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Home My WebLink About13- Development Department D o V I L 0 P MEN T DR P A R T !l E IT OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: KENNETH J. HENDERSON Subject: PURCHASE OF 578 NORTH Executive Director MT. VERRON AVENUE Date: February 19, 1993 -------------------------------------------------- ------------------- SynoPsis of Previous Commission/Council/Committee Actions) On February 18, 1993, the Redevelopment Committee recommended that the Community Development Commission direct staff to prepare and execute all necessary documents for the purchase of property Down as 578 North Mt. Vernon Avenue for a total cost of $108,000. ------------------------------ ------------------- Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commission direct staff to prepare all necessary documents for the purchase of property known as 578 North Mt. Vernon Avenue for a total cost of $108,000 and authorize the Chairman and Executive Director to execute same. Administrator JM&TH J. HBND &SON Executive Director - ------------------------------- Person(s): Ken Henderson/James W Sharp Phone: 5081 Project Area(s) : Mt. Vernon Corridor Ward(s) : One (1) Supporting Data Attached: Staff Report, Appraiser Valuation, Site May FUNDING REQUIREMENTS: Amount: $108,000 Source: Budget Authority: ---------------------------------------------------------------------- Commission/Council Notes: ----------------- ------------------- YJH:JWS:MKC:2888J COMMISSION MEETING AGENDA Meeting Date: 3/08/1993 Agenda Item Number: 0 D - V E L O P M Z N T D E P A R T M E N T OF THE CITY OF SAN BEYNAYDIWO STAFF REPORT PUR HASB OF 578 N. MT VERNON Staff has received an offer of sale for the property located at 578 North Mt. Vernon Avenue. This 3,400 square foot unreinforced masonry building is a key parcel within the Paseo Las Placitas Specific Plan Area. Located between Sixth Street and Spruce Street on the west side of Mt. Vernon Avenue, this property is a significant parcel in one of the largest blocks within the Specific Plan area. As such, it is important that the Agency gain control of this site to better promote the goals of the Paseo Las Placitas Specific Plan. In addition, this unreinforced masonry building is uninhabitable in its current condition and must either be seismically reinforced or demolished. After purchase of the property, staff will seek the approval of CDBG monies for the demolition of all improvements and structures on the site. Staff will also seek CDBG monies for the demolition of improvements and structures on two sites directly south of the subject parcel. The completion of demolition activities on the three sites will greatly accelerate the redevelopment of the area in accordance with the Specific Plan. The price of the subject parcel is set forth below: 578 North Mt. Vernon Purchase price $106,900 Estimated escrow fees J 1,100 $108,000 Staff has received a letter from Hill & Associates, as independent consultant, stating that the above purchase price is reasonable, if not conservative. It is staff's determination that the purchase of the subject property and subsequent demolition of that property will greatly assist and advance the goals and objectives of the Paseo Las Placitas Specific Plan. ---------------------- ------------- - ---------------- KJH:JWS:MKC:2888J COMMISSION MEETING AGENDA Meeting Date: 3/08/199+3 0� Agenda Item Dumber: l J DEVELOPMENT DEPArDix-T STAFF REPORT Purchsae of 578 N. Mt. Vernon Avenue October 6, 1992 Page Number -2- On February 18, 1993, the Redevelopment Committee reviewed this matter and recommended approval of same to the Community Development Commission. Staff recommends adoption of the form motion. —_'4 KENNETH . HF.NDE ON, Executive Director Development Depa tment --------------------------------------------—---------------------------- KJH:JWS:MKC:2888J COMMISSION MEETING AGENDA Meeting Date: 3/08/1993 Agenda Item Number: hat & associates STATE CERIFIED GENERAL REAL ESTATE APPRAISERS EDWARD G HILL,JR, CLAUDIA AGUILAR LYWE A KOTTEL 93-112 February 11, 1993 Mr. J. W. Sharp, Project Manager City of San Bernardino Development Department 201 North "E" Street San Bernardino, CA 92401 Re: Consultation 578 N. Mt. Vernon San Bernardino, California Dear Mr. Sharp: At your request I have made an exterior inspection only of the above referenced property and reviewed pertinent factors in order to provide you with a consultation regarding its possible present value. The following comments are not to be considered as an appraisal but a consultation based upon facts provided to me regarding the subject parcel. It is my understanding that the property was purchased in 1989 for $80,000. By our measurements, the improvements consist of a 3,300± square foot (assessor's roll indicates 3,400sf) building of masonry construction. This building is essentially a 'shell'. The buyer anticipated adding area to create a total of 5,545 square feet and upgrading this building for use as a health-oriented facility. Prior to the purchase, he made inquiry as to the approval of such a project and pursued a costing bid for the necessary expansion and upgrades. An additional expenditure of $80,000 was budgeted for these improvements. As a result of these actions by the buyer, the property as of this date is in transition from a mason expanded and upgraded facility. ' shell' building to an . neither the original y The value is represented by purchase price of $80,000, nor by the Potential value as proposed less costs to complete, but somewhere in between. -At the lower parameter is the rice pocket expenses; the upper value is the projected value in-usetless C) costs to develop. 1113 1807 NORTH"D"STREET,SAN BERNARDINO,CA 92405 • (909)881-1864 • FAX(909)886.1585 (17 1 zl� February 10, 1993 Page Two The difference between these indicators is unrealized entrepreneurship. This entrepreneurship increment would be due the present owner/developer had the project been fully implemented. Based upon these facts I have made the following cursory studies: first, an analysis of the purchase price plus out-of-pocket costs; second, an Income Analysis based upon its potential economic rental after expansion and upgrades are accomplished. The potential present value lies between these two parameters and the difference reflects entrepreneurial profit. Our studies of the component Parts of the value are as follows: 1) Analysis of Purchase Price (Contributing Values) Land 7,500sf 8 $3.00±/sf $ 20,000 Improvement 31300±sf 8 $15.00±/sf $ 60,000 Total Purchase Price -$ 8—" Plus: Out-of-Pocket Costs (say $15,000 to $20,000) S 15.000 Lower Limit Indicator $ 95,000 2) Income Analysis: It is believed that the subject improvements, if modernized to code requirements, could attain a rental of between $0.35 and $0.40 per square foot, triple net. At this time, we have made no rental studies but have made an experienced judgment for this consultation. February 10, 1993 Page Three It is believed that a $0.35 per square foot, triple net rental for the upgraded building is supportable, if not low. Our capitalization rate at 12% is considered to reflect a conservative approach. A refined valuation might consider vacancy, management and reserves. This income study for a completed and upgraded building reflects a value in the $200,000 range as shown below: Net Income 5,545sf @ $4 .20 ($0.35/sf) _ $23,289 Capitalized Income $23,289 + 128 _ $194,075 Say $200,000 Less: Costs to Complete ( 80 000) QPper Limit Indicator $120,000 The first study reflects the contributing value of land and improvements. It recognizes that the improvement adds value to the land (if placed into use) . The second study justifies the purchase price and viability of expenditures to create an improvement project by reflecting an entrepreneur's profit. /3 February 10, 1993 ' Page Four The resulting $25,000 difference between these two analyses is attributable to entrepreneurship. The resent value is an that exceeds the original cost plus expenses because much of othe basic creativity has been implemented. However, the present value does not reach the ultimate increment ($25 project is not completed. ,000) because the Ky consultation is that the amount of the increment is approximately fifty percent (50%) of the $251000 difference and an appraisal would probably result in a valuation in the $105,000 to $110,000 range. If you have any questions regarding this consultation or the Potential for a completed appraisal, please do not hesitate to call. 41 l Res tfully, Edward G. Hill, Jr. S.C.R.E.A. EGH:caa ILI .. a�r 11 It 1!� Ifte ME r �1I : .� .�- _....- .. �- 11111 ..1 11 1 r liti .-;-:....� . . y illll .-�irlri:1111 •. r�lrrrlrirr�irr �:� �► ti1111111ir I1llr�. " irrirrrr .. Illll! . - irit�ilrlr ^ IfN rirt:.u,, a, !� 1i1111r1 li ii .. r:. : : Ylf Lil�� . 111 f If1l� Ill�i 11 Iwo Now lief l�lit� ; get t� NOli_.11Ii1111lltiiitl![ ! . .... . E 1111111111111lti 1� ��j � 111! !1�l=j: ..r �._1•_ � -=� �_` _". 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