20-1207_GANAHL LUMBER COMPANY_Agreement Affecting Real Property17
has committed by this Agreement to contribute to the acquisition, construction and maintenance
of certain “Public Benefits.” The Public Benefits consist of a one-time payment to the City at the
Close of Escrow in the amount of Five Hundred Thousand Dollars ($500,000) which the City
will use toward public facilities including but not limited to: park maintenance, rehabilitation
and improvements, public facility upgrades and improvements, street maintenance and
improvements, or any other improvement to the public facilities as the City deems necessary to
provide appropriate facilities and services to the residents of this community and the City at
large. City shall have no obligation to construct specific public facilities as a result of this
Agreement. In addition to payment for the construction and maintenance of Public Benefits,
Developer shall provide a one-time payment to the City at the Close of Escrow in the amount of
Eighty Two Thousand Dollars ($82,000) ($25,000 of which Developer has already paid via a
Developer Deposit provided to the City) which the City will use toward recovering a portion of
staff cost associated with the processing of the sale of the Property. Payment of this latter
amount by Developer shall supersede Developer’s obligations under section 3 of that certain
Exclusive Negotiating Agreement between the Parties, dated August 31, 2017.
3.SPECIAL COVENANTS OF DEVELOPER
3.1 Maintenance Condition of the Property. Developer for itself, its successors and
assigns covenants and agrees that:
3.1.1 The areas of the Property that are subject to public view (including all
existing and future improvements, paving, walkways, landscaping, exterior signage and
ornamentation) shall be maintained in good repair and a neat, clean and orderly
condition, ordinary wear and tear excepted. If, at any time within fifteen (15) years
following the Close of Escrow, there is an occurrence of an adverse condition on any area
of the Property that is subject to public view in contravention of the general maintenance
standard described above (a “Maintenance Deficiency”), then City shall Notify
Developer in writing of the Maintenance Deficiency. If Developer fails to cure or
commence and diligently pursue to cure the Maintenance Deficiency within thirty (30)
calendar days of its receipt of Notice of the Maintenance Deficiency, City may conduct a
public hearing, following transmittal of Notice of the hearing to Developer, at least ten
(10) calendar days prior to the scheduled date of such public hearing, to verify whether a
Maintenance Deficiency exists and whether Developer has failed to comply with the
provisions of this Section 3.1. If, upon the conclusion of the public hearing, City finds
that a Maintenance Deficiency exists and that there appears to be non-compliance with
the general maintenance standard described in this Section 3.1.1, City shall have the right
to enter the Property and perform all acts necessary to cure the Maintenance Deficiency,
or to take any other action at law or in equity that may then be available to City to
accomplish the abatement of the Maintenance Deficiency. Any sum expended by City
for the abatement of a Maintenance Deficiency on the Property as authorized by this
Section 3.1 shall become a lien on the Property until paid.
3.1.2 Graffiti, as this term is defined in Government Code Section 38772, that
has been applied to any exterior surface of a structure or improvement on the Property
that is visible from any public right-of-way adjacent or contiguous to the Property, shall
be removed by Developer by either painting over the evidence of such vandalism with a
3.7 Prohibited Uses. No portion of the Property shall be used for a junkyard, adult
entertainment, adult movie theater, adult bookstore, massage parlor, pawn shop, dollar store,
check cashing center (the foregoing shall in no event prohibit banking facilities within a grocery
store or a walk up ATM), payday loan or other similar business, laundromat, marijuana
dispensary, tattoo parlor or fortuneteller, or for the sale of narcotics paraphernalia, or for the long
term treatment, storage or disposal of Hazardous Materials.
THIS NOTICE OF AGREEMENT is dated as of ________ � 2021, and
has been signed and made by and on behalf of Developer and City by and through the signatures
of their authorized representative(s) set forth below. This Notice of Agreement may be signed in
counterparts and each counterpart shall, collectively, be deemed to be one original instrument.
Signatures on following page
4
Exhibit E
EXHIBIT E
TO
AGREEMENT AFFECTING REAL PROPERTY
(Ganahl Lumber Company)
SCHEDULE OF PERFORMANCE
A. Days shall be calendar days, unless otherwise specified.
B. The City Manager is authorized by City to make minor changes to the schedule of
ninety (90) calendar days or less.
C. In the event of any conflict between this schedule and the Agreement, the terms
and provisions of this schedule shall control, subject to extension for Unavoidable Delays.
D. All defined terms indicated by initial capitalization used in this schedule shall
have the meanings ascribed to the same terms in the Agreement.
Action Date Action to be
Completed By
Completion of construction of Site A Within 24-months after
Effective Date*
Completion of construction of Site B Within 24-months after
Effective Date*
Completion of construction of Site C Within 36-months after
Effective Date*
*Subject to extension by Unavoidable Delay. Also, if the Effective Date occurs between
October 1 of one year and March 31 of the following year, for purposes of this Schedule of
Performance only, the Effective Date shall be deemed to be April 1 of such following year.
EXHIBIT F
TO
AGREEMENT AFFECTING REAL PROPERTY
(Ganahl Lumber Company)
DEPICTION OF SITES
EXHIBIT G
TO
AGREEMENT AFFECTING REAL PROPERTY
(Ganahl Lumber Company)
KMA ANALYSIS
500 SOUTH GRAND AVENUE, SUITE 1480 #LOS ANGELES, CALIFORNIA 90071 #PHONE 213.622.8095
1905023.JAR
WWW.KEYSERMARSTON.COM 10700.015.001
ADVISORS IN:
Real Estate
Affordable Housing
Economic Development
BERKELEY
A. Jerry Keyser
Timothy C. Kelly
Debbie M. Kern
David Doezema
Kevin Feeney
LOS ANGELES
Kathleen H. Head
James A. Rabe
Gregory D. Soo-Hoo
Kevin E. Engstrom
Julie L. Romey
Tim R. Bretz
SAN DIEGO
Paul C. Marra
MEMORANDUM
To:Elizabeth Hull Esq.
Best Best & Krieger
From:James Rabe, CRE
Date:May 28, 2019
Subject:Extraordinary Costs – Lower Rosan Site
At your request, Keyser Marston Associates, Inc. (KMA) has researched and compiled a
comprehensive estimate of the extraordinary costs associated with the potential
commercial development of a property in San Juan Capistrano bounded by San Juan
Creek on the west, an existing mobile home park on the north, BNSF Railroad on the
east and Stonehill Drive on the south. The parcel is owned by the City of San Juan
Capistrano (City) and covers approximately 16.5 acres (Site). The Site was is currently
vacant, but it is used for the offsite storage of automobiles for local auto dealerships.
This memorandum report was prepared to assist in the appraisal of the Site.
BACKGROUND
Prior to being channelized, the Site was part of the San Juan Creek riverbed/flood plain
and is characterized by alluvial soils. Above the alluvial soils are undocumented fills that
have been placed on the Site over the years. Previous analyses by Lidgard and
Associates1 and Gafcon, Inc.2 have identified the need for soil remediation at the site.
The Lidgard study noted the need for “relatively extensive remediation including
excavation and recompaction of existing stockpile soil material, importation of
1 Lidgard and Associates, Inc., Market Value Study, Lower Rosan Ranch, April 2003.
2 Gafcon, Inc., Lower Rosan Ranch Land Planning Analysis, January 2009
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additional soil material, construction of a multi-level retaining wall.” Lidgard did not
have access to a soils report or other geotechnical studies. Lidgard’s conceptual
estimate of the remediation costs in 2003 was approximately $1.6 million.
The Gafcon analysis included a preliminary geotechnical investigation by Lawson &
Associates Geotechnical Consulting, Inc. (LGC) and engineering analyses prepared by
Fuscoe Engineering. The LGC review indicated that the site was underlain with 10 to 15
feet of artificial/undocumented fill sitting on top of alluvial sentiments. Groundwater
was identified at nine feet below the surface. Lawson noted the that due to the soils
and groundwater that the soils are subject to settlement and consolidation and
“seismically-induced settlement.” LGC also noted that “stiffened slabs” may be required
for the proposed structures in the alternatives evaluated by Gafcon. Gafcon’s
conceptual estimate of the required site work in 2009 was $9.0 to $10.0 million.
Both studies recognized the need to raise the site out of the floodplain, but it is not clear
what the height of the flood plain was at that time.
Subsequent assessments and engineering/construction estimates have provided a
better indication of the remediation work required. The latest geotechnical study has
been prepared by Wildan3. Willdan has also prepared several addendums and updates
to the geotechnical study. The Wildan analysis is more extensive than the previous
analyses and included borings and CPT soundings. The borings and CPT data indicate
that the site is underlain by 15 to 20 feet of undocumented fill. The borings and CPT
data confirmed that the undocumented fill is underlain by alluvial deposits.
Groundwater was encountered at depths of 18 to 22 feet. Willdan also noted that the
Site has a low loadbearing capacity. Finally, Wildan concluded that the Site is subject to
liquefaction in the event of an earthquake.
While the remediation steps necessary to resolve the conditions associated with the
undocumented fill and alluvial soil have been well studied, there is an unknown
potential to encounter hazardous materials requiring specialized remediation. In the
event hazardous materials are discovered on the Site, a remediation plan for those
materials will be developed at that time.
3 Willdan Engineering Geotechnical Group, Update Geotechnical Investigation Report and Response to
Third Party Review; Proposed Ganahl Lumber Facility Development, San Juan Capistrano, November 2018
Elizabeth Hull, Best Best & Krieger May 28, 2019
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REQUIRED REMEDIATION WORK
In order to prepare the site for development, the property owner (either buyer or seller)
will need to undertake substantial remediation in order to prepare a developable site.
Summarizing from the Wildan analysis, tasks include:
•Remove 12 feet of undocumented fill and determine if the fill is useable for site
development or needs to be replaced.
•Remove saturated soil and dry or replace
•Install two-foot rock base at bottom of excavated area with geogrid material
above and below
•Provide sufficient engineered fill (combination of new fill and onsite, dried
materials) to raise the site out of the floodplain.
•Foundations, drive aisles and parking areas must be upgraded to compensate
for the low soil carrying capacity.
In addition to the soil remediation issue, the property has two other issues that a typical
buyer would not expect to incur. First, because the Site must be excavated and then its
elevation must be raised to be above the flood plain, there is certain infrastructure
onsite that must be “protected” or “modified” as a result of the construction. Second,
the buyer would expect that utilities are near the property and that previously installed
utilities would not have to be relocated. In this case natural gas and sewer are located a
significant distance from the Site and previously installed utilities must be relocated.
COST ESTIMATES
As noted above at least two conceptual estimates of costs to alleviate or mitigate these
problems have been prepared over the years. Current cost estimates have been
prepared for Ganahl by various contractors based on the proposed development plan.
KMA has reviewed the estimates and compared them to other estimates for other
Elizabeth Hull, Best Best & Krieger May 28, 2019
Extraordinary Costs – Lower Rosan Site Page 4
1905023.JAR
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locations in Orange County. Overall, the cost estimates are consistent with other land
remediation estimates that KMA has reviewed.4
Direct Costs
Direct cost estimates are presented in Table 1 and more detailed tables are provided in
the Attachment. Cost estimates were initially prepared as preliminary contractor bids
for work at the site. The bid information has been compared to other preliminary bid
information prepared by NearCal Corp, General Contractors, C&V Consulting, Leighton
and Associates and Psomas for other sites. Given the nature of the work, the estimates
appear reasonable. Costs for other activities were included in the estimates prepared
for Ganahl. KMA has not included those, because in KMA’s opinion those costs
represent costs that are part of “normal” negotiations between buyer and seller or
between buyer/developer and a city.
Also, a 10% contingency factor is added to all of the direct costs activities, which is
shown as the last line item of the Direct Costs.
Site Remediation
The greatest cost to preparing the Site for development is to fix the soil problems and to
raise the site out of the floodplain. This entails excavating the site, determining which
(if any) soil can be reutilized at the site, bringing in rock to stabilize the site, and adding
soil to the site to raise the site out of the flood plain. These activities are presented as
the first two line items of Table 1 and represent the largest extraordinary costs. The soil
activities are estimated at a little more than $2.8 million and elevating the site out of the
flood plain is estimated at nearly $5.1 million.
Structural Improvements
Even after the upper level soils at the site have been prepared for development, the soil
will still be subject to liquefaction and settlement due to the alluvial soils that underlay
the site. This issue can be dealt with in several ways including driving piles to support
the support the buildings or installing deeper and stronger foundations, stronger
4 Beach and Lincoln construction landfill site and Orange County Water District groundwater recharge
parcel.
Elizabeth Hull, Best Best & Krieger May 28, 2019
Extraordinary Costs – Lower Rosan Site Page 5
1905023.JAR
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structural walls and deeper and stronger paving for roadways and parking areas. Based
on discussions with Ganahl, the City and review of pile costs and the environmental
issues of driving piles, KMA believes the stronger foundations and site work represent
the least cost alternative. In addition there is an existing sewer line along the western
edge of the property that must be retained and shoring along the flood control channel
must be upgraded. The costs of these improvements is estimated at nearly $1.75
million.
Utility Issues
When Stonehill Drive was developed it was known that a deceleration lane would be
required for the future development of the Site. However, the electric and telecom
utility vaults were installed within the deceleration right of way instead of outside the
right of way. The costs of relocating the vaults or mitigating the issue is estimated at
$325,000 for the two utilities.
A buyer would expect that the natural gas and sewer connections would be located at
or within 100 feet of the edge of the property. That is not the case here. The natural
gas connection is located approximately 500 feet north of the Site and the sewer
connection is a similar distance to the south of the Site. The cost of bringing these
utilities to the Site is approximately $300,000.
The total direct costs, including the 10% contingency factor, are estimated at more than
$11.3 million.
Indirect Costs
KMA independently estimated the indirect costs for the Site, taking into account the size
and complexity of the project. With that in mind KMA estimated design and
engineering cost at 8.0% of direct costs. Permits and fees were estimated at 5.0% of
direct costs. Construction bonds and insurance and project management fees were
estimated at 2.0% and 3.5% of direct costs, respectively.
Indirect costs are estimated at $2.1 million.
Elizabeth Hull, Best Best & Krieger May 28, 2019
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Financing
Interest rates have been increasing over the last year or two. Given the nature of the
work to be done and the upfront risks, KMA has assumed a 7.0% interest rate for this
construction financing. KMA has also assumed a nine month construction period.
Construction interest is estimated at $353,000.
Remediation Risk Profit
For projects that typically have management and profit expressed as a percentage of
value or cost, the typical range that KMA has reviewed is 10% to 15% of cost. At this
point there has been substantial evaluation of the remediation required and the
remediation work is the initial step at the beginning of the typical construction process.
For purposes of this analysis, KMA has estimated a remediation risk profit at the lower
end of the range of 10.0%. Developer profit is estimated at $1,379,000.
CONCLUSION
Based on its review of the history of the Site, construction estimates prepared over time
and the most recent estimates prepared by for the Site, KMA has compiled a total
extraordinary cost estimate of $15,168,000 as shown in Table 1.
Attachments
TABLE 1
ESTIMATE OF EXTRAORDINARY COSTS
LOWER ROSAN SITE
SAN JUAN CAPISTRANO, CALIFORNIA
Direct Costs1
Remediate/Replace Exising Soil $2,838,000
Elevate Site out of FEMA Flood Plain $5,097,000
Structural and Shoring Premiums $1,747,000
Electric & Telcom Relocations $325,000
Extraordinary Utility Access Conditions
Gas $185,000
Sewer $115,000
Subtotal - Utilities $300,000
Contingency @ 10% $1,031,000
Total Direct Costs $11,338,000
Indirect Costs2
Design & Enginnering 8.0% $907,000
Permits & Fees 5.0% $567,000
Bonds & Insurance 2.0% $227,000
Project Management 3.5% $397,000
Total Indirect Costs $2,098,000
Financing Costs2
Interest for nine months 7.0% Interest Rate $353,000
Developer Profit2 10.0%$1,379,000
Total Costs $15,168,000
1. Direct cost work sheets are provided in the Attachment
2. KMA estimates.
ATTACHMENTS
LOWERROSANSITEIssue:Remediate/ReplaceExistingSoilADJUSTMENTSBUDGETQuantityUnitUnitPriceBaseBidPricing:Overexcavateandrecompact12'fromproposedgrades257,241CY$2.72699,696Assumes15%Wetmaterials38,586CY$5.44209,909Geotextilefabric+2'of3/4rock+anotherlayeroffabric759,200SF$0.62$470,704Cleanfilldirttoraiserestaurantsite(fromEL41.00to48.00)1,207.14LOAD$98.00118,300cut/filltograde16,900CY$2.2938,701Excavateandcharacterizeundocumentedfill(approximately72,250cy)88,459CY$2.72240,608Assumes33.5%ofmaterialsneedtobeexported2,117LOADS$294.00622,307Assumes16.5%ofmaterialsneeddrying1,460CY$5.447,940Replacementof33.5%ofmaterialsneedtobeexported2,117LOADS$98.00207,436CutandfilltobalanceincludedinGradingRequirements29,634CY$2.2967,861Trashanddebris(unitpricefordump$2,450/load,25tons/load)63LOAD$2,450154,803AdjustmentSubtotal:$2,838,263Rounded$2,838,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:ElevateSiteoutofFEMAFloodPlainADJUSTMENTSBUDGETAdjustmentforimporttoraisegradestonewminimumfloodelevation40/41QuantityUnitUnitPriceBaseBidPricing:Furnishandinstallrockimporttoraisegrade110,000ton$32.01$3,521,100Cleanfilldirttobalancesite14CY/LOAD1,221LOAD$98.00119,700Cutandfilltobalance17,100CY$2.2939,159Adjustmentforretainingwallsfor40/41elevation14,205SF$98.001,392,090Storm-costtoundergroundrailroaddrainageacrosssiterequiredbyraisedgradesPipelineincludingtrenching350LF$60.0021,000JunctionStructureconnectionatchannel1LS$1,950.001,950NewheadwallatRR1EA$1,950.001,950AdjustmentSubtotal:$5,096,949Rounded$5,097,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:ElevateSiteoutofFEMAFloodPlainADJUSTMENTSBUDGETAdjustmentforimporttoraisegradestonewminimumfloodelevation40/41QuantityUnitUnitPriceBaseBidPricing:Furnishandinstallrockimporttoraisegrade110,000ton$32.01$3,521,100Cleanfilldirttobalancesite14CY/LOAD1,221LOAD$98.00119,700Cutandfilltobalance17,100CY$2.2939,159Adjustmentforretainingwallsfor40/41elevation14,205SF$98.001,392,090Storm-costtoundergroundrailroaddrainageacrosssiterequiredbyraisedgradesPipelineincludingtrenching350LF$60.0021,000JunctionStructureconnectionatchannel1LS$1,950.001,950NewheadwallatRR1EA$1,950.001,950AdjustmentSubtotal:$5,096,949Rounded$5,097,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:StructuralandShoringPremiuimsADJUSTMENTSBUDGETQuantityUnitUnitPriceBaseBidPricing:GanahlSitePremium277,303SF$2.00$554,606RestaurantSite53,840SF$1.00$53,840StorageSite114,737SF$1.00$114,737GanahlFoundationsPremium184,869SF$2.00$369,737RestaurantFoundationsPremium35,893SF$1.00$35,893StorageFoundationsPremium76,491SF$1.00$76,491GanahlStructuralFraming184,869SF$2.00$369,737RestaurantStructuralFramingPremium35,893SF$1.00$35,893StorageStructuralFramingPremium76,491SF$1.00$76,491Shoringforexisitngslopesandsewer8,000SF$7.50$60,000AdjustmentSubtotal:$1,747,427Rounded$1,747,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:AdjustmentforOffsiteElectricalandTelcommRequirementsADJUSTMENTSBUDGETQuantityUnitUnitPriceBaseBidPricing:Electrical-costtomodifyexistingimprovementsfordecelerationlaneAdjustexistinghandholesdg&ecosts1LS$100,000$100,000Adjustexistinghandholeincludingsconduitandsubcontractorcosts1LS$150,000150,000Telecom/Data-costtorelocateexistingimprovementsfordecelerationlaneRelocatevault1LS$75,00075,000AssumesrelocationdirectlyadjacenttoexistinglocationAdjustmentSubtotal:$325,000Rounded:$325,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:ExtraordinaryUtilityAccess-GasADJUSTMENTSBUDGETQuantityUnitUnitPriceBaseBidPricing:Gas-anyoff-sitescopebeyondfirst100feetPipelineincludingcutting,trenching,patching1,320LF$140$184,800AssumesPOCshownnearwestendofAvenidaAeropuertoEasementdocsrequiredBasedonallinunitcostGasmain($140/LFto$155/LF).AdjustmentSubtotal:$184,800Rounded:$185,000KeyserMarstonAssociates,Inc.5/22/2019
LOWERROSANSITEIssue:AdjustmentforOffsiteSewerRequirementsADJUSTMENTSBUDGETQuantityUnitUnitPriceBaseBidPricing:Sewer-costbeyondfirst100feetoff-sitedistancebeyond100'635LF$44$27,940boring50LF$1,40070,000connecttomanhole1EA$2,4002,400cleanout5EA$6003,000pavingremove/replace600SF$2012,000AdjustmentSubtotal:$115,340Rounded$115,000KeyserMarstonAssociates,Inc.5/22/2019