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Memorandum May 29,2014 EPSP Economic Feasibility Analysis Page 10 • The transfer station relocation cost.Is assumed at$2.5 million. In addition, the costs assume $6 million for community amenities, such as park facilities, landscaping, trails, and fences. Pursuant to the City's Park Ordinance, the development is assumed to receive a park fee credit of between $4.9 and 17.0 million, depending on the development alternative, as compensation for dedicating all of the public park land within the EPSP area. • The project-wide infrastructure costs indude 20 percent for soft costs plus a 25 percent contingency factor. It is assumed that a soft cost of 6 percent of direct infrastructure costs would be incurred upfront, with the remaining 14 percent proportionate to the timing of direct infrastructure costs. • On the commercial development side, this analysis reflects development of 91,000 square feet of retail in the middle of Phase 2, but no other non-residential uses. This is because retail is the only commercial use with positive land value, whereas office and industrial uses are less certain given their estimated negative land values under the current market conditions. The feasibility assessments assume no land costs associated with office or industrial uses. While office and or industrial may eventually generate value, this could be off-set by the fact that less than the maximum allowable retail program may be developed due to a range of market, location, and site-specific constraints of the Project as a retail location. • All development altematives.assume that Mello-Roos Community Facilities District proceeds are used to fun; • • - infrastructure. Specifically, this special tax is assumed to generate monthly revenue of$150 pe- ' ' , -• _ • -• -- - - • gher, C' additional charges would likely have an adverse effect on price. This analysis assumes that bonds are available for the Project with a 10 percent coverage and a 6 percent Interest rate on 30-year bonds. If Mello-Roos debt is not available in small increments, as assumed herein, project feasibility will be negatively affected due to increased debt carrying costs. Consequently, the City may want to consider the merits of selecting a development scenario that requires a CFD to be financially feasible. • The analysis assumes that the City's transportation and in lieu park dedication fees are credited to the Project based on its improvement of El Charm Road and dedication of park land at the 5 acre per 1,000 resident ratio required to not pay the fee. The credits are based on the absorption of residential and retail uses and vary by alternative. • A predevelopment cost of$3 million is assumed. This is a ballpark estimate that reflects the developer's carrying cost on the land and entitlement investment made through the Specific Plan approval. This analysis assumes a land take down payment of$300,000 per acre by the developer and is based on comparable raw land values in the Tri-Valleys. The gross land acreage is assumed to be taken down in even Increments during the first five years of the Project and excludes office and industrial acreage. 6 Land takedown is a raw land value measure reflective of the upfront horizontal developer land acquisition cost prior to making infrastructure Improvements and selling improved land pads to vertical builders. o:unwouII990 •,Wotammll7)99Jm_onp 1.•ua