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Financial Feasibility and Fiscal Impacts As was noted previously during the August 2022 City Council meeting, sales tax revenue generated by the mall has steadily declined, more steeply since 2015, attributed principally to the growing popularity of e-commerce and impacts from the COVID-19 pandemic. Despite this trend, the location of the mall near two major freeways, in close proximity to BART, and in a desirable community makes the mall area a valuable asset from an economic perspective. With regard to retail, the mall's owner Simon Property Group reports seeing a relatively good recovery among its tenants, and its outlook on the prospects for the ongoing health of the mall's core retail shops and anchor tenants remains very positive. Further, all owners have expressed an interest in potential diversification of land use. EPS notes that based on the types of uses being considered, high-density residential and office are likely to be well-received by the market, followed by office and hotel; the success of existing retail will likely be tied to overall redevelopment efforts. Financial Feasibility of Conceptual Scenarios While the conceptual scenarios could be expected to be economically viable over the long-term, they are also subject to fluctuating market dynamics, and high cost of development including infrastructure, financing, and amenities. Of the various land uses referenced in the conceptual scenarios, high-density residential is likely to provide the greatest investment return to a property owner; a large office building, such as Workday, could also be favorable given the proximity to BART. New retail construction is not as likely to "pencil" unless it is integrated with other land uses, such as high- density residential or large-scale office. Fiscal Impact EPS provided a high-level analysis of the fiscal impact of the conceptual scenarios (i.e., impact of the proposed land uses to the City's General Fund budget relative to existing baseline conditions). The EPS analysis indicates that the fiscal performance of the three scenarios relative to baseline conditions is highly sensitive to key assumptions related to the future performance of the retail uses at the mall. If property owners are unable to find desirable tenants to fill existing vacant spaces (e.g., those formerly occupied by Sears and Nordstrom), then redevelopment for high-density residential and potentially office or hotel, will have a positive impact on the City's General Fund budget relative to baseline conditions (i.e., existing large vacant tenant spaces). Alternatively, if the existing vacant spaces would otherwise be re-tenanted by highly successful retail tenants, this outcome would likely be slightly preferable from a fiscal perspective as compared to the baseline conditions. However, among the scenarios themselves, there is not a significantly more positive or negative fiscal outcome for one (compared to baseline conditions), when compared to each other. Finally, across all of the scenarios, there is a positive fiscal balance for the City, in that the General Fund revenues estimated from the future land uses (e.g., sales and property tax), would in each case be greater than the cost of providing services to the project area. Page 14 of 17