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2206002.SA Page 8 <br />19090.018.019 June 3, 2022 <br /> <br />II. COST OF THE GROUND LEASE TO THE AGENCY / FORMER REDEVELOPMENT <br />AGENCY <br />The costs incurred by the Agency and the Former Redevelopment Agency to implement the <br />Ground Lease are estimated as follows: <br />Property Acquisition Cost $1,911,000 <br />Property Management / Miscellaneous Costs 103,000 <br /> Total Agency Cost $2,014,000 <br /> <br />The Agency will ground lease the Agency Site to the Tenant for an Agency Base Rent of $4.11 <br />million. The Agency Base Rent will be repaid through residual receipts over the Ground Lease <br />Term, and any remaining balance will be due at the end of the Ground Lease Term. However, <br />given that residual receipts payments are completely dependent on the cash flow produced by <br />the Project over time, it is too speculative to predict the net present value of the payments that <br />will be applied to the Agency Base Rent. <br />III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT <br />THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN <br />Section 33433 requires the Agency to identify the value of the interests being conveyed at the <br />highest and best uses permitted under zoning in place on the Site. The valuation must be <br />based on the assumption that near-term development is required, but the valuation does not <br />take into consideration any extraordinary use, quality and/or income restrictions being imposed <br />on the development by the Agency. <br />An appraisal prepared by Kinetic Valuation Group on November 1, 2019 estimates the market <br />value of the Site at $6.45 million, or $65 per square foot of land area. Based on the 63,423 <br />square feet of land area attributed to the Agency Site, the market value of the Agency Site is <br />estimated at $4.11 million. <br />IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED <br />Keyser Marston Associates, Inc. (KMA), the Agency’s financial consultant, prepared a reuse <br />valuation analysis of the Project based on the financial terms and conditions imposed by the <br />Ground Lease and separate Agency Loan documents. The KMA analysis concluded that the <br />fair reuse value of the Site is negative $4.6 million. This means that the Site needs to be <br />conveyed at no cost plus $4.6 million in financial assistance needs to be provided to the Project <br />in order to make the scope of development required by the Ground Lease financially feasible. <br />Through separate loan agreements, the City proposes to provide $4.6 million in financial <br />assistance to the Project. <br />EXHIBIT 14