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S` C~ '~c,~,P ~° ; ~e /~ ~ Summary Report regarding C%~ ~ ~ Courthouse Square G G ~'y (Nov. 14, 1997) - Purpose: The following is a brief overview of the project development with specific emphasis on Marion County's interests and needs. Background: In 1995 the county owned approximately 85% of the Senator Block. The county had been acquiring ownership of the block since 1974 when we purchased the old Senator Hotel. The aging condition of the Senator of£ce building and the need to move county departments out of the Courthouse necessitated the county to prepare a master facility plan in 1993. The plan concluded that the county should maintain its primary government office buildings in downtown Salem. On three occasions since the late 1970's, the city, county and transit district recognized the Senator block as the preferred site for a transit center and also encouraged joint development as the best use of the site. In 1996, the availability of $7 million in federal funds and up to $2 million in urban renewal funds made the project a reality. Original Proposal: In February of 1996, proposals were requested to solicit a developer for Courthouse Square. The request for proposals (RFP) stated the county needed 50,000 sf of office space in the first year (1999) with an additiona160,000 sf needed for growth over a 20 year period. Developers were asked to include a design for 250 parking spaces in the proposal. Dan Berrey of Prudenrial Real Estate Professionals and his development team consisting of Arbuckle Costic Architects and Pence/Kelly Construction was chosen to complete the project. (Note): Based on an analysis of available class A/B office space in the downtown area, the county concluded that if it had to purchase an existing office building or lease space for departments being displaced from the Courthouse, the lease rate would be at least $1.20/sf. This rate was chosen as a goal for rates paid by county departments in Courthouse Square. Evolution of the Design and Cost: The fust proposal by Mr. Berrey was for a 186,000 gsf office building cosring an estimated $34,000,000. An above-ground parking garage containing 642 parking stalls was included. Lease rates for the county, depending on different options, ranged from $0.89 to $1,42/ sf. In the original proposal, the county would not obtain an ownership position unless a residual payment estimated at $38 million was paid. Beney was requested to modify his original proposal by a special review committee when it was determined tax exempt financing could be used. By August of 1996, a preliminary financial analysis indicated the county would need to finance $14 million in order to acquire ownership of 72,000 sf of office space. The rental rate, paid by county deparhnents, to cover operations & maintenance (O&M) and debt service, ranged beriveen $1.20 and $1.40/sf. In December of 1996, Mr. Berrey produced the first financial analysis (proforma) based on a conceptual design and cost estimates from the contractor. The total project cost was estimated at $30 million. The county would own 72,000 sf at an estimated cost of $12.8 million. The proforma estimated a rental rate of $1.17/sf. However, Mr. Berrey cautioned the county to