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using the JDEDZ Transportation Fee which will be collected from "non -Costco" properties in the JDEDZ Project area as each develops, and with 40 percent of the city sales tax revenue generated by the new Pleasanton Costco store. Since it is unknown when "non -Costco" properties will develop and pay the JDEDZ Transportation Fee, the following calculation is based only on the city sales tax revenue generated from the Pleasanton Costco. According to the City consultants, Management Partners and HdL Companies, the anticipated city sales tax revenue from the Pleasanton Costco store will be between $1.8 and $2.1 million in 2024. (Up from the $1 to $1.3 million estimated in 2018). Using 40 percent of the anticipated city sales tax revenue, generated by Costco, or $0.72 to $0.84 million, the loan payback period will be between 13 and 15 years. If JDEDZ Transportation Fees are collected before the loan is paid in full the fees will shorten the payback period. If JDEDZ Transportation Fees are collected after the loan is paid in full, the fees will go to the City's General Fund to offset the sales tax payments to the loan. Conclusion The JDEDZ will revitalize the approximately 40 acres of underutilized land fronting Johnson Drive near 1-680 and Stoneridge Drive as envisioned since 2014. The JDEDZ requires public street improvements to reduce the impact of traffic from the new land uses. While an agreement was reached with Costco to construct the needed improvements in 2018, the estimated cost of constructing those improvements has increased significantly in the four-plus years since the Agreement was executed. Amendment One is proposed to modify the Cost Overrun provisions of the Agreement so that instead of being required to make direct reimbursement within 60 -days of receiving the final Cost Certification, a portion of the Cost Overruns will be included in the loan amount. Based on the Final Cost Estimate the amount of the Cost Overruns to be reimbursed within 60 -days is consistent with City CIP budgeting to date, and due to increased city sales tax revenue projections compared to 2018 the anticipated loan payback period remains similar to the period anticipated in 2018. Finally, the increased cost estimate allows the City Council to terminate the Agreement. Termination of the Agreement requires the City to reimburse Costco for half of the design costs incurred by Costco on the JDEDZ Project through the date of termination. As of April 28, 2022, according to the Cumming Group's most recent expenditure report, Costco has expended $3,248,202 toward the design of the JDEDZ Project. If City Council chooses to terminate the Agreement the City will be required to reimburse Costco approximately $1.,63 million. Page 10 of 11