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The first technique which is the market rent analysis versus the cost to build on a direct <br />comparison basis, indicates the market rent analysis scenario results in a higher cost in present <br />dollars to the County than the cost per square foot to build the structure. The mazket rent cost per <br />square foot using the market oriented discount rate is $218.54 per square foot and $243.19 square <br />foot using the project oriented discount or interest rate. Both exceed the $181.80 per square foot <br />cost in the building cost scenario. <br />The second technique which is the comparison of the market rent versus the contract <br />rent/ownership analysis indicates a similar pattern when the present value of the reversion is <br />deductsd from the analysis for comparison purposes. The market rent cost per squaze foot using <br />the market oriented discount rate is $218.54 per square foot and $243.19 per square foot using <br />the project oriented discount or interest rate. Both exceed the $164.95 to $177. 65 per square foot <br />cost range in the contract rent/ownership scenario. <br />In summary, the techniques using present value analysis (discounted cash flow analysis) supports <br />the build and contract rent/ownership scenarios as being the least cost per square foot to Marion <br />County for the office/parking provided in the Courthouse Square project. <br />Graphic Presentation <br />Also, you have requested that we present a graphic representation of the conclusion in our report. <br />On the following pages are graphic illustrations of our techniques described as follows: <br />(1) The first chart presents a graphic comparison of dollars per square foot for both <br />techniques; and . <br />(2) The second chart presents a graphic comparison of the annual growth in cunent dollars of <br />total annual market rent (escalated at 2% per year) compared to the scheduled contract <br />rent. The contract rent is also escalated 2 percent per year. However, the escalation is <br />applied only to the $.30 per square foot of the $1.30 per square foot monthly contract rent, <br />because the $.30 per square foot represents the expense portion of the contract rent with <br />the balance of the contract rent remaining flat. A 2 percent growth rate is a conservative <br />estimate with cunent rental escalations being in the 3 to 4 percent range. <br />C98052 PALMER, GROTH & PIETKA, INC. iS <br />