An Appraisal Report
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AN APPRAISAL REPORT of County Government Center Development - Chanate Campus A 75.03 Gross Acre Site Proposed For Development With Two Mixed-Use Projects 3313 Chanate Road Santa Rosa, CA 95404 DATE OF VALUE July 29, 2016 PREPARED FOR Marc McDonald Real Estate Manager, Sonoma County General Services Dept. County of Sonoma 2300 County Center Drive, Ste. A-211 Santa Rosa, CA 95403 (707) 565-3468 PREPARED BY Robert Horning Howard R. Levy, MAI, AI-GRS Ward Levy Appraisal Group, Inc. 533 Fifth Street, Suite 300 Santa Rosa, CA 95401 (707) 575-7778 533 Fifth Street, Suite 300 Santa Rosa, CA 95401 (707) 575-7778 [email protected] August 23, 2016 Marc McDonald Real Estate Manager, Sonoma County General Services Dept. County of Sonoma 2300 County Center Drive, Ste. A-211 Santa Rosa, CA 95403 RE: County Government Center Development - Chanate Campus A 75.03 Gross Acre Site Proposed For Development With Two Mixed-Use Projects 3313 Chanate Road Santa Rosa, CA 95404 Dear Mr. McDonald: As requested by you, we have conducted the required investigation, gathered the necessary data and made certain analyses that have enabled the formation of the following opinions of value: Appraisal Interest Opinion of Date of Value Premise Appraised Value As Is Fee Simple July 29, 2016 $7,150,000 Hypothetical Assuming Entitlements And Earthquake Fee Simple July 29, 2016 $30,640,000 Fault Trace Impacts Hypothetical As Proposed – 600 MFR/200 SFR/ Leased Fee July 29, 2016 $275,500,000 33,000 SF Commercial Hypothetical As Proposed – 300 MFR/100 SFR/ Leased Fee July 29, 2016 $149,000,000 33,000 SF Commercial This letter and related exhibits must remain attached to the report in order for the value opinions set forth to be considered valid. The appraisal that follows is a narrative appraisal report that sets forth the scope of the assignment, identification of the property, pertinent facts about the area and the subject property, comparable data, the results of the research and analyses and the reasoning leading to the conclusions set forth. 533 Fifth Street, Suite 300 Santa Rosa, CA 95401 (707) 575-7778 [email protected] The value opinions are subject to the Statement of Assumptions and Limiting Conditions and Certifications set forth in this report, as well as the following Extraordinary Assumptions and Hypothetical Conditions, the use of which might have affected the assignment results: Extraordinary Assumptions: No Preliminary Title Report was provided. The value opinions set forth in this appraisal report are subject to and conditioned upon the absence of any easements or encumbrances that would materially affect the subject's market value. The subject site is located within a special studies earthquake zone as shown on the Alquist Priolo map. The Alquist Priolo map, which was most recently updated in 1983, also shows that there are several fault traces affecting the subject site. The City of Santa Rosa prohibits any construction of new housing units within 50 feet of a fault trace. However, according to subsequent survey work conducted by Rutherford & Chekene, a San Francisco-based structural and geotechnical engineering firm, there are no fault traces affecting the subject site. At the request of the client, the appraisers assumed that the fault traces are accurately depicted on the Alquist Priolo map, thus reducing the site’s development capacity. For all of the “as improved” valuation scenarios, the unit mix, sizes and quality for the improved apartment and condominium units is assumed to be the same as those of The Overlook at Fountaingrove apartment complex at 200 Bicentennial Way, Santa Rosa, while the quality and tenant mix for the improved retail/office valuation scenario is assumed to be typical for the market. The appraisers were not provided with a comprehensive estimate for demolition costs, nor were we provided with detailed information regarding the scope of potential hazardous materials necessitating special abatement measures. The appraisers therefore had to project demolition costs without key information. The 'as is' value opinion set forth herein is subject to the accuracy of this cost estimate and is subject to review and possible revision upon the receipt of any conflicting information. The gross and developable site area figures for the subject property are taken from a site plan provided by the client in 2011 in conjunction with separate figures provided in 2014 for the subject's developable area assuming earthquake fault trace impacts. These figures appear reasonable but it is noted that they are estimates developed by County staff based on prior survey work by other consultants. The value opinions are subject to the accuracy of this information, 533 Fifth Street, Suite 300 Santa Rosa, CA 95401 (707) 575-7778 [email protected] and are subject to review and possible revision upon the receipt of any materially conflicting information. Hypothetical Conditions: The value opinion as vacant land with entitlements is based on the hypothetical condition that, as of the date of valuation, the existing improvements had been demolished and the subject had full entitlements for a mixed-use subdivision development to comprise 600 multi-family units, of which there will be 480 market rate units, 60 units that will be affordable to very low income households, and 60 units that will be rented with voucher subsidies, 200 for-sale residential condominiums, and a 33,000 square foot retail/office building that includes a 12,000 square foot grocery. The value opinions for the subject as improved are based on the hypothetical condition that, as of the date of valuation, the proposed improvements had been constructed in a workmanlike manner in accordance with the criteria provided by the client, and the subject improvements are at stabilized occupancy with the commercial space, market rate apartments and voucher subsidized apartments leased at market rents and the very low income units leased at their respective affordable rent limits. Respectfully submitted, Robert Horning State of California Certified General Real Property Appraiser OREA License Number AG028396 Expiration: October 18, 2017 Howard R. Levy, MAI, AI-GRS State of California Certified General Real Property Appraiser OREA License Number AG003852 Expiration: August 30, 2016 3313 Chanate Road, Santa Rosa TABLE OF CONTENTS OVERVIEW ................................................................................................................................... 1 SUMMARY OF SALIENT FACTS AND CONCLUSIONS ........................................................ 2 SUBJECT PROPERTY PHOTOGRAPHS .................................................................................... 9 SCOPE OF WORK ....................................................................................................................... 13 STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS ..................................... 17 DEFINITIONS .............................................................................................................................. 21 REGIONAL MAP ........................................................................................................................ 24 COUNTY MAP ............................................................................................................................ 25 CITY MAP.................................................................................................................................... 26 AREA ANALYSIS ....................................................................................................................... 27 MARKET ANALYSIS ................................................................................................................. 42 NEIGHBORHOOD MAP ............................................................................................................. 59 NEIGHBORHOOD ANALYSIS.................................................................................................. 60 LAND ANALYSIS ....................................................................................................................... 63 IMPROVEMENT DESCRIPTION .............................................................................................. 73 HIGHEST AND BEST USE ........................................................................................................ 81 APPRAISAL PROCESS .............................................................................................................. 87 MARKET VALUE AS IS ............................................................................................................ 90 HYPOTHETICAL MARKET VALUE OF SUBJECT SITE AS ENTITLED .......................... 103 HYPOTHETICAL MARKET VALUE AS IMPROVED - COST APPROACH ...................... 115 HYPOTHETICAL MARKET VALUE AS IMPROVED - SALES COMPARISON APPROACH ............................................................................................................................... 122 HYPOTHETICAL MARKET VALUE AS IMPROVED - INCOME APPROACH ................ 162 HYPOTHETICAL MARKET VALUE AS IMPROVED - RECONCILIATION AND FINAL VALUE CONCLUSIONS .......................................................................................................... 186 CERTIFICATION OF ROBERT A. HORNING ....................................................................... 188 CERTIFICATION OF HOWARD R. LEVY, MAI, AI-GRS .................................................... 189 QUALIFICATIONS OF ROBERT A. HORNING ...................................................................