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Memorandum May 29,2014 EPSP Economic Feasibility Analysis Page 6 • Cumulative Effect A combination of faster absorption and a land value increase has a compounding effect on the development return. This scenario is necessary to justify development of 1,000 units, with the 1,300-unit alternative as well as the Preliminary Draft EPSP also becoming feasible. The 500-unit and 800-unit alternatives remain infeasible even under these optimistic assumptions. • Cumulative Effect with no CFD: Elimination of CFD proceeds has a negative effect on development feasibility of the Project. The 1,300-unit scenario remains feasible with no CFD proceeds, while the 1,000 and the Preliminary Draft EPSP scenarios become infeasible. Consequently, the City may want to consider the merits of selecting a development scenario that requires a CFD to be financially feasible. • Parks and Open Space: As mentioned above, this development alternative has not been subjected to the same level of feasibility analysis as other alternatives above because the cost of the site used solely for parks and open space can be quite high and funding sources are scarce. Based on comparable large-scale projects, EPS estimates the land acquisition cost for park use ranges between $10,000 and $50,000 per acre and varies based on a range of site and market conditions, location, appraised value, alternative land uses, and site conditions (note that current property owners might require more than this given that much of the site is currently designated for some form of urban development). Construction costs vary significantly depending on active and passive uses desired. Additionally, operating and maintenance costs associated with these types of facilities typically range from $50 and $1,000 annually per acre for passive open space to $10,000 to $15,000 per year for more Intensive park improvements. Key Assumptions The key findings described above incorporate the following assumptions: • The Infrastructure cost and timing estimates for all development alternatives are based on the preliminary and conceptual program developed by Kier&Wright with input from the City Public Works Department and from the EPSP property owners/developers. The costs, summarized in Table 2 with underlying assumptions in Table 3, are assumed to be incurred over a five to seven-year period, depending on the number of units in each alternative, and are generally front-loaded.5 For the purpose of this analysis, the total infrastructure cost estimate does not vary by alternative. While this is designed to reflect the general optimized nature of the infrastructure phasing, the actual ability to phase infrastructure will depend on many factors that have not been evaluated in this exercise. Given the importance of infrastructure phasing to overall project feasibility, It will be Important to verify the accuracy from both policy and engineering perspectives. It is recognized that further analysis will need to optimize the cost timing assumptions based on relationships between project phasing, development absorption, and Infrastructure capacity and costs. B Table 2 costs exclude the school contribution amount, assumed In year 12 under the conservative cost scenario. School contribution varies by scenario. r.UU2XOoOU21•90FaawmmmMr.nU fo••_mm•Q•U.an,