HomeMy WebLinkAboutStaff Report 2309-19922.Supplemental Memo - Financial Analysis Prepared by Keyser Marsten Associates
City Council
Supplemental Report
From: Jonathan Lait, Planning Director
Meeting Date: September 12, 2023
Item Number: 2
Report #:2309-1992
TITLE
Supplemental Memo - Financial Analysis Prepared by Keyser Marsten Associates
ANALYSIS
On Tuesday, September 5 the City Council directed release of the financial analysis completed
for the proposed development. As was communicated at that meeting, the information is
difficult to interpret and staff has not had the opportunity to develop a narrative. This memo
transmits two documents prepared by Keyser Marsten Associates.
The first document is a comparative analysis of three different development proposals that
were considered by the ad hoc. The Development Agreement project is consistent with
"Concept G."
The second document is an updated "code compliant baseline" requested by staff in November
2022 to provide an equal amount of residential development in the “code compliant” project
and the Development Agreement project. Recent staff reports have utilized this updated
baseline in describing financial analysis of the project.
ATTACHMENTS
Attachment A: 6.7.22 Financial Analysis
Attachment B: 11.22.22 Financial Analysis
APPROVED BY:
Jonathan Lait, Planning Director
SOBRATO (3/9)SOBRATO 5/25 CITY (3/21)
CONCEPT F CONCEPT G
5% @ 80%, 7.5% @
100%, 7.5% 120%
Land Donation +
$3.75M CBF
Land Donation +
Hsg Contribution
I.Development Scope
A.Revenue Generating Uses
Townhome Development
Units 99 74 74
Sf Saleable Area 214,155 160,104 160,104
R&D/Office Development
Sf of Leasable AreaCannery Building 140,744 140,744 140,744
Ash Building 4,707 4,707 4,707
Audi Building 11,762 11,762 11,762
Total R&D/Office Development 157,213 157,213 157,213
Total Leasable/Saleable Area (Sf)371,368 317,317 317,317
B.Non-Revenue Generating Uses
Retail (Sf Leasable Area)2,500 2,500 2,500Community Space (Sf Bldg Area)0 0 0
Open Space (Acres)2.31 2.31 2.31
Land Donation for Housing 0.00 1.08 1.08
Replacement Parking Spaces 325 325 325
II.Pro Forma Analysis Summaries
A.Townhome Development
Construction Costs
Total $96,738,000 $72,546,000 $73,091,000
Per Sf Saleable Area $452 $453 $457
Net Revenue $166,521,000 $145,763,000 $145,763,000
Per Sf Saleable Area $778 $910 $910
Threshold Profit @ 12% Net Revenue $19,983,000 $17,492,000 $17,492,000
Residual Land Value $49,800,000 $55,725,000 $55,180,000
Affordability Gap $30,115,400 $0 $0
B.R&D/Office Development
Construction Costs
Total $26,569,000 $26,569,000 $26,569,000
Per Sf Leasable Area $169 $169 $169
Stabilized Net Operating Income $9,542,000 $9,542,000 $9,542,000
Project Value
Total $159,033,000 $159,033,000 $159,033,000
Per Sf Leasable Area $1,012 $1,012 $1,012
Threshold Profit @ 10% Project Value $15,903,000 $15,903,000 $15,903,000
Residual Land Value $116,561,000 $116,561,000 $116,561,000
III.Residual Land Value Summary
Townhome Development $49,800,000 $55,725,000 $55,180,000
R&D/Office Development 116,561,000 116,561,000 116,561,000
Total Residual Land Value $166,361,000 $172,286,000 $171,741,000
IV.Offsets for Replacement Parking Spaces $13,163,000 $13,163,000 $13,163,000
V.Community Benefit Fund
Affordable Housing Contribution $5,000,000
Townhome Impact Fees Included in Costs
Bridge Contribution 1,000,000 1,000,000
Sobrato Impact Fee + CBF $3,750,000
Total Community Benefit Fund $1,000,000 $3,750,000 $6,000,000
VI.Net Residual Land Value $152,198,000 $155,373,000 $152,578,000
VII.Value Enhancement ComparisonsA.City Code Compliant Project Alternative
Development Concept Alternatives $152,198,000 $155,373,000 $152,578,000
City Code Compliant Project 103,766,000 103,766,000 103,766,000
Estimated Value Enhancement $48,432,000 $51,607,000 $48,812,000
B.Original Sobrato Proposal Alternative
Development Concept Alternatives $152,198,000 $155,373,000 $152,578,000
Original Sobrato Proposal 171,333,000 171,333,000 171,333,000
Estimated Value Enhancement ($19,135,000)($15,960,000)($18,755,000)
Prepared by: Keyser Marston Associates, Inc.
File name: 6 7 22 VE Analysis; CC Version Page 1 of 1
SUMMARY TABLE
RESIDUAL LAND VALUE & VALUE ENHANCEMENT ANALYSIS
CODE COMPLIANT COMMERCIAL + 74 TOWNHOMES
CANNERY COMMUNITY BENEFITS ANALYSIS
PALO ALTO, CALIFORNIA
I.Development Scope
A.Revenue Generating Uses
Townhome Development
Units 74
Sf Saleable Area 160,104
R&D/Office Development
Sf of Leasable Area
Cannery Building 90,514
Ash Building 4,707
Audi Building 0
Total R&D/Office Development 95,221
Automative Use (Audi Building)11,762
Total Leasable/Saleable Area (Sf)267,087
B.Townhome Development
Construction Costs
Total $73,091,000
Per Sf Saleable Area $457
Net Revenue $145,763,000
Per Sf Saleable Area $910
Threshold Profit @ 12% Net Revenue $17,492,000
Residual Land Value $55,180,000
C.R&D/Office Development
Construction Costs
Total $9,444,000
Per Sf Leasable Area $99
Stabilized Net Operating Income $5,779,000
Project Value
Total $96,317,000
Per Sf Leasable Area $1,012
Threshold Profit @ 10% Project Value $9,632,000
Residual Land Value $77,241,000
D.Automative Use (Audi Building)
Property Value
Total $5,307,000
Per Sf Leasable Area $451
II.Residual Land Value Summary
Townhome Development 55,180,000
R&D/Office Development 77,241,000
Automotive Use 5,307,000
Total Residual Land Value $137,728,000
IV.Offsets for Replacement Parking Spaces $0
V.Community Benefit Fund
Affordable Housing Contribution $10,000,000
Bridge Contribution
Sobrato Impact Fee + CBF
Total Community Benefit Fund $10,000,000
VI.Net Residual Land Value $127,728,000
VII.Value Enhancement Comparisons
A.City Code Compliant Project Alternative
Development Concept Alternatives $127,728,000
City Code Compliant Project $103,766,000
Estimated Value Enhancement $23,962,000
Prepared by: Keyser Marston Associates, Inc.
File name: 11 22 22 Code Compliant Commercial_74 THs; Sum 8.5 x 11 Page 1 of 1