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 1985.• Last updated in 2007.• 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 6503.5.

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 5th – Email 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

1 Update current benchmark methodology for docks and buoys

$0.79 $377

2 Keep current Benchmark methodology for docks, but apply dock rental rate to buoy areas.

Same as No. 1 $1,550

3 Rent for docks & buoys based on 9% of appraised land value. Preliminary value estimate of $50/SF.

 

$4.50 $8,831

4a Buoy 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)

4b Dock 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) ---

5 Use paired sales analysis to isolate value of submerged land.

Consultant

Sample Rent Under the AlternativesCounty Location PlacerDock 1,150 Sq. Ft.Use Area 2,887 Sq. Ft.No. of Buoys (25-ft swing area) 2Buoy Area (based on 25-ft. swing area) 1962.5 Sq. Ft.

SampleNo. Alternative   Docks Buoys Rent

--- Current benchmark 

$0.804 $340 $2,765

1 Update current benchmark methodology for docks and buoys

$0.79 $377 $2,803

2 Keep current Benchmark methodology for docks, but apply dock rental rate to buoy areas.

Same as No. 1 $1,550 $5,150

3 Rent for docks & buoys based on 9% of appraised land value. Preliminary value estimate of $50/SF.  

$4.50 $8,831 $29,333

4a Buoy rent based on direct comparison. Rent shown is for Placer Co.

--- $3,932 $7,864

4b Dock rent based on buoy rent (from No. 4a). Rent shown is for Placer Co.

$2.00 --- $5,187

  Total 4a & 4b 

    $13,051

5 Use paired sales analysis to isolate value of submerged land.

Consultant N/A 

Staff Recommendations - Docks  Method Rate / Rent Pros Cons

1 The 2012 Lake Tahoe Benchmark

$0.79/SF Based 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.

2 Pier 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.

3 9% 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  Method Rate / Rent Pros Cons1 The 2012 Lake

Tahoe Benchmark$377 per buoy Based on average rate of

change from last Benchmark rate.

Different methodology for buoys than recreational piers.

2 Direct 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.

3 Apply 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.