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The $710,000 is considered a loan from Costco to the City with an interest rate of one- and-one-half (1.5) percent annually. The design and construction of the JDEDZ Street Improvements were estimated to cost a total of$12.86 million. The 2018 Agreement specifies that Costco will be responsible for $6,785,000 of the JDEDZ Street Improvements design and construction cost, and the City will reimburse Costco the $6,075,000 balance of design and construction cost from the JDEDZ Transportation Fee and 40 percent of city sales tax revenue generated by the proposed Costco store (Section 4.2.a). Again, the $6,075,000 is considered a loan to the City with an interest rate of one-and-one-half (1.5) percent annually. The acquisition of the right-of-way needed for the JDEDZ Street Improvements was estimated to cost $1.5 million. The 2018 Agreement specifies that Costco will reimburse the City $750,000 of the acquisition costs (Section 3.9). The 2018 Agreement further specifies at project completion $750,000 will be added to the loan balance, but the right- of-way loan balance will not be charged interest (Section 4.2.b). 2018 Agreement Reimbursement Terms for Cost Overruns The 2018 Agreement defines "Cost Overruns" similarly for both the Stoneridge Drive and 1-680 Project and the JDEDZ Street Improvements as the final Cost Certification less the Planning Level Estimate (Sections 3.5 and 3.6). While the Final Cost Estimate is not the final Cost Certification, for purposes of this agenda report the Final Cost Estimate is used to predict the expected Cost Overruns. The difference between the Final Cost Estimate and the Planning Level Estimate indicates the Cost Overrun for the Stoneridge Drive and 1-680 Project will be $6,036,332 and the Cost Overrun for the JDEDZ Street Improvements will be $4,993,054. The 2018 Agreement states the City must reimburse Costco for the Stoneridge Drive and 1-680 Project Cost Overrun within 60-days of approving the final Cost Certification (Section 4.1). The 2018 Agreement states that Costco is responsible for half of the JDEDZ Street Improvement Cost Overrun (Section 3.5), and also requires the City to reimburse Costco the other half, or $2,496,527, within 60-days of approving the final Cost Certification. (Section 4.2.c). Proposed Amendment One The proposed Amendment One to the 2018 Agreement modifies the Cost Overrun reimbursement provisions by allowing some of the Cost Overruns to be added to the loan and reimbursed according to the loan terms (increasing the loan) instead of requiring the Cost Overruns to be reimbursed in full within 60 days following approval of the final Cost Certification. For the Stoneridge Drive and 1-680 Project, Amendment One caps the direct reimbursement to $11.6 million, which is equal to the $6.4 million stated in the 2018 Agreement and the $5.2 million available from the ACTC grant accepted for the project in 2021, with the balance of$1,546,332 of the cost increase being reimbursed through the loan. For the JDEDZ Street Improvements, Costco and the City split the cost increase above the Planning Level Estimate equally, and the half the City is required to reimburse Costco ($2,496,527) is also added to the loan instead of being due Costco within 60 days of the approving the final Cost Certification. Amendment One is included as Attachment 5. The effect of proposed Amendment One, in relation to city Page 7 of 12