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 13
b. The management fee is set at 3% of the effective gross retail income.
KMA estimates the effective gross income for the retail component at $340,500, and the
operating expenses at $72,000. The retail net operating income is estimated at
$268,500.
Total Net Operating Income
KMA estimates the net operating income for the residential component at $989,800, and
for the retail component at $268,500. The resulting net operating income for the
Proposed Project is estimated at $1.26 million.
Estimated Supportable Land Value (Appendix B - Table 3)
The valuation analysis prepared by KMA for the Proposed Project is summarized in the
following table. As discussed previously in this analysis, the capitalization rate is derived
from a weighted average of 5.5% for the residential component and 7% for the retail
component.
Estimated Net Operating Income $1,258,300
Capitalization Rate 5.82%
Project Value $21,620,000
The supportable land value derived under the KMA analysis is presented in the following
table:
Project Value $21,620,000
(Less) Total Construction Costs (16,105,000)
Supportable Land Value $5,515,000
Value Enhancement Calculation
The value enhancement is equal to the difference between the land values supported by
the Base Zoning Alternative and the Proposed Project. The following table presents the
KMA estimate of the value enhancement:
1210011_v4;SM:TRB
19305.013.001