Tl ICNCE fl.OR I H 85°39'~6--EAST 20.00 FEET: 11 JEJI.CF SOU I H 4°10'04" EAST 28.29 rEET; I l!ENCI:. sou,,~ 85"39'56" WEST 33.94 FEET TO SAID NORTHl:.ASTERL Y LIKE OF LOT 176 A1'D l Hl-TRl'E POl1''T OF 8EGINSI G. CO TAI l\iG 869 OUARE FEET MORE OR LCS. . ATTACIIW HERETO Al\D MADE A PART HEREOF IS A PLA I LABl:.Ll:.D EXHIBIT'B'. flilS REAL PROPERTY DF.SCRIPTIO HAS BEEl PREPARED BY ME. OR DER MY OIRl:.C,-10:'\. IN co FOR"1A"-CI: wrrn rt-IF. PROF(; SIO AL L,\KD UR VEY ORS ACT. SIG;~,\TllRE --.,..,11,=.,.,,..~o~,.,..,_"="~.,.=.,~,~~oii---- DATE ------ Anderson & Brabant, Inc. Expertise: OUALIFICA TIONS OF THE APPRAISER Brian L. Flannery Anderson and Brabant, Inc. 353 West Ninth Avenue Escondido, CA 92025 (760) 741 -4146 X 309 Real Estate Appraising and Consulting in San Diego and other areas throughout California. General practice concentrates on commercial property with investment potential. Areas of specialization include ad valorem property tax valuations of commercial, industrial and apartment properties. Testified before Assessment Appeals Boards in all Southern California Counties. Education: MBA Real Estate, National University, San Diego, California BA Economics, San Diego State University, San Diego, California Successful completion of the following courses sponsored by Appraisal Institute: Appraisal Principles & Techniques A & B Standards of Professional Practice A & B Other Courses and Seminars (Partial List): Membersltips: Technical Inspection of Real Estate Cost Approach Narrative & Summary Reports Appraisal of Partial Interests Highest & Best Use Analysis OREA Federal and State Law and Regulations Certified General Real Estate Appraiser, State of California (No. AGO l 7627) Associate Member Appraisal Institute Professional: Anderson & Brabant, Inc., Staff Appraiser Lipman Stevens & Thene, Inc., Staff Appraiser Property Tax Representatives, Inc., Senior Appraiser COMPS, Inc. Data Manager and Sales Representative Member Firms New York Stock Exchange, Registered Representative Qualifications of the Appraiser -Brian L. Flannery Page Two Financial Institutions City National Bank Comerica Bank California Bank & Trust Coronado First Bank First American Trust USB First Bank & Trust First Private Bank & Trust First Republic Bank First State Bank of California Hawthorne Savings & Loan Home Bank of California ICA Mortgage Capital, LLC Manufacturers Bank Michigan National Corporation Mission Federal Credit Union Network Small Business Finance, Inc. Northern Trust of California Provident Bank PFF Bank & Trust San D iego National Bank Temecula Valley Bank Torrey Pines Bank Union Bank of California U. S. Bancorp U.S. Bank Wells Fargo Bank Attorneys Steven E. Anderson Fisch, Spiegler, & Ginsburg Gray, Cary, Ware & Freidenich Ginger Larson Dan Guevera Hennenhoefer & Heffron Edwin Johnson Charles D. Nachand Wesley Peltzer Daniel Pearl Herber D. Sterman Government Agencies and Municipalities Cajon Valley Union School District Center City Development Corporation City of Carlsbad City of Chula Vista City of Del Mar City of Encinitas City of Escondido City of San Diego City of San Diego Redevelopment Agency City of Vista County of Riverside County of San Diego North County Transit District San Diego Unified Port District The Nature Conservancy The Trust for Public Lands Vista Fire Protection District Vista Unified School District U S Postal Service Other Appraisal Clients Asset Property Management Aegon Realty Advisors Air Frame Mfg. & Supply American Security Products Burger King Best Western Inns NGJ Sparkplug Coronado Cays Yacht Club La Jolla Village Towers Pulse Engineering SBC Communications QUALIFICATIONS OF THE APPRAISER William 8. Anderson, MAJ Anderson & Brabant, Inc. 353 W. Ninth Avenue Escondido, CA 92025 (760) 741-4146 Ext. 314 I. Resident of San Diego County since 1970 11. Professional Affiliations: 111. IV. A. Member, Appraisal Institute, MAI, RM (Not Active) B. Member, International Right of Way Association C. 1988 President, AlREA, San Diego Chapter No. 42 D. Certified General Real Estate Appraiser (AG0023 I 5) Office of Real Estate Appraisers, State of California Appraisal Experience: Co-owner -Anderson & Brabant, Inc., I 979 to present Co-Owner -Robert M. Dodd & Associates, Inc., 1977 to 1979 Staff Appraiser, Vice President and Appraisal Manager -Financial Appraisals, lnc., 1968 to 1977 Staff Appraiser -Financial Savings and Loan Association, Culver City, California, 1964 to 1966 Expert Witness: Superior Court, San Diego County Municipal Court, San Diego County Federal Bankruptcy Court, San Diego County, San Bernardino County Assessment Appeals Board, San Diego County Various Arbitration Hearings as Witness and Arbitrator V. Educational Background: A. Graduated from El Segundo High School -1963 8. Attended El Camino Junior College, Palomar Junior College, and U.C.L.A. C. Professional Education Completed: I. Appraisal Institute 2. 3. Anderson & Brabant, Inc. a. Real Estate Appraisal I -Principle Methods and Techniques b. C. d. e. Real Estate Appraisal JI-Urban Properties Real Estate Appraisal VI -Investment Analysis Real Estate Appraisal VJ II Standards of Professional Practice f. Litigation Valuation Society ofReal Estate Appraisers: a. Course IO I -Real Property Valuation b. Course 20 I -Income Property Valuation Partial List of Seminars: Condemnation Valuation, 11/94 Court Preparation in Litigation Cases, 11/95 California Laws & Regulations, 3/96 Litigation Valuation, 11/96 Qualifications of the Appraiser William B. Anderson, MAI Page2 Standards of Professional Appraisal Practice, 12/97 Damages, Diminution and Mitigation, 8/98 31st Annual Litigation Seminar, 11 /98 Land Development, 3/99 Gramm-Leach Privacy Act, I 0/0 I 34th Annual Litigation Seminar, 11/01 Real Estate Disclosure, 1/02 Applying Economic Forecast, 2/02 Partial Interest Valuation -Divided, 3/02 Price Indexing Real Estate Markets, 7/02 Statistical Analysis Using the Database, 7/02 Eminent Domain Case Study Update, I 0/02 35th Annual Litigation Seminar, 11/02 Standards of Professional Practice, Part C, 12/02 National USPAP Update Course, 4/04 Applying Economic Forecast -SD Regional Analysis, 2/05 Uniform Appraisal Standards for Federal Land Acquisitions, 1/07 San Diego Economic Forecast, 2/07 Business Practices and Ethics, 6/07 JRWA 's Eminent Domain Case Update Seminar; I 0/07 40th Annual Litigation Seminar; 9/08 VI. Types of Appraisals: Residential Property: Commercial Property: Industrial Property: Vacant Land: Agricultural: Special Purpose Appraisals: Special Purpose Properties: Special Projects: VIL Partial List of Appraisal Clients: Lenders Fallbrook National Bank Downey Savings Bank of America North County Bank Grossmont Bank Pomona First Federal GE Capital Anderson & Brabant, Inc. Single-Family Residence, Condominiums, Apartments, Subdivisions, Mobile Home Parks, Existing and Proposed Automobile Dealerships, Office Buildings, Shopping Centers, Office Condominiums, Etc., Existing and proposed Single/Multi-Tenant, Business Parks, Etc., Existing and proposed Industrial, Commercial, Residential, and Rural Ranches, Avocado and Citrus Groves, Nurseries, Etc. Partial Takings for Road Rights of Way, Easements, Leasehold Estates, Possessory Interest, Historical Appraisals, Etc. Hangers, Golf Courses, Churches, Yacht Club & Marina, Etc. Fire Damaged Property, Encinitas Ranch, Pomerado Business Park, Parkway Business Park, San Marcos County Landfill and Keller Canyon Landfill Great Western Bank Imperial Bank Pacific Coast Savings & Loan Palomar Savings & Loan Rancho Santa Fe National Bank Union Bank Wells Fargo Bank Qualifications of the Appraiser William B. Anderson, MAI Page3 Title Companies Chicago Title Co. First American Title Co. Safeco Title Co. St. Paul Title Co. Title Insurance & Trust Government Agencies and Municipalities United States Justice Department CA Department of Transportation -Caltrans City of Encinitas City of Chula Vista City of National City City ofEscondido City of Oceanside City of San Diego City of San Marcos City of Vista County of San Diego Escondido Union School District Encina Wastewater Authority North County Transit District San Diego Port District Federal Deposit Insurance Corp. Olivenhain Municipal Water District Poway Municipal Water District Ramona Unified School District Small Business Administration Vallecitos Water District Valley Center Municipal Water District Law Firms Daley&Heft Higgs Fletcher & Mack Law Offices of Wesley W. Peltzer Winet, Patrick & Weaver Endeman, Lincoln, Turek & Heater Best Best & Krieger Gray, Cary, Ware & Freidenrich Jones, Hatfield & Penfield Nugent & Newnham Skripek & Miller Paul, Hastings, Janofsky & Walker Post, Kirby, Noonan & Sweat Rutan & Tucker Jeffrey Scott Sternberg, Eggers, Kidder & Fox Sullivan, Delafield, McGrath & McDonald Anderson & Brabant, Inc. Wingert, Grebing, Anello & Chapin White & Bright Detisch & Christensen Others County Counsel Stone & Youngberg Trust for Public Land The Willett Company Koll Real Estate Hollandia Dairy Pardee Construction Sutro Mortgage Company Wessell Construction Company Palomar College Granite Construction Homer Heller Ford The Kissell Company Los Alamitos Race Course MCI Pacific Telephone AT&T