Agenda - City of Santa Monica

To: Steve Mizokami, City of Santa Monica April 23, 2013
Subject: 1320 2 nd Street: Value Enhancement & Fiscal Impact Analysis Page 7
b. The management fee cost is estimated at 5% of the effective gross
residential income.
c. The annual property tax payments are estimated at $3,940 per unit. 3
d. A capital reserve equal to $150 per unit per year is provided.
Based on the preceding assumptions, KMA estimates the effective gross income for the
residential component at $605,700, and the operating expenses at $230,300. The
resulting residential net operating income is $375,400.
Retail Net Operating Income
1. Revenues:
a. The retail rent is set at $4.00 per square foot of retail GBA per month.
b. The common area maintenance (CAM) reimbursements are estimated at
$10 per square foot per year.
2. A 5% vacancy and collection allowance is provided.
3. KMA estimates the retail operating expenses as follows:
a. The CAM expenses are estimated at $10 per square foot per year.
b. The management fee is set at 3% of effective gross retail income.
KMA estimates the effective gross income for the retail component at $345,500, and the
operating expenses at $73,100. Based on these assumptions, the retail net operating
income is set at $272,400.
Total Net Operating Income
KMA estimates the net operating income for the residential component at $375,400, and
for the retail component at $272,400. The resulting net operating income for the Base
Zoning Alternative at $647,800.
3 This estimate is based on a 5.5% capitalization rate and a 1.27% property tax rate.
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