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Home My WebLink AboutItem 09_COUNCIL READING FILE_a_Agreement with 1042 Pacific StreetSTATE OF CALIFORNIA• DEPARTMENT OF TRANSPORTATION WAIVER VALUATION RW 7-15 (REV 10/2005) CONFIDENTIAL This document contains personal information and pursuant to Civil Code 1798.21 it shall be kept confidential in order to protect against unauthorized disclosure. Project: City of San Luis Obispo I Marsh Street Bridge Replacement Project Date of Report: October 19, 2019 Date of Value: October 1, 2019 Date of Inspection: October 18, 2019 APN: 002-443-017 Owner: 1042 Pacific Street, a California general partnership Property Address: 1042 Pacific Street, San Luis Obispo, CA 93401 Locale: San Luis Obispo Zone: Office (0) Present Use: Office (0) Best Use: Present Possible Hazard Waste (include underground tanks) ___ Yes _x_ None known or suspected Date Acquired: Over 5 years Total Property Area: 20,368 square feet Total Property Area: Full _x_ Part (include access rights _x_ Yes_ No) 3,243 TOTAL square feet (SF)± for a temporary non-exclusive access easement Waiver Valuation $9,800 PROJECT DESCRIPTION: The proposed project involves replacing the existing Marsh Street Bridge, which was originally built in 1909. The project is scheduled to run from roughly April through November 2020, conditions permitting. It involves the required temporary use of private property, including the subject property. Marsh Street will be temporarily closed near the location of the bridge. PARCEL DESCRIPTION: The full parcel is 20,368 SF and is improved with a 6,552 SF two-story office building, asphalt paved parking and landscaping. It is located in downtown San Luis Obispo and has approximately 130 feet of frontage on Pacific Street. The parcel has one driveway for access, located along Pacific Street. Along Pacific Street, there are Office-zoned properties to the east, west and south of the subject property. Although zoned Office, the three properties to the east of the subject are currently used as residences. Behind the subject property to the north, there are Downtown Commercial (C-D) zoned properties along Marsh Street. ANALYSIS FINDING: The City of San Luis Obispo seeks to acquire a 3,243 SF temporary non-exclusive access easement on the subject property for the Marsh Street Bridge Replacement Project. Since the City will be replacing the bridge, it will need to provide access during construction to the Dialysis Center parcel which is located north of the subject. This access easement will begin from the subject's driveway on Pacific Street and will extend through the subject's parking lot to the Dialysis Center parcel. Consequently, two parking spaces will be temporarily inaccessible, and a portion of the subject's fence will be removed in order to allow vehicles to enter and exit the parcel on which the Dialysis Center is located. The duration of the access easement will be for 14 months. APN: 002-443-017 (1042 Pacific Street) STATE OF CALIFORNIA• DEPARTMENT OF TRANSPORTATION WAIVER VALUATION RW 7-15 (REV 10/2005) This waiver valuation is subject to the following extraordinary assumption: While the larger parcel is improved with an office building, the project will not directly impact any building improvements. The value of the larger parcel has been estimated based on land value. The sales comparison approach using comparable sales to determine land value has been used to value the subject portion based on the larger parcel/subject property. Three comparable sales ranging from 7,000 SF to 11,300 SF were found in the San Luis Obispo area and are examined below: Comparable 1 is a 7,904 SF (net) square-shaped property located at 667 Marsh Street (APN: 003-521-009). This is a vacant corner parcel that is part of the Wells Fargo Parking lot. It sold in July of 2014 for $800,000, or $101.21/SF (net). The adjacent owner disputed the parking agreement, which resulted in the seller discounting the price. The property later resold in April of 2015 for $1,300,000, or $164.47/SF (net). This property is located roughly 0.3 miles from the subject and is zoned Downtown Commercial (C-D). Comparable 2 is a 11,300 ± SF rectangularly-shaped property located at 1135 Santa Rosa Street (APN: 002- 435-015). It sold in October of 2014 for $2,200,000. At the time of the sale, this property was improved with a building with a contributory value of $730,000, thereby attributing $1,470,000 to the land. As such, the land value in this sale equates to $130.09/SF. Since the sale, the building has been completely rebuilt. This property is located less than 0.05 miles from the subject and is zoned Downtown Commercial (C-D). Comparable 3 is a 7,000 square foot square-shaped property located at 1041 Mill Street (APN: 002-323-023). It sold in March of 2017 for $790,000, or $112.86/SF. Located at a mid-block location with a rear alley; no significant contributory improvement value. This vacant parcel established land only value. This property is located roughly 0.4 miles from the subject and is zoned Office (0). Because of location, zoning, and land value only sale, this is the most comparable sale to the subject parcel. There have been several potential-development properties sold within the past few years in downtown San Luis Obispo and market conditions have been strong and competitive. The above-mentioned comparable sales reflect a price range of $112.86 to $164.47 per SF for vacant properties and/or those with minimal contributory improvement value. After analyzing these sales, $113.00/SF is justified as fair compensation for land value and shall be used in this waiver valuation. Lastly, appraiser Todd Murphy conducted an investigation into current parking space rents in downtown San Luis Obispo and reports that space rents are ranging from $120 to $150 per space. This includes a parking lot on Monterey Street, plus another on Higuera Street. The current market rent for the subject parking lot is concluded to be $150 per space, per month. CALCULATION: Generally, long-term, good-quality, ground-leased properties are selling in the range of 4% to 5% annual rate of return. Based on a short-term rental arrangement, a somewhat higher rate of return of 6% is concluded in this case. However, because this temporary easement is "non-exclusive" and because there is no major impact (aside from the two temporarily inaccessible parking spaces, for which owner is compensated separately), the land is valued at 25% of the total rate of return. APN: 002-443-017 ( 1042 Pacific Street) STATE OF CALIFORNIA• DEPARTMENT OF TRANSPORTATION WAIVER VALUATION RW 7-15 (REV 10/2005) NON-EXCLUSIVE ACCESS EASEMENT: (3,243 SF -400 SF within Parking Spaces)= 2,843 SF X $113 X 6% annual rate of return X 25% (non-exclusive)= 402/month X 14 months PARKING SPACES: 2 parking spaces (approx . 400 SF) X $150 per space X 14 months= TOTAL JUST COMPENSATION: DAMAGES AND BENEFITS: None $5,628 $4,200 $9,828 $9,800 (rounded) CONSTRUCTION CONTRACT WORK : Fenc ing within easement area to be replaced by City in kind . At the owner's request, the City will install permanent bollards to protect the light pole and power pole near the fencing area . The City is to also post signs advising the public of "no creek or downtown access ." Date of Value : 10/1/19 Date of Report: 10/19/19 Attachments : Subject Photos (including aerial) Easement Locat ion Exhibit Assessor's Parcel Map Comparable Sales Summary Aerial of Comparable Sales Comparable Sales Photos APN : 002 -443-017 (1042 Pacific Street) SUBJECT PHOTOS Aerial View of subject’s driveway and parking lot from Pacific Street View of subject’s fencing area and parking spots affected by project View of subject’s parking lot with affected fencing and parking spots in background Easement Location Exhibit Subject’s Assessor’s Map Comparable Sales Summary No. Address City APN Sale Date Land Size (SF) Zoning Sale Price Price per SF 1. 667 Marsh Street, San Luis Obispo, CA 003-521-009 04/2015 7,904± (Net) C-D $1,300,000 $164.47 (Net) 2. 1135 Santa Rosa Street, San Luis Obispo, CA 002-435-015 10/2014 11,300± C-D $2,200,000 $130.09 3. 1041 Mill Street, San Luis Obispo, CA 002-323-023 03/2017 7,000 O $790,000 $112.86 SUBJECT 1042 Pacific Street, San Luis Obispo, CA 002-443-017 DOV 10/14/19 20,368 O NA NA Aerial of Comparable Sales Comparable Sales Photos Comp #1- 667 Marsh Street, San Luis Obispo, CA (APN: 003-521-009) Comp #2- 1135 Santa Rosa Street, San Luis Obispo, CA (APN: 002-435-015) Comp #3- 1041 Mill Street, San Luis Obispo, CA (APN: 002-323-023)