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RRA - Item 6 - Dearden V. City of Rosemead Approval of Appraisal for Acquisition of 4016 Temple City BlvdWALLIN, KRESS, REISMAN S KRANITZ Law Occip ES ' 2800 iY/ENiV-ECG NTw STRE CT, :VITE Jas SANTA M ONICA,'CALICORNIA 904OS-6205 TELE~mo E (ilo) <sc-55e2 r<cs~MUE idol aso-esoe Confidential Memorandum - Attorney/Client Privilege To: Chaimlan and Members Rosemead Redevelopment Agency From: Peter L. V allin Subject: Dearden v. City of Rosemead: Approval of Appraisal for Acquisition of 4016 Temple City Boulevard Date: February 5, 2002 - . Dearden v. City of Rosemead The Ciry of Rosemead has been sued in inverse condenmatioirby Mn. and Mrs. Dearden. the owners of Weatherite Roofing and the parcel at 4016 Temple City Boulevard at which Weatherite previously conducted its roofurg business. The law suit seeks compensation for the property, lost business; lost business goodwill. relocation benefits for moving the business to El Monte in Januarv 2001. and costs of carrying the properly and lost rents since that move. The Agency is not named in the lawsuit. The Deardens allege that they sought to be owner participants under the Redevelopment Plan and notified the Agency of their development plans for expanding the roofing business at that location. They allege they were told they could not expand because the City had enacted a moratorium pending the rezoning of the area from light industrial use to cotrunercial use to facilitate [McCov's] retail shopping center development. Since the Deardens moved their business they have not been able to sel I or lease the Rosemead property. They claim that they moved because they were told they would have to find a new location for their business or risk Navin, their property condemned and that their inability to sell or lease the property has been caused by the rezoning and the pendency of the commercial project. I do not believe the complaint states a valid cause of action in inverse condemnation against the City, and will file a demurrer to challenge it. FEB 2 2009 Feb 05 02 03:34p WallinKressReismanKranitz 3104500506 p.3 WALLIN, KRESS, REISMAN & KRANITZ L: W OFFICES " Chairman and Members Rosemead Redevelopment Agency Page 2 February 5, 2002 Background In February 2002 the Agency was notified, by a letter from the Deardcus' attorney, that they had moved the business. The letter requested cooperation in their efforts to rent or sell the property. In anticipation of the need for the property in connection with the proposed development of a Ralph's grocery store, the Agency Board responded by authorizing an appraisal of the property and negotiation of a purchase agreement calling for payment of the appraised amount at close of escrow, but allowing the Deardens to contest the amount of compensation for the property in an eminent domain proceeding,. After the appraisal, valuing the property at $120,000.00, was completed in June; 2001, the Dear-den's attorney was sent a draft purchase agreement. No response was received. After a follow up reminder in July the attorney called and objected to provisions in the agreement by which his clients waived claims for relocation benefits and goodwill loss. I explained that those claims were not compensable under the circumstances and he told me lie would talk to his client and get back to me. The next contact, six months later, was the fiIma of the lawsuit. Attempts to negotiate a purchase by which certain claims are relinquished have obviously failed. Any further attempts to acquire should be done in accordance with statutory procedures for acquisition under threat of eminent domain. Evaluation Redevelopment law allows a property owner to demand that the Agency acquire property or malcc it acquisition exempt. If the February 2001 letter were interpreted as such a demand [which it technically is not], the Agency is well within the statutory time frame for electing to pursue one of those options. If the Agency ignores the Deardens' request, ultimately it will face an inverse condemnation action that could stick or, at least, be subjected to liability for lost rents and other damages if and when the decision is made to acquire the property. Now that the . Ralphs project has fallen through, it is not certain when, if ever, the Agency may wish to use this parcel for an assemblage. However, purchase of the property now should minimize exposure to compensation claims and seems to be superior to making the property acquisition exempt and precluding a major development in that area. Reconunendation That the Agency approve The $120,000 appraisal (pertinent excerpts from the appraisal are enclosed) and authorize an offer to the owners at the amount of the appraisal. Feb 05 02 03:34p WallinKressReismanKranitz 3104500506 SUBJECT SITE DESCRIPTION Owner: Jerry L. and Dolly J. Dearden, Trustees of the Dearden Trust. Property Address: 4016 Temple City Boulevard, Rosemead, California Mailing Address: 9165 Camino Real, San Gabriel, California 91775-2009 Location: East side of Temple-City.Boulevard commencing approximately 125 feet north of Valley Boulevard. p.4 Leqal Description: Part of Lot 1, Tract 3749. Dimensions and Area: A slightly irregular rectangle with 58.42 feet of frontage on Temple City Boulevard and average dimensions of 58.92 feet north-south by 125 feet east-west. 7,365 square feet (calculated). Zonin : C-3. Utilities: All required public utility services and sanitary sewer are installed in Temple City Boulevard and connected to the subject improvements. Topography: Flat and level at street grade with drainage to the street. Street Improvements: Temple City Boulevard is a secondary highway with an 30 foot wide right- of-way. The asphalt paved street section has a curb-to-curb width of 66 feet, two traffic lanes in each direction, and a center turn lane. There is no street parking opposite the subject. Concrete curb, gutter and seven foot wide concrete side- walk is installed on both sides. Street lights are mounted on wood . posts. Assessor's Index: 3577-9-27. Assessed Values: 2000: Land: $30,654 Imps: $37,035 Property Taxes: 1999-00: 51,006.60 Easements: None apparent. (No title report furnished.) LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 p.5 SUBJECT SITE DESCRIPTION Vesting: The Dearden Trust acquired title by.a quit Claim Deed recorded in February of 1987. There have been no apparent changes in title since that date. LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 --Jj U .nj UJ S9 Q ty f: b ~7FMp\ L ~ l Q T U lT r~~ r Ss~ ti u =Z_ ,4 \ t \ 4, ~ \ \ ttt,i4 \ \ ~ Vt \ d, N FC Co OI°pr°~ A o 00 Z . . . . u, l r a7 =feTOf l al a,f 4~.i e.r o^ ~j 5 3 < ,36- < 1` ~ m w q 1 4y .m \ J p; O G, OL Vo :N. ,A ll~ ON J/ V - U "I L ~ r: ;brut ~ lib w~ V y' 2 Cl. 0 0 <r , 1 WASH PLAT MAP //n.' SUBJECT PROPERTY SCALE: 1' = lOC' P.6 i i% Vv 1 o t r, I--l Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 SUBJECT IMPROVEMENTS DESCRIPTION p.7 The subject site is improved with a small office building, freestanding canopy, portable office building and miscellaneous yard improvements. Permanent Office Building This rectangular structure is at the south end of the Temple City Boulevard frontage, four feet to eight feet from the west property line. It was constructed in 1983, has dimensions of 23 feet by 24.5 feet, and contains 564 square feet. Exterior construction is a combination of Class C/D and includes concrete slab foundation, concrete block wall on the south side, structured brick wall on the front and wood frame and stucco on the two remaining sides. Sash is fixed, metal frame with tinted glass. Roof is Cal shake and is drained by painted sheet- metal gutters and downspouts. There is a paneled wood entry door at the front and a solid wood door at the rear. The building interior is divided into a larger front office with small lobby area, small rear office, combination center hall and kitchenette, and two restrooms. Heating and cooling is by a packaged, forced air heat and refrig- erated system with the furnace mounted in the attic and the air conditioning compressor ground mounted on the east side of the'portable office building described below. Registers and air returns are in the ceilinas. Larger front office has commercial carpet, painted plasterboard walls, sprayed acoustic over plasterboard ceiling, strip fluorescent lighting and mini blinds. The small lobby area at the south end has track light- ing. Small rear office has identical finish. Hall has vinyl floor covering, eiaht linear feet of stained plywood base cabinet with formica countertop and stainless steel bar sink, eight linear feet of stained plywood wall cabinets, and strip fluorescent lighting. LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 SUBJECT IMPROVEMENTS DESCRIPTION Permanent Office Building (cont'd) Canopy Portable Office Building Yard Improvements Larger front restroom has vinyl floor covering, built-out storage cabinet, wall hung lavatory, toilet, and light strip. Entry door is from the hall. Second restroom is accessible by an exterior door in the rear wall. It has identical finish except there is no storage cabinet and lighting is by a low cost wall fixture. This freestanding structure is about 20 feet east of the rear wall of the office and attached to a concrete block wall along the south property line. It has dimensions of 15 feet by 24 feet and the area is 360 square feet. There is asphalt on wood frame and Cal shake gable roof structure is suported on steel posts. There is no lighting. P.8 This 180 square foot, Class D struc- ture is between the office building and canopy, about three feet from the south property line. It has no foundation and is.supoorted on wood skids. Floor is wood and walls are wood frame and texture 111 plywood with metal frame sash. Entry door is on the west side and roof is flat composition. The interior is a single space with commercial carpet, sheet wood panel walls and T-bar ceiling with acoustic panels and recessed fluorescent lighting. There is a ,wall mounted air condition- ino unit. This structure is moveable personal property and is specifically excluded from the appraisal. Extending north of the office build- ing along the Temple City Boulevard frontage there is an asphalt paved entrance driveway and parking area with four foot high painted steel fence on the north side and seven foot high painted steel fence (in- cluding 22 foot wide sliding double gate) between the northeast corner of the building and the north prop- erty line. LAWRENCE g. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:36p WallinKressReismanKranitz 3104500506 p.9 SUBJECT IMPROVEMENTS DESCRIPTION Yard Improvements (cont'd) Quality and Condition The yard area east of the office build- ing and steel fence has clear asphalt paving. It is enclosed with six foot high chainlink fence on the north side. The two remaining sides are secured by buildings on adjacent properties. Between the west property line and the office building there is a small yard area with ornamental shrubbery and an automatic sprinkler system. Front entry walk is concrete. The office building is above average quality construction, well maintained and in above average to good condition. The freestanding canopy is average quality and yard improvements are fair to average. Lot Coverage Tenancy interview and Inspection Computed on the 564 square foot perman- ent office building only, lot coverage is approximately 1.5r. The subject is presently vacant but was recently occupied by the owners dba Weatherite Roofing Systems. The exterior of the subject was inspected and-photographed on June 3, 2001. On June 5 I met Doug Dearden (owner's son) at the property and inspected the interior of both build- inas. LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:36p. WallinKressReismanKranitz 3104,500506 p.10 SUBJECT PROPERTY LAWRENCE D. BRC'A N A EAL ~_TA.I~ APPRAIS`lI AUU COUI.L_LOR Feb 05 02 03:36p WallinKressReismanKranitz 3104500506 P.11 SUBJECT PROPERTY LAWREKCE D. BROWN RFAI FSTATF APPRAIAFA AND CO KIELCR Feb 05 02 03:37p .WallinKressReismanKranitz 3104500506 SUBJECT PROPERTY. p.12 LAWRENCE D. BROWN REAL ESTATE APPRAISER ANO CCJNSELOF Feb 05 02 03:38p WallinKressReismanKranitz 3104500506 p.13 VAI IIATi nN In arriving at my final conclusion of value for the subject I relied on two of the three standard appraisal methods, replacement cost and direct market. The subject has some characteristics of a "special purpose" property and I found no recent income data on comparable ones. The subject improvements have been owner occupied since their construction and there is no rental history. For these reasons I was unable to use the income capitalization approach. Lost Approach For the land value portion of the cost approach equation 1 investigated and analyzed seven recent sales of vacant commercial and industrial sites in the vicinity of the subject. Details concerning these transactions will be found in the Market Data section of this report as the seven numbered sales. Each market data summary includes a photograph and Plat Map, and the subject and sale property locations are indicated on the accompanying Sales Map. The seven sales occurred during the past two years on vacant parcels ranging in size from 11,518 square feet to 161,470 square feet. Two of the sale properties are in Rosemead immediately adjacent to the subject. The remaining five include three properties in El Monte and one each in Baldwin Park and Arcadia (unincorporated county portion). The two parcels in Rosemead have industrial zoning identical to that on the subject. Of the remaining five properties, four have.light.`manufacturing_or.commercial manufacturing designations and one is commercially zoned. in analyzing the sales and comparing them to the subject, I used selling price per square foot of net land area as the unit of comparison. Adjustments were made to the unit price of each sale to account for differences between it and the subject. Variable factors which were considered and adjusted for include overall location, access, size and shape, site prominence, character of surrounding development, and use potential. In common with the subject, all of the sale sites are essentially level. No,adjustments are required for topography. With respect to zoning, while there are some fairly significant differences in regulations which control development of the sale properties, I did not consider it necessary to make substantial adjustments for these variations. Regarding time differential, the market for vacant commer- cial/industrial land in the central San Gabriel Valley was undergoing some,appreciation through the first quarter of 2000. Since that time the market has stabilized and is now static. This situation is clearly evidenced by the lack of sales activity during the past year. Unit prices in the seven transactions varied from a low of $8.10 to a high of $14.00 per square foot. The three sales at the low end of the unit price range require some positive adjustment. Sale 1 ($9.35 per square foot) has corner location on Valley Boulevard in E1 Monte but the surrounding neighborhood is significantly inferior to the subject one. Additionally, some positive adjustment is required for the two year time differential. Sale 5 ($8.10) sets"the lower limit of value. While this site is impacted by the San Bernardino Freeway, access is not as good, neighborhood influences are inferior and shape: is some-. what difficult. Additional positive adjustments are required for irregular shape and larger size. LAWRENCE p. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 VALUATION I made negative adjustments to the unit prices for the two sale properties at the high end of the price range. Sale 2 ($14.00 per square foot) is substantially larger than the subject but was purchased for commercial development and the larger size was a requirement. It has the distinct advantage of frontage on Valley Boulevard which is a far more imoprtant, high traffic street than Temple City Boulevard. Sale 4 ($12.10) is a prime industrial site adjacent to a major street intersection with excellent freeway access. Despite the substantial difference in size, I considered this sale property to be somewhat superior to the subiect. After weighing the available market data and making adjustments for variables, my conclusion of unit value for the subject site is $11.00 per square foot. Computed on the net land area of 7,365 square feet, my estimate of total site value is rounded to $81,000. To determine remaining value for the subject improvements I estimated their replacement cost by consulting Marshall Valuation Service, a nationally recognized index of construction costs. Depreciation esti- mates are based on observed physical deterioration. I found no evidence; of either economic or functional obsolescence. The following summarizes my estimates and calculations leading to an indication of value by the cost approach: Replacement Cost Above average quality, Class C/D office -building adjusted for packaged heat and air conditioning system, and access plumbing - 564 square feet @ $76.75 per square foot = Average quality, Class D freestanding ' canopy - 360 square feet @ $9.00 per square foot = Total replacement cost = Depreciation 351. of $46,527 = Depreciated replacement cost = Yard Improvements value in-place, including depreciation Asphalt paving, concrete paving, fencing and rails, and landscaping - 6,440 square feet @ $1.75 per square foot = Total improvement value (rounded) = 43,287 3,240 $ 46,527 -16,284 $ 30,243 11,270 $ 41,500 p.14 LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 p.15 VALUATION Land Value (from market approach) 7,365 square feet @ $11.00 per square foot (rounded) _ Total Indicated Value = Market Approach $ 81,000 $ 122,500 To apply the direct,market.approach I investigated and analyzed five sales of modestly improved, commercial and industrial sites located in the area surrounding the subject. Details concerning these transactions will be found in the Market Data section of this report as the lettered sales. Each sale summary includes a photograph and Plat Map, and the sale and subject parcel locations are delineated on the accompanying Sales Map. In each instance the sale property was purchased primarily for its land value but'had improvements with some contributory value. In analyzing these sales and comparing them to the subject, the unit of comparison I used was selling price per square foot of net land area, including the contributory value of improvements. 1 made adjustments to the unit prices in each sale to account.for differences between it and the subject. Site factors which were considered and adjusted for include overall location, access, size and shape, site prominence and quality of surrounding development. The subject and sale improvements were compared on the basis of their size, age, quality of construction, condition and lot coverage (density of development). Because it is my opinion that the market for small, service commercial/industrial properties was appreciating until the spring of 2000, I made special Positive adjustments to Sales A and B for time differential. All of these properties are level and at grade with the streets.which provide their access. No adjustments were needed for differing topography. I made only slight adjustments for differences in zoning and that was performed on an individual property basis. The five improved 'property sales occurred at unit prices varying from a low of $14.30 to a high of $15.50 per square foot. Only Sale B is situated in the City of Rosemead. The remaining four properties include two which are on or close to Valley Boulevard and proximate to the subject in the viest part of El Monte, one which is in the southeast part of that city and somewhat geographically remote from the subject, and, one on Rosemead Boulevard in South E1 Monte. At $18.35 per square foot, Sale A has the greatest locational and land size comparability to the subject. With 2,520 square feet of enclosed building area, its improvements are not as good quality but more than three times larger with far more utility. The unit price in this sale requires significant minus adjustment for superior improvements with only a partially offsetting plus one for the two year time differential. At $19.30 per square foot, Sale B has corner location on Garvey Avenue in Rosemead which is a far more important street with better surrounding development. The improvements on this sale are inferior to those on the subject and lot coverage is only 3.5%, or about half that of the subject. The unit price requires a slight positive adjustment for inferior improve- ments and larger size but far more than offsetting minus ones for LAWRENCE 0. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 VALUATION drastically superior location and corner situation. At $19.50 per square foot, Sale C is again superior to.the subject. The land has corner location at a signalized intersection and the building area is far larger with 2.5 times the lot coverage. All required adjustments to the unit price are negative. At $13.30 per square foot, Sale D is fairly close to the subject. It is similar in its interior location but fronts on Rosemead Boulevard, a far more important and higher traffic artery. On the negative side, the sale land is roughly three.times the size of the subject and lot coverage for the older. and lower quality building is smaller than on the subject. The unit price requires plus adjustment for all of its negative features with only a partially offsetting'negative one for superior access. At $17.65 per square foot, Sale E is geo- graphically closest to the subject. It is also the most recent sale. The principal advantage of this sale over the subject is its corner location on Valley Boulevard. The sale improvements are inferior in quality and condition to those on the subject but the lot coverage is about the same. Overall, the unit price requires about a 10% net minus adjustment for superior location. After weighing the available market data and making adjustments for variables, my conclusion of value for the subject by.the market approach is $118,000. Including the contributory value of the improvements, the corresponding unit value estimate is about $16.00 per square foot computed on the net land area of 7,365 square feet. Conclusion The two appraisal approaches indicate a probable range in value from $118,000 to $122,500. I consider these methods to be equally reliable and gave approximately equal weight to each in arriving at my final conclusion of value at $120,000. p.16 LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:&4p WallinKressReismanKranitz 3104500506 WALL-IN, KREss, REISMAN & KRANITZ L4W OFFICES 2200 TvIE NTV-EIG MTr1 STq ECT. SVrtE 315 ` SANTA MONICA. CALIFORNIA 90005-6205 'CIE.-ONE 11101 <SO-95E2 I-CSI.ILC 13101 -50-0500 Confidential Memorandum - Attorney/Client Privilege To: Chairman and Members Rosemead Redevelopment Agency _ From: Peter L. Wallin Subject: Dearden v. City of Rosemead; Approval of Appraisal for Acquisition of 4016 Temple City Boulevard Date: February 5, 2002 Dearden v. Cit- of Rosemead The City of Rosemead has been sued in inverse condemnation by tblr. and Mrs. Dear den, p.2 The owners of Weadmerite Roofing and the parcel at 4016 Temple City Boulevard at which Weatherite previously conducted its roofing business. The law suit seeks compensation for the property, lost business, lost business goodwill, Telocation benefits for moving the business to El Monte in January 2001, and costs of carrying the property and lost rents since that move. The Agency is not named in the lawsuit. The Deardens allege that they sought to be owner participants under the Redevelopment Plan and notified the Agency of their development plans for expanding the roofing business at that location. They allege they were told they could not expand because the City had enacted a moratorium pending (lie rezoning of the area from light industrial use to commercial use to facilitate [McCoy's] retail shopping center development. Since the Deardens moved their business they have not been able to sell or lease the Rosemead property. They claim that they moved because they were told they Would hay e to find a new location for their business or risk having their property condemned and that their inability to sell or lease the property has been caused by the rezoning and the pendency of the commercial project. I do not believe the complaint states a valid cause of action in inverse condemnation against the City, and will file a demurrer to challenge it. Feb 05 02 03:34p WallinKressReismanKranitz 3104500506 p.3 WALLIN. KRESS. REISMAN & KRANITZ LAN' OFCICES Chainuan and Alembcrs Rosemead Redevelopment Agency Page 2 February S, 2002 Background In February 2002 the Agency was notified, by a letter from the Deardens' attorney, that they had moved the business. The letter requested cooperation in their efforts to rent or sell the property. In anticipation of the need for the property in connection with the proposed development of a Ralph's grocery store, the Agency Board responded by authorizing an appraisal of the property and negotiation of a purchase agreement calling for payment of the appraised amount at close of escrow, but allowing the Deardens to contest the amount of compensation for the property in an eminent domain proceeding. After the appraisal, valuing the property at $120,000.00, was completed in June; 2001. the Dearden's attorney was sent a draft purchase agreement. No response was received. After a follow up reminder in July the attorney called and objected to provisions in the agreement by which his clients waived claims for relocation benefits and goodwill loss. I explained that those claims were not compensable tinder the circumstances and he told me lie would talk to his client and get back to me. The next contact six months later, w as the filing of the lawsuit. Attempts to negotiate a purchase by which certain claims are relinquished have obviously failed. Any further attempts to acquire should be done in accordance with statutory procedures for acquisition under threat of eminent domain. Evaluation Redevelopment law allows a property owner to demand that the Agency acquire property, or make it acquisition exempt. If the February 2001 letter were interpreted as such a demand [which it technically is not], the Agency is well within the statutory time, frame for electing to pursue one of those options. If the Agency ignores the Deardens' request, ultimately it will face an inverse condemnation action that could stick or, at least, be subjected to liability for lost rents and other damages if and when the decision is made to acquire the property. Now that the Ralphs project has fallen through, it is not certain when, if ever, the Agency may wish to use this parcel for an assemblage. However, purchase of the property now should minimize exposure to compensation claims and seems to be superior to making the property acquisition exempt and precluding a major development in that area. Recommendation That the Agency approve the $120,000 appraisal (pertinent excerpts from the appraisal are enclosed) and authorize an offer to the owners at the amount of the appraisal. Feb 05 02 03:34p WallinKressReismanKranitz 3104500506 SUBJECT SITE DESCRIPTION Owner: Property Address: Mailing Address: Location: Legal Description: Dimensions and Area: Zonin : Utilities Topography: Street Improvements: Assessor's Index: Assessed Values: Property Taxes: Easements: Jerry L. and Dolly J. Dearden, Trustees of the Dearden Trust. 4016 Temple City Boulevard, Rosemead, California 9165 Camino Real, San Gabriel. California 91775-2009 East side of Temple City Boulevard commencing approximately 125 feet north of Valley Boulevard. Part of Lot 1, Tract 3749 p.4 A slightly irregular rectangle with 58.42 feet of frontage on Temple City Boulevard and average dimensions of 58.92 feet north-south by 125 feet east-west. 7,365 square feet (calculated). C-3. 411 required public utility services and sanitary sewer are installed in Temple City Boulevard and connected to the subject improvements. Flat and level at street grade with drainage to the street. Temple City Boulevard is a secondary highway with an 80 foot wide right- of-way. The asphalt paved street section has a curb-to-curb width of 66 feet, two traffic lanes in each direction, and a center turn lane. There is no street parking opposite the subject. Concrete curb, gutter and seven foot wide concrete side- walk is installed on both sides. Street lights are mounted on wood posts. 8577-9-27. 2000: Land: $30,654 imps: S37,035 1999-00: $1,006.60 None apparent. (No title report furnished.) LAWRENCE D. BROWN REAL ES7ATE APPRAISER AND COUNSELOR i Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 SUBJECT SITE DESCRIPTION Vestin p.5 The Dearden Trust acquired title by a Quit Claim Deed recorded in February of 1987. There have been no apparent changes in title since that date. LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:35p v ~JO l \ ` \ rrf uC~ T I rv /L u J ! r9 6 9y -1 j!~- WallinKressReismanKranitz 3104500506 p.6 Vv III U i ~JJ rGG ~2,,,fE L~ ~ Y l I c ry ti V 4 I~ ll \ 4.h 0 L~ _ u, l~ SC v o J T - O J iP G. A. Co. F. C lJ,°ore~ u~ o o TOFI°«: ' It WASI i ; cir 2\ ON, J~ ,v ^i ° i n r p> tVn ! ~ j J PLAT MAP SUBJECT PROPERTY SCALE: 1" = lOC' Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 SUBJECT iMPROVEMENTS DESCRIPTION P.7 The subject site is improved with a small office building, freestanding canopy, portable office building and miscellaneous yard improvements. Permanent Office Building This rectangular structure is at the south end of the Temple City Boulevard frontage, four feet to eight feet from the west property line. It was constructed in 1983, has dimensions of 23 feet by 24.5 feet, and contains 564 square feet. Exterior construction is a combination of Class C/D and includes concrete slab foundation, concrete block wall on the south side, structured brick wall on the front and ;rood frame and stucco on the two remaining sides. Sash is fired, metal frame with tinted glass. Roof is Cal shake and is drained by painted sheet- metal gutters and downspouts. There is a paneled wood entry door at the front and a solid wood door at the rear. The building interior is divided into a larger front office with small lobby, area, small rear office, combination center hall and kitchenette, and two restrooms. Heating and cooling is by a packaged, forced air heat and refrig- erated system with the furnace mounted in the attic and the air conditioning compressor e_round mounted on the east side of the portable office building described below. Registers and air returns are in the ceilings. Larger front office has commercial carpet, painted plasterboard walls, sprayed acoustic over plasterboard ceiling, strip fluorescent lighting and mini blinds. The small lobby area at the south end has tract: light. ing. Small rear office has identical finish. Hall has vinyl floor covering, eight linear feet of stained plywood base cabinet with formica countertop and stainless steel bar sink, eight linear feet of stained plywood wall cabinets, and strip fluorescent lighting. LAWRENCE 0. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:35p WallinKressReismanKranitz 3104500506 SUBJECT IMPROVEMENTS DESCRIPTION Permanent Office Building (cont'd) Canopy Portable Office Building Yard Improvements Larger front restroom has vinyl floor covering, built-out storage cabinet, wall hung lavatory, toilet, and light strip. Entry door is from the hall. Second restroom is accessible by an exterior door in the rear wall. it has identical finish except there is no storage cabinet and lighting is by a low cost wall fixture. This freestanding structure is about 20 feet east of the rear wall of the office and attached to a concrete block wall along the south property line. It has dimensions of 15 feet by 24 feet and the area is 360 square feet. There is asphalt on wood frame and Cal shake gable roof structure is suported on steel posts. -There is no lighting. p.8 This 160 square foot, Class D struc- ture is between the office building and canopy, about three feet from the south property line. It has no foundation and is supported on wood skids. Floor is wood and walls are wood frame and texture 111 plywood with metal frame sash. Entry door is on the west side.and roof is flat composition. The interior is a single space with commercial carpet, sheet wood panel walls and T-bar ceiling with acoustic panels and recessed fluorescent lighting. There is a wall mounted air condition- inc unit. This structure is moveable personal property and is specifically excluded from the appraisal. Extending north of the office build- ing along the Temple City Boulevard frontage there is an asphalt paved entrance driveway and parking area with four foot high painted steel fence on the north side and seven foot high painted steel fence (in- cluding 22 foot wide sliding double gate) between the northeast corner of the building and the north prop- ertv line. LAWRENCE 0. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:36p WallinKressReismanKranitz 3104500506 SUBJECT IMPROVEMENTS DESCRIPTION p.9 Yard Improvements (cont'd) The yard area east of the office build- ing and steel fence has clear asphalt paving. It is enclosed with six foot high chainlink fence on the north side. The two remaining sides are secured by buildings on adjacent properties. Between the west property line and the -office building there is a small yard area with ornamental shrubbery and an automatic sprinkler system. Front entry walk is concrete. Quality and Condition The office building is above average _ quality construction, well maintained and in above average to good condition. The freestanding canopy is average quality and yard improvements are fair to average.. Lot Coverage Computed on the 564 square foot perman- ent office building only, lot coverage is approximately 1.5t. Tenancy The subject is presently vacant but was recently occupied by the owners dba bleatherite Roofing Systems. interview and Inspection The exterior of the subject was inspected and photographed on June 3, 2001. On June 5 I met Doug Dearden (owner's son) at the, property and inspected the interior Of both build- ings. LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:36p WallinKressReismanKranitz 3104500506 p.10 SUBJECT PROPERTY HE?Ili;:.➢U; : n ; LAWRENCE D. BROWN REAL EZTASE APFfiF15_II A:IU COUN-- LOR Feb 05 02 03:36p WallinKressReismanKranitz 3104500506 P.11 SUNECT PROPERTY LAWRENCE D. BROWN REAL ESTATE APPRAISER AND CQ NSELCR Feb 05 02 03:37p WallinKressReismanKranitz 3104500506 p,12 SUBJECT PROPERTY LAWRENCE 0. BROWN REAL ESTATE APPRAISER AND CCOt15ELCR Feb 05 02 03:38p WallinKressReismanKranitz 3104500506 p.13 VAI I IATT nN In arriving at my final conclusion of value for the subject I relied on two of the three standard appraisal methods, replacement cost and direct market. The subject has some characteristics of a "special purpose" property and 1 found no recent income data on comparable ones. The subject improvements have been owner occuoied since their construction and there is no rental history. For these reasons I was unable to use the income capitalization approach. Cost Approach For the land value portion of the cost approach equation 1 investigated and analyzed seven recent sales of vacant commercial and industrial sites in the vicinity of the subject. Details concerning these transactions will be found in the Market Data section of this report as the seven numbered sales. Each market data summary includes a photograph and Plat Map, and the subject and sale property locations are indicated on the accompanying Sales Map. The seven sales occurred during the past two years on vacant parcels ranging in size from 11,518 square feet to 161,470 square feet. Two of the sale properties are in Rosemead immediately adjacent to the subject. The remaining five include three properties in E1 Monte and one each in Baldwin Park and Arcadia (unincorporated county portion). The two parcels in Rosemead have industrial zoning identical to that on the subject. Of the remaining five properties, four he ve:1.ght.`manufacturing_or.commercial manufacturing designations and one is commercially zoned. in analyzing .the sales and comparing them to the subject, I used selling price per square foot of net land area as the unit of comparison. Adjustments were made to the unit price of each sale to account for differences between it and the subject. Variable factors which were considered and adjusted for include overall location, access, size and shape, site prominence, character of surroundino development, and use potential. In common with the subject, all of the sale sites are essentially level. No adjustments are required for topography. With respect to zoning, while there are some fairly significant differences in regulations which control development of the sale properties, I did not consider it necessary to make substantial adjustments for these variations. Regarding time differential, the market for vacant commer- cial/industrial land in the central San Gabriel Valley was undergoing some appreciation through the first quarter of 2000. Since that time the market has stabilized and is now static. This situation is clearly evidenced by the lack of sales activity during the past year. Unit prices in the seven transactions varied from-a low of $8.10 to a high of $14.00 per square foot. The three sales at the low end of the unit price range require some Positive adjustment. Sale 1 (£4.35 per square foot) has corner location on Valley Boulevard in E1 Monte but the surrounding neighborhood is significantly inferior to the subject one. Additionally, some positive adjustment is required for the two year time differential. Sale 5 ($8.10) sets the lower limit of value. While this site is impacted by the San Bernardino Freeway, access is not as good, neighborhood influences are inferior and .shape. is some- what difficult. Additional positive adjustments are required for irregular shape and larger size. LAWRENCE g. BROWN REAL ESTATE APPRAISER ANO COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 VALUATION I made negative adjustments to the unit prices for the two sale Properties at the high end of the price range. Sale 2 ($14.00 per square foot) is substantially larger than the subject but was purchased 'or commercial development and the larger size was a requirement. It has the distinct advantage of frontage on Valley Boulevard which is a far more important, high traffic street than Temple City Boulevard. Sale 4"($12.10) is a prime industrial site adjacent to a major street intersection with excellent freeway access. Despite the substantial difference in size, I considered this sale property to be somewhat superior to the subject. After weighing the available market data and making adjustments for variables, my conclusion of unit value for the subject site is $11.00 per square foot. Computed on the net land area of 7,365 square feet, my estimate of total site value is rounded to $81,000. To determine remaining value for the subject improvements I estimated their replacement cost by.consulting Marshall Valuation Service, a nationally recognized index of construction costs. Depreciation esti- mates are based on observed physical deterioration. I found no evidence of either economic or functional obsolescence. The following summarizes my estimates and calculations leading to an indication of value by the cost approach: Replacement Cost Above average quality, Class C/D office building adjusted for packaged heat and air-conditioning system, and access plumbing - 564 square feet @ $76.75 per square foot = S 43,287 Average quality, Class D freestanding canopy - 360 square feet @ $9.00 per square foot = 3,240 Total replacement cost = $ 46,527 Depreciation 35a of 546,527 = -16,284 Depreciated replacement cost = $ 30,243 Yard Improvements value in-place, including depreciation Asphalt paving, concrete paving, fencing and rails, and landscaping - 6,440 square feet @ $1.75 per square foot = 11,270 Total improvement value (rounded) = $ 41,500 p.14 LAWRENCE D. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 p.15 VALUATION Land Value (from market approach) 7,365 square feet @ $11.00 per square foot (rounded) = Total Indicated Value = Market Approach $ 81,000 $ 122,500 To ;apply the direct market approach I investigated and analyzed five sales of modestly improved, commercial and industrial sites located in the area surrounding the subject. Details concerning these transactions will be found in the Market Data section of this report as the lettered sales. Each sale summary includes a photograph and Plat Map, and the sale and subject parcel locations are delineated on the accompanying Sales Map. In each instance the sale property was purchased primarily for its land value but had improvements with some contributory value. In analyzing these sales and comparing them to the subject, the unit of comparison I used was selling price per square foot of net land area, including the contributory value of improvements. i made adjustments to the unit prices in each sale to account for differences between it and the subject. Site factors which were considered and adjusted for include overall location, access, size and shape, site prominence and quality of surrounding development. The subject and sale improvements were compared on the basis of their size, age, quality of construction, condition and lot coverage (density of development). Because it is my opinion that the market for small, service commercial/industrial properties was appreciating until the spring of 2000, I made special positive adjustments to Sales A and B for time differential. All of these properties are level and at grade with the streets which provide their access. No adjustments were needed for differing topography. I made only slight adjustments for differences in zoning and that was performed on an individual property basis. The five improved property sales occurred at unit prices varying from a low of $14.30 to a high of $19.50 per square foot. Only Sale B is situated in the City of Rosemead. The remaining four properties include two which are on or close to Valley Boulevard and proximate to the subject in the west part of E1 Monte, one which is in the southeast part of that city and somewhat geographically remote from the subject, and one on Rosemead Boulevard in South El Monte. At $18.35 Per square foot, Sale A has the greatest locational and land size comparability to the subject. With 2,520 square feet of enclosed building area, its improvements are not as good quality but more than three times larger with far more utility. The unit price in this sale requires significant minus adjustment for superior improvements with only a partially offsetting plus one for the two year time differential. At $19.30 per square foot, Sale B has corner location on Garvey Avenue in Rosemead which is afar more important street with better surrounding development. The improvements on this sale are inferior to those on the subject and lot coverage is only 3.50%, or about half that of the subject. The unit price requires a slight positive adjustment for inferior improve- ments and larger size but far more than offsetting minus ones for LAWRENCE P. BROWN REAL ESTATE APPRAISER AND COUNSELOR Feb 05 02 03:39p WallinKressReismanKranitz 3104500506 p.16 VALUATION drastically superior location and corner situation. At $19.50 per square foot, Sale C is again superior to the subject. The land has corner location at a signalized intersection and the building area is far larger with 2.5 times the lot coverage. All required adjustments.to the unit price are negative. At $13.30 per square foot, Sale D is fairly close to the subject. It is similar in its interior location but fronts"on Rosemead Boulevard, a far more important and higher traffic artery. On the negative side, the sale land is roughly three.times the size of the subject and lot coverage for the older and lower quality building is smaller than on the subject. The unit price requires plus adjustment for all of its negative features with only a partially offsetting negative one for superior access. At $17.65 per square.foot, Sale E is geo- graphically closest to the subject. It is also the most recent sale. The principal advantage of this sale over the subject is its corner location on Valley Boulevard. The sale improvements are inferior in quality and condition to those on the subject but the lot coverage is about the same. Overall, the unit price requires about a 10% net minus adjustment for superior location. After weighing the available market data and making adjustments for variables, my conclusion of value for the subject by the market approach is 5118,000. Including the contributory value of the improvements, the corresponding unit value estimate is about $16.00 per square foot computed on the net land area of 7,365 square feet. Conclusion The two appraisal approaches indicate a probable range in value from $118,000 to $122,500. I consider these methods*to be equally reliable and gave approximately equal weight to each in arriving at my final conclusion of value at $120,000. LAWRENCE 0. BROWN REAL ESTATE APPRAISER AND COUNSELOR