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maintain a budget estimate based on $130-1.35/sf. A$3.6 million underground parking structure was included in the cost estimate containing 335 stalls. The next significant change in the project scope occurred in February of 1997. Mr. Berrey was developing 60,000 sf of office space which the county would lease or purchase for future espansion. Our financial advisors suggested that the county build the expansion space and lease it to the private market. Mr. Berrey's proforma estimated the cost of this additional office space at $5.3 million. However, later cost estimates increased the cost of the expansion space to $13 million. As construction costs were refined the total cost of the projected had escalated to $37 million. The county's share of the project was now estimated at $25 million. During the months of May and June, the county asked our independent financial advisors to prepare an new proformas based on Mr. Berrey's estimates. These analysis' gave us the first indication that the original budget goals were unrealistic. The analysis continued after ivlr. Berrey's development role was terminated in June. The analysis indicated that the parking structure was oversized and was an economic drain on the project. Revenues necessary to support the project were over-inflated and the overall unit cost of the building was still too high. In addition, independent reports from the Salem business community raised concerns that the county could not, and should not, support the risk associated with overbuilding and leasing excessive expansion space. On July 31 1997, with the concurrence of our new developers (Melvin Mark Co.) the county stopped the design process and directed the development team to study new down-sized options for our consideration. The architects were asked to consider a smaller (one-level) parking structwe, reduce the size of the office building from 180,000 gsf to 150,000 gsf and separate the public and private portions of the development for easier and more flexible financing options. In our final analysis of the former design, it became clear that the building was inefficient in its allocation of space, contained too much espansion space and construction costs could not be reduced to an affordable level. Two of the most costly features of the old design was the office structure spanning 160 feet over the transit mall and the two-story underground parking structure. It is now believed that the old design would have required a rental rate of at least $1.65/sf and may have had an actual construction cost as high as $40 million. Work has progressed steadily, but cautiously over the past 4 months. The county has made it clear to all parties that we will not authorize final design work until a more efficient design has been analyzed. In the last two months, at least 5 proformas have been prepared by our developers. Their analysis indicates that the county can construct an office building containing 112,000 gsf for county offices of which 29,000 is expansion space. The county's financing cost is estimated at $19 million and the rental rate is in the $1.25 to $130 /sf range. The $130 rate will be used until such time as final design drawings, construction and financing costs are known. The county is still evaluating the number of parking stalls required. The stall count under revi.ew ranges from 192 to 256. The firm of C. Spencer Powell and Assoc. is conducting an analysis of our e;cpansion space and it impact on the Salem market.