VI. Valuation of Site

Traditional market value appraisal methods which attempt to determine the highest price that the land would bring if sold on the open market for any use or purpose, are not ideally suited for valuing secondary 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 Site, SCE solicited 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. After reviewing all submitted proposals, a staff appraiser computed the rent paid by comparable facilities located in Orange Country as a function of the effective gross income of the facilities. The annual base license fee SCE will receive from Katella falls within the acceptable market range established by the appraiser based on the analysis of comparable facilities and is in line with the fees SCE receives from the project approved in D.00-02-041.