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Memorandum May 19,2014 EPSP Economic Feasibility Analysis Page 3 (Th Economic Sensitivity Analysis The economic sensitivity analysis developed by EPS was used to test a range of development and policy outcomes. This sensitivity Is provided to account for the significant level of uncertainty associated with the key-assumptionsthat have a substantial impact on the economic performance of the EPSP Project. Specifically, in addition to the land use program (number and type of units) which vary by alternative, the key feasibility factors assessed separately herein Include (1)the potential for on-site affordable housing, (2) credit for future absorption under the City's Growth Management Ordinance, (3) the use of a Mello-Roos Community Facilities District (CFD) bond_to finance-project wide infrastructure, (4) optimization of land values by maximizing valuable residential product types and densities, and (5) the use of a portion of the site for open space, parks and trail facilities. These factors are embodied in the following sensitivity runs: • Baseline: Reflects a development outcome with the annual absorption of 100 market-rate units per year. For the 1,300-unit alternative and above; It reflects infrastructure development cost phased over the first three years in Phase 1, over two years in Phase 2a, and over two years in Phase 2b with specific timing assumptions based on the preliminary conceptual program developed by Kier&Wright. The other development alternatives reflect an expedited 5-year development cost timing. While there remains.a high level of uncertainty associated With this infrastructure costs phasing, it is recognized the developers will need to be able to optimize the cost of some infrastructure components to correspond with project absorption. The actual infrastructure investment timing will need to be further evaluated based on more detailed discussions with civil engineers and property owners/developers. • On-site Affordable Housing: Assumes 50.affordable.units provided_through an 11-dwelling ad ,,t• units- per-acre product type. The units are assumed to be provided ast ar rental product at 80 A5 ('o''" spiv—percent of Area Median Income (AMI), or a sales price of$250,000 per affordable unit. The lat;"5 remaining market-rate single-family detached units range in density between 4 and 11 (.0 PC dwelling units per acre and are assumed to be subject to the affordable housing fee.3 • Accelerated Absorption: Reflects faster upfront absorption based on the maximum development capacity supported by the upfront infrastructure Investment identified by Kier& Wright. Specifically,this Investment"Is tested at an annual_average of250'market units per year for the first two years and 200 units a year thereafter. It is understood that this absorption average is a proxy for a more sporadic absorption that will vary due to a range of external factors and Will require-upfront credits against future allocation under the Growth 'Management Ordinance. 3 This sensitivity applies to the development alternatives of 1,300 units and below. The 50 indusionary units are assumed to satisfy a portion of the fee requirement with the remaining market- rate units subject to the Affordable Housing Fees of$20,000 per unit. P:u21000 21CSO.w. snrconaM210Y0-mtiOS]ON.Env