Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 20 23-RBA-042
Comparable 5 is the July 2021 sale of an unentitled site in San Carlos for $173 per square foot of FAR / gross building area. Negative adjustment is warranted for market conditions due to interest rate increases and flood zone. This is more than offset by positive adjustment for status of entitlements, density- parking ($185.07), and improvements which will require demolition. A higher unit value is concluded based on this sale.
As shown on the adjustment grid, the comparables indicate an adjusted range of $259 to $342 per square foot of FAR / gross building area. The biggest adjustment is for density, mainly the cost of structured parking. Comparable 1 sold with a similar density, although a slightly higher density is proposed with use of the density bonus. That site is the closest in terms of proximity but differs due to the assemblage issue and the lack of entitlements.
The remaining comparables had higher densities and required significant adjustment for that factor. In considering the value of the subject property at base density, a unit value in the middle to low end of the adjusted range is concluded. A unit value of $300 per square foot of FAR is concluded at the base density which is toward the upper end of the unadjusted range. The indicated value at base density is as follows:
100,989 SF X $300 / SF = $30,296,700
Rounded Value Conclusion at Base Density: $30,300,000
C. Analysis and Land Value Conclusion – Bonus Density
Under this scenario, the property is valued assuming it is entitled at the proposed density of 228,081 square feet, or an FAR of 1.24. A new adjustment grid is shown on the table on the following page.
Similar adjustments are made to Comparable 1 with a downward adjustment for density – parking due to the requirement to add structured parking at the higher density. A negative density – other adjustment is also made for higher construction costs due to building height.
A lower unit value is concluded based on this sale.
Comparable 2 is adjusted slightly upward for density- parking, and no adjustment is made for density – other. Otherwise the adjustments are the same. A lower unit value is concluded.
Comparable 3 is adjusted up for density – parking and downward for density – other due to construction height. Otherwise the adjustments are the same. A higher unit value is concluded based on this sale.
Comparable 4 has a very small downward adjustment for density – parking. Otherwise the adjustments are the same with no adjustment made for density – other. A slightly lower unit value is concluded.
Resolution No. XXXX
Table 3 Page 20.1
Comparable Sales
Sale 1 Sale 2 Sale 3 Sale 4 Sale 5
Characteristics:
Address: 1 Casey Ct. 200 Twin Dolphin Dr. 1030 Brittan Ave. 210 Adrian Rd. 1021 Howard Ave.
City: Menlo Park Redwood City San Carlos Millbrae San Carlos Land Area 73,180 204,045 87,990 89,951 95,519
Allowed / Proposed Bldg. Area 40,249 202,010 88,054 263,042 190,869 FAR 55% 99% 100% 292% 200%
Sale Date: 3/22 1/22 1/22 10/21 7/21
Transaction Price: $11,712,500 $64,875,000 $20,000,000 $80,000,000 $33,000,000 Price Per Sq.Ft. of GBA $291 $321 $227 $304 $173
Property Rights Conveyed 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $291 $321 $227 $304 $173
Financing Terms: 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $291 $321 $227 $304 $173
Conditions of Sale: -10.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $262 $321 $227 $304 $173
Expenditures After Purchase 0.0% 0.0% 0.0% 0.0% 0.0%
Adjusted Price/Sq. Ft.: $262 $321 $227 $304 $173
Market Conditions: 0.0% 0.0% 0.0% -10.0% -10.0%
Price Adj. For Mkt. Cond. $262 $321 $227 $274 $156
Location 0.0% -20.0% 0.0% -10.0% 0.0%
Status of Entitlements 10.0% 0.0% 5.0% 5.0% 10.0%
Zoning 0.0% 0.0% 0.0% 0.0% 0.0%
Flood Zone 0.0% -5.0% 0.0% -5.0% -5.0%
Size 0.0% 0.0% 5.0% 0.0% 0.0%
Shape 0.0% 0.0% 0.0% 0.0% 0.0%
Density - Other -5.0% 0.0% -5.0% 0.0% -5.0%
Density - Parking -23.4% 6.5% 15.0% -1.6% 22.2%
Improvements 2.0% 2.0% 0.0% 2.0% 2.0%
Other -5.0% 0.0% 0.0% 0.0% 0.0%
Frontage / Visibility / Access 5.0% 0.0% 0.0% 0.0% 0.0% Net Adjustment -16.4% -16.5% 20.0% -9.6% 24.2%
Adjusted Unit Value
for the Subject: $219 $268 $273 $247 $193
Estimated Parking Cost / SF $9.46 $41.76 $68.14 -$8.86 $68.98 PRICE PER SQ.FT. RANGE $193 - $273
VALUE CONCLUSION $270 / SQ.FT.
SF X 228,081 $270 /SF = $61,581,870
ROUNDED $61,600,000
Parking Adjustments
$30,082,300 $0 $38,972,500 $18,564,000 $32,933,250 $39,060,000 $143,500 $69,700 $0 $0
$39,116,000 $18,633,700 $32,933,250 $39,060,000 Total Est. Cost $131.89 9.46 $193.63 $211.62 $125.20 $204.64 Per SF / FAR -$122.43 $61.74 $79.72 -$6.69 $72.75 Differential
2.31 2.31 3.42 2.70 1.74 Parking Ratio 2.44
1 0.68 0.85 1.32 Multiplier 0.95
-$122.43 $41.76 $68.14 -$8.86 $68.98 Adjustment Adj. for Ratio R. Blum and Associates, November 2023, 23-RBA-042
COMPARABLE LAND SALE ADJUSTMENT GRID - BONUS DEVELOPMENT DENSITY Appraisal of 1005 O'Brien and 1320 Willow Road
Menlo Park, California
Resolution No. XXXX
Appraisal: 985 & 1001 O’Brien Dr. and 1320 Willow Rd., Menlo Park, CA Page 21 23-RBA-042
Comparable 5 is adjusted up for density – parking and down for density - other. Otherwise similar adjustments are made. A higher unit value is concluded.
At the bonus level development density, the adjusted range is $193 to $273 per square foot of gross building area / FAR. The density is most similar to Comparables 2 and 3 which are given the greatest weight. Some consideration is given to the other sales which are slightly lower. A unit value at the bonus density level is concluded at $270 per square foot of FAR / GBA. The concluded value at the bonus density is as follows:
228,081 Square Feet X $270 / SF = $61,581,870
Rounded: $61,600,000
D. Bonus Level Development Value Conclusion
The value of the amenity is concluded by taking the difference between the bonus and base value conclusions and multiplying by 50 percent. This calculation is shown as follows:
Hypothetical Land Value Conclusion at Bonus Level Density: $61,600,000 Hypothetical Land Value Conclusion at Base Level Density: $30,300,000 Difference (Value of Bonus Floor Area): $31,300,000
Bonus Level Development Value (Multiplied by 50%): $15,650,000 E. Final Value Conclusions
Based on the research and analysis contained in this report, and subject to the assumptions and limiting conditions contained herein, it is the opinion of the appraiser that the concluded hypothetical fee simple market land values and bonus level development value, as of May 26, 2022, are as follows:
Hypothetical Market Value as if Vacant at Bonus Level Density: $61,600,000 Hypothetical Market Value as if Vacant at Base Level Density: $30,300,000 Differential (Value of Bonus Floor Area): $31,300,000
Bonus Level Development Value (50% of Value of Bonus Floor Area): $15,650,000 It is concluded that the above market land values could be achieved within a 12-month exposure period.
Resolution No. XXXX
ADDENDA
Resolution No. XXXX
Comparable 1 - 1 Casey Court Comparable 2 - 200 Twin Dolphin Drive Comparable 3 - 1030 Brittan Avenue Comparable 4 - 210 Adrian Road
COMPARABLE LAND SALES
Resolution No. XXXX Page 160 of 175
Comparable 5 - 1021 Howard Avenue
COMPARABLE LAND SALES
Resolution No. XXXX Page 161 of 175
QUALIFICATIONS OF RONALD BLUM, MAI, AI-GRS
California Certified General Real Estate Appraiser No. AG009958
EXPERIENCE
Mr. Blum is the Principal and Founder of R. Blum and Associates (RBA), a firm providing commercial real estate appraisal and consulting services since 2014. From 1986 to 2014, he worked for the of Carneghi-Blum & Partners, Inc. and was Vice President and Managing Partner of their San Francisco office. His responsibilities included supervising a staff of 10 appraisers and researchers. Clients include financial institutions, government agencies, law firms, development companies and individuals.
Mr. Blum has completed a wide variety of valuation and evaluation analyses. He has appraised most urban property types including office buildings, retail centers, hotels, residential projects, industrial parks and a variety of development sites. Mr. Blum also specializes in unusual urban properties.
Appraisal assignments have included performing arts theaters, former military bases, college dormitories, schools, live/work lofts, churches, athletic clubs, ship-repair facilities, medical offices and mortuaries. Market feasibility, value impact and highest and best use studies have also been completed for a variety of property types and geographic locations.
In the course of his real estate appraisal practice, Mr. Blum has provided litigation support and served as an expert witness in various courts. He also acts as an arbitrator in resolving matters of real estate values, rents and related issues and has testified as an expert in arbitration hearings. He has been qualified as a real estate expert and provided testimony in the Superior Courts of San Francisco and Contra Costa Counties, United States Bankruptcy Court, and United States Tax Court.
EDUCATION
Master of Science Degree in Real Estate Appraisal and Investment Analysis University of Wisconsin - Madison, 1986
Bachelor of Business Administration Degree in Finance
University of Wisconsin - Madison, 1984
Successful completion of all professional appraisal courses offered by the Appraisal Institute as a requirement of membership
Continued attendance at professional real estate lectures and seminars
SPEAKING ENGAGEMENTS
“Market Rent Arbitration Principles for Real Estate Leasing Professionals.” Presentation to San Francisco office of CRESA, commercial real estate brokerage specializing in tenant representation, 2015.
Resolution No. XXXX
Qualifications of Ronald Blum, MAI, AI-GRS Page 2
“San Francisco Commercial and Multi-family Market Overview.” Presentation to Board of Directors of First Republic Bank, 2014
“The Definition of Market Value and Its Implication for Corporate Real Estate Acquisition.” Presentation to national meeting of Kaiser Permanente Real Estate Executives, Sonoma California, 2004 Organized and Moderated the panel discussion: Unreinforced Masonry Buildings (UMBs) and the Americans with Disabilities Act (ADA), Appraisal Institute San Francisco Bay Area Fall Conference, 1992
PROFESSIONAL AFFILIATION
Appraisal Institute - MAI Designation No. 10381,
Appraisal Institute - AI-GRS Designation
Continuing Education Requirements Complete
STATE CERTIFICATION
State of California Certified General Real Estate Appraiser No. AG009958 Certified through October 30, 2024
Resolution No. XXXX
Resolution No. XXXX
NEWMARK VALUATION & ADVISORY
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
March 16, 2024
Mr. John Tarlton
O’Brien Drive Portfolio II, LLC
1530 O’Brien Drive, Suite C
Menlo Park, CA 94025
Menlo Park, CA 94025RE: Appraisal of Land located at 985-1001 O'Brien Drive, 1320 Willow Road, Menlo Park, San Mateo County, CA 94025, prepared by Newmark Valuation & Advisory, LLC (herein “Firm” or “Newmark”)
Newmark Job No.: 22-0160779-2
Dear Mr. Tarlton:
The purpose of this letter is to adjust our market values reached in our appraisal of the Community Amenities we estimated in our appraisal dated May 26, 2022. This letter should not be construed as a new appraisal subject to USPAP Standards but an adjustment to the applicant’s appraisal in compliance with Section III(B)(1)(b)(3)(c)(ii) of Community Amenity Implementing Regulations For The Application, Review, And Appraisal, Of Proposed Community Amenities In Exchange For Bonus Level Development In R-MU, O, And L-S Zoning Districts (“Appraisal Instructions”) approved by resolution of the City Council of the City of Menlo Park on August 15, 2023.
The following appears on page L-2.22 of Exhibit B to the Resolution.
A pertinent section of the Resolution is copied below:
(ii) Ten (10) percent or greater than the value of the lower of the two appraisals, the Applicant shall have the option of revising the Applicant’s Appraisal to state a value that is within ten (10) percent of the value of the lower of the two appraisals and accepting a Final Appraised Value that is the midpoint between the two appraisals as set forth in Section III-B-1-(b)-(3)-(c)-(i). If the Applicant chooses not to revise the Applicant’s Appraisal, then the Applicant may submit a written request to the City that the Applicant’s appraiser and the City’s appraiser agree upon and appoint a third appraiser, who shall be a Qualified Appraiser. The Applicant’s appraiser and the City’s appraiser must agree upon and select a third appraiser within 30 days of the Applicant’s written request. If the Applicant’s appraiser and City’s appraiser fail to agree on the appointment of a third party appraiser, then each party may submit the names of two appraisers, within 10 days after EXHIBIT C Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
the deadline for the parties’ appraisers to select a third appraiser, and a third party appraiser will be selected, at random, by the City Manager, from the names of the submitted appraisers. The Applicant will be notified of the date, time, and place where the selection will occur and will have the opportunity to be present and observe the selection process.
The City of Menlo Park has specific instructions for the appraiser when determining the value of the bonus FAR. The formula which they have dictated in their instructions is based solely on the sales comparison approach. The have eliminated the use of the land residual approach.
Land sales are most commonly compared on a price per square foot of useable land area or on the price per square foot of permitted building area or “Gross Floor Area”. Their instructions are specific in describing the use of the price per building area or price per “Gross Floor Area”.
Key Value Considerations of the May 26, 2022 Applicant’s Appraisal Site Area
The subject is comprised of three assessor parcels, 055-421-050, 060, 160. Combined they reflect a total site area of 183,616 square feet or 4.2152 acres. The parcels wrap around the corner of O’Brien Drive and Willow Road. A lot line adjustment is requested to adjust lot lines between 1001 O’Brien and the neighboring 1035 O’Brien property in order to make the lot lines perpendicular to the right of way, as well as to merge lots on the project site.
Existing Buildings
The three existing building addresses are 985 and 1001 O’Brien drive, and 1320 Willow Road.
The existing buildings are located on three parcels.
Building use is storage, office, R&D
Total 90,600 sq. ft. (0.49 FAR)
114 uncovered stalls on the surface parking lots
Minimal landscaping at the front entry of 1320 Willow; no sensitive habitat Proposed Buildings
Tarlton Properties has proposed a phased project to replace three existing single-story buildings with one 5-story new building, one 4-story new building, a parking garage, a sport court and a open space accessible to the community.
One 4-story and one 5-story R&D building
Total 228,398 sq. ft. (1.24 FAR) of R&D, office Life Science (154,581 sq. ft. (1.25 FAR) in Phase 1; 73,817 sq. ft. (1.24 FAR) in Phase 2) 545 Parking stalls (511 in parking garage and 34 surface parking spaces) Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
All buildings to be elevated 24” above BFE (12.8’)
New entry lobbies facing O’Brien Drive and Willow Road High performance bird friendly glazing with aluminum mullions Mechanical equipment to be located within the roof screen Environmentally sensitive and pedestrian friendly landscaping along three sides of property, including facing the public right of way and Peninsula High School The two R&D buildings are designed to accommodate life science tenants with anticipated ratios ranging from 30-45% office and 55-70% lab areas. Tarlton Properties has supported a variety of tenants over the last 36 years. In the last 15 years the tenants have predominantly been R&D type facilities. These have included companies that design medical devices and services, develop clean technology products, and engineer environmentally sustainable foods. All tenants require lab-related, clean manufacturing environments. The open office areas adjacent to the labs provide technical working areas for scientists, lab technicians and researchers. The open office areas also provide working space for sales, marketing and office support staff. Since these companies are in the development stages of their products, their R&D staff is proportionately larger than their support staff.
This project will be phased between Phase I and Phase 2. Up to ten years may be required due to existing lease agreements. The anticipated tenants are R&D/ office or Life Science.
Open Space
Public open space is provided in multiple locations for Phase 1 and 2 of the project.
In Phase 1, 15% of the publicly accessible open space is located along O’Brien Drive adjacent to the street/sidewalk. 85% of the publicly accessible open space is located adjacent to existing open space and proximate to proposed publicly accessible open spaces on three neighboring and nearby properties: playing fields for the Mid-Peninsula High School, Greenspace at 20 Kelly Court, Willow Village public park and community space. The publicly accessible open space will also provide community access to the sports court and will also provide pedestrian access to the facility which is located close to the Belle Haven neighborhood.
The developer, Tarlton Properties, has designed the publicly accessible open space for this project in response to community comments that asked for public open space to be aggregated with other proposed and existing open space, and to provide connections with that space from public rights of way. It is anticipated that these contiguous open spaces could eventually be linked to more publicly accessible spaces proposed along the Hetch Hetchy corridor. Additionally, publicly accessible open space leads from public rights of way. It is anticipated that the publicly Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
accessible open space will work in conjunction with the building to extend public indoor/outdoor space. In Phase 1 and 2 combined, 38% of the publicly accessible open space on the project directly fronts either Willow Road or O’Brien Drive, with the remaining open space is directly accessible from those public rights of way and connecting to other existing and proposed publicly accessible open space. Phase 2 connection to the Public open space along the Hetch Hetchy corridor is directly connected to and visible from Willow Road as well as to O’Brien Drive via a pathway that is accessible to the public but is not counted towards project totals. Directional signage for phase 1 could be added if required to clarify that areas are open to the public.
Environmentally sensitive and pedestrian friendly landscaping will be planted along three sides of property, including facing the public right of way and Peninsula High School.
Utilities
The existing site is served by all required utilities and public services including a 4” water line for fire sprinklers.
Proposed project will provide:
New fire department connection (FDC) and backflow preventer. All new electrical connected underground from existing service on O’Brien Drive. Two new sprinkler risers for each of the building and parking garage Given the above, the subject site which comprises a total of 4.2152 acres or 183,616 square feet of R&D or Life Science has the base level capacity of 100,989 gross floor area (183,616 X 55%).
The project sponsor is proposing 228,398 square feet of Gross Floor Area which reflects an FAR of approximately 124% coverage and is within the Bonus Level FAR of 125%.
Based on the appraisal dated 5/22/2022, our opinion of market values for the subject were:
Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Value Conclusions of the May 26, 2022 City Appraisal
On November 16, 2023 Ron Blum of RBA issued an appraisal authorized by the City which analyzed the Property and Project. Based on the research and analysis contained in that report, and subject to the assumptions and limiting conditions contained therein, Mr. Blum concluded the fee simple market land values and Bonus Level Development Value, as of May 26, 2022. The City Appraisal’s conclusions are as follows:
Value Conclusions
Appraisal Premise Interest Appraised Date of Value Value Conclusion Phase 1
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $34,800,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $17,000,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $17,800,000 Less: 50% Deduction Fee Simple 5/26/2022 $8,900,000
Value of the Amenity Fee Simple 5/26/2022 $8,900,000
Phase 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $16,600,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $8,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $8,400,000 Less: 50% Deduction Fee Simple 5/26/2022 $4,200,000
Value of the Amenity Fee Simple 5/26/2022 $4,200,000
Combined Phases 1 & 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $51,400,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $25,200,000 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $26,200,000 Less: 50% Deduction Fee Simple 5/26/2022 $13,100,000
Value of the Amenity Fee Simple 5/26/2022 $13,100,000
Hypothetical As If Vacant at Bonus Level Density: $61,600,000 Hypothetical As If Vacant at Base Level Density: $30,300,000 Differential (Value of Bonus Floor Area): $31,300,000
Bonus Level Development Value (50% of Value of Bonus Floor Area): $15,650,000 Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Revised Value of Applicant’s Appraisal
Since the values from the City’s appraiser and our values are more than 10% apart, the client has requested that we adjust the value conclusions of the Applicant’s Appraisal, as understood by Appraisal Instruction Section III(B)(1)(b)(3)(c)(ii), to state a value that is within ten (10) percent of the value of the lower of the two appraisals. Further, to accept a Final Value that is the midpoint between the two appraisals as set forth in Section III-B-1-(b)-(3)-(c)-(i).
This mathematical adjustment and value statement is shown below:
Broken down by Phase 1 & 2 the adjusted values are:
City's Appraiser's Adjusted Applicant's
Values Values
Hypothetical As If Vacant at Bonus Level Density: $61,600,000 / 110% $56,000,000 Hypothetical As If Vacant at Base Level Density: $30,300,000 / 110% $27,545,455 Differential (Value of Bonus Floor Area): $31,300,000 / 110% $28,454,545 Bonus Level Development Value (50% of Value of Bonus Floor Area): $15,650,000 / 110% $14,227,273 Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Please note that breakdown by Phase is based on the square footage contributed to the whole by each Phase.
Per the Resolution the following reflects the averages between the City appraiser’s values and the applicant’s values:
Extraordinary Assumptions
An extraordinary assumption is defined in USPAP as an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions. The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results.
Appraisal Premise Interest Appraised Date of Value Value Conclusion Phase 1
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $37,900,800 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $18,642,764 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $19,258,036 Less: 50% Deduction Fee Simple 5/26/2022 $9,629,018
Value of the Amenity Fee Simple 5/26/2022 $9,629,018
Phase 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $18,099,200 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $8,902,691 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $9,196,509 Less: 50% Deduction Fee Simple 5/26/2022 $4,598,255
Value of the Amenity Fee Simple 5/26/2022 $4,598,255
Combined Phases 1 & 2
Site Value of Proposed Gross Floor Area Fee Simple 5/26/2022 $56,000,000 Site Value of Base Gross Floor Area (55%) Fee Simple 5/26/2022 $27,545,455 Value of Additional (Bonus) Floor Area Fee Simple 5/26/2022 $28,454,545 Less: 50% Deduction Fee Simple 5/26/2022 $14,227,273
Value of the Amenity Fee Simple 5/26/2022 $14,227,273
Compiled by Newmark
Adjusted Value Conclusions per the Resolution
Hypothetical As If Vacant at Bonus Level Density: $58,800,000 Hypothetical As If Vacant at Base Level Density: $28,922,727 Differential (Value of Bonus Floor Area): $29,877,273
Bonus Level Development Value (50% of Value of Bonus Floor Area): $14,938,636 Average Between the City's Appraiser's
Values and the Revised Applicant's Values
Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Hypothetical Conditions
A hypothetical condition is defined in USPAP as a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. The value conclusions are based on the following hypothetical conditions that may affect the assignment results.
The appraisal was developed based on, and this report has been prepared in conformance with the Client’s appraisal requirements, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
1. None
1. At least one of the buildings on the subject site is leased. We have used the hypothetical condition that the subject buildings are unencumbered by leases and thus we are appraising the fee simple interest.
2. In order to comply with the City's instructions, we have employed the Hypthetical Condition that the subject has entitlements to build the development as proposed.
The use of these hypothetical conditions might have affected assignment results.
Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Certification
We certify that, to the best of our knowledge and belief:
1. The statements of fact contained in this report are true and correct.
2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.
3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.
4. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
5. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.
6. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.
7. This appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan.
8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of
9. 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 Institute.
10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
11. As of the date of this report, Kenneth Matlin, MAI, AI-GRS, SRA, ASA has completed the continuing education program for Designated Members of the Appraisal Institute.
12. Kenneth Matlin, MAI, AI-GRS, SRA, ASA made a personal inspection of the property that is the subject of this
13. No one provided significant real property appraisal assistance to the person(s) signing this certification.
14. The Firm operates as an independent economic entity. Although employees of other service lines or affiliates of the Firm may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without
15. Within this report, "Newmark", "Newmark Valuation & Advisory", "Newmark, Inc.", and similar forms of reference refer only to the appraiser(s) who have signed this certification and any persons noted above as having provided significant real property appraisal assistance to the persons signing this report.
16. Kenneth Matlin, MAI, AI-GRS, SRA, ASA has not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding the agreement to perform this assignment. Kenneth Matlin, MAI, AI-GRS, SRA, ASA has not Resolution No. XXXX
March 16, 2024
MR. JOHN TARLTON
Newmark Valuation & Advisory
3055 Olin Avenue, Suite 2200
San Jose, CA 95128
www.nmrk.com/valuation
Kenneth Matlin, MAI, AI-GRS, SRA, ASA
Senior Vice president
Certified General Real Estate Appraiser
California # AG0022
Telephone: 408.982.8419
Email: [email protected]
Resolution No. XXXX
Tarlton Properties, Inc. 1530 O’Brien Drive, Suite C Menlo Park, CA 94025 Phone (650) 330-3600 Fax (650) 330-3636 www.tarlton.com
March 26, 2024
Chris Turner
Senior Planner
Planning Division
Community Development Department
City Hall, First Floor
701 Laurel Street
Menlo Park, CA 94025
Update to the Community Amenities Proposal for 985-1005 O’Brien Drive Dear Mr. Turner:
Tarlton Properties is pleased to provide this letter updating its Communities Amenities Proposal for the proposed project at 985-1005 O’Brien Drive, Menlo Park, CA 94025 (the “Project”), in the Life ScienceBonus District. This letter supplements the Community Amenities Proposal for 985-1005 O’Brien Drive that was sent to the City on Aug. 26, 2023 and confirms the Applicant’s proposal to pay the in-lieu fee for the Project, as previously proposed in our Aug. 26, 2023 letter.
Pursuant to subsection (3) of Section 16.44.070, the value of the community amenities to be provided must equal fifty percent (50%) of the fair market value of the additional gross floor area of the bonus level development (rounded to the nearest thousand) as determined when appraised in accordance with the Community Amenity Implementing Regulations For The Application, Review, And Appraisal, Of Proposed Community Amenities In Exchange For Bonus Level Development In R-MU, O, And L-S Zoning Districts (the “Appraisal Instructions”). As described in the March 16, 2024 letter from Kenneth E. Matlin of Newmark Knight Frank, CA Appraiser License # AG002022, which is submitted to the City concurrently with this letter, Tarlton Properties has adjusted the Applicant’s Appraisal for the Project to be within 10% of the City’s Appraisal consistent with Section III(B)(1)(b)(3)(c)(ii) of Appraisal Instructions. Section III(B)(1)(b)(3)(c)(i) of the Appraisal Instructions provides that where the Applicant’s Appraisal and the City Appraisal are within 10% of each other, the Project’s final community amenity value is the 50% of the average of the two appraisals. Here, that average Bonus Level Development Value of the Project is $29,878,000, which results in a final Project community amenity value of $14,939,000.
Tarlton is pleased to propose payment of 110% of the community amenity value, consistent with the requirements of Section 16.44.070 (4)(B), being $16,432,900.
Sincerely,
John Tarlton,
President and CEO
Tarlton Properties, Inc.
EXHIBIT D Resolution No. XXXX
CITY OF MENLO PARK
LOCATION MAP
985-1005 O'BRIEN DRIVE AND 1320 WILLOW ROAD
Scale: 1:8,000 Drawn By: CRT Checked By: KTP Date: 6/11/2024
ATTACHMENT F
CUP PROJECT DESCRIPTION
P:\Tarlton\MenloParkLabs\1005OBrien\10025002\Admin\Agencies\Planning\23-0217 PCR4-PLN202100028\23-0217 CUPR4 Project Description.docx 399 Bradford Street Redwood City, California 94063 Tel 650-364-6453 Fax 650-364-2618 www.des-ae.com Project Background:
Tarlton Properties proposes a phased project to replace three existing single-story buildings with one 5-story new research and development (R&D) building, one 4-story new R&D building, and a parking garage. An outdoor sports court and extensive public open spaces will surround the new buildings.
The three existing building addresses are 985 and 1001 O’Brien drive, and 1320 Willow Road. The existing buildings are located on three parcels. A lot line adjustment is requested to adjust lot lines between 1001 O’Brien and the neighboring 1035 O’Brien property, to create perpendicular lots to the right of way, as well as to merge lots on the project site. This project will be phased; the applicant intends to move quickly from completion of Phase 1 to the commencement of Phase 2, however up to ten years may be required between Phase I and Phase 2 to honor existing lease agreements.
Therefore, a development agreement is requested to extend the life of the use permit and Architectural Control for Phase 2 of the development. The anticipated tenants are R&D/life science.
Existing buildings
- Building use is storage, office, R&D
- Total 90,600 sq. ft. (0.49 FAR)
- 114 uncovered stalls on the surface parking lots
- Minimal landscaping at the front entry of 1320 Willow; no sensitive habitat Proposed buildings
- One 4-story and one 5-story R&D building
- Total 227,998 sq. ft. (1.24 FAR) of R&D
- 527 Parking stalls
- All buildings to be elevated 24” above BFE (12.8’)
- New entry lobbies facing O’Brien Drive and Willow Road - High performance bird friendly glazing with aluminum mullions. - Mechanical equipment located within roof screen.
- Environmentally sensitive and pedestrian friendly landscaping along three sides of property, including facing the public right of way and Peninsula High School.
Site, Utilities:
Public open space is provided in multiple locations for Phase 1 and 2 of the project.
In Phase 1, 30% of the publicly accessible open space is located along O’Brien Drive adjacent to the street/ sidewalk. 70% of the publicly accessible open space is located adjacent to existing open space and proximate to proposed publicly accessible open spaces on three neighboring and nearby properties: playing fields for the Mid-Peninsula High School, Greenspace at 20 Kelly Court, Willow Village public park and Community space. The publicly accessible open space will also provide community access to the sports court and pedestrian proximity to the Belle Haven neighborhood on the west.
B1 ATTACHMENT G
985 & 1001 O’Brien Dr / 1320 Willow Rd (1005 OBD NB)
10025.002
CUP Response 4 Project Description
February 17, 2023
P:\Tarlton\MenloParkLabs\1005OBrien\10025002\Admin\Agencies\Planning\23-0217 PCR4-PLN202100028\23-0217 CUPR4 Project Description.docx DES Architects + Engineers, Inc.
©2002
The Applicant has designed the publicly accessible open space for this project in response to community comments that asked for public open space to be aggregated with other proposed and existing open space, and to provide connections with that space from public rights of way. It is anticipated that these contiguous open spaces could eventually be linked to more publicly accessible spaces proposed along the Hetch Hetchy corridor. Additionally, publicly accessible open space leads from public rights of way to the sports court. Since this court will be used by the surrounding community, it is anticipated that the publicly accessible open space will work in conjunction with this outdoor space. In Phase 1 and 2 combined, 30% of the publicly accessible open space on the project directly fronts either Willow Road or O’Brien Drive, with the remaining open space directly accessible from those public rights of way and connecting to other existing and proposed publicly accessible open spaces. Phase 2 connection to the Public open space along the Hetch Hetchy corridor is directly connected to and visible from Willow Road as well as to O’Brien Drive via a pathway that is accessible to the public but is not counted towards project totals. Directional signage for phase 1 could be added if required to clarify that areas are open to the public.
The existing site is served by all required utilities and public services including a 4” water line for fire sprinklers. Proposed project will provide:
- New fire department connection (FDC) and backflow preventer. - All new electrical connected underground from existing service on O’Brien Drive. - Two new sprinkler risers for each of the building and parking garage.
Allocation of Uses:
The two R&D buildings are designed to accommodate life science tenants with anticipated ratios ranging from 30-45% office and 55-70% lab areas. Tarlton Properties has supported a variety of tenants over the last 36 years. In the last 15 years the tenants have predominantly been R&D type facilities. These have included companies that design medical devices and services, develop clean technology products, and engineer environmentally sustainable foods. All tenants require labrelated, clean manufacturing environments. The open office areas adjacent to the labs provide technical working areas for scientists, lab technicians and researchers. The open office areas also provide working space for sales, marketing and office support staff. Since these companies are in the development stages of their products, their R&D staff is proportionately larger than their support staff.
Phase 1 of this project is anticipated to be initiated immediately after entitlement. During Phase 1 it is anticipated that the Wine Bank (or tenant) in the western side of 1320 Willow will remain operational.
Phase 2 will follow in or before 2035.
B2
985 & 1001 O’Brien Dr / 1320 Willow Rd (1005 OBD NB)
10025.002
CUP Response 4 Project Description
February 17, 2023
P:\Tarlton\MenloParkLabs\1005OBrien\10025002\Admin\Agencies\Planning\23-0217 PCR4-PLN202100028\23-0217 CUPR4 Project Description.docx DES Architects + Engineers, Inc.
©2002
Project Phasing:
Phase I
- Removal of 985 and 1001 O’Brien Drive buildings as well as east half of 1320 Willow building.
- New 5 story building on O’Brien Drive
- New 5 story parking garage (4 active floors, 1 floor inactive for Phase 1) Phase II
- Removal of west half of 1320 Willow building.
- New 4 story building on Willow Road
- Addition of 1.5 stories to parking garage
Parking and EV to Support Uses:
Required:
- R&D: 343 – 573 spaces (1.5 -2.5 / 1000 SF)
Provided:
- R&D: 527 (2.4 / 1000 SF)
From parking provided:
- 23 are surface parking spaces and 504 are garage parking spaces. - Accessible spaces are located near the building front door and on the ground floor of the garage. - Additional stalls will be designated for EV charging stations including EV accessible parking stalls The applicant owns and operates numerous life science facilities in Menlo Park and is continually monitoring parking needs for life science users in Menlo Park. The proposed parking is based on the applicant’s assessment of needs at the time the project will be operational, and considers a TDM program that includes carpool, vanpool, and participation in carshare, bike share, and a district wide shuttle program that is timed for common commute lines on BART and CalTrain. The project TDM is designed to reduce project trips by at least 20%.
Garage Phase 1 will be built as a 5-level structure in order to provide staging space for Phase 2 and eliminate the need of reshoring of Level 3 and Level 4. During Phase 1, parking will be only available from Level 1 to Level 4. Vehicular access to Level 5 will blocked by bollards that could be removed for fire department access only. During Phase 2 construction, Level 6 and Level 7 will be completed.
Staging will be on the existing Level 5.
Flood Elevation: This site has a B.F.E. of 12.5 and 12.8 per the FEMA map indicated on the topo.
The Public Works Department has advised to use 12.8 for the overall site. The building slab will be elevated 24” above BFE.
B3
985 & 1001 O’Brien Dr / 1320 Willow Rd (1005 OBD NB)
10025.002
CUP Response 4 Project Description
February 17, 2023
P:\Tarlton\MenloParkLabs\1005OBrien\10025002\Admin\Agencies\Planning\23-0217 PCR4-PLN202100028\23-0217 CUPR4 Project Description.docx DES Architects + Engineers, Inc.
©2002
Landscaping and Project Site Amenities: Proposed site amenities and plants complement fourteen other Tarlton buildings along O’Brien Drive.
Community Amenities: Community amenities will be met through payment of the in-lieu fee, consistent with Section 16.44.070 (4)(B).
Base Height Modulation Standard – Modification
The applicant is requesting to modify the 45ft height modulation required by LS zoning to support a typical R&D office/laboratory building. The 45ft height modulation is designed to work with typical office heights.
Labs typically require 17ft floors to accommodate the increased ventilation and process pipping to support these technology heavy spaces.
We propose a building height modulation at 34ft to incorporate two 17ft stories.
This design was presented to the Planning Commission on 02/24/2022. Staff expressed favorable comments regarding this modulation.
Hazardous Materials – Generator
The project will include a new generator for each building to be provided at the corresponding project Phase. At Phase 1 for 1005 O’Brien Bldg and at Phase 2 for the 1320 Willow Bldg.
The Generators to be in stand-by only – 24 hrs and used for life-safety and continuous operation in the event of a power outage.
Generators to be in an enclosure which finishes match the adjacent building and hidden from street view with landscaping such as hedges and trees.
Monthly testing, monitoring and alarms are to be included. The diesel fuel tank has a Power Armor Plust textured epoxy-based rubberized coating. Both the inner and the outer tanks have UL-listed emergency relief vents. The containment tank’s construction protects against fuel leaks or ruptures.
The inner (primary) tank is sealed inside the outer (secondary) tank. The outer tank contains the fuel if the inner tank leaks or ruptures.
Any hazardous waste removed from the site to be manifested and transported to a licensed hazardous waste disposal site or a licensed treatment, storage, and disposal facility (TSDF) by a licensed hazardous waste transporter, subject to all applicable government regulations.
Employee training is required for all employees and/or contractors handling hazardous materials and/or hazardous wastes during normal and/or emergency operations.
Site Specific Training Plan Provided.
B4
ATTACHMENT I