Project Analysis and Feasibility Report (2)

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Risks/OptionsNariables: The Proforma contains some risks and variables that are noteworthy. They includ~: 1. Construction estimates are tentative and subject to final design and competi ive bidding. 2. Utility and labor costs may exceed estimates over the next two years. 3. Interest rates may climb prior to obtaining final financing. 4. Demand for class A& B office space may drop resulting in higher vacancy rates and longer leasing time. 5. The amount of parking required/desired, including the 59 above ground sp es, and the associated cost has not been finalized. 6. Costs associated with remodeling of the Franklin Building and Courthouse ave been estimated but, are not included as a Courthouse Square expense. 7. A change in the cost sharing forniula between transit and the county could hift actual expenses. (There are currently two formulas which aze based on the origin I design). 8. A change in Salem's Streetscape funding could alter cost estimates to com ete the project. 9. Until such time as a private partner is selected to develop the north pad, the financial impacts on the total project are unknown. Once SPOC gives it's approval t the project, an RFP could be issued. 10 Addirional environmental cleanup costs may be incurred during the Opportunities: phase. There are several options under consideration that can minimize risks noted above. In addition, these options have the potential to reduce the service impact of the higher project r nts. They include: 1. The project contingency fund is $3.6 million. A reduction in the actual use of the project contingency has the potential to reduce the rental rate by up to $0.10 /sf or ore. 2. Profits generated from commercial leases in the Franklin Bldg. and Courth use Square could be used to offset assessments to county departments. 3. The ability to invest in quality and energy efficient building systems can r uce long term maintenance costs. The proforma represents a best guess estimate of expenses for a building which is t least two years from occupancy and still must undergo detailed design review and constructi n bidding. It does not take into account the benefits or impacts that private development of the orth pad will have on the project. Subject to the risks and variables noted above, we believe all relevant data and costs have been identified The county must rely on its consultants to constan y review and update these projections as the project proceeds. 3