Project Analysis and Feasibility Report (2)

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Analysis of the County's $1.30 rental rate Courthouse Square March 19, 1998 The county's project manager, Melvin Mark Company (MMC), has developed sev ral proformas analyzing the monthly costs and rental rates relating to Courthouse Square. The p oformas have been used to estimate the monthly rental rate chazged to county departments. The ost recent proforma estimates the rental rate at $1.30 /sf. Staff has used this rate in order to d budget and impact projections. However, we have not abandoned our goal of lowering the rat into the $1.20 range. For budgeting purposes, all savings generated in recent months have en placed in the contingency fund rather than used to reduce the rental rate. The proforma has two basic components. An analysis is includzd below: Debt Service: Debt Service for the project is estimated at approximately $1.00 /sf and represents e principle and interest payments on $21,115,717 in revenue bonds. The bonds will be repaid by using revenue generated from rent, leases, parking and ground leases. It should be noted owever, that ground lease revenue is not included in the proforma at this time. The specific t s of the financing package will not be determined until Bond Counsel completes the analys s of the project and the bonds are sold T'he amount to be financed includes an estimate of the pay ack of expenses already incurred, plus the associated financing costs. Debt service is affected by two variables, construction costs and interest rates. Co truction costs are 6-8 months old and most likely reflect the 1997 construction environment. Fin 1 construction costs ~~vill not be available until the fall of 1998 when competitive bids are receive Interest rates have been updated constantly, and as a result of greater public occupancy in the b ding, is now based on a tax exempt rate of 5.25% amortized over 25 years. Although the coun has received some indications that interest rates will remain low and construction costs may m erate as major conshuction projects in the Willamette Valley peak, there is a risk that costs associ ted with the debt service component will escalate' Given the fact that final design has not been mpleted and construction costs are dated, it is likely that total project costs could still escalate as fmal design is completed. Operations & Maintenance: Operations & Maintenance (O & Ivn has been estimated at $0.30 /sf. These cost e imates were prepared by Melvin Mazk Co. using their experience with the Robert Duncan Plaza Building in Portland. This building is occupied by govemment agencies. Attached, as exhibit , is the line ~Source: 12~' annual Coldwell Fianker market update, 1-28-98.