87-124 AUTHORIZING SALE OF LAND 300 BLOCK WEST 1ST DRIVE

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� Page 4 INCOME APPROACH �Ir. Landholt advised the appraiser that the property is currently leased to Mr. �Ielnik for a 20 year term from 7-29-75 to 7-29-95 at �200.00 per month net which amounts to $2,400 per year. The lease was not reviewed but it is assumed that it is a net lease to the City and that all of the site improvements such as surfacing, curb- ing, etc. , were installed by Mr. Melnik and are to be maintained by him. Since the su�'ect lease to Melnik is ne � t the onl_y basic question is what rate at which to capitalize the net income stream. Market data was not plentiful for land leases in Decatur but the follow- ing were among those considered: LEASE 1 Land lease at Northtown Ford on E. Pershing Road for 5 year term for period 1984-1989 was based on .09� rate of return. Figure arrived at by arbitration. LEASE 2 1984 valuations of two leased tracts of land in the Pershing-Monroe- N. Water area of the city was at a 10� rate in 1984 when the general interest structure was higher than today. LEASE 3 A 1983 land lease on the land occupied by the Hardee Restaurant at the Southeast corner of E. Pershing and V. Water reflects a base rent of $27,500 per year plus percer.tage of sales. 20 year lease term with options. Lease to be adjusted every 3 years based on C.P.I. Based on $7.50 S.F. for land overall rate was .094�. LEASE 4 The 1984 land lease for the Bob Evans Restaurant on N. Water Street is for 20 years with options. Tenant to pay pro-rata share of taxes, insurance and maintenance for the entire mall area. Rent starts at �20,000 net annually and increases over the 20 year period. Based on $5.00 S.F. for land the rate of return would be .092�. ' Thus, after reflecting on the above a reasonable capitalization rate for subject would appear to be in the .09� area. If we capitalize the net annual income of $2,400 which applies until 1995 (�2,400 = .09) we obtain an indicated full value of �26,66i which is rounded to �26,700 and is the estimated value as of April 18, 1986.