Development Team Meeting Notes (96-99)

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difference using 10 cents per million, depending on the interest rate available. Randy also had an issue with assumptions made at Tuesday's meeting. It was assumed that transit was in budget and everything else fell into county costs. Exact costs for each partner were not known. Per Dave's numbers a couple weeks ago, costs were up above transit's budget. The model did not reflect true transit costs. If transit is out of budget, it shows up as a county shortfall. Discussion was held on how to anive at true costs. If changes are being made in the design, without a good starting point, we won't get to the end result. County was overwhelmed and in shock as a result of Tuesday's meeting. RG added that in review of the numbers, it appears with a debt reserve of $2 million and changing from a 7.5% to a 5.5% interest rate could have made up more than $3 million. MNIDC stated that the reserve wasn't included in the bottom line total. Ken had concerns over the numbers being generated at $1.65 vs. the older cost of $1.78. Is the new building flawed? Currently the Equitable building is renting at $1.18-1.20 now and 1999 projections are at $1.30. Randy had concerns and frustration over the difference between numbers generated by MNIDC and the bond people that was being calculated differently. He has concern with public perception and trying to explain how a deficit of anywhere from $3-7 million could have happened. Based on what he has now, he can't pinpoint it, and would need some justification for paying consultants close to $1 million and he still has no answers. It is critical that everyone is on the same page and we may be getting there. It is important that all ~y consultants paid to analyze this project, all agree on a goal and where we are. It is hard to solve a problem when you don't know where the target is. NIlVIDC and Ken expressed their lack of confidence in the previous model. Craig clarified that the $1.65 is at the upper end. They have been working for 3 weeks, but numbers have been out there for 8 months and those numbers were flawed. It is a process or refinement of where we are today. Ken recognizes the process and was not a part of it. There seem to be different concepts on how the land was treated in the model. Randy felt Mike left out the first step of the starting point of $33.8 million less the $5.3 million land value to get to the $28.5 million figure, which was reduced to $19.5 million in his explanation the other day. MNIDC is expecting to receive additional input from Mark for the model. Their goal is to reach $1.60 and then work creatively on cutting another $800,000 to $900,000 out of the numbers by working on the parking and value engineering. Byron added that Dave was put on the spot to price the second phase very quickly and there may be additional savings available. Dave felt comfortable with the structural portion based on information received last week. There may be room in the mechanical and skin treatment. It is too early to tell what this potential might be. Randy brought another issue to the table. He had been cautioned prior to not go this way but, in working with 100% county tenants and focusing on the Franklin building that would increase occupancy by 25,000 square feet. While decreasing the expansion space, it would still leave about 24,000 square feet or slightly less than one floor in the building that we won't need. I ~ Page 3 of 7