REPORT ON THE L A K E T A H O E B E N C H M A R K

Lake Tahoe Los Angeles Eureka Sacramento Owens Lake San Francisco

Lake Tahoe Benchmark Been in use since Last updated in Currently used for more than 70 leases. Will be used for 600 previously rent-free Recreational Pier Leases as they come up for renewal and conversion to rent-paying leases pursuant to PRC

Overview January 29, 2012 – Commission Meeting February 13 - Staff invites Stakeholders to meeting to seek input. February 29 – Stakeholder Meeting. March 29 – Commission Meeting. Update to Commissioners postponed due to lack of input. April 5 th – Reminder to Stakeholders for input. April 30 – Another reminder to Stakeholders. As of May 24 – Total of 5 comments received.

Lake Tahoe Benchmark Methodology The Benchmarks for docks and buoys are based on a market survey of commercial marinas. The current (2007) Benchmark for docks is $0.804 per square foot. The current Benchmark for buoys is $340 per buoy, Benchmark for docks is not based on a simple formula that is easy for the public to understand. Benchmark for buoys is based on the rate of increase in the market, as surveyed, since the last Benchmark date.

Stakeholder Input 1.Curtis Sproul (attorney) – Comments related to swim areas, not Benchmark methodology per se. 2.Kevin Agan (consultant) – Recommended a methodology tied to the cost to install the docks and buoys, and not on the value of the Public land. 3.William Threlfall (property owner) – Comments related to enforcement and having a non- operational category for buoys. No comments on methodology.

Stakeholder Input (Con’t.) 4.Greg Price ( property owner) – Recommended tying annual rent for buoys to 5% of market rate. Recommended establishing a Benchmark based on 5% of the seasonal market rate for a 25’ slip and then applying it to the number of “safe berth locations” on the dock (catwalks, boathouses, etc.). Proposal does not appear to include rent for footprint of actual dock structure. 5.Tahoe Lakefront Owners’ Association – Criticize current methodology. Propose use of either a Flat Rate Method or a Revised and Discount Benchmark. Both methods employ the criticized CSLC benchmark rate. Haven’t had sufficient time to analyze.

Alternatives 1.Update and continue to use current methodology. 2.Base buoy rent on current dock rate (variation of #1). 3.Base rent for docks and buoys on 9% of appraised land value per CCR ( Title 2, Division 3, Chapter 1, §2003 ). 4.a) Buoy rent based on direct comparison to buoy rates in marinas. 4.b) Dock rent based on per SF rate derived from direct comparison of buoys (variation of 4a). 5.Paired sales analysis.

Alternatives Alternative Docks (Per SF)Buoys (Per Buoy) ---Current benchmark $0.804$340 1Update current benchmark methodology for docks and buoys $0.79$377 2Keep current Benchmark methodology for docks, but apply dock rental rate to buoy areas. Same as No. 1$1,550 3Rent for docks & buoys based on 9% of appraised land value. Preliminary value estimate of $50/SF. $4.50$8,831 4aBuoy rent based on direct comparison. Rents would range from $1,163 (El Dorado Co.) to $3,932 (Placer Co.), or be based on overall average of $2,701 per buoy. ---$2,701 (overall) 4bDock rent based on buoy rent (from No. 4a). Would range from $0.59 (El Dorado Co.) to $2.00 (Placer Co.), or be based on overall average of $1.38. $1.38 (overall)--- 5Use paired sales analysis to isolate value of submerged land. Consultant

Sample Rent Under the Alternatives County LocationPlacer Dock1,150 Sq. Ft. Use Area2,887 Sq. Ft. No. of Buoys (25-ft swing area)2 Buoy Area (based on 25-ft. swing area) Sq. Ft. Sample No.Alternative DocksBuoysRent ---Current benchmark $0.804$340$2,765 1Update current benchmark methodology for docks and buoys $0.79$377$2,803 2Keep current Benchmark methodology for docks, but apply dock rental rate to buoy areas. Same as No. 1$1,550$5,150 3Rent for docks & buoys based on 9% of appraised land value. Preliminary value estimate of $50/SF. $4.50$8,831$29,333 4aBuoy rent based on direct comparison. Rent shown is for Placer Co. ---$3,932$7,864 4bDock rent based on buoy rent (from No. 4a). Rent shown is for Placer Co. $ $5,187 Total 4a & 4b $13,051 5Use paired sales analysis to isolate value of submerged land. ConsultantN/A

Staff Recommendations - Docks MethodRate / RentProsCons 1The 2012 Lake Tahoe Benchmark $0.79/SFBased on the principle of substitution, i.e., rent for a slip in a marina. Not simple or easy for the public to understand. Basis is slips that are rented on a seasonal basis, but the benchmark rent is extrapolated to annual basis to reflect that the facilities occupy State lands year round. Some have questioned the applicability of commercial rates to private recreational use. 2Pier rent extracted from the Direct Comparison Method for buoys $1.38/SF (overall); $0.59/SF (El Dorado Co.); $2.00/LF (Placer Co.) Simple & easy to understand. Based on market data. Consistent with buoy methodology. Not apples to apples (i.e., buoys to piers). Does not adequately reflect the owner's investment in the pier. Reflects seasonal usage only, not year-round occupancy by the dock. 39% of appraised value of the leased land per the California Code of Regulations. Will vary.Reflective of specific property location and physical characteristics. Rate is set by Code. Does not provide efficiencies or consistencies for Commission staff. Based on preliminary information, will most likely result in significantly higher annual rents.

Staff Recommendations - Buoys MethodRate / RentProsCons 1The 2012 Lake Tahoe Benchmark $377 per buoyBased on average rate of change from last Benchmark rate. Different methodology for buoys than recreational piers. 2Direct Comparison Method $2,700 per buoy (overall); $1,160 per buoy (El Dorado Co.); $3,900 per buoy (Placer Co.) Simple & easy to understand. Based on direct comparison of market data. Rents would be significantly higher than under the current methodology. 3Apply recreational pier rate (per SF) from the 2012 Benchmark to buoys $1,550 per buoy ($0.79/SF) Methodology and per SF rate consistent with piers. Overall methodology is not simple or easy for the public to understand. Basis is slips that are rented on seasonal basis, but this benchmark rent is extrapolated to annual basis. Some have questioned the applicability of commercial rates to private recreational use.