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HomeMy WebLinkAbout00 - Council Announcements - Added InfoAdded to 10.22.19 Council Packet Council Announcements Per Request of Council Member Brenner CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5A October 10, 2019 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Seimone Jurjis, Community Development Director 949-644-3200, siuriis(c)_newportbeachca.gov SUBJECT: USE OF CITY PROPERTY AT LESS THAN FAIR MARKET VALUE SUMMARY: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing and monitoring issues that may affect the financial status of the City of Newport Beach ("City"), and making recommendations to the City Council regarding amendments to financial policies. The purpose of this presentation is to review agreements for use of City -owned real property, which have rents set at less than open fair market value. At the March 14, 2019, Finance Committee meeting, Council Member Brenner requested a report regarding the value of the properties rented for charitable purposes and expressed a desire to see a Finance Policy on how often the City should conduct a market analysis of the leased properties. Chair O'Neill recommended an item be placed on a future agenda to discuss a potential F -Policy update and requested a discussion with Community Development Department staff. RECOMMENDED ACTION: Review the list of properties and agreements with less than open fair market value rent, and provide input to staff. DISCUSSION: The City owns or holds in trust a portfolio of real property assets, both income and non- income producing. The income producing properties vary in use and include residential developments, restaurants, yacht basins, commercial marinas, office space, tidelands, and telecommunications sites. The non -income producing properties in the portfolio include parks, open space, beaches, and municipal use properties like fire stations and libraries. Use of City Property at Less Than Fair Market Value October 10, 2019 Page 2 The real property portfolio is managed pursuant to City Council Policy F-7, Income Property ("Policy") (Attachment A), which requires third parties using City -owned real property to be charged fair market value ("FMV") rent. The Policy considers circumstances in which a property may be used for charitable or other public uses, and collecting FMV rent is not feasible or would outweigh other benefits. In such instances, the City Council shall make certain findings, outlined in the Policy, Section F, numbers 1 through 7. FMVs are based on a number of different factors that are different for each property. They include but are not limited to the zoning, location, parking availability, similar comparable properties, age of improvements, or revenue generation. The FMV of a property is established by a certified appraiser with expertise or knowledge of the type property being appraised. For discussion purposes, City staff obtained an appraisal report from an MAI (Member Appraisal Institute) certified appraiser for the Boys' and Girls' Club ("BGC") property at Eastbluff Park, 2555 Vista Del Oro (Attachment B). The BGC holds a long-term lease from the City. They pay no monthly rent, but the FMV of the lease has been appraised at $55,800 per year. This is significantly less than the FMV that would be calculated for an equivalent office building. The reason for the difference in FMV is the BGC property is zoned Parks and Recreation (PR). PR zoned properties are limited in their use and, hence, have a lower FMV than a property zoned for commercial office use. The BGC originally leased the property from the City in 1971, constructed the building and gymnasium, and in exchange for a $1.00 per year lease, operated a boys' club (later updated to include girls) with the facility also serving as a community center available for programming by the City's Recreation and Senior Services Department. The City Council approved a new lease in 1998, with rent and use terms similar to the previous agreements — including the less than FMV rent, as the facility was continuing to provide a service to the community. Properties Below Fair Market Value An inventory of existing agreements for use of City -owned or managed real property, with rent set at less than FMV is provided as Attachment C. The document estimates the equivalent FMV rent for each property. This was established based on existing appraisal reports, or if an appraisal report was not applicable then staff provided an estimate. Staff requests the Committee review the information presented, and provide input and direction to staff. Prepared and Submitted by: /s/ Seimone Juriis Seimone Jurjis Community Development Director Use of City Property at Less Than Fair Market Value October 10, 2019 Page 3 Attachments: A. City Council Policy F-7, Income Property B. Appraisal Report, Market Rental Value Study for Newport Beach Boys and Girls Club Facility, prepared by R.P. Laurain & Associates, Inc., dated April 23, 2019 C. Real Property Inventory of Below Fair Market Value Rent ATTACHMENT A CITY COUNCIL POLICY F-7, INCOME PROPERTY F-7 INCOME AND OTHER PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns or ground leases and/or operates a yacht basin, resort hotel and apartment property, a luxury residential development and various other income-producing properties. Much of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is substantial. As owner/manager of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state -managed property or be subject to a charge of making a gift of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise financially less feasible uses and facilities that benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing or licensing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income generating opportunities on City controlled areas using sound business principles and after receiving input from neighbors, users and the public. The policy of the City Council is that income and other property be held and managed in accordance with the following: A. Whenever a lease, license, management contract, concession or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest income generating use of the property. B. All negotiations regarding the lease, license, management contract, concession, or similar action regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant, or business consultant. C. The City shall seek, whenever practical and financially advantageous, both in the short and long term, to operate or manage all property and facilities directly with City staff or contractors, provided staff have the expertise needed to competently do so, or to oversee the work of contractors. 11 F-7 D. In most negotiations regarding the lease, license, management contract, concession, or similar action regarding an income or other property, the City shall seek revenue equivalent to the open market value of the highest and best use; and, whenever practicable the City shall conduct an open bid or proposal process to ensure the highest financial return. E. However, in some circumstances the City may determine that use of a property by the public for recreational, charitable or other nonprofit purpose is preferred and has considerable public support, in which case the City may determine that non- financial benefits justify not maximizing revenue from such property. In such circumstances, the City has a vested interest in ensuring that the lessee of such property operates the activities conducted on or from the property in the manner that has been represented to the City throughout the duration of any lease or contract with the City. F. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. Such findings may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from converting the property to another use. 2. Redevelopment of the property would require excessive time, resources, expertise and costs, which would outweigh other financial benefits. 3. Converting the property to another use or changing the operator, manager, concessionaire, licensee, or lessee of the property would result in excessive vacancy, relocation or severance costs, real estate commissions, tenant improvement allowances, expenses or rent concessions which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long-term residents. 5. The property provides an essential or unique service to the community or a clearly preferred use that enjoys substantial support in the community that might not otherwise be provided were full market value of the property be required. 2 F-7 6. The property serves to promote other goals of the City such as affordable housing, preservation of open space, uses available to the public or marine related services. 7. If the lessee is not (a) a statewide or national nonprofit organization, or (b) a public entity or subdivision thereof, then the City finds that the By -Laws and charter documents of such lessee (i) establishes a procedure wherein the election of directors of such lessee is accomplished by an open, democratic and transparent process that allows members to vote, (ii) has a governance and operational structure that is consistent with best practices for non-profit public benefit corporations as determined by the City Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the prior written consent of the City as lessor. G. Generally, lengths of licenses, leases, management contracts, concessions, or similar agreements will be limited to the minimum necessary to meet market standards or encourage high quality improvements and will contain appropriate reappraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. H. All negotiations regarding the license, lease, management contract, concession or similar action regarding income property shall be conducted by the City Manager or his/her designee under the direction of any appropriate City committees. I. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs directly attributable or allocable to the management of a specific income property shall be charged against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs so chargeable include, but are not limited to, property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager, or by this Income Property Policy. J. The City Manager or his/her designee is authorized to sign a license, lease, management contract, concession, or similar agreement or any amendment thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager or his/her designee, or a City Council member, may refer any license, lease, management contract, concession or similar agreement or any amendment thereto, to the City Council for its consideration and/or action. K. The City's portfolio of quality income producing properties adds an element of diversification to a portfolio otherwise invested primarily in financial assets. Certain of those income properties are restricted from sale by their terms of grant, state agency regulations or rules, other federal and state guidelines, private 3 F-7 covenant or agreement or otherwise. For those properties not so restricted from sale, an analysis shall be prepared to determine the following prior to such income producing property being offered for sale: 1. The maximum open market value of the City's interest in the property in its as is condition. 2. If the property is in an important location, a determination of the possible future consequences of the City no longer controlling that property. 3. If the current rent is contractually low and significant rent increases are likely within a finite period. 4. The likelihood of significant increases in the ability of the property to generate income after the expiration of any current lease of the property. 5. The likelihood of a lease extension being requested by the tenant and the ability to substantially increase rents or require significant improvements to enhance the utility and the value of the property as consideration for granting such an extension. 6. The value of the revenue stream from (i) lease income over the life of an existing lease and/or (ii) likely lease revenue if an existing lease were to be renewed or the property re -let to a different tenant; and/or (iii) lease income from the property if it were to be converted to its highest and best use, compared with the financial benefits of the use of the proceeds of a sale and if, considering the totality of the circumstances, such use of the proceeds of a sale is preferable to retaining the property in question. Adopted - July 27,1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26,1998 Amended - August 11, 2009 Amended - May 14, 2013 Amended - February 12, 2019 Formerly F-24 11 ATTACHMENT B APPRAISAL REPORT, MARKET RENTAL VALUE STUDY FOR NEWPORT BEACH BOYS AND GIRLS CLUB FACILITY, PREPARED BY R.P. LAURAIN & ASSOCIATES, INC., DATED APRIL 23, 2019 APPRAISAL REPORT MARKET RENTAL VALUE STUDY NEWPORT BEACH BOYS AND GIRLS CLUB FACILITY 2555 VISTA DEL ORO NEWPORT BEACH, CALIFORNIA APN: PORTION OF 440-161-01 R. P. LAURAIN & ASSOCIATES I N C O R P O R A T E D APPRAISAL REPORT MARKET RENTAL VALUE STUDY NEWPORT BEACH BOYS AND GIRLS CLUB FACILITY 2555 VISTA DEL ORO NEWPORT BEACH, CALIFORNIA APN: PORTION OF 440-161-01 Effective Date of Market Value Study April 10, 2019 Prepared for CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 Prepared by LAURAIN & ASSOCIATES, INC. 53 Linden Avenue, Suite 200 )ng Beach, California 90807 Date of Report April 23, 2019 R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS R. P. LAURAIN & ASSOCIATES INCORPORATED April 23, 2019 3353 LINDEN AVENUE, SUITE 200 LONG BEACH, CALIFORNIA 90807 TELEPHONE (562) 426-0477 FACSIMILE (562) 988-2927 Ms. Lauren Wooding Whitlinger Real Property Administrator City of Newport Beach Community Development Department 100 Civic Center Drive Newport Beach, California 92660 Subject: Market Rental Value Study Newport Beach Boys and Girls Club Facility 2555 Vista Del Oro Newport Beach, California APN: Portion of 440-161-01 Dear Ms. Wooding Whitlinger: In accordance with your request and authorization, I have personally appraised the above -referenced property as of a current date. The appraisal study included (1) an inspection of the subject property, (2) a review of market data in the immediate and general subject market area, and (3) a valuation analysis. The purpose of this appraisal is to estimate the fair market rental rate applicable to the subject property, based on the existing special purpose use (Boys and Girls Club). Further, the appraisal sets forth the allocation of rent for that portion of the site vested with the Newport Mesa Unified School District (NMUSD). The subject lease site is part of a larger public park (Eastbluff Park) which larger public park is identified as APN 440-161-01, containing 13.87± acres of land area, per Assessor's Mapping. The subject lease site, however, contains 41,500± total square feet, per the City of Newport Beach. It should also be noted that approximately 2,560 square feet of land area is vested with the Newport Mesa Unified School District (NMUSD). The subject lease site is improved with a community recreation building containing 12,393 total square feet, consisting of (1) 6,161 square feet of classroom, game room, and office space, as well as restrooms and a kitchen area, and (2) a gymnasium containing 6,232 square feet. The building was constructed circa 1975, was remodeled in 2008, and is in overall below average condition. APPRAISERS - ANALYSTS Ms. Lauren Wooding Whitlinger Real Property Administrator City of Newport Beach April 23, 2019 Page 2 The subject site is located in the PR (Public Recreation) zone district, and is considered a special purpose property. Given the lack of comparable sale and rental properties, the market rental value is based on a rate of return applied to the otherwise market value of the subject property. The Sales Comparison Approach has been utilized to estimate the underlying land value considering the public open space/recreation nature of the subject site. The market value of the building and on-site improvements is based on the Cost Approach. Refer to the accompanying report for a complete description of the subject property. The purpose of the appraisal study is to set forth the market rental rate applicable to (1) the subject lease site as a whole, plus (2) that portion of the lease site vested with the Newport Mesa Unified School District (NMUSD). For each rental value study, the market rental value is allocated between (1) the underlying land and (2) the building and on-site improvements. After considering the various factors which influence value, the market rental value of the subject lease site, as of April 10, 2019, is summarized as follows: Property as a Whole: Annual Rent, land only: $ 3,600 Annual Rent, building and site improvements: 52,200 Total Annual Rent: $ 55,800 Total Monthly Rent: $4,650 Allocation of School District Portion; Annual Rent, land only: Annual Rent, basketball court improvements: Total Annual Rent: $ 230 R64 $ 1,U94 Total Monthly Rent: $91.17 R. P. L A U R A IN & A S S O C I A T E S INCORPORATED Ms. Lauren Wooding Whitlinger Real Property Administrator City of Newport Beach April 23, 2019 Page 3 The foregoing values are subject to the assumptions and limiting conditions set forth in the Preface Section and the valuation study in the Valuation Analysis Section. No portion of this report shall be amended or deleted. This appraisal report is submitted in accordance with the Uniform Standards of Professional Appraisal Practice, per Standard Rule 2-2(a), as a complete narrative Appraisal Report. If you require any additional information from our file, it would be appreciated if you would contact the undersigned at your convenience. Very truly yours, R. P. RAIN &ASSOCIATES, INC. n Ura , MAI, ASA ertified General Real Estate Appraiser California Certification No. AG 025754 J PL: cl R. P. L A U R A IN & A S S O C I A T E S INCORPORATED TABLE OF CONTENTS Title Page Letter of Transmittal Table of Contents PREFACE Location Map Date of Value Purpose of the Appraisal Property Rights Appraised Client Intended User of Appraisal Intended Use of Appraisal Appraiser's Certification Scope of the Appraisal Assumptions and Limiting Conditions Terms and Definitions SUBJECT PROPERTY DESCRIPTION Lessor Lessee Property Address Legal Description Aerial Site Plan Exhibit Plat Map Aerial Photograph Site Description Building Improvements Building Drawing and Floor Plan Drawings Other Improvements Furniture, Fixtures, and Equipment Ownership History Assessment Data Tenant Data Appraisal Inspection Neighborhood Environment R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS TABLE OF CONTENTS (Continued) VALUATION ANALYSIS Highest and Best Use Analysis Valuation Methods Sales Comparison Approach Cost Approach Market Rent Final Estimate of Rental Value ADDENDA Additional Photographs Qualifications of Appraiser R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS PREFACE '� DELORME DATE OF VALUE The date of value (effective date) employed in this report, and all opinions and computations expressed herein, are based on April 10, 2019. Said date being generally concurrent with the valuation analysis process. PURPOSE OF THE APPRAISAL The purpose of this appraisal report is to express an estimate of market rental value applicable to the subject site. The definitions of market value and rental value are set forth in the following portion of this section, following the heading "Terms and Definitions." Further, it is the purpose of this appraisal report to describe the subject property, and to render an opinion of the highest and best use based on (1) the character of potential development of the property appraised, (2) the requirements of local governmental authorities affecting the subject property, (3) the reasonable demand in the open market for properties similar to the subject property, and (4) the location of the subject property considered with respect to other existing and competitive districts within the immediate and general subject market area. Further, it is the purpose of this appraisal report to provide an outline of certain factual and inferential information which was compiled and analyzed in the process of completing this appraisal study. PROPERTY RIGHTS APPRAISED The property rights appraised herein are those of the fee simple interest in the subject property. Fee simple is defined as, "An absolute fee; a fee without limitation to any particular class of heirs, or restrictions, but subject to the limitations of eminent domain, escheat, police power, and taxation. An inher- itable estate." R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-1 CLIENT The client for the subject appraisal assignment is the City of Newport Beach. INTENDED USER OF APPRAISAL The intended user of this appraisal is the City of Beach, including representatives thereof. INTENDED USE OF APPRAISAL It is understood that this appraisal will be utilized to establish the fair market rental rate applicable to the subject property, for the possible lease negotiations with the existing tenant, and/or for budgetary purposes. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 1-2 CERTIFICATION The undersigned does hereby certify that: I have personally inspected the subject property; I have no present or contemplated future interest in the real estate which is the subject of this appraisal report. Also, I have no personal interest or bias with respect to the subject matter of this appraisal report, or the parties involved in this assignment. My engagement in this assignment and the amount of compensation are not contingent upon the reporting or development 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 predetermined or stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. Also, to the best of my knowledge and belief the statements of fact contained in this appraisal report, upon which the analyses, opinions, and conclusions expressed herein are based, are true and correct. This appraisal report sets forth all of the assumptions and limiting conditions (imposed by the terms of this assignment or by the undersigned), affecting my personal, impartial, and unbiased professional analyses, opinions, and conclusions. The reported analyses, opinions, and conclusions, were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institutes, and the Uniform Standards of Professional Appraisal Practice. As of the date of this report I have completed the continuing education program for Designated Member of the Appraisal Institute, the State of California and the American Society of Appraisers; note that duly authorized representatives of said organizations have the right to review this report. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. No one other than the undersigned prepared the analyses, conclusions, and opinions for this appraisal study. No other person provided significant professional assistance. I have not appraised or provided any other services pertaining to the subject property in the last three years. John P. L n, MAI, ASA Certified General Real Estate Appraiser California Certification No. AG 025754 Renewal Date: April 16, 2021 R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-3 SCOPE OF THE APPRAISAL The appraiser, in connection with the following appraisal study, has: 1. Been retained, and has accepted the assignment, to make an objective analysis and valuation study, in order to determine the fair market rental rate applicable to the subject property. The subject property is particularly described in the following portion of this report in the section entitled Subject Property Description. 2. Toured the general area by automobile to become acquainted with the extent, condition, and quality of nearby developments, sales and offerings in the area, density and type of development, topographical features, economic conditions, trends toward change, etc. 3. Walked within the subject area, and some of the nearby neighborhood, to become acquainted with the current particular attributes, or shortcomings, of the subject property. 4. Completed an on-site inspection of the subject property for the purpose of becoming familiar with certain physical charac- teristics. 5. Made a visual observation concerning public streets, access, drainage, and topography of the subject property. 6. Obtained information regarding public utilities and sanitary sewer available at the subject site. 7. Made, or obtained from other qualified sources, calculations on the area of land contained within the subject property. Has made, or caused to be made, plats and plot plan drawings of the subject property, and has checked such plats and plot plan drawings for accuracy and fair representation. 8. Taken photographs of the subject property, together with photographs of the immediate environs. 9. Made, or caused to be made, a search of public records for factual information regarding recent sales of the subject property. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-4 SCOPE OF THE APPRAISAL (Continued) 10. Reviewed current maps, zoning ordinances, and other material for additional background information pertaining to the subject property, and sale properties. 11. Attempted to visualize the subject property as it would be viewed by a willing and informed buyer, as well as a willing and informed seller. 12. Interviewed various persons, in both public and private life, for factual and inferential information helpful in this appraisal study. 13. Formed an opinion of the highest and best use applicable to the subject property appraised herein. 14. Made, or caused to be made, a search for recent sales of comparable properties. Has viewed, confirmed the sale price, and obtained certain other information pertaining to each sale property contained in this report. 15. Formed an estimate of the market rental rate applicable to the subject property, as of the date of value expressed herein, by application of the Sales Comparison Approach, Cost Approach, and by employing an appropriate rate of return to the indicated market value. 16. Prepared and delivered this appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice, and in summation of all the activities outlined above. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-5 ASSUMPTIONS AND LIMITING CONDITIONS This appraisal is made with the following understanding as set forth in items No. 1 through 17, inclusive: 1. That this narrative Appraisal Report is intended to comply with reporting requirements set forth in the Uniform Standards of Professional Appraisal Practice, under Standard Rule 2-2(a), for an Appraisal Report. The information contained in this appraisal report is specific to the needs of the client; no responsibility is assumed for the unauthorized use of this report. 2. That title to the subject property is assumed to be good and merchantable. Liens and encumbrances, if any, have not been deducted from the final estimate of value. The subject property has been appraised as though under responsible ownership. The legal description is assumed accurate. 3. That the appraiser assumes there are no hidden or unapparent conditions of the subject property, subsoil, structures, or other improvements, if any, which would render them more or less valuable, unless otherwise stated. Further, the appraiser assumes no responsibility for such conditions or for the engineering which might be required to discover such conditions. That mechanical and electrical systems and equipment, if any, except as otherwise may be noted in this report, are assumed to be in good working order. The property appraised is assumed to meet all governmental codes, requirements, and restrictions, unless otherwise stated. 4. That no soils report of the subject property was provided to the appraiser; therefore information, if any, provided by other qualified sources pertaining to these matters is believed accurate, but no liability is assumed for such matters. Further, information, estimates and opinions furnished by others and contained in this report pertaining to the subject property and market data were obtained from sources considered reliable and are believed to be true and correct. No responsibility, however, for the accuracy of such items can be assumed by the appraiser. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-6 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) 5. That unless otherwise stated herein, it is assumed there are no encroachments, easements, soil toxics/contaminants, or other physical conditions adversely affecting the value of the subject property. 6. That no report(s) pertaining to mold, organic toxins, or chemical substances at the subject property was provided to the appraiser; therefore, information, if any, provided by other qualified sources pertaining to these matters is believed accurate, but no liability is assumed by the appraiser for such matters. That unless otherwise stated herein, the subject property has been appraised assuming the absence of mold, organic toxins, the presence of asbestos, or other organic and/or chemical substances which may adversely affect the value of the subject property. 7. That no opinion is expressed regarding matters which are legal in nature or which require specialized investigation or knowledge ordinarily not employed by real estate appraisers, even though such matters may be mentioned in the report. 8. That no oil rights have been included in the opinion of value expressed herein. Further, that oil rights, if existing, are assumed to be at least 500 feet below the surface of the land, without the right of surface entry. 9. That the distribution of the total valuation in this report between land and improvements, if any, applies only under the existing program of utilization. The separate valuations for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 10. That the valuation of the property appraised is based upon economic and financing conditions prevailing as of the date of value set forth herein. Further, the valuation assumes good, competent, and aggressive management of the subject property. 11. That the appraiser has conducted a visual inspection of the subject property and the market data properties. Should subsequent information be provided relative to changes or differences in (1) the quality of title, (2) physical condition or characteristics of the property, and/or (3) governmental R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-7 ASSUMPTIONS AND LIMITING CONDITIONS (Continued) restrictions and regulations, which would increase or decrease the value of the subject property, the appraiser reserves the right to amend the final estimate of value. 12. That the appraiser, by reason of this appraisal, is not required to give testimony in court or at any governmental or quasi - governmental hearing with reference to the property appraised, unless contractual arrangements have been previ- ously made therefor. 13. That drawings, plats, maps, and other exhibits contained in this report are for illustration purposes only and are not necessarily prepared to standard engineering or architectural scale. 14. That this report is effective only when considered in its entire form, as delivered to the client. No portion of this report will be considered binding if taken out of context. 15. That possession of this report, or a copy thereof, does not carry with it the right of publication, nor shall the contents of this report be copied or conveyed to the public through advertising, public relations, sales, news, or other media, without the written consent and approval of the appraiser, particularly with regard to the valuation of the property appraised and the identity of the appraiser, or the firm with which he is connected, or any reference to the Appraisal Institute, or the American Society of Appraisers, or designations conferred by said organizations. 16. That the form, format, and phraseology utilized in this report, except the Certification, and Terms and Definitions, shall not be provided to, copied, or used by, any other real estate appraiser, real estate economist, real estate broker, real estate salesperson, property manager, valuation consultant, invest- ment counselor, or others, without the written consent and approval of Ronald P. Laurain. 17. That this appraisal study is considered completely confidential and will not be disclosed or discussed, in whole or in part, with anyone other than the client, or persons designated by the client. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS W TERMS AND DEFINITIONS Certain technical terms have been used in the following report which are defined, herein, for the benefit of those who may not be fully familiar with said terms. MARKET VALUE (or Fair Market Value): Market value is sometimes referred to as Fair Market Value; the latter is a legal term, and a common synonym of Market Value. Market value as defined in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) is defined as follows: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowl- edgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation 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 or well advised, and acting in what they consider their own best interests; 3. A reasonable time is allowed for exposure in the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." RENTAL VALUE: The definition of rental value is based generally on the concept of market value, i.e. willing and informed parties, neither party being under duress or compulsion to act, etc. The definition of rental value is as follows: "A fair, proper and reasonable rental which would result from informed, intelligent, and prudent negotiations in the usual course of business; the rental which could be expected if the property were available, under competitive market conditions, as of a certain date." R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 1-9 TERMS AND DEFINITIONS (Continued) SALES COMPARISON APPROACH: One of the three accepted methods of estimating Market Value. This approach consists of the investigation of recent sales of similar properties to determine the price at which said properties sold. The information so gathered is judged and considered by the appraiser as to its comparability to the subject properties. COST -SUMMATION APPROACH: Another accepted method of estimating Market Value. This approach consists of estimating the new construction cost of the building and yard improvements and making allowances for appropriate amount of depreciation. The depreciated reconstruction value of the improvements is then added to the Land Value estimate gained from the Sales Comparison Approach. The sum of these two figures is the value indicated by the Cost -Summation Approach. INCOME CAPITALIZATION APPROACH: The Income Capitalization Approach consists of capitalizing the net income of the property under study. The capitalization method studies the income stream, allows for (1) vacancy and credit loss, (2) fixed expenses, (3) operating expenses, and (4) reserves for replacement, and estimates the amount of money which would be paid by a prudent investor to obtain the net income. The capitalization rate is usually commensurate with the risk, and is adjusted for future depreciation or appreciation in value. DEPRECIATION: Used in this appraisal to indicate a lessening in value from any one or more of several causes. Depreciation is not based on age alone, but can result from a combination of age, condition or repair, functional utility, neighborhood influ- ences, or any of several outside economic causes. Depreciation applies only to improvements. The amount of depreciation is a matter for the judgment of the appraiser. HIGHEST AND BEST USE: Used in this appraisal to describe that private use which will (1) yield the greatest net return on the investment, (2) be permitted or have the reasonable probability of being permitted under applicable laws and ordinances, and (3) be appropriate and feasible under a reasonable planning, zoning, and land use concept. R. P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS 1-10 SUBJECT PROPERTY DESCRIPTION SUBJECT PROPERTY View looking northwesterly at the subject property from Vista Del Oro. See aerial photograph on the following page, and additional photographs in the Addenda Section. LESSOR: City of Newport Beach LESSEE: Newport Beach Boys and Girls Club PROPERTY ADDRESS: 2555 Vista Del Oro Newport Beach, California 92660 LEGAL DESCRIPTION: Portion of Lot 223, Block 52, Irvine Subdivision, per Miscellaneous Maps recorded in Book 1, Page 88, in the office of the County Recorder, County of Orange, California. A complete metes and bounds legal description was not provided for review. Refer to the aerial map exhibit on the following page. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 2-1 Portion of APN 440-161-01 THIS MAP WAS PREPAflED POR ORANGE COUNTY ASSESSOR DEPT. PURPOSES ONLY. THE ASSES SOR MAKES NO WARANfEE AS TO RSACCURACY NOR ASSUMES ANY LUUMLIfY F011 OTHER USES. NCT T OPOYRIGHTO ANGEECOUNfY g$ESSpRERYED. 2� BO�SA VISTA D E� N IRVINE �`• 0 I a.,9 STREET "A" Fo° TRACTS O //AC. N, Loran 9 '�a 4 /s ,�L 22 EASMUFF PARK /"=200' N u° Rn+se-s , P. M 5e-2/'�' N 0 8 O VISTA DEL SOL —I R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 2-2 SITE DESCRIPTION COMMENT: The subject lease site is part of a larger public park (Eastbluff Park) which larger public park is identified as APN 440-161-01, containing 13.87± acres of land area, per Assessor's Mapping. The subject lease site, however, contains 41,500± total square feet, per the City of Newport Beach. It should also be noted that approximately 2,560 square feet of land area is in turn leased from the Newport Mesa Unified School District (NMUSD). LOCATION: The subject property is located on westerly side of Vista Del Oro, near the terminus intersection of Vista Del Sol, in the City of Newport Beach. LAND SHAPE: Irregular land configuration. LAND AREA: The subject lease site appraised herein contains 41,500 square feet of land area, per the City of Newport Beach. As stated, approximately 2,560 square feet of land area is vested with the Newport Mesa Unified School District (NMUSD), representing a portion of APN 440-221-02. TOPOGRAPHY: Effectively level and generally at street grade. SOIL STABILITY: Appears to be adequate based on develop- ments in the immediate area. A soils report, however, was not provided for review. SOIL CONTAMINATION: DRAINAGE: None known or observed, however, an environ- mental assessment report was not provided for review. The subject site has been appraised as though free of soil contaminants requiring remediation. Appears to be adequate. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-3 SITE DESCRIPTION (Continued) EARTHQUAKE FAULT: The subject site does not appear to be located within an earthquake fault, however, the greater Southern California area is prone to earthquakes. Inasmuch as no seismic or geological studies were provided for review, the appraisers assume no responsibility for the possible impact that seismic activity or earthquakes may have on the subject site. FRONTAGE/ACCESS: The subject property has frontage on, and vehicular access from, Vista Del Oro. RIGHT OF WAY WIDTH: Vista Del Oro: 60 feet STREET IMPROVEMENTS: Asphalt paved traffic lanes. Concrete curb, gutter and sidewalk (each side of street). STREET LIGHTS: Mounted on ornamental standards. PUBLIC UTILITIES: Water, gas, electric power, telephone service, and sanitary sewer are available to the site. ENCROACHMENTS: None apparent, however, a survey of the subject property was not provided for review. EASEMENTS: A preliminary title report was not provided for review. Easements, if existing, are assumed to be located along the property boundaries, not interfering with the existing or future highest and best use development of the subject property. It is assumed that there are no NNcross-lot" or "blanket" easements located over the subject site. ILLEGAL USES: PRESENT USE: None observed. Community recreation building (Newport Beach Boys and Girls Club). R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-4 SITE DESCRIPTION (Continued) ZONING: The subject property is located in the PR (Parks and Recreation) zone district of the City of Newport Beach. The PR zone district is intended to provide for land areas utilized for public and private recreational uses, such as public parks, aquatic facilities, golf courses, marina support facilities, private recreational facilities such as tennis clubs, and similar recreational facilities. As such, residential development of the subject site would not be permitted under the current zoning. Note that all uses in the PR zone district require a Conditional Use Permit (CUP) or a Minor Use Permit (MUP) with the exception of minor utilities, which are permitted by right. The development standards are established during review of the required permit. HIGHEST AND BEST USE: The reader is referred to the first portion of the Valuation Analysis Section for a discussion regarding the highest and best use of the subject property. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-5 BUILDING IMPROVEMENTS BUILDING LAYOUT: The subject building represents a community recreation building consisting of a gymnasium and various classrooms, small office rooms, an open reception/game room, restrooms, and a former kitchen area (utilized for storage purposes). Refer to the building drawing and evacuation floor plan drawing on the following pages. TYPE OF STRUCTURE: Single tenant community recreation building. YEAR BUILT: Originally constructed circa 1975; remodeled in 2008. NO. OF STORIES: One story. BUILDING SIZE: Per the on-site inspection, the subject building contains 12,393 total square feet, as follows: Classrooms/offices: 6,161 sq. ft. Gymnasium: 6,232 sq. ft. Total: 12,393 sq. ft. CONSTRUCTION QUALITY: Average quality Class D (wood frame) construction. FOUNDATION: Perimeter concrete foundation. EXTERIOR WALLS: Painted stucco over wood framing. ROOF: Rolled asphalt roofing, tarred at joints. Mission tile mansards. FLOORS: Concrete slab floor with sheet vinyl and vinyl tile flooring in classroom, game room, and office area; assumed to be ceramic tile in restrooms R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-6 BUILDING IMPROVEMENTS (Continued) Subject Community Recreation Building �E n R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 2-7 noYs � �n�rs cr,,v� OF CENTRAL ORANGE COAST cadtra Has& I trvAM I Miprpm SO M.I OnWW i SaMa Am Parking Lot Girls Bathroom ' Closet a Boys Bathroom Janitor's Closet Primary Room Newport Beach Emergency Evacuation Plan Kitchen Athletic Office Games Room Office Games Room Gym Classroom lassraom I Classroom W d C'3 O y e. T a BUILDING IMPROVEMENTS (Continued) INTERIOR WALLS: Painted drywall interior walls in classroom and office areas. CEILINGS: Painted drywall and sprayed acoustic ceilings in classroom and office areas. DOORS: Plate glass set in anodized and metal sheathed entry doors; double flush solid core and natural wood solid core interior doors. WINDOWS: Plate glass set in anodized frame and aluminum frame sliding windows; certain classrooms have interior partition wall windows set in wood frames. ELECTRICAL: Conventional electrical system; incandescent and fluorescent lighting. HEATING AND COOLING: Per information provided by employees, the easterly (front) "Primary Room" is the only room with an operating forced air heating and cooling system. It is assumed the roof - mounted central forced air heating and cooling units for the remainder of building require replacement. PLUMBING: Conventional plumbing system. There are two restroom facilities having a total of 9 fixtures. There is also a sink in the kitchen area, however, the kitchen area is in fair condition and appears to be utilized for storage purposes. Fire sprinkler system throughout GYMNASIUM: As stated, the gymnasium contains 6,232 square feet and includes wood flooring, open wood beam ceiling with skylights, wood panel and drywall walls, with some damage to certain drywall, basketball hoops, bleachers, and an electronic scoreboard. CONDITION: The subject building is in overall below average condition, considering the age. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-8 OTHER IMPROVEMENTS ON-SITE PARKING: The subject property includes an asphalt paved parking lot containing five standard parking spaces, one handicap space, and approx- imately 5,500 square feet of paved area, inclusive of driveways and the drive aisle. OTHER: Other on-site improvements include: Concrete walkways: 4,950± sq.ft. Outdoor basketball court: 5,760± sq.ft. Concrete block trash enclosure: 20± In.ft. Concrete curbing: 375± In.ft. In addition, there is certain irrigated grass, shrubbery, and tree landscaping. FURNITURE, FIXTURES, AND EQUIPMENT COMMENT: Furniture, fixture, and equipment (FF&E) items specific to the existing Boys & Girls Club facility have been excluded from the appraisal study (furniture, play equipment, pool tables, ping pong tables, supplies, etc.). OWNERSHIP HISTORY COMMENT: The subject property has been vested with the City of Newport Beach for more than 20 years. ASSESSMENT DATA COMMENT: The subject property represents a portion of APN 440-161-01. The assessed land value is $1,645,016; the assessed improvement value is $514,390. The property is tax exempt as vested with a public agency. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-9 11i;10/_10kM9-Y`r_1 COMMENT: It is understood the subject lease site appraised herein is currently leased to the Newport Beach Boys and Girls Club for $1 per year. APPRAISAL INSPECTION COMMENT: The appraisal inspection was conducted on March 21, 2019, with the permission of the tenant. NEIGHBORHOOD ENVIRONMENT LOCATION: The subject property is located in the northwest portion of the City of Newport Beach; the City of Costa Mesa boundary is located westerly of the subject neighborhood and the City of Irvine boundary is located north and northeasterly of the subject neighborhood. The City of Newport Beach was incorporated in 1906 and includes 16,654 acres of land area, 14,894 acres of ocean water area, 800 acres of Bay water area, and 800 acres of Harbor water area. LAND USES: The predominant uses in the City of Newport Beach are single family and multiple family residential developments, which account for approximately 50% of the total land area, followed by open space and recreational uses which account for 36±% of the total land area. Commercial, institutional, and industrial uses generally account for remaining land area. There are also a number of hotel developments within the City. The John Wayne Airport is located adjacent to the extreme northerly portion of the City boundary. The University of California Irvine campus is located within two miles easterly of the subject property. R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-10 NEIGHBORHOOD ENVIRONMENT (Continued) LAND USES: (Continued) Commercial office, retail, and restaurant uses are located on primary street. Fashion Island, a major retail center, is located within 1 1/2 miles south of the subject property. Upper Newport Bay and an ecological preserve are located immediately westerly of the subject neighborhood. The Big Canyon Country Club and golf course is located within one mile southeasterly of the subject neighborhood. ACCESS: Primary thoroughfares in the general subject neighborhood include Coast Highway, Jamboree Road, MacArthur Boulevard. The San Joaquin Hills Transportation Corridor (73) Freeway, a toll road, is located at the northerly boundary of the City. The Costa Mesa (55) Freeway is located approximately 1/2 mile northwesterly of the westerly City Boundary, and terminates on Newport Boulevard. The San Diego (405) Freeway is located approximately one mile north of the extreme northerly portion of the City. Said freeways are part of the freeway network serving the Southern California region. OCCUPANCY: Residential: 75f% owners 25f% tenants Commercial: 25f owners 75f tenants PRICE RANGE: Older single family and low density multiple family residential properties, generally range in value from $1,000,000 to exceeding $5,000,000 for properties having close proximity to the beach or bay. Residential properties at the lower end of the range generally represent older dwellings that are acquired based on the underlying land value. Single family and multiple family properties having frontage on the beach or bay, can range in value from $3,000,000 to exceeding $20,000,000. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-11 NEIGHBORHOOD ENVIRONMENT (Continued) TREND: Real estate values, in general, were declining between 1991 and 1995. The value trend, however, generally stabilized during 1996 and 1997. Beginning in 1998, there was evidence of increased real estate market activity. There was an upward value trend affecting residential properties within the immediate and general subject market area, from 2003 through the mid portion of 2006, after which property values generally stabilized. In the early part of 2007, residential property values began to decrease significantly, and the decrease continued through the mid to latter portion of 2009, due primarily to the subprime credit and housing crisis. The residential real estate market generally stabilized in the latter portion of 2009. Begin- ning in 2010, certain markets began to experience varying monthly increases and decreases in sales volumes and pricing, due primarily to abnormally low interest rates and first time home buyer's tax credits. Overall, property values remained relatively stable from the first portion of 2010 through the latter portion of 2012, after which property values and sales activity began to experience increases through the mid to latter portion of 2018. It appears the property values have begun to stabilize in recent months. AGE RANGE: The age range of all types of improved prop- erties is rather broad. Generally, the age range for single family residences is effectively new to 30 years. Certain commercial and mixed use properties were constructed as far back as the early 1900s, however, commercial and mixed use properties typically undergo significant renovation in the immediate subject area (as opposed to demolition and clearing for new development). As such, the effective age of commercial and mixed use properties ranges widely from 5 years to exceeding 50 years. R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2-12 NEIGHBORHOOD ENVIRONMENT (Continued) PROPERTY MAINTENANCE: Property maintenance in the immediate and general neighborhood, evidenced by an on- going maintenance program, ranges from above average to very good. PUBLIC/PRIVATE FACILITIES: The availability and adequacy of public facilities, transportation, schools, commercial facilities, recreational opportunities, and resi- dential housing are rated average. The City of Newport Beach provides police and fire protection. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 2-13 VALUATION ANALYSIS VALUATION ANALYSIS The purpose of this appraisal is to estimate the fair market rental rate applicable to the subject property, based on the existing special purpose use (Boys and Girls Club) and taking into consideration the location of the site within a larger public park (Eastbluff Park). Prior to the application of the appraisal process, it is necessary to determine the highest and best use of the subject property. HIGHEST AND BEST USE ANALYSIS; The 14th Edition of The Appraisal of Real Estate, by the Appraisal Institute, defines highest and best use on Page 332, as follows: "The reasonably probable use of property that results in the highest value." In the analysis of which uses are reasonably probable, three criteria are applied in the following order to develop adequate support for the determination of highest and best use: 1. Physically possible 2. Legally permissible 3. Financially feasible These criteria are generally considered sequentially; however, the tests of phys- ical possibility and legal permissibility can be applied in either order, but they must both be applied before the test of financial feasibility. Uses that meet all three criteria of being reasonably probable are then tested for economic pro- ductivity, to identify the maximally productive use. The reasonably probable use with the highest value (i.e. maximally productive) is the highest and best use. In the process of forming an opinion of highest and best use, consideration must be given to various factors such as zoning restrictions, probability of zone change, private deed restrictions, location, land size and configuration, topogra- phy, and the character/quality of land uses in the subject market area. Conclusion; The subject lease site is part of a larger public park (Eastbluff Park), which public park is identified as APN 440-161-01, containing 13.87± acres of land area, per Assessor's Mapping. The subject lease site, however, contains 41,500 total square feet, per the City of Newport Beach. It should also be noted that approximately 2,560 square feet of land area is vested with the Newport Mesa Unified School District (NMUSD). _ R . P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS 3-1 VALUATION ANALYSIS (Continued) HIGHEST AND BEST USE ANALYSIS; (Continued) Both the subject lease site, as well as the greater Eastbluff Park site, have irregular land configurations, and an effective inside location on a secondary street. The topography at the subject site is effectively level. All public utilities including water, gas, electric power, telephone, and sanitary sewer are available in the immediate area. The physical characteristics of the subject parcel are considered adequate to accommodate legally permissible uses. Land uses in the immediate area include low and medium density residential uses on secondary streets. Commercial uses are located on primary streets; however, the subject site is located in a residential neighborhood and commercial or industrial uses are not considered reasonably probable. Further, the subject property is located in the PR (Parks and Recreation) zone district of the City of Newport Beach. The PR zone district is intended to provide for land areas utilized for public and private recreational uses, such as public parks, aquatic facilities, golf courses, marina support facilities, private recreational facilities such as tennis clubs, and similar recreational facilities. As such, residential development of the subject site would not be permitted under the current zoning. While the purpose of the appraisal study is to estimate the fair market rent of the subject Boys & Girls club facility (land and improvements), it is also noted that the highest and best use of the subject site, as presently zoned, is limited to an open space (public park) or similar recreational use. As such, the existing Boys & Girls Club building, and related site improvements, are considered the highest and best use under the current zoning. The subject lease site has been appraised accordingly. VALUATION METHODS; There are three conventional methods (approaches) which can be used to estimate value. They are the Sales Comparison Approach, Cost Approach, and Income Capitalization Approach. The reader is referred to the last portion of the Preface Section, following the heading "Terms and Definitions," for a description of each approach to value. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-2 VALUATION ANALYSIS (Continued) VALUATION METHODS: (Continued) Inasmuch as the subject property is located within the Parks and Recreation zone district, and is developed with a non-profit use (Boys and Girls Club), the subject lease site is considered a special use property. Special-purpose properties are unique with respect to design, construction, and/or utility; they generally fall within one of two categories, i.e. those capable of producing income and having an economic value (until such time as the improvements become functionally obsolete), and those which are private service, public service, or community amenity properties. Those having economic value (capable of generating net income to support the value of the land and improvements) include special processing and manufacturing plants, airports, marinas, athletic stadiums, amusement and theme parks, convention facilities, etc.; those without economic production capabilities include houses of worship, service club facilities, nonprofit community facilities, public schools, public parks, and public buildings, e.g. library, city hall, fire station, community center, police station, public health service building, court building, etc. Special-purpose properties are limited -market properties; they rarely, if ever, sell. Likewise, there is a lack of rental data in which to derive market rental rates for special purpose properties. The conventional and long-standing method of appraising special-purpose private and public properties has been employed in the subject case. The method includes, as indicated above, (1) the valuation of the land based on the limited effective open space and/or recreational use, plus (2) the addition of the depreciated value of the improvements. Said method describes the characteristics of the Cost Approach, one of the three conventional valuation methods. The value of the subject land, one of the components of the Cost - Summation Approach, is based on the fair market value concept by the application of the Sales Comparison Approach; the depreciated value of the improvements is based on the cost new, less depreciation from all causes (age, condition, functional inutility, etc.). Lastly, in the subject case the purpose of the appraisal study is to set forth the market rental rate applicable to (1) the subject lease site as a whole, plus (2) that portion of the lease site vested with the Newport Mesa Unified School District (NMUSD). As such, and given that there is a lack of direct rental data pertaining to the subject site, the market rent estimated is based a market rate of return applied to the indicated market value of the underlying land and improvements (as derived via the Sales Comparison and Cost Approaches). R . P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS 3-3 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH; In the Sales Comparison Approach, the value of a property is estimated by comparing it with similar, recently sold properties in the surrounding area. Inherent in this approach is the principle of substitution, which holds that when a property is replaceable in the market, its value tends to be set by the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution. Thus, the Sales Comparison Approach attempts to equate the subject property with sales of comparable properties by analyzing and weighing the various elements of comparability. The Sales Comparison Approach has been applied to the subject property after an investigation was conducted of comparable vacant land parcels which sold in the subject market area. The reader is referred to the summary of Recreational and Open Space Land Value Indicators on the following page. Due to the limited sales data, and infrequency of recreational and open space land sales, both the chronological time frame and the geographic search area were expanded, in order to obtain a representative number of comparable sale properties. A detailed discussion of each land sale utilized herein is contained in the latter portion of this section, as part of the overall analysis. The properties surveyed consist of vacant land parcels ranging in size from 1.20 to 688.00 acres. The purchase prices per square foot of land area range from $0.39 to $6.43. The sales are set forth in chronological order and took place between October 2011 and October 2018. Data 1, 3 and 4 represent recreation use sites, however Data 3 sold as improved with a golf course. Data 5 represents a limited entertainment use site. Data 2,6 and 7 represent open space sites. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-4 Recreational and Open Space Land Value Indicators : Data Date Zoning Land Size Use 1 10-11 Rec 4,334,656 sf 99.51 ac. campground 23100-23800 East Fork Rd., Azusa 2 8-14 OS 25,700 sf 0.59 ac. Open Space 39± La Paz Rd., adjacent to railroad, Mission Viejo K, El C Sale Price $ Per SF $5,250,000 $1.21 $10,000 $0.39 11-14 OSPR 2,070,407 sf 47.53 ac. Golf course $8,400,000 $4.06 16782 Graham St., Huntington Beach with 11,149 sf clubhouse 1-15 OCGP, P 29,969,280 sf 688.00 ac. recreation/ Portion of Orange County Great Park, Irvine parkland 5-16 ECSP 380,850 sf 8.74 ac. Butterfly 7711-33 Beach Blvd., Buena Park Paladium $19,171,000 $0.64 $2,450,000 $6.43 8-16 OS 52,272 sf 1.20 ac. Open Space 100± Pacific Coast Hwy., Dana Point 10-18 GOS 74,052 sf 1.70 ac. Open Space SEC Camino Las Ramblas and Via California, San Juan Capistrano $30,000 $0.57 $70,000 $0.95 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The first adjustments applied to the sale properties, when warranted, are known as transactional adjustments. Said transactional adjustments are generally applied to the sale properties in the sequence listed below, and are made cumu- latively (i.e. the base changes before applying the next adjustment). Following is the list of transactional adjustments: • Property rights conveyed • Financing (cash equivalency) • Conditions of sale • Expenditures after sale • Market conditions Property Rights Conveyed: An adjustment is required when a sale transaction conveyed a different set of property rights, compared to the property rights being appraised, such as leased fee estate vs. fee simple estate. None of the comparable land sales utilized herein required an adjustment for property rights conveyed, as all of the land sale properties conveyed title to the fee simple interest in each property. Financing and Cash Equivalency: Sale properties are adjusted for financing arrangements involved in transactions which are not market -typical. A cash equivalency adjustment is required when the financing of a particular property caused a higher purchase price. Common examples include seller financing, or assumption of existing financing, at non - market terms. Inasmuch as all of the sales involved all cash transactions, a cash equivalency adjustment is not warranted for any of the sale transactions. Conditions of Sale: An adjustment for conditions of sale is required when a property sold under atypical conditions, such as (1) a seller being under duress (REO transactions or other distressed sales), (2) a property selling as part of a bulk portfolio sale, (3) a developer paying a premium to acquire an adjacent property as part of assembling a larger development site, or (4) other similar situations where the motivation of a buyer or seller affects the price paid for a property. None of the sale properties required an adjustment for conditions of sale. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-6 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Expenditures after Sale: An adjustment is required when a buyer anticipates a particular expenditure that he/she will have to expend shortly after purchasing a property; the price paid by a knowledgeable buyer considers any required expenditures. Such expenditures can include (1) the cost to remediate known environmental conta- mination, (2) the cost to cure deferred maintenance at a building, or (3) similar costs that a buyer anticipates making upon purchase of a property, such as demolition costs when an improved site is purchased for redevelopment. While demolition costs can be accounted for as expenditures after sale, in the subject case, building improvements at the various sales, if any, were accounted for on a qualitative basis, in the "elements of comparability" portion of this report. As such, none of the land sales required an adjustment for expenditures after sale. Market Conditions: Consideration of the market conditions (date of sale) is appropriate when sales occur during a rising or declining market. Said consideration is based upon observation of the real estate market and value appreciation/declining cycles dating back more than 15 years. Residential real estate values in the subject market area were largely flat (level) from the latter portion of 2009 through the mid to latter portion of 2013, after which residential real estate values began increasing. Said price increase has generally continued through the mid to latter portion of 2018, due in part to the continued availability of low mortgage interest rates. Certain residential markets, however, appear to have stabilized from the first portion of 2019, through the present time. The following graph, which was obtained from truila.com, sets forth the median sale price of single family homes and condominiums in the City of Newport Beach, over the past five years. As noted, there can be fluctuations in the median price due, in part, to the large fluctuation in home values in differing portions of Newport Beach. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-7 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Median Sales Price in Newport Beach ❑ 1 Br ❑ 2 Br ❑ 3 $r ❑ 4 Br 0 All properties Mediad Sales Price 32M S1.9M S1.8M S1.TM $1.15M S 1.5M SIAM $i_3M f r r r f 4 'G o9 4 m O 4 2 Z Z Z Z All properties Note that recreational land, along with other nonutilitarian or limited -utility land (i.e. open space, agricultural land, etc.), does not appreciate in value as quickly as conventional -use properties offering increased economic benefits (i.e. land zoned for residential, commercial, or industrial use). The market conditions adjustments utilized herein are based on (1) discussions with various market participants (brokers, property managers, etc.), (2) observations of local real estate market trends (sales activity, development activity, etc.) and (3) a review of sale prices and current asking prices at comparable vacant land parcels in the immediate and general subject market area. While there has been an upward trend in single family residential values over the last few years as stated the open space, agricultural, recreational, and related markets for limited utility property do not typically experience the same extent of price appreciation, due primarily to the more speculative nature of open space land sale acquisitions. Based on the foregoing, adjustments are applied to the various sale properties based on an annual appreciation rate of 3.0% per year (0.25% per month) for those years seeing more substantial residential price appreciation, and 0% (level) per year for those years seeing more moderate residential price appreciation, as follows: R. P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS W VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The adjustments applied to the sale properties for market conditions are based on the following schedule: January -December 2012: January -December 2013: January -December 2014: January -December 2015: January -December 2016: January -December 2017: January -December 2018: January -March 2019: Elements of Comparability: 0.0% per year or 0.00% per month 0.0% per year or +0.00% per month + 3.0% per year or + 0.25% per month + 3.0% per year or + 0.25% per month + 3.0% per year or + 0.25% per month + 3.0% per year or + 0.25% per month 0.0% per year or 0.00% per month 0.0% per year or 0.00% per month After considering the transactional adjustments, the appraiser analyzed the fol- lowing elements of comparability at the sales, as compared to the subject site: General location Access Land size Best use/zoning Land Sales Comparison Analysis: Land configuration/utility Topography Improvements Plans/entitlements The comparability adjustments applied to the sale properties are judgment estimates which are intended to equate the subject land parcel with the respective land sale properties. Adjustments for the various elements of comparability were applied on a qualitative basis due to the lack of direct market evidence regarding quantitative adjustments in the subject market. The reader is referred to the Land Sales Comparison Grid on the following page. As can be noted, Data 1 through 6 required adjustments for market conditions, ranging from 4.0% to 12.0%. None of the sales required adjustments for property rights, financing, conditions of sale, or expenditures after sale. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-9 W VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Lastly, note that while subject lease site contains 41,500 square feet of land area, or 0.953± acres, the larger park parcel contains 13.87± acres. Larger parcels, whether vacant or improved, typically sell at overall lower rates per square foot of land area. As such, Data 1, containing 99.51 acres, and Data 4, containing 688 acres, are deemed inferior and far inferior regarding land size. Following are comments and aerial photographs regarding the various sale properties. Data 1 — Follows Campground • it i � � M .r. Data 1 represents the sale of Follows Camp, a former RV campground that suffered significant flood damage, was effectively vacant at the time of sale, and was declared a public nuisance. The property is zoned for Recreational and Resort use, though portions of the site are within the A-1 (agricultural) and W (watershed) zone districts. The site has an extremely large land area of just under 100 acres, is located in unincorporated Los Angeles County, in the Angeles National Forest (Azusa mailing address) and was purchased by the City of Industry for undisclosed purposes. The site is not currently being utilized, and is being considered for potential disposition by the City. The site has limited economic potential via potential camping fees, however, it would require significant rehabilitation, per published records. R. P. L A U R A I N & A S S O C I A T E S APPRAISERS - ANALYSTS 3-11 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The purchase price was $5,250,000, all cash, which equates to $1.21 per square foot of land area. The market conditions adjusted purchase price is $1.36 per square foot of land area. The deed recorded October 24, 2011, as Document No. 139268. Data 1 is considered inferior to the subject property, due primarily to the land size, rural location, irregular and non-contiguous land area, and overall condition. Data 2 — Open Space site, Mission Viejo The sale property is a remnant open space land parcel, and represents a strip of land located between a railroad right of way and public park. The site is below the grade (bridge) of adjacent La Paz Road; there is no physical vehicular access to the site. The property is zoned OS (Open Space) consistent with the zoning of the adjacent park. The site was acquired on a speculative basis. The purchase price was $10,000, all cash, which equates to $0.39 per square foot of land area. The market conditions adjusted purchase price is $0.43 per square foot of land area. The deed recorded August 4, 2014, as Document No. 310724. Data 2 is considered far inferior to the subject property, due primarily to the far inferior access, and configuration, as well as the inferior best use/zoning. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-12 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Data 3 — Golf Course Data 3 represents the sale of the Meadowlark Golf Course facility in Huntington Beach. The facility is relatively small for a golf course, containing only 47.530 acres of land area. The site is zoned OSPR (Open Space Parks and Recreation) and is improved with an 18 -hole golf course, club house building containing 11,149 square feet, constructed in 1980±, and related on-site improvements. The purchase price equates to $4.06 per square foot of land area, as improved with the existing golf course facility, implying the underlying recreation land area, as vacant, would be significantly less than $4.06 per square foot. It is noted that the subject PR (Parks and Recreation) zone district does allow golf course facilities, however, the subject site is considered to be too small in land size to support a golf course. Regardless, Data 3 does have a similar zone, and is in a similar inland area. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-13 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The purchase price was $8,400,000, all cash, which equates to $4.06 per square foot of land area. The market conditions adjusted purchase price is $4.44 per square foot of land area. The sale occurred November 19, 2014, as an LLC company transfer. Data 3 is considered far superior to the subject property, due primarily to the existing golf course improvements and superior best use (as the sale OSPR zone, and land size combined, allow for golf course use). Data 4 — Great Park, Irvine FI 1 - UPPER SEE CANYON BOSQUE AGRICULTURE! COURSE !`!GOLF 2 9A it aiL� - SPORTS PARK WILDLIFE CORRIDOR DEVELOPMENTGREAT PARK Data 4 represents the sale of a portion of the former EI Toro Marine Corps base, which portion is commonly known as the "Great Park." The site is zoned for OCGP (Orange County Great Park) and P (Preservation), and contains 688 acres of land area. The site was acquired by a home developer, from the City of Irvine, for related open space use, and will be developed and utilized for various sports fields as part of a public park, a wildlife corridor, a golf course, and some agricultural use. Note however, the buyer is responsible for approximately $10,000,000 in infrastructure costs applied toward Marine Way. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-14 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The purchase price was $19,171,000, all cash, which equates to $0.64 per square foot of land area. The market conditions adjusted purchase price is $0.70 per square foot of land area. The deed recorded January 30, 2015, as Document No. 48405. Data 4 is considered far inferior to the subject property, due primarily to the extraordinarily large land size which is deemed far inferior (on a rate per square foot basis), and the inferior improvements, due to the required infrastructure costs. Data 5 — Butterfly Palladium, Buena Park Data 5 represents the sale of the former Movieland Wax Museum site, which use was vacated in 2005. Data 5 is located in Subdistrict 132(a) of the ECSP, which subdistrict only allows entertainment uses as a primary use; museums, hotels, and restaurants are permitted as incidental uses. The site was improved with the former Movieland Wax Museum building containing over 67,000 square feet of building area, plus ancillary buildings. Further, the southerly portion of the site is encumbered with a KV highline. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-15 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The site required extensive demolition, and the former museum building included asbestos; the sale price of $2,450,000 was "net" of estimated demolition costs of $1,360,000. The site is currently being developed with a Butterfly Palladium, which will include (1) a 40,000± square foot building consisting of a rainforest atrium, honey bee exhibit, Amazon -Aqua life presentation, 3-D theater, education room, party room, cafe, gift shop, and related exhibits, (2) a 10,000 square themed restaurant and family entertainment center, and/or (3) a future skydiving experience venue. Note that restaurant use is only permitted in conjunction with an entertainment use (i.e. independent restaurant development is not permitted under the current entertainment zoning). The purchase price was $2,450,000, all cash, which equates to $6.43 per square foot of land area. The market conditions adjusted purchase price is $6.74 per square foot of land area. The deed May 4, 2016, as Document No. 198773. Data 5 is considered far superior to the subject property, due primarily to the far superior entertainment zoning which allows a greater variety of economic uses, which is considered to more than offset the inferior location. Data 6 - Open Space site, Dana Point R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-16 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The sale property is a remnant open space land parcel, and represents a relatively long and narrow parcel of land located on the north side of Pacific Coast Highway, across from the ocean, in the City of Dana Point. The site is zoned OS (Open Space) and does not permit development. The seller was a real estate agent that had previously obtained a permit to utilize the site for real estate sales/signage purposes. The site has level to sloping topography, with no drive apron access. The site was acquired on a speculative basis and could reasonably be utilized for signage purposes or for potential sale to adjacent (northerly) property owners as a backyard extension. The purchase price was $30,000, all cash, which equates to $0.57 per square foot of land area. The market conditions adjusted purchase price is $0.59 per square foot of land area. The deed recorded August 31, 2016, as Document No. 414988. Data 6 is considered inferior to the subject property, due primarily to the inferior best use/zoning and topography, which is considered to outweigh the superior beach location. Data 7 - Open Space site, San Juan Capistrano R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-17 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) The sale property is a remnant open space land parcel, and represents a relatively long and narrow parcel of land located in close proximity to the ocean, in the City of San Juan Capistrano. The site is zoned GOS (General Open Space) and does not permit development. The site was marketed and sold as a non - developable site, on a speculative basis, and could reasonably be utilized for (1) potential sale to adjacent (southerly) property owners as a backyard extension, or (2) speculative zone change or variance for potential one dwelling site near the corner intersection. The purchase price was $70,000, all cash, which equates to $0.95 per square foot of land area. An adjustment for market conditions was not warranted. The deed recorded October 10, 2018, as Document No. 368414. Data 6 is considered inferior to the subject property, due primarily to the inferior best use/zoning and topography. Refer to the following array of land sales, which have been placed in the array by rating with respect to overall comparability. The rates applicable to Data 1 to Data 6 have been adjusted for market conditions (date of sale); an adjustment for market conditions was not warranted for Data 7. The adjusted rates range from $0.43 to $6.74 per square foot, as follows: R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-18 Overall Rate Per Data Comparability SF Land 5 far superior $6.74 3 far superior $4.44 Subject - - - $1.50 1 inferior $1.36 7 inferior $0.95 4 far inferior $0.70 6 inferior $0.59 2 far inferior $0.43 R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-18 VALUATION ANALYSIS (Continued) SALES COMPARISON APPROACH: (Continued) Land Value Conclusion: Based on the foregoing analysis, the rate applicable to the subject property is estimated at $1.50 per square foot of land area, as follows: 41,500 SF @ $1.50 = $62,250 Adjusted: $60,000 FINAL ESTIMATE OF LAND VALUE: Based on the foregoing analysis, the market value of the fee simple interest in the subject land parcel, as of April 10, 2019, is $60,000. See Cost Approach beginning on the following page. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 3-19 VALUATION ANALYSIS (Continued) COST APPROACH: The Cost Approach is based on the replacement cost new of the subject building and on-site improvements, less accrued depreciation, plus the value of the underlying land parcel. The replacement costs new of the subject property have been categorized as (1) direct building costs, (2) indirect building costs, and (3) entrepreneurial profit. The value of the underlying land parcel was estimated in the preceding Sales Comparison Analysis. Direct and Certain Indirect Building Costs: The direct cost estimates employed in the following Cost Approach Analysis are based on (1) development projects wherein construction costs were available, and (2) cost estimates obtained from Marshall & Swift, a national cost service handbook that provides building costs and site improvement costs for a wide variety of construction classes and materials. The national cost service is considered a guide for estimating replacement costs, plus other related costs. It should be noted, however, that Marshall & Swift does not generally include an allocation between the direct and indirect costs. Further, cost estimates published by Marshall & Swift generally exclude the following: (1) legal and accounting fees, as well as recording fees, (2) consulting fees to obtain required reports, such as environmental impact report (EIR), a geotechnical report, traffic studies, etc., (3) real estate taxes, (4) a contingency factor, (5) financing points, and (6) entrepreneurial profit. Direct costs are those expenditures for labor and materials directly employed in the construction of the improvements. The overhead and profit of the general contractor and various subcontractors are part of the usual construction contract, and represent direct costs. Other costs associated with a project such as the subject development will include the following: • Architectural, design, and engineering fees • Building permit and review fees • Materials, products, and equipment • Labor force • Security during construction • Temporary contractor's office and fencing • Material storage facilities • Powerline installation and utility costs • Contractor's overhead and profit • Developer's administrative expenses • Performance bond(s) R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-20 VALUATION ANALYSIS (Continued) COST APPROACH: (Continued) The base direct replacement cost includes regional and local adjustments. The "base" cost new for the subject building, based on average quality Class D (wood frame and stucco) construction, and allocating between (1) the gymnasium portion of the building, containing 6,232 square feet, and (2) the remaining building area (classrooms, offices, game rooms, etc.), containing 6,161 square feet, is estimated at: Classrooms: $138.00 per square foot Gymnasium: $110.00 per square foot Additional Indirect Building Costs: In addition to the direct building costs (which include certain indirect costs), a number of additional indirect building costs or allowances will be encountered when developing an industrial warehouse similar to the subject property. Said indirect costs, while necessary for construction, (1) are not typically included in the base (direct) building cost rates, and (2) include the following: Professional services (legal/accounting) Consulting (EIR, geotechnical, etc.) Real estate taxes Contingency factor Financing points In the subject case, additional indirect costs, exclusive of profit, are based on 10% of the base construction costs and are in the total amount of $153,574. Entrepreneurial Profit: Entrepreneurial profit, or developer's profit, reflects the amount a developer expects to receive for his or her contribution in a particular project. Additionally, it represents the degree of risk and expertise associated with the development. Developers and real estate brokers familiar with the intricacies of real estate development indicate that the pro forma profit margins for building develop- ments are generally within a relatively wide range of 10% to exceeding 20% of the direct and indirect development costs. The actual profit margin, upon completion of a particular project, however, can vary considerably depending on a number of factors such as cost overruns, unanticipated additional expenses, labor force negotiations, etc. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-21 VALUATION ANALYSIS (Continued) COST APPROACH: (Continued) After considering current economic conditions, an entrepreneurial profit based on 15% of the total direct and indirect building costs has been employed in the subject cost study. The entrepreneurial profit for the subject development is estimated at $253,397. Accrued Depreciation: Accrued depreciation is a loss in property value due to any cause. The five basic types of accrued depreciation that affect building structures are summarized as follows: • Curable physical deterioration • Incurable physical deterioration • Curable functional obsolescence • Incurable functional obsolescence • External obsolescence Depreciation resulting from incurable physical deterioration has been based upon an effective age -life technique, which is a straight line method. The depreciation was estimated after (1) conducting a physical interior and exterior inspection of the subject building, and (2) considering the effective age and remaining physical and economic life of the building improvements, based on the physical characteristics, as well as the immediate environmental influences, land values in the subject market, trends pertaining to industrial redevelopment, etc. Note that the remaining "life" of the subject building takes into consideration all of the factors which influence the remaining economic life, including the location of the subject property, land values in the subject vicinity, the current cost necessary to redevelop the subject site, the physical condition of the building and overall functional utility, the state of the current real estate market, plus the state of the local and national economy. The subject building was originally constructed in 1975±, having an actual age of approximately 44 years, however, the building was remodeled in 2008. Considering the below average condition of the subject building, the overall effective age of the subject building is estimated at 30 years. The remaining life, considering the present utility and contributory benefit to the land, is estimated at 20 years. The indicated overall depreciation attributable to the subject building, therefore, is 60% (30/50). R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-22 VALUATION ANALYSIS (Continued) COST APPROACH: (Continued) Cost Approach Analysis: The Cost Approach Analysis applicable to the existing subject development is set forth following; the land value was estimated in the preceding portion of this section. Cost Analysis: Recreation Center Building: Direct and Certain Indirect Costs: Classrooms/offices/game rooms: 6,161 sf x $138.00 = Gymnasium: 6,232 sf x $110.00 = Subtotal: Additional indirect costs (10%): Total direct and indirect costs: Entrepreneurial Profit (15%): Total building cost new: Depreciation: Typical Age/Life: 60% Deprecaited value of building: Depreciated value of on-site improvements: Asphalt paving (driveways and pkg lot): 5,500 sf x $2.15 x 0.75* Concrete walkways: 4,950 sf x $8.00 x 0.75* Outdoor basketball court: 5,760 sf x $7.50 x 0.75* Trash enlcosure, conc. blk., 6' high: 20 If x $115 x 0.50* Concrete curbing: 375 If x $20.50 x 0.75* Subtotal: Contributory value of landscaping: * Reciprocal of depreciation rate. Total, depreciated value of on-site improvements: 850,218 685,520 $1,535,738 153,574 $1,689,312 253,397 $1,942,709 - 1,165,625 29,700 32,400 = 1,150 5,766 $ 77,885 15,000 $777,084 92,885 Total, depreciated value of building and on-site improvements: $869,969 Adjusted: $870,000 Land value (via Sales Comparison Approach): 60,000 Total market value of subject property: $930,000 R. P. LAU RAIN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-23 VALUATION ANALYSIS (Continued) MARKET RENT: The purpose of this appraisal is to estimate the market rent applicable to the subject property. Further, an allocation is included for the NMUSD portion of the site containing 2,560 square feet of land area, and improved with a portion of the existing basketball court. As noted, there is a lack of comparable recreation and/or community center properties in the open market in which a market rental rate can be derived via direct comparison. As such, in order to estimate the rental value of the subject property, it is necessary to apply an appropriate rate of return to the market value of the subject property (land and improvements). Rate of Return: In determining the appropriate rate of return to apply to the subject property, the appraiser considered (1) gross annual rates of return received by public agencies and large land -holding private corporations, (2) national capitalization rates and yield rates, obtained by large private real estate investment firms, and (3) range of capitalization rates for conventional properties in the immediate and general subject market area. Following is the gross annual return rates received by public agencies and large real estate corporations: City of Long Beach: 7-10% City of Los Angeles: 8-10% County of Los Angeles: 6-9% County of Orange: 8-10% Irvine Company: 9-10% Watson Land Company: 8-10% Newhall Land Company: 8-10% The rates in the above-mentioned table effectively represent those rates which the public agency seeks to obtain at their sites over a long-term holding period (20+ years). Sites located in areas of high demand and/or limited availability can achieve the higher rates (as quoted in the table above), while sites which are more "typical" or "common" are often leased at lower rates. Further, note that short term capitalization rates are generally 2% to 4% lower than the public agency rates of return. R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-24 VALUATION ANALYSIS (Continued) MARKET RENT: (Continued) As stated, in addition to the rates of return sought by public agencies and private real estate companies, a review was conducted of national yield rates (internal rates of return) obtained by private real estate investors, on a quarterly basis. The rates were obtained from the Price Waterhouse Cooper (PWC) Investor Survey. The overall capitalization rates, as well as the investment yield rates (also known as discount rates) were obtained from the PwC Investor Survey, First Quarter, 2019. The PWC is a quarterly publication based on a survey of real estate investors and developers. Said survey includes economic and financial information, plus rates produced by acquisitions and dispositions of large income-producing properties. Following is a summary of certain average yield rates, as obtained from Korpacz: Cap Rate Yield Rate Los Angeles Office Market: 5.98% 7.63% National Net Lease Market 6.77% 7.52% National Strip Shopping Center Market: 6.63% 7.73% Pacific Region Apartment Market: 4.54% 6.63% As noted, the overall yield rates (discount rates) are generally 1% to 2.5% greater than the capitalization rates (which are based on a single year income). Note, however, the yield rates are generally based on long term investments, and include the return on capital and appreciation of the underlying real estate investment. As such, in the subject case, the capitalization rate range is deemed more appropriate, which range (excluding apartments) is 5.98% to 6.77%. As will be demonstrated, however, capitalization rates for conventional commercial property (office and retail), in the Orange County and Newport Beach area, are generally at the lower end of the range, as follows: Cap Rate Orange County Office Market: 5.5%-5.7% Orange County Retail Market 5.20/o-5.4% Newport Beach Office Market: 5.3%-5.4% Newport Beach Retail Market: 4.6%-5.1% R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-25 VALUATION ANALYSIS (Continued) MARKET RENT: (Continued) Although the capitalization rates for conventional retail properties in Newport Beach and Orange County are at the lower end of the range, the subject Boys and Girls Club is an atypical special use property which, by nature, has a lower value and higher risk (i.e. higher rate of return). As such, the rate of return deemed applicable to the subject property, as applied to both the underlying land and the existing improvements, is estimated at 6.0%. Market Rent Conclusion — Property as a whole: Based on the foregoing analysis, the market rent deemed applicable to the subject property as a whole, allocated between the underlying land and improvements, is estimated at $55,800 per year, or $4,650 per month, as follows: Fair market rent - Property as a whole: Land Value: $60,000 Rate of Return: 6.0% Annual Rent, land only: $3,600 Monthly Rent, land only: $300 Value of building and site improvements: $870,000 Rate of Return: 6.0% Annual Rent, building and site improvements: $52,200 Monthly Rent, building and site improvements: $4,350 Reconciliation - property as a whole: Annual Rent, land only: $ 3,600 Annual Rent, building and site improvements: 52,200 Total Annual Rent: $ 55,800 Total Monthly Rent: $4,650 R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-26 VALUATION ANALYSIS (Continued) MARKET RENT: (Continued) Allocation of School District Portion: As stated, the appraisal study also sets forth the market rent for the allocated portion of the Newport Mesa Unified School District (NMUSD) site. Said NMUSD site contains 2,560 square feet of land area, valued at $1.50 per square foot ($3,840). The NMUSD site is improved with a portion of the basketball court, which site improvement is valued at $7.50 per square foot (cost new), and depreciated 25%. The rate of return applied to the allocated portion of the NMUSD is 6.0% (as part of the whole). Market Rent Conclusion — NMUSD Allocated Portion: Based on the foregoing analysis, the market rent deemed applicable to the NMUSD portion of the site, allocated between the underlying land and improvements, is estimated at $1,094 per year, or $91.17 per month, as follows: Allocation of Newport Mesa Unified School District portion: Land Value: 2,560 sf x $1.50 = $ 3,840 Rate of Return: 6.0% Annual Rent, land only: $230 Monthly Rent, land only: $19.17 Value of allocated basketball court improvements: 2,560 sf x $7.50 x 0.75* = 14,400 Rate of Return: 6.0% Annual Rent, land only: $864 Monthly Rent, land only: $72.00 Reconciliation - Allocation of School District portion: Annual Rent, land only: $ 230 Annual Rent, basketball court improvements: 864 Total Annual Rent: $ 1,094 Total Monthly Rent: $91.17 R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-27 VALUATION ANALYSIS (Continued) FINAL ESTIMATE OF RENTAL VALUE: Based on the foregoing analysis, the fair market rental rate applicable to the subject property, as of April 10, 2019, is summarized as follows: Property as a Whole: Annual Rent, land only: $ 3,600 Annual Rent, building and site improvements: 52,200 Total Annual Rent: $ 55,800 Total Monthly Rent: $4,650 Allocation of School District Portion: Annual Rent, land only: $ 230 Annual Rent, basketball court improvements: 864 Total Annual Rent: $ 1,094 Total Monthly Rent: $91.17 Said rental rates are based on a triple net (NNN) rental arrangement wherein the lessee (tenant) would be responsible for the payment of real estate taxes (if any), insurance premiums, utilities, maintenance, etc. Further, the applicable rental rate would be subject to annual adjustments, typically based on the Consumer Price Index (CPI), with re -adjustment to market levels at set intervals (every 3, 5 or 10 years). R. P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3-28 ADDENDA See Photo No. 1 on first page of Subject Property Description Section. PHOTO NO. 2: View looking southwesterly at the subject property from Vista Del Oro.. _f - W PHOTO NO. 3: View looking southeasterly at the rear elevation of the subject building and basketball court. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 5-1 PHOTO NO. 4: Interior view of main game room. PHOTO NO. 5: Interior view of typical classroom. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 5-2 PHOTO NO. 6 Interior view of gymnasium. PHOTO NO. 7: Interior view of hallway. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 5-3 PHOTO NO. 8: Interior view of kitchen area. PHOTO NO. 9: View looking southerly along Vista Del Oro from a point adjacent to the subject property. R. P. LAURAIN & ASSOCIATES APPRAISERS - ANALYSTS 5-4 m \TIONS SER R A I N H33vt-,IAIGS APPRAISERS -ANALYSTS BACKGROUND AND QUALIFICATIONS John P. Laurain, MAI, ASA Certified General Real Estate Appraiser California Certification No. AG 025754 PRESIDENT; R. P. Laurain & Associates, Inc. 3353 Linden Avenue, Suite 200 Long Beach, California 90807 Office: (562) 426-0477 - Fax: (562) 988-2927 rpla@rplaurain.com PROFESSIONAL ORGANIZATION AFFILIATIONS; The Appraisal Institute MAI Designated Member American Society of Appraisers Senior member; hold professional endorsement and designation "ASA" in urban real estate. American Arbitration Association Associate arbitrator in title insurance matter. Certified General Real Estate Appraiser by the Office of Real Estate Appraisers, State of California. Certification No. AG 025754. APPRAISAL BACKGROUND; Real estate appraisal and valuation consultation services conducted for public purposes include eminent domain studies, street widening and grade separation (bridge) projects, public school and university expansion projects, relocation studies, housing and public loan programs, Navy housing, senior housing, public bond measures, leasing of publicly -owned properties, Quimby Act park fee studies, Fair Political Practices Commission analyses, budgetary studies, and transfers (exchanges) of properties between public agencies. Private real estate appraisal services have been conducted for lending institutions, insurance companies, attorneys, estates for tax and donation purposes, private subdivision development studies, and other private uses. R . P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS 1 BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL BACKGROUND: (Continued) Residential Property: Residential properties appraised include single family, condominiums, own - your -own, townhouse, low and medium density multiple family, 100+ unit apartment complexes, waterfront properties, boat docks, mobile home parks, vacant single-family lot and acreage parcels, and low to high density vacant land parcels. Commercial and Industrial Property: Commercial property appraisal studies have included single and multi -tenant retail, strip centers, shopping centers, low-rise and high-rise office buildings, medical offices, restaurants and fast-food developments, nightclubs, con- venience stores, theaters, automobile repair and service facilities, service stations, truck fueling and washing stations, car wash facilities, automobile sales, mixed-use properties including single resident occupancy (SRO) developments, as well as hotel and motel properties, and vacant land. Industrial property appraisals have included warehouses, light and heavy manufacturing, distribution and transit facilities, food processing, cold storage, lumber yards, recycling centers, open storage, vacant land, remnant and landlocked parcels, properties encumbered with oil and water injection wells, sites with soil contamination and land fill properties. Special Purpose and Special Use Properties: Appraisal services and valuation studies of public, quasi -public, special use, and nonprofit facilities include, among others, seaport properties, airport properties (FBO, hangars, warehouse, office, land, etc.), submerged land, river rights-of- way, reservoirs, agricultural land, conservation/mitigation and wetland properties, utility and railroad rights-of-way, flood control channels, city hall buildings and civic center complexes, courthouses, libraries, fire and police stations, post offices, public parking structures, parks, public and private schools, adult learning centers, athletic facilities and gyms, bowling alleys, tennis centers, youth homes, after school facilities, daycare facilities, hospitals, skilled nursing facilities, churches, meeting halls and veteran facilities. Valuation Methodologies: In addition to the three conventional valuation methods (Sales Comparison Approach, Cost -Summation Approach, and Income Capitalization Approach), valuation methodologies have included discounted cash flow analyses, leased fee, and leasehold analyses, absorption discounts, deferred maintenance, cost - to -cure, bonus value, excess rent, across -the -fence, value -in -use, fractional interests, hypothetical valuations, and reuse studies. _ R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2 BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL BACKGROUND: (Continued) Property interests appraised for eminent domain purposes include full and partial takings, as well as severance damage and project benefit studies. Valuation of various types of easements have included permanent surface, street, temporary construction, slope, utility, pipeline and subsurface, aerial, bridge structure, signal light, exclusive and nonexclusive surface rights, multi- layered, battered pilings, tie -back, railroad, drainage ditch, and flood control easements. Clients: Real estate research, analysis and appraisal services performed on projects for the following public agencies and private corporations while associated with R. P. Laurain & Associates, Inc., since 1986: Cities: City of Alhambra City of Artesia City of Azusa City of Baldwin Park City of Bell City of Bell Gardens City of Bellflower City of Buena Park City of Burbank City of Carson City of Cathedral City City of Chino Hills City of Compton City of Covina City of Cudahy City of Cypress City of Diamond Bar City of Downey City of EI Monte City of EI Segundo City of Glendale City of Hawaiian Gardens City of Huntington Beach City of Huntington Park City of Industry City of Irwindale City of La Mirada City of Lawndale City of Long Beach City of Los Alamitos City of Los Angeles City of Monrovia City of Monterey Park City of Newport Beach City of Norwalk City of Ontario R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 3 City of Palmdale City of Palm Springs City of Paramount City of Pasadena City of Riverside City of Rosemead City of San Juan Capistrano City of Santa Ana City of Santa Fe Springs City of Seal Beach City of Signal Hill City of South EI Monte City of South Gate City of Tustin City of Upland City of West Hollywood City of Whittier BACKGROUND AND QUALIFICATIONS (Continued) APPRAISAL BACKGROUND: (Continued) Other Public and Quasi -Public Agencies: Other: Alameda Corridor Engineering Team Alameda Corridor Transportation Authority California High Speed Rail Authority Caltrans Castaic Lake Water Agency Hawthorne School District Kern County Long Beach Community College District Long Beach Airport Long Beach Unified School District Long Beach Water Department Los Angeles County Department of Beaches and Harbors Los Angeles County Chief Executive Office Los Angeles County Internal Services Department Los Angeles County Metropolitan Transportation Authority Los Angeles County Public Works Los Angeles Unified School District Los Angeles World Airports Lynwood Unified School District Orange County Transportation Authority Orange County Public Works Port of Los Angeles Port of Long Beach Riverside County Transportation Commission San Bernardino County Southern California Edison State of California, Santa Monica Mountains Conservancy U. S. Department of the Navy U. S. Postal Service Various attorneys, corporations, lending institutions, and private individuals. Gold Coast Appraisals, Inc.: Associate appraiser, as independent contractor, during portions of 1991 and 1992, specializing in appraisal of single family residential through four -unit residential properties. _ R . P . LAURA IN & A S S O C I A T E S APPRAISERS - ANALYSTS 2 BACKGROUND AND QUALIFICATIONS (Continued) EXPERT WITNESS; Qualified as an expert witness in the Los Angeles County Superior Court, Central District. Qualified as an expert witness Orange County Superior Court. Qualified as an expert witness in an arbitration matter before Judicial Arbitration and Mediation Services in the Counties of Los Angeles and Orange. Provided testimony as an expert witness in conjunction with eminent domain matters before the San Bernardino and Riverside County Superior Courts. ACADEMIC BACKGROUND: Cypress Community College - Basic curriculum. Long Beach Community College - Basic curriculum. Real estate and related courses taken through and at various Community Colleges, Universities, the Appraisal Institute, and business schools, in accordance with the Continuing Education Requirements of the State of California, as follows: Fundamentals of Real Estate Appraisal Appraisal Principles and Techniques California Real Estate Principles Real Estate Appraisal: Residential Principles of Economics California Real Estate Economics Basic Income Capitalization Approach Advanced Income Capitalization Approach Advanced Market Analysis and Highest & Best Use Advanced Applications Advanced Concepts and Case Studies Real Estate Escrow California Real Estate Law Uniform Standards of Professional Appraisal Practice, Part A Uniform Standards of Professional Appraisal Practice, Part B Federal and State Laws and Regulations Uniform Appraisal Standards for Federal Land Acquisitions (Yellow Book) Valuation of Conservation Easements R . P . LAURA IN _ & A S S O C I A T E S APPRAISERS - ANALYSTS 5 ATTACHMENT C REAL PROPERTY INVENTORY OF BELOW FAIR MARKET VALUE RENT Inventory of Agreements (Rent < Fair Market Value) Site # APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Estimated Annual FMV Rent Notes Sailing lessons and rides for disabled, including veterans. Volunteers from TS - Tidelands and Submerged Lands, Slip Rental Agreement 20 foot slip, FY19-20 $24.64 per foot per 1 050-210-02 Balboa Yacht Basin - Slip B2 829 Harbor Island Drive Sailing Fascination Yes Friends of Oasis. Water 20 foot slip 04/09/2013 - 04/09/2023 $1.00 $5,913.60 month Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Street -end parks, exclusive use by HOA Using Kiley appraisal of slough parcel members, with sidewalks for public access Lease value is $3.99/sf, @ 6% return = 2 423-255-02 Lido Isle Street End Parks Street Ends - Lido Island Lido Isle Community Association Yes to tidelands. PR - Parks and Recreation 116,566 sf 4/1/2000 - 3/31/2025 $0.00 Range $10,490.94 - $27,975.84 $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Entryway landscaping, streets, sidewalks, Using Kiley appraisal of slough parcel parkways, beaches, tennis courts and PR - Parks and Recreation. OS - Open Lease value is $3.99/sf, @ 6% return = 3 050-221-02 Beacon Bay Common Areas 1 Beacon Bay (approximate) Beacon Bay Community Association Yes common parking. Space. 196,078 sf 02/08/2005 - 07/01/2044 $0.00 Range $17,647.02 - $47,058.72 $0.24/sf/year. January 2017, General Commercial property on PCH, appraised land value as if vacant $210 sf, @ 6% return = $88,099.20 Comparable locations listed for lease on Costar: Recreational and Marine Commercial on CM - Recreational and Marine Lease Bayside Drive at $51-63 sf/year for office 4 117-801-10 Lower Castaways Park 100 Dover Drive (portion of parcel) Newport Outrigger Canoe Club Yes Canoe storage. Commercial, PC37 Castaways Marina 6,992 sf Automatic Renewal -1 year term $2,400 $88,099.20 space. CM - Recreational and Marine Lease S 117-801-10 Lower Castaways Park 100 Dover Drive (portion of parcel) (Pending) Castaways Outrigger Canoe Club Yes Canoe storage. Commercial, PC37 Castaways Marina 2,613 sf Automatic Renewal -1 year term $2,400 March 2014, Public Facilities property in West Newport (less than 250 feet from property) appraised land value as if vacant $80 sf, @ 6% return = $63,336 License Agreement 2017 sale at $6,850,000 for 34,960 A PCHS Facilities LLC (Pacifica Christian High 09/26/2014-09/26/2024 $195.94/sf. $196 x 12,707 = $2,490,572 @ 5 424-401-11 15th Street Extension at 1499 Monrovia 1499 Monrovia School) No Site access and parking. RM - Multiple -Unit Residential 13,195 sf Optional extension to 2034 $0.00 $63,336 6% return = $149,434 January 2017, General Commercial Automobile dealership and ancillary uses, property on PCH, appraised land value as subject to SLURS, which prohibits if vacant $210 sf, @ 6% return = construction of a building. Encroachment $1,420,876.80 Agreement for 66,085 sf portion of Office Airport on Quail and Campus Bayview Way right-of-way used as Lease $23.40 sf/year for light industrial building. parking, shuttle stop, and staging for no CG - General Commercial, PC42 San Diego 05/20/1996 - 5/20/2046 General Commercial on PCH in Mariner's 6 442-071-22 3300 Jamboree Rd 3300 Jamboree Rd Fletcher Jones Motor Cars, Inc. No fee. Creek North 112,768 sf Optional extension to 2066 $1.00 $1,420,876 Mile $66-81 sf/year for retail building. Educational and research programs and exhibits. Water Quality Lab to be maintained by County of Orange. City manages and performs regular maintenance and janitorial work, and Using Kiley appraisal of slough parcel holds policies of insurance for the value is $3.99/sf, @ 6% return = property. UCI to provide 1/3 of annual $0.24/sf/year. cost to maintain common parking area. Using BGC appraisal, value for land Multiple Agencies - City of Newport Beach, Capital projects and improvements to be Master Lease Agreement $1.50/sf, @ 6% return = $0.09/sf/year, State of California, County of Orange, planned and paid for by all agencies Land - 95,903 sf 01/01/2008-01/01/2033 Land - Range $8,631.27 - $23,016.72 and value for building $70.20/sf, at 6% 7 440-132-42 / 440 Back Bay Science Center 600 Shellmaker Road University of California at Irvine Public Agencies pursuant to Facilities Working Group. State tidelands, no General Plan or Zoning Building -12,409 sf Optional extension to 2048 $0.00 Building - $52,241.89 return = $4.21/sf/year. Inventory of Agreements (Rent < Fair Market Value) Site # APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Estimated Annual FMV Rent Notes Comparable properties for lease, as listed on Costar: Mixed Use - Water Related in Lido Marina Manage and operate a non-profit angling Village at $31-38 sf/year club to further the purpose of rod and reel Mixed Use - Visitor Serving in Balboa fishing, fish conservation, and goodwill of Village at $43.33 sf/year up to $63 sf/year persons in the fishing industry. Must for restaurant include hosting and promoting of civic, Commercial Visitor -Serving on Newport recreational, and educational programs, Boulevard (not waterfront) at $47.40 and make services, programs, and facilities Lease Range ($31/sf) $110,236 - ($47.40/sf) sf/year 8 048-133-16 Balboa Angling Club 200 A Street, Balboa Balboa Angling Club Yes available to public at cost. CV - Commercial Visitor -Serving 3,556 sf 5/10/1999 - 5/10/2024 $0.00 $168,554.40 Existing lease - Manage and operate a boys' and girls' club to instruct children of all ages in athletics, handicrafts and sportsmanship. All services, programs and Per appraisal - land rent $3,600/year for facilities shall be made available to the Land - 41,500 sf Lease 41,500 sf, building $52,200/year for 9 440-161-01 Boys & Girls Club of Harbor Area 2555 Vista Del Oro Boys' and Girls' Club of the Harbor Area Yes public on fair and reasonable terms. PR - Parks and Recreation Building - 12,393 sf 6/22/1998-6/30/2023 $0.00 $55,800.00 12,393 sf. 6% return. Rick Heil, DBA Corona del Mar Certified Park and public parking lot, no General License Agreement $120 sf land value, $2,330,280, @ 6% 10 No APN Corona del Mar Farmers' Market Bayside Park Parking Lots Farmers' Market Yes Operation of a certified farmers' market. Plan or Zoning 19,416 sf 05/13/2014-05/12/2024 $3,974.28 $139,816.80 return. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Lockers for storage of fishing gear and Using Kiley appraisal of slough parcel equipment, and stalls for wholesale fish Land - 5,878 sf Permit Land - Range $529.02 - $1,410.72 value is $3.99/sf, @ 6% return = 11 047-300-01 Dory Fisherman's Fleet 2111 West Ocean Front (approximate) Dory Fisherman's Fleet No market, open to the public. PR - Parks and Recreation Building- 2,110 sf 11/23/2018- 11/23/2028 $0.00 Building -$8,883.10 $0.24/sf/year. Construction, operation and maintenance of a Girl Scout program facility used for troop meetings, other youth group Using BGC appraisal, value for land meetings, and overnight stays. Use will $1.50/sf, @ 6% return = $0.09/sf/year. provide experiential learning activities that Using Kiley appraisal of slough parcel emphasize the environment, conservation Lease value is $3.99/sf, @ 6% return = 12 047-190-09 Girl Scout Council of Orange County 1700 West Balboa Boulevard Girl Scout Council of Orange County Yes and sustainability. PR - Parks and Recreation, Marina Park 49,594 sf 06/27/2013 - 06/27/2063 $1.00 Range - $4,463.46 - $11,902.56 $0.24/sf/year. [Lot at Central Ave - $1.60/hour, Sam to 6pm, daily, 2hour max, 25 spaces] FY19 Revenue - $54,397 = 37.3% utilization ($400/day, $146,000/year, $54,397/146,000)] [1 parking space = 143sf. 27739sf/143=194 parking spaces] [Market hours Ilam to 7pm, 8 hours spaces x ($1.60/hr x 8 Lido Marina Village Certified Farmers' Public Right -of -Way, no General Plan or License Agreement hours=$12.80)=$2,483.20/day or 13 423-123-03 Lido Marina Village 3450 Via Oporto (approximate) Market No Operation of a certified farmers' market. Zoning 27,739 sf 06/25/2019 - 06/24/2024 $4,200 $48,164.15 $129,126.40/year] [Bayside Lot - $2.30/hour, 8am to 6pm, daily, 211 spaces] FY19 Revenue - $434,309 = 24.5% utilization (2.30x10x211x365=$1,771,345)] [7110/143=50 parking spaces][Market hours 7am-4pm, 9 hours --50 spaces x Sprouts of Promise Foundation - Farmers' Public Right -of -Way, no General Plan or License Agreement ($2.30/hrx9hours=$20.70)=$1,035/day or 14 047-300-01 McFadden Square Plaza 1 Newport Pier (approximate) Market Yes Operation of a certified farmers' market. Zoning 7,110 sf 09/13/2015 - 09/13/2024 $3,929.52 $13,185.90 $53,820/year] Lease Recreational use of beach, for exclusive 08/12/1969 - Automatic Renewal - Using residential pier rates of $0.52 per 15 048-301-07 "N" Street Beach 2144-2204 Balboa Blvd E Balboa Peninsula Point Association Yes use by members of association. PR - Parks and Recreation 30,092 sf 1 year term $0.00 $15,647.84 square foot per year. Inventory of Agreements (Rent < Fair Market Value) Site # APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Facilities to promote sports involving human -powered watercraft, including boat storage, multi-purpose area and meeting room, weight training room, small offices for conduct and operation of facility, locker rooms, and such other facilities incidental to the operation including a bulkhead, low-lying docks, landscape, and appropriate public parking, restroom facilities, and access to the Land -173,804 sf Lease 16 117-381-06 Newport Aquatic Center 1 Whitecliffs Drive Newport Aquatic Center Yes beach. PR - Parks and Recreation Building -18,228 sf 10/27/1998-10/27/2023 $0.00 Playground area for use by children participating in activites of the public school, and for use by the public for park Newport Elementary School Playfield and pleasure purposes when not being Lease 17 047-290-03 (NMUSD) 1327 Ocean Front W Newport Mesa Unified School District Public Agencies used by the school. PR - Parks and Recreation 151,676 sf 02/10/2015 - 02/10/2065 $0.00 Parking facilities with shared use by the City and Elks, with public parking over the property from 6am to 6pm daily, and parking reserved for the Elks from 6pm to 6am, daily. Option for exclusive use by Elks over a 24-hour period, up to six times Lease 18 423-123-02 Newport Harbor Elks Lot 3456 Via Oporto Newport Harbor Elks, Lodge 1767 Yes per calendar year, for special events. PF- Public Facilities 7,208 sf 01/01/2007 - 12/31/2021 $0.00 Operate and maintain a community theater program, with necessary theatrical stage lighting and sound equipment. The program shall offer not less than four theatrical productions during each year, that shall be open to the public at a reasonable admission price, and shall include a variety of theatrical, cultural or artistic productions. The facilitiy may also be used for community meetings conducted by and/or on behalf of Management Agreement community organizations that will benefit 05/01/2001- 04/30/2011, two 5 - Friends of the Newport Theatre Arts and serve the interests of nearby Land - 70,356 sf year extensions 19 425-471-44 Newport Theatre Arts Center 2501 Cliff Drive Center Yes residents. PR - Parks and Recreation Building - 7,947 sf Automatic Renewal -1 year term $0.00 North Star Beach - IMUA Outrigger Canoe Permit 20 No APN Club 1 Whitecliffs Drive (approximate) Imua Outrigger Canoe Club Yes Canoe storage. PR - Parks and Recreation 15,685 sf Automatic Renewal -1 year term $0.00 Option to ground lease the City's public parking lot, to construct a new multi-level parking structure. New structure to include public parking, and parking for use Option to Ground Lease by tenant in operation of an expanded Agreement Initial term -$2,500, or experiential ocean literacy center open to PF - Public Facilities, with Balboa Village 11/25/2014 - 12/31/2021, $357.14/year, 21 048-116-06 Palm Street Lot 600 East Balboa Boulevard Discovery Science Center Orange County Yes the general public on adjacent property. Parking Management Overlay District 33,858 sf Three 1 -year extensions available Each option $2,500/year Portion of park property devoted to the sport of lawn bowling, including a clubhouse, bowling greeens, and other facilities and improvements to be operated for the benefit of its members, the City, and its citizens. When not in use by its members, the clubhouse is available to civic, cultural and educational groups San Joaquin Hills Park & Lawn Bowling within the City. Public restrooms are also PR - Parks and Recreation, PC13 Jasmine Land - 88,242 sf Agreement 22 458-022-06 Center 1550 Crown Drive North Newport Harbor Lawn Bowling Association Yes available on the property. Creek Building - 3,200 sf 07/01/1998 - 06/30/2023 $0.00 Estimated Annual FMV Rent I Notes Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $15,642.36 - $41,712.96 and value for building $70.20/sf, at 6% Building -$76,739.88 return = $4.21/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = FY19 Revenue for parking lot - $54,397. 198.50 Shared use at 12 hours. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $6,332.04 - $16,885.44 and value for building $70.20/sf, at 6% Building $33,456.87 return = $4.21/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = FY19 Revenue for parking lot. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $7,941.78 - $21,178.08 and value for building $70.20/sf, at 6% Building $13,472 return = $4.21/sf/year. SITE 1 Sailing Fascination Balboa Yacht Basin — Slip B2 829 Harbor Island Drive 20 foot slip Page 11 SITE 2 Lido Isle Street End Parks 116,566 sf A Page 12 SITE 3 Beacon Bay Common Areas Beacon Bay Community Association 1 Beacon Bay (approximate) 196,078 sf Property SF LOT A 10,776 LOT B 13,363 LOT C 8,345 LOT D 12,039 LOT E 7,707 LOT F 11,056 LOT G 6,589 LOT H 38,772 LOT 1 29,123 LOT J 8,340 LOT 62 20,039 BULKHEAD 29,551 Amendment 1 378 TOTAL 196,078 Page 13 SITE 4 Newport Outrigger Canoe Club 100 Dover Drive 6,992 sf Page 14 SITE 5 15th Street Extension at 1499 Monrovia Pacific Christian High School Facilities 1499 Monrovia 13,195 sf Page 15 F � { SITE 6 Fletcher Jones Fletcher Jones Motor Cars, Inc. 3300 Jamboree Rd 112,768 sf C. 01 " ''JF -, 40/ � L lj� Oft Lil Page 16 SITE 7 Back Bay Science Center 600 Shellmaker Road 95,903 sf Page 17 SITE 8 Balboa Angling Club 200 A St 3,556 sf Page 18 SITE 9 Boys & Girls Club of the Harbor Area 2555 Vista Del Oro 41,500 sf Page 19 SITE 10 Corona Del Mar Farmer's Market Bayside Park Parking Lots 19,416 sf ti 1�. 4t 31 d1 Page 110 SITE 11 Dory Fishermen's Fleet 2111 West Ocean Front (approximate) 5,878 sf 40 Page 111 f .200 SITE 12 Girl Scout Council of Orange County 1700 West Balboa Boulevard 49,594 sf 5 0- +'r► -s -s ti .+ Page 112 SITE 13 Lido Marina Village Lido Marina Certified Farmers' Market 3450 Via Oporto (approximate) 27,739 sf Page 113 0 f r� SITE 14 McFadden Square Plaza Sprouts of Promise Foundation Farmers' Market 1 Newport Pier (approximate) 7,110 sf Page 114 SITE 15 "N" Street Beach Balboa Peninsula Point Association 2144-2204 Balboa Blvd E 30,092 sf BALBOA B1 Vl] f � t r Page 115 SITE 16 Newport Aquatic Center 1 Whitecliffs Drive 173,804 sf e� 41� Th, r Page 116 SITE 17 Newport Elementary School Playfield Newport Mesa Unified School District 1327 Ocean Front W 151,675.92 sf Q '010 -NAW' n or i _r V-Ien entarv, or- : } � `J Aev R• I � � I � ' J r Page 117 SITE 18 Newport Harbor Elks Lot Newport Harbor Elks, Lodge 1767 3456 Via Oporto 7,208 sf Page 118 SITE 19 Newport Theatre Arts Center Friends of the Newport Theatre Arts Center 2501 Cliff Drive 70,356 sf Page 119 e SITE 20 Imua Outrigger Canoe Club North Star Beach 1 Whitecliffs Drive (approximate) 15,685 sf Page 120 SITE 21 Palm Street Lot Discovery Science Center Orange County 600 East Balboa Blvd 33,858 sf Page 121 -71 SITE 22 San Joaquin Hills Park & Lawn Bowling Center Newport Harbor Lawn Bowling Association 1550 Crown Drive North 88,242 sf W11 Page 122 Item No. 5A1 Use of City Property at Less Than Fair Market Value Additional Materials Received October 10, 2019 Inventory of Agreements (Rent < Fair Market Value) Site a APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Estimated Annual FMV Rent Notes Sailing lessons and rides for disabled, including veterans. Volunteers from TS - Tidelands and Submerged Lands, Slip Rental Agreement 20 foot slip, FY19-20 $24.64 per foot per 1 050-210-02 Balboa Yacht Basin - Slip B2 829 Harbor Island Drive Sailing Fascination Yes Friends of Oasis. Water 20 foot slip 04/09/2013 - 04/09/2023 $1.00 $5,913.60 month Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Street -end parks, exclusive use by HOA Using Kiley appraisal of slough parcel members, with sidewalks for public access Lease value is $3.99/sf, @ 6% return = 2 423-255-02 Lido Isle Street End Parks Street Ends - Lido Island Lido Isle Community Association Yes to tidelands. PR - Parks and Recreation 116,566 sf 4/1/2000 - 3/31/2025 $0.00 Range $10,490.94 - $27,975.84 $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Entryway landscaping, streets, sidewalks, Using Kiley appraisal of slough parcel parkways, beaches, tennis courts and PR - Parks and Recreation. OS - Open Lease value is $3.99/sf, @ 6% return = 3 050-221-02 Beacon Bay Common Areas 1 Beacon Bay (approximate) Beacon Bay Community Association Yes common parking. Space. 196,078 sf 02/08/2005 - 07/01/2044 $0.00 Range $17,647.02 - $47,058.72 $0.24/sf/year. January 2017, General Commercial property on PCH, appraised land value as if vacant $210 sf, @ 6% return = $88,099.20 Comparable locations listed for lease on Costar: Recreational and Marine Commercial on CM - Recreational and Marine Lease Bayside Drive at $51-63 sf/year for office 4 117-801-10 Lower Castaways Park 100 Dover Drive (portion of parcel) Newport Outrigger Canoe Club Yes Canoe storage. Commercial, PC37 Castaways Marina 6,992 sf Automatic Renewal - 1 year term $2,400 $88,099.20 space. March 2014, Public Facilities property in West Newport (less than 250 feet from property) appraised land value as if vacant $80 sf, @ 6% return = $63,336 License Agreement 2017 sale at $6,850,000 for 34,960 sf, PCHS Facilities LLC (Pacifica Christian High 09/26/2014-09/26/2024 $195.94/sf. $196 x 12,707 = $2,490,572 @ 5 424-401-11 15th Street Extension at 1499 Monrovia 1499 Monrovia School) No Site access and parking. RM - Multiple -Unit Residential 13,195 sf Optional extension to 2034 $0.00 $63,336 6% return = $149,434 January 2017, General Commercial Automobile dealership and ancillary uses, property on PCH, appraised land value as subject to SLURS, which prohibits if vacant $210 sf, @ 6% return = construction of a building. Encroachment $1,420,876.80 Agreement for 66,085 sf portion of Office Airport on Quail and Campus Bayview Way right-of-way used as Lease $23.40 sf/year for light industrial building. parking, shuttle stop, and staging for no CG - General Commercial, PC42 San Diego 05/20/1996 - 5/20/2046 General Commercial on PCH in Mariner's 6 442-071-22 3300 Jamboree Rd 3300 Jamboree Rd FletcherJones Motor Cars, Inc. No fee. Creek North 112,768 sf Optional extension to 2066 $1.00 $1,420,876 Mile $66-81 sf/year for retail building. Educational and research programs and exhibits. Water Quality Lab to be maintained by County of Orange. City manages and performs regular maintenance and janitorial work, and Using Kiley appraisal of slough parcel holds policies of insurance for the value is $3.99/sf, @ 6% return = property. UCI to provide 1/3 of annual $0.24/sf/year. cost to maintain common parking area. Using BGC appraisal, value for land Multiple Agencies - City of Newport Beach, Capital projects and improvements to be Master Lease Agreement $1.50/sf, @ 6% return = $0.09/sf/year, State of California, County of Orange, planned and paid for by all agencies Land - 95,903 sf 01/01/2008-01/01/2033 Land - Range $8,631.27 - $23,016.72 and value for building $70.20/sf, at 6% 7 440-132-42 / 440 Back Bay Science Center 600 Shellmaker Road University of California at Irvine Public Agencies pursuant to Facilities Working Group. State tidelands, no General Plan or Zoning Building -12,409 sf Optional extension to 2048 $0.00 Building - $52,241.89 return = $4.21/sf/year. Inventory of Agreements (Rent < Fair Market Value) Site R APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Estimated Annual FMV Rent Notes Comparable properties for lease, as listed on Costar: Mixed Use - Water Related in Lido Marina Manage and operate a non-profit angling Village at $31-38 sf/year club to further the purpose of rod and reel Mixed Use - Visitor Serving in Balboa fishing, fish conservation, and goodwill of Village at $43.33 sf/year up to $63 sf/year persons in the fishing industry. Must for restaurant include hosting and promoting of civic, Commercial Visitor -Serving on Newport recreational, and educational programs, Boulevard (not waterfront) at $47.40 and make services, programs, and facilities Lease Range ($31/sf) $110,236 - ($47.40/sf) sf/year 8 048-133-16 Balboa Angling Club 200 A Street, Balboa Balboa Angling Club Yes available to public at cost. CV - Commercial Visitor -Serving 3,556 sf 5/10/1999 - 5/10/2024 $0.00 $168,554.40 Existing lease - Manage and operate a boys' and girls' club to instruct children of all ages in athletics, handicrafts and sportsmanship. All services, programs and Per appraisal - land rent $3,600/year for facilities shall be made available to the Land - 41,500 sf Lease 41,500 sf, building $52,200/year for 9 440-161-01 Boys & Girls Club of Harbor Area 2555 Vista Del Oro Boys' and Girls' Club of the Harbor Area Yes public on fair and reasonable terms. PR - Parks and Recreation Building - 12,393 sf 6/22/1998-6/30/2023 $0.00 $55,800.00 12,393 sf. 6% return. Rick Heil, DBA Corona del Mar Certified Park and public parking lot, no General License Agreement $120 sf land value, $2,330,280, @ 6% 10 No APN Corona del Mar Farmers' Market Bayside Park Parking Lots Farmers' Market Yes Operation of a certified farmers' market. Plan or Zoning 19,416 sf 05/13/2014-05/12/2024 $3,974.28 $139,816.80 return. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Lockers for storage of fishing gear and Using Kiley appraisal of slough parcel equipment, and stalls for wholesale fish Land - 5,878 sf Permit Land - Range $529.02 - $1,410.72 value is $3.99/sf, @ 6% return = 11 047-300-01 Dory Fisherman's Fleet 2111 West Ocean Front (approximate) Dory Fisherman's Fleet No market, open to the public. PR - Parks and Recreation Building- 2,110 sf 11/23/2018- 11/23/2028 $0.00 Building -$8,883.10 $0.24/sf/year. Construction, operation and maintenance of a Girl Scout program facility used for troop meetings, other youth group Using BGC appraisal, value for land meetings, and overnight stays. Use will $1.50/sf, @ 6% return = $0.09/sf/year. provide experiential learning activities that Using Kiley appraisal of slough parcel emphasize the environment, conservation Lease value is $3.99/sf, @ 6% return = 12 047-190-09 Girl Scout Council of Orange County 1700 West Balboa Boulevard Girl Scout Council of Orange County Yes and sustainability. PR - Parks and Recreation, Marina Park 49,594 sf 06/27/2013 - 06/27/2063 $1.00 Range - $4,463.46 - $11,902.56 $0.24/sf/year. [Lot at Central Ave - $1.60/hour, Sam to 6pm, daily, 2hour max, 25 spaces] FY19 Revenue - $54,397 = 37.3% utilization ($400/day, $146,000/year, $54,397/146,000)] [1 parking space = 143sf. 27739sf/143=194 parking spaces] [Market hours Ilam to 7pm, 8 hours spaces x ($1.60/hr x 8 Lido Marina Village Certified Farmers' Public Right -of -Way, no General Plan or License Agreement hours=$12.80)=$2,483.20/day or 13 423-123-03 Lido Marina Village 3450 Via Oporto (approximate) Market No Operation of a certified farmers' market. Zoning 27,739 sf 06/25/2019 - 06/24/2024 $4,200 $48,164.15 $129,126.40/year] [Bayside Lot - $2.30/hour, 8am to 6pm, daily, 211 spaces] FY19 Revenue - $434,309 = 24.5% utilization (2.30x10x211x365=$1,771,345)] [7110/143=50 parking spaces][Market hours 7am-4pm, 9 hours --50 spaces x Sprouts of Promise Foundation - Farmers' Public Right -of -Way, no General Plan or License Agreement ($2.30/hrx9hours=$20.70)=$1,035/day or 14 047-300-01 McFadden Square Plaza 1 Newport Pier (approximate) Market Yes Operation of a certified farmers' market. Zoning 7,110 sf 09/13/2015 - 09/13/2024 $3,929.52 $13,185.90 $53,820/year] Lease Recreational use of beach, for exclusive 08/12/1969 - Automatic Renewal - Using residential pier rates of $0.52 per 15 048-301-07 "N" Street Beach 2144-2204 Balboa Blvd E Balboa Peninsula Point Association Yes use by members of association. PR - Parks and Recreation 30,092 sf 1 year term $0.00 $15,647.84 square foot per year. Inventory of Agreements (Rent < Fair Market Value) Site # APN Project Name Property Address Tenant Name Non -Profit Description of Use General Plan & Zoning Area Agreement/Term Current Payment $/year Facilities to promote sports involving human -powered watercraft, including boat storage, multi-purpose area and meeting room, weight training room, small offices for conduct and operation of facility, locker rooms, and such other facilities incidental to the operation including a bulkhead, low-lying docks, landscape, and appropriate public parking, restroom facilities, and access to the Land -173,804 sf Lease 16 117-381-06 Newport Aquatic Center 1 Whitecliffs Drive Newport Aquatic Center Yes beach. PR - Parks and Recreation Building -18,228 sf 10/27/1998-10/27/2023 $0.00 Playground area for use by children participating in activites of the public school, and for use by the public for park Newport Elementary School Playfield and pleasure purposes when not being Lease 17 047-290-03 (NMUSD) 1327 Ocean Front W Newport Mesa Unified School District Public Agencies used by the school. PR - Parks and Recreation 151,676 sf 02/10/2015 - 02/10/2065 $0.00 Parking facilities with shared use by the City and Elks, with public parking over the property from 6am to 6pm daily, and parking reserved for the Elks from 6pm to 6am, daily. Option for exclusive use by Elks over a 24-hour period, up to six times Lease 18 423-123-02 Newport Harbor Elks Lot 3456 Via Oporto Newport Harbor Elks, Lodge 1767 Yes per calendar year, for special events. PF- Public Facilities 7,208 sf 01/01/2007 - 12/31/2021 $0.00 Operate and maintain a community theater program, with necessary theatrical stage lighting and sound equipment. The program shall offer not less than four theatrical productions during each year, that shall be open to the public at a reasonable admission price, and shall include a variety of theatrical, cultural or artistic productions. The facilitiy may also be used for community meetings conducted by and/or on behalf of Management Agreement community organizations that will benefit 05/01/2001- 04/30/2011, two 5 - Friends of the Newport Theatre Arts and serve the interests of nearby Land - 70,356 sf year extensions 19 425-471-44 Newport Theatre Arts Center 2501 Cliff Drive Center Yes residents. PR - Parks and Recreation Building - 7,947 sf Automatic Renewal -1 year term $0.00 North Star Beach - IMUA Outrigger Canoe Permit 20 No APN Club 1 Whitecliffs Drive (approximate) Imua Outrigger Canoe Club Yes Canoe storage. PR - Parks and Recreation 15,685 sf Automatic Renewal -1 year term $0.00 Option to ground lease the City's public parking lot, to construct a new multi-level parking structure. New structure to include public parking, and parking for use Option to Ground Lease by tenant in operation of an expanded Agreement Initial term -$2,500, or experiential ocean literacy center open to PF - Public Facilities, with Balboa Village 11/25/2014 - 12/31/2021, $357.14/year, 21 048-116-06 Palm Street Lot 600 East Balboa Boulevard Discovery Science Center Orange County Yes the general public on adjacent property. Parking Management Overlay District 33,858 sf Three 1 -year extensions available Each option $2,500/year Portion of park property devoted to the sport of lawn bowling, including a clubhouse, bowling greeens, and other facilities and improvements to be operated for the benefit of its members, the City, and its citizens. When not in use by its members, the clubhouse is available to civic, cultural and educational groups San Joaquin Hills Park & Lawn Bowling within the City. Public restrooms are also PR - Parks and Recreation, PC13 Jasmine Land - 88,242 sf Agreement 22 458-022-06 Center 1550 Crown Drive North Newport Harbor Lawn Bowling Association Yes available on the property. Creek Building - 3,200 sf 07/01/1998 - 06/30/2023 $0.00 Estimated Annual FMV Rent I Notes Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $15,642.36 - $41,712.96 and value for building $70.20/sf, at 6% Building -$76,739.88 return = $4.21/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = FY19 Revenue for parking lot - $54,397. 198.50 Shared use at 12 hours. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $6,332.04 - $16,885.44 and value for building $70.20/sf, at 6% Building $33,456.87 return = $4.21/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = FY19 Revenue for parking lot. Using Kiley appraisal of slough parcel value is $3.99/sf, @ 6% return = $0.24/sf/year. Using BGC appraisal, value for land $1.50/sf, @ 6% return = $0.09/sf/year, Land - Range $7,941.78 - $21,178.08 and value for building $70.20/sf, at 6% Building $13,472 return = $4.21/sf/year. Item No. 5A2 10/10/2019 Use of City Property at Less Than Fair Market Value Staff Presentation October 10, 2019 Finance Committee October 10, 2019 Real Property at Below Fair Market Rent LL/Folli Community Development Department Real Property - Management City Council Policy F-7, Income and Other Property City Council Policy B-1, Park Fee Policy City Council Policy B-6, Newport Theatre Arts Center City Council Policy B-13, Public Use of City Facilities City Council Policy H-4, Dory Fishermen's Fleet 1 10/10/2019 Property - 3300 Jamboree Road Fletcher Jones Motor Cars, Inc. ► 112,768 square feet of land, 2.59 acres ► Zoned CG - General Commercial, PC42 San Diego Creek North ► Rent per agreement - $1.00/year�����` ► Estimated market rent - S1.4M/year 2 10/10/2019 Property - 2111 West Ocean Front Dory Fisherman's Fleet ► 5,878 square feet of land, 0.13 acres ► 2,110 square feet of building ► Zoned PR - Parks and Recreation ► Rent per agreement - $0.00/year ► Estimated market rent ► Land $529 - $1,410/year ► Building $8,883/year 3 10/10/2019 Property - 1327 Ocean Front W Newport Elementary School (NMUSD) ,z� eAC80q,�,Lv OCEAN pR0 Po.151,676 square feet of land, 3.48 acres LV ► Zoned PR - Parks and Recreation e n entrttY ► Rent per agreement - $0.00/year"FROM ► Estimated market rent - $13,650 - $36,402/year �1 4 10/10/2019 - ON OEM 0 MEN 10/10/2019 d� �M I— Questions? contact'. Lauren Wooding Whitlinger Real Property Administrator lwoodmaC newwrtbeachca.aov LtIFOR% 949-644-3236 Community Development Department