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3B Public Hearing 2012 0521
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3B Public Hearing 2012 0521
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5/30/2012 11:46:42 AM
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5/15/2012 3:20:49 PM
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CM City Clerk-City Council
CM City Clerk-City Council - Document Type
Staff Report
Document Date (6)
5/21/2012
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_CC Agenda 2012 0521 CS+RG
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\City Clerk\City Council\Agenda Packets\2012\Packet 2012 0521
SA Reso 2012-007
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\City Clerk\City Council\Resolutions\2012
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To: Cynthia Battenberg <br />Subject: Village Marketplace <br />May 1, 2012 <br />Page 4 <br />■ Financing costs, consisting of loan fees and interest during construction, are <br />estimated to be $307,000 or 6.57% of direct costs, including off site improvement <br />costs. The estimated construction loan is $5.5 million. <br />Net Operating Income <br />Table 2 presents the estimate of stabilized net operating income (NOI) estimated by the <br />Developer. KMA reviewed the revenue projection and compared it to other similar <br />projects with which we are familiar. The NOI projection of approximately $704,280 <br />reflects the following inputs provided by the Developer, which have been reviewed for <br />reasonableness by KMA: <br />■ The specialty grocery store will ground lease a pad on a long term basis. <br />■ Rents for built space are projected to range from $33 to $42 per square foot. <br />■ Rent including ground lease revenue is approximately $735,190 per year. <br />■ Allowance for vacancy and for operating expenses not recovered from the <br />tenants is approximately $30,910 per year. This estimate is 6% of rents from the <br />in -line shops, excluding the anchor space. <br />The projected annual net operating income (NOI) is approximately $704,280. <br />Reuse Value /Residual Land Value <br />The reuse land value supported by the Project can be estimated as the residual land <br />value, which is the difference between the private investment supported and total <br />development costs (exclusive of land acquisition) and Developer's profit. The residual <br />land value for the Village Marketplace is estimated at $2,170,000, as shown below: <br />■ The private investment supported by the projected rents is approximately <br />$9,500,000. This is based on Net Operating Income (NOI) of approximately <br />$704,280 capitalized at 7.5 percent. <br />■ Development costs, excluding land cost, are estimated at approximately <br />$6,378,000. This includes off -site improvements, direct and indirect costs and <br />financing costs. See Table 1. <br />■ Developer profit is estimated at approximately $855,000, which is the equivalent <br />of 10% of total development costs including land costs. <br />001 -002; jf <br />19096.040 <br />
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