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years. Note this calculation assumes city sales tax revenue generated by Costco remains at the city consultants anticipated in 2024 over the entire payback period. Also, 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 payments on the loan made with sales tax revenue generated by the Pleasanton Costco. 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 2018 Agreement was executed. Amendment One is proposed to modify the Cost Overrun provisions of the 2018 Agreement so that instead of being required to make direct reimbursement of the Cost Overruns within 60 days of approving 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 does allow the City Council to terminate the 2018 Agreement. Termination of the 2018 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. (Note the expenditure reports prepared by the Cumming Group only include direct payments made by Costco toward the design and implementation of the JDEDZ Project traffic mitigation measures, and no other Costco expenses, such as Costco staff time, legal costs, etc. are included in the reports.) If City Council chooses to terminate the 2018 Agreement the City will be required to reimburse Costco approximately $1.63 million. While termination is an available option, the recommendations in this agenda report assume City Council will choose to proceed with the implementation of the JDEDZ Project. Should City Council decide to terminate the 2018 Agreement due to the increased costs, Costco will prepare a final Cost Certification of all design and implementation expenses that are allowed by the 2018 Agreement and submit it to the City. Staff will review the final Cost Certification and present it to City Council at a future meeting, along with a recommended budget adjustment to fund the City's share of the expended costs. Page 11 of 12