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2014 Appraisal - SilverRock 2.43 acres Parking Lot A Restricted Appraisal Report Of 2.43-Acres of Land Prepared For: City of La Quinta Attn: Mr. Frank J. Spevacek City Manager 78-495 Calle Tampico La Quinta, CA 92253 Location: SilverRock Resort; South of 52nd Avenue, west of Jefferson Street, La Quinta, CA. Otherwise Known As APN: 777-490-012; Riverside County, CA. Date of Report: March 1, 2014 Date of Value: February 25, 2014 Capital Realty Analysts File No.: 14-3950 CAPITAL REALTY ANALYSTS MICHAEL A. SCARCELLA, MAI 78015 MAIN STREET, SUITE 207 LA QUINTA, CA 92253 PHONE: (760) 564-6222 FAX: (888) 985-9994 EMAIL: MIKE@REALTYADVISOR.COM March 1, 2014 City of La Quinta Attn: Mr. Frank J. Spevacek City Manager 78-495 Calle Tampico PO Box 1504 La Quinta, CA 92253 RE: 2.43-Acres of Land, Improved With a Parking Lot and Ancillary Site Improvements; Located Within the SilverRock Resort, South of 52nd Avenue, West of Jefferson Street, La Quinta, CA.; Otherwise Known As APN: 777-490-012; Riverside County, CA. Dear Mr. Spevacek: At your request and authorization, I have completed this restricted appraisal report, setting forth my opinion of the market value of the fee simple estate in the subject property as of February 25, 2014. Per your request, the following market value estimates are reported for the subject property: Market Value “As Is” The subject property includes 2.43-acres, located within the SilverRock Resort. The property is located immediately adjacent to the Ahamanson House, a historic structure currently in use as a clubhouse for the SilverRock golf course. The subject land is improved with a parking lot and other site improvements, ancillary to the subject’s current use as a parking lot for the SilverRock golf course and clubhouse facilities. Because the format of this report is restricted, some or all information that support the analysis, conclusions and opinions in the report are retained in my files. This report may not be properly understood without the additional information contained within my files. The following guidelines apply to this report: The property rights being appraised are the fee simple estate. The purpose of the appraisal is to estimate the market value of the fee simple estate in the subject property “As Is. Phone: (760) 564-6222 Fax: (888) 985-9994 Email: mike@realtyadvisor.com CAPITAL REALTY ANALYSTS REAL ESTATE APPRAISERS ♦ ANALYSTS ♦ ADVISORS 78-015 MAIN STREET, SUITE 207 LA QUINTA, CA 92253-8962 March 1, 2014 Capital Realty Analysts / Mr. Frank J. Spevacek Page 3 Definition of Market Value The definition of market value for this appraisal is as follows: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 1. Buyer and seller are typically motivated. 2. Both parties are well informed or well advised, and acting in what they consider their best interests; 3. A reasonable time is allowed for exposure on the open market; 4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. Assumptions and limiting conditions are attached. The intended use and sole purpose of this value estimate is for internal use. The required certifications are attached. Effective Date of Value: February 25, 2014 Highest and Best Use “As Vacant”: Hold for investment Highest and Best Use “As Improved”: Remain “As Improved” March 1, 2014 Capital Realty Analysts / Mr. Frank J. Spevacek Page 4 History of the Subject Property The subject parcel was acquired by the City of La Quinta on 6/27/02 as a component of a larger acquisition. The land is zoned for golf course uses, and is currently improved as the parking lot for the golf course and Ahmanson House. The General/Specific Plan is for Civic and Cultural Event Facilities. The property was acquired with public funds, and is required to be maintained in public ownership. Consequently, the marketability of the property is considered virtually nil; except as a component of the larger golf facility. According to the Desert Area MLS, the property is not currently listed for sale. Appraisal Process Interestingly, the subject property has no current individual marketability. However, the property could potentially trade as a component of the golf course. Consequently, an “over the fence” type valuation methodology is applied. This method is similar to many eminent domain applications; wherein the value of the subject is considered equal to the value of the larger parcel that it would trade with, on a pro rata basis. Consequently, the value of the subject land will be compared against golf course land value. For this analysis, the Sales Comparison Approach is applied exclusively. Lacking improvements with a material contributory value and associated cost or income earning ability, the Cost and Income Approaches are excluded. Sales Comparison Approach The following grid shows the comparable sales applied to estimate the market value of the subject property: Sale Sale Size Sale Price Per #Location Date (Acres)Price Acre 1 Palm Desert Country Club 77200 California Drive Palm Desert, CA 9/9/11 174.180 $1,150,000 $6,602 2 Indian Palms Country Cvlub 48630 Monroe Street Indio, CA 8/31/12 170.000 $5,610,000 $33,000 3 Woodhaven Country Club 41555 Woodhaven Drive Palm Desert, CA 2/15/11 108.000 $2,500,000 $23,148 Subject Golf Course Parking Lot SilverRock Resert 2.430 La Quinta, CA. March 1, 2014 Capital Realty Analysts / Mr. Frank J. Spevacek Page 5 Sales Comparison Approach (cont’d) As shown, the 3 most recent golf course facility sales ranged from $6,602 per acre to $33,000 per acre unadjusted. In this case, the required adjustments are comparatively significant. The subject property is designed to serve 2 golf courses. However, only 1 has been developed and the other remains vacant. Consequently, in a bulk sale, the subject land would only serve 1 course; thus reducing the utility, and per acre indications of the comparables by half. This feature alone brings the adjusted range down to $3,301 per acre to $16,500 per acre. In light of the lack of feasibility for new golf development, the market value estimate for the subject property would likely fall at the lower end of the range of adjusted values. Conclusion As a component of the entire golf assemblage, the subject has a relatively prominent location. However, the amount of adjacent vacant land is significant and could easily displace the subject property. The restrictive zoning and location prevents the property from being put to other uses. In light of the available data, a market value estimate at the lower end of the range is considered most relevant. Based upon the available data, I conclude that the market value of the fee simple estate in the subject property as of the date of value, by the Sales Comparison Approach is as follows: $5,000 Per Acre x 2.43-Acres = $12,150 $12,000 (Rounded) (Twelve Thousand Dollars) March 1, 2014 Capital Realty Analysts / Mr. Frank J. Spevacek Page 6 The undersigned have no personal interest either present or contemplated in the subject property and certify that my employment was not dependent upon producing a specific value, or a value within a given range. No fee, received or to be received for the employment of my services is in any way contingent on the opinions reported herein. I hope you find the details of this appraisal report relevant to your decisions. Thank you for the opportunity to be of service. Respectfully submitted, CAPITAL REALTY ANALYSTS Michael A. Scarcella, MAI State Certification No.: AG019463 Expiration Date: October 24, 2015 © 2014 CAPITAL REALTY ANALYSTS Page 7 Certification I certify that, to the best of my knowledge and belief... The statements of fact contained in this Report are true and correct. The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and is my personal, unbiased professional analyses, opinions and conclusions. I have no present or prospective interest in the property that is the subject of this Report, and I have no personal interest or bias with respect to the parties involved. My engagement in this assignment was not contingent upon developing or reporting predetermined results. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. My analysis, opinions and conclusions were developed, and this Report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation, except that the Departure Provision of the USPAP shall not apply to federally related transactions. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. I certify that the use of this Report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. As of the date of this Report, I have completed the requirements of the continuing education program of the Appraisal Institute. I have made a personal inspection of the property that is the subject of this Report. No other person provided significant professional assistance to the person(s) signing this Report. © 2014 CAPITAL REALTY ANALYSTS Page 8 Certification (cont’d) This Appraisal assignment was not based on a requested minimum valuation, a specific valuation or the approval of a loan. I certify that, to the best of my knowledge and belief, the reported analyses, opinions and conclusions were developed, and this Report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. I have not previously appraised the property that is the subject of this report. Michael A. Scarcella, MAI State Certification No.: AG019463 Expiration Date: October 24, 2015 © 2014 CAPITAL REALTY ANALYSTS Page 9 Addendum © 2014 CAPITAL REALTY ANALYSTS Page 10 Assumptions and Limiting Conditions This appraisal report has been made with the following general assumptions and limiting conditions: 1. No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. The appraiser reserves the right to make adjustments to the analyses, opinions and conclusions in this report, as may be required by consideration of additional or revised data that may become available. 5. All engineering is assumed to be correct. The plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 7. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. 8. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. © 2014 CAPITAL REALTY ANALYSTS Page 11 Assumptions and Limiting Conditions 10. It is assumed that the utilization of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 11. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the subject property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The intended user is urged to retain an expert in this field, if desired. 12. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate allocations for land and building must not be used in conjunction with any other appraisal and are invalid if so used. 13. Except for use in the Official Statement as required for bond issuance, possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event only with properly written qualification and only it its entirety. 14. The appraiser herein by reason of this appraisal is not required to give further consultation, testimony, or be in attendance in court with reference to the property in question unless arrangements have been previously made. 15. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. © 2014 CAPITAL REALTY ANALYSTS Page 12 Assumptions and Limiting Conditions 16. Improved Properties - The Americans with Disabilities Act (“ADA”) became effective January 26, 1992. I (we) have not made a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since I (we) have no direct evidence relating to this issue, I (we) did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. 17. Improvements, Proposed Improvements - The value estimates in this report are subject to the improvements being completed in the manner represented to the Appraiser(s), and described in the Improvement Description section of this report. 18. The legal descriptions, site sizes, dimensions and/or other surveys provided to the appraiser, including County Tax Plats, are assumed to be accurate. Should a survey prove these characteristics inaccurate, it may be necessary for the appraisal to be adjusted. 19. The forecasts, projections, or operation estimates contained herein are based upon current market conditions, anticipated short-term supply and demand factors, and a continued state economy. These forecasts are therefore, subject to change in the future. 20. The appraiser undertaking this assignment warrants that he is competent in properly identifying the appraisal problem and has the necessary knowledge and experience to complete the assignment. 21. Provision of an insurable value by the appraiser does not change the intended user or intended purpose of the appraisal. The appraiser assumes no liability for, and does not guarantee that any estimate or opinion will result in the subject property being fully insured for any possible loss that may be sustained. The appraiser recommends that an insurance professional be consulted. © 2014 CAPITAL REALTY ANALYSTS Page 13 Assumptions and Limiting Conditions 22. Copyright of this material belongs exclusively to Michael A. Scarcella, Inc., and/or Capital Realty Analysts, Inc. This copy is intended for private use as defined in the body of the report for the designated client only. No person or entity is permitted to reproduce this material, in whole or in part, for distribution either free of charge or for 'commercial purposes', unless that person or entity has a signed license agreement with Michael A. Scarcella, Inc. and/or Capital Realty Analysts, Inc. Reproduction for commercial purposes is reproduction for the purposes of sale, rent, trade or distribution, or posting it on the Internet or on electronic bulletin boards. © 2014 CAPITAL REALTY ANALYSTS Page 14 MICHAEL A. SCARCELLA, MAI Education 1982 B.S., Business, University of Nevada, Las Vegas All required Appraisal Institute sponsored courses required to attain the MAI designation, along with Appraisal Institute sponsored courses, seminars and on-line forums required for continuing education. Professional Organizations/Licensing Member of the Appraisal Institute - MAI Member Number 11072 Licensed by the State of California as a “Certified General Real Estate Appraiser”. Office of Real Estate Appraisers, Appraiser Identification Number AG 019463. Appraisal Institute – So. Cal. Chapter, 1997, 1998, 2001 Experience Review Committee; 1999, 2000, 2005 So. Cal. Chapter Ethics Committee General Experience 1997 to Current Capital Realty Analysts – President 1991 to 1996 - MacKenzie and Associates – Staff Appraiser 1982 to 1991 - Hotel, Construction / Development Controller Qualified as an expert real estate witness, United States Bankruptcy Court Qualified as an expert real estate witness, Riverside County Superior Court Representative List of Clients Public Sector Private Sector Institutional Lenders United States Of America Price Waterhouse Bank of America RTC/FDIC Merrill Lynch Rabobank N.A. Bureau of Indian Affairs CB Commercial Wells Fargo Bank BLM Textron Pacific Western Bank State of California Bechtel Corporation Washington Mutual Bank State of Arizona KSL Recreation Corp. Bank Midwest Riverside County United States Filter Pacific National Bank City of Palm Springs Sunrise Company Pacific Premier Bank City of Coachella Trust for Public Land Desert Commercial Bank City of Desert Hot Springs Mojave Desert Land Trust Pacific Mercantile Bank City of Cathedral City Canyon Development Banc One City of Rancho Mirage Lennar Homes Fidelity Federal Bank City of Palm Desert City of Indian Wells Temple Construction Santa Fe Pacific Bankers Trust Company Sunrise Community Bank City of Indio Takenaka Corporation Union Bank City of La Quinta Betty Ford Center Commerce Federal Svgs Palm Springs Unified SD Heart Inst. of the Desert Great American Bank Desert Sands Unified SD Basic Capital Management Mitsubishi Bank Coachella Valley Unified SD Estate of Walter Annenberg Indymac Bank Southern California Edison Estate of Frank Sinatra Foothill Independent Bank Coachella Valley Water Dist. Wessman Development El Paseo Bank Mojave Water Agency Attorneys Palm Desert National Bank Eisenhower Memorial Hsp. Developers Bank Six Desert Hospital Accountants First Bank