V. Valuation of Site

Traditional market value appraisal methods, which attempt to determine the highest price which the land would bring if sold on the open market for any use or purpose, are not ideally suited for valuing secondary land uses. Instead, real estate appraisers establish rental value for the property based on the value the property has for a specific secondary use.

To evaluate the rental value for the subject site, SCE reviewed development proposals from the real estate market place. The developers incorporated into their proposals the highest lease rate that they were able to pay for the particular use to be developed. The opportunity to develop the Site was minimized when the City declined SCE access to the Site from the frontage street, Kanan Road, which leaves the Site virtually landlocked for development purposes. Because of the access restriction, Silagi Trust became the only viable candidate for development of the Site. To evaluate the Silagi Trust proposal, SCE reviewed rent paid by "comparable" parking and office facilities in Southern California as a function of the effective gross income of the facility.

The annual base rent SCE will receive from Silagi Trust falls within the acceptable market range established based on the analysis of comparable facilities and is in line with rents received in the transactions approved by the Commission in D.96-12-024, D.99-02-035, D.99-02-036, D.99-03-016 and D.99-04-066.