82477.03000\41062594.1
A. Landlord reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or views of Tenant, and without interference or hindrance. If the foregoing development or improvement shall have a material adverse effect on Tenant's use of the Premises, the parties hereto shall meet and confer prior to the commencement of such development or improvement.
B. Landlord reserves the right, but shall not be obligated to Tenant, to maintain and keep in repair the landing area of the Airport and all publicly-owned facilities of the Airport to standards established by Landlord in Landlord’s sole discretion, together with the right to direct and control all activities of Tenant in this regard.
C. This Lease shall be subordinate to the provisions and requirements of any existing or future agreement between Landlord and agencies of the United States relative to the development, operation or maintenance of the Airport.
D. In the event any future structure or building is planned for the Premises or in the event of any planned modification or alteration of any present or future building or structure situated on the Premises, Tenant shall comply with the notification and review requirements covered in Part 77 of the Federal Aviation Regulations.
E. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of any exclusive right within the meaning of Section 308(a) of the Federal Aviation Act of 1958 (49 U.S.C. Section 1349).
F. There is hereby reserved to Landlord, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises. This public right of flight shall include the right to cause within the said airspace any noise inherent in the operation of any aircraft used for navigation or flight through the said airspace or landing at, taking off from or operating on the Airport.
G. Tenant, by accepting this Lease, expressly agrees for itself, its successors and assigns that it will not permit any natural growth or other obstruction on the land leased hereunder above a height as determined by the application of the requirements of Part 77 of the Federal Aviation Regulations. Tenant shall also not erect or permit the erection of any structure or building on the land leased hereunder above a height of thirtyfive (35) feet, as required by the City Fire Code. In the event the aforesaid covenants are breached, Landlord reserves the right to remove the offending structure or object, all of which shall be at the expense of Tenant.
H. Tenant shall not make use of the Premises in any manner which might interfere with the landing and taking off of aircraft from the Airport, or which might otherwise constitute a hazard. In the event the aforesaid covenant is breached, Landlord reserves the right to enter upon the Premises and cause the abatement of such interference, at the expense of Tenant.
I. This Lease and all the provisions hereof shall be subject to whatever right the United States Government now has, or in the future may have or acquire, affecting the control, operation, regulation and taking over of said Airport, or the exclusive or nonexclusive use of the Airport, by the United States during the time of war or national emergency or otherwise.
J. Tenant shall conform to the Airport Rules and Regulations and FAA safety and security rules and regulations regarding use of the Airport operations area including runways, taxiways, aircraft aprons by vehicles, employees, customers, visitors, etc. in order to prevent security breaches and avoid aircraft incursions and vehicle/pedestrian deviations; will complete and pass an airfield safe driving instruction program when offered or required by the Airport, and will be subject to penalties as prescribed by the Airport for violations of the Airport safety and security requirements.
4.4. Airport Security. Tenant is responsible for maintaining security in and around the Premises or any other area adjacent to or upon the Airport which Tenant has an exclusive right to use or which Tenant otherwise controls. Tenant is further responsible for maintaining security with respect to access to and entry upon Airport Attachment 2
82477.03000\41062594.1
operations areas, or other areas of the Airport designated by Landlord from time to time as security areas, by employees, subtenants, contractors, invitees or customers of Tenant or any other person who enters the Airport operations areas at Tenant’s invitation, direction, or authority, whether through or from the Premises or otherwise.
4.5. Hazardous Materials.
A. Restrictions. Landlord acknowledges receipt and consents to Tenant's list of the current hazardous materials or toxic substances, as more particularly described on Exhibit "B", attached hereto and made a part hereof, which are necessary or useful to Tenant's business and which are used, kept and stored in a manner that complies with all laws relating to such hazardous materials or toxic substances so brought upon or used or kept in or about the Premises or the Airport. Notwithstanding the foregoing, Tenant shall not cause or permit any hazardous materials or toxic substances which are not included on the foregoing approved list to be brought upon, kept or used in or about the Premises or the Airport by Tenant, its agents, employees, contractors or invitees, without the prior written consent of Landlord. Landlord's consent shall not be unreasonably withheld so long as Tenant demonstrates to Landlord's reasonable satisfaction and covenants to Landlord that such hazardous materials or toxic substances are necessary or useful to Tenant's business and will be used, kept and stored in a manner that complies with all laws relating to any such hazardous materials or toxic substances so brought upon or used or kept in or about the Premises or the Airport. If Tenant breaches the obligations stated in the preceding sentence, or if the presence of hazardous materials or toxic substances on the Premises or the Airport caused or permitted by Tenant results in contamination of the Premises or the Airport, or if contamination of the Premises or the Airport by hazardous materials or toxic substances otherwise occurs for which Tenant is legally liable to Landlord for damage resulting therefrom, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in value of the Premises or the Airport, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or the Airport, damages arising from any adverse impact on marketing of space in the Airport, and sums paid in settlement of claims, actual attorneys' fees, consultant fees and expert fees), which arise during or after the term of the Lease as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions, including regular inspections, or any clean up, remedial, removal or restoration work required or recommended by any federal, state or local governmental agency or political subdivision because of hazardous materials or toxic substances present in the soil or ground water on or under the Premises and/or the Airport. The indemnity, defense and hold harmless obligations of Tenant hereunder shall survive any termination of this Lease. Without limiting the foregoing, if the presence of any hazardous materials or toxic substances on the Premises or the Airport caused or permitted by Tenant results in any contamination of the Premises or the Airport, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises and the Airport to the condition existing prior to the introduction of any such hazardous materials or toxic substances; provided that, Landlord's approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions, in Landlord's sole and absolute discretion, would not potentially have any material adverse long-term or short-term effect on the Premises or the Airport.
B. Testing Wells. Landlord shall have the right, at any time, to cause testing wells to be installed on or about the Premises and/or the Airport, in a manner that will not unreasonably interfere with the Tenant's use of the Leased Premises, and may, at its option, cause the ground water, soil and air to be tested to detect the presence of hazardous materials or toxic substances at least once every twelve (12) months during the term of the Lease by the use of such tests as are then customarily used for such purposes. Landlord shall provide Tenant with thirty (30) days prior written notice if it determines such testing wells are to be installed in order to minimize disruption to Tenant's business operations. If Tenant so requests, Landlord shall supply Tenant with copies of such test results. Landlord shall bear the cost of such tests and of the maintenance, repair and replacement of such wells, unless such test indicates that the presence of hazardous materials or toxic substances are the result of Tenant's operations on the Premises. In that event, the cost of such tests and of the maintenance, repair and replacement of such wells shall be fully paid for by Tenant within ten (10) days after receiving a statement of charges from Landlord.
Attachment 2
82477.03000\41062594.1
C. Access. Landlord and Landlord's agents shall have the right to inspect the Premises for the purposes of ascertaining Tenant's compliance with this Lease, Airport Minimum Standards, and Airport Rules and Regulations with notice at least five (5) days in advance of any inspection. The cost of such inspections shall be paid by Landlord, unless such inspection reveals the presence of hazardous materials or toxic substances are the result of Tenant's operations on the Premises. In the event of a release, spill or mishandling of hazardous materials or toxic substances, Tenant shall immediately inform Landlord verbally and in writing. Such notice shall identify the hazardous materials or toxic substances involved and the emergency procedures taken.
D. Assignment and Subletting. It shall not be unreasonable for Landlord to withhold its consent to any proposed assignment or sublease if: (A) the proposed assignee's or subtenant's anticipated use of the Premises or the Airport involves the generation, storage, use, treatment or disposal of hazardous materials or toxic substances; (B) the proposed assignee or subtenant has been required by any prior landlord, lender or governmental authority to take remedial action in connection with hazardous materials or toxic substances contaminating a property if the contamination resulted from such assignee's or subtenant's actions or use of the property in question; or (C) the proposed assignee or subtenant is subject to an enforcement order issued by any governmental authority in connection with the use, disposal or storage of any hazardous materials or toxic substances.
E. Definitions. As used herein, the terms "hazardous materials and/or toxic substances" mean (A) any hazardous or toxic substance, material or waste which is or becomes regulated by any local, state or federal government or special district, (B) designated as a "hazardous substance" pursuant to Section 1311 of the Federal Water Pollution Control Act (33 USC Section 1317), (C) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 USC Section 6901, et seq. (42 USC Section 6903), (D) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC Section 9601, et seq. (42 USC Section 9601), (E) defined as a "hazardous waste" or as a "hazardous substance" pursuant to Section 25117 or 25316 of the California Health and Safety Code, (F) substances defined as “hazardous materials” in the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq., (G) any infectious wastes or substances, or (H) petroleum and any by-products thereof. References herein to specific statutes or laws shall also be references to any amendments of or applicable successor statutes or laws.
F. Delivery of Inventory and Plans. During the term of the Lease, Tenant shall immediately deliver to Landlord (A) a new list of all such hazardous materials and toxic substances, each time Tenant adds or changes the materials or substances it may use and each time a material or substance used by Tenant becomes included within the definition of hazardous materials or toxic substances under this Lease (due to new or revised laws or otherwise), and (B) copies of all reports required by any and all regulatory agencies governing the use, handling, storage and disposal of hazardous materials or toxic substances. Tenant shall obtain Landlord’s written consent prior to the use or storage of any such added or changed materials or substances.
G. Insurance. Any increase in the premium for insurance carried by Landlord or required of Tenant under this Lease on the Premises or the Airport which arises from Tenant's use and/or storage of these materials shall be solely at Tenant's expense. Tenant shall procure and maintain at its sole expense such additional insurance as may be necessary to comply with any requirement of any federal, state or local governmental agency or special district with jurisdiction.
H. Storage. It is the intent of the parties hereto that the provisions of this Section 4.5 regarding the use and handling of hazardous materials and toxic substances shall also apply to Tenant's storage upon the Premises of any substances, including, but not limited to, gasoline and diesel fuels, in above or below-ground storage tanks.
5. OPERATING EXPENSES
5.1. Taxes and Assessments. Tenant shall pay without abatement, deduction or offset all real and personal property taxes, general and special assessments, and other charges of every description levied on or assessed against the Leased Premises, improvements located on the Leased Premises, personal property located on or in the land or improvements, the leasehold estate, or any subleasehold estate, to the full extent of installments Attachment 2
82477.03000\41062594.1
falling due during the term, whether belonging to or chargeable against Landlord or Tenant. Tenant shall make all such payments directly to the charging authority at least fifteen (15) days before delinquency and before any fine, interest or penalty shall become due or be imposed by operation of law for nonpayment. If, however, the law permits the payment of any or all of the above items in installments (whether or not interest accrues on the unpaid balance), Tenant may, at Tenant's election, utilize the permitted installment method, but shall pay each installment with any interest before delinquency. Tenant shall pay any charge or levy only upon the rent payable by the Tenant under this Lease to Landlord, and any tax in lieu of property tax, but shall not be required to pay any franchise, state inheritance, succession, capital levy or transfer tax of the Landlord, or any income, excess profits or revenue tax, or any other tax, assessments or charge attributable to Landlord. In addition, Landlord shall be solely responsible for any income taxes assessed against Landlord arising out of its operation of the Airport or related to the rents received from Tenant.
If at any time during the term of this Lease any tax, however described, is levied or assessed against Landlord as a substitute, in whole or in part, for any real property taxes, or in addition to such real property taxes, Tenant shall pay before delinquency the substitute or additional tax or excise. Such substitutes include, but are not limited to, any possessory interest tax imposed on Tenant by California Revenue and Taxation Code Sections 103 and 107.
Tenant recognizes and understands that this Lease may create a possessory interest subject to property taxes pursuant to Revenue & Taxation Code Section 107.6 and that, if a possessory interest is created, Tenant shall, in accordance with this Section 5, be responsible for payment of property taxes levied against such possessory interest. Any documentary transfer tax assessed upon the creation of a leasehold interest in the Premises under this Lease shall be paid by Tenant. Tenant hereby expressly acknowledges that Landlord has given Tenant notice that Tenant's possessory interest in the demised premises may be taxed.
Tenant’s initials
A. Proof of Compliance. Tenant shall furnish to Landlord at least fifteen (15) days before the date when any tax, assessment or charge would become delinquent, receipts or other appropriate evidence establishing their payment. Tenant may comply with this requirement by retaining a tax service to notify Landlord when the taxes have been paid.
B. Proration. Taxes and assessments determined from the latest information available for the first and, if Tenant is not in default under this Lease, the last year of this Lease shall be prorated between the Landlord and Tenant on the basis of a three hundred sixty-five (365) day year for any fractional portion of a tax fiscal year commencing July 1st and ending June 30th included within the term of this Lease.
C. Payment by Landlord. In the event Tenant fails to pay such taxes or assessments, Landlord may, at its option, after giving fifteen (15) days' notice to Tenant, pay any such taxes or assessments together with all penalties and interest which may have been added thereto by reason of any such delinquency or failure to pay, and may likewise redeem the Leased Premises or any part thereof, or the buildings or improvements located thereon, from any tax sale or sales. Any such amounts so paid by Landlord shall become immediately due and payable as additional rent by Tenant to Landlord, together with interest thereon at the maximum lawful rate from the date of payment by Landlord until paid by Tenant. Any such payment shall not be deemed to be a waiver of any other rights of Landlord hereunder. Tenant may, in good faith, contest any such tax or assessment at its expense. However, Tenant shall defend itself and Landlord against the same and shall pay and satisfy any judgment including all penalties and interest that may be rendered thereon. Landlord may require Tenant to furnish Landlord a surety bond or other security reasonably satisfactory to Landlord in an amount equal to such contested tax or assessment, indemnifying Landlord against liability for such tax or assessment and holding the Leased Premises free from the effect of such tax or assessment. Landlord shall cooperate with Tenant in any such contest and shall execute any necessary legal documents incident thereto, but shall be held harmless by Tenant against all costs or expenses incident to such cooperation.
Attachment 2
82477.03000\41062594.1
5.2. Net Lease. This shall be a triple net Lease and Base Rent shall be paid to Landlord absolutely net of all costs and expenses, except as specifically provided to the contrary in this Lease. it being understood that Landlord will receive the rent set forth in Section 3 free and clear of any and all other impositions, taxes, liens, charges or expenses of any nature whatsoever in connection with the ownership and operation of the Premises.
In addition to the rent required by Section 3, and to the other amounts payable by Tenant pursuant to this Lease, Tenant shall pay to the parties respectively entitled thereto all other impositions, operating charges, maintenance charges, construction costs and any other charges, costs and expenses which arise or may be contemplated under any provision of this Lease during the term hereof. All of such charges, costs and expenses shall constitute additional rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by Tenant, and that Tenant shall in no event be entitled to any abatement of or reduction in rent payable under this Lease, except as herein expressly provided. Any present or future law to the contrary shall not alter this Lease.
6. UTILITIES AND SERVICES
6.1. Utilities. During the term of this Lease, Tenant agrees to pay all charges and expenses in connection with utility services furnished to the Leased Premises and to protect Landlord and the Leased Premises from all such charges and expenses. If any utilities are not separately metered for the Leased Premises, Tenant will arrange for separate meters at Tenant's expense and Tenant shall contract directly with utility providers. If separate meters are not possible, Tenant shall reimburse Landlord for Tenant's pro rata share, as reasonably determined by Landlord, of all shared utilities within ten (10) days after billing by Landlord.
6.2. Tenant acknowledges that Landlord has no obligation to provide utilities except those already furnished as of the date of this Lease to the Premises or additional utilities. Landlord shall not be liable to Tenant under any circumstances for damages or loss to Tenant's property, injury to person or property, or consequential damages, however occurring, through, in connection with, or incidental to failure to furnish or interruption of any utilities or services.
6.3. Tenant shall comply with all rules and regulations which Landlord, any governmental agencies or authorities, or any utility company may establish for the use, proper functioning and protection of any such utility.
7. IMPROVEMENTS, REPAIRS AND MAINTENANCE
7.1. Tenant's Obligations to Improve, Maintain and Repair. Tenant shall maintain, or cause to be maintained, the Premises and every part thereof in good order, condition and repair according to standards determined by Landlord (whether or not such part of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result of Tenant's use, any prior use, the elements or the age of such part of the Premises), including, without limiting the generality of the foregoing, (A) all buildings, structures or fixtures, including foundations, roofs, ceilings, floors, interior and exterior walls, (B) store fronts, windows, doors, hangar doors, plate glass, showcases, skylights, entrances and vestibules located within the Premises, (C) automobile and aircraft pavement, driveways, landscaping, parking lots, fences and signs, and (D) all sprinkler systems, plumbing, sewers, drainage devices, heating, air conditioning, electrical facilities, equipment and other utilities or facilities serving the Premises.
Tenant shall commence any repair within thirty (30) days after the receipt by Tenant of written notice of the need for such repair, including any notice from Landlord. Landlord shall not be liable to Tenant by reason of any injury to or interference with Tenant's business arising from or connected with the need for or the making of any repairs, alterations or improvements. All repairs, modifications or improvements to the Premises shall be performed in accordance with the building standards of the City of Paso Robles, and it shall be the responsibility of Tenant to secure appropriate permits from the City of Paso Robles. Tenant shall keep the exterior of the improvements on the Premises in a reasonably neat and attractive condition, free from waste or debris, and replace any trees, shrubs, plants, and ground cover as may be needed. Tenant shall screen and landscape all outside storage areas and service yards of the Premises with fencing and landscaping approved by Landlord, and shall not allow any temporary structures or facilities on the Premises, without Landlord's reasonable approval.
Attachment 2
82477.03000\41062594.1
Tenant shall assure that only essential support vehicles, aircraft and equipment are parked or stored outside and adjacent to the hangar and that all are screened or located so as to remain out of sight of the public streets.
7.2. Landlord's Remedies. In the event Tenant fails to perform its obligations under Section 7.1 Landlord may, at its option, after fifteen (15) days' written notice to Tenant to cure such failure, enter upon the Premises and put the same in good order, condition and repair, and the cost thereof shall become due and payable, upon demand, by Tenant to Landlord as additional rent.
7.3. No Landlord Obligations. Landlord shall have no obligation to make any repairs to the Premises other than as expressly and specifically set forth in this Lease. Tenant hereby waives any and all rights provided in Sections 1941 through 1942, inclusive, of the Civil Code of California and hereby waives, to the extent permissible, any rights other than statutes or laws now or hereafter in effect which are contrary to the obligations of Tenant under this Lease, or which place obligations upon Landlord in addition to those provided in this Lease.
7.4. Landlord's Reservations of Rights. During the term of this Lease, Landlord reserves the right, in its sole discretion, to reconstruct, alter or improve the aircraft pavement areas of the Premises, to such standards as it shall determine; provided, however, if such reconstruction, alteration or improvement to the aircraft pavement areas would result in a material adverse effect on Tenant's use of the Premises, the parties hereto shall meet and confer prior to the commencement of such reconstruction, alteration or improvement. Tenant hereby acknowledges that Landlord has no obligation to make such alterations or improvements.
7.5. Indemnity. Tenant shall indemnify and save harmless Landlord against all actions, claims and damages by reason of (A) Tenant's failure to perform the terms of this Section 7, or (B) Tenant's nonobservance or nonperformance of any law, ordinance or regulation applicable to the Leased Premises, and any liability or duty to repair imposed by the laws of California.
8. PLANS AND SPECIFICATIONS; CONSTRUCTION; LIENS AND CLAIMS
8.1. Approval of Plans. No improvement shall be erected, placed, altered or maintained on the Premises unless plans and specifications have been approved in writing by Landlord, at Landlord’s sole discretion. Prior to commencing construction of any building, structure or improvement (not including the internal layout) on the Leased Premises, Tenant shall notify Landlord of the date of commencement and expected completion thereof and shall submit for approval plans and specifications in accordance with the City of El Paso de Robles Community Development Department Application Guide for Major Development, which can be found at:
http://www.prcity.com/government/departments/commdev/planning/pdf/formsapplications/MajorGuide.pdf:
8.2. Time for Approval. Tenant shall notify Landlord in writing when completed plans and specifications for improvements to be erected, placed or altered on the Premises have been submitted to Landlord ("Notice").
Such plans and specifications shall be processed in accordance with the normal procedures of the City of Paso Robles. If Landlord does not approve the plans and specifications, it shall notify Tenant of the reasons for its disapproval, and failure to so notify Tenant shall be deemed approval of the plans and specifications. By approving the plans and specifications, Landlord does not represent or warrant that such plans and specifications comply with Applicable Laws. Tenant shall be responsible, at Tenant's sole cost and expense, for securing all necessary governmental or quasi-governmental approvals of the plans and specifications and for securing all permits necessary to construct and operate any improvements or Approved Improvements.
8.25 Approval Delays. In the event the required approval process exceeds a period of one (1) year from the Commencement Date, or if Tenant is unable to obtain approvals necessary to use the Premises for the use set forth in Section 4.1.B, above, Tenant shall have the option to terminate this Lease in its entirety.
8.3. Commencement of Construction. Once Tenant has commenced construction, Tenant shall pursue the same with reasonable speed and dispatch in compliance with the approved plans and specifications. All construction shall be in accord with all applicable laws, ordinances and regulations. Tenant's construction shall Attachment 2
82477.03000\41062594.1
not interfere with Landlord's operation of the Airport, and Tenant shall comply with all directives of Landlord related thereto. If Tenant is prevented from completing improvements on account of strikes, lockouts, failure of contractor or subcontractors, inability to procure material or labor in the free market, governmental restrictions, fire, earthquake, the elements, or other casualty or similar extraordinary conditions beyond Tenant's reasonable control (excluding financial difficulties, economic conditions or inability to obtain governmental approvals), then the Tenant shall thereafter proceed with all reasonable speed and dispatch to complete the improvements.
8.4. Liabilities. By approving plans and specifications, Landlord assumes no liability therefor, or for any defect resulting from the plans and specifications. Tenant indemnifies and shall hold Landlord harmless from any damage, loss or prejudice claimed, and from all expenses incurred arising out of approvals of plans and specifications or any improvement on the Premises. Tenant hereby assigns to Landlord all warranties and guarantees of all material suppliers, contractors and subcontractors furnishing material or labor or otherwise relating to any improvements or Approved Improvements.
8.5. Approved Buildings and Improvements. All of the improvements shown in the approved plans and specifications constitute the "Approved Improvements." Substantial modifications to Approved Improvements shall be made only with prior written approval of Landlord, except that Landlord's prior written approval shall not be required for changes to the interior of any building on the Premises. Notwithstanding the foregoing, nothing in this Section 8.5 shall limit, alter, or waive the building and permit requirements of the City of Paso Robles.
8.6. Notice of Work. Before commencement of any construction, alteration, addition, replacement or restoration of any building, structure or other improvement, Tenant shall (A) give to Landlord written notice of the work to be performed, specifying the nature and location of the intended work and the expected date of commencement and completion thereof; and (B) provide Landlord with written plans and specifications therefor, and shall have obtained the written approval thereof from the Landlord as required above. Landlord reserves the right at any time and from time to time to post and maintain on the Leased Premises such notices as may be necessary to protect Landlord against liability for all such liens and claims.
8.7. Covenant Against Liens and Claims. Tenant shall not allow or permit to be enforced against the Leased Premises or any part thereof, any mechanic's, materialmen's, contractor's or subcontractor's liens arising from any claim growing out of work of any construction, repair, restoration, replacement or improvement, or any other claim or demand no matter how the same may arise. Tenant shall pay or cause to be paid all of said liens, claims or demands before any lawsuit is brought to enforce them against the Leased Premises. Tenant agrees to indemnify and hold the Landlord and the Leased Premises free and harmless from all liability for any and all such liens, claims and demands, together with reasonable attorneys' fees and all costs and expenses incurred by Landlord in connection therewith.
8.8. Tenant's Right to Contest Liens. Notwithstanding anything to the contrary set forth above, if Tenant shall in good faith contest the validity of any such lien, claim or demand, then Tenant shall, at its expense, defend itself and Landlord against the same and shall pay and satisfy any adverse judgment that may be rendered thereon before the enforcement thereof against Landlord or the Leased Premises. A condition to Tenant's right to contest the validity of any lien, claim or demand shall be that if Landlord shall require, Tenant shall furnish to Landlord evidence of a surety bond satisfactory to Landlord in an amount at least equal to the contested lien, claim or demand, the effect of which is to indemnify Landlord against liability for the same, and to hold the Leased Premises free from the effect of such lien or claim.
8.9. Landlord Paying Claims. In the event Tenant shall fail to pay and discharge or cause to be paid and discharged, when due and payable, any tax, assessment or other charge upon or in connection with the Leased Premises, or any lien or claim for labor or material employed or used or any claim for damages arising out of the construction, repair, restoration, replacement, maintenance and use of the Leased Premises and any improvements thereon, or any judgment on any contested lien or claim, or any insurance premium or expense in connection with the Leased Premises and improvements, or any other claim, charge or demand which Tenant has agreed to pay or cause to be paid under the terms of this Lease, and if Tenant, after fifteen (15) days' written notice from Landlord to do so shall fail to pay and discharge the same, or in the event Tenant contests such tax, Attachment 2
82477.03000\41062594.1
assessment, claim or charge and fails to post security as provided elsewhere in this Lease, then Landlord may, at his option, pay any such tax, assessment, insurance expense, lien, claim, charge or demand, or settle or discharge any action therefor, or judgment thereon, and all costs, expenses and other sums incurred or paid by Landlord in connection with any of the foregoing shall be paid by Tenant to Landlord upon demand, together with interest thereon at Bank of America's prime rate from the date incurred or paid. Any default in such repayment by Tenant shall constitute a breach of the covenants and conditions of this Lease.
8.10. Prevailing Wage. Tenant acknowledges that any improvements, alterations or repairs on the Premises, may be subject to the payment of prevailing wage under the provisions of the California Labor Code. To the extent any such improvements, alterations, or repairs are subject to prevailing wage requirements, the following shall apply:
A. Tenant shall and shall cause its contractors and subcontractors to: pay prevailing wages in the construction of any improvements, or alterations on the Premises, or any other work as those wages are determined pursuant to Labor Code Sections 1720 et seq.; to employ apprentices as required by Labor Code Sections 1777.5 et seq.; and comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and the implementing regulations of the Department of Industrial Relations (the “DIR”) for all such Labor Code sections.
B. Tenant shall indemnify, hold harmless and defend (with counsel selected by the Landlord), to the extent permitted by applicable law, Landlord, its councilmembers, commissioners, officials, employees and agents, against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Tenant, or its contractors or subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq., to hire apprentices in accordance with Labor Code Sections 1777.5 et seq., or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and the implementing regulations of the DIR in connection with the work performed pursuant to this Lease. The provisions of this Section shall survive expiration or earlier termination of this Lease.
9. INSURANCE AND INDEMNITY
9.1. Landlord's Non-liability. Landlord shall not be liable for any loss, damage or injury of any kind to any person or property arising from any use of the Leased Premises, or any part thereof, or caused by any defect in any building, structure or other improvement thereon or in any equipment or other facility therein, or caused by or arising from any act or omission of Tenant or any of its agents, employees, licensees or invitees, or by or from any accident on the Leased Premises or any fire or other casualty thereon, or occasioned by the failure of Tenant to maintain the Leased Premises and all improvements thereto in a safe condition, or arising from any other cause except where caused by the sole negligence of Landlord, its agents or employees.
9.2. Indemnification of Landlord.
A. To the fullest extent permitted by law, Tenant shall, at Tenant's sole expense and with counsel reasonably acceptable to Landlord, defend, indemnify, and hold harmless Landlord and Landlord's officers, officials, employees and agents from and against all claims, (including demands, losses, actions, causes of action, damages, liabilities, expenses, charges, assessments, fines or penalties of any kind, and costs including consultant and expert fees, costs of investigation, court costs and attorney’s fees) from any cause, arising out of or relating (directly or indirectly) to this Lease, the tenancy created under this Lease, or the Premises, including without limitation:
i. The use or occupancy, or manner of use or occupancy, of the Premises or buildings by Tenant;
ii. Any act, error or omission, or negligence of Tenant or of any subtenant, invitee, guest, contractor or licensee or Tenant or any subtenant in, on, or about the Premises; iii. Tenant’s conducting or managing of its business;
Attachment 2
82477.03000\41062594.1
iv. Any alterations, activities, work, or things done, omitted, permitted, allowed, or suffered by Tenant in, at, or about the Premises or buildings, including the violation of or failure to comply with any insurance requirements or any applicable laws, statues, ordinances, standards, rules, regulations, orders, decrees, or judgments in existence on the Commencement Date or enacted, promulgated, or issued after the date of this Lease, and;
v. Any breach or default in performance of any obligation on Tenant’s part to be performed under this Lease, whether before or during the term of this Lease or after its expiration or earliest termination.
B. This indemnification extends to and includes, without limitation, claims for:
i. Injury to any persons (including death at any time resulting from that injury); ii. Loss of, injury or damage to, or destruction of property (including loss of use at any time resulting from that loss, injury, damage, or destruction); and iii. All economic losses and consequential or resulting damage of any kind.
C. Tenant’s indemnification obligation hereunder shall survive the expiration or earlier termination of this Lease until all claims against Landlord involving any of the indemnified matters are fully, finally, and absolutely barred by the applicable statutes of limitations.
9.3. Liability Insurance. Tenant shall procure and maintain at all times during the term of this Lease, at its sole cost and expense, a policy or policies of comprehensive public liability insurance by the terms of which Landlord and Tenant are named as insured and are indemnified against liability for damage or injury to property or person, including death, of any person entering upon or using the Leased Premises or any improvements thereon or any part thereof, with a combined single limit coverage in an amount of not less than Two Million Dollars ($2,000,000.00) and annual aggregate coverage in an amount of not less than Two Million Dollars ($2,000,000.00) applying to injury to or death of any one or more persons arising from the same occurrence and for damage or injury to property. If Landlord's reasonably exercised judgment determines that the liability insurance amounts set forth herein become inadequate, then Landlord may, by written notice, require an increase in coverage commencing with the next policy anniversary date. Such public liability insurance policy or policies shall be stated to be primary and noncontributing with any insurance which may be carried by Landlord and shall contain a provision (provided such provisions are available without increased premium) that the Landlord, although named as an insured shall nevertheless be entitled to recover under that policy for any loss, injury or damage to the Landlord, its agents and employees or the property of such persons by reason of the negligence of Tenant. Worker's compensation insurance shall be in the amounts required by law.
9.4. Endorsements. The following endorsements shall be attached to the liability insurance policy:
A. If the insurance policy insures on an "accident" basis, it shall be changed to an "occurrence" basis.
B. The policy must cover personal injury, as well as bodily injury.
C. The coverage shall be at least as broad as comprehensive liability and broad form comprehensive general liability or "commercial" general liability.
D. The Landlord, its officers, agents, employees, and volunteers shall be named as insured under the coverage afforded with respect to liability arising out of activities performed by or on behalf of Tenant under this contract. The coverage shall contain no special limitations on the scope of protection afforded to Landlord, its officers, agents, employees and volunteers.
Attachment 2
82477.03000\41062594.1
E. An endorsement shall be attached which states that the coverage is primary insurance and that any insurance or self-insurance fund maintained by or available to Landlord or any of its officers, agents, employees or volunteers shall be in excess of Tenant's insurance and shall not be called upon to contribute to a loss covered by the policy.
F. The policy must provide that it shall not be canceled or changed or made the "retroactive date" of the policy or any renewal or replacement policy be changed without thirty (30) days' prior written notice to Landlord.
G. A cross-liability endorsement must be included to the effect that each insured is covered as if separate policies had been issued to each insured.
H. The liability coverage may be either on a blanket basis or a policy which specifically identifies this Lease with a contractual liability endorsement.
I. Any deductibles or self-insured retention must be declared to and approved by Landlord. At the option of Landlord, the insurer shall reduce or eliminate such deductibles or self-insured retention as respects the Landlord, its officers, agents, employees and volunteers or the Tenant shall procure a bond guaranteeing payment of losses and related investigation, claims administration and defense expenses.
J. If the policy or policies are written on a "claims made" basis, the retroactive date of such policies shall be maintained as the date this Lease was executed or earlier in time notwithstanding any renewals of such policies or changes in insurance carriers. Further, the reporting period for claims made under such policy or policies shall, at a minimum, continue through sixty (60) days after termination of this Lease.
9.5. Additional Requirements - Claims Made Policies.
A. Statement of Coverage. If the policy or policies are written on a "claims made" basis, the insurer shall provide Landlord with a statement specifically describing (A) the date coverage began under the policy and the retroactive date for claims received, (B) the reporting period(s) applicable to the policy, and (C) the incident, event and claims notice procedures applicable to the policy and the name and address of the person to whom notice of incidents, events and claims may be given.
B. Notice of Events and Claims. If the policy or policies are written on a "claims made" basis, Tenant shall give its insurance carrier and Landlord written notice of each and every event or incident occurring during the term of this Lease that may ripen into a claim. Notice shall be given no later than ten (10) days after such event or incident.
9.6. Fire Insurance. Tenant shall at all times during the term of this Lease and at its sole expense, procure and maintain in full force a policy or policies of standard fire and extended coverage insurance insuring all improvements on the Leased Premises in an amount equal to not less than the full replacement costs. Tenant agrees to reevaluate insurance coverage at three (3)-year intervals and to increase said coverage if it shall be less than the then full replacement cost of the improvements on the Leased Premises. The amount of the full replacement cost shall be determined in writing by the carrier of insurance then in force and shall be binding on the parties for the purpose of this paragraph. The insurance policies insuring against fire or other casualty shall include a "Loss Payee" endorsement issued in favor of Landlord and the interest of the holder of any "mortgage" executed by Tenant in connection with obtaining of any interim or permanent financing with respect to the Leased Premises, and said policies shall provide that any loss is payable jointly to Landlord, Tenant and the holder, if any, of a "mortgage" in the Tenant's interest under this Lease. Proceeds from any insurance policy shall be used in accordance with the provisions of this Lease dealing with use of insurance funds for repair and restoration.
Attachment 2
82477.03000\41062594.1
9.7. Certificates or Policies of Insurance. All policies of insurance procured and maintained by Tenant hereunder shall be issued by companies authorized to do business in California having not less than Best's A rating and shall be issued in the name of the Landlord and Tenant for the mutual and joint benefit and protection of the parties. Executed copies of all insurance policies or a certificate thereof shall be delivered to Landlord on the Commencement Date and shall contain a provision that not less than thirty (30) days' written notice shall be given to Landlord prior to the cancellation, reduction of coverage, expiration or any material change in any such policy.
9.8. Use of Insurance Funds for Repair and Restoration. In the event any buildings, structures or improvements located on the Leased Premises are damaged by fire or other casualty, any such sums as are received from or on account of any policy of insurance covering the same shall, except as provided in Section 10 below, be expended for the restoration, repair or replacement of said buildings, structures or improvements.
9.9. Failure to Provide Insurance. If Tenant fails or refuses to procure or to maintain insurance as required by this Lease or fails or refuses to furnish Landlord with required proof that the insurance has been procured and is in force and paid for, Landlord shall have the right at Landlord's election, without notice, to procure and maintain such insurance. The premiums paid by Landlord shall be treated as added rent due from Tenant with interest at the Bank of America prime rate, to be paid within thirty (30) days of demand. Landlord shall give prompt notice of the payment of such premiums, stating the amounts paid and the names of the insurer or insurers.
9.10. Waiver of Subrogation. The parties hereby release each other, and their respective representatives, from any claims for damage to any person or to the Premises and the improvements which may be located upon the Premises and to the fixtures, personal property, Tenant's improvements and alterations of Tenant in or on the Premises and the improvements which may be located upon the Premises that are caused by or result from risks insured against under any insurance policies carried by the parties hereto and in force at the time of any such damage. Each party hereto shall cause each insurance policy obtained by it to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any policy, provided obtaining such a waiver in each such policy is then available at a reasonable charge.
10. REPAIR AND RESTORATION
If during the term of this Lease any building or improvement on the Leased Premises or any part thereof shall be damaged or destroyed by fire or other casualty, Tenant shall, at its sole cost and expense, repair or restore the same according to the original plans thereof or to such modified plans as shall be previously approved in writing by Landlord pursuant to Section 8. If such damage or destruction occurs during the last eighteen (18) months of the Lease term Tenant shall have no duty to repair or restore, and if Tenant elects not to repair or restore, this Lease shall terminate and Landlord shall receive all insurance proceeds that are attributable to those improvements that would become the property of the Landlord pursuant to Section 17. Such work of repair or restoration shall be commenced within one hundred twenty (120) days after the damage or loss occurs and shall be completed with diligence but not longer than one (1) year after such work is commenced, provided, however, that the time for completion of such repair and restoration shall be extended as appropriate in accordance with the provisions of Section 21.15 below. If insurance proceeds provided for above shall be insufficient for the purpose of such restoration and repair, or if the casualty is one not required to be insured against, then Tenant shall make up the deficiency out of its own funds. Tenant waives the provisions of Civil Code Sections 1932(2) and 1933(4) with respect to any destruction of the Premises.
11. ASSIGNMENT AND SUBLETTING
11.1. Restriction of Assignment. Except as provided in Section 19 of this Lease entitled "Hypothecation of Leasehold Interest," Tenant shall not encumber, assign or otherwise transfer this Lease, or any right or interest hereunder, or in or to any of the improvements constructed or installed on the Leased Premises, in whole or in part, without the prior written consent of Landlord. Landlord's consent will not be unreasonably withheld. If Tenant is a corporation or a partnership, any change in Tenant which would be a "change in ownership" pursuant to California Revenue and Taxation Code Sections 60 et seq. shall be deemed an assignment subject to Attachment 2
82477.03000\41062594.1
Landlord's consent. It shall not be unreasonable for Landlord to withhold or condition its consent based on the prospective assignee's financial strength, credit history or any other factor which Landlord reasonably believes germane to a tenant's ability and willingness to perform the obligations of this Lease. No such assignment shall release Tenant of further liability under this Lease unless express written approval is signed by Landlord.
11.2. Restriction on Subleasing. Tenant may not sublease all or any portion of the Leased Premises or the improvements constructed or installed on the Leased Premises without the prior written consent of Landlord.
Landlord's consent shall not be unreasonably withheld.
Any such sublease shall provide: (A) such subleasing shall be subject to the terms of this Lease; (B) such subleasing shall comply with all applicable statutes and regulations, including, without limitation, the California Subdivision Map Act and the provisions of Section 20 hereof; (C) all building improvements and alterations constructed on the Leased Premises shall have been approved by Landlord pursuant to Section 8 of this Lease; (D) Tenant shall remain liable under this Lease; (E) subtenant shall not be permitted to further assign or sublet the Leased Premises to any person or entity, including the affiliated entities stated above; and (F) each sublease shall contain a provision satisfactory to Landlord requiring the subtenant, if Landlord shall so demand as provided below, to attorn to Landlord if Tenant defaults under this Lease, and if the subtenant is notified of Tenant's default and instructed to make subtenant's rental payments to Landlord, but Landlord shall have no obligation to recognize the subtenant or to allow any subtenant to remain in possession upon the default of Tenant. Tenant's failure to comply with any of the foregoing requirements shall render any such sublease void.
11.3. Effect of Failure to Comply. Except as provided above, no encumbrance, assignment or other transfer, whether voluntary, involuntary, by operation of law, under legal process, through a receivership, bankruptcy or otherwise, shall be valid or effective without the prior written consent and approval of Landlord. Except as provided in Section 11.1 and 11.2, if Tenant attempts to make or allow to be made any subleasing, encumbrance, assignment or other transfer except in accordance with the provisions of this Section 11, then any of the foregoing events shall be deemed a breach of the conditions and restrictions of this Lease, and upon such breach, Landlord may, at its option, terminate this Lease at once by written notice, and upon such termination this Lease shall end and be of no further force.
12. CONDEMNATION
If, during the term of this Lease there is a taking, or transfer of, or damage to all or any part of the Leased Premises (Leased Premises as used herein shall include all appurtenant interests such as access rights) for a public use by any individual or entity, public or private, possessing the power of eminent domain, whether by condemnation proceedings or otherwise (hereinafter referred to as "appropriation"), the rights and obligations of Landlord and Tenant with regard to such appropriation shall be governed by the provisions of this Section.
12.1. Date of Taking. The date of taking, as used in this Section, is defined as the earliest of the following dates: (A) the date legal possession is taken, which is defined as the date, if any is established, after which the condemnor may take possession of the property as stated in an order authorizing the condemnor to take possession; (B) the date a final order of condemnation or final judgment is filed or recorded or the date a deed is recorded in the event of a voluntary sale; and (C) the date physical possession of the property is taken.
12.2. Total Taking. Total taking means an appropriation of the entire Leased Premises or so much thereof as to prevent or substantially impair the conduct of Tenant's business unless Tenant elects to continue the Lease in effect. If during the term of this Lease there is an appropriation of the Leased Premises which amounts to a total taking as herein defined, then the leasehold estate of Tenant in and to the Leased Premises shall cease and terminate as of the date of such taking, and all rentals and other charges payable by Tenant to Landlord hereunder and attributable to the Leased Premises shall be paid up to the date of such taking.
12.3. Partial Taking. The term "partial taking" shall mean the taking of a portion only of the Leased Premises which does not constitute a total taking as defined above. If during the term of this Lease there shall be a partial taking of the Leased Premises, this Lease shall terminate as to the portion of the Leased Premises so taken at the date of taking as herein defined, but said Lease shall continue in force and effect as to the remainder of the Leased Premises. The rental payable hereunder by Tenant shall, as of the date of taking, be adjusted so Attachment 2
82477.03000\41062594.1
that Tenant shall be required to pay for the remainder of the term only such portion of such rent as the value of the part of the Leased Premises remaining after the taking bears to the value of the entire Leased Premises at the date of taking.
12.4. Abandonment of Proceedings. In the event the condemning agency shall abandon an eminent domain proceeding, either party hereto shall have the right to contest the condemnor's abandonment and a right to its respective costs and disbursements as defined and provided for in California law. If after the condemnor takes possession or the Tenant moves from the property sought to be condemned in compliance with an order of possession, the condemnor abandons the proceeding as to such property or a portion thereof, or if it is determined that the condemnor does not have authority to take such property or portion thereof by eminent domain and the condemnor is required by law to deliver possession of such property or such portion thereof to the party entitled to the possession thereof and pay damages as provided for in California law, then Tenant shall receive the award for costs and damages incurred by reason of Tenant being removed from possession of the Premises, but Tenant shall be entitled to retake possession of the Premises and, in the event of such repossession by Tenant, all of the terms of this Lease shall remain in operation and effect.
12.5. Allocation of Award. All compensation and damages awarded for the taking of the Leased Premises or any portion thereof shall, except as otherwise herein provided, belong to and be the sole property of Landlord.
However, any award that may be made for the taking of or injury to the Approved Improvements, and all other improvements constructed by Tenant on the Leased Premises shall belong to Tenant. Tenant shall be entitled to any award for damage to Tenant's business or on account of any cost or loss Tenant may sustain in the removal of Tenant's fixtures, equipment and furnishings, or as a result of any alterations, modifications or repairs which may be reasonably required by Tenant in order to place the remaining portion of the Leased Premises not so condemned in a suitable condition for the continuance of Tenant's tenancy. Tenant shall also be entitled to that portion of any award that may be attributable to any severance damages to the remaining leasehold interest, to any improvements constructed by Tenant, and to good will.
12.6. Cost. Each party shall bear his own costs, attorneys' fees, appraiser's fees and all other costs in connection with any matter contained in this Section, except as may be otherwise provided.
12.7. Right of Entry. Neither party hereto shall grant a right of entry to any condemnor without the written consent of the other party hereto.
13. DEFAULT
The occurrence of any one or more of the following events shall constitute a default under this Lease by Tenant:
13.1. Events of Default. The occurrence of any of the following shall constitute an event of default on the part of the Tenant:
A. Tenant fails to make the payment of any installment of rent or other sum when due hereunder (“Monetary Default”) within ten (10) days from when due.
B. Failure to perform any obligation, agreement or covenant under this Lease (“Non-Monetary Default”) and such failure continues for fifteen (15) days after written notice of such failure, or if such Non-Monetary Default cannot be cured within fifteen (15) days, Tenant has not commenced corrective action and prosecuted the same to completion with due diligence, or the Non-Monetary Default is of such a nature that it cannot be cured by any action of Tenant.
C. Failure to pay any insurance premium, lien, claim, demand, judgment or other charge provided for in this Lease to be paid or caused to be paid by Tenant at the time and in the manner as provided for in this Lease.
D. Failure to maintain the Premises or cause the same to be maintained as provided for in this Lease.
Attachment 2
82477.03000\41062594.1
E. Abandonment or vacation of the Premises for a continuous period in excess of thirty (30) days without payment of rent. Tenant waives any right to notice Tenant may have under Section 1951.3 of the Civil Code of the State of California, the terms of this Section 13.1 being deemed such notice to Tenant as required by said Section 1951.3.
F. Default by Tenant under the terms of any mortgage on the estate of Tenant.
G. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant's creditors, which involuntary petition remains undischarged for a period of thirty (30) days. If under applicable law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant's obligations under this Lease.
H. The attachment, execution or other judicial seizure of all or substantially all of Tenant's assets or Tenant's leasehold of the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of fifteen (15) days after the levy thereof.
I. The admission by Tenant in writing of its inability to pay its debts as they become due; J. A general assignment by Tenant for the benefit of creditors.
K. Failure to maintain compliance with Economic Development Administration Civil Rights Provisions and Certificate on Non-relocation.
L. Failure to complete construction of proposed development outlined in Eexhibit C, which is attached hereto and made a part hereof, within 5 years.
14. REMEDIES IN EVENT OF DEFAULT
14.1. Termination. In the event of the occurrence of any event of default, Landlord shall have the right to give a written termination notice to Tenant, and on the date specified in such notice, Tenant's right to possession shall terminate, and this Lease shall terminate unless on or before such date all Rent in arrears and all costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other events of default of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord.
At any time after such termination, Landlord may recover possession of the Premises or any part thereof and expel and remove therefrom Tenant and any other person occupying the same, including any subtenant or subtenants notwithstanding Landlord's consent to any sublease, by any lawful means, and again repossess and enjoy the Premises without prejudice to any of the remedies that Landlord may have under this Lease, or at law or equity by any reason of Tenant's default or of such termination. Landlord hereby reserves the right, but shall not have the obligation, to recognize the continued possession of any subtenant. The delivery or surrender to Landlord by or on behalf of Tenant of keys, entry codes, or other means to bypass security at the Premises shall not terminate this Lease.
14.2. Continuation after Default. Even though an event of default may have occurred, this Lease shall continue in effect for so long as Landlord does not terminate Tenant's right to possession under Section 14.1 hereof. Landlord shall have the remedy described in California Civil Code Section 1951.4 ("Landlord may continue this Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations"), or any successor code section.
Accordingly, if Landlord does not elect to terminate this Lease on account of any event of default by Tenant, Landlord may enforce all of Landlord's rights and remedies under this Lease, including the right to recover Rent as it becomes due. Acts of maintenance, preservation or efforts to lease the Premises or the appointment of a receiver under application of Landlord to protect Landlord's interest under this Lease or other entry by Landlord upon the Premises shall not constitute an election to terminate Tenant's right to possession.
Formatted: Indent: Left: 0.5"
Attachment 2
82477.03000\41062594.1
14.3. Damages After Default. Should Landlord terminate this Lease pursuant to the provisions of Section 14.1 hereof, Landlord shall have the rights and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor code sections. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitled under applicable law or at equity, Landlord shall be entitled to recover from Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination, (2) the worth at the time of award of the amount by which the unpaid Rent and other amounts that would have been earned after the date of termination until the time of award exceeds the amount of such Rent loss that Tenant proves could have been reasonably avoided; (3) the worth at the time of award of the amount by which the unpaid Rent and other amounts for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant proves could be reasonably avoided; and (4) any other amount and court costs necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The "worth at the time of award" as used in (1) and (2) above shall be computed at the Applicable Interest Rate (defined below). The "worth at the time of award" as used in (3) above shall be computed by discounting such amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). If this Lease provides for any periods during the Term during which Tenant is not required to pay Base Rent or if Tenant otherwise receives a Rent concession, then upon the occurrence of an event of default, Tenant shall owe to Landlord the full amount of such Base Rent or value of such Rent concession, plus interest at the Applicable Interest Rate, calculated from the date that such Base Rent or Rent concession would have been payable.
14.4. Landlord’s Option to Cure. Notwithstanding the foregoing, if Tenant fails to provide necessary repair and maintenance of the Premises and all improvements thereon, Landlord shall have the right but not the obligation, after notice provided for above, and failure of Tenant to cure or commence and diligently pursue a cure to such default, to enter the Premises and take all corrective action necessary in the sole judgment of Landlord. Any such entry shall be at the sole risk and expense of Tenant. Tenant shall immediately, upon presentation of a statement therefor, reimburse Landlord for all costs incurred by Landlord in taking such corrective action with interest on said sums from the date of payment by Landlord at the lower of: (A) the highest rate allowed by law; or (B) two points over the prime rate charged from time to time by the Bank of America, or if the Bank of America no longer exists, an equivalent institution. Nothing in this Section shall: (i) require Landlord to take any corrective action on the Premises; (ii) diminish the rights and remedies of Landlord under this Lease, whether or not Landlord elects to take such corrective action; and (iii) cause a waiver by Landlord of any of its rights and remedies under this Lease. Any such reentry shall be allowed by Tenant without hindrance, and Landlord shall not be liable in damages for any such reentry, or be guilty of trespass or forcible entry.
14.5. Remedies Cumulative. All of Landlord’s rights, privileges and elections or remedies are cumulative and not alternative, to the extent permitted by law and except as otherwise provided herein.
14.6. Replacement of Statutory Notice Requirements. When this Lease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notice required by California Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Lease) in the manner required by this Section 14.6 shall replace and satisfy the statutory service-of-notice procedures, including those required by California Code of Civil Procedure Section 1162 or any similar or successor statute.
15. LANDLORD'S RIGHT TO SELL ITS INTEREST
15.1. Landlord's Right to Sell. Landlord shall have the right to sell all of its interest in the Leased Premises and any lease with respect thereto. If Landlord chooses to exercise such right to sell, and whether such sale is to a public entity or non-public entity, Landlord shall conduct the sale in accordance with the legal requirements imposed upon a municipality by law.
15.2. Landlord's Release from Liability Upon Sale. In the event of any such sale by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability under all of its covenants and unaccrued obligations Attachment 2
82477.03000\41062594.1
contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale.
16. ESTOPPEL CERTIFICATES
Landlord and Tenant shall, respectively, at any time and from time to time upon not less than ten (10) days' prior written request by the other, deliver to the requesting party an executed and acknowledged statement in writing certifying:
16.1. That this Lease is unmodified and in full force and effect (or if there has been any modification(s) thereof that the same is in full force and effect as modified, and stating the nature of the modification or modifications);
16.2. That to its knowledge the requesting party is not in default under this Lease (or if any such default exists, the specific nature and extent thereof),
16.3. The date to which rent and other charges have been paid in advance, if any; and
16.4. Such other statements as Landlord or Tenant reasonably requests.
Each certificate delivered pursuant to this Section may be relied on by any prospective purchaser or transferee of the Leased Premises or of Landlord's or Tenant's interest hereunder or by any fee mortgagee of the Leased Premises or of Landlord's or Tenant's interest hereunder or by any assignee of any such mortgagee. Tenant shall be liable to Landlord for all damages suffered by Landlord attributable to Tenant's failure to timely deliver an accurate estoppel, including loss or renegotiation of a sale, financing or bond financing.
17. OWNERSHIP OF IMPROVEMENTS
At the expiration or sooner termination of the term of this Lease, all improvements pertaining to the real property shall become the property of Landlord.
18. SUBORDINATION FOR BENEFIT OF LANDLORD
If Landlord desires this Lease to be subordinated to any mortgage, deed of trust or other encumbrance ("Fee Mortgage") now or hereafter placed upon the Leased Premises by Landlord, and all advances, whether obligatory or optional made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof, this Lease, at Landlord's election, shall be subordinate to any such Fee Mortgage provided Landlord first obtains from the lender a written agreement that provides substantially as follows: As long as Tenant performs its obligations under this Lease, no foreclosure of, deed given in lieu of foreclosure of, or sale under the encumbrance, and no steps or procedures taken under the encumbrance, shall affect Tenant's rights under this Lease.
Subject to the foregoing, Tenant agrees to execute any documents required to effectuate such subordination, and failing to do so within ten (10) days after Landlord's written request to Tenant therefore, does hereby irrevocably appoint Landlord as Tenant's attorney-in-fact in Tenant's name to do so.
19. HYPOTHECATION OF LEASEHOLD INTEREST
Tenant is hereby given the right by Landlord, in addition to any other rights herein granted, without Landlord's prior written consent, to mortgage its interest in this Lease, under one or more leasehold Mortgage(s) and assign its interest in this Lease, as collateral security for such Mortgage(s) to secure any bona fide loan upon the condition that all rights acquired under such leasehold Mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights and interest of Landlord herein, none of which covenants, conditions or restrictions is or shall be deemed waived by Landlord by reason of the right given so to mortgage such interest in this Lease, except as expressly provided herein. If Tenant shall mortgage this leasehold, and if the holder(s) of such Mortgage(s) shall, within thirty (30) days of execution, send to Landlord a true copy thereof, together with written notice specifying the name and address of the Attachment 2
82477.03000\41062594.1
Mortgagee(s) and the pertinent recording data with respect to such Mortgage(s), Landlord agrees that (effective upon receipt of such notice) so long as any such leasehold Mortgage(s) shall remain unsatisfied of record or until written notice of satisfaction is given by the holder(s) to Landlord, the following provisions shall apply:
19.1. Except for the natural expiration of the term of this Lease, there shall be no cancellation, surrender or material modification of this Lease by joint action of Landlord and Tenant without the prior consent in writing of the leasehold Mortgagee(s);
19.2. Landlord shall, upon serving Tenant with any notice of default, simultaneously serve a copy of such notice upon the holder(s) of record of such leasehold Mortgage(s). The leasehold Mortgagee(s) shall thereupon have sixty (60) days, after service on it of such a notice, either to cure such default or breach, if the same can be cured by the payment of money, or if such default or breach is not so curable or cannot be remedied within said sixty (60) day period, if such holder, within said period, shall (A) commence in good faith to cure such default or breach if curable and thereafter diligently prosecute the same to completion, or (B) institute proceedings for the foreclosure of such mortgage and thereafter diligently prosecute the same to completion; provided such holder keeps and performs all of the covenants and conditions of this Lease herein provided to be kept and performed by Tenant, and capable of being performed by such holder, until such time as Tenant or such holder shall cure any defaults hereunder (if curable) or until the leasehold hereunder shall be either sold upon foreclosure pursuant to any such mortgage or shall be released from said mortgage or reconveyed thereunder.
The time periods set forth immediately above shall be extended for delays occasioned by the application of any law, rule, court order or court decree restraining or prohibiting such leasehold Mortgagee(s) from taking any such action. If such leasehold Mortgagee(s) undertakes to so cure any such default by Tenant in accordance with the terms and conditions set forth in this subsection 19.2, Landlord shall not terminate this Lease. If the leasehold Mortgagee(s) has fully complied with the foregoing provisions of this subsection 19.2 but all such defaults of Tenant have not been cured by the time that Tenant's interest under this Lease is sold by a judicial or nonjudicial foreclosure sale or by deed in lieu of foreclosure, the party who acquires such leasehold estate and interest through such foreclosure sale or deed in lieu of foreclosure shall not be in default hereunder by reason of such uncured defaults, provided such party diligently prosecutes to completion the curing of all such defaults which are curable by such party.
19.3. Notwithstanding anything contained herein to the contrary, if Landlord shall elect to terminate this Lease by reason of any default of Tenant, the leasehold Mortgagee(s) shall have the right to postpone and extend the specified date for termination of this Lease as fixed by Landlord in its notice of termination, for a period of six (6) months, provided that such leasehold Mortgagee(s) shall cure or cause to be cured any then existing money defaults and meanwhile pay the rent and comply with and perform all of the other terms, conditions and provisions of this Lease on Tenant's part to be complied with and performed, and capable of being performed by such holder, other than past nonmonetary defaults, and provided further that the leasehold Mortgagee(s) shall forthwith take steps to acquire or sell Tenant's interest in this Lease by foreclosure of the Mortgage(s) or otherwise and shall prosecute the same to completion with all due diligence. If at the end of said six (6) month period the leasehold Mortgagee(s) shall be actively engaged in steps to acquire or sell Tenant's interest herein, the time of said Mortgagee(s) to comply with the provisions of this Section 19.3 shall be extended for such period as shall be reasonably necessary to complete such steps with reasonable diligence, but in no event shall such extension exceed an additional twelve (12) months.
19.4. Landlord agrees that the name of the leasehold Mortgagee(s) may be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant hereunder on condition that the insurance proceeds are to be applied in the manner specified in this Lease and that the leasehold Mortgagee(s) or collateral document shall so provide.
19.5. Nothing contained herein shall require the leasehold Mortgagee(s) to cure any default of Tenant hereunder, but such failure to cure and proceed in accordance with this Section 19 shall leave Landlord free to terminate this Lease and to pursue all of its rights against Tenant.
Attachment 2
82477.03000\41062594.1
19.6. Any act required to be performed by Tenant pursuant to the terms of this Lease may be performed by any leasehold mortgagee on Tenant's behalf and the performance of such act shall be deemed to be performance by Tenant and shall be acceptable as Tenant's act by Landlord.
20. COMPLIANCE WITH FEDERAL REQUIREMENTS
20.1. Tenant, for itself, its heirs, personal representatives, successors in interest, sub-lessees and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that in the event facilities are constructed, maintained or otherwise operated on the said property described in this Lease for a purpose for which a Department of Transportation program or activity is extended or for another purpose involving the provision of similar services or benefits, Tenant shall maintain and operate such facilities and services in compliance with all other requirements imposed pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally-Assisted Programs of the Department of Transportation Effectuation of Title VI of the Civil Rights Act of 1964, or as said Regulations may be amended.
20.2. Tenant, for itself, its personal representatives, successors in interest and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land:
(A) that no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of or be otherwise subjected to discrimination in the use of said facilities; (B) that in the construction of any improvements on, over or under such land and the furnishing of services thereon, no person on the grounds of race, color or national origin shall be excluded from participation in, denied the benefits of or otherwise be subject to discrimination; and (C) that Tenant shall use the Premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in FederallyAssisted Programs of the Department of Transportation-Effectuation of Title VI of the Civil Rights Act of 1964, and assaid Regulations may be amended.
20.3. Tenant agrees that it shall insert Sections 20.1 and 20.2 in any lease agreement by which said Tenant grants a right or privilege to any person, firm or corporation to render accommodations and/or services to the public on the Premises herein leased.
21. MISCELLANEOUS
21.1. Attorneys' Fees. In the event any action is brought by Landlord to recover any rent due and unpaid hereunder or to recover possession of the Leased Premises, or in the event any action is brought by Landlord or Tenant against the other to enforce or for the breach of any of the terms, covenants or conditions contained in this Lease, the prevailing party shall be entitled to recover reasonable attorneys' fees to be fixed by the Court, together with costs of suit therein incurred.
21.2. Waiver. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions and conditions hereof. No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of any such right or remedy or of any default by Tenant under this Lease. The various rights and remedies reserved to Landlord herein including those not specifically described in this Lease shall be cumulative and, except as otherwise provided by California statutory law in force at the time of execution of this Lease, Landlord may pursue any or all of such rights and remedies whether at the same time or otherwise.
21.3. Holding Over. If Tenant shall hold over the Leased Premises after the expiration of the term hereof with the consent of Landlord, either express or implied, such holding over shall be construed to be only a tenancy from month to month, subject to all the covenants, conditions and obligations hereof, except that Tenant shall pay to Landlord 200% of Base Rent due as of the expiration of the term; terminable on thirty (30) days written notice given at any time by either party; provided, however, that nothing herein contained shall be construed to Attachment 2
82477.03000\41062594.1
give Tenant any rights to so hold over and to continue in possession of the Leased Premises after the expiration of the term hereof.
21.4. Surrender at End of Term. Upon the end of the term of this Lease, as provided herein, or any extension thereof, or sooner termination of this Lease, Tenant shall surrender to Landlord all and singular the Leased Premises, together with all improvements, except as hereinabove provided, and all fixtures appurtenant to the real estate in broom-clean, good condition, reasonable wear and tear excepted.
21.5. Lease Binding Upon Successors and Assigns. Subject to the limitations on assignment and subleasing, each of the terms, covenants and conditions of this Lease shall extend to and be binding on and inure to the benefit of not only Landlord and Tenant, but each of their successors and assigns. Whenever in this Lease reference is made to either Landlord or Tenant, the reference shall be deemed to include, wherever applicable, the successors and assigns and such parties the same as if in every case expressed.
21.6. Inspection. Landlord reserves the right for Landlord and Landlord's agents and representatives to enter upon the Leased Premises at any reasonable time upon five (5) days prior written notification for the purpose of attending to Landlord's interest hereunder, and to inspect the Leased Premises.
21.7. Relationship of Parties. The relationship of the parties hereto is that of Landlord and Tenant, and it is expressly understood and agreed that Landlord does not in any way nor for any purpose become a partner of Tenant or a joint venturer with Tenant in the conduct of Tenant's business or otherwise.
21.8. Time of the Essence. Time is expressly declared to be of the essence of this Lease.
21.9. Memorandum of Lease. This Lease shall not be recorded, but the parties agree to execute and deliver a Memorandum of this Lease in recordable form.
21.10. Quitclaim. At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord within five (5) days after written demand from Landlord to Tenant any quitclaim deed or other document required by any reputable title company to remove the cloud of this Lease from the real property subject to this Lease.
21.11. Number and Gender. Whenever the singular number is used in this Lease and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and the word "person" shall include corporation, firm or association. If there is more than one Tenant, the obligations imposed under this Lease upon Tenant shall be joint and several.
21.12. Headings and Titles. The marginal headings or titles to the Sections of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part of this Lease.
21.13. Compliance with Governmental Regulations. Tenant shall, at its own cost and expense, promptly and properly, comply with and execute, including the making of any alteration to the Leased Premises, all orders, regulations, laws and requirements of all governmental authorities arising from the use or occupancy of, or applicable to, the Leased Premises ("Applicable Laws").
21.14. Entire Agreement; Amendments. This Lease, including the exhibits attached hereto and all documents referenced herein, all of which are incorporated herein by reference, contain the entire agreement of the parties hereto with respect to the matters covered hereby, and no other previous agreement, statement or promise made by any party hereto which is not contained herein shall be binding or valid. No amendment or modification to this Lease shall be effective unless in writing and signed by both Landlord and Tenant.
21.15. Force Majeure. Except as to the payment of rent, neither of the parties hereto shall be chargeable with, liable for, or responsible to, the other for anything or in any amount for any delay caused by fire, earthquake, Attachment 2
82477.03000\41062594.1
explosion, flood, hurricane, the elements, acts of God, or the public enemy, action or interference of governmental authorities or agents, war, invasion, insurrection, rebellion, riots, strikes, or lockouts or any other cause whether similar or dissimilar to the foregoing, which is beyond the control of such parties and any delay due to said causes or any of them shall not be deemed a breach of or default in the performances of this Lease.
21.16. Disclaimer of Representation. Except as otherwise specifically provided herein, Landlord has made no representations or warranties to the Tenant concerning the Leased Premises, the present use thereof or the suitability for Tenant's intended use of the property. The foregoing disclaimer includes, without limitation, topography, climate, air, water, water rights, utilities, present and future zoning, soil, subsoil, drainage, access to public roads, proposed routes of roads, or extension thereof, or effect of any state or federal environmental protection laws or regulations. Tenant represents and warrants to Landlord that he and his representatives have made or will make their own independent inspection and investigation of the Leased Premises and Tenant, in entering into this Lease, is relying solely on such inspection and investigation. No patent or latent physical condition of Leased Premises, whether or not known or discovered, shall affect the rights of either party hereto.
Any agreement, warranties or representations not expressly contained herein shall in no way bind either Tenant or Landlord. Landlord and Tenant waive any right of rescission and all claims for damages by reason of any statement, representations, warranty, promise and agreement, if any, not contained in this Lease.
21.17. Priority of Lease. This Lease is subject and junior to all existing easements, covenants, conditions and restrictions and other matters and encumbrances of record.
21.18. Late Charge. Both Landlord and Tenant acknowledge and agree that Landlord is dependent on the revenue from Tenant for Airport operations and that it would be extremely difficult to estimate the damages to Landlord from late payment by Tenant. If any installment of Base Rent or other payment due from Tenant is not received by Landlord within ten (10) days of the date upon which it is due, Tenant shall pay to Landlord an additional charge of ten percent (10%) of the overdue payment as a late charge.
21.19. Interest on Past Due Obligations. Any amount due from Tenant to Landlord which is not paid when due shall bear interest at an annual rate equal to the higher of (A) ten percent (10%) per annum, or (B) five percent (5%) per annum in excess of the prevailing rate established by the Federal Reserve Bank at San Francisco on advances to member banks on the twenty-fifth (25th) day of the month preceding the Commencement Date (but not more than the maximum rate permissible by law), from the due date until paid, but the payment of such interest shall not excuse or cure any default by Tenant. Said interest is in addition to the late charge due pursuant to Section 21.18.
21.20. Rules and Regulations. Tenant shall comply, and shall ensure that its employees, visitors and guests comply, with the Rules and Regulations established by Landlord for use of the Airport or the Premises, as the same may be amended from time to time by Landlord (“Airport Rules and Regulations”). Landlord has provided Tenant with a copy of the Airport Rules and Regulations in effect as of the Commencement Date, and shall provide Tenant with a copy of any and all rules and regulations and any amendments thereto that may be established by Landlord during the term hereof. As required by the Airport Rules and Regulations, Tenant shall maintain on the Premises a copy of the Airport Rules and Regulations and make it available to all persons upon request. Landlord shall not be responsible to Tenant for the nonperformance of any other tenant or occupant of the Airport of any of said Airport Rules and Regulations.
21.21. Airport Operation. It is understood and agreed that general control over said Airport and all flying activities in connection therewith are vested by law in the City acting by and through its City Council, Committees and Officers appointed by such City Council. In the general operation of any activities conducted under the terms of this Lease, Tenant agrees to comply with the Airport Rules and Regulations and all other reasonable rules and regulations adopted by the City for the use and operation of the Airport which are not in conflict with the terms of this Lease.
21.22. Continued Operation. Save and except as to acts beyond its control, the City does hereby obligate itself during the Term hereof to continue the operation of said Airport as a public airport, consistent with public regulations.
Attachment 2
82477.03000\41062594.1
21.23. Payments and Notices. Any notice to be given or other document to be delivered by either party to the other party may be given by personal delivery, generally recognized overnight courier, prepaid, or may be deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed to the party for whom intended as follows:
To Landlord: City of Paso Robles
Municipal Airport
1000 Spring Street
Paso Robles, CA 93446
To Tenant: XXX
Either party hereto may from time to time by written notice to the other party designate a different address which shall be substituted for the one specified above. Notices and documents shall be served upon receipt or, if any notice or other document is sent by registered or certified mail, as provided above, the same shall be deemed served or delivered seventy-two (72) hours after the mailing thereof.
This Municipal Airport Property Lease / Nonsubordinated Airport Property Lease has been executed on this ______________ day of _________________, XXXX
Landlord: Tenant:
CITY OF PASO ROBLES XXX
____________________________________ _____________________________________ Ty Lewis, City Manager XXX
Attest:
_____________________________________
Melissa Boyer, City Clerk
Approved as to Form:
______________________________________
Elizabeth Hull, City Attorney
Attachment 2
82477.03000\41062594.1
EXHIBIT ‘A’
Legal Description of Leased Premises
A leasehold estate described as follows:
Attachment 2
82477.03000\41062594.1
EXHIBIT B
HAZARDOUS MATERIALS LIST
None Submitted.
Attachment 2
82477.03000\41062594.1
EXHIBIT C
Building/Development Plans
Attachment 2
MARKET RENT ANALYSIS
****************
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport (PRB)
Paso Robles, California
Prepared for:
Ms. Meg Williamson
Assistant City Manager
Paso Robles Municipal Airport
1000 Spring Street
Paso Robles, California 93446
Date of Report & Analysis: December 1, 2015
Attachment 3
Airport Business Solutions
“Valuation and Consulting Services to the Aviation Industry” 12950 Race Track Road, Suite 206, Tampa, Florida 33626-1307 Phone (813) 855-3600 Fax (813) 200-1014
Solutions as Unique as the Problems . . .
December 1, 2015
Ms. Meg Williamson
Assistant City Manager
Paso Robles Municipal Airport
1000 Spring Street
Paso Robles, California 93446
RE: Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport (PRB)
Paso Robles, California
Dear Ms. Williamson:
In accordance with your request, we have completed a comprehensive study of the Paso Robles Municipal Airport and competing market for the purpose of providing an estimate of the current monthly Market Rent for aeronautical and non-aeronautical land for land leased by the City of Paso Robles, owner of the Airport. This analysis provides an opinion of the Market Rent, on a per square foot per month basis, applicable to unimproved land on the Airport to assist with current and future lease negotiations by the City. For the purpose of this analysis, a single land rate applicable to the respective property types is provided without regard to parcel size or location on the Airport. Moreover, it is significant to note that the rates recommended herein do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee.
After careful analysis of the Paso Robles Municipal Airport and its competitive environment, as well as the local and regional aviation market, it is our opinion that the current Market Rent of aeronautical and non-aeronautical land at the Paso Robles Municipal Airport, as of December 1, 2015, are as follows:
PASO ROBLES MUNICIPAL AIRPORT MONTHLY
RENTAL RATES FOR LAND
Component Monthly Rent Per Sq. Ft.
Aeronautical Land $0.035 - $0.04
Non-Aeronautical Land $0.033
Please note that the aforementioned rates are predicated upon a lease of unimproved land directly with the City of Paso Robles. Said rates may not be reflective of market rates for subleases of developed sites within larger leaseholds at PRB, whereby the Lessee provided all infrastructure improvements at their own expense.
Attachment 3
Ms. Meg Williamson
December 1, 2015
Page Two
As noted above, for the purpose of this analysis, a single land rental rate applicable to the respective property types is provided without regard to parcel size or location on the Airport.
While size and location typically play a role in the overall value of a property, none of the airports surveyed distinguished their rates based upon these characteristics for aeronautical land. With regard to non-aeronautical land, it is City policy to utilize a single rate as a baseline for negotiations.
In addition, it is significant to note that the rates recommended herein do not differentiate between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. This factor can and should be negotiated as part of a prospective tenant’s proposed capital investment and contributory value to the overall Airport.
We appreciate this opportunity to be of service to the Paso Robles Municipal Airport on this project. If you should have any further questions, or request additional information or clarification, please advise.
Sincerely,
Michael A. Hodges, MAI
President/CEO
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
3 SCOPE OF THE ASSIGNMENT
The scope of this assignment is to estimate the current monthly Market Rent, on a per square foot per month basis, for aeronautical and non-aeronautical land at the Paso Robles Municipal Airport in Paso Robles, California. This analysis provides an opinion of the applicable to unimproved land on the Airport to assist with current and future lease negotiations. For the purpose of this analysis, a single land rate applicable to the respective property types is provided without regard to parcel size or location on the Airport.
Moreover, it is significant to note that the rates recommended herein do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. As such, the City/Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
4 It is assumed that Airport Business Solutions (ABS) and their representatives were provided all available information relative to the Paso Robles Municipal Airport, and that said information is current and accurate. ABS reserves the right to modify its conclusions if it is discovered that pertinent information was not made available.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
5 IDENTIFICATION OF PROPERTIES ANALYZED
The subject of this analysis includes the unimproved aeronautical and non-aeronautical land at the Paso Robles Municipal Airport. The primary purpose of the analysis is to determine marketbased rental rates for the specified areas and facilities in conjunction with current and pending lease negotiations. The aerial photo below reflects the western quadrant of the Airport, which exhibits primarily aeronautical development to the south and along the east side of the developed area. Areas to the north and the western portion to Airport Road reflect non-aeronautical development, primarily office, warehouse and distribution uses. Additional undeveloped areas to the north are primarily non-aeronautical, while the southern portions reflect aeronautical development potential.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
6 The development area on the south side of the Airport is similar to the west side development with most of the area along the flightline (Taxiway F) almost entirely aeronautical in nature, with the exception of an office building. On the far east end near the end of Runway 31 is the Estrella Warbird Museum development
DATE OF RENT ESTIMATE
The date of this report is December 1, 2015, while an on-site review and personal inspection of the properties was performed on July 23, 2015.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
7 OWNERSHIP HISTORY
The Paso Robles Municipal Airport is owned by the City of El Paso de Robles (Paso Robles), with various leaseholds around the Airport subject to ground and facility leases of mixed terms and conditions. The purpose of this analysis is to estimate the current Market Rent of aeronautical and nonaeronautical land at the Airport without regard to any current leases or operating agreements. The concluded rents herein will be utilized by the Airport for rate-setting purposes in conjunction with prospective lease negotiations.
DEFINITION OF MARKET RENT
The rent estimates herein conform with the definition of "Market Rent" per The Dictionary of Real Estate Appraisal (Fifth Edition, page 121-122), specifically defined as “The most probable rent that a property should bring in a competitive and open market reflecting all conditions and restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term, concessions, renewal and purchase options, and tenant improvements (TIs).” Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
8 PASO ROBLES MUNICIPAL AIRPORT
The Paso Robles Municipal Airport (FAA Identifier PRB) is owned by the City of El Paso de Robles and lies approximately 4 miles northeast of the City in San Luis Obispo County, California.
The Airport serves as the primary general aviation airport for the community and surrounding area, with the closest commercial service airports lying approximately 26 miles to the South in San Luis Obispo. The Airport encompasses about 1,277 acres at an elevation of 836 feet above mean sea level, and is identified as a General Aviation Airport in the National Plan of Integrated Airport Systems (NPIAS), and a Regional Airport in the California Aviation System Plan.
There are two primary runways serving PRB. Runway 1/19 is the primary runway with a length of 6,008 feet and width of 150 feet. The runway offers an asphalt grooved surface in good condition, with a maximum weight capacity of 150,000 pounds with a double tandem wheel configuration. The runway has high intensity runway edge lights and a 4-light PAPI and runway Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
9 end identifier lights on Runway 19. Runway 13/31 is 4701 feet long and 100 feet wide and reflects an asphalt surface with a double tandem wheel weight capacity of 90,000 pounds. This runway is in good condition and has medium intensity runway edge lights and a 4-light PAPI on Runway 31. A parallel and connecting taxiway system supports the ground operations for maximum safety.
The Airport currently reflects aircraft operations
(takeoffs and landings) of approximately 34,300 annually, of which approximately 89% is general aviation, 7% is air taxi, and 4% is military. The Airport reflects a based aircraft population of 164 aircraft, of which 134 are single engine, 19 are multi-engine, 2 are jets, 6 are helicopters, and the remaining 3 are gliders or ultralights.
Development at the airport is mixed, with aeronautical areas heavily dominated by aircraft storage hangars, both T-hangars and bulk storage, while non-aeronautical areas predominately reflect warehouse, light manufacturing or office/research and development facilities. From an aeronautical standpoint, limited new development or construction has occurred over the past 15 years, primarily due to two issues. First, while there is an abundance of developable land around the Airport, minimal land exists with infrastructure in place or even reasonably proximate. As a result, the development costs to provide roads, utilities, taxilanes, etc. are seen as cost prohibitive, especially given the impact of the national recession over the past 7 to 8 years. This is especially true of individual hangar development, whereby the costs cannot be spread across a larger project.
Second, the development sites that are available with existing infrastructure are currently part of larger parcels subject to existing long-term leases with “master leaseholders”. These master leaseholders have historically entered into sublease agreements for smaller sites within their development for either build-to-suit hangar projects or straight ground leases whereby the subtenant built their own facility. However, the remaining lease terms on the master lease agreements are not sufficient to amortize significant investments before the improvements will revert to the City upon expiration of the master lease. (It should be noted that these reversionary Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
10 terms are typical of airport lease agreements throughout California and the rest of the U.S., and are not specific to Paso Robles.)
With regard to non-aeronautical development trends at PRB, although still very limited, while there have been more recent developments at the Airport, the challenge of any nonaeronautical development at an airport relates to the fact that the competing marketplace is the general real estate market surrounding the airport. In this surrounding market, potential users/developers have the benefit of purchasing the fee simple estate in the land, with no impact of such issues as reversion, rent adjustments, or other restrictive lease terms. As such, airports must be very creative in their lease terms in order to effectively compete for non-aeronautical development. In addition, the non-aeronautical land areas at PRB have the same limitations relative to the lack of existing infrastructure at many potential development areas.
In summary, the Paso Robles Municipal Airport reflects a typical general aviation airport found in similarly sized communities throughout the United States. However, the airport infrastructure and available development land at PRB exceeds many competing airports in the region, which will provide it with many opportunities to diversify revenues through marketing as the nation’s economy continues to recover in coming years. The lack of an instrument landing system is not seen as an impediment to growth opportunities due to the limited weather impact on the area. The lack of infrastructure (roads and utilities) is seen as the primary challenge faced by the Airport, as without additional hangar and other aeronautical facilities, the potential for based aircraft, operations, and fuel volume growth are extremely limited. The development of new aeronautical facilities at PRB would likely spur significant growth opportunities relative to revenues from indirect sources such as fuel flowage.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
11 MARKET RENT ANALYSIS
Aeronautical Land
In this analysis, the purpose of the assignment is to estimate prevalent Market Rent of both aeronautical and non-aeronautical land at the Paso Robles Municipal Airport. As previously noted, the Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
The most accurate and effective methodology for projecting Market Rent for aeronautical land is through the assessment of rental rates at similar and competing airports, which is consistent with the FAA's Rates and Charges Policy for fair and reasonable rates and fees for aeronautical property at airports. As such, the estimation of market-based rental rates for the subject areas is completed through an analysis of similar areas and facilities throughout the region. These rental rates are derived from similar airports throughout the immediate region, with special attention to airports offering similar locational, physical, and operational characteristics to the Paso Robles Municipal Airport (PRB) where available. On the following page is a summary of our research relative to comparable land rents for the Paso Robles Municipal Airport.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the Paso Robles Municipal Airport December 1, 2015 12 COMPARABLE AERONAUTICAL LAND RATES
Airport Name Paso Robles Santa Maria San Luis Obispo Oceano Columbia Lompoc Mesa Del Rey Santa Ynez Tehachapi Identifier PRB SMX SBP L52 O22 LPC KIC IZA TSP Number of Runways 2 2 2 1 2 1 1 1 1 Longest Runway 6,008 8,004 6,100 2,325 4,673 4,600 4,479 2,803 4,040 ILS No Yes Yes No No No No No No Annual Operations 34,310 45,260 68,620 9,855 40,150 29,930 8,030 30,295 10,950 Based Aircraft 162 235 270 23 109 53 22 115 95 Ownership/Management City Airport District County County County City City County/Pvt City Current Rent/SF/Month $0.0024-
$0.036 $0.035 $0.027-$0.03
$0.0233-
$0.0583 $0.046 $0.08 $0.11 $0.042 $0.05
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
13 For the purpose of this analysis, a single land rate applicable to the respective property types is provided without regard to parcel size or location on the Airport. While size and location typically play a role in the overall value of a property, none of the airports surveyed distinguished their rates based upon these characteristics.
Moreover, it is significant to note that the rates recommended herein do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. As such, the City/Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
Based upon the breadth of the consultant's research, there is sufficient data to derive reasonable conclusions of market rent for the aeronautical land at the Airport. The selection of a market-based rental rate is based upon the information analyzed by the consultant, with consideration to the utility of the current and available aeronautical areas discussed herein. Of significant importance, the location and amenities of PRB was carefully considered as compared to the airports surveyed as part of this analysis. Specifically, such issues as runway length, other airport infrastructure, activity levels, supply and demand, etc. were considered.
It is significant to note that the surveyed rates represent rents charged directly by the airport to their lessees, and does not consider any subleases that may exist. Airports have little to no control over subleases on their airport, except as it relates to the character of the tenant. In other words, airport sponsors must be wary of all activities and tenants on their airport to insure that no illegal or unsafe activity occurs, or that a subtenant is not someone that may have previously been a direct tenant that was evicted for various reasons. Otherwise, the relationship between the airport sponsor’s tenant and their subtenants is a business relationship that is between them. They generally have minimal legal jurisdiction relative to rents or other terms imposed. If a lessee incurs capital investment costs and other risks associated with providing development alternatives on their Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
14 leasehold, it is reasonable to expect that the lessee would expect a return of and on that investment.
Potential subtenants have several alternatives available to them, to include leasing other property on the airport (or another airport), with or without existing infrastructure.
Given the foregoing, it is the consultant's opinion that the prevailing market rent conclusion for unimproved aeronautical land at the Paso Robles Municipal Airport, leased directly from the City, is considered to be best reflected by a range of $0.035 to $0.04 per square foot per month.
As noted above, the land rate is deemed applicable herein without regard to parcel size or location on the Airport. While size and location typically play a role in the overall value of a property, none of the airports surveyed distinguished their rates based upon these characteristics.
Moreover, these rates do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. As such, the City/Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
15 Non-Aeronautical Land
As noted previously, the purpose of the assignment is to estimate prevalent Market Rent of both aeronautical and non-aeronautical land at the Paso Robles Municipal Airport, or the amount of rent that the City can expect to receive from a tenant of the land.
In accordance with the FAA’s Order 5190.6b, also known as the Airport Compliance Manual, “The FAA defines “aeronautical use” as all activities that involve or are directly related to the operation of aircraft, including activities that make the operation of aircraft possible and safe. Services located on the airport that are directly and substantially related to the movement of passengers, baggage, mail, and cargo are considered aeronautical uses. . . . Individuals or businesses providing services involving operation of aircraft or flight support directly related to aircraft operation are considered to be aeronautical users. . . . All other uses of the airport are considered nonaeronautical.
Aviation-related uses that do not need to be located on an airport, such as flight kitchens and airline reservation centers, are considered nonaeronautical uses. Nonaeronautical uses include public parking, rental cars, ground transportation, as well as terminal concessions such as food and beverage and news and gift shops.
In Chapter 17.11 of FAA Order 5190.6b, the following on non-aeronautical rates is indicated:
“Rates charged for nonaeronautical use (e.g., concessions) of the airport must be based on fair market value (e.g., lease of land at fair market rent subject to the specific exceptions listed in this chapter).” Moreover, the FAA further states in Chapter 17.12 that “Fair market fees for use of the airport are required for nonaeronautical use of the airport and are optional for non-airfield aeronautical use.”
Based upon the foregoing, the derivation of a market rent for non-aeronautical land at PRB must be driven by land values and rates of return for similar and competing non-aeronautical land in the subject environs. While an aeronautical use competes with other properties on an airport, non-aeronautical uses compete with other similar properties located in the immediate and competing vicinity of the subject site, without regard to an on-airport location. It basically follows the “principle of substitution” which generally states that “when several similar or commensurate Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
16 commodities, goods or services are available, the one with the lowest price attracts the greatest demand and widest distribution. . . a buyer will not pay more for one property than for another that is equally desirable. Property values tend to be set by the price of acquiring an equally desirable substitute property. The principle of substitution recognizes that buyers and sellers of real property have options, i.e., other properties are available for similar uses. . . The cost of acquisition may be the cost to purchase a similar site and construct a building of equivalent utility, assuming no undue cost due to delay.” (The Appraisal of Real Estate, Thirteenth Edition, page 38-39)
In the determination of market rent for a non-aeronautical property, the most viable and accurate method is to determine a fee simple value for the land, then apply a rate of return based upon investor expectations in the market with regard to that particular property type and prevailing lease terms. As such, in this analysis, the consultant surveyed the immediate and surrounding competing area for pertinent land sales. The following is a summary of the land sales discovered by the consultant that were determined to be reasonably similar and comparable. (Detailed comparable data and analysis have been retained in the consultants’ files.)
NON-AERONAUTICAL/INDUSTRIAL LAND SALES
Address Grantor/Grantee Date of
Sale
Land Area
(Acres)
Consideration Price Per
Sq. Ft.
2615 Germaine
Way, Paso Robles
Estate Financial/Horn 1/3/14 2.76 $365,000 $3.04
Cow Meadow Place,
Templeton
Silva Farm Trust/Olson
Family Trust
9/25/14 5.46 $875,000 $3.68
Wisteria Lane, Paso
Robles
Ramirez Family
Trust/Riboli Paso Robles
11/7/14 5.17 $939,500 $4.17
Tractor Street, Paso
Robles
Pacific Capital
Bank/Mullahey
5/21/13 9.49 $1,750,000 $4.23
3330 Ramada
Drive, Templeton
NWK1/Zacastreet21, LLC 2/6/14 4.80 $1,100,000 $5.26
Theater Drive, Paso
Robles
Yellow Jacket/Templeton
Properties
2/5/15 4.17 $1,200,000 $6.61
The six sales above are deemed the most comparable to the non-aeronautical land at the Paso Robles Municipal Airport. As noted within the aeronautical land analysis, a single land rate is deemed applicable herein without regard to parcel size or location on the Airport. While size and Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
17 location typically play a role in the overall value of a property, it is the City’s policy to utilize a single uniform rate as a baseline for all lease negotiations of Airport property. Moreover, these rates do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. As such, the City/Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
The six sales offered herein are deemed the most viable for comparison to the subject parcels and demonstrate a wide range of unit values from $3.04 to $6.61 per square foot. Excluding the first sale, which is considered to be below market, a slightly narrower range is indicated. The focus of the selections of sales was predominately toward reasonably similar located properties, as well as those with a similar zoning, use, or prospective use. Based upon the available data, an overall unit value of $5.00 per square foot is deemed reasonable and appropriate for nonaeronautical sites at the Paso Robles Municipal Airport.
RATE OF RETURN ANALYSIS
As noted herein, the purpose of this portion of the analysis is to estimate an annual rent allocation for the non-aeronautical land at PRB. As discussed, market rent estimates herein are predicated upon non-aeronautical land values and rates of return for the subject land. The significance of this designation is related to the fact that the Federal Aviation Administration (FAA) requires airport sponsors that receive Federal funds to obtain Fair Market Value for nonaeronautical land and facilities, while lease agreements on aeronautical properties should reflect “fair and reasonable” rates and fees. The fair market value requirement dictates that the airport should be mindful of the competing market for similar non-aeronautical developments when determining the prevailing fair market rent. This not only includes a comparison with similar Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
18 properties relative to underlying land and property values, but also with regard to market-based rates of return, which may or may not coincide with an airport sponsor policy driven rate of return for aeronautical leases.
A rental rate determination analysis (as a percent of value) was prepared in conjunction with this assignment. Most of the data reviewed were of land lease opportunities near or proximate to an airport location, and as such, were in general similar to the subject property, although in other markets. Our research indicated that developers/investors desired deals with lower rates than end users. Part of this phenomenon is attributable to desired profit levels sought by developers versus owner/users. In addition, we analyzed national survey data for net lease capitalization rates from several sources, as well as performed market interviews as an indication of land lease capitalization rates.
Based upon our research, land lease rates range from a low of 3% to a high of 10%. The trend in land lease rates for the past several years has been lower as alternative yield rates have also compressed. However, it was indicated that ground lease rates in the Paso Robles market for commercial sites has been in the 8-10% range. Given the location of the sites at PRB and the data reviewed, it is the consultant’s opinion that a land lease rate of 8% is appropriate for sites at the Paso Robles Municipal Airport. Based upon the previous land value conclusion, and the concluded rate of return, yields an annual rental rate of $0.40, or $0.033 per month, for non-aeronautical land at PRB. This indicated rental rate is deemed to consider the current supply and demand of developable land in the Airport environs, as well as overall market conditions.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
19 RECONCILIATION AND FINAL RENT ESTIMATES
Reconciliation is the process of evaluating facts, trends, observations, and conclusions developed in the valuation methods utilized to derive the final estimate of Market Rents of the aeronautical and non-aeronautical land areas at the Airport. After careful analysis and evaluation, it is our opinion that the Market Rent of these land areas at the Paso Robles Municipal Airport, as of October 22, 2015, is as follows.
PASO ROBLES MUNICIPAL AIRPORT MONTHLY
RENTAL RATES FOR LAND
Component Monthly Rent Per Sq. Ft.
Aeronautical Land $0.035-$0.04
Non-Aeronautical Land $0.033
Please note that the aforementioned rates are predicated upon a lease of unimproved land directly with the City of Paso Robles. Said rates may not be reflective of market rates for subleases of developed sites within larger leaseholds at PRB, whereby the Lessee provided all infrastructure improvements at their own expense.
Moreover, as noted herein, the prescribed land rate is deemed applicable herein without regard to parcel size or location on the Airport. While size and location typically play a role in the overall value of a property, none of the airports surveyed distinguished their rates based upon these characteristics for aeronautical land. For non-aeronautical land, it is City policy to utilize a single rate as a baseline for lease negotiations.
In addition, the rates noted herein do not distinguish between parcels with infrastructure (roads and utilities) and those without. It is anticipated that the distinction in the rates applicable to properties without infrastructure will be adjusted through the application of rent credits or other adjustments for capital improvements made by either the City or a prospective Lessee. As such, the City/Airport is advised to utilize these rates as a guideline for rate-setting, with prospective adjustments being warranted for specific investment requirements or other lease conditions.
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
20 ADDENDA
Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
EXHIBITS
Attachment 3
12/2/2015 AirNav: KPRB - Paso Robles Municipal Airport
http://www.airnav.com/airport/KPRB 1/5
1570 users online
KPRB Paso Robles Municipal Airport
Paso Robles, California, USA
GOING TO PASO ROBLES?
FAA INFORMATION EFFECTIVE 15 OCTOBER 2015
Location
FAA Identifier: PRB
Lat/Long: 35-40-22.4000N / 120-37-37.5000W
35-40.373333N / 120-37.625000W
35.6728889 / -120.6270833
(estimated)
Elevation: 839 ft. / 255.7 m (surveyed)
Variation: 15E (1980)
From city: 4 miles NE of PASO ROBLES, CA
Time zone: UTC -7 (UTC -8 during Standard Time)
Zip code: 93446
Airport Operations
Airport use: Open to the public
Activation date: 10/1943
Sectional chart: LOS ANGELES
Control tower: no
ARTCC: OAKLAND CENTER
FSS: HAWTHORNE FLIGHT SERVICE STATION
NOTAMs facility: PRB (NOTAM-D service available)
Attendance: 0700-1800
FEE FOR CALL OUT SVC OTR HRS. 805-596-0212
(FBO).
Pattern altitude: 1839 ft. MSL
Wind indicator: lighted
Segmented circle: yes
Lights: RY LGTS OPER DUSK-2200; AFTER 2200 ACTVT
HIRL RY 01/19 MIRL RY 13/31 PAPI RYS 19 & 31, RY
H1 PERIMETER LGTS - CTAF.
Beacon: white-green (lighted land airport)
Operates sunset to sunrise.
Airport Communications
CTAF/UNICOM: 123.0
Loc | Ops | Rwys | IFR | FBO | Links
Com | Nav | Svcs | Stats | Notes
Road maps at: MapQuest Bing Google
Aerial photo
WARNING: Photo may not be current or correct
Airports Navaids Airspace Fixes Aviation Fuel iPhone App My AirNav Attachment 3
12/2/2015 AirNav: KPRB - Paso Robles Municipal Airport
http://www.airnav.com/airport/KPRB 2/5
WX ASOS: 120.125 (805-239-3593)
COMMUNICATIONS PRVDD BY HAWTHORNE RADIO ON FREQS 122.4/255.4 (PASO ROBLES RCO).
APCH/DEP SVC PRVDD BY OAKLAND ARTCC ON FREQS 128.7/307.0 (PRIEST RCAG).
Nearby radio navigation aids
VOR radial/distance VOR name Freq Var
PRB at field PASO ROBLES VORTAC 114.30 16E
MQOr358/26.1 MORRO BAY VORTAC 112.40 16E
ROMr160/(28.1) PRIEST VOR 110.00 16E
AVEr257/31.7 AVENAL VORTAC 117.10 16E
NDB name Hdg/Dist Freq Var ID
HUNTER LIGGETT 107/32.4 209 15E HGT .... --. -
Airport Services
Fuel available: 100LL JET-A
Parking: tiedowns
Airframe service: MINOR
Powerplant service: MINOR
Bottled oxygen: LOW
Runway Information
Runway 1/19
Dimensions: 6008 x 150 ft. / 1831 x 46 m
Surface: asphalt/grooved, in good condition
Weight bearing capacity: Single wheel: 60.0
Double wheel: 106.0
Double tandem: 150.0
Runway edge lights: high intensity
RUNWAY 1 RUNWAY 19
Latitude: 35-39.966505N 35-40.835537N
Longitude: 120-38.134630W 120-37.552758W
Elevation: 814.5 ft. 803.4 ft.
Gradient: 0.2% 0.2%
Traffic pattern: left left
Runway heading: 014 magnetic, 029
true
194 magnetic, 209 true
Markings: nonprecision, in
good condition
nonprecision, in good
condition
Visual slope indicator: 4-light PAPI on left (3.00
degrees glide path)
Runway end identifier lights: no yes
Touchdown point: yes, no lights yes, no lights
Runway 13/31
Dimensions: 4701 x 100 ft. / 1433 x 30 m
Photo by David Byrne of www.focalflight.com
Photo taken 06-Apr-2010
Do you have a better or more recent aerial photo of Paso Robles Municipal Airport that you would like to share? If so, please send us your photo.
Sectional chart
Airport diagram
CAUTION: Diagram may not be current
Airport distance calculator
Flying to Paso Robles Municipal Airport?
Find the distance to fly.
From to KPRB
Sunrise and sunset
Times for 02-Dec-2015
Local
(UTC-8)
Zulu
(UTC)
Attachment 3
12/2/2015 AirNav: KPRB - Paso Robles Municipal Airport
http://www.airnav.com/airport/KPRB 3/5
Surface: asphalt, in good condition
Weight bearing capacity: Single wheel: 30.0
Double wheel: 50.0
Double tandem: 90.0
Runway edge lights: medium intensity
RUNWAY 13 RUNWAY 31
Latitude: 35-40.649245N 35-40.025252N
Longitude: 120-37.625793W 120-37.062968W
Elevation: 810.0 ft. 838.7 ft.
Gradient: 0.6% UP 0.6%
Traffic pattern: left left
Runway heading: 129 magnetic,
144 true
309 magnetic, 324 true
Markings: nonprecision, in
good condition
nonprecision, in good
condition
Visual slope indicator: 4-light PAPI on left (3.00
degrees glide path)
Runway end identifier lights: no no
Touchdown point: yes, no lights yes, no lights
Obstructions: none 54 ft. tree, 1950 ft. from
runway, 32:1 slope to clear
Helipad H1
Dimensions: 100 x 100 ft. / 30 x 30 m
Surface: asphalt, in excellent condition
Runway edge lights: PERI
Runway edge markings: STANDARD HELIPAD MARKINGS.
Traffic pattern: left left
Markings: , in good condition
Airport Ownership and Management from official FAA
records
Ownership: Publicly-owned
Owner: CITY OF PASO ROBLES
1000 SPRING ST.
PASO ROBLES, CA 93446
Phone 805-237-3888
Manager: ROGER OXBORROW
4912 WING WAY
PASO ROBLES, CA 93446
Phone 805-237-3877
Airport Operational Statistics
Aircraft based on the field: 164
Single engine airplanes: 134
Multi engine airplanes: 19
Jet airplanes: 2
Helicopters: 6
Gliders airplanes: 1
Ultralights: 2
Aircraft operations: avg 94/day *
57% local general aviation
32% transient general aviation
7% air taxi
4% military
* for 12-month period ending 10 December 2013
Morning civil twilight 06:28 14:28
Sunrise 06:56 14:56
Sunset 16:48 00:48
Evening civil twilight 17:16 01:16
Current date and time
Zulu (UTC) 02-Dec-2015 18:25:17
Local (UTC-8) 02-Dec-2015 10:25:17
METAR
KPRB 021753Z AUTO 33004KT 10SM CLR
08/M01 A3023 RMK AO2 SLP237
T00831011 10083 20000 55005 TSNO
TAF
KPRB 021720Z 0218/0318 VRB05KT P6SM
BKN250 FM022000 11010KT P6SM
BKN250 FM030300 VRB05KT P6SM
SCT250
NOTAMs
Click for the latest NOTAMs
NOTAMs are issued by the DoD/FAA and
will open in a separate window not
controlled by AirNav.
Attachment 3
12/2/2015 AirNav: KPRB - Paso Robles Municipal Airport
http://www.airnav.com/airport/KPRB 4/5
Additional Remarks
- PPR FOR AIRCRAFT OVER 80,000 LBS. CONTACT AMGR 805-237-3877 Instrument Procedures
NOTE: All procedures below are presented as PDF files. If you need a reader for these files, you should download the free Adobe Reader.
NOT FOR NAVIGATION. Please procure official charts for flight.
FAA instrument procedures published for use between 12 November 2015 at 0901Z and 10 December 2015 at 0900Z.
IAPs - Instrument Approach Procedures
RNAV (GPS) RWY 19 download (230KB)
VOR/DME RWY 19 download (236KB)
VOR/DME-B download (178KB)
NOTE: Special Alternate Minimums apply download (18KB)
NOTE: Special Take-Off Minimums/Departure Procedures
apply download (132KB)
Other nearby airports with instrument procedures:
KSBP - San Luis County Regional Airport (26 nm S)
KHGT - Tusi Army Heliport (Hunter Liggett) (35 nm NW)
KSMX - Santa Maria Public Airport/Capt G Allan Hancock Field (47 nm S) KNLC - Lemoore Naval Air Station (Reeves Field) (51 nm NE) KVBG - Vandenberg Air Force Base (56 nm S)
FBO, Fuel Providers, and Aircraft Ground Support
Business Name Contact Services / Description Fuel Prices Comments
UNICOM 123.00
805-596-0212
[web site]
[email]
ACI Jet is located in the main
terminal at Paso Robles. We offer
rental cars, full-service Jet-A and
100LL, self-serve Jet-A and 100LL,
catering, crew car, lav service and
are available 24-hours a day.
More info and photos of
ACI Jet - Paso Robles
100LL Jet A
FS $5.28 $3.94
SS $4.58 ---
GUARANTEED
18 read write
FS=Full service
SS=Self service
Where to Stay: Hotels, Motels, Resorts, B&Bs, Campgrounds In this space we feature lodging establishments that are convenient to the Paso Robles Municipal Airport. If your hotel/inn/B&B/resort is near the Paso Robles Municipal Airport, provides convenient transportation, or is otherwise attractive to pilots, flight crews, and airport users, consider listing it here.
Attachment 3
12/2/2015 AirNav: KPRB - Paso Robles Municipal Airport
http://www.airnav.com/airport/KPRB 5/5
AirNav users who flew into KPRB have stayed at...
Miles Price ($)
PASO ROBLES TRAVELODGE 4.2 99-109
LA QUINTA INN & SUITES PASO ROBLES 3.2 129-159
BEST WESTERN PLUS BLACK OAK 4.0 170-225
LA BELLASERA HOTEL AND SUITES 7.0 189-479
COURTYARD MARRIOTT PASO ROBLES 5.5 189-239
Other hotels near Paso Robles Municipal Airport
Miles Price ($)
AYRES RESORT AND VINEYARD PASO 2.6
MOTEL 6 PASO ROBLES 3.9 79-82
THE OAKS HOTEL 4.0 203-264
PASO ROBLES WINE COUNTRY INN 4.0 60-127
HOLIDAY INN EXPRESS HOTEL & SUITES PASO ROBLES 4.1 114-175 CHEVAL HOTEL 4.8 345-346
PASO ROBLES INN 4.9 179-180
Distances are approximate, and may vary depending on the actual route traveled and the location of the travel start on the airport.
Hotels in other cities near
Paso Robles Municipal
Airport
11 in Paso Robles
Would you like to see your business listed on this page? If your business provides an interesting product or service to pilots, flight crews, aircraft, or users of the Paso Robles Municipal Airport, you should consider listing it here. To start the listing process, click on the button below Other Pages about Paso Robles Municipal Airport
www.prcity.com/...
Copyright © AirNav, LLC. All rights reserved. Privacy Policy Contact Attachment 3
Market Rent Analysis
Aeronautical and Non-Aeronautical Land at the
Paso Robles Municipal Airport
December 1, 2015
QUALIFICATIONS OF CONSULTANT
Attachment 3
CURRICULUM VITAE
NAME: Michael A. Hodges, MAI
TITLE: President/CEO
FIRM NAME: ABS Aviation Consultancy, Inc. d/b/a
Airport Business Solutions
ADDRESS: 12950 Race Track Road, Suite 206
Tampa, Florida 33626-1307
PHONE: (813) 855-3600 or (813) 317-3170
EDUCATION
Graduate of the University of Tennessee with a Bachelor of Arts Degree - Major in Philosophy.
PROFESSIONAL AND TECHNICAL COURSES
Currently certified in the program of continuing education as required by the Appraisal Institute.
Completed requirements for MAI member designation of the Appraisal Institute to include peer review of appraisal assignments, completion of a demonstration appraisal report on an income-producing property, experience rating, and educational courses.
Attended numerous professional courses and seminars relative to real estate appraisal such as Capitalization Theory and Techniques, Case Studies in Real Estate Valuation, Real Estate Appraisal Principles, Basic Valuation, Residential Valuation, Investment Analysis, Standards of Professional Practice, and Report Writing and Valuation Analysis, as presented by the American Institute of Real Estate Appraisers and the Appraisal Institute.
BACKGROUND AND EXPERIENCE
President and CEO of ABS Aviation Consultancy, Inc. d/b/a Airport Business Solutions (ABS), a diverse aviation valuation and consulting firm which specializes in the analysis of airports, fixed base operations, and other aviation-related properties for lease negotiation, acquisition, litigation, leasehold and going-concern valuation, and bankruptcy, as well as providing specialized airport management consulting, to include policy development, to airports of all sizes. Additional expertise offered in the area of financial self-sufficiency analysis for general aviation airports and through-the-fence access agreements and operations.
Attachment 3
BACKGROUND AND EXPERIENCE (Continued)
ABS has provided a myriad of services to airports throughout North and South America, Asia, and Europe. Using our extensive and diverse experience, ABS has assisted airports throughout the world in such areas as business plan development and implementation, concessions planning and management, air cargo assessments, airline agreement negotiation, terminal design analysis, parking assessment, rental car analysis, general aviation operations and management, non-aeronautical land development, financial modeling, and full or partial airport privatization assessments.
President and CEO of ABS Aviation, Inc., an airport and FBO management services entity currently providing comprehensive airport management of the Minden-Tahoe Airport in Minden, Nevada.
Aviation President of Kompass Partners from 2005 through 2013. Kompass Partners was a Hong Kong-headquartered company specializing in creating successful partnerships between U.S. and Chinese aviation businesses.
Vice President and Part Owner in the firm of Hodges, McArthur, & Dunn, P.C. Real Estate Appraisers and Consultants from 1990 through 1995. Hodges, McArthur and Dunn, P.C. was a full-service real estate appraisal and consulting firm with offices in Knoxville, Nashville, and Memphis, Tennessee, and Atlanta, Georgia. Responsibilities included appraisals, general feasibility studies, and market analyses on a variety of property types involved in financing, acquisition, condemnation, bankruptcy, litigation, and estate valuation.
Founder and President of HMD Aviation Appraisal Group in 1994, a division of Hodges, McArthur & Dunn, P.C. HMD Aviation Appraisal Group was a real estate appraisal and consulting firm which specialized in the valuation of the real estate aspect of fixed base operations and other aviation-related properties for lease negotiation, acquisition, litigation, leasehold valuation, and bankruptcy.
Staff Appraiser with Hodges and Wallace Appraisal Associates from 1982 through 1990.
Responsibilities included research, appraisals, general feasibility studies and market analyses on a variety of property types involved in financing, acquisition, condemnation, bankruptcy, litigation, and estate valuation.
COURT EXPERIENCE
Qualified as an expert witness in various courts in Florida, Georgia, Tennessee, Kentucky, Arizona, Colorado, and California on various valuation, management, financial and operational issues on airports, aviation businesses and aviation-related properties.
Attachment 3
TERRITORY
Airport Business Solutions is based in Tampa, Florida, with satellite offices in Denver, Colorado and Dayton, Ohio. The firm has completed a variety of assignments throughout the United States, Asia, Europe and Latin America, to include valuation, consultation, and miscellaneous advisory services.
AFFILIATIONS AND DESIGNATIONS
Elected to Membership in the Appraisal Institute with an MAI designation on April 20, 1994 - Member No. 10,333.
State of Florida - Certified General Appraiser - License No. RZ2770 Commonwealth of Pennsylvania - Certified General Appraiser - Certificate No. GA-001626-R State of Georgia - Certified General Real Property Appraiser - License No. CG004018 State of Texas – Certified General Real Estate Appraiser – License No. TX 1338569 G Member of the Appraisal Institute's Young Advisory Council in 1994, 1995 and 1996 Corporate Member of the National Air Transportation Association (NATA) Corporate Member of the American Association of Airport Executives (AAAE) Corporate Member of the National Business Aviation Association (NBAA) Member of AAAE's Non-Hub/GA Airport Committee
Member of NATA’s Airport Business Committee
Attachment 3
APPRAISAL REPORT
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California 93446
APN: 025-453-005
Date of Value: November 15, 2022
Date of Report: December 12, 2022
BRI 22-176
2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 December 12, 2022
Mark Scandalis
Airport Manager, PRB
4912 Wing Way
Paso Robles, California 93446
Re: Appraisal of:
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California 93446
APN: 025-453-005
Dear Mr. Scandalis,
We have prepared this report for the Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the fee simple value and market ground lease rate of the subject property.
The intended user of the report is the City of Paso Robles. The function of the appraisal is to assist the airport management in the outlease of the subject property.
This is a narrative Appraisal Report as defined by USPAP. As such, it fully presents the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. The depth of discussion contained in this report is specific to the needs of the client and of the intended use stated in this report. The following report sets forth the descriptive and factual data, the assumptions and conditions affecting the appraisal, and the findings and analyses that lead to and support our value opinion. The appraiser is not responsible for unauthorized use of this report. Every effort has been made to conform to the Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, we have intended to comply with applicable laws. The undersigned conducted the appraisal and prepared the report.
We are pleased to have this opportunity to provide you with professional appraisal services.
BENDER ROSENTHAL, INC.
David C. Houghton, MAI
Certified General Real Estate Appraiser
California Certificate No. AG039402
Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 II
TABLE OF CONTENTS
LETTER OF TRANSMITTAL
TABLE OF CONTENTS.....................................................................................................................................II PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS ................................................................IV Assessor’s Parcel Map
Aerial Photographs
Subject Photographs (Exterior)
INTRODUCTION.............................................................................................................................................1 Client, Intended Use, Intended User of the Appraisal
Scope of Work
Definitions Used in the Report
General Assumptions and Limiting Conditions
Extraordinary Assumptions and Hypothetical Conditions
SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW .......................................................................................7 Regional Map
Access and Transportation
Cities / Communities
Population
Unemployment Rates
Employment by Industry
Major Employers
Inflation
Conclusion
NEIGHBORHOOD DESCRIPTION..................................................................................................................13 Neighborhood Map
Neighborhood Conclusion
INDUSTRIAL MARKET OVERVIEW................................................................................................................15 CoStar Industrial Report
Industrial Market Overview Conclusion
PROPERTY DESCRIPTION.............................................................................................................................20 General
Site Attributes
Building Attributes
Subject Floor Plan
Subject Property Interior Photographs
Other Property Matters
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 III
HIGHEST AND BEST USE ANALYSIS..............................................................................................................41 Highest and Best Use of the Property, As If vacant
Highest and Best Use of the Property, As Improved
Conclusion
VALUATION ANALYSIS.................................................................................................................................44 Valuation Methods and Considerations
Sales Comparison Approach
Comparable Improved Sales Summary Table and Map
Comparable Land Sales Summary Table
Comparable Land Sales Summary Map
Industrial Land Sales Comparison Grid
Value of the Ground Lease
Opinion of Market Value
APPENDIX....................................................................................................................................................64 Appraiser’s Certifications
Appraiser’s Qualifications
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 IV
PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS
Appraisal Assignment To provide the fee simple value and market ground lease rate of the subject property.
Property Location 3010 Rollie Gates Drive
Paso Robles, California 93446
PROPERTY DATA
Assessor’s Parcel Number: 025-453-005
Parcel Size 2.02± acres, or 87,991± square-feet.
Source: San Luis Obispo County Assessor’s Parcel Map
Owner of Record City of El Paso de Robles, a California municipal corporation (see Extraordinary Assumption No. 1).
Property Description The subject property is improved with a 33,500 square-foot industrial warehouse building. There is an
ancillary paved parking lot containing 53 surface
parking spaces and two curb cuts accessing Rollie
Gates Drive. While the Airport Road frontage and the
rear fringe of the parking lot are landscaped
approximately 16,000 square feet is unimproved.
Zoning AP PD, Airport Planned Development, City of Paso Robles
General Plan Designation BP, Business Park, City of Paso Robles Current Use Industrial warehouse building.
Highest and Best Use (as Vacant) Develop to service commercial/light industrial use.
Fee Simple Value
Improved Value (Building & Land)
Land Only Value
Building Value
$4,525,000
$ 750,000
$3,775,000
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 V
Market Ground Lease Value $44,875 Annually
Date of Inspection November 15, 2022
Date of Value November 15, 2022
Date of Report December 12, 2022
ASSESSOR’S PARCEL MAP
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 VI
AERIAL PHOTOGRAPHS
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 VII
SUBJECT PHOTOGRAPHS (EXTERIOR)
View of the front entrance portico.
View of the west building profile, north of the front entrance portico.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 VIII
SUBJECT PHOTOGRAPHS (EXTERIOR)
Secured utility bay along the east building profile.
East building profile looking north.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 IX
SUBJECT PHOTOGRAPHS (EXTERIOR)
East building profile looking south.
Outdoor break area proximate to northeast corner of the building.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 1
INTRODUCTION
CLIENT, INTENDED USE, INTENDED USER OF THE APPRAISAL
The client and intended user are the City of Paso Robles (City) and its subsidiary, Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the current market value of the entire property, both land and building, the market value of the land, and the market value of the ground rental rate. The function of the appraisal is to assist the City in the out lease of the subject property.
SCOPE OF WORK
The purpose of this appraisal assignment is to determine the current market value of the entire property, both land and building, the market value of the land, and the market value of the ground rental rate. The date of value is based on the inspection date, unless noted otherwise in the appraisal. The date of the report is the date the appraisal is transmitted to the client.
VALUATION / RESEARCH OVERVIEW
The following is an overview of the valuation process and research involved for the subject property and comparable leases. The valuation of the property involved an investigation and analysis of the neighborhood, as well as the entire regional area, for social, economic, governmental, and environmental forces and trends that affect or could influence property values. • The property was inspected on November 15, 2022, by Ross Campbell of Bender Rosenthal, Inc. • Research the area, community, and neighborhood to determine market influences/conditions. • Research of public records to verify information about the subject property and comparables to ensure they are factually accurate and that there are no terms or additional influences that affect price or value.
• Research zoning and general plan obtained from the City of Paso Robles Planning Departments and other department websites, as well as extensive research of the land market. • Review of applicable flood and seismic hazard areas from appropriate source data. • Review public records obtained from the various county governmental agencies including the Planning Department, Assessor’s Office, and Tax Collector’s Office. • A search of specific property transfers occurring during the past three years was conducted for the subject properties.
• Determine highest and best use of the property.
• Research comparable property leases, listings, and offers to lease involving grazing leases within the subject’s or competing market area.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 2
• Research comparable property sales, listings, and offers to lease involving properties like the subject property and within the subject’s or competing market areas. • Interview comparable property owners and/or brokers.
• Fred McGrew provided significant assistance in the preparation of this report including the collection of market and regional data in this report under the direct supervision of Ross Campbell and David Houghton.
REPORT TYPE
USPAP Standards Rule 2-2a require each written real property appraisal report to state the specific report type, either an Appraisal Report or a Restricted Appraisal Report. This appraisal is reported in an Appraisal Report format as defined by USPAP.
DEFINITIONS USED IN THE REPORT
Definition of an Appraisal
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 10. • The act or process of developing an opinion of value; an opinion of value. An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, more than, not less than, less than) to a specified amount. (SVP) Market Value
Source: Office of the Comptroller of the Currency. CFR Title 12, Part 34, Subpart C, § 34.42 Definitions 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 knowledgeably, 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
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.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 3
Market Rent
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 117 The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution of a lease as of a specified date under conditions whereby • Lessee and lessor are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their best interests; • Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs).
Fee Simple Estate
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 73 Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
Extraordinary Assumption
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 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 Hypothetical Condition
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 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.
Ground Lease.
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 86 A lease that grants the right to use and occupy land. Improvements made by the ground lessee typically revert to the ground lessor at the end of the lease term.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 4
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report and the value estimates it contains are expressly subject to the following assumptions and/or limiting conditions.
1. Title to the property is marketable.
2. No survey of the property has been made by the appraisers and property lines as they appear on the ground are assumed to be correct.
3. Data, maps, and descriptive data furnished by the client or his/her representatives are accurate and correct.
4. No responsibility is assumed for matters of law or legal interpretation.
5. No conditions exist that would affect the use and value of the property, which are not discoverable through normal, diligent investigation.
6. The valuation is based on information from sources believed reliable, and that such information is correct and accurately reported.
7. The value estimate is made subject to the purpose, date, and definition of value.
8. The report is to be considered in its entirety and use of only a portion will invalidate the appraisal.
9. This appraisal was made on the premise that there are no encumbrances prohibiting utilization of the property under the appraiser's estimate of highest and best use.
10. Possession of this report or a copy does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Bender Rosenthal, Inc., and then only with proper qualifications.
11. Disclosure of the contents of this appraisal report is governed by the By-Laws and Regulations of the Appraisal Institute. No part of this narrative report may be reproduced by any means nor disseminated to the public in any way without the prior written consent of Bender Rosenthal, Inc.
12. Any person or entity who obtains or reads this report, or a copy, other than the client specified in this report, expressly assumes all risk of damages to themselves or third persons arising out of reliance on this report and waives the right to bring any action based on the appraisal, and neither the appraisers nor the appraisal firm shall have any liability to any such person or entity.
13. The appraiser shall not be required to give testimony or appear in court by reason of this appraisal with reference to the property described in this report unless prior arrangements have been made.
14. No responsibility is assumed for building permits, zone changes, engineering or any other services or duty connected with legally utilizing the subject property.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 5
15. The property appraised may or may not be subject to the Americans with Disabilities Act of 1990 (ADA). Title III of this act provides for penalties for discrimination in failing " to remove architectural barriers . . .in existing facilities [unless] an entity can demonstrate that the removal. is not readily achievable." Unless otherwise noted in this appraisal, it is assumed that the property appraised is not substantially impacted by this law.
16. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of such substances as asbestos, ureaformaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
17. It is assumed that the property appraised is competently managed and marketed.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 6
EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
Note to Reader: The subject property is subject to the following extraordinary assumptions and/or hypothetical conditions, which might have affected the assignment results.
EXTRAORDINARY ASSUMPTIONS
1. A preliminary title report was not provided to the appraisers for review as of the date of value.
Further, a transfer document indicating the current ownership was not available in public records.
The appraisers therefore assume that A) title is held by the City of El Paso de Robles, a California municipal corporation, B) title is marketable (see Hypothetical Condition No. 1), and C) that no exceptions to title exist that adversely impact the subject’s value. If upon receipt of a title report and after review, it is determined an exception will impact the opinion of value, the appraisers reserve the right to revise the report as a new assignment.
HYPOTHETICAL CONDITIONS
1. The City of Paso Robles is restricted in that it cannot sell land within the municipal airport boundaries (ground leases are permitted). For the purposes of this appraisal, the valuation is based on the hypothetical condition that title is marketable and could be sold on the open market.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 7
SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW
Social, economic, governmental, and environmental forces influence property value since real estate is an immobile asset. In this section, an examination of these location factors provides the context for the valuation of the subject property. The property is located within the environs of the Paso Robles Municipal Airport, four miles northeast of downtown Paso Robles and in San Luis Obispo County.
San Luis Obispo County is located on the Central Coast of California, covering 3,299 square-miles of land.
As of the 2020 United States Census, the county had a population of 282,424 residents. The small size of the county's communities, scattered along the beaches, coastal hills, and mountains of the Santa Lucia range, provides a wide variety of coastal and inland hill ecologies to support fishing, agriculture, and tourist activities. California Polytechnic State University has almost 20,000 students. Tourism, especially for the wineries, is popular. Grapes and other agriculture products are an important part of the economy.
San Luis Obispo County is the third largest producer of wine in California, surpassed only by Sonoma and Napa counties. Strawberries are the largest agricultural crop in the county. A map of the subject in relation to the county is seen below.
REGIONAL MAP
SUBJECT
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 8
ACCESS AND TRANSPORTATION
San Luis Obispo County is served by U.S. Highway 101 and State Highways 1, 41, 46, and 58. U.S. Highway 101 is the primary access route in the county, and throughout most of the county is a multi-lane freeway.
The highway links the county to Los Angeles to the south and to San Jose and the San Francisco Bay Area to the north. The Pacific Coast Highway (State Highway 1) generally parallels Highway 101 following the coast, except where the two highways briefly merge between the City of San Luis Obispo and Pismo Beach.
State Highways 41 and 46 are east-west axis routes connecting the north county coastal region to Paso Robles and Atascadero and thence to Fresno and Bakersfield in the Central Valley. Another east-west route is Highway 58, which connects the City of San Luis Obispo to Bakersfield before terminating at Barstow, California, near the junction of Interstates 15 and 40.
As the Coast Starlight, Amtrak operates the Los Angeles to Seattle rail passenger service through the county, with stations in Paso Robles, City of San Luis Obispo, and Grover Beach.
San Luis Obispo County Regional Airport is located near the City of San Luis Obispo. Four passenger airlines serve the airport with non-stop flights to eight cities. Alaska Airlines has flights to Portland, Oregon, San Diego, and Seattle/Tacoma in Washington. American Airlines connects the county to Dallas/Fort Worth in Texas. Flights to Phoenix, Arizona are provided by American Eagle. United Express offers flights to Denver, Colorado, Los Angeles, and San Francisco.
Paso Robles Municipal Airport offers charter passenger services and is home to CalFire’s Air-Attack Base, which is used to fight wildfires in Kern, Monterey, and San Luis Obispo Counties.
CITIES / COMMUNITIES
The nearest major metropolitan areas to San Luis Obispo County are San Jose, approximately 145 miles north of the county, and Los Angeles, approximately 165 miles south, both connected to the county via Highway 101. Located in San Luis Obispo County are the incorporated cities of San Luis Obispo, the county seat, Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, and Pismo Beach.
Unincorporated communities of 1,000 or more residents include Avila Beach, Blacklake, Callender, Cambria, Cayucos, Lake Nacimiento, Los Osos, Los Ranchos, Nipomo, Oceano, San Miguel, Santa Margarita, Shandon, Templeton, and Woodlands. Bordering counties include Monterey County, Kings County, Kern County, and Santa Barbara County.
POPULATION
As of January 1, 2022, the California Department of Finance estimated the population of San Luis Obispo County as 280,721. While the county population increased 0.4% year-over-year, this is still over 1,700 fewer than the 2020 U.S. Census. With the exception of the City of San Luis Obispo which gained 0.2% Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 9
year-over-year, the other incorporated cities in the county all lost between 1.1% and 1.6% of the 2021 population while the balance of the county gained 2.0%. A table summarizing the State and County populations is presented below.
POPULATION ESTIMATES –
CALIFORNIA AND SAN LUIS OBISPO COUNTY
State/County/City 1/1/2021 1/1/2022 Change
California 39,303,157 39,185,605 -0.3%
San Luis Obispo County 279,710 280,721 0.4%
Arroyo Grande 18,533 18,294 -1.3%
Atascadero 30,823 30,480 -1.1%
Grover Beach 12,879 12,707 -1.3%
Morro Bay 10,638 10,466 -1.6%
Paso Robles 31,659 31,176 -1.5%
Pismo Beach 8,095 7,981 -1.4%
San Luis Obispo 47,541 47,653 0.2%
Balance of County 119,542 121,964 2.0%
Source: California Department of Finance, Demographic Research.
UNEMPLOYMENT RATES
It is noted that the subject property is located within the San Luis Obispo-Paso Robles-Arroyo Grande Metropolitan Statistical Area (MSA), which encompasses San Luis Obispo County. The following chart presents the historical unemployment rate for the MSA since September 2020.
Source: California EDD.
The unemployment rate in the San Luis Obispo MSA was 2.7% in August 2022, up from a revised 2.5% in July 2022, and below the year-ago estimate of 5.2%. This compares with an unadjusted unemployment rate of 4.1% for California and 3.8% for the nation during the same period. As noted in the chart above, the MSA unemployment rate dropped to 2.1% in May 2022, the lowest rate observed over the past 30 plus years of available data. This follows the recent spike observed at the beginning of the COVID19 pandemic related lockdowns, when the County’s unemployment rate reached 14.6% in April 2020.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 10
EMPLOYMENT BY INDUSTRY
Source: Employment Development Department, September 2022.
As shown in the above pie chart, the largest industry in the region is Government at 17% of the total employment. The second largest employment industry sectors are Trade Transportation & Utilities and Leisure & Hospitality with 16%. Educational & Health Services (15%) and Professional & Business Services (10%) round-out the top five industry sectors.
MAJOR EMPLOYERS
As shown in the table presented on the following page, the six largest employers in the county, each with between 1,000 and 4,999 employees, are distributed between the City of San Luis Obispo (3), Paso Robles (2), and Atascadero. Overall, government services (not including educational services) and health services each account for six of the major employers, while educational services accounts for three.
Farm
4%
Mining, Logging, &
Construction
8%
Manufacturing
7%
Trade, Transporatation,
& Utilities
16%
Information
1%
Financial Activities
3%
Professional & Business
Services
10%
Educational & Health
Services
15%
Leisure & Hospitality
16%
Other Services
3%
Government
17%
SAN LUIS OBISPO COUNTY EMPLOYMENT BY INDUSTRY
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 11
Employer Name Location Industry No. of Employees
Atascadero State Hospital Atascadero Hospitals 1,000-4,999 Avalara Paso Robles Computer Software 1,000-4,999
Cal Poly State University San Luis Obispo Schools-Universities & Colleges Academic 1,000-4,999 Glenair Inc Paso Robles Communications Consultants 1,000-4,999 Pacific Gas & Electric Co San Luis Obispo Electric Companies 1,000-4,999 San Luis Obispo County EMS San Luis Obispo Government Offices-County 1,000-4,999 AMI Sierra Vista Radiology San Luis Obispo Physicians & Surgeons 500-999 California Mid-State Fair Paso Robles Concert Venues 500-999 Cuesta College Paso Robles Junior-Community College-Tech Institutes 500-999 Medi-Cal Eligibility Info San Luis Obispo Government Offices-County 500-999 Mental Marketing San Luis Obispo Advertising-Agencies & Counselors 500-999 Sierra Vista Regional Med Ctr San Luis Obispo Hospitals 500-999 Trust RCM San Luis Obispo Billing Service 500-999
Arroyo Grande Community Hosp Arroyo Grande Hospitals 250-499 California State Parks San Simeon State Parks 250-499
French Hospital Medical Ctr San Luis Obispo Hospitals 250-499 Madonna Inn Bakery San Luis Obispo Resorts 250-499
Morro Bay Art Assn Morro Bay Art Galleries & Dealers 250-499 Mustang Waterpark Arroyo Grande Water Parks 250-499
Pismo State Beach Oceano State Parks 250-499
Ramirez Farm Labor Shandon Labor Contractors 250-499
San Luis Obispo County Ofc-Edu San Luis Obispo County Government-Education Programs 250-499 San Luis Obispo Sheriff's Dept San Luis Obispo Sheriff 250-499 Social Services Dept San Luis Obispo Government Offices-County 250-499 Twin Cities Community Hospital Templeton Hospitals 250-499
INFLATION
Beginning in 2021, high inflation returned to the nation for the first time in four decades, reaching 8.3% for the 12 months ended August 2022 after rising 8.5% previously, according to U.S. Labor Department data published Sept. 13, 2022. This phenomenon has been attributed to a combination of a multitude of factors, most significantly the historically low unemployment rate (where the number of job openings atypically exceeds that of the unemployed workers), international supply chain breakdowns resulting from the COVID-19 pandemic, and government bailouts during the early stages of the pandemic increasing consumer demand that outpaced the already weakened supply chain. The chart presented on the following page displays annual US inflation rates for calendar years from 2012 to 2022.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 12
USInflationCalculator.com, September 13, 2022
*The latest inflation data (12-month based) is always displayed in the chart’s final column.
On September 21, 2022, the Federal Reserve raised its benchmark interest rate by 75-basis points for the for third time this year in its fight against a 40-year high in inflation. The preceding 75-bais point hikes were announce in June and July, respectively. This follows a 50-basis point increase on May 5, 2022, and a 25-basis point increase on March 16, 2022.
It’s easy to forget that the Fed was holding the federal funds rate at around zero as recently as the first quarter of 2022. The Fed was also still buying billions of dollars of bonds every month to stimulate the economy. All despite 40-year highs in various measures of U.S. inflation.
CONCLUSION
It is apparent that San Luis Obispo County has been recovering from the recent pandemic. Further, a rebound in the housing markets has helped the local economy as well. Despite expectations of a mild recession looming in the coming months, driven by the Federal Reserve raising interest rates to fight inflation, the general consensus in the marketplace is that the County will continue to remain stable over the course of the next year, with slow growth moving forward.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 13
NEIGHBORHOOD DESCRIPTION
The subject is located in the Paso Robles Municipal Airport, a contiguous section of the incorporated City of Paso Robles. The airport is approximately 4 miles northeast of downtown Paso Robles. A map of the airport and its environs is presented below.
NEIGHBORHOOD MAP
PASO ROBLES MUNICIPAL AIRPORT
The area around the Paso Robles Airport, known as Airport Road Industrial Park, is home to aviation maintenance providers and facilities, as well as aviation parts manufacturers and other related businesses.
Under the city's direction, sections of the industrial park have been developed with utilities and infrastructure improvements, in addition to aircraft hangar and aviation service facilities being constructed. Currently, the industrial park offers over 500,000 square feet of industrial building space in operation, housing approximately 50 individual businesses, and providing over 700 jobs in the community.
SUBJECT
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 14
The number of aircraft based at the airport has grown from 55 at the time of city acquisition in 1973, to over 200 today. The airport is home to a CalFire Air Attack Base, providing Kern, Monterey, and San Luis Obispo Counties with wildfire air-support.
Access to central Paso Robles from the airport is via Airport Road and Highway 46.
PASO ROBLES
With a State estimated population of 31,176 as of January 2022, Paso Robles has a median household income of $78,415, as compiled by the Site-To-Do-Business (STDB). The city’s median household income is projected to increase by 23% over the next five years. STDB reports the median home value in Paso Robles is $577,525 as of 2022. This is also expected to increase over the next five years.
NEIGHBORHOOD CONCLUSION
Overall, the neighborhood is largely rural and is primarily dominated by the airport, which offers commercial and industrial zoned lots. Although surrounded by rural residential and agricultural uses, median incomes and home prices are expected to increase over the next five years. Generally, the neighborhood is stable.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 15
INDUSTRIAL MARKET OVERVIEW
Given the industrial nature of the subject property, a market overview of the industrial market in San Luis Obispo County is appropriate. Pertinent information was obtained from CoStar, a leading commercial real estate company and from market participants.
COSTAR INDUSTRIAL REPORT
OVERVIEW
Industrial rents in the San Luis Obispo Market were rising at a 7.3% annual rate during the fourth quarter of 2022 and have posted an average annual gain of 5.8% over the past three years. In addition to 79,000 SF that has delivered over the past three years (a cumulative inventory expansion of 0.9%), there is 10,000 SF currently underway, representing a fractional expansion of the existing inventory. Vacancies were basically in line with the 10-year average as of the fourth quarter 2022 and were little changed over the past four quarters.
Employment in the metro was recently increasing at an annual rate of 4.7%, or a gain of about 5,500 jobs.
While a positive result, this does represent the weakest rate of job creation in the past twelve months, which at one point was as high as 7.3%.
Source: CoStar’s San Luis Obispo Industrial Report.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 16
VACANCY AND ABSORPTION
The vacancy rate for the county’s Industrial market has declined since the fourth quarter of 2016, when it was approximately 5.25%. It has dropped as low as 1.5% in the first quarter of 2022 but is currently sitting at 2.5%. This compares favorably to the national vacancy rate, approximately 4.0%.
Third quarter 2022 deliveries of nearly 40,000 square-feet pushed the absorption to a negative 30,000± square-feet. As shown in the “Key Indicators” table on the preceding page, current quarter absorption and delivery figures haven’t been complied yet, but over 10,000 square-feet is currently under construction.
Source: CoStar’s San Luis Obispo Industrial Report.
ASKING RENTS
Since the fourth quarter 2016, asking rents in the county have steadily increased and the average asking rent is currently at $15.62 per square-foot. The pace of rent increases is expected to remain strong through 2023 before leveling off somewhat from 2024 through 2026.
Source: CoStar’s San Luis Obispo Industrial Report.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 17
CONSTRUCTION AND INVENTORY
The third quarter 2022 saw one delivery of new industrial space consisting of 39,000 square-feet, the first in nearly two years. A more modest delivery of approximately 10,000 square-feet is expected in November 2022. Both projects are located in the South SLO submarket, which includes the City of San Luis Obispo.
Source: CoStar’s San Luis Obispo Industrial Report.
Industrial inventory currently sits at 627 buildings county-wide, comprising of a total of 9,154,000 squarefeet. The South SLO submarket has the largest share of buildings at 42.5%, followed by the North 101 Corridor, which includes Paso Robles, at 38.5%.
SALES
The San Luis Obispo industrial market contains one of the smaller inventories in the nation. In turn, the market saw limited investment relative to its peers in the past year, with 19 transactions. That was a drop in the sales count relative to the five-year average in the metro. Annual sales volume has averaged $33.7 million over the past five years, and the 12-month high in investment volume hit $57.0 million over that stretch. In the past 12 months specifically, $55.8 million worth of industrial assets sold. Logistics facilities drove recent sales volume, accounting for $49.0 million in confirmed transactions.
The market price, which is based on the price movement of every industrial property in each sector in the metro and informed by actual transactions, now sits at $213/SF. That figure is up over this time last year, and the price itself sits way above the average pricing for the overall country. As depicted in the chart presented on the following page, the5.2% market cap rate is within a few basis points of where it was 12 months ago, but the cap rate is structurally lower here than those found across the United States.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 18
Source: CoStar’s San Luis Obispo Industrial Report.
NORTH 101 CORRIDOR SUBMARKET
Paso Robles is included in the North 101 Corridor submarket, which ranks last out of the seven county submarkets with the lowest current average monthly asking rent of $1.10 per square-foot; but it ranks first for the lowest vacancy rate, currently at 1.8%, and absorption of 3,643 square-feet in the third quarter 2022. Inventory sits at 195 buildings, representing 3,523,000 square-feet.
Current asking rates pulled from Loopnet.com show a range between $1.15 to $1.40 per square-foot. As noted below, new construction expected to be delivered late 2023 is listed at $1.20 per square-foot.
Market participants point to two
developments currently under construction:
the Paso Commons in Paso Robles and the Del
Rio Market Place in Atascadero. By the end of
the fourth quarter 2022, the seven-building
development of Paso Commons is expected to
deliver an additional 375,000 square-feet of
space to the 44,000 square-feet of space
delivered in third quarter 2022, raising the
submarket inventory to 202 buildings totaling
approximately 3,943,000 square-feet.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 19
The ten building Del Rio Market Place at the
signalized intersection of El Camino Real and
Del Rio Road in Atascadero is expected to
deliver two industrial buildings with over
50,000 square-feet in September 2023. The
eight other buildings within this project are
dedicated to office and retail uses. The NNN
monthly asking rate for the industrial space is
currently $1.20 per square-foot.
INDUSTRIAL MARKET OVERVIEW CONCLUSION
While the industrial market remained resilient throughout the COVID-19 pandemic, the post pandemic outlook is tempered by the highest inflation in four decades, which has resulted in higher interest rates set by the Federal Reserve to combat the high inflation. Overall, higher interest rates on loans reduces the market pool and demand for both land and product inventory falls. New inventory coming to the market will likely lead to a drop in absorption rates and existing inventory will have difficulties finding tenants.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 20
PROPERTY DESCRIPTION
GENERAL
The subject property consists of an industrial warehouse building which totals 33,500 square feet in size, located along the east side of Airport Road and the south side of Rollie Gates Drive in the City of Paso Robles. The improvements were constructed in 1989 as a single-tenant warehouse of average quality concrete tilt up construction with a concrete slab foundation. Improvements are considered to be of average quality construction and in average condition.
Additional description of the subject is included in the following sections.
SITE ATTRIBUTES
Site Area 2.02± acres, or 87,991± square-feet.
Source: San Luis Obispo County Assessor’s Parcel Map
Assessor’s Parcel Number 025-453-005
Zoning AP PD, Airport Planned Development, City of Paso Robles
Within the Airport Zoning District, permitted uses
include agriculture, food processing and service,
automotive sales and services, commercial offices,
commercial retail, limited health care facilities,
wholesale services, warehousing, and various
manufacturing uses.
General Plan Designation BP, Business Park, City of Paso Robles The BP designation is intended to provide areas for
clean and attractive businesses and industries in
which all activities are conducted indoors (some
limited outdoor storage and/or activities may be
permitted via approval of a conditional use permit
and if completely screened). Where appropriate,
compatible convenience and highway commercial
land uses may be located in the Business Park
category.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 21
Special Plan Area None
Shape Rectangular
Frontage / Exposure The corner site has approximately 238 feet of frontage and exposure along Airport Road, and
approximately 348 feet of frontage and exposure
along Rollie Gates Drive. Overall exposure is
considered average.
Access Two curb cuts provide access from Rollie Gates
Drive. Access to State Route 46 is approximately two
miles south via Airport Road, and U.S. Highway 101
is an additional 2.5 miles west via Highway 46.
Overall access is considered average.
Topography The improved site is level and at street grade.
Utilities All typical municipal utilities are connected to the site.
Flood Zone The subject lies within FEMA Flood Zone X,
unshaded, per map 06079C0392G, dated November
16, 2012. This is an area with minimal flood hazards.
Mandatory flood insurance purchase requirements
and floodplain management standards do not apply.
Seismic Information As verified through the California Department of Conservation website the subject property is not
within an earthquake fault zone and has not been
evaluated for liquefaction hazards or landslide
hazards.
Because San Luis Obispo County and most of the
state of California is a seismically active region, the potential for earthquake-induced hazards must be
acknowledged. Current engineering design and
construction practices, such as the Uniform Building
Code, provide the opportunity to reduce earthquake
related hazard.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 22
Site Improvements The subject property is improved with a 33,500 square-foot, two story industrial warehouse
building.
Office Build-Out Based on the client provided floor plans, the office build-out encompasses the entire second floor,
consisting of approximately 14,400 square-feet.
Parking Spaces The subject has 53 parking spaces, or 1.58 spaces per 1,000 square feet of rentable building area. Parking
exceeds market requirements.
Floor-to-Area Ratio (FAR) 38%
BUILDING ATTRIBUTES
Building Area 33,500 square feet, as per the client provided floor plans.
Year Built / Age 1989 (33 years old), remodeled in 2000.
Basic Construction The subject property is average quality concrete tiltup construction on a concrete slab foundation.
Interior According to the floor plans in the current marketing brochure, the subject building has two floors. The
19,100 square-foot ground floor is demised with a
lobby, two multi-stall restrooms, each with an
attached shower/changing room, a private restroom
two assembly/ manufacturing bays, a warehouse,
utility room, and three storage rooms. The 14,400
square-foot second floor is into three offices, each
with a private restroom, a storeroom/office, a
communal office space, an assembly/manufacturing
floor, a warehouse, and three additional private
restrooms.
HVAC The HVAC systems are roof mounted and are
considered adequate for the use. The HVAC system
is assumed to be in good working condition.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 23
Electrical Electric power is considered above average as service is provided by Pacific Gas and Electric
Company, and the building has a roof top solar array.
Roof Details regarding the roof were not provided to the appraisers. However, the building underwent
extensive reconstruction in 2000. Therefore, the roof
is assumed to be in average condition.
Fire Sprinklers The entire building is protected with a wet fire sprinkler system.
Furniture, Fixtures, and Equipment (FF&E) This appraisal does not include the value of any FF&E or any other personal property.
Condition / Utility The overall condition of the building improvements is average. The configuration of the improvements
on the site, as well as the interior layout of the
improvements, makes the subject functional for use
as a manufacturing building and the building
includes all the typical amenities currently desired by potential market participants.
A floor plan of the subject interior is presented on
the following page.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 24
SUBJECT FLOOR PLAN
(Ground Floor)
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 25
SUBJECT FLOOR PLAN
(Second Floor)
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 26
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
View of left side of the lobby entrance.
Central view of the lobby entrance.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 27
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
View of the ADA compliant restroom located adjacent to the lobby.
View of the south ground floor Assembly/Manufacturing Bay.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 28
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Breakroom kitchenette located in the south ground floor Assembly/Manufacturing Bay.
View of the Women’s ground floor restroom.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 29
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
View of the Men’s ground floor restroom.
Electrical panel for the south ground floor Assembly/Manufacturing Bay.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 30
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Ground floor office adjacent to the lobby.
View of the north ground floor Assembly/Manufacturing Bay.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 31
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Electrical panel for the north ground floor Assembly/Manufacturing Bay.
View of the ground well electrical/utility room.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 32
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Roll-up door for warehouse.
Another ground floor view of the warehouse.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 33
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Secondary stair well.
Second floor breakroom kitchenette. The door leads to the secondary stair well.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 34
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Private restroom off second floor breakroom.
Second floor breakroom.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 35
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Typical view of one of three private offices.
View of a typical private restroom attached to the three private offices.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 36
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Second floor Assembly/Manufacturing Bay.
Second floor Assembly/Manufacturing Bay.
Note the gated doorway to the second level of the warehouse in the background.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 37
SUBJECT PROPERTY INTERIOR PHOTOGRAPHS
Second level of warehouse.
Primary stair well to the lobby.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 38
OTHER PROPERTY MATTERS
Ownership
Leasehold Timothy R. Kopack and Deborah L. Kopack, Trustees of the Kopack Family Trust dated January 26, 1999.
Land City of El Paso De Robles, a California municipal
corporation.
Sales History Neither the land nor the leasehold have been transferred within the previous ten-year period.
However, the leasehold (building improvements) is
currently listed for sale at 2,900,000, or $86.57 per
square-foot. Further, as of December 8, 2022, the
leasehold, with 13-years remaining on the lease, is
under contract for a reported $2,550,000, or $76.12
per RBA square-foot. The buyer intends to lease the
building to an as yet to be determined third party.
However, the buyer is performing due diligence in
negotiating with the client a potential 20-year ground
lease extension and could withdraw the purchase
offer if the negotiations are unsuccessful. The listing broker also attempted to lease the building at $0.75
per month per square-foot, triple net, but found no
takers.
Easements / Encroachments A title report was not made available to the appraisers for review, who therefore assume no atypical
easements or encroachments encumber the subject
property (see Extraordinary Assumption No. 1).
Private Restrictions None noted by the client. Further, a title report was not made available to the appraisers for review, who
therefore assume no private restrictions encumber
the subject property (see Extraordinary Assumption
No. 1).
Wetlands The site is fully developed and there are no wetlands on the site.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 39
Cultural, Recreational and Historic Significance None known or suspected to be present.
ADA Compliance The Americans with Disabilities Act (ADA) provides standards for building accessibility for persons with
disabilities. The structure and site improvements has
an ADA compliant restroom on the ground floor.
Property Tax Data and Projected Taxes Property taxes are current for the subject property.
County Assessor’s records show the following
assessed values (2021-2022 tax year) and direct
assessments.
Tax Code Area:
002-000 APN: 025-453-005
Land Value $52,215.00
Improvements $108,494.00
Fixtures $0.00
Personal Property $0.00
Taxable Value $160,709.00
Exemptions $0.00
Total Assessed Value $160,709.00
Base Tax Rate 1.123780%
Base Taxes $1,806.02
Special Assessments
None $0.00
Total Special Assessments $0.00
Late Fees $0.00
Effective Tax Rate 1.12378%
Total Paid $1,806.02
The subject property has not been reassessed since
the original construction in 1989. However, it is noted that the underlying land is owned by a tax-exempt
municipal corporation. Should the subject building be
sold at the appraised value of $2,770,000, the
property taxes would increase to approximately
$31,129 annually.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 40
OVERALL COMMENTS
The subject is comprised of a single-tenant industrial warehouse building totaling 33,500 square feet. The building was constructed in 1989 and remodeled in 2000. The improvements have a very functional layout for its use and includes many of the many amenities desired by users in the current market. The corner location offers above average access and exposure. Those areas not dedicated to building improvements are used as a paved parking lot, landscaping, and excess land. The subject’s location at the Municipal Airport is somewhat distant from major highway, being two miles to State Route 46 and 4.5 miles to U.S.
Highway 101. Overall, the subject has average market appeal due to the location and condition.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 41
HIGHEST AND BEST USE ANALYSIS
Highest and best use may be defined as the reasonably probable use of property that results in the highest value.
There are four criteria used in the highest and best use analysis process. These are:
1. Legally Permissible Use
What uses are permitted legally under existing zoning, building codes, historic district controls, environmental regulations, deed (private) restrictions, and long-term lease provisions on the site in question?
2. Physically Possible Use
What uses of the site are physically possible, given its size, shape, area, terrain, soils composition, accessibility, assembly potential, and risk potential from natural disasters?
3. Financially Feasible Use
Which possible and permissible uses will produce a positive net return to the owner of the property?
4. Maximally Productive Use
Among the feasible uses, which use will produce the highest residual land value consistent with the rate of return warranted by the market for that use? Since improved properties sometimes do not, in fact, contain the improvements that would generate the greatest return to the land, the highest and best use of the land as if it were vacant, as well as the highest and best use of the property as it is currently improved, normally are considered. In extreme cases, this analysis will call into question whether the existing improvements should be preserved. Usually, however, the analysis shows that if a property is already improved, the continuing use of the existing improvements yields more total return to the land than does the razing of the improvements in favor of alternative uses.
We first evaluate the highest and best use of the subject property as an undeveloped site zoned for light industrial development. Then we evaluate the highest and best use of the property as it currently exists, improved with a 33,500 square foot flex/industrial building.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 42
HIGHEST AND BEST USE OF THE PROPERTY, AS IF VACANT
LEGALLY PERMISSIBLE USES
In accordance with the definition of highest and best use, it is appropriate to analyze the subject property as though vacant as it relates to legal permissibility, physical possibility, financial feasibility and maximum productivity. Possible uses are constrained by legal restrictions on the property both private and public.
As previously discussed, the subject is zoned for Airport, Planned Development, and the General Plan designation is Business Park.
Overall, the legally permissible uses cover a variety of uses, including agriculture, food processing and service, automotive sales and services, commercial offices, commercial retail, limited health care facilities, wholesale services, warehousing, and various manufacturing uses.
PHYSICALLY POSSIBLE USES
The size, topography, and location of the subject are important factors in determining the use of the property. The size of the site can have a significant effect on the type of development that is possible and on the economies of scale. The 2.49± acre size of the subject is too small for commercial agriculture.
Further, the site lacks the exposure desired for automotive sales and services, commercial retail, and health care facilities. Therefore, the remining physically possible uses are limited to food processing and service, commercial offices, wholesale services, warehousing, and various manufacturing uses. These remaining uses can best be described as light industrial use.
FINANCIALLY FEASIBLE / MAXIMALLY PRODUCTIVE USES
The proposed property improvement must be able to deliver an income return that generates the market value sufficient to pay for the developmental costs, the risks involved, and profit appropriate for the type of development.
With the demand for office space declining in the post pandemic economy, office development is currently speculative and would not be feasible in the near to mid future. Given the current supply of industrial product along with an analysis of current construction costs and the amount of construction currently underway in the submarket, light industrial development is concluded to be currently the most financially feasible and maximally productive use.
HIGHEST AND BEST USE OF THE SITE AS IF VACANT
Considering all the preceding factors, the highest and best use as if vacant of the properties is for light industrial development.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 43
HIGHEST AND BEST USE OF THE PROPERTY, AS IMPROVED
The subject consists of a flex/industrial building. The improvements consist of average quality construction that were completed in 1989 and extensively remodeled in 2000. The improvements are in average condition.
As with the highest and best use as vacant, the four tests of highest and best use must also be applied to the subject considering the in-place improvements. Consideration must be given to the continued “as-is” use of the subject, as well as alternative uses for the property. The improvements total 33,500 square feet and are currently vacant and listed for sale. The industrial building has a typical amount of buildout varying from office, restrooms, breakrooms, manufacturing rooms, and warehouse space. The potential alternative uses consist of demolition, expansion, conversion or renovation. The following discussion of the possible “as improved” uses is offered on the following page.
DEMOLITION
One alternative would be to demolish the existing improvements, creating a vacant site. The improvements have a concluded market value of $3,775,000 while the land-only value is $750,000 rounded. The building is in average condition, retains average utility, and makes a significant contribution to the overall value. Therefore, for all these reasons, demolition is not economically prudent at this time.
EXPANSION
The site coverage of the subject is 38%, and portions of the remaining land is used for required parking, circulation, and setbacks from Rollie Gates Drive and Airport Road. This leaves approximately 0.40 acres (17,424± square-feet) of undeveloped land available. However, while expansion is possible, it does not result in future economic gain.
CONVERSION
The property is a vacant flex/industrial building. Surrounding uses are primarily flex/industrial within the Airport business park. Therefore, conversion is possible but does not result in future economic gain.
RENOVATION
The subject building was constructed in 1989 and extensively remodeled in 2000. The improvements currently have several tenant improvements with good utility. Furthermore, the overall building appears to be in average condition. Based on these reasons, a moderate level of renovation is likely appropriate prior to occupancy.
CONCLUSION
Legal, physical, and financially feasible considerations, as well as alternative uses and market considerations, have been analyzed to evaluate the highest and best use of the property. Based on this analysis, the subject’s highest and best use is for continued as a flex/industrial building with a moderate level of renovation prior to occupancy. The most likely buyers for this property would be an owner/user.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 44
VALUATION ANALYSIS
VALUATION METHODS AND CONSIDERATIONS
The initial stages of the appraisal process include the investigation, organization, and analysis of relevant market data and other information that relate to the market value of the subject property. Factors discussed previously that influence value include the San Luis Obispo County demographics and economic conditions, neighborhood characteristics and features, the market for industrial facilities, and subject property attributes. All of these need to be considered when rendering the highest and best use conclusion. After a highest and best use conclusion has been made, the possibilities for the property have been sufficiently narrowed so that a proper valuation process can be pursued. This section of the report contains the comparable data, the interpretation, analysis, and processing of these data and the conclusions reached about the property's market value.
An appraisal of an improved property typically utilizes up to three valuation approaches:
• The Replacement Cost Approach to Value
• The Sales Comparison Approach to Value
• The Income Capitalization Approach to Value
COST APPROACH
The Cost Approach to Value usually involves estimation of the land value through the sales comparison approach. Then, we estimate the replacement cost of the improvements as if they were new, less a deduction for depreciation, which is computed after analyzing the deficiencies or disadvantages of the existing building compared to a new building. Depreciation, however, is subjective and difficult to support in the market. The Cost Approach is generally considered a good approach for new or proposed improvements; however, properties are commonly transferring well below replacement costs at the present time. Given that the subject’s improvements are not new and have been in place for over 30 years, the Cost Approach is not considered to be relevant to this analysis. The elimination of this approach does not detract from the credibility of this report.
SALES COMPARISON APPROACH
In the Sales Comparison Approach to Value, the subject property should be compared to other similarly improved properties that have recently sold in the market area. The respective sale prices of the comparable properties are adjusted, quantitatively, if possible, based on market data, but at least subjectively based on the appraiser’s knowledge of market behavior, in order to derive an indication of market value. All sale and listing properties were compared based on price per square foot of building area, consistent with the market. Additionally, whenever possible, the overall rate of return was calculated for use in the Income Capitalization Approach. This approach is a logical one for this appraisal assignment as similar buildings within the region have recently sold.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 45
INCOME CAPITALIZATION APPROACH
The Income Capitalization Approach to Value is based on the assumption that there is a relationship between the amount of income a property will produce and its value. This approach involves estimating the annual net income the property will earn and converting it into value. This process, called capitalization, is accomplished by dividing the net income, before payment of debt service, by a capitalization rate. This rate will vary as a result of such factors as risk, time, interest or capital investment, and recapture of the depreciating asset. However, given the subject is currently vacant, the direct capitalization methodology is not appropriate for this.
The next step in the appraisal process is the reconciliation or correlation of the value indications generated by the approaches used, as influenced by other pertinent analysis that previously have been developed in the report. The range in value established by these approaches is examined and major emphasis is placed on the approach, or approaches, considered the best indicators of value for the specific appraisal problem being addressed. Lastly, we consider the effect of any leasehold position on the market value.
SALES COMPARISON APPROACH
In the Sales Comparison Approach to value, the subject property should be compared to other similarly improved properties that have recently sold in the market area. All the sale properties were compared based on price per square foot of building area, consistent with the market. The data search was focused on industrial buildings in the San Luis Obispo County market. Effort was made to locate sales of industrial buildings with ground leases; however, no recent sales with ground leases were found in San Luis Obispo County. Therefore, a qualitative adjustment was made for each sale relative to the subject property.
In order to determine the value of only the industrial building, we also looked at land sales with the intention to derive the building value by subtracting the land value from the site value (building and land).
With regard to elements of comparison, the comparables were analyzed in terms of property rights, financing, conditions of sale, changes in market conditions, location, building size, building quality and condition, age of the improvements, level of buildout, and other physical characteristics.
IMPROVED VALUE
To determine the improved value (building and land), a summary table of the comparable building sales and map are presented on the following pages, followed by a discussion of the comparable improved sales and comparison to the subject property.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 46
COMPARABLE IMPROVED SALES SUMMARY TABLE AND MAP
Sale No.
BRI No.
Location
APN(s)
Grantor
Grantee
Sale Date
Doc. No.
Sale Price
Price /SF
Size:
RBA SF
Office %
Age
FAR
I-1
2846
8404-8410 El Camino Real
Atascadero, CA
APNs: 056-041-029
& -030
Central City Industrial
LLC
Redwood Center LP
8/4/2022
031898
$2,400,000
$102
23,500
0%
48 years
0.30 I-2
2845
3490 Broad Street
San Luis Obispo, CA
APN: 053-231-019
77 Broad Street LLC
Toyon Creek Properties
LLC
10/4/2021
067115
$4,175,907
$256
16,327
55%
41 years
0.34 I-3
2847
155 Cow Meadow Place
Paso Robles, CA
APN: 040-153-008
Linda Vogt Trust
Robert G Smith
8/24/2021
058769
$2,800,000
$232
12,072
33%
15 years
0.27 I-4
2848
3563 Combine Street
Paso Robles, CA
APN: 025-437-004
Jose Manuel Bejar Cuara
& Wendy Rico Cruz
Central Valley Industrial
Inc
7/6/2021
047279
$1,100,000
$234
4,968
38%
1 year
0.55 SUBJECT
3010 Rollie Gates
Paso Robles, CA
APN: 025-453-005
Appraisal --- ---
33,500
10%
33 years
0.38 Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 47
COMPARABLE BUILDING SITE SALE DISCUSSION
The results of the analysis of each comparable are not absolute; therefore, the appraiser considers the strengths and weaknesses of the analysis in the reconciliation process by giving more or less weight to specific comparable properties. In the analysis of the individual comparables, property characteristics identified that could have an impact on value are considered.
It was reported that the sales were either cash or cash equivalent and there were no unusual conditions of sale, unless noted.
The following is a discussion of each comparable sale used.
Comparable Sale No. 1
This is the sale of three multi-tenant industrial
buildings totaling 23,500± square feet located
at 8404-8410 El Camino Real, Atascadero,
California. The land area was 77,537± squarefeet (1.78± acres), for a FAR of 0.30. Escrow closed on August 4, 2022, for $2,400,000, or
$102 per square foot, in an arms-length
transaction. The buyer paid 68.75% down and
financed $750,000 with First Interstate Bank.
The listing/buyer’s broker said there were no
atypical sale conditions. The surrounding
neighborhood was light industrial/service
commercial adjacent to neighborhood shopping centers. The property has good visibility from the adjacent U.S. 101 freeway; however, the visibility from El Camino Real is limited due to an intervening building. Built in 1974, the building was 48 years old at time of sale, with no dedicated office buildout, and was in below average condition. The three buildings were demised into ten units, which were fully leased at the time of sale. The ten units had a total of 26 roll-up doors, but no loading docks or levelers. All municipal utilities were connected. There were 32 surface parking spaces, or approximately 1.36 spaces for every 1,000 square feet of rentable building area.
This comparable has indirect access to El Camino Real, a high traffic arterial route. These factors generally cancel one another. Further, this sale has freeway access and an average of 2.6 roll-doors per unit.
However, the buildings have limited to no office build-out, units demised for multi-tenants, with an older building age, below average condition, and an inferior Atascadero location. Giving more weight to the inferior factors, this sale indicates a subject unit value above $102 per square-foot.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 48
Comparable Sale No. 2
This is the sale of a 16,327± square foot
industrial building located at 3490 Broad
Street, San Luis Obispo, California. The land
area was 47,480± square-feet (1.09± acres),
for a FAR of 0.34. Escrow closed on October 4,
2021, for $4,175,907, or $256 per square foot,
in an arms-length transaction. The buyer paid
19.2% down and financed $3,375,000 with
American Riviera Bank. The listing broker said
there were no atypical sale conditions. The
surrounding neighborhood was light
industrial/service commercial adjacent to multi-family residential complexes. Built in 1980, the single tenancy, metal building was 40 years old at time of sale, with 9,400± square feet (≈ 55%) of retail/office/showroom buildout. The warehouse space had one drive-in 12’w x 14’h rollup door and one loading dock. All municipal utilities were connected. There were 25 surface parking spaces, or approximately 1.5 spaces for every 1,000 square feet of rentable building area. The building was vacant at the close of escrow, available for immediate occupancy by the owner/user buyer.
This comparable is effectively 19-years older than the subject. However, this is outweighed by the City of San Luis Obispo location, loading dock, above average access, significantly more office build-out, and smaller building size, which places upward pressure on the unit value. Overall, this sale indicates a subject unit value well below $256 per square-foot.
Comparable Sale No. 3
This is the sale of a 12,072± square foot
industrial building located at 155 Cow
Meadow Place, Paso Robles, California. The
land area was 44,867± square-feet (1.03±
acres), for a FAR of 0.27. Escrow closed on
August 24, 2021, for $2,800,000, or $232 per
square foot, in an arms-length transaction.
The buyer paid 50% down & financed
$1,400,000 with CoastHills Credit Union. The
listing/buyer’s broker said there were no
atypical sale conditions. The surrounding
neighborhood was light industrial/service
commercial with several infill lots available. Built in 2006, the building was 15 years old at time of sale, with 500± square-feet of office space and 3,500± square-feet of showroom space, or roughly 33% was Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 49
built-out. The building had three 10’w x 12’h roll-up doors and one loading dock with a leveler. All municipal utilities were connected. There were 30 surface parking spaces, or approximately 2.49 spaces for every 1,000 square feet of rentable building area.
This comparable is slightly newer construction, has additional roll-up doors, loading dock and leveler, more office build-out, and smaller building size, which places upward pressure on the unit value. With no offsetting inferior factors, this sale indicates a subject unit value well below $232 per square-foot.
Comparable Sale No. 4
This is the sale of a 4,968± square foot
industrial building located at 3563 Combine
Street, Paso Robles, California. The land area
was 9,102± square-feet (0.21± acres), for a
FAR of 0.55. Escrow closed on July 6, 2021, for
$1,100,000, or $234 per square foot, in an
arms-length, all-cash transaction. The listing
broker said there were no atypical sale
conditions. The surrounding neighborhood
was light industrial/service commercial north
of Highway 46. Built in 2020, the building was
1 year old at time of sale and had no previous
occupants. The buyer is an investor now seeking a tenant. Office build-out was 1,100± square-feet (22%), and the warehouse had 2 roll-up doors. All municipal utilities were connected. There were 5 surface parking spaces, or approximately 1.01 spaces for every 1,000 square feet of rentable building area.
This comparable has higher floor-to-area ratio (FAR) and limited parking. However, these are outweighed by the newer construction, an additional roll-up door, more office build-out, and significantly smaller building size, which places upward pressure on the unit value. Overall, this sale indicates a subject unit value below $234 per square-foot.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 50
SITE VALUE CONCLUSION
Based on the previous discussion, the improved sale comparables indicate a subject bracketed value range is from $102 to $232 per square foot as shown in the following table.
Sale No. Subject Value Less Than /
Greater Than Sale Price /SF Sale Date Size (RBA SF)
S-2 < $256 10/4/2021 16,327
S-4 < $234 7/6/2021 4,968
S-3 < $232 8/24/2021 12,072
The Subject unit value range is greater than $102 and less than $232 per square-foot.
S-1 > $102 8/4/2022 23,500
Sale 2 represents the top of the range, primarily due to the larger office build-out and smaller building size. This was followed by Sale 4, which had a significantly smaller building size.
This leaves the subject directly bracketed by Sales 1 and 3, respectively at $102 and $232 per square-foot.
For Sale 3 the below average street exposure is outweighed by numerous positive factors, including the larger office build-out and smaller size, though neither was to the degree of those same factors for Sale
2. The subject is closer in value to Sale 1 where the negative factors slightly outweigh the positive factors, with the deciding factor being the below average building condition. Therefore, placing more weight on Sale 1, a value of $135 per square foot for the subject is considered appropriate.
The indicated value by the Sales Comparison approach is shown below. 33,500 SF x $135 /SF = $ 4,522,500
Rounded to $ 4,525,000
LAND VALUE
To determine the land value, a summary table of the comparable industrial sales and map are presented on the following pages, followed by a discussion of the comparable land sales and comparison to the subject property.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 51
COMPARABLE LAND SALES SUMMARY TABLE
Sale No.
BRI No.
Location
APN(s)
Grantor
Grantee
Sale Date
Doc. No.
Sale Price
Price /SF
Land Use
Size: Acres
SF
S-1
6899
Lot 2, Ardmore Road
Paso Robles, CA
APN: 025-362-045
Ardmore Development Co
LLC
Case Paso LLC
4/22/2022
017879
$1,000,000
$7.04
Commercial/
Light Industrial
3.26±
142,006±
S-2
6902
Lot 18, Germaine Way
Paso Robles, CA
APN: 025-421-088
(was 025-425-007)
Esteem Land Company
LLC
Beta USA Inc
3/2/2022
009488
$700,000
$5.15
Planned Industrial
3.12±
135,907±
S-3
6896
Lot 13, Wisteria Lane
Paso Robles, CA
APN: 025-425-016
Margie Danley 2005
Revocable Trust, et al
PRG Paso Industrial
Holdings LLC
8/31/2021
060246
$1,080,000
$9.02
Planned Industrial
2.75±
119,790±
S-4
6897
Lot 16, Wisteria Lane
Paso Robles, CA
APN: 025-425-016
Wheeler-Barinka Family
Trust
PRG Paso Industrial
Holdings LLC
7/6/2021
047453
$856,000
$7.74
Planned Industrial
2.54±
110,642±
S-5
6898
430 Germaine Way
Paso Robles, CA
APN: 025-421-038
(was 025-425-006)
Forefront Properties LLC
Beta USA Inc
4/12/2021
027295
$753,000
$6.38
Planned Industrial
2.71±
118,048±
SUBJECT
3010 Rollie Gates
Paso Robles, CA
APN: 025-453-005
Appraisal --- ---
Airport Planned
Development
2.02±
87,991±
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 52
COMPARABLE LAND SALES SUMMARY MAP
DISCUSSION OF SALE COMPARABLES
This analysis identifies the similarities and differences between the larger parcel and comparable properties. The primary elements of comparison include property rights, financing terms, conditions of sale (motivation), market conditions (sale date), and physical characteristics (e.g., zoning, utilities, soil quality, site improvements, location, access, etc.). The sales selected for comparison are considered the best available.
The market conditions for the following sales span from April 2021 through April 2022, generally before the interest rate hikes by the Federal Reserve. However, land sales are not typically financed (nor were any sales within the dataset presented) and rising interest rates have not yet impacted the land market.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 53
Comparable Land Sale 1
This is the sale of 3.26± acres (142,006± square-feet) of vacant industrial land located on Ardmore Road, Paso Robles, California.
Further, it is located on the southwest corner of the 90-degree north-to-west bend in Ardmore Road, an interior street. Escrow closed April 22, 2022, for $1,000,000, or $7.04 per square foot, in an all-cash transaction. The buyer said there were no atypical sale conditions. The property had a secured yard at the time of sale, which the buyer intends to use for equipment storage for his construction business located diagonally across (west) Ardmore Road. The seller was a neighbor located directly across Ardmore Road. The neighborhood is a new development with all municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as CS, Service Commercial and the zoning is C3, Service Commercial. The site is level to street grade with a rectangle shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.
The Ardmore Business Park location for this comparable is similar to the subject, as is service commercial zoning. Superior factors for this sale are the secured yard and neighbor purchase. However, these are outweighed by the interior street access and larger size, which is indicative of the lower unit value. Overall, this sale warrants a unit value greater than $7.04 per square foot for the subject.
Comparable Land Sale 2
This is the sale of 3.12± acres (135,907± square-feet) of vacant industrial land located at the north terminus of Germaine Way, a cul-de-sac, in Paso Robles, California, and identified as Lot 18. Escrow closed March 2, 2022,
for $700,000, or $5.15 per square foot, in an all-cash
transaction. Two brokers said there were no atypical
sale conditions. However, the buyer previously
purchased the west adjacent parcel (APN 025-421-038)
in April 2021 for $753,000, or $6.38 per square-foot.
The brokers noted this sale had open space
requirements and it was encumbered with an access
easement along the western property line, both of
which reduced the usable area. These factors outweighed any potential buyer motivation for assemblage, to which neither broker gave any weight. The Golden Hills Business Park is a new development with all Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 54
municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.
The size and location for this comparable are similar to the subject. Inferior factors are the cul-de-sac access, open space requirement, and larger size, which is indicative of the lower unit value. With no mitigating superior factors, this sale indicates a unit value well above $5.15 per square-foot for the subject.
Comparable Land Sale 3
This sale totaled 2.75± acres (119,790± square-feet) of vacant industrial land located on the southwest corner of Wisteria Lane and Germaine Way, Paso Robles, California. Escrow
closed August 31, 2021, for $1,080,000, or $9.02 per square foot, in an all-cash transaction. The buyer’s broker said there were no atypical sale conditions. However, the buyer
previously purchased a similar lot on the opposite southeast corner in July 2021 for $856,000, or $7.74 per square-foot (see Sale 4), and the broker said the primary difference between the two sales was buyer motivation, not market
conditions. The neighborhood is a developing business park with all municipal utilities necessary for industrial
development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.
This comparable sale shares several similarities with the subject, including business park location, zoning, and corner access. An inferior factor is the larger size, which is indicative of the lower unit value. However, this was outweighed slightly by the buyer’s assemblage, and this sale warrants a subject unit value below $9.02 per square-foot.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 55
Comparable Land Sale 4
This is the sale of 2.54± acres (110,642± square-feet)
of vacant industrial land located on the southeast
corner of Wisteria Lane and Germaine Way, Paso
Robles, California. Escrow closed July 6, 2021, for
$856,000, or $7.74 per square foot, in an all-cash
transaction. The buyer’s broker said there were no
atypical sale conditions. However, the buyer later
purchased a similar lot on the opposite southwest
corner in late August 2021 for $1,080,000, or $9.02
per square-foot (see Sale 3), and the broker said the
primary difference between the two sales was buyer
motivation, not market conditions. The Golden Hills
Business Park is a new development with all municipal utilities necessary for industrial development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.
This comparable sale shares several similarities with the subject, including size, business park location, zoning, and corner access. An inferior factor is the larger size, which is indicative of the lower unit value.
With no offsetting superior factors, this sale indicates a unit value above $7.74 per square-foot for the subject.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 56
Comparable Land Sale 5
This is the sale of 2.71± acres (118,048± square-feet) of vacant industrial land located at 430 Germaine Way, Paso Robles, California. Further, it is located at the north terminus of Germaine Way, a cul-de-sac. Escrow closed April 12, 2021, for $753,000, or $6.38 per square foot, in an all-cash transaction.
Both brokers said there were no atypical sale conditions. The Golden Hills Business Park is a new development with all municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangle shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.
The zoning and location for this comparable are similar to the subject. Inferior factors are the cul-de-sac access and larger size, which is indicative of the lower unit value. With no mitigating superior factors, this sale indicates a unit value well above $6.38 per square-foot for the subject.
A comparison grid of the sales discussed above is presented on the following page.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 57
INDUSTRIAL LAND SALES COMPARISON GRID
Subject
BRI No. N/A
3010 Rollie Gates Drive
Paso Robles
APN(s) 025-453-005
Sale Price N/A
Price /SF N/A
Qualitative Comparisons Description Description Weight Description Weight Description Weight Description Weight Description Weight Property Rights Fee Simple Fee Simple ≈ Fee Simple ≈ Fee Simple ≈ Fee Simple ≈ Fee Simple ≈ Financing Terms N/A Cash ≈ Cash ≈ Cash ≈ Cash ≈ Cash ≈
Conditions of Sale N/A Neighbor
Purchase Sl Superior Neighbor Assemblage No Impact
Neighbor
Assemblage Sl. Superior None ≈ None ≈
Expenditures After Sale N/A None ≈ None ≈ None ≈ None ≈ None ≈ Market Conditions November 2022 April 2022 ≈ March 2022 ≈ August 2021 ≈ July 2021 ≈ April 2021 ≈ Location Airport Ind. Park Ardmore BP ≈ Golden Hills BP ≈ Golden Hills BP ≈ Golden Hills BP ≈ Golden Hills BP ≈ Site Size (SF) 87,991 142,006 Sl. Inferior 135,907 Sl. Inferior 119,790 Sl. Inferior 110,642 Sl. Inferior 118,048 Sl. Inferior Zoning Airport PD (Ind) Service Com. Sl. Inferior Industrial ≈ Industrial ≈ Industrial ≈ Industrial ≈ Site Improvements N/A Secured Yard Sl Superior Graded ≈ Graded ≈ Graded ≈ Graded ≈ Reduced Usable Area None None ≈ Significant Inferior None ≈ None ≈ None ≈ Access Corner Interior Street Sl. Inferior End of Cul-de-sac Inferior Corner ≈ Corner ≈ End of Cul-de-sac Inferior Overall Rating N/A Sl. Inferior Sig. Inferior Sl. Superior Sl. Inferior Inferior $7.04 $5.15 $9.02 $7.74 $6.38
025-362-045 025-421-088 025-425-016 025-425-019 025-421-038 $1,000,000 $700,000 $1,080,000 $856,000 $753,000
430 Germaine Way
Paso Robles Paso Robles Paso Robles Paso Robles Paso Robles 6899 6902 6896 6897 6898
Address Lot 2, Ardmore Road Lot 18, Germaine Way Lot 13, Wisteria Lane Lot 16, Wisteria Lane Sale 1 Sale 2 Sale 3 Sale 4 Sale 5
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 58
LAND VALUE CONCLUSION
Based on the previous discussion, the comparable sales indicate the subject bracketed value range is from $7.74 to $9.02 per square foot as shown in the following table.
Sale No. Subject Value Greater Than
/ Less Than Sale Price /SF Sale Date Size (Acres)
S-3 < $9.02 8/31/2021 2.75±
The Subject unit value range is greater than $7.74 and less than $9.02 per square-foot.
S-4 > $7.74 7/6/2021 2.54±
S-1 > $7.04 4/22/2022 3.26±
S-5 > $6.38 4/12/2021 2.71±
S-2 > $5.15 3/2/2022 3.12±
Based on the preceding comparable analysis, the subject is bracketed by S-3 and S-4, respectively $9.02 and $7.74 per square-foot. Both sales have similar zoning, location, and corner exposure. Sale S-3 is superior to subject because more weight was attributed to the buyer motivation than the slightly larger size. Conversely, S-4 also had a slightly larger size but without the buyer motivation. Giving equal weight to both sales, a unit value of $8.50 per square foot for the subject land only is concluded and is well supported by the comparable data.
Market Value of the Land Only
87,991± SF x $8.50/SF = $ 747,924
Rounded $ 750,000
BUILDING VALUE
The market value for the building will be the difference between the improved value (building and land) and land only value, as summarized in the following table:
Improved Value: $4,525,000
Land Only Value: - $750,000
Building Value: $3,775,000
Expressed as a per square-foot unit value, the building market value is calculated as follows:
Per square-foot unit value
$3,775,000 ÷ 33,500 SF = $ 112.69 /SF
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 59
RECONCILIATION TO SALES CONTRACT
As previously noted, the listing broker reported that the subject leasehold building is currently in contract for $2,550,000, which is significantly lower than the appraised value of $3,775,000. The difference is attributable to the relatively short remaining lease term of 13-years. The broker further reported the buyer is seeking to extend the ground lease by approximately twenty additional years. Considering the current sales and the remaining lease-term, the appraised value of $3,775,000 is reasonable.
VALUE OF THE GROUND LEASE
The next step in the valuation is to estimate a market rate of return to the fee value of the land in order to estimate market rent. Although there are inherent challenges with estimating a rate of return, there are various sources of rates of return that we will consider, including investor surveys and ground leases.
INVESTOR SURVEY
One method of determining an appropriate rate of return is to look at a published investor survey for land leases. One of the most widely used and respected publications is the RealtyRates.com Investor Survey.
The Investor Survey publishes prevailing land lease capitalization rates and discount rates on a national level. According to the publication, the former reflects initial rates of return on appraised values for vacant land proposed for development but does not address increases in land lease payments or the reversion but may include percentage rent. These rates are considered more applicable to the subject. The latter are internal rates of return being achieved by landowners on improved properties. As such, they include changes in land lease payments, percentage rent where applicable and the reversion of the entire property at the termination of the lease. These rates are not really applicable to the subject since no improvements are being analyzed for this analysis.
The following table summarizes the information for 4th Quarter 2022 data from RealtyRates.com.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 60
The subject’s specific use type as industrial land displays a range in cap rates from 3.35% to 10.72%. The subject property would likely see cap rates toward the middle of the range given the high demand for more typical industrial uses. Overall, given that these are broad and general ranges across the national marketplace, guarded reliance is placed on these investor surveys.
GROUND LEASE CAPITALIZATION RATES
Another method of estimating a rate of return is by examining ground lease discount rates in the region relative to industrial land prices. Market transactions of ground leases for industrial properties in the region are essentially non-existent. Accordingly, sales of all property types on ground leases were surveyed in the San Luis Obispo County and the adjacent Kern County to extract cap rates from the market.
The results of that survey are displayed on the following page.
San Luis Obispo County and Kern County Ground Lease Survey City Property Type Bldg Size (SF) Tenant Sale Date Sale Price Cap Rate Bakersfield QSR 2,200 Starbucks Oct-22 $2,666,667 3.75% Buttonwillow QSR 4,187 Carl's Jr. Jul-22 $2,467,829 5.25% Nipomo QSR 1,000 Dutch Bros. Jul-22 $2,800,000 3.75%
Bakersfield QSR 1,820 Carl's Jr. Jun-22 $2,800,000 3.93% Bakersfield QSR 3,200 Carl's Jr. Jun-22 $2,150,000 4.45% Bakersfield QSR 2,510 Jack In the Box Mar-22 $2,025,000 4.48% Bakersfield QSR 2,080 Tacos La Villa Feb-22 $1,720,000 5.23% Bakersfield QSR 856 Dutch Bros. Jan-22 $2,225,000 4.00% Arroyo Grande QSR 2,040 Dutch Bros. Jun-21 $2,828,000 4.35% Santa Maria QSR 862 Dutch Bros. Mar-21 $2,762,500 4.52% Atascadero QSR 2,800 Burger King Dec-20 $1,450,000 4.11% Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 61
Cap rates for ground lease sales will largely depend on the creditworthiness of the tenant, the remaining lease term, and the age and condition of the building improvements. The range displayed in the market is nonetheless relatively narrow, between 3.75% and 5.25%. However, the cap rates presented above represent improved properties, which carry significantly less risk, as they are secured by credited tenants, long term leases and building improvements which are collateral if the tenant walks from the lease.
Further, the bulk of these tenants are national fast food and retail chains that are considered to carry minimal risk from an investor’s perspective. Per conversations with local market participants, when dealing with atypical ground lease property types, 8.0% is typically used as a base cap rate, and then adjustments are made from there to account for specific risk characteristics such as location, quality of the tenant, overarching market conditions, etc. The subject property would be considered relatively safe given the robust market conditions. Accordingly, a cap rate below 8.0%, consistent with the rates displayed in the sales above, would be appropriate for this site. However, the airfield zone of the subject would likely be perceived to carry slightly more risk given the less intensive allowable uses. Though it is noted that there is still strong demand for those uses, a cap rate above the range displayed by the ground lease sales is warranted for that portion of the property.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 62
RECONCILIATION OF RATES AND CONCLUSION
Based on the investor survey and the market ground lease sales, appropriate rates for the subject can be determined. The indicated cap rate ranges are summarized below.
Indicated Market Cap Rates
Minimum Maximum Average
Investor Survey 3.35% 10.72% 7.65%
Ground Leases 3.75% 5.25% 4.35%
For a vacant industrial building such as the subject, an appropriate cap rate should still be above those displayed by the quick-serve restaurants with national credit tenants on long-term deals. However, a rate below the base of 8.0% is warranted given the limited risk associated with the site. Therefore, a concluded rate of 6.0% is appropriate for the general industrial portion of the subject property.
CONCLUSION OF MARKET GROUND LEASE RATE
Based on the previously concluded land values and cap rates, the concluded fair market lease rate for the subject property is summarized in the following table.
Market Ground Lease Rate Summary as of November 15, 2022 Size (Ac) Size (SF) Price /SF Indicated
Land Value
Cap Rate Indicated
Annual Rent
2.02 87,991 $8.50 $747,924 6.0% $44,875
The rounded annual rent is concluded to be $44,875.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 63
OPINION OF MARKET VALUE
The rounded market value of the subject property (building and land) is concluded as:
Four Million Five Hundred Twenty-five Thousand Dollars
($4,525,000)
The rounded market value of the subject property (land only) is concluded as:
Seven Hundred Fifty Thousand Dollars
($750,000)
The rounded market value of the subject property (building only) is concluded as:
Three Million Seven Hundred Seventy-five Thousand Dollars ($3,775,000)
The rounded annual ground lease value is determined to be:
Forty-four Thousand Eight Hundred Seventy-five Dollars
($44,875)
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176 64
APPENDIX
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATIONS
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I 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 analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.
3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.
4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
5. My engagement in this assignment was not contingent upon developing or reporting predetermined results.
6. My 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. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).
8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
10. As of the date of this report, I have completed the continuing education program for designated members of the Appraisal Institute.
11. I made a personal inspection from public right of way of the property that is the subject of this report.
12. I have performed no other 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 acceptance of this assignment.
13. Fred McGrew provided significant assistance in the preparation of this report including the determination of the appraisal problem, the collection and analysis of market data, inspection of the subject property, the determination of highest and best use, and the valuation analysis.
David C. Houghton
Certified General Real Estate Appraiser
California Certificate No. AG039402
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I 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 analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.
3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.
4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.
5. My engagement in this assignment was not contingent upon developing or reporting predetermined results.
6. My 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. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).
8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.
9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
10. I made a personal inspection from public right of way of the property that is the subject of this report.
11. I have performed no other 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 acceptance of this assignment.
12. Fred McGrew provided significant assistance in the preparation of this report including the determination of the appraisal problem, the collection and analysis of market data, inspection of the subject property, the determination of highest and best use, and the valuation analysis.
Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
3010 Rollie Gates Drive
Paso Robles, California
BRI 22-176
APPRAISER’S QUALIFICATIONS
Attachment 3
professional
qualifications
david houghton, MAI
Manager of Agency Appraisal
David Houghton is a Senior Appraiser with Bender Rosenthal (BRI). He has been involved in real estate appraising since 2005 and is a Certifi ed General Appraiser in the State of California. He has professional experience appraising a wide range of property types, including industrial, offi ce, medical offi ce, retail, multifamily, condemnation, right of way, residential subdivisions, and various agricultural/rural residential property types.
Between 2007 and 2014 he worked exclusively on low income housing appraisal assignments. While focused on that specialty, Dave gained experience appraising aff ordable housing and conducting market studies for Low Income Housing Tax Credit (LIHTC) developers. In 2014, David began working with BRI and has since shifted his focus and expertise into right of way appraisal assignments.
Geographically, Dave has appraised properties and completed market studies throughout Southern and Northern California, Washington, Hawaii, and Nevada, with the bulk of the experience in Southern and Northern California.
YEARS OF EXPERIENCE
17 Years (with BRI since 2014)
EDUCATION
BS, Science of Business
Management
University of Phoenix
Phoenix, Arizona
PROFESSIONAL REGISTRATIONS
California Certifi ed General
Real Estate Appraiser
AG 39402
Professional Affiliations
Northern California Chapter of
Appraisal Institute
Designations
MAI, Appraisal Institute
representative valuations include
Offi ce – Existing and proposed offi ce properties in Sacramento Region and Central Valley.
Retail – Existing and proposed retail properties in Northern and Southern California.
Industrial – Existing and proposed industrial properties in Sacramento Region and Central Valley.
Multi-family – Existing and proposed multi-family properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.
Mixed Use – Existing and proposed mixed use properties in Northern and Southern California.
Subdivision – Proposed residential subdivisions in Sacramento Region and Central Valley.
Eminent Domain – Improved and unimproved properties involving full and partial takings for municipalities, quasi-public companies, and property owners.
Agricultural – Vineyards, dairies, orchards, fi eld/row crop land, and rural residential properties.
Land – Various types of land appraised such as commercial land, retail pad sites, residential land, transitional land, and agricultural/ rural residential land.
Multi-family Market Studies – Existing and proposed multi-family LIHTC/HUD/USDA properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.
Headquarters: 2825 WaƩ Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3
professional
qualifications
Ross campbell
Appraiser
Ross Campbell has been involved in real estate appraising and consulting since 2011. His professional experience in real estate appraisal encompasses a broad range of property types including industrial, office, retail, single family, multi-family, residential subdivisions, agricultural, transitional, and various types of land. Ross also has right of way experience involving both partial and full acquisitions, complex damage/benefit analysis, crop loss scenarios, transportation and utility projects. Over the course of his career he has worked on several specialty property types/projects of note which encompass cell tower sites, water related use properties (both inland and oceanfront), mitigation work, contamination issues, corridor valuations, title claims, conservation easements, and shelter valuation.
Ross received his Bachelor’s degrees in Economics and Sociology:
Organizational Studies, respectively, from The University of California at Davis. He continues his education with courses from the Appraisal Institute and the International Right of Way Association in pursuit of a professional designation.
YEARS OF EXPERIENCE
11 Years (with BRI since 2011)
EDUCATION
BA, Economics
University of California
Davis, California
BA, Sociology: Organizational
Studies
University of California
Davis, California
PROFESSIONAL REGISTRATIONS
California Certified General
Real Estate Appraiser
AG 3003418
Professional Affiliations
Sacramento-Sierra Chapter of
Appraisal Institute
representative valuations include
Industrial – Existing and proposed distribution, storage, and research and development properties.
Office – Existing and proposed general-office, medical-office, and dental-office developments.
Retail – Existing and proposed shopping centers, mixed-use buildings, and restaurants.
Single-Family Residential – Existing and proposed residential subdivisions.
Multifamily Residential – Existing and proposed apartment complexes and condominiums.
Agricultural – Field and row crops, conservation easements, and rural-residential properties.
Land – Retail, office, residential, industrial, transitional, and agricultural land.
Special Use – Cell tower sites, water related sites, transportation and utility corridors.
Eminent Domain – Improved and unimproved properties involving full and partial acquisitions.
Headquarters: 2825 Watt Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3
APPRAISAL REPORT
City of El Paso de Robles
Lot 2, Cloud Way
Paso Robles, California 93446
APN: 025-471-030
Date of Value: November 15, 2022
Date of Report: December 12, 2022
BRI 22-176
2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 Attachment 3
2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 December 12, 2022
Mark Scandalis
Airport Manager, PRB
4912 Wing Way
Paso Robles, California 93446
Re: Appraisal of:
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California 93446
APN: 025-471-030
Dear Mr. Scandalis,
We have prepared this report for the Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the fee simple value and market ground lease rate of the subject property.
The intended user of the report is the City of Paso Robles. The function of the appraisal is to assist the airport management in the outlease of the subject property.
This is a narrative Appraisal Report as defined by USPAP. As such, it fully presents the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. The depth of discussion contained in this report is specific to the needs of the client and of the intended use stated in this report. The following report sets forth the descriptive and factual data, the assumptions and conditions affecting the appraisal, and the findings and analyses that lead to and support our value opinion. The appraiser is not responsible for unauthorized use of this report. Every effort has been made to conform to the Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, we have intended to comply with applicable laws. The undersigned conducted the appraisal and prepared the report.
We are pleased to have this opportunity to provide you with professional appraisal services.
BENDER ROSENTHAL, INC.
David C. Houghton, MAI
Certified General Real Estate Appraiser
California Certificate No. AG039402
Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 II
TABLE OF CONTENTS
LETTER OF TRANSMITTAL
TABLE OF CONTENTS.....................................................................................................................................II PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS ................................................................IV Assessor’s Parcel Map
Aerial Photographs
INTRODUCTION.............................................................................................................................................1 Client, Intended Use, Intended User of the Appraisal
Scope of Work
Definitions Used in the Report
General Assumptions and Limiting Conditions
Extraordinary Assumptions and Hypothetical Conditions
SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW .......................................................................................6 Regional Map
Access and Transportation
Cities / Communities
Population
Unemployment Rates
Employment by Industry
Major Employers
Inflation
Conclusion
NEIGHBORHOOD DESCRIPTION..................................................................................................................12 Neighborhood Map
Neighborhood Conclusion
INDUSTRIAL MARKET OVERVIEW................................................................................................................14 CoStar Industrial Report
Industrial Market Overview Conclusion
PROPERTY DESCRIPTION.............................................................................................................................19 General
Existing Site Attributes
HIGHEST AND BEST USE ANALYSIS..............................................................................................................22 Highest and Best Use, As Vacant
VALUATION.................................................................................................................................................24 Valuation Method and Considerations
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 III
Comparable Land Sales Summary Table and Map
Value of the Ground Lease
Opinion of Market Value
APPENDIX....................................................................................................................................................33 Appraisers’ Certifications
Subject Photographs
Appraisers’ Qualifications
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 IV
PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS
Appraisal Assignment To provide the fee simple value and market ground lease rate of the subject property.
Property Location The subject property is located at the north terminus of Cloud Way within the Paso Robles
Municipal Airport.
San Luis Obispo County, California
PROPERTY DATA
Assessor’s Parcel Number: 025-471-030
Size 2.49± acres, or 108,464± square-feet.
Source: San Luis Obispo County Assessor’s Parcel Map
Owner of Record City of El Paso de Robles, a California municipal corporation (see Extraordinary Assumption No. 1).
Site Description The subject property is vacant, graded land.
Zoning AP PD, Airport Planned Development, City of Paso Robles
General Plan Designation BP, Business Park, City of Paso Robles Current Use Vacant, rough-graded land
Highest and Best Use (as Vacant) Develop to service commercial/light industrial use.
Fee Simple Value $705,000
Market Ground Lease Value $52,900 annually
Date of Inspection November 15, 2022
Date of Value November 15, 2022
Date of Report December 12, 2022
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 V
ASSESSOR’S PARCEL MAP
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 VI
AERIAL PHOTOGRAPHS
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 1
INTRODUCTION
CLIENT, INTENDED USE, INTENDED USER OF THE APPRAISAL
The client and intended user are the City of Paso Robles (City) and its subsidiary, Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the fee simple value and market ground lease rate of the subject property. The function of the appraisal is to assist the City in the outlease of the subject property.
SCOPE OF WORK
The purpose of this appraisal assignment is to determine the fee simple value and market ground lease rate of the subject property. The date of value is based on the inspection date, unless noted otherwise in the appraisal. The date of the report is the date the appraisal is transmitted to the client.
VALUATION / RESEARCH OVERVIEW
The following is an overview of the valuation process and research involved for the subject property and comparable leases. The valuation of the property involved an investigation and analysis of the neighborhood, as well as the entire regional area, for social, economic, governmental, and environmental forces and trends that affect or could influence property values. • The property was inspected on November 15, 2022, by Ross Campbell of Bender Rosenthal, Inc. • Research the area, community, and neighborhood to determine market influences/conditions. • Research of public records to verify information about the subject property and comparables to ensure they are factually accurate and that there are no terms or additional influences that affect price or value.
• Research zoning and general plan obtained from the City of Paso Robles Planning Departments and other department websites, as well as extensive research of the land market. • Review of applicable flood and seismic hazard areas from appropriate source data. • Review public records obtained from the various county governmental agencies including the Planning Department, Assessor’s Office, and Tax Collector’s Office. • A search of specific property transfers occurring during the past three years was conducted for the subject properties.
• Determine highest and best use of the property.
• Research comparable property leases, listings, and offers to lease involving grazing leases within the subject’s or competing market area.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 2
• Research comparable property sales, listings, and offers to lease involving properties like the subject property and within the subject’s or competing market areas. • Interview comparable property owners and/or brokers.
• Fred McGrew provided significant assistance in the preparation of this report including the collection of market and regional data in this report under the direct supervision of David Houghton.
REPORT TYPE
USPAP Standards Rule 2-2a require each written real property appraisal report to state the specific report type, either an Appraisal Report or a Restricted Appraisal Report. This appraisal is reported in an Appraisal Report format as defined by USPAP.
DEFINITIONS USED IN THE REPORT
Definition of an Appraisal
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 10.
The act or process of developing an opinion of value; an opinion of value. An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, more than, not less than, less than) to a specified amount. (SVP) Market Value
Source: Office of the Comptroller of the Currency. CFR Title 12, Part 34, Subpart C, § 34.42 Definitions 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 knowledgeably, 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
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.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 3
Market Rent
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 117 The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution of a lease as of a specified date under conditions whereby • Lessee and lessor are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their best interests;
• Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs).
Fee Simple Estate
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 73 Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.
Extraordinary Assumption
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 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 Hypothetical Condition
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 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.
Ground Lease.
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 86 A lease that grants the right to use and occupy land. Improvements made by the ground lessee typically revert to the ground lessor at the end of the lease term.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 4
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report and the value estimates it contains are expressly subject to the following assumptions and/or limiting conditions.
1. Title to the property is marketable.
2. No survey of the property has been made by the appraisers and property lines as they appear on the ground are assumed to be correct.
3. Data, maps, and descriptive data furnished by the client or his/her representatives are accurate and correct.
4. No responsibility is assumed for matters of law or legal interpretation.
5. No conditions exist that would affect the use and value of the property, which are not discoverable through normal, diligent investigation.
6. The valuation is based on information from sources believed reliable, and that such information is correct and accurately reported.
7. The value estimate is made subject to the purpose, date, and definition of value.
8. The report is to be considered in its entirety and use of only a portion will invalidate the appraisal.
9. This appraisal was made on the premise that there are no encumbrances prohibiting utilization of the property under the appraiser's estimate of highest and best use.
10. Possession of this report or a copy does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Bender Rosenthal, Inc., and then only with proper qualifications.
11. Disclosure of the contents of this appraisal report is governed by the By-Laws and Regulations of the Appraisal Institute. No part of this narrative report may be reproduced by any means nor disseminated to the public in any way without the prior written consent of Bender Rosenthal, Inc.
12. Any person or entity who obtains or reads this report, or a copy, other than the client specified in this report, expressly assumes all risk of damages to themselves or third persons arising out of reliance on this report and waives the right to bring any action based on the appraisal, and neither the appraisers nor the appraisal firm shall have any liability to any such person or entity.
13. The appraiser shall not be required to give testimony or appear in court by reason of this appraisal with reference to the property described in this report unless prior arrangements have been made.
14. No responsibility is assumed for building permits, zone changes, engineering or any other services or duty connected with legally utilizing the subject property.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 5
15. The property appraised may or may not be subject to the Americans with Disabilities Act of 1990 (ADA). Title III of this act provides for penalties for discrimination in failing " to remove architectural barriers . . .in existing facilities [unless] an entity can demonstrate that the removal. is not readily achievable." Unless otherwise noted in this appraisal, it is assumed that the property appraised is not substantially impacted by this law.
16. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of such substances as asbestos, ureaformaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
17. It is assumed that the property appraised is competently managed and marketed.
EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
Note to Reader: The subject property is subject to the following extraordinary assumptions and/or hypothetical conditions, which might have affected the assignment results.
EXTRAORDINARY ASSUMPTIONS
1. A preliminary title report was not provided to the appraisers for review as of the date of value.
Further, a transfer document indicating the current ownership was not available in public records. The appraisers therefore assume that A) title is held by the City of El Paso de Robles, a California municipal corporation, B) title is marketable (see Hypothetical Condition No. 1), and C) that no exceptions to title exist that adversely impact the subject’s value. If upon receipt of a title report and after review, it is determined an exception will impact the opinion of value, the appraisers reserve the right to revise the report as a new assignment.
HYPOTHETICAL CONDITIONS
1. The City of Paso Robles is restricted in that it cannot sell land within the municipal airport boundaries. For the purposes of this appraisal, the valuation is based on the hypothetical condition that title is marketable and can be sold on the open market.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 6
SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW
Social, economic, governmental, and environmental forces influence property value since real estate is an immobile asset. In this section, an examination of these location factors provides the context for the valuation of the subject property. The property is located within the environs of the Paso Robles Municipal Airport, four miles northeast of downtown Paso Robles and in San Luis Obispo County.
San Luis Obispo County is located on the Central Coast of California, covering 3,299 square-miles of land.
As of the 2020 United States Census, the county had a population of 282,424 residents. The small size of the county's communities, scattered along the beaches, coastal hills, and mountains of the Santa Lucia range, provides a wide variety of coastal and inland hill ecologies to support fishing, agriculture, and tourist activities. California Polytechnic State University has almost 20,000 students. Tourism, especially for the wineries, is popular. Grapes and other agriculture products are an important part of the economy. San Luis Obispo County is the third largest producer of wine in California, surpassed only by Sonoma and Napa counties. Strawberries are the largest agricultural crop in the county. A map of the subject in relation to the county is seen below.
REGIONAL MAP
SUBJECT
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 7
ACCESS AND TRANSPORTATION
San Luis Obispo County is served by U.S. Highway 101 and State Highways 1, 41, 46, and 58. U.S.
Highway 101 is the primary access route in the county, and throughout most of the county is a multilane freeway. The highway links the county to Los Angeles to the south and to San Jose and the San Francisco Bay Area to the north. The Pacific Coast Highway (State Highway 1) generally parallels Highway 101 following the coast, except where the two highways briefly merge between the City of San Luis Obispo and Pismo Beach. State Highways 41 and 46 are east-west axis routes connecting the north county coastal region to Paso Robles and Atascadero and thence to Fresno and Bakersfield in the Central Valley. Another east-west route is Highway 58, which connects the City of San Luis Obispo to Bakersfield before terminating at Barstow, California, near the junction of Interstates 15 and 40.
As the Coast Starlight, Amtrak operates the Los Angeles to Seattle rail passenger service through the county, with stations in Paso Robles, City of San Luis Obispo, and Grover Beach.
San Luis Obispo County Regional Airport is located near the City of San Luis Obispo. Four passenger airlines serve the airport with non-stop flights to eight cities. Alaska Airlines has flights to Portland, Oregon, San Diego, and Seattle/Tacoma in Washington. American Airlines connects the county to Dallas/Fort Worth in Texas. Flights to Phoenix, Arizona are provided by American Eagle. United Express offers flights to Denver, Colorado, Los Angeles, and San Francisco.
Paso Robles Municipal Airport offers charter passenger services and is home to CalFire’s Air-Attack Base, which is used to fight wildfires in Kern, Monterey, and San Luis Obispo Counties.
CITIES / COMMUNITIES
The nearest major metropolitan areas to San Luis Obispo County are San Jose, approximately 145 miles north of the county, and Los Angeles, approximately 165 miles south, both connected to the county via Highway 101. Located in San Luis Obispo County are the incorporated cities of San Luis Obispo, the county seat, Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, and Pismo Beach.
Unincorporated communities of 1,000 or more residents include Avila Beach, Blacklake, Callender, Cambria, Cayucos, Lake Nacimiento, Los Osos, Los Ranchos, Nipomo, Oceano, San Miguel, Santa Margarita, Shandon, Templeton, and Woodlands. Bordering counties include Monterey County, Kings County, Kern County, and Santa Barbara County.
POPULATION
As of January 1, 2022, the California Department of Finance estimated the population of San Luis Obispo County as 280,721. While the county population increased 0.4% year-over-year, this is still over 1,700 fewer than the 2020 U.S. Census. With the exception of the City of San Luis Obispo which gained 0.2% year-over-year, the other incorporated cities in the county all lost between 1.1% and 1.6% of the 2021 population while the balance of the county gained 2.0%. A table summarizing the State and County populations is presented next.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 8
POPULATION ESTIMATES –
CALIFORNIA AND SAN LUIS OBISPO COUNTY
State/County/City 1/1/2021 1/1/2022 Change
California 39,303,157 39,185,605 -0.3%
San Luis Obispo County 279,710 280,721 0.4%
Arroyo Grande 18,533 18,294 -1.3%
Atascadero 30,823 30,480 -1.1%
Grover Beach 12,879 12,707 -1.3%
Morro Bay 10,638 10,466 -1.6%
Paso Robles 31,659 31,176 -1.5%
Pismo Beach 8,095 7,981 -1.4%
San Luis Obispo 47,541 47,653 0.2%
Balance of County 119,542 121,964 2.0%
Source: California Department of Finance, Demographic Research.
UNEMPLOYMENT RATES
It is noted that the subject property is located within the San Luis Obispo-Paso Robles-Arroyo Grande Metropolitan Statistical Area (MSA), which encompasses San Luis Obispo County. The following chart presents the historical unemployment rate for the MSA since September 2020.
Source: California EDD.
The unemployment rate in the San Luis Obispo MSA was 2.7% in August 2022, up from a revised 2.5% in July 2022, and below the year-ago estimate of 5.2%. This compares with an unadjusted unemployment rate of 4.1% for California and 3.8% for the nation during the same period. As noted in the chart above, the MSA unemployment rate dropped to 2.1% in May 2022, the lowest rate observed over the past 30 plus years of available data. This follows the recent spike observed at the beginning of the COVID19 pandemic related lockdowns, when the County’s unemployment rate reached 14.6% in April 2020.
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 9
EMPLOYMENT BY INDUSTRY
Source: Employment Development Department, September 2022.
As shown in the above pie chart, the largest industry in the region is Government at 17% of the total employment. The second largest employment industry sectors are Trade Transportation & Utilities and Leisure & Hospitality with 16%. Educational & Health Services (15%) and Professional & Business Services (10%) round-out the top five industry sectors.
Farm
4%
Mining, Logging, &
Construction
8%
Manufacturing
7%
Trade, Transporatation,
& Utilities
16%
Information
1%
Financial Activities
3%
Professional & Business
Services
10%
Educational & Health
Services
15%
Leisure & Hospitality
16%
Other Services
3%
Government
17%
SAN LUIS OBISPO COUNTY EMPLOYMENT BY INDUSTRY
Attachment 3
Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 10
MAJOR EMPLOYERS
As shown in the table presented on the following page, the six largest employers in the county, each with between 1,000 and 4,999 employees, are distributed between the City of San Luis Obispo (3), Paso Robles (2), and Atascadero. Overall, government services (not including educational services) and health services each account for six of the major employers, while educational services accounts for three.
Employer Name Location Industry No. of Employees
Atascadero State Hospital Atascadero Hospitals 1,000-4,999 Avalara Paso Robles Computer Software 1,000-4,999
Cal Poly State University San Luis Obispo Schools-Universities & Colleges Academic 1,000-4,999 Glenair Inc Paso Robles Communications Consultants 1,000-4,999 Pacific Gas & Electric Co San Luis Obispo Electric Companies 1,000-4,999 San Luis Obispo County EMS San Luis Obispo Government Offices-County 1,000-4,999 AMI Sierra Vista Radiology San Luis Obispo Physicians & Surgeons 500-999 California Mid-State Fair Paso Robles Concert Venues 500-999 Cuesta College Paso Robles Junior-Community College-Tech Institutes 500-999 Medi-Cal Eligibility Info San Luis Obispo Government Offices-County 500-999 Mental Marketing San Luis Obispo Advertising-Agencies & Counselors 500-999 Sierra Vista Regional Med Ctr San Luis Obispo Hospitals 500-999 Trust RCM San Luis Obispo Billing Service 500-999
Arroyo Grande Community Hosp Arroyo Grande Hospitals 250-499 California State Parks San Simeon State Parks 250-499
French Hospital Medical Ctr San Luis Obispo Hospitals 250-499 Madonna Inn Bakery San Luis Obispo Resorts 250-499
Morro Bay Art Assn Morro Bay Art Galleries & Dealers 250-499 Mustang Waterpark Arroyo Grande Water Parks 250-499
Pismo State Beach Oceano State Parks 250-499
Ramirez Farm Labor Shandon Labor Contractors 250-499
San Luis Obispo County Ofc-Edu San Luis Obispo County Government-Education Programs 250-499 San Luis Obispo Sheriff's Dept San Luis Obispo Sheriff 250-499 Social Services Dept San Luis Obispo Government Offices-County 250-499 Twin Cities Community Hospital Templeton Hospitals 250-499
INFLATION
Beginning in 2021, high inflation returned to the nation for the first time in four decades, reaching 8.3% for the 12 months ended August 2022 after rising 8.5% previously, according to U.S. Labor Department data published Sept. 13, 2022. This phenomenon has been attributed to a combination of a multitude of factors, most significantly the historically low unemployment rate (where the number of job openings atypically exceeds that of the unemployed workers), international supply chain breakdowns resulting from the COVID-19 pandemic, and government bailouts during the early stages of the pandemic increasing consumer demand that outpaced the already weakened supply chain. The chart presented on the following page displays annual US inflation rates for calendar years from 2012 to 2022.
Attachment 3