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According to the contract for professional services, we have compared the present value of the cost of renting space at market levels for Class A/B buildings with the projected construction cost. Additionally, we compared the present value of the cost of market rent to the present value of scheduled contract rent and reversionary value of the building. The specified period is fiscal year 7uly 1, 1999, to fiscal year 2025, which is represented as a 26-year period. The estimatsd market rent is based on a market rent survey of Salem CBD Class A/B buildings. The concluded lease rates will then be analyzed (using discounted cash flow analysis) with a discount to present value of the proposed total lease income for the Marion County space compared to the reported cost to build the Marion County office space, exclusive of the Transit District's contribufion. This technique will be identified as Technique 1. The second technique will compare the present value of the lease income stream to the proposed contract/ownership, which includes the proposed contract amount ($1.30/SF) plus the reversion at the end of the 26-year period of the land and building value. These two techniques will be summarized in the Summary section. The Salem office market is influenced by the overall economic influences ~on the Salem metropolitan azea. The area has displayed positive economic influences, with tlie recent U.S. Territory 1998 Regional Economic Review and Forecast by the Economics Department of US Bank stating: "The Salem metropolitan area offers the stability of a state capitol complex, a productive, diverse agricultural sector, forest products, one of the State's most popular tourist destinations, a growing technology sector, and the stimulus of a private university. All of this is within one hour's drive of a large, rapidly growing urban area. This is a combination that should result in continued strong growth in Salem, despite the leveling out in the State government complex." According to information from the Salem/Keizer Market Update 1997 Overview and 1998 Forecast provided by Coldwell Banker, the Salem area's office market remained healthY in 1997, closing the year with a 5.9 percent overall vacancy rate. The vacancy rate has increased slightly ove.r 1996 because of new construction completion, and a change in the methodology of tracking spac;e. The report indicates that State and County govemments continue to lease space, occaPyu-g former. retail buildings and new Class A office space because they are unable to find large blocks of contiguous space elsewhere. The report indicates that the State entered into and renewed leases 7 C98052 PALMER, GROTH & P[ETKA, INC.