A Business Case for Joint Development: California High Speed Rail Authority and Millbrae Serra Sta?on LLC Prepared for the California High Speed Rail Authority and the City of Millbrae by Land Econ Group as Consultant to MSS June 2017
June 2017
Objec?ves of This Proposed Joint Development Project • Sa>sfy all of the essen>al Millbrae Sta>on requirements of the CA HSR Authority • Sa>sfy the City of Millbrae’s top priority economic development objec>ves for Site 1 • Preserve Millbrae Serra Sta>on’s (MSS) development project that has been 10 years and $3 million+ in planning, design and engineering
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June 2017
The Exis?ng Land Ownership PaJern
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June 2017
MSS Has Fully Designed Development Project Ready for Approval
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June 2017
Ar?st Rendering of MSS Development Project
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June 2017
Recent Requirements from HSR • Acquire 50 feet of property to the west for by-pass track • Relocate California Avenue to the west • Previous Millbrae City Planner agreed to 55 feet width for new California Avenue • Total public acquisi>on land area amounts to approximately 93,600 SF out of MSS parcel of 153,700 SF • Remaining MSS parcel is 60,100 SF in a linear configura>on not suitable for any significant development • Acquisi>on of full MSS parcel is MAI appraised at $60 million or $390/SF (I would like to see appraisal)
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June 2017
Most Recent HSR Sta?on Concept
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June 2017
HSR Concept Requirements •
Concept dates from September 2016
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Requires assembly of en>re block surrounded by California Avenue, El Camino Real and Millbrae Avenue
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Acquisi>ons in addi>on to MSS parcel includes 11 private parcels and remnant of City of Millbrae parcel aYer California Avenue take
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Total addi>onal land assembly area and cost es>mated at 83,600 SF with average of $350/SF or $29 million
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Total land assembly cost for Site 1 block (excluding area for by-pass track and new California Avenue) is $89 million
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AYer detailed sta>on planning of parking requirements, disposi>on of surplus land area to developers is likely
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Timing and amount of disposi>on revenue is currently highly uncertain
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Legal/policy jus>fica>on for land acquisi>on in excess of sta>on parking needs is ques>onable 8
June 2017
Proposal for Joint Development from MSS •
MSS offers to exchange the 93,600 SF it is losing for by-pass track and new California Avenue for the 83,600 which HSR would assemble that includes one City parcel and 11 private parcels
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Since the ownership of Site 1 would be en>rely under MSS control, the streets (Isabel Alley, Serra Avenue and Linden Avenue totaling approximately 50,000 SF) would be abandoned to MSS
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MSS would in turn convey (either in fee >tle and/or via easement) half of that street abandonment square footage (25,000 SF) back to public use in support of the HSR sta>on
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The current an>cipated use of that 25,000 SF is 7,000 SF for drop-off curb cut, 8,000 SF for a public plaza and a 10,000 SF easement for sta>on entry galleria
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MSS would provide HSR sta>on parking at actual construc>on cost less net lease back revenue
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June 2017
Property Acquisi?on and Land Exchange
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June 2017
New Development Parcel that Meets HSR Requirements
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June 2017
Benefits of Joint Development for HSR •
Reduces front-end land acquisi>on cost from approximately $89 million to $29 million
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Gains a well designed and prominent Millbrae Sta>on entrance from El Camino Real
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Gains high density transit suppor>ve development at Millbrae Sta>on which is consistent with HSR goals
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Assures that Millbrae Sta>on parking requirements can be accommodated on Site 1
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Can earn parking revenue by leasing the spaces back to MSS to operate before and aYer sta>on opens
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In light of the growing popularity of the ride sharing companies such as LyY or Uber, HSR can avoid over-building parking by par>cipa>ng in a joint use garage
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A private developer such as MSS can likely build parking more cost effec>vely than HSR
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HSR can save on detailed Millbrae Sta>on planning cost and >me
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Eliminates the carry cost burden and return uncertainly of having acquired excess lands
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June 2017
Comparison of HSR Front-End Land Assembly Cost (in Millions of Dollars)
$89
HSR Goes It Alone
$29
HSR/MSS Joint Development
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 13
June 2017
Survey of Ride Sharing Passengers (Based Upon 34,000+ Responses in 20 Metro Areas During 2016)
Less Likely to Own Private Automobile Due to Availability of Ride Sharing Service
Likely to Use Private Automobile Less Due to Availability of Ride Sharing
57%
43%
Agreed
58%
Not Agreed
Agreed
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42%
Not Agreed
June 2017
Benefits of Joint Development for MSS • Preserves a major development project that has been in the works for 10+ years • Expands the project to three land uses by adding a hotel to beber spread development risk • Gains El Camino frontage to gain greater visibility and project value • May allow the new project to proceed to construc>on in the current strong real estate market cycle
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June 2017
Illustra?ve Massing Diagram
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June 2017
Benefits of Joint Development for City of Millbrae • Implements the City’s highest priority economic development objec>ve – major development on Site 1 • Includes a major hotel in the development that provides an annual return to the General Fund in the vicinity of $3 million
• Creates a more posi>ve development climate which will s>mulate other sites to follow 17
June 2017
Thank You Land Econ Group
June 2017