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SR-01-28-2014 -7A - SUPPCity of City Council Report Santa Monica City Council Meeting: January 28, 2014 Agenda item: 7-A To: Mayor and City Council From: David Martin, Director of Planning and Community Development Subject: Development Agreement 10 -002 for the construction of a mixed -use project consisting of 473 rental housing units, 25 artist work/live units, approximately 374,434 square feet of creative office space, approximately 15,500 square feet of restaurant space, and approximately 13,891 square feet of retail space. Address: 1681 26th Street Applicant: Hines 26th Street LLC Property Owner: Hines 26th Street LLC Executive Summary This report is a supplement to the staff report that was previously provided to the City Council and includes sections regarding the project's compliance with the California Environmental Quality Act, value enhancement analyses, and the financial feasibility of project alternatives. Environmental Analysis In accordance with the California Environmental Quality Act (CEQA), an Environmental Impact Report (EIR) was prepared to determine the environmental effects of the proposed project. The original project studied in the Draft EIR studied an approximately 766,094 square foot mixed -use development with approximately 70 percent of the square footage dedicated to commercial use (541,822 square feet) and approximately 30 percent of the square footage dedicated to residential use (325 apartments) [ "the original project "]. However, subsequent to the publication of the Draft EIR, the applicant elected to pursue development of a Project substantially similar to Alternative 3, which was thoroughly described and analyzed in Chapter 5.0, Alternatives, of the EIR. This alternative would result in an approximately 762,976 square foot mixed -use development with an increase in residential uses and decrease in commercial square footage. Specifically, Alternative 3 would comprise 498 rental residential units, 375,585 sf of office, 15,500 sf of restaurant, and 13,891 sf of retail space. As analyzed in Chapter 5.0, Alternatives of the EIR, Alternative 3 would not result in new significant impacts or increase the severity of previously identified significant impacts. The EIR determined that Alternative 3 would be similar to the original project's impacts and would reduce environmental impacts to Greenhouse Gas Emission and Transportation/Traffic. Therefore, Alternative 3 would not change any of the conclusions reached in the EIR. In accordance with Section 15082 of the CEQA Guidelines, a Notice of Preparation was published on November 16, 2010 for a 30 -day comment period which indicated the City's intent to prepare an EIR for the project. An EIR scoping meeting was held on December 8, 2010 in order to provide an opportunity for interested persons to provide input into the scope of issues to be studied in the EIR. On January 12, 2012 a Notice of Completion and Public Availability was published for the Draft EIR which commenced a 45 -day public comment period. The public comment period was extended by an additional 14 days, resulting in a total public comment period of 60 days. The areas studied in the Draft EIR include: • Aesthetics /Shadows • Air Quality • Biological Resources • Construction Effects • Cultural Resources • Geology and Soils • Greenhouse Gas Emissions • Hazards and Hazardous Materials • Hydrology and Water Quality • Land Use and Planning • Neighborhood Effects • Noise • Population and Housing • Public Services and Recreation • Transportation/Traffic E ® Utilities and Service Systems (Water, Wastewater, Solid Waste, Energy) On May 9, 2012, after the publication of the Draft EIR, the applicant elected to pursue a Project substantially similar to Alternative 3 as the basis for development agreement negotiations (Attachment 3). The Final EIR, which was published in June 2013, contains all comments and responses to comments received during the comment period and analyzes the original project studied in the EIR as well as the currently proposed project (Alternative 3). The EIR also includes analyses to determine the project's traffic impacts at time of anticipated project approval (approval year plus project). The Final EIR continues to provide an analysis of the incremental traffic impacts of the project on future operating conditions to 2030 (Cumulative Base plus Project). In the document, mitigation measures were identified in the areas of Aesthetic, Air Quality, Biological Resources, Construction Effects, Cultural Resources, Geology /Soils, Greenhouse Gas Emissions, Hazards /Hazardous Materials, HydrologyANater Quality, Neighborhood Effects, Noise, Transportation/Traffic, and Utilities /Service Systems to reduce potential impacts to less than significant levels. To ensure that these measures are properly enacted, a mitigation monitoring program is necessary and will be enforced during the construction and operation of the project, if approved. The proposed mitigation measures are provided in the Final EIR. Significant and unavoidable impacts were identified in the areas of Aesthetics (removal of coral trees), Air Quality (construction and operational), and Transportation/Traffic. Unavoidable and Significant Adverse Aesthetics Impact As discussed in Chapter 6 of the Final EIR, the Open Space Element of the City of the Santa Monica identifies Olympic Boulevard as a green street with scenic value. The EIR studied the removal of two coral trees in the Olympic Boulevard median as part of the project's construction of the street into the project site. While the trees would be relocated and replaced on a 2:1 basis in accordance with Mitigation Measures MM4.3 -2 through MM 4.3 -4, it is unknown if the existing coral trees would be relocated or 3 replaced within the median of Olympic Boulevard. The City's Community Forester may identify alternative sites if an appropriate location within the Olympic Boulevard median cannot be found. Therefore, since these trees are recognized scenic resources, their removal results in a significant and unavoidable impact. Unavoidable and Significant Air Quality Impact (construction and operation) During the excavation /grading phase and architectural coating phases of project construction, emissions of VOCs and NOx would exceed SCAQMD daily construction thresholds. Mitigation measures MM4.2 -1 through MM4.2 -14 would reduce the emissions of VOCs and NOX during construction activities; however, emissions would still exceed thresholds. No other feasible mitigation is available to reduce these emissions to a less than significant level. Therefore, construction - related air quality impacts of the proposed project would remain significant and unavoidable. Operation emissions would be generated by both stationary sources (space and water heating devices and operation of landscape equipment) and mobile sources (motor vehicles traveling to and from the site). Mitigation measures MM4.2 -15 through MM4.2 -18 would reduce emissions. However, even with implementation of mitigation measures VOC and NOx emissions would still exceed thresholds of significance established by SCAQMD. As no other feasible mitigation is available to reduce these emissions to less than significant levels, this impact would remain significant and unavoidable. Unavoidable and Significant Adverse Traffic Impacts Intersections Approval Year plus Project Under approval year (Year 2012) conditions, the currently proposed project would generate an estimated 6,926 daily trips (which includes 446 weekday AM peak hour trips and 527 weekday PM peak hour trips). Using approval year (Year 2012) traffic 4 conditions without the project as the baseline to conduct impact analysis, the proposed project would result in significant traffic impacts at 24 intersections under the City of Santa Monica HCM methodology and 11 intersections under the City of Los Angeles CMA methodology. For informational purposes, it should be noted that based on information provided in the Final EIR, significant and unavoidable impacts at 17 intersections would result from any reoccupation or redevelopment of the existing site that generates 100 or less trips, which is considered a low impact threshold. Level of Significance After Mitigation (Approval Year) With implementation of mitigation measures MM4.16 -1 through MM4.16 -10 and in consideration of the fact that approval of mitigation measures MM4.16 -6 through MM4.16 -10 cannot be guaranteed (as LADOT and /or Caltrans approval would be required), the currently proposed project would result in significant and unavoidable impacts at 20 intersections under the HCM methodology and 11 intersections under the CMA methodology. City of Santa Monica —HCM Methodology 14. 20th Street and Olympic Boulevard (AM peak hour) 18. 20th Street and Pearl Street (AM and PM peak hours) 21. 23rd Street and Pearl Street (PM peak hour) 30. Cloverfield Boulevard and 1 -10 Westbound Off -Ramp (AM peak hour) 31. Cloverfield Boulevard and 1 -10 Eastbound On -Ramp (AM and PM peak hours) 33. Cloverfield Boulevard and Pearl Street (PM peak hour) 36. 26th Street and Montana Avenue (PM peak hour) 44. Yale Street and Broadway (PM peak hour) 46. Stewart Street and Colorado Avenue (AM peak hour) 49. Stewart Street and Exposition Boulevard (AM peak hour) 56. Centinela Avenue and Colorado Avenue /Idaho Avenue (PM peak hour) 61. Centinela Avenue and 1 -10 Westbound Ramps (AM and PM peak hours) 71. Bundy Drive and Olympic Boulevard (AM and PM peak hours) 72. Bundy Drive and Pico Boulevard (PM peak hour) 5 75. Bundy Drive and Ocean Park Boulevard (PM peak hour) 78. Centinela Avenue and Venice Boulevard (AM peak hour) 82. Barrington Avenue and Wilshire Boulevard (PM peak hour) 84. Barrington Avenue and Olympic Boulevard (PM peak hour) 87. Federal Avenue and Wilshire Boulevard (AM and PM peak hours) City of Los Angeles —CMA Methodology 23. Walgrove Avenue and Rose Avenue (PM peak hour) 25. Walgrove Avenue and Venice Boulevard (AM peak hour) 56. Centinela Avenue and Colorado Avenue /Idaho Avenue (AM and PM peak hours) 58. Centinela Avenue (west) and Olympic Boulevard (PM peak hour) 61. Centinela Avenue and 1 -10 Westbound Ramps (AM and PM peak hours) 71. Bundy Drive and Olympic Boulevard (PM peak hour) 72. Bundy Drive and Pico Boulevard (PM peak hour) 75. Bundy Drive and Ocean Park Boulevard (AM and PM peak hours) 76. Bundy Drive and National Boulevard (AM peak hour) 82. Barrington Avenue and Wilshire Boulevard (PM peak hour) 83. Barrington Avenue and Santa Monica Boulevard (PM peak hour) Future Year (2030) plus Project Under Future Year (2030) Plus Project conditions, the currently proposed project is expected to generate 6,733 daily trips (which includes 425 AM peak hour trips and 507 PM peak hour trips). Using future year (Year 2030) traffic conditions without the project as the baseline to conduct impact analysis, the proposed project would result in significant traffic impacts at 25 intersections under the City of Santa Monica HCM methodology and 11 intersections under the City of Los Angeles CMA methodology. Level of Significance After Mitigation (Future Year) With implementation of mitigation measures MM4.16 -1 through MM4.16 -3 and MM4.16.5 through 4.16 -10, and in consideration of the fact that approval of mitigation measures MM4.16 -6 through MM4.16 -10 cannot be guaranteed (as LADOT and /or 11 Caltrans approval would be required), the currently proposed project would result in significant and unavoidable impacts at 22 intersections under the HCM methodology and 11 intersections under the CMA methodology City of Santa Monica —HCM Methodology 14. 20th Street and Olympic Boulevard (AM peak hour) 18. 20th Street and Pearl Street (AM and PM peak hours) 25. Walgrove and Venice Boulevard (AM peak hour) 30. Cloverfield Boulevard and 1 -10 Westbound Off -Ramp (AM peak hour) 31. Cloverfield Boulevard and 1 -10 Eastbound On -Ramp (AM and PM peak hours) 33. Cloverfield Boulevard and Pearl Street (PM peak hour) 36. 26th Street and Montana Avenue (PM peak hour) 37. 26th Street and Wilshire Boulevard (PM peak hour) 44. Yale Street and Broadway (PM peak hour) 46. Stewart Street and Colorado Avenue (PM peak hour) 48. Stewart Street and Olympic Boulevard (PM peak hour) 55. Centinela Avenue and Broadway /Ohio Avenue (PM peak hour) 56. Centinela Avenue and Colorado Avenue /Idaho Avenue (PM peak hour) 61. Centinela Avenue and 1 -10 Westbound Ramps (AM and PM peak hours) 71. Bundy Drive and Olympic Boulevard (PM peak hour) 75. Bundy Drive and Ocean Park Boulevard (PM peak hour) 78. Centinela Avenue and Venice Boulevard (AM peak hour) 80. Barrington Avenue and Montana Avenue (PM peak hour) 82. Barrington Avenue and Wilshire Boulevard (PM peak hour) 84. Barrington Avenue and Olympic Boulevard (PM peak hour) 87. Federal Avenue and Wilshire Boulevard (AM peak hour) 92. Sawtelle Boulevard and Pico Boulevard (PM peak hour) City of Los Angeles —CMA Methodology 23. Walgrove Avenue and Rose Avenue (PM peak hour) 25. Walgrove Avenue and Venice Boulevard (AM peak hour) i 56. Centinela Avenue and Colorado Avenue /Idaho Avenue (AM and PM peak hours) 58. Centinela Avenue (west) and Olympic Boulevard (PM peak hour) 61. Centinela Avenue and 1 -10 Westbound Ramps (AM and PM peak hours) 71. Bundy Drive and Olympic Boulevard (PM peak hour) 72. Bundy Drive and Pico Boulevard (PM peak hour) 75. Bundy Drive and Ocean Park Boulevard (AM and PM peak hours) 76. Bundy Drive and National Boulevard (AM peak hour) 82. Barrington Avenue and Wilshire Boulevard (PM peak hour) 83. Barrington Avenue and Santa Monica Boulevard (PM peak hour) Street Segments The EIR also analyzed the proposed project's impacts on neighborhood and collector street segments in the project vicinity. The application of City of Santa Monica significance criteria indicate that the project would result in significant impacts on the following street segments: Segment 1 — Yale Street north of Colorado Avenue Segment 4 — Idaho Avenue east of Bundy Avenue Segment 6 — Nebraska Avenue west of Stanford Street Segment 7 — Nebraska Avenue east of Centinela Avenue Segment 15 — 23`d Street south of Ocean Park Boulevard As more fully described in the Statement of Overriding Considerations (Attachment 5), no feasible mitigation measures are available to reduce these impacts in the City of Santa Monica. In addition, a significant impact would occur on the City of Los Angeles street segment of Idaho Avenue east of Centinela Avenue. MM4.16 -11 is proposed to reduce project volumes at this segment. However, since this street segment is owned and controlled by the City of Los Angeles, the proposed mitigation must be approved by LADOT, which R cannot be guaranteed. Therefore, street segment impacts are considered significant and unavoidable. Comments on Draft EIR There were 341 written letters received on the Draft EIR during the public review period, which included three public agencies, ten organizations, and 328 individuals. Issues of concern were wide ranging but primarily focused on traffic, land use /planning, neighborhood effects, and alternatives. Responses to all comments received are included in the Final EIR. Alternatives Studied The EIR studied three alternatives to the original project designed to reduce potential adverse environmental impacts. In addition to the No Project/No Development Alternative (Alternative 1), a No Project/Reasonably Foreseeable Development (Alternative 2 - Zoning Compliant), a Residential Project Alternative (Alternative 3 - the currently proposed project), and the Reduced Project Alternative (Alternative 4) were studied. As described in Section 6.2 of the Final EIR, an Alternative Location /Site alternative was also considered but rejected during the scoping process because it was found to be infeasible. Santa Monica is a highly urbanized city and there are no currently assembled sites of similar size to the subject property that would also facilitate satisfaction of the project objectives. Moving the project to another location would not satisfy many of the project objectives regarding location of the project in order to maximize Expo Light Rail ridership nor would it reduce significant and unavoidable impacts. Alternative 1— No Project/No Development Alternative Alternative 1 serves as a "no development' alternative where the site remains in its existing condition as a vacant industrial building and no improvements occurring at the site. Therefore, no new environmental effects would directly result from the selection of this alternative. None of the project objectives would be achieved. Alternative 2 — No Project/Reasonably Foreseeable Development Under the No Project/Reasonably Foreseeable Development Alternative, an additional 104,000 sf of building area would be added vertically to the existing buildings for a total of 310,000 sf of building area and the site would be reoccupied. Development on the site would contain 217,000 sf of office and 93,000 sf of creative office use. This Alternative would eliminate the project's operational air quality impacts and would reduce traffic impacts. Under Approval Year conditions, this Alternative would generate 2,912 daily trips (which includes 216 AM peak hour trips and 244 PM peak hour trips). Under Future Year (2030) conditions, this Alternative would generate 2,857 daily trips (which includes 211 AM peak hour trips and 237 PM peak hour trips). With the reduction in trips, the number of significantly impacted intersections would decrease. Prior to mitigation, this Alternative would result in significant impacts at 17 intersections under the HCM methodology and 4 intersections under the CMA methodology. Alternative 3 — Residential Project Alternative Alternative 3, the Residential Project Alternative, is the currently proposed project. Traffic impacts for this alternative have been described above on Page 7 to 11 of this report. Under this alternative, the total daily, AM and PM peak hour estimated trip generation would be less than that of the original project studied in the EIR. The AM peak hour trips would be reduced by 11% and the PM peak hour trips would be reduced by 12 %, as compared to the original project. Alternative 3 would also result in four fewer significant impacts at intersections impacted under both Approval Year and Future plus Project scenarios. Mitigation Measures 4.16 -1 through 4.16 -10 would also apply to this alternative. Delay and V/C would be expected to improve slightly as a result of the decrease in trips in the AM and PM peak periods, compared to the trips generated by the original project. Alternative 4 - Reduced Project Alternative The Reduced Project Alternative would result in the construction of five mixed -use buildings for creative office, retail /service, and residential uses totaling approximately 621,000 sf of building area as well as subterranean parking and ground floor open 10 space. Development would consist of 430,000 sf of creative office uses, 16,500 sf of restaurant uses, 8,500 sf of retail /restaurant uses, 241 dwelling units, approximately 83,978 sf of open space, and 1,581 parking stalls within 3 levels of parking. With the reduction in development, this Alternative would eliminate the project's significant operational air quality impacts. In addition, this Alternative would reduce traffic impacts. Under Approval Year conditions, this Alternative would generate 6,255 daily trips (which includes 407 AM peak hour trips and 484 PM peak hour trips). Under Future Year (2030) conditions, this Alternative would generate 6,088 daily trips (which includes 393 AM peak hour trips and 469 PM peak hour trips). With the reduction in trips, the number of significantly impacted intersections would decrease. Prior to mitigation, this Alternative would result in significant impacts at 24 intersections udder the HCM methodology and 11 intersections under the CMA methodology. Environmentally Superior Alternative The EIR determined that the No Project Alternative was the Environmentally Superior Alternative. Pursuant to CEQA Guidelines Section 15126.6(e)(2), if the environmentally superior alternative is the No Project Alternative, the EIR shall also identify an environmentally superior alternative among the other alternatives. Accordingly, the EIR identifies Alternative 4 (i.e. the Reduced Project Alternative) as the Environmentally Superior Alternative. The Reduced Project Alternative (Alternative 4) would reduce environmental impacts to Air Quality, Greenhouse Gas Emission, Noise, Population /Housing, Public Services, Traffic, and Utilities. The conclusion drawn in the EIR was based upon Alternative 4 having quantitatively fewer impacts than the project and other alternatives. Pursuant to CEQA Guidelines Section 15126.6(a), an EIR shall describe a range of reasonable alternatives to the project, or to the location of the project, which would feasibly attain most of the basic objectives of the project but would avoid or substantially lessen any of the significant effects of the project, and evaluate the comparative merits of the alternatives. Since the applicant is currently proposing a project substantially similar to Alternative 3, the merits of Alternative 4 will be compared to Alternative 3 instead of the original 11 project. Of the impacts areas where Alternative 4 reduced environmental impacts, only Air Quality and Traffic were identified as significant and unavoidable impacts of Alternative 3. With respect to traffic, Alternative 4 would result in one less impacted intersection than Alternative 3, before mitigation. With respect to Air Quality (Construction Emissions), Alternative 4 would result in similar, but marginally less, air quality impacts related to construction emissions (specifically building construction due to the reduced project size) compared to Alternative 3 although the significant and unavoidable impact would still remain. With respect to Air Quality (Operational Emissions), with the reduction in building area and trip generation compared to the proposed project, emissions for Alternative 4 are estimated to be reduced below the established thresholds, although only by a marginal amount, thereby eliminating the significant Air Quality impact related to operational emissions. As shown in Tables 6 -8 and 6 -22 of the EIR, operational air quality impacts with respect to Alternative 3 are only slightly higher (i.e. 7 pounds per day of VOC) than Alternative 4, although emissions exceed SCAQMD thresholds and therefore, this impact area would remain significant and unavoidable. Therefore, Alternative 4 would be considered the Environmentally Superior Alternative because it would result in the elimination of the significant impact related to operational air quality. Alternative 4 also meets the majority of the project objectives. In determining the feasibility of alternatives, the issue is considered at two distinct points in the administrative review process: first in the EIR and next, by the decision maker during project approval [see California Native Plant Soc. V. City of Santa Cruz (2009) 177 Cal.App.4" 957]. Courts have given decision - making bodies discretion in evaluating whether the alternatives are actually feasible. At project approval, the agency considers whether specific economic, legal, social, technological, or other considerations make infeasible the mitigation measures or alternatives identified in the EIR. Thus, broader considerations of policy come into play when the decision - making body is considering actual feasibility than when the EIR preparer is first assessing the potential feasibility of the alternatives. Alternative 4 has a mix of 73% commercial and 27% residential, which is inconsistent with the LUCE land use target for the Bergamot area of 60% commercial and 40% residential. The Bergamot Area Plan further supported this goal with Policy LU1.3 that establishes the same land use target although this target is intended to only apply on a district -wide basis. The project site is one of the largest in the Bergamot Transit Village district at approximately 7 acres, representing roughly a fifth of the district's land area. In addition, the proposed project is the only pending development application in the Bergamot Transit Village zoning district and is the only unoccupied property in the district, making it reasonable to assume that it is the property most likely to redevelop. If the land use mix of the project were to be significantly changed from the proposed 55% commercial and 45% residential, the district -wide land use target established by the LUCE and Bergamot Area Plan could be impeded. Alternative 4 also includes approximately 55,000 more square feet of creative office space than the proposed project. After publication of the Draft EIR, the applicant elected to pursue a project substantially similar to Alternative 3 in response to direction from the City Council to explore project alternatives that included more housing. Changing the proposed project at this juncture to be substantially similar to Alternative 4 would be inconsistent with the policy direction previously given by the City Council for the proposed project. Therefore, based on the above, the City Council has the discretion to disagree with the conclusion of the EIR that Alternative 4 is a feasible alternative and reject it as undesirable and infeasible from a policy standpoint. Statement of Overriding Considerations Due to the significant and unavoidable impacts of the project with respect to Aesthetics (removal of coral trees), Air Quality (construction and operational), Construction Effects (localized construction emissions), and Transportation/Traffic, approval of the proposed project will require the City Council to adopt a Statement of Overriding Considerations. The benefits of the proposed project have been discussed earlier in this staff report and are incorporated into the Council resolution adopting the Statement of Overriding Considerations and Mitigation Monitoring Program should the Council determine that an override is appropriate. 13 Project Economic Analyses Three analyses were prepared by the City's consultant, HR &A. In addition to the Fiscal Impact Analysis and Economic Impact Analysis that have already been provided to the City Council, the following is a summary of the additional Value Enhancement Analysis and Financial Feasibility of project alternatives that are attached to this report. Value Enhancement Analysis A value enhancement analysis was also completed (Attachment 1A) and studied the proposed project and three alternatives including a Tier 1 alternative, a zoning - compliant alternative, and Alternative 4 in the EIR (reduced project). Table 1 describes the scenarios that were studied: Tahla 1 • PrnnncPd PrniPrt and Alternatives Studied in Value Enhancement Analvsis The metric used for the value enhancement analysis is the relative difference in residual land value between the proposed project and the two base case scenarios. Residual land value is the amount a developer could theoretically afford to pay for the land and still earn a market - responsive return on investment. It is a theoretical exercise that derives a land value and therefore, may have little if any relation to the price that the developer actually paid for the property. This analysis is being provided in response to the City Council's desire for a frame of reference to evaluate the project's community benefits. The analysis found that the proposed project has a residual land value of approximately $55.9 million. The proposed project's residual land value represents a value enhancement over the Tier 1 base scenario of $36.5 million and over the zoning - compliant base scenario of $8.7 million. The value enhancement analysis for 14 Proposed Project Tier 1 Zoning- Compliant Alternative 4 in EIR Total SF 766,000 540,000 357,000 621,000 # Residential Units 473 179 -- 229 # Affordable 24 9 12 Commercial SF 405,000 408,000 310,500 455,0.00 The metric used for the value enhancement analysis is the relative difference in residual land value between the proposed project and the two base case scenarios. Residual land value is the amount a developer could theoretically afford to pay for the land and still earn a market - responsive return on investment. It is a theoretical exercise that derives a land value and therefore, may have little if any relation to the price that the developer actually paid for the property. This analysis is being provided in response to the City Council's desire for a frame of reference to evaluate the project's community benefits. The analysis found that the proposed project has a residual land value of approximately $55.9 million. The proposed project's residual land value represents a value enhancement over the Tier 1 base scenario of $36.5 million and over the zoning - compliant base scenario of $8.7 million. The value enhancement analysis for 14 Alternative 4 showed a residual land value of $71.3 million, which is $15.4 million more than the proposed project. However, as explained in the HR &A memorandum in Attachment 113, the relative difference in residual land values between Alternative 4 and the proposed project is not an equal comparison because of different underlying assumptions in the two scenarios. Alternative 4 has a significantly lower development cost ($85.8 million less than the proposed project) because of the relatively generic assumptions that were made compared to the detailed assumptions that were made for the proposed project, which are the result of the design improvements that have been made to the proposed project. Alternative 4 also has a lower net operating income and capitalized value, as compared to the proposed project. The combination of these factors with the predominantly commercial nature of Alternative 4 (i.e. 73% commercial) result in Alternative 4 having a higher residual land value than the proposed project. Additionally, the value of the affordable units and resulting difference in residual land value for the proposed project, based on the development agreement proposal, is also attached to this report (Attachment 1 C). Financial Feasibility Analysis A financial feasibility analysis of the project, Alternative 4 studied in the EIR, and a 60% commercial and 40% residential land use mix variation of Alternative 4 ( "Alternative 4 modified ") was also prepared by HR &A using return on development cost and developer profit margin as metrics (Attachment 2). The results determined that all of the alternatives would be considered infeasible by conventional real estate industry metrics with Alternative 4 modified considered significantly less feasible than the project or Alternative 4. Table 2 illustrates the scenarios studied. Table 2: Scenarios Studied in Financial Feasibility Analysis 15 Proposed Project Alternative 4 EIR Alternative 4 Modified Total SF 766,000 621,000 621,000 # Residential Units 405 196 277 # Affordable 93 45 65 Commercial SF total 403,825 455,000 372,600 Retail SF Office SF 29,391 374,434 25,000 430,000 22,600 350,000 15 The results illustrate that the amount of affordable housing units and the amount of office are key drivers in the feasibility of a project. While both the proposed project and Alternative 4 are considered infeasible by conventional real estate metrics, it is conceivable that a developer would proceed with either scenario based on the intent to stake a position in the Santa Monica real estate market. However, given the results that Alternative 4 Modified is significantly less feasible, the memo also concludes that even smaller and more residentially- oriented alternatives would generate financial feasibility results that are even more negative than Alternative 4 Modified. Prepared by: Jing Yeo, Special Projects Manager Approved: 12z!�'A David Martin Director, Planning and Community Development Forwarded to Council: Rod Gould City Manager Attachments 1A. Value Enhancement Analysis — Proposed Project and Two Base Cases 1 B. Value Enhancement Analysis — Alt 4 EIR 1C. Residual Land Value Implications of Additional Affordable Housing for Proposed Project 2. Financial Feasibility Analysis 3. May 9, 2012 Letter from Applicant Electing to Pursue Project Substantially Similar to Alternative 3 4. Resolution Certifying the Environmental Impact Report 5. Resolution Adopting Statement of Overriding Considerations and Mitigation Monitoring Plan 16 ..00 B --• • :. 28010 28th Street, Suite 325, Santa NO, tica, CA 90405 T: 310 - 581.0900 ( F 310 -581 -0910 1 v nt.=.hraadv €sons -cone MEMORANDUM To: Jing Yeo, City of Santa Monica From: Paul J. Silvern Date: December 3, 2013 Re: Revised Estimate of the Value Enhancement of the Bergamot Transit Village and Two Base Cases —With No Community Benefits Per your request following a discussion with the Planning Commission on October 23, 2013, this memorandum summarizes the results of revising the `value enhancement" analysis of the proposed Bergamot Transit Village development ( "Project ") without any of the community benefits that have been negotiated between City staff and Hines for the Project, as previously presented in an HR &A memorandum dated September 18, 2013. Based on our discussions, the revised analysis reflects changes to the following categories of assumptions: • Adjusted Costs for Public Improvements. For the no- benefits version of the proposed Project, we now include only the basic costs for new sidewalks along Olympic Boulevard, 261h Street and Stewart Street and a 20 -foot fire access lane along Nebraska Avenue, rather than the full costs of new sidewalks, streetscape improvements and new streets, which were previously included in the no- benefits analysis. For the Tier 1 scenario, we include the same sidewalk assumptions, but only a 12 -foot passageway as required by the Bergamot Area Plan. For the Zoning - Compliant scenario, we include the same 12 -foot passageway as in Tier 1, but no sidewalk improvements. These adjusted assumptions have the effect of reducing hard construction costs in each development scenario between $1.8 million and $234,000, depending on the scenario, as compared with the assumptions in the September 18 version of the no- benefits analysis. • Addition of Required Utility Undergrounding. The full cost of undergrounding existing overhead utility lines ($1,350,000) has been added to each scenario, because that is a standard City requirement for all projects. ® Increase in Hard Construction Cost. To reflect the changes in proposed Project design resulting from recent design review by City staff and discussion with the Planning Commission, the building shell and core cost has been increased by $15 per gross square foot. This reflects, in particular, a change to a more expensive Type III construction, as compared with the previous version of the Project design. No changes were made to the assumed costs for the other development scenarios. HR&A Advisors, Inc. ( Los Angeles I New York I Washington, D.C. • Addition of Proposed New Development Fees. In this revision, and by mutual agreement between City staff and Hines, we have added the net cost of a new affordable housing "linkage fee" on non - residential floor area, and a new parks and recreation fee applicable to all Project land uses. These proposed new fees are currently being finalized by City staff and consultants for recommendation to City decision makers. The assumed fee amounts and fee credits for existing land uses at the Project site (i.e., 50,000 s.f. of general office and 153,000 s.f. of industrial) are based on draft fees that were presented to the Santa Monica Area Chamber of Commerce Land Use Committee in July 2013. The net new fees were applied, as applicable, to each development scenario, and add between $5.0 million and $1.6 million in "soft costs" to each scenario. • Adjusted All City Fee Calculations for Live - Work Units and Calculation Corrections. Based on direction from City staff, the 25 live -work units in the proposed Project have been treated as a creative office use, rather than a residential use, in calculating all of the City's existing and proposed new development fees. Certain fee calculation corrections were also included. • Updated Other City Fees to FY 2013 -2014 Levels. We also adjusted the amounts of various City fees to correspond with the latest fee schedule adopted in the FY 2013 -14 City budget. The updated fee amounts went into effect in September 2013. These are primarily minor adjustments consistent with the annual change in consumer prices. • Change in Affordable Housing Requirements. The revision also makes key changes to the assumption about the minimum affordable housing requirements in each development scenario with residential uses. Consistent with recent actions by the City Council, the analysis now assumes that the minimum requirement applicable to a no- benefits analysis is five percent of total units affordable to extremely low- income households, rather than 10 percent affordable to very low- income households. Because the total number of apartment units in the proposed Project and the Tier 1 scenario remain unchanged, this also means a corresponding increase in the number of market rate units in those scenarios. Based on the cumulative effects of these revisions, and no community benefits included, the residual land values for each development scenario are as follows: • The Proposed Project has a residual land value of about $55.9 million, which is about $20.4 million less than the previous no- benefits estimate prior to the adjustments noted above, and is equal to 73 percent of the current assessed value of land at the Project site ($76.3 million). • The Tier 1 Project Base Case Scenario has a residual land value of about $19.4 million, which is about $9.1 less than the previous no- benefits estimate prior to the adjustments noted above. • The Zoning - Compliant Base Case Scenario has a residual land value of about $47.2 million, which is about $1.3 million more than the previous no- benefits estimate prior to the adjustments noted above. These revised residual land value estimates also mean that the proposed Project represents a Value Enhancement over the two base case development scenarios as follows: HPI-A^ ADVISORS, INC. BERGAMOT TRANSIT VILLAGE VALUE ENHANCEMENT -WITH NO BENEFITS 1 2 • About $36.5 million over the Tier 1 base case. • About $8.7 million over the Zoning- Compliant base case. Table 1 on the following page includes a summary of the calculation components for the revised residual land value estimates for each development scenario and the proposed Project's resulting Value Enhancement over the two base case scenarios. All of the calculation details supporting this summary are included in Attachment A to this memo. zl':A ADVISORS, INC. BERGAMOT TRANSrf VILLAGE VALUE ENHANCEMENT -WITH NO BENEFITS 13 Table 1 Revised Value Enhancement Summary of Results- No Community Benefits Bergamot Transit Village Project vs. Tier 1 Project and Zoning- Compliant Project Base Cases Program Summary Zoning- Compliant Development Scenario Proposed Protect Tier 1 Project Proiect LUCE Ter 3 1 1 Permit Requirement DA As -of -Right As -of -Right If Parcels 5 4 1 Bldg. Height (Feet) 81 35 35 Stories ( #) 6-7 2 2 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 624,881 357,000 Floor Area Ratio (FAR) -Gross Area 2.89 2.01 1.15 Floor Area Ratio (FAR) - Net Area 2.47 1.75 1.00 Net Leasable Areas Residential (NSF) 361,271 134,950 - Market Rate Units 473 179 - Aftordable Units 24 9 - Total Units 497 188 - Retail (NSF) 29,391 29,611 - Ofice (NSF) 374,434 378,814 310,500 Development Costs Land Costs See Below See Below See Below Hard Costs $ 254,701,037 $ 166,546,054 $ 60,579,593 Soft Costs City Permits and Fees $ 21,276,567 $ 15,486,945 $ 7,635,812 Public Benefit Payments $ - $ - $ - Other Soft Costs $ 51,811,500 $ 42,037,877 $ 18,567,045 Financing Costs $ 30,844,955 $ 21,085,070 $ 5,063,756 Total Development Cost $ 358,634,060 $ 245,155,947 $ 91,846,206 Less: Lease -up Revenue $ (11,721,331) $ (11,043,567) $ (6,812,438) Net Development Cost $ 346,912,729 $ 234,112,380 $ 85,033,766 Net Ope rating Income (NOI) Residential - Market Rate $ 9,906,532 $ 3,771,155 $ - Residential- Affordable $ (109,403) $ (41,170) $ - Retail $ 1,543,777 $ 1,555,333 $ - Office $ 13,781,424 $ 11,251,364 $ 9,222,332 Total Net Operating Income $ 25,122,330 $ 16,536,682 $ 9,222,332 Project Component Values Residential - Market Rate $ 205,316,725 $ 78,158,653 $ - Residential- Affordable $ (2,267,420) $ (853,264) $ - Retail $ 24,899,629 $ 25,086,016 $ - Office $ 219,624,285 $ 179,304,606 $ 146,969,441 Total Project Value $___447,573,219 $ 281,696,011 $ 146,969,441 Residual Land Value Estimate Total Project Value $ 447,573,219 $ 281,696,011 $ 146,969,441 Less: Developer Profit $ (44,757,322) $ (28,169,601) $ (14,696,944) Less: Total Net Development Cost KA. �.« .pro —6dd Gal 1Mal inro,dec 95I iw -Wnrk units. For certain Citv development fee calculations these Lice -Work units are treated as creative office space. Prepared by. HRBA Advisors, Inc. INC< BERGAMOT TRANSIT VILLAGE VALUE ENHANCEMENT -WITH No BENEFITS 1 4 ATTACHMENT A Revised Residual Land Value Calculation Models for the Bergamot Transit Village Without Community Benefits, Tier 1 Base Case Scenario and Zoning - Compliant Base Case Scenario HF AA ADVISORt, INC. BERGAMOT TRANSIT VILLAGE VALUE EPIHANCEMENT -WITH NO BENEFITS Revised Residual Land Value Analysis - Summary of Results - No Community Benefits Bergamot Transit Village Project vs. Tier 1 Project Scenario and Zoning - Compliant Project Scenario Program Summary (see App. A) Zoning- Compliant Development Scenario Proposed Project Tier Protect Proiect LUCE Tier 3 1 1 Permit Requirement DA As -of -Right As -of -Right # Parcels 5 4 1 Bldg. Height (Feet) 81 35 35 Stories ( #) 6 -7 2 2 Site Area SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 624,881 357,000 Floor Area Ratio(FAR) - Gross Area 2.89 2.01 1.15 Floor Area Ratio (FAR) - Net Area 2.46 1.75 1.00 Net Leasable Areas 30,844,955 $ 21,085,070 Residential (SF) 361,271 134,950 - Market Rate Units 474 179 - Affordable Units 24 9 - Total Units 498 188 - Retail(SF) 29,391 29,611 - Offce (SF) 374,434 378,814 310,500 Hard Costs $ 254,701,037 $ 166,546,054 $ 50,b/9,b93 Soft Costs City Permits and Fees $ 21,276,567 $ 15,486,945 $ 7,635,812 Public Benefit Payments S - S - $ - Other Soft Costs $ 51,811,500 $ 42,037,877 $ 18,567,045 Financing Costs $ 30,844,955 $ 21,085,070 $ 5,063,756 Total Development Cost $ 358,634,060 $ 245,155,947 $ 91,846,206 Less: Commercial Lease -up Revenue $ (11,272,673) $ (10,880,430) $ (6,812,438) Less: Residential Lease -up Revenue $ (448.6561 $ (163,137) $ - Net Development Cost $ 346,912,729 $ 234,112,380 $ 85,033,768 Net Operating Income (NOI) (see App. D) Residential- Market Rate Effective Gross Income $ 14,300,038 $ 5,430,306 $ - Less:AllOperatingExpenses $ (4393506) $ (1,659,151) $ Net Operating Income $ 9,906,532 $ 3,771,155 $ - ResidentiakAffordable Effective Gross Income $ 113,053 $ 42,251 $ - Less:AllOperatingExpenses $ (222,456) $ (83421) $ Net Operating Income $ (109,403) $ (41,170) $ - Retail Effective Gross Income $ 1,591,523 $ 1,603,436 $ Less: All Operating Expenses $ (47,746) $ (48,103) $ Net Operating Income $ 1,543,777 $ 1,555,333 $ - Office Effective Gross Income $ 21,890,064 $ 18,785,386 $ 15,397,695 Less: All Operating Expenses $ (8,108,640) $ (7,534,022) $ (6,175,363) Net Operating Income $ 13,781,424 $ 11,251,364 $ 9,222,332 Total Net Operating Income $ 25,122,330 $ 16,536,682 $ 9,222,332 Page 1 of 16 HRBA Advisors, Inc. Revised No Benefits Residual Land Value Analysis v4 12 -03-13 Summary 12 -03 -2013 ' The market -rate residential units total includes 25 live -work units. As noted in the supporting detail, these were, however, considered a creative office use for purposes of calculating certain City Development fees. HR&A Advisors, Inc. Revised No Benefits Residual Land Value Analysis—v4 12 -03 -13 Summary Page 2 of 16 12 -03 -2013 Zoning - Compliant Development Scenario Proposed Proiect Tier Proiect Prolect Project Component Values (see App. E) Residential- Market Rate NOI $ 9,906,532 $ 3,771,155 $ - Cap Rate 4.83% 4.83% 4.83% Value $ 205,316,725 $ 78,158,653 $ - Residential- Affordable NOI $ (109,403) $ (41,170) $ - Cap Rate 4.83% 4.83% 4.83% Value $ (2,267,420) $ (853,264) $ - Retail NOI $ 1,543,777 $ 1,555,333 $ - Cap Rate 6.20% 6.20% 6.20% Value $ 24,899,629 $ 25,086,016 $ - OfFce NOI $ 13,781,424 $ 11,251,364 $ 9,222,332 Cap Rate 6.28% 6.28% 6.28% Value $ 219,624,285 $ 179,304,606 $ 146,969,441 Total Project Vale $ 447,573,219 $ 281,696,011 $ 146,969,441 Residual Land Value Estimate Total Project Value $ 447,573,219 $ 281,696,011 $ 146,969,441 Less: Developer Profit $ (44,757,322) $ (28,169,601) $ (14,696,944) Less: Total Net Development Cost $ (346 912,729) $ (234,112,360) $ (85,033,768) Residual Land Value - No Benefits Total $ 55,903,168 $ 19,414,030 $ 47,238,729 Per SF Land Area $180 $63 $152 ' The market -rate residential units total includes 25 live -work units. As noted in the supporting detail, these were, however, considered a creative office use for purposes of calculating certain City Development fees. HR&A Advisors, Inc. Revised No Benefits Residual Land Value Analysis—v4 12 -03 -13 Summary Page 2 of 16 12 -03 -2013 Appendix A Physical Parameters Development Scenario LUCE Tier Permit Requirement # Parcels Max. Bldg. Height (Feet) Stories ( #) Land Area (SF) Gross Bldg. Area (SF)' Residential Retail Office Floor Area Ratio (FAR) -Gross SF Floor Area Ratio (FAR) -Net SF Net Leasable Areas (Net SF)' Residential (incl. Live -Work) Retail Office Residential Unit Mix2 Market Rate Units Studio 1 BR 1 BR Loft- Uve/Work 2 BR 2 SR Townhouse 3BR Market Rate Units Net SF (NSF) Studio NSF 1 BR NSF 1 BR Loft NSF 2 SR NSF 2 BR Townhouse NSF 3 BR NSF Proposed Proiect' 3 DA 5 81 6 -7 310,500 896,010 451,803 32,330 411,877 2.89 2.46 765,096 361,271 29,391 374,434 474 211 69 25 94 62 13 370 530 580 859 980 1,307 Tier 1 Proieef 1 As -of -Right 4 35 2 310,500 624,881 155,192 34,053 435,636 2.01 1.75 543,375 134,950 29,611 378,814 179 80 35 59 5 370 530 541 859 904 1,307 Zoning- Compliant Proiect' 1 As -of -Right 1 35 2 310,500 357,000 357,000 1.15 1.00 310,500 310,500 HR&A Advisors, Inc.. Revised No Benefits Residual Land Value Analysis—v4 12-03-13 A- Program Page 3 of 16 12 -03 -2013 Page 4 of 16 HRBA Advisors, Inc.. Revised No Benefits Residual Land Value Analysis _ v4_12 -03 -13 A- Program 12 -03 -2013 Zoning- Compliant Development Scenario Proposed Proiect' Tier 1 Proieef Proiect2 Affordable Rate Units 24 9 - Studio - Extremely Low Income 11 4 - Studio - Very Low Income - - - Studio - Low Income - - - 1 BR - Extemely Low Income 5 2 - 1 BR - Very Low Income - - 1 BR -Low Income - - - 1BR Loft -Very Low Income - - - 2 SR - Extemely Low Income 7 3 - 2 BR - Very Low Income - - 2 BR - Low Income - - - 2 BR Townhouse -Very Low Income - - - 3 BR - Extemely Low Income 1 - - 3 BR- Very Low Income - - - Affordable Units Net SF (NSF) Studio - Extremely Low Income 365 365 - Studio -Very Low Income 365 - - Studio - Low Income 361 - - 1 BR - Extemely Low Income 548 548 - 1 BR -Very Low Income 548 - - 1 BR -Low Income 540 - - 1 BR Loft - Very Low Income 607 - - 2 SR - Extemely Low Income 849 849 - 2 BR -Very Low Income 849 - - 2 BR - Low Income 841 - - 2 BR Townhouse -Very Low Income 974 - - 3 BR - Extemely Low Income 1,232 11232 - 3 BR- Very Low Income 1,232 - - Parking° Surface Parking (spaces) - - 600 Subterranean Parking (spaces) 11936 1,373 - Levels 1 -2 1,297 1,373 - Office /Retail 797 1,091 - Residential 500 282 - Level 3 639 - - Office /Retail 392 - - Residential 247 - - Construction Period (months) 24 24 12 Per Hines; Draft EIR; and City staff. Per Hines and City staff. - 3 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). 4 Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 4 of 16 HRBA Advisors, Inc.. Revised No Benefits Residual Land Value Analysis _ v4_12 -03 -13 A- Program 12 -03 -2013 Appendix 61: Development Costs Proposed Project Development Scenario' Land Area Gross Bldg. Area (GSF) Residential Retail Office Net Leasable Areas (NSF) Residential Retail Office Residential Units Subterranean Parking (spaces) Levels l -2 Office /Retail Residential Level Office /Retail Residential Project Elements Land Cost Hard Cost1 Construction Type Building Construction /GSF' Building Core & Shell Cost Demo On -Site Improvementsa Nebraska 20' Fire Access Olympic Sidewalk 26th Street Sidewalk Stewart Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Arr itiesa Surface Parkings Subterranean Parking Levels t -2 Level 3 Contingency Subtotal Hard Costs Assumptions Office /Retail Residential Total Per Appendix A 153,934 156,566 310,500 Per Appendix A x Land Area $ 896,010 $407,177 Allocated 451,803 201,863 $290,040 32,330 $ 143,791 $46,751 411,877 $ 46,751 Per Appendix Allocated 765,096 $1,350,000 Allocated 361,271 669,278 $38 29,391 $ 14,228,492 $38 374,434 $ 1,116,858 Per AppentlixA per Unit 498 - Per AppentlixA per Space $ 1,930 $30,000 per Space $ 1,285 $35,000 793 $ 13,663,650 5% xSubtotal Hard Costs 492 6,139,452 $0.00 $0.00 $ 645 390 255 Office /Retail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF see Residual Value see Residual Value see Residual Value Page 5 of 16 HR&A ABNSOrs, Inc.. Revised No Benefits Residual Land Value Analysis_v4 12 -0313 81 -Dev Cost - Project 12 -03-2013 Varies If $150.00 Varies $ 66,631,050 $15 x Land Area $ 2,309,010 $407,177 Allocated $ 201,863 $290,040 Allocated $ 143,791 $46,751 Allocated $ 46,751 $11,068 Allocated $ - $1,350,000 Allocated $ 669,278 $38 x NSF Office $ 14,228,492 $38 x NSF Retail $ 1,116,858 $2,900 per Unit $ - $1,000 per Space $ - $30,000 per Space $ 23,778,300 $35,000 per Space $ 13,663,650 5% xSubtotal Hard Costs $ 6,139,452 $0.00 $0.00 $ 128,928,494 Page 5 of 16 HR&A ABNSOrs, Inc.. Revised No Benefits Residual Land Value Analysis_v4 12 -0313 81 -Dev Cost - Project 12 -03-2013 III $202.00 III $150.00 $165.00 $ 91,264,280 $252.62 $183,262 $ 157,895,330 $ 176.22 $ 206.37 $5.20 $5.72 $ 2,348,490 $6.50 $4,716 $ 4,657,500 $ 5.20 $ 6.09 $0.45 $0.50 $ 205,314 $0.57 $412 $ 407,177 $ 0.45 $ 0.53 $0.32 $0.36 $ 146,249 $0.40 $294 $ 290,040 $ 0.32 $ 0.38 $0.11 $0.12 $ - $0.00 $0 $ 46.751 $ 0.05 $ 0.06 $0.00 $0.00 S 11,066 $0.03 $22 $ 11,068 $ 0.01 $ 0.01 $1.51 $1.66 $ 680,722 $1.88 $1,367 $ 1,350,000 $ 1.51 $ 1.76 $32.03 $35.23 $ - $0.00 $0 $ 14,228,492 $ 15.86 $ 18.60 $2.51 $2.77 $ - $0.00 $0 $ 1,116,858 $ 1.25 $ 1.46 $0.00 $0.00 $ 1,444,200 $4.00 $2,900 $ 1444,200 $ 1.61 $ 1.89 $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $53.53 $58.88 $ 14,771,700 $40.89 $29,662 $ 38,550.000 $ 43.02 $ 50.39 $30.76 $33.84 $ 8,911,350 $24.67 $17,894 $ 22,575,000 $ 25.20 $ 29.51 $1&82 $15.20 $ 6.989,169 $16M $12,026 $ 12,128,621 $ 13.54 $ 15.85 $290.24 $319.27 $ 125,772,543 $348.14 $252,555 $ 254,701,037 $ 284.26 $ 332.90 Page 5 of 16 HR&A ABNSOrs, Inc.. Revised No Benefits Residual Land Value Analysis_v4 12 -0313 81 -Dev Cost - Project 12 -03-2013 Soft Costs' City Permits & Fees (See App. C) Public Benefit Payments Expo Buffer Contribution TMA Contribution Bike Share Contribution Big Blue Bus Contribution Historic Preservation Programs Subtotal Public Benefit Payments A &E /Other Professionals Marketing /Leasing Commissions° Residential RetaiVOffCe Legal & Accounting Real Estate Taxes Insurance Developer Fee Contingency Subtotal Soft Costs Subtotal Hard +Botts Costs Financing Costs° Loan Term (months) Average Loan Balance Construction Loan Interest Rate Construction Loan Interest Construction Loan Fees Permanent Loan Percent x Cost Permanent Loan Fees & Costs Subtotal Financing Costs Total Development Cost Hard + Soft +Financing $ 186,577,532 $420.02 $462.03 $ 172,856,528 $476.25 $345,495 Less: Commercial Lease -up Revenue° $25.38 x NSF Commercial $ (11,272,673) 425.38 - $27.91 $ Less: Residential Lease -up Revenue° $901 per Unit $ - $0_00 $0_00 $ (448,658) -$1_24 -$901 Net Development Cost $ 175,304,859 $394.65 $434.11 1 171,607,870 $475.01 $344,594 ' Per Program Summary, Appendix A. t Per Hines based on contractor estimates. These unit costs are somewhat less than those derived by HR&A from the Marshall & Swift construction cost estimation software a Per Hines and City staff. 4 Per Hines, and determined by HR&A to be generally reasonable based on current market condition$. Page 6 of 16 $ 358,634,060 $ 400.26 $ 468.74 $ (11,272,673) $ (12.58) $ (14.73) $ (448,658) $ (0.50) $ 0.59 $ 346,912,729 $ 387.18 $ 453.42 HR &A Advisors, Inc.. Revsed No Benefits Residual Land Value Analysis v4 12 -03-13 Bl -Dev Cost - Project 12 -03 -2013 10,548,097 $23.75 $26.12 $ 10,728,470 $29.70 $21,543 $ 21,276,567 $ 23.75 $ 27.81 $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $ - $0.00 $0.00 s - $0.00 so $ - $ - $ - $ $0.00 0.00 $ - 0.00 §0 $ $ $ $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - 6.0% xHard Costs $ 7,735,710 $17.41 $19.16 $ 7,546,353 $20.89 $15,153. $ 15,282,063 $ 17.06 $ 19.97 $7.50 x NSF $ - $0.00 $0.00 $ 2,709,533 $7.50 $5,441 $ 2,709,533 $ 3.02 $ 3.54 $29.76 xNSF $ 12,017,832 $27.05 $29.76 $ - $ 12,017,832 $ 13.41 $ 15.71 0.5% xHard Costs $ 644,642 $1.45 $1.60 $ 628,863 $1.74 $1,263 $ 1,273,505 $ 1.42 $ 1.66 1.25% x hard costs x 2 yrs. $ 3,223,212 $7.26 $7.98 It 3,144,314 $8.70 $6,314 $ 6,367,526 $ 7.11 $ 8.32 1.0% x Hard Costs $ 1,289,285 $2.90 $3.19 $ 1,257,725 $3.48 $2,526 $ 2,547,010 $ 2.84 $ 3.33 3.0% x Hard +Soft Costs $ 4,931,618 $11.10 $12.21 $ 4,553,634 $12.60 $9,144 $ 9,485,252 $ 10.59 $ 12.40 3.0% x Subtotal Soft Costs $ 1.211,712 2.73 $3.00 $ 917,067 $2_54 $1.842 $ 2,128,779 $ 2.38 $ 2.78 $ 41,602,108 $93.65 $103.02 $ 31,485,960 $87.15 $63.225 $ 73,088,068 $ 81.57 $ 95.53 $ 170,530,602 $383.90 $422.29 $ 157,258,503 $435.29 $315,780 $ 327,789,105 $ 365.63 $ 428.43 24 65.00% 5.50% $ 12,192,938 $27.45 $30.19 $ 11,243,963 $31.12 $22,578 $ 23,436,921 $ 26.16 $ 30.63 1.75% $ 2,984,286 $6.72 $7.39 $ 2,752,024 $7.62 $5,526 $ 5,736,310 $ 6.40 $ 7.50 68.00% 0.75% $ 869,706 1.96 $2.15 $ 602,018 $2.22 $1.610 $ 1,671,724 $ 1.87 $ 2.18 $ 16,046,930 $36.12 $39.74 $ 14,798,025 $40.96 $29,715 $ 30,644,955 $ 34.42 $ 40.32 Total Development Cost Hard + Soft +Financing $ 186,577,532 $420.02 $462.03 $ 172,856,528 $476.25 $345,495 Less: Commercial Lease -up Revenue° $25.38 x NSF Commercial $ (11,272,673) 425.38 - $27.91 $ Less: Residential Lease -up Revenue° $901 per Unit $ - $0_00 $0_00 $ (448,658) -$1_24 -$901 Net Development Cost $ 175,304,859 $394.65 $434.11 1 171,607,870 $475.01 $344,594 ' Per Program Summary, Appendix A. t Per Hines based on contractor estimates. These unit costs are somewhat less than those derived by HR&A from the Marshall & Swift construction cost estimation software a Per Hines and City staff. 4 Per Hines, and determined by HR&A to be generally reasonable based on current market condition$. Page 6 of 16 $ 358,634,060 $ 400.26 $ 468.74 $ (11,272,673) $ (12.58) $ (14.73) $ (448,658) $ (0.50) $ 0.59 $ 346,912,729 $ 387.18 $ 453.42 HR &A Advisors, Inc.. Revsed No Benefits Residual Land Value Analysis v4 12 -03-13 Bl -Dev Cost - Project 12 -03 -2013 Appendix 82: Development Costs Tier 1 Project Development SCenano' Land Area Gross Bldg. Area (GSF) Residential Retail Office Net Leasable Areas (NSF) Residential Retail Office Residential Units Surface Parking (spaces) Subterranean Parking (spaces) Levels l -2 ORCelRetail Residential Level OacelRetail Resitlential Project Elements Land Cost Hard Cost' Construction Type Building ConsmdtionlGSFt Building Core & 6hol Cost Demo/On-Site Improvements Orr ile Improvements' Passageway -12' Olympic Sidewalk 26th Street Sidewalk Stewart Steel Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities Surfam Parking' Subterranean Parking Level31 -2 Level Contingency Subtotal Hard Costs Soft Costs, City Pol lit5 & Fees (See App. C) Public Benefit Payments Expo Buffer Contribution TMA Contribution Bike Share Contribution Big Blue Bus Contribution Historic Preservation Programs Subtotal Public Benefit Payments A &E/Other Professionals Marketing/Leasing Commissions' Residential Reads /Office Legal & Accounting Real Estate Taxes Insurance Developer Fee ContingimW Subtotal Soft Costs Subtotal Hand +Soft Costs Assumptions Per AppendixA Per AppendixA Per AppendixA Per AppendixA Per Appendix Varies Varies $15 xLand Area $18,350 Allocated $290,D40 Allocated 546,751 Allocated $11,068 Allocated $1,350,000 Allocated 538 xNSF Office $38 x NSF Retail $2,900 per Unit $1,000 per Space $30,000 per Space $35,000 per Space 5% x Subtotal Had Costs 6.0% .Hand Casts $7.50 x NSF $29.76 x NSF 0.5% xHard Case, 125% .hard costs x 2 ym, 1.0% x Hand Costs 3.0% x Hand +son costs 3.0% x Subtotal Safi Costs Officamptail 233,386 34,053 435,536 29,611 3]8,814 1,091 Office /Retail Per GSF Per NSF see Residual Value IIIB $135.00 $ 63,407,981 $135.00 $155.25 $ 3,500,790 $7.45 $BE7 $ 18,350 $0.04 $0.04 $ 218,007 $0.46 $0.53 $ 46,751 $0.10 $0.11 S $ ,014,]21 $ 144,394,932 $30.65 $38.00 $ 1,125,218 82.40 838.00 5 - $ $0.00 $ 32,730,000 $69.68 580.14 S - $0.00 $0.00 $ 5822,838 1s 2.40 1$1426 $ 122,279,588 $260.34 $299.39 11,640,687 $2438 $28.50 s - $0.00 $0.00 s - $0.00 $0.00 S - $0.00 $0.00 S - $0.00 $0.00 $ $0.00 $O.DO is - $o.DO 30.00 $ 7,336,775 $15.62 $17.96 $ - $0.00 $0.00 S 12,154,728 $25.68 $29.76 is 611,396 $1.30 $1.50 $ 3,056,990 $5.51 $7.48 $ 1,222,796 $2.60 $2.99 $ 4,749,089 $10.11 $11.63 S 1,687,782 $3.59 $4.13 $ 46.306,503 $98.59 $113.36 $ 168,586,091 $358.93 $412.]] Page 7 of 15 Residential n,114 155,192 134,950 188 282 Residential Per NSF Per Unit see Residual Value HIS $203.48 $ 31,578,249 $234.00 $167,969 $ 1,166,710 $8.57 $6,153 $ - $0.00 $0.00 $ 72,033 50.00 $0.00 $ - $040 $0.00 $ 11,068 80.00 $0.00 $ 335,279 MOD $0.00 so,oD $0.00 $ - MOD $0.00 s 545,200 54.04 $2,900 $ - 50.00 $0.00 $ 8,460,000 $62.69 845,000 $ $0.00 $0 s 2,107.92] 15Si; 5.62 111 2212 6 4,266,466 $328.02 $235,460 5 3,846,258 $28.50 $20,459 s - $0.00 $0.00 s - $0.00 50.00 s - $0.00 BD.00 s - $o,DO So.00 5 $0.00 30.OD S - $0.00 M.00 5 2,655,988 $19.68 $14,128 5 1,012,123 $7.50 $51384 S $ 221,332 $1.64 51,1T7 $ 1,106,662 $8.20 $5,886 $ 442,665 $3.28 52,355 5 1,606,545 $11.90 $6,545 S 326.747 $2 a2 $1,738 5 11.218,320 $83.13 $59,672 5 55,484,786 $411.15 $295,132 Total 310,500 624,881 543,375 1,3]3 1,3]3 1,091 282 Total Per GSF Per NSF see Residual Value $ 94,986,230 $ 152.01 $ 174.81 $ 4,557,500 $ 7.45 $ 8.57 $ 16,350 $ 0.03 $ 0.03 $ 29D,040 $ 0.46 $ 0.53 $ 46,751 $ 0.07 $ -0.09 $ 11,068 $ 0.02 $ 0.02 $ 1,35D,ODO $ 2.16 $ 2.48 $ 14,394,932 $ 23.04 $ 26.49 $ 1,125,218 S 1.80 $ 2.07 $ 545,200 $ 0.87 is 1.00 $ $ $ - $ 41,190,000 5 65.92 $ 75.80 $ - 3 - $ - $ 7,930,765 $ 12.69 S 14.60 $ 166,545,054 S 266152 $ 306.50 $ 15,486,945 $ 24.78 S 28.50 5 224,070,877 $ 358.58 S 412.37 HRSAAdvisors,Inc. Revised N0 Benefb Residual Land Value Analysis v4_12 -0}13 Bi Cosner t 12 -03.2013 - $ s $ $ 5 $ $ 5 $ $ $ 5 $ $ $ s 9,992,]63 S 15.99 $ 18.39 s 1,012,123 $ 1.62 $ 1.86 3 12,154,726 S 19.45 $ 22,37 5 832,730 S 1.33 S 1.53 S 4,163,651 $ 6.66 s 7.66 5 1,655,461 $ 2.67 6 3.07 3 6,355,634 $ 10.17 $ 11.70 S 2,014,529 $ 3.22 $ 3.71 5 57,524,823 $ 92.06 $ 105.87 5 224,070,877 $ 358.58 S 412.37 HRSAAdvisors,Inc. Revised N0 Benefb Residual Land Value Analysis v4_12 -0}13 Bi Cosner t 12 -03.2013 P All assumptions per HRBA review of market data, financial feasibility peer reviews of recent developments and HRBA experience , unless noted otherwise. 2 Per Hines based on contractor estimates. These unit costs are less than those derived by HRBA from the Marshall 8 Swift construction cost estimation soflvlme. s Per Hines and City staff. 4 Per Hines, and determined by HRBA to be generally reasonable, based on current market conditions. Page 8 of 16 Total Per GSF Per NSF $ 16,021,068 S Assumptions 29.48 OffcelRetail Per GSF Per NSF $ 1,142,761 $ Residential Per NSF Per Unit Financing Costs° 38.80 $ 245,155,947 S 392.32 $ 451.17 $ (10,880,430) S (17.41) S (20.02) $ (163,137) $ (0.26) S Loan Term (months) 24 374.65 S 430.85 Average Loan Balance 65.00% Construction Loan Interest Rate 5.50% Conanction Loan Interest S 12,053,906 $25.66 529.51 $ 3,967,162 $29.40 $21,102 Constmdion Loan Fees 1.75% $ 2,950,257 $6.28 $7.22 5 970,984 $7.20 $5,165 Permanent Loan Percent x Cost 68.00% Permanent Loan Fees B Costs 0 .75% $ 659,789 $163 $211 $ 282,972 $210 S105 Subtotal Finanang Costs $ 15,863,952 $33.78 $36.84 $ 5,221,118 $38.69 $27,772 Total Development Cast Hard+ Soft+ Financing $ 184,450,043 $392.71 $451.61 $ 60,705,904 5449.84 $322.904 Less: Commercial Lease -up Revenue' $23.17 x NSF Commercial S (10,880,430) - $23.17 - 626.64 $ - Less: Residential Lease -up Raven n4 $868 per Unit $ - $0_00 $0_00 $ (163,137) 41 21 4869 Net Develo meatcost $ 173,569,613 $369.54 $424.97 S 60,542,767 $448.63 $322,036 P All assumptions per HRBA review of market data, financial feasibility peer reviews of recent developments and HRBA experience , unless noted otherwise. 2 Per Hines based on contractor estimates. These unit costs are less than those derived by HRBA from the Marshall 8 Swift construction cost estimation soflvlme. s Per Hines and City staff. 4 Per Hines, and determined by HRBA to be generally reasonable, based on current market conditions. Page 8 of 16 Total Per GSF Per NSF $ 16,021,068 S 25.64 $ 29.48 $ 3,921,241 5 6.26 S 7.22 $ 1,142,761 $ 1.63 $ 2.10 S 21,065,070 $ 33.74 $ 38.80 $ 245,155,947 S 392.32 $ 451.17 $ (10,880,430) S (17.41) S (20.02) $ (163,137) $ (0.26) S (0,30) S 234,112,390 S 374.65 S 430.85 HRBA Advisors. Inc. Revised No Benefi6 Reslduel Lord Velue Analysis_v4 12 -0}13 B2 -Dev Cast -Tien 12. 0}2013 Appendix 133: Development Costs Zoning Compliant Project Development Scenario' Land Area Gross Bldg. Area (GSF) Residential Retail office Net Leasable Areas (NSF) Residential Retail Mo Residential Units Surface Parking' Subterranean Parking (spaces) Levels 1 -2 Oflcemetail Residential Level Offc.11 ii Residential Project Elements Land Coat Hard Cost' Construction Type Building ConstmctionCiff' Building Core & Shell Cost DemolOrS to Improvements On -S'de improvements' Passageway -12' Olympic Sidewalk 26th Street Sidewalk Stevan Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant improvements Residential Common Area Amenitcc Surface Parking Subterranean Parking Levels 1 -2 Level Contingency Subtotal Hard Cosh Soft COSts' City Permits & Fees (See App. G) Public Benefit Payments Expo Buffer Contribution TMA Contrbution Bike Share Contribution Big Blue Bus Contribution Histoda Preservation Programs Subtotal Public Benefit Payments A &FJOther Professionais Morketing/Leasing Commissions° Residential RetaillORCe Legal & Accounting Real Estate Taxes Insurance Developer Fee Contingency Subtotal Soft Costs Subtotal Hard t Soft' Costs Assumptions ORCelRetail Per Appendix 310,500 Per AppentlixA Residential Per NSF 357,000 Per AppentlixA Tow! Per GSF 310,500 Per Appendix Per Appendix 600 Per Appendix Residential Tani 310,500 357,000 310,500 600 Office /Retail Per GSF Per NSF Residential Per NSF Per Unit Tow! Per GSF Per NSF see Residual Value see Residual Value see Residual Value IIIB IIIB Varies $11 D.00 Vance $ 39,270,000 $110.00 $126.47 $ - $0.00 $0.00 3 39,270,000 $ 110.00 $ 126.47 $15 xLord Area $ 4,657,500 $13.05 $15.00 $ - $0.00 $0.00 $ 4,657,500 3 13.05 S 15.00 $18,350 Allocated $ 18,350 $0.00 50.00 $ - 30.00 $0.00 $ 18,350 $ 0.05 $ 0.06 $0 Allocated $ - $0.00 $0.00 $ - $0.00 $O.DO $ - S - $ - $0 Allocated S - SD.OD $0.00 $ - $0.00 $0.00 $ - S - $ - 30 Allocated $ - $0.00 $0.00 S - $0.00 $0.00 3 - $ - $ $1,30,000 Allocated $ 1,350,000 $3.78 $4.35 $ - $0.00 50.00 $ 1,350,OOD $ 378 $ 4.35 $38 .NSF Co. $ 11,799,000 $33.05 $38.00 $ - $0.00 50.00 $ 11,799,000 $ 33.05 $ 38.00 538 x NSF Retail $ - $0.00 $0.00 $ - 50.00 $0.00 $ - $ - $ - $2,90Q per Unit 5 - $ - $0.00 $0.00 S - S - $ - $1,000 per Space $ 600,000 $1.68 $1.93 $ - 50.00 $0.00 $ 500,000 $ 1.68 S 1.93 $30,000 per Space $ - $0.00 50.00 $ - $0.00 50.00 $ - $ - 5 - $35,000 per Space $ - $0.00 $0.00 $ - 3100 $0.00 S - S - $ - 5% x Subtotal Hard Costs $ 2,884743 $80B $P29 $ $0 OD $0 DO $ 2.884,74$ $ 8.08 $ 9.29 S 60,579,593 $169.69 $195.10 $ - $0.00 $0.00 $ 60,579,593 S 169.69 $ 195.10 7,635,812 $21.39 $24.59 $ - $0.00 $0.00 S 7,635,812 $ 21.39 $ 24.59 3 - $0.00 $0.00 $ - $0.00 $0.00 3 - S - $ - $ - $0.00 $0.00 $ - $ - $ - $ - $ - $0.00 $0.00 3 - $ - $ - 3 - $ - $0.00 $0.OD $ - $0.00 MOD $ - $ - 8 - $ $000 SD_OD $ - 50_00 $0 DO 3 $__ $ 5 - $0.00 $0.00 $ $0.00 $0.00 $ - $ - $ - 6.0% xHard Costs 5 3,634,776 $10.18 311.71 S - 3000 $0.00 $ 3,53QTr6 $ 10.18 $ 11.71 $7.50 x NSF $ - $0.00 $0.00 3 - $D.00 $0.00 $ - $ - S - 529,75 xNSF $ 9240,480 $25.88 $29.76 $ - $ 9,240,480 $ 25.68 S 29.76 0.5% xHard Costs 5 302,898 3185 $0.98 $ - 50.00 $0.00 $ 302,898 $ 0.85 $ 0.98 1.25% x hard costs x 2 yrs. S 1,514,490 $424 $4.88 $ - $0.00 $0.00 $ 1,514,490 S 424 5 4.88 1.0% xHard Costs S 605,796 $1 .70 $1.95 S - $0.00 $0.00 $ 505,796 $ 170 S 1.95 3.0% x Hard t Soft Costs $ 2,505 415 $7.02 $8.07 5 - $0.00 $0.00 $ 2,505,415 $ 7.02 $ 8.07 3.0% x Subtotal Bar CobxS $ 763,190 $214 $246 3 $000 $000 $ 763.190 $ 2.14 S 2.46 $ 26,202,857 $73.40 $84.39 $ - $0.00 $0.00 $ 26,202,857 $ 73.40 $ 84,39 $ 86,782,450 $243.09 $279.49 $ - $0.00 $0.00 S 86,782,450 $ 243.09 $ 279.49 HRBA Advisors, Inc. Revised No Benefits Residual Land Value Anah big v4 12-03 -13 B3-Oev COSt- drnpliant Page 9 of 16 12. 032013 t All assumptionsper HR &A review of mallet data, financial feasibility peer reviews of recent developments and HR&A experience, unless noted otherwise. s Per Hines based on contractor estimates. These unit costs are less than those derived by HR &A from the Marshall & Swill constmdion cost estimation software z Per Hines and City staff. Per Hine, and determined by HR&A to be generally reasonable, based on current market conditions. Page 10 of 16 HR &A Advisors, Inc. Revised No Benefits Residual Land Value Analysis v4_1M3 -13 83 -Dev Cost - Compliant 12 -03 -2013 Assumptions Officefietail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF Financing Costs° Loan Tem1 (months) 12 Average Loan Balance 65.00% Construction Loan Interest Rate Construction Loan Interest Construction Loan Fees 5.50% 1.75% $ $ 3,102473 1,518,693 $8.69 $4.25 $9.99 5439 $ - $ - $100 50.00 80.00 $0.00 $ 8 3,102,673 1,518,693 S 8.69 $ 4.25 S 9.99 S 4.89 Permanent Loan Percent x Cost Permanent Lean Fees &Costs Subtotal Financng Costs 68.00% 075% $ $ 442.590 $124 $14.18 1.43 $16.31 $ $0.00 $0.00 $0 -00 $0.00 $ 442590 $ L24 $ 1.43 $ 5,063,756 $ 14.18 S 16.31 $ - 5,063756 Total Development Cost Less: Commercial Lease -up Revenue Less: Residential Lease -up Revenue' Net Development Cast Hard + Soft +Financing $19.08 xNSF Commercial S0 per Unit $ S S $ 91,846,206 (6,812638) - $257.27 -81908 $0_00 $236.19 $295.80 521.94 $0_00 $273.86 $ - $ - $ - $0.00 $0.00 $000 $0.00 $0.00 $0.00 $0000 $ 0.00 $ $ $ 8 91,846,206 (6,812,438) $ 25727 $ (19.08) __ $ $ 295.80 $ (21.94) $ $ 05,033,760 $ 238.19 $ 273.86 $ - 85,033,768 t All assumptionsper HR &A review of mallet data, financial feasibility peer reviews of recent developments and HR&A experience, unless noted otherwise. s Per Hines based on contractor estimates. These unit costs are less than those derived by HR &A from the Marshall & Swill constmdion cost estimation software z Per Hines and City staff. Per Hine, and determined by HR&A to be generally reasonable, based on current market conditions. Page 10 of 16 HR &A Advisors, Inc. Revised No Benefits Residual Land Value Analysis v4_1M3 -13 83 -Dev Cost - Compliant 12 -03 -2013 Appendix C Proposed New Fees, Existing City Fees & Permit Costs Zoning-compliant Development Scenario, Assumptions Proposed Protect Merl Project Protect Land Area 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 624,881 357,000 Residential units Ma Met Rate Units Studio 211 80 - 1 BR 69 35 1 BR Loft Live -Wark 25 - 2 BR 94 2 DR Townhouse 62 59 - 3 SR 13 5 Subtotal 474 179 Affordable Rate Units Studio Extremely Low Income 11 4 Studio -Very Low Income Stutlio- Low Income ' 2 1BR- Bxtremely Low Income 5 1BR -Vary Low Income _ 1 BR - Low Income 1 SR Lon- Very Low income - 3 _ 2 BR- Extremely Low Income 7 2 BR -Very Low Income 2 BR- Low Income 2 D Townhouse -Very Law Income _ 3 SIR - Extremely Low Income 1 " 3 BR- Very Low Income - Subtotal 24 9 Residential (Net Leasable SF) 346,744 134,950 - L,,WOrk Units (Net Leasable SF) 14,527 - Retail (Net Leasable SF) 29,391 374,434 29,611 378,814 - 310,500 Office (Net Leasable SF) Planning Permits' $ - $ - Development Review $15,568 perproject $ - Development Agreement 525,000 per Project $ 25,000 $ - 6 - 1,684 MultiplePermitFee $1,684 perproject $ 1,684 $ 1,684 $ Architectural Review Board $1,684 perproject $ 1,684 $ 1,684 $ 1,684 Coastal Zone Concept Review $276 perproject $ - $ - $ - CEOA Categorical Exemption $14,622 perproject $ - $ - $ Negative Declaration 625,445 perproject $ - $ $ - EIR Allowance $ 1000,000 $ - $ - Subtotal $ 1,028,368 $ 3,368 $ 3,368 ItIF Fees Market Rate Residential -Areas 52,600 per unit $ 1,167,400 $ 465,400 $ - Affordable Residential $0.00 perunit $ - $ - $ - Retail -Area 1 $21.00 x NSF $ 617,211 $ 621,831 $ - Of%a - Area1 59.10 xNSF S 3,772,922 S 3,674,496 $ 3,011,850 Subtotal $ 5,557,533 $ 4,761,727 $ 3,011,050 Less: Credit for Existing Office (50K NSF) $9.70 xNSF $ (485,000) $ (465,000) $ (485,000) Less: Creditfor Existing lnduWal(153K NSF) $1.20 xNSF $ (183600) $ (163600) $ (183600) Subtotal Net 7IF $ 4,088,933 $ 4,093,127 $ 2,343,25D HRBAAdylsors, Inc. Revised No Benefits Residual Land Value Analysts v4 12 -0}13 o- ity ccat Doell 12 -0 }2013 Page 11 of 16 HRBA Advisom, Inc. Revised No Benefits Residual Land Value Analydd v4_4 -0}13 CCity cost oetell 12.0 }2013 Page 12 of 16 Zon no- C..Pliant Assumptions Proposed Protect Tier Protect Proiect Other Requirements' Proposed AHorable Linkage Fee Creative Office 5 %x$158.91 xNSF $ 3,090,490 5 3.009,867 $ 246],0]8 Retail 5 %x$161.41 xNSF S 237200 $ 238,976 5 - Subtotal $ 3,327,690 $ 3,248,843 $ 2,46],0]8 Less: Credit for Existing General Once 5 %x$188.43 xNSF $ (4]1,0]5) $ (4]1,0]5) $ (4]1,0]5) Less: Credit for Eapting Industrial 5 %x$104.60 xNSF $ (800,190) $ (800190) $ (800190) Net Affordable Housing Linkage Fee $ 2,056,425 S 1,9T{578 $ 1,195,813 Proposed ParkVRecm.tion Fee Market Rate 0.1 SR Units 25 %x$16,554 per Unit $ 1,158,780 5 475,928 5 - Market Rate 2- 38R units 25 %x$26,661 per Unit $ 1,126,427 $ 426,576 $ - Office 25 %x$9.24 xNSF $ 898.500 $ 875,060 $ ]1],255 Retail 25 %x55.98 vWSF $ 43.940 S 44.268 $ - Subtotal S 3,22],64] S 1,821,832 S 717,255 Less: Credit for Existing Once 25 %x$9.24 x50,000 NSF $ (115,500) $ (115,5D0) $ (115,500) Less: Credit for Existag Industrial 25 %x$5.18 x153,000 NSF $ (198135) $ (198,135) S (196135) Net Parks/Recreation Fee $ 2,914,012 $ 1,508,197 $ 403,620 Arts Fees New Residential/Cconn al 1.00% x$200ISF $ 3,060,384 S 2.173,499 $ 208,000 Tenant Improvements 1.00% x$50ISF S 403,825 S 406425 $ 155,250 Subtotal Arts Fee S 3,464,209 $ 2,581,924 $ 363,250 Child Care Fee Residential $133.48 per unit $ 59,933 $ 23,893 $ - Retail $4.53 x NSF $ 133,141 $ 134,130 $ - Ofice 56.34 xNSF $ 2466,013 $ 2,401,681 $ 1988.570 Subtotal Child Care Fee S 2,659,086 5 2.559,712 $ 1,968,570 School Facilities Fee Residential $3.20 .NSF S 1,109,501 $ 431,839 S - Commeraal $0.51 xNSF $ 213,360 $ 208297 S 156,355 Subtotal School Facilities Fees $ 1,322,851 $ 640,136 S 158,355 Subtotal Other Requirements $ 12,416,593 $ 9,26],54] $ 4,009,608 BIEg.lCDnstmotion paMhs2 Plan Check Residential 4+ stories $0.9127 xNSF S 316,473 $ 123,169 $ - Commercial nlOKSF $1.2790 xNSF 537,591 53],8]2 S - Commercial >10K SF14 stores $1.3521 xNSF $ 510,028 $ 515,994 $ 422,941 Mechanical $727 per project $]2] $727 $727 Ele.m.1 $727 per project $727 $727 $727 Plumbing $727 per project $727 $727 $727 Building Permitsllnspections Multi - family 4+ Stories 51.0236 xNSF S 354,927 $ 138,135 5 - Comm er !or lSt., SD.7]82 xNSF $ 22,872 $ 23,043 5 - Commemial4 +stories $1.3581 xNSF $ 508,519 $ 514,467 $ 421,690 Tenant Improvements >10K SF $0.2702 xNSF $ 112,344 $ 113,624 $ 86,381 G,.a.hmcal Reports 52,481 per project $ 2,481 S 2,481 $ 2,481 Subtotal SIdg.IConstruction Permits 5 1,867,416 $ 1,470,966 $ 935,674 Utility Fees' Water Meter $3,837 314" meter per parcel $ 19,185 $ 15,348 S 3,837 Fire Line Meter $18,195 4" meter per parcel $ 90,975 $ ]2,]80 $ 18,195 Wastewater Capital Facilities Studloll -BR Units $1,168 per unit $ 374,928 S 141,328 $ - 2 -BR +Units $1.557 per unit $ 275,589 S 104,319 $ - Commerdal $7]9 per 1,000 NSF $ 314,580 $ 318,163 5 241,860 Subtotal Utilities $ 1,075,257 $ 651,938 $ 263,912 Total City Permits S Fees $ 21,2]6,56] $ 15,486,045 S 7,635,012 per GSF 523.75 $24.78 $21.39 Per Program Summary, Appendix A, 2 Per FY 2013.14 City fees schedule, new Transportation Impact Fee per Ordinance N0. 2420 (CCS). and draft linkage and parks /recreation fees as of July 2013. 3 For proposed Project and Ter 1 base case only, assumes 2%x applicable hard costs for on -site art. 4 Includes meter and captial faith fies charge. HRBA Advisom, Inc. Revised No Benefits Residual Land Value Analydd v4_4 -0}13 CCity cost oetell 12.0 }2013 Page 12 of 16 Appendix D Net Operating Income Development SCenarid Land Area Gross Bldg. Area (SF) Residential Units Market Rate Studio 1 SR 1 BR Loft 2 BR 2 BR Townhouse 3SR Subtotal Market Rate Stutlio- Extremely Low Income Studio - Very Low Income Studio - Law income i BR- Extremely Low Income 1 BR - Very Law Income 1 SR -Low Income 1 SR Loft - Very Low income 2 BR - Extremey Low Income 2 SR - Very Low Income 2 BR - Low Income 2 SR Townhouse -Very Low Inwme 3 BR - Extremely Low Income 3 BR- Very Low Income SubtotalABOrpable Retail (Net SF) Once (Net SF) Residential (Net SF) Market Rate (% of total units) Affordable (% of total units) Parking Spaces Residentiai Market Rate (% of total units) Affordable I% of total units) OficelRetail Residential Market Rate Apar mentsr Studio 1 BR 1 BR Loft 2 BR 2 BR Townhouse 3SR Gross Rental income per Month Gross Rental Income per Year Parking Income Nir usl)F Premium Income (annual)' Other Miac Income (annual)' Total Gross Income Less: Vacancy & Collection Loss° Effective Gross Income (EGI) Less: Operating Expenses & Mgmt. Fee° Less: Replacement Reserve° Less: Annual Community Benefit Payments Residential Transit Subsidy Historic Preservation Programs Net Operating Income - Market Rate Residential Assumptions Proposed Protect 310,500 B95,010 Meet Project 310,500 624,881 NSF 211 370 69 530 25 580 94 859 62 98D 13 1,307 474 546 - - Meet Project 310,500 624,881 Zon'na- Compliant Praiser 310,500 357,000 NSF 11 NSF 80 370 35 530 Per NSF $41 859 59 904 5 1,307 179 546 - - Zon'na- Compliant Praiser 310,500 357,000 NSF 11 355 4 365 - Per Unit 365 Per NSF Per Unit 361 per uniVmonth $ 337,600 5 546 2 546 - - 548 $2,500 - $ 172,500 540 $ 87,500 54.72 507 $ - $2,500 7 849 3 849 - - is - 849 $ - $3,175 841 $ 298,450 $3.70 874 $0.00 - 1 1,232 - 1,232 - - -24 1.232 $ 193,225 $3.62 $ - 9 perunittmonth 29.391 $3.36 29,611 - 374,434 378,814 310,500 361,271 10D% 134.950 100% - 2$7,637 80% 108,021 80% - 73,634 20% 26,929 20% - 747 100% 282 100% - 711 95% 269 95% - 36 5% 14 5% 1,189 $ - 1,091 600 Page 13 of 16 Per NSF $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 S0.0D 5100 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 S0.0o $0.00 50.00 $0.00 HRdA Advisors. Inc. Revised No Si Residual Land Value Analysis x4_12 -M-13 D-Net Ops Income 1503 -2913 Per age Per Unit Per NSF Per Unit $1,60D per uniVmonth $ 337,600 $4.32 $ 12B4O00 $4.32 is - $2,500 per unit/month $ 172,500 $4.72 $ 87,500 54.72 $ - $2,500 per unit/month $ 65,000 $4.48 is - $0.00 $ - $3,175 permitmi $ 298,450 $3.70 $ - $0.00 $ - S3,275 pdrunitlmonih $ 203,050 $3.34 $ 193,225 $3.62 $ - S4,420 perunittmonth $ 57.460 $3.36 $ 22.100 $3.38 S - S 1,134,060 $3.94 52,393 $ 430,825 $3.99 $2,407 is - 12 months S 13,608,720 $47.31 $28,710 $ 5,169,900 $47.86 $26,882 $ - 5110 perspacelmonth $ 938,520 $3.26 $1,980 is 354,420 $3.28 $1,980 $ - $205 peruniVyear $ 97.170 $0_34 $205 $ Si $0_34 $205 $ 3% x Gross Rental Income $ 408,252 $1.42 $661 $ 155,097 $1.44 $866 $ - $ 15,052,572 $52.33 $31,757 $ 5,716,112 $52.92 $31,934 $ - 5.0% x Gross lncomelyear $ (752634) - -52.62 41588 $ (285,806 42,65 - $1.599 $ - $ 14,300,038 $49.72 $30,169 $ 5,430.306 S50.27 $30.337 $ - $9,119 per unityear 5 (4,322,406) u$15.D3 49,119 5 (1,632,301) 515.11 - $9,119 3 - $150 per unityear $ (71,100) -$0.25 -$150 $ (26.850) -$0.25 4150 $ - $ - s0.00 $0 $ - $0.00 so $ - $ $000 _ $ $0_00 So $ $ 9,906,532 $34.44 $20900 is 3,T71,155 $34.91 521,068 $ - Page 13 of 16 Per NSF $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 S0.0D 5100 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 S0.0o $0.00 50.00 $0.00 HRdA Advisors. Inc. Revised No Si Residual Land Value Analysis x4_12 -M-13 D-Net Ops Income 1503 -2913 Page 14 of 16 HRMAdvisers, Inc. Revised No Benefits Residue) Land Value Aneysia_v4 12 -03-13 DNet Oq Income 12 -0}2013 Assumptions Proposed Proiectl Teri Preface Zon'na -0ompliant Project, Per NSF Per Unit Per NSF Pew$ Per NSF AMoNable Apartmenta4 Studio - Extemey Low l nmme 5340 per unitmonth S 3,740 $0.93 $ 1,360 $0.05 $ - studio Vary Low Income $567 per unitmonth S - $0.00 S - $0.00 S - Studio Low Income $680 per unNmonth $ - $0.00 S - $0.00 $ - 18R- Extremely Low Income 5389 per unitmonth $ 1,945 S9.71 $ 778 $0.03 $ - IBR - Very Low Income 5646 per unitlmonth $ - $0.00 $ - $0.00 $. - 1SR- Law Income $798 per unitmonth $ - $0.00 $ - $0.00 is - 18R Loft - Very Low Income $645 per unit/menO $ - $0.00 $ - $0.00 $ - 2BR- Extremely Low Income $437 per uniVmonth $ 3,059 $0.51 $ 1,311 $0.05 $ - 2BR -Very Low Income $729 per unitlmonth 5 - $0.00 $ - $0.00 S - 2BR -Low Income $875 per uniVmcnN 5 - $0.00 S - $0.00 $ - 2BR Townhouse -Very Low Income $729 per unitlmonth S - $0.00 S - $0.00 S - 38R- Extremely Low Income $486 per unitlmonth S 486 $0.39 $ - 50.00 S - 3BR- Very Low Income $810 per unitlmonth S - $000 $ $0_00 $ Gross Rental Income per Month $ 9,230 $0.13 $385 $ 3,449 $0.13 $383 $ - $0.00 Gross Rental Income per Year 12 months $ 110,760 51.50 $4,615 $ 41,388 $1.54 $4,599 $ - $0.00 Parking Income (unbundled parking assumed) so $ - $0.00 $0 $ - $0.00 $0 Premium Income (annual)" $205 per uniVyear is 4.920 SOD] $205 $ 1845 $0.07 $205 S - $0.00 Other Misc. Income (annual)" 3% x Gross Rental Income S 3,323 $0_05 $138 S 1,242 $0_05 $13B S - $0_00 Total Gross Income $ 119,003 $1.62 S4,958 S 44,475 $1.65 $4,942 S - $0.00 Less: Vacancy B Collection LOSS" 5.0% xGross Income S (5.950) -246 S (2224) -$0.08 -5247 S ,$000 Effective Gross Income (EGI) S 113,053 $1.54 54,711 $ 42,251 $1.57 $4,695 S - $0.00 Less: Operating Expenses B Mgmt. Fee" $9,119 per uniVyear S (218,656) -$2.97 - $9,119 $ (82,071) 53.05 -SE119 $ - $0.00 Less: Replacement Reserve" $150 per unityear S (3,600) -$0.05 -$150 $ (1350) -$0.05 -150 $ - $000 Net Operating Income- Affordable Residential S (109,403) -$1.49 54,558 $ (41,170) -$1.53 - 54,574 S - $0.00 Retail Per NSF Per NSF Per NSF Average RoMISF/Month(NNN)s $4.75 per NSF /month $4.75 $4.75 $ - $0.00 Gross Annual Rental Income (NNN) $ 1,6]5.28] $57.00 is 1,68],132] $57.00 $ - $0.00 Less: Vacancy & Collection Loss 5.c °A $ (83764) -$285 $ (84391) 5285 $ - $0.00 Effective Gross Income (EGI) $ 1,591,523 $54.15 S 1,603436 S54A6 $ - $0.00 Less: Unreimbumed Operating Expenses 3.0% x EGI S (4]7467 51.62 $ (48.103) -51.62 S - $0_00 Net Operating Income - Retail S 1,543,7`77 $52.53 3 1,555,333 $52.53 S - S100 Office" Per NSF Per NSF Pan N F Average Monthly Rent(FSG) per NSFlmonth $4.50 $4.35 $4.35 Average Annual Rent(FSG) per NSFlyear $54.00 $52.20 $52.20 Gross Annual Rental Income(F3G) $ 20,219,436 $54.00 $ 18,774,091 $52.20 $ 15,208.100 $52.20 Parking Incomervear(Ind. Retails Proposed Project 56.99 per NSFNear $ 2,822,]3] $7.54 $ - $0.00 $ - $0.00 Teri Project $6.12 per NSFlyear $ - $0.00 $ 2,499,561 $6.60 $ - $0.00 Zoning - Compliant Project $3.48 per NSF/y... $ SO_00 S $0_00 $ 1.080,540 $3_48 Gross Rental limomelYear $ 23,042,173 $61.54 $ 19,]]4,091 $52.20 S 16,208,100 $52.20 Less: Vacancy & Collection Loss 5.0% $ (1.152,109 43.DS 5 (988]05) -2.61 5 (810405) -S2.61 Effective Gross Income (EGI) S 21,890,064 558.46 $ 13,785,386 $49.59 $ 15,397,695 $49.59 Less: Annual Community Benefit Payments WA Contribution S - $0.00 S - $0.00 $ - $0.00 Bike Share Facility S - $0.00 $ - $0.00 $ - $0.00 Child Care Contribution $ - $0.00 $ - $0.00 $ - $0.00 Histonc Preservation Programs $ - 50.00 $ - $0.00 is - $0.00 Van Pool Subsidy $ - $0.00 $ - $0.00 $ - $0.00 Parking Cash-Out Program $ - $0.00 $ - $0.00 $ - $0.00 Less: Operating Expenses $12.50 per NSFyeac $ (4680,425) - $12.50 is (4,735,175) 512.50 S (3,881,250) $12.50 Less: Real Estate Taxes' 1.25% x subtotal N0l x cap rate $ (34281215) 59.16 5 (2]98,84]) 37.39 S (2,294,113) -51.39 Net Operating Income - Office S 13.781,424 S36.81 $ 11,251,364 $29.70 $ 9,222,332 $29.70 Total Net Operating Income $ 25,122,330 532.84 $ 16,536,682 $30.43 $ 9,222,332 $29.70 Per Program Summary, Appendix A. " Per Hines, and ved6ed by HR&A as reasonable assumptions based on current market earphone a Per Hines (100 units purchase storage units at $50 1me, and pay additional rent for pets at $25 17konth). 4 Per"! 'a maximum AHPP rents, as modified by City Council action on June 11, 2013. s Per HR &A. Accounts for a mix of retail tenants (assuming $3.50 psf per me.) and dining tenants (assumes $6.00 pat per me.). 6 For Proposed Project and Ter 1 Project, weighted average of reserved monthly (5240; 10%), unreserved monthly ($165; 80 %) and daily ($40; 50A); for Zoning Compliant, $150 unreserved. ' HR&A estimates. Page 14 of 16 HRMAdvisers, Inc. Revised No Benefits Residue) Land Value Aneysia_v4 12 -03-13 DNet Oq Income 12 -0}2013 Appendix E Residual Land Values Page 15 of 16 HRBA Advisors, Inc. Revised No Benefits Residual Land Value Analysis—v4-12-03-13 E- Resitlual Values 12- 032013 Zoning- Compliant Development Scenario' Assumptions Proposed Project Tier 1 Proiect Project Land Area 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 624,861 357,000 Residential Units - Market Rate 474 178 Studio 211 80 - 1 BR 69 35 1 SR Loft 25 - - 2 SR 94 2 SR Townhouse 62 59 - 3 BR 13 5 Affordable 24 9 " Studio - Extremely Low Income 11 4 - Studio -Very Low Income - - " Studio - Low Income - 1 BR - Extremely Low Income 5 2 " 1 BR - Very Low Income - - " 1 BR -Low Income - - " 1 SR Loft - Very Low Income - - - 2 SR - Extremely Low Income 7 3 - 2 SR - Very Low Income - - - 2 BR - Low Income - - " 2 BR Townhouse -Very Low Income - - - 3 BR - Extremely Low Income 1 " 3 BR- Very Low Income - " Residential (Net SF) 361,271 134,950 - Market Rate (% of total units) 287,637 108,021 - Affordable (% of total units) 73,634 26,929 - Retail (Net SF) 29,391 29,611 - Offce (Net SF) 374,434 378,814 310,500 Project Value Residential- Market Rate Per NSF Per Unit Per NSF Per Unit Per NSF Net Operating Income From Ape,D $ 9,906,532 $34 $20,900 $ 3,771,155 $35 $21,068 $ - $ - Cap Rate' 4.63% Value NOI /Cap Rate $ 205,316,725 $714 $433,158 $ 75,158,653 $724 $436,641 $ - $ - Residential- Affordable Net Operating Income From App,D $ (109,403) -$1 - $4,558 $ (41,170) -$2 - $4,574 $ - $ - Cap Rate' 4.83% Value NOI /Cap Rate $ (2,267,420) -$31 - $94,476 $ (853,264) -$32 - $94,607 $ - $ - Retail Net Operating Income From Apt,D $ 1,543,777 $53 $ 1,555,333 $53 $ - $ - Cap Rate' 6.20% Value NO]/Cap Rate $ 24,899,629 $847 $ 25,086,016 $847 $ - $ - Office Net Operating Income From App,D $ 13,781,424 $37 $ 11,251,364 $30 $ 9,222,332 $30 Cap Rate' 6.28% Value NO[/Cap Rate $ 219,624,285 $587 $ 179,304,606 $473 $ 146,969,441 473 Total Project Value $ 447,573,219 $585 $ 281,696,011 $518 $ 146,969,441 $473 Page 15 of 16 HRBA Advisors, Inc. Revised No Benefits Residual Land Value Analysis—v4-12-03-13 E- Resitlual Values 12- 032013 Real Estate Report, 2nd Quarter 2013, Los Angeles Area data 0 10-15% typical, per HR&A. HR&A Advisors, Inc. Revised No Benefits Residual Land Value Analysis _v4_12 -03 -13 E- Residual Values Page 16 of 16 12 -03 -2013 Zonino- Compliant Development Scenario' Assumptions Proposed Proiect Per NSF Tier 1 Proiect Per NSF Project Per NSF Residual Land Value Estimate Total Project Value From above $ 447,573,219 $585 $ 281,696,011 $518 $ 146,969,441 $473 Less: Developer Proft2 10.00ri x Total Project Value $ (44,757,322) -$58 $ (28,169,601) -$52 $ (14,696,944) -$47 Less: Total Net Development Cost From App, B $ (346 912,729) -$453 $ (234,112,380 -$431 $ (85 033,768) -$274 Residual Land Value Total $ 55,903,168 $74 $ 19,414,030 $35 $ 47,238,729 $152 Per SF Land Area $180 $63 $152 Average of the midpoint of the cap rate range per CBRE, Cap Rate Survey, February 2013, Los Angeles area data; and and point estimates by Real Estate Research Corp., Real Estate Report, 2nd Quarter 2013, Los Angeles Area data 0 10-15% typical, per HR&A. HR&A Advisors, Inc. Revised No Benefits Residual Land Value Analysis _v4_12 -03 -13 E- Residual Values Page 16 of 16 12 -03 -2013 ALTERNATIVE 4 EIR H& Analyze, Advk , Act, 2800 28th Street, Suite 325, Santa Monica, CA 90405 F; T; 310 -581 -0900 1 . 310.581 -0910 j � _r,),raadvisors,00rn MEMORANDUM To: Jing Yea, City of Santa Monica From: Paul J. Silvern Date: December 3, 2013 Re: Estimate of the Value Enhancement of the Bergamot Transit Village Under Draft EIR Alternative 4 (Reduced Project) — With No Community Benefits Per your request, this memorandum summarizes the results of a "Value Enhancement" analysis of the Alternative 4 (Reduced Project) version the proposed Bergamot Transit Village development ( "Project "), as that alternative was presented in the Project's Draft Environmental Impact Report (EIR), but without any of the community benefits that have been negotiated between City staff and Hines, LLC ( "Hines ") for the Project. The analysis is based on certain assumptions required for this analysis that go beyond the general description of Alternative 4 as presented in the Draft EIR, and considers additional information about the likely financial performance of Alternative 4 as provided by Hines. The residual land value and relayed Value Enhancement results for Alternative 4 are presented in comparison with the no- benefits analysis for the proposed Project (as recently revised) and the Tier 1 project and Zoning - Compliant project base case scenarios. Table 1 provides a comparison of the physical features of Alternative 4, as compared with the other cases. Relative to the proposed Project, Alternative 4 features 189,670 less gross floor area and 144,096 less net floor area overall. Importantly, it also features a very different distribution of floor area by land use: 55,566 more net square feet of creative office space; 4,391less square feet of retail; and 256 fewer total residential units (244 fewer market rate units and 12 fewer affordable units). HR &A Advisors, Inc. I Los Angeles I New York I Washington, D.C. Table 1 Features of Alternative 4 vs. Proposed Project and the Tier 1 and Zoning - Compliant Base Cases, Bergamot Transit Village Project Table 2 on the following page compares the key components of the residual land value estimates for Alternative 4 with the other development scenarios, which define the Value Enhancement results. As compared with the proposed Project, Alternative 4 exhibits the following differences: ® Significantly Lower Development Cost. Based in part on the overall differences in floor areas, the total development cost for Alternative 4 is about $85.8 million (- 24.7 %) less than for the proposed Project. But this difference is also a result of the fact that Alternative 4 has not been fully designed or subject to the rigorous scrutiny that the City staff and Planning Commission have given to the proposed Project design, including requirements for particularly high quality architectural and public open space design. Accordingly, the development costs assumed for Alternative 4 in this analysis are relatively generic, and do not reflect the costs of various design improvements that have been assumed for the proposed Project at its current state of design. ® Lower Net Operating Income (NOI). Although NOI from the residential uses (market rate and affordable units) is about $5.1 million less than the residential NOI in the proposed Project, and retail NOI is about $230,000 less, the office NOI is about $2.0 million more than for the proposed Project. Overall, the total NOI for Alternative 4 is about $3.4 million less than for the proposed Project (- 13.4 %). ® Lower Capitalized Value. Consistent with the changes in NOI noted above, the capitalized value of Alternative 4 is about $78.3 million (- 17.5 %) less than the proposed Project. HP. &A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE ALT. 4 VALUE ENHANCEMENT -WITH NO BENEFITS 1 2 Alt.4 Zoning - Compliant Development Scenario Reduced Project Proposed Project Tier 1 Project Project LUCE Tier 2 3 1 1 Permit Requirement DR DA As -of -Right As -of -Right # Parcels 5 5 4 1 Bldg. Height (Feet) 81 81 35 35 Stories ( #) 6 -7 6 -7 2 2 Site Area (SF) 310,500 310,500 310,500 310,500 Gross Bldg. Area (SF) 706,340 896,010 624,881 357,000 Floor Area Ratio (FAR) - Gross Area - 2.89 2.01 1.15 Floor Area Ratio(FAR) - Net Area 2.00 2.46 1.75 1.00 Net Leasable Areas Residential (SF) 166,000 361,271 134,950 - Market Rate Unitsi 229 474 179 - Affordable Units 12 24 9 - Total Units 241 r 498 188 - Retail (SF) 25,000 29,391 29,611 - Office (SF) 430,000 374,434 378,814 310,500 The market -rate residential units total for the proposed Project includes 25 live -work units. As noted in the supporting calculation detail, these units were, however, considered a creative office use for purposes of calculating certain City development fees. Prepared by HR&AAdvisors, Inc. Table 2 on the following page compares the key components of the residual land value estimates for Alternative 4 with the other development scenarios, which define the Value Enhancement results. As compared with the proposed Project, Alternative 4 exhibits the following differences: ® Significantly Lower Development Cost. Based in part on the overall differences in floor areas, the total development cost for Alternative 4 is about $85.8 million (- 24.7 %) less than for the proposed Project. But this difference is also a result of the fact that Alternative 4 has not been fully designed or subject to the rigorous scrutiny that the City staff and Planning Commission have given to the proposed Project design, including requirements for particularly high quality architectural and public open space design. Accordingly, the development costs assumed for Alternative 4 in this analysis are relatively generic, and do not reflect the costs of various design improvements that have been assumed for the proposed Project at its current state of design. ® Lower Net Operating Income (NOI). Although NOI from the residential uses (market rate and affordable units) is about $5.1 million less than the residential NOI in the proposed Project, and retail NOI is about $230,000 less, the office NOI is about $2.0 million more than for the proposed Project. Overall, the total NOI for Alternative 4 is about $3.4 million less than for the proposed Project (- 13.4 %). ® Lower Capitalized Value. Consistent with the changes in NOI noted above, the capitalized value of Alternative 4 is about $78.3 million (- 17.5 %) less than the proposed Project. HP. &A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE ALT. 4 VALUE ENHANCEMENT -WITH NO BENEFITS 1 2 Table 2 Value Enhancement Summary of Results - No Community Benefits Bergamot Transit Village Alt.4 vs. Proposed Project, Tier 1 Project and Zoning - Compliant Project Base Cases Zoning - Alt.4 Compliant Development Scenario Reduced Project Proposed Project Tier 1 Project Project Development Costs Land Costs See Below See Below See Below See Below Hard Costs $ 188,653,347 $ 254,701,037 $ 166,577,554 $ 60,579,593 Soft Costs City Permits and Fees $ 18,750,722 $ 21,276,567 $ 15,486,945 $ 7,635,812 Public Benefit Payments $ - $ - $ $ " Other Soft Costs $ 42,671,796 $ 51,811,500 $ 42,042,193 $ 18,567,045 Financing Costs $ 23,532,139 $ 30,844,955 $ 21,088,441 $ 5,063,756 Total Development Cost $ 273,608,004 $ 358,634,059 $ 245,195,133 $ 91,846,206 Less: Lease -up Revenue $ (12,528,420) $ (11,721,331) $ (11,043,567) $ (6,812,438) Net Development Cost $ 261,079,584 $ 346,912,728 $ 234,151,566 $ 85,033,768 Net Operating Income (NOI) Residential - Market Rate $ 4,716,891 $ 9,906,532 $ 3,772,409 $ - Residential- Affordable $ (55,277) $ (109,403) $ (41,170) $ - Retail $ 1,313,137 $ 1,543,777 $ 1,555,333 $ - Offce $ 15,780,043 $ 13,781,424 $ 11,251,364 $ 9,222,332 Total Net Operating Income $ 21,754,794 $ 25,122,330 $ 16,537,936 $ 9,222,332 Project Component Values Residential - Market Rate $ 97,759,399 $ 205,316,725 $ 78,184,642 $ - Residential- Affordable $ (1,145,637) $ (2,267,420) $ (853,264) $ - Retail $ 21,179,629 $ 24,899,629 $ 25,086,016 $ - Office $ 251,474,791 $ 219,624,285 $ 179,304,606 $ 146,969,441 Total Project Value $ 369,268,182 $ 447,573,219 $ 281,722,000 $ 146,969,441 Residual Land Value Estimate Total Project Value $ 369,268,182 $ 447,573,219 $ 281,722,000 $ 146,969,441 Less: Deeelooer Profit $ (36,926,818) $ (44,757,322) $ (28,172,200) $ (14,696,944) Less: Total Net Development Cost Prepared by: HR &A Advisors, Inc. 151 Arw sdRS, Itde. BERGrJ✓,OT TRANSIT VILLAGE ALT. 4 VALUE ENHANCEMEIAT -WITH NO BENEFITS 1 3 • Higher Residual Land Value. The combined effect of much lower overall development costs (but subject to the caveats noted above) and somewhat lower capitalized value results in a residual land value for Alternative 4 of about $71.3 million, which is about $15.4 million more than the residual land value for the proposed Project. Comparing the residual land values for Alternative 4 with no community benefits with the residual land values for the Tier 1 project and Zoning - Compliant project means that Alternative 4 results in the following Value Enhancement over those base cases: • About $51.9 million over the Tier 1 base case, as compared with the Project's Value Enhancement difference of about $36.5 million over this base case. • About $24.0 million over the Zoning - Compliant base case, as compared with the Project's Value Enhancement difference of about $8.7 million over this base case. All of the calculation details supporting the above summary and conclusions are included in Attachment A to this memo. Ii.A D I5GR5, INe. BERGAMOT TRANSIT VILLAGE ALT. 4 VALUE ENHANCEMENT -WITH NO BENEFITS 1 4 Attachment A Residual Land Value Calculation Models for the Bergamot Transit Village Without Community Benefits: Alternative 4, the Proposed Project, Tier 1 Base Case Scenario and Zoning - Compliant Base Case Scenario TDVISORS INC. BERGAMOT I RANSII V ILLAI L 4 VALUE WITH No BENEFITS Alt 4 (Reduced Project) Residual Land Value Analysis -Summary of Results - No Community Benefits Bergamot Transit Village Project vs. Ter f Project Scenario and Zoning - Compliant Project Scenario Program Summary (see App. A) Alt. 4 Zoning - Compliant Development Scenario Reduced Project Proposed Project Tier 1 Protect Project LUCE Tier 2 3 1 1 Permit Requirement DR DA Aii-of -Right As-of -Right # Parcels 5 5 4 1 Bldg. Height (Feet) 81 81 35 35 Stories ( #) 6-7 6 -7 2 2 Site Area (SF) 310,500 310,500 - 310,500 310,500 Gross Bldg. Area (SF) 706,340 896,010 624,881 357,000 Floor Area Ratio(FAR) - Gross Area - 2.89 2.01 1.15 Floor Area Ratio(FAR) - Net Area 2.00 2.46 1.75 1.00 Net Leasable Areas Residential (SF) 166,000 361,271 134,950 - Market Rate Units' 229 474 179 - Affordable Units 12 24 9 - Total Units 241 498 188 - Retail (SF) 25,000 29,391 29,611 - Offce (SF) 430,000 374,434 378,814 310,500 Development Costs (see App. B & C) Land Costs See Below See Below See Below See Below !. Hard Costs $ 188,676,982 $ 254,701,037 $ 166,546,054 $ 60,579,593 SOH Cods City Permits and Fees $ 18,750,722 S 21,276,567 $ 15,486,945 $ 7,635,812 Public Benefit Payments $ - $ - $ $ - OtherSoftCosts $ 42,675,034 S 51,811,500 $ 42,037,877 $ 18,567,045 Financing Costs $ 23,534,668 $ 30,844,955 $ 21,085,069 $ 5,063,756 Total Development Cost $ 273,637,406 $ 358,634,059 $ 245,155,946 $ 91,846,206 Less: Commercial Lease -up Revenue $ (12,255,457) $ (11,272,673) $ (10,880,430) $ (6,812,436) Less: Residential Lease -up Revenue $ (272,963) $ (448.658) $ (163,137) $ Net Development Cost $ 261,108,986 $ 346,912,728 $ 234,112,379 $ 85,033,768 Net Operating Income (NOI) (see App. D) Residential- Market Rate Effective Gross Income $ 6,839,492 $ 14,300,038 $ 5,430,306 $ - Less: All Operating Expenses $ (2,122,601) $ (4,393,506) $ (1,659,151) $ - Net Operating Income $ 4,716,891 $ 9,906,532 $ 3,771,155 $ - Residential- Affordable Effective Gross Income $ 55,951 $ 113,053 $ 42,251 $ - Less:AllOpefatingEXpenses $ (111,228) $ (222,456) $ (83,421) $ Net Operating Income $ (55,277) $ (109,403) $ (41,170) $ - Retail Effective Gross Income $ 1,353,750 $ 1,591,523 $ 1,603,436 $ - Less: All Operating Expenses S (40,613) $ (47,746) $ (48,103) $ - Net Operating Income $ 1,313,137 $ 1,543,777 $ 1,555,333 $ - Offce Effective Gross Income $ 25,080,427 $ 21,890,064 $ 18,785,386 $ 15,397,695 Less: All Operating Expenses $ (9,300,384) $ (8,108,640) $ (7,534,022) $ (6,175,363) Net Operating Income $ 15,780,043 $ 13,781,424 $ 11,251,364 $ 9,222,332 Total Net Operating Income $ 21,754,794 $ 25,122,330 $ 16,536,682 $ 9,222,332 Page 1 of 18 HR8A Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis v3 12 -03-13 Summary 12 -03 -2013 ' The market -rate residential units total for the proposed Project includes 25 live-work units. As noted in the supporting detail, these units were however, considered a creative office use for purposes of calculating certain City development fees. Page 2 of 18 HR&A Advisors, Inc. Alt 4 No Benefits Residual Lantl Value Analysis v3_12 -03 -13 Summary 12 -03 -2013 Alt 4 Zoning- Compliant Development Scenario Reduced Project Proposed Project Tier 1 Project Proiect Project Component Values (see App. E) Residential - Market Rate $ 4,716,891 $ 9,906,532 $ 3,771,155 $ - N01 433% 4.83% 4.83% 4.63% Cap Rate Value $ 97,759,399 $ 205,316,725 $ 78,158,653 $ - Residential- Affordable $ (55,277) $ (109,403) $ (41,170) $ - NOI 4.83% 4.83% 4.63% 4.83% Cap Rate Value $ (1,145,637) $ (2,267,420) S (853,264) $ - Retail NOI - $ 1,313,137 $ 1,543,777 $ 1,555,333 $ - Cap Rate 6.20% 6.20% 6.20% 6.20% Value $ 21,179,629 $ 24,899,629 $ 25,086,016 $ Office NOI $ 15,780,043 $ 13,781,424 $ 11,251,364 $ 9,222,332 6.28% 6.28% 6.28% 6.28% Cap Rate $ 251,474,791 $ 219,624,285 $ 179,304,606 $ 146,969,441 Value Total Project Value $ 369,268,182 $ 417,573,219 $ 281,696,011 $ 146,969,441 Residual Land Value Estimate $ 369,268,182 $ 447,573,219 $ 281,696,011 $ 146,969,441 Total Project Value $ (36,926,818) $ (44,757,322) $ (28,169,601) $ (14,696,944) Less: Developer Profit $ $ (346912728) $ (234112379) $ (85033768) Less: Total Net Development Cost (261,108,986) Residual Land Value - No Benefits $ 71,232,378 $ 55,903,169 $ 19,414,031 $ 47,238,728 Total $229 $180 $63 $152 Per SF Land! Area ' The market -rate residential units total for the proposed Project includes 25 live-work units. As noted in the supporting detail, these units were however, considered a creative office use for purposes of calculating certain City development fees. Page 2 of 18 HR&A Advisors, Inc. Alt 4 No Benefits Residual Lantl Value Analysis v3_12 -03 -13 Summary 12 -03 -2013 Appendix A Physical Parameters HRBA Advisors, Inc.. Alt 4 No Benefits Residual Land Value Analysis_v3_12 -03 -13 A- Program Page 3 of 18 12 -03 -2013 Alt 4 Reduced Zoning - Compliant Development Scenario Proiect' Proposed Proiect' Tier 1 Proiect2 Proiect' LUCE Tier 2 3 1 1 Permit Requirement As -of -Right DA As -of -Right As -of -Right # Parcels 5 5 4 1 Max. Bldg. Height (Feet) 81 81 35 35 Stories ( #) 6 -7 6 -7 2 2 Land Area (SF) 310,500 310,500 310,500 - 310,500 Gross Bldg. Area (SF)3 706,340 896,010 624,881 357,000 Residential 205,840 451,803 155,192 - Retail 27,500 32,330 34,053 - Offce 473,000 411,877 435,636 357,000 Floor Area Ratio (FAR) -Gross SF 2.89 2.01 1.15 Floor Area Ratio (FAR) -Net SF 2.00 2.46 1.75 1.00 Net Leasable Areas (Net SF)' 621,000 765,096 543,375 310,500 Residential 166,000 361,271 134,950 - Retail 25,000 29,391 29,611 - Office 430,000 374,434 378,814 310,500 Residential Unit Mix' Market Rate Units 229 474 179 - Studio 103 211 Bo - 1 SR 45 69 35 - 1 BR Loft- LiveMork - 25 - - 2 SR 75 94 2 SR Townhouse 62 59 - 3 BR 6 13 5 - Market Rate Units Net SF (NSF) Studio NSF 370 370 370 - 1 BR NSF 530 530 530 - 1 BR Loft NSF 580 580 541 - 2 BR NSF 659 859 859 - - 2 BR Townhouse NSF 980 980 904 - 3 BR NSF - 1,307 1,307 1,307 - HRBA Advisors, Inc.. Alt 4 No Benefits Residual Land Value Analysis_v3_12 -03 -13 A- Program Page 3 of 18 12 -03 -2013 Page 4 of 18 Zonina - Compliant Proiece .rr 12 HR&A Advisors, Inc.. Alt 4 No Benefits Residual Land Value Analysis-v3 12-03-13 A- Program 12 -03 -2013 Alt 4 Reduced Development Scenario Proiect+ Proposed Proiect' Tier 1 Proiece Affordable Rate Units 12 24 9 Studio - Extremely Low Income 6 11 4 Studio -Very Low Income - - Studio - Low Income - - 1 BR - Extemely Low Income 2 5 2 1 BR - Very Low Income - - 1 BR -Low Income - 1 BR Loft - Very Low Income 2 BR - Extemely Low Income 4 7 3 2 BR -Very Low Income - - - 2 BR - Low Income - - - 2 BR Townhouse -Very Low Income - 3 BR - Extemely Low Income - 1 - 3 BR- Very Low Income - - Affordable Units Net SF (NSF) Studio - Extremely Low Income 365 365 365 Studio - Very Low Income - 365 - Studio - Low Income - 361 - 1 BR - Extemely Low Income 548 548 548 1 BR - Very Low Income 0 548 - 1 BR -Low Income - 540 - 1 BR Loft - Very Low Income - 607 - 2 BR - Extemely Low Income 849 849 849 2 BR - Very Low Income - 849 2BR -Low Income - 841 2 BR Townhouse -Very Low Income - 974 - 3 BR - Extemely Low Income 1,232 1,232 1,232 3 BR- Very Low Income - 1,232 - Parking° Surface Parking (spaces) Subterranean Parking (spaces) - 1,561 - 1,936 1,373 Levels 1 -2 1,297 1,297 1,373 Office /Retail 935 - 797 1,091 Residential 362 500 282 Level 284 639 - Office /Retail 284 392 - Residential - 247 Construction Period (months) 24 24 24 Per Hines; Draft EIR; and City staff. 2 Per Hines and City staff. - a Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). ° Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 4 of 18 Zonina - Compliant Proiece .rr 12 HR&A Advisors, Inc.. Alt 4 No Benefits Residual Land Value Analysis-v3 12-03-13 A- Program 12 -03 -2013 Appendix B7: Development Costs Alternative 4- Reduced Project Development Scenario' Assumptions Office /Retail Residential Total Land Area Per Appendix 239,169 71,331 310,500 Gross Bldg. Area(GSF) Per AppendixA 896,010 Residential 205,840 Retail 27,500 Office 473,000 Net Leasable Areas (NSF) Per Appendix A 621,000 Residential 166,000 Retail 25,000 Office 430,000 Residential Units Per Appendix A 229 Subterranean Parking (spaces) Per Appendix A 1,581 Levels 1-2 1'287 Office /Retail 935 Residential 362 Level 284 Office/Retail 264 Residential - Project Elements Office /Retail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF Land Cost see Residual Value see Residual Value see Residual Value Hard CoSe Construction Type IIIB IIIB IIIB Building Construction /GSF' Varies $135.00 $188]1 Building Core & Shell Cost Varies $ 67,567,500 $135.00 $148.50 $ 38,844,000 $234.00 $169,624 S 106,411,500 $ 118]6 $ 171.36 Demo $15 xLand Area $ 3,587,535 $7.17 $738 $ 1,059,965 $6.45 $4,672 $ 4,657,500 $ 5.20 $ 7.50 On -Site Improvements' Nebraska 20'Fire Access $407,177 Allocated $ 227,444 $0.45 - $0.50 $ 179,733 $1.08 $785 $ 407,177 $ 0.45 $ 0.66 Olympic Sidewalk $290,040 Allocated $ 162,013 $0.32 $0.36 $ 128,027 $0.77 $559 $ 290,040 $ 0.32 $ 0.47 26th Street Sidewalk $46,751 Allocated $ 46,751 $0.09 $0.10 $ - $0.00 $0 $ 46,751 $ 0.05 $ 0.08 Stewart Street Sidewalk $11,068 Allocated $ - $0.00 $0.00 $ 11,068 $0.07 $48 S 11,066 $ 0.01 $ 0.02 Utility Line Undergrounding $1,350,000 Allocated $ 754,093 $1.51 $1.66 $ 310,135 $1.87 $1,354 $ 1,064,228 $ 1.19 $ 1.71 Office Tenant Improvements $38 x NSF Office $ 16,340,000 $32.65 $35.91 $ - $0.00 $0 $ 16,340,000 $ 18.24 $ 26.31 Retail Tenant Improvements $38 x NSF Retail $ 950,000 $1.90 $2.09 $ - $0.00 $0 $ 950,000 $ 1.06 $ 1.53 Residential Common Area Amenities' $2,900 per Unit $ - $0.00 $0.00 $ 664,100 $4.00 $2,900 $ 664,100 $ 0.74 $ 1.07 Surface Parking' $1,000 per Space $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - Subterranean Parking $30,000 per Space $ 28,050,000 $56.04 $61.65 S 10,860,000 $65.42 $47,424 $ 38,910,000 $ 43.43 $ 62.66 Levels 1 -2 Leve13 $35,000 per Space $ 9,940,000 $19.86 $21.85 $ - $0.00 $0 $ 9,940,000 $ 11.09 $ 16.01 Contingency 5% x Subtotal Hard Costs $ 6,381,267 $12.75 $14.02 $ 2,603,351 $15.68 $11,368 $ 8,984,618 $ 10003 $ 14447 Subtotal Hard Costs $ 134,006,603 $267.75 $294.52 $ 54,670,379 $329.34 $238,735 $ 188,676,982 $ 210.57 $ 303.83 Page 5 of 18 HR&A Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis_ 12 -03-13 81 -Dev Cost Alt 4 12 -03-2013 Net Development ost ' Per Program Summary, Appendix A. 2 Per Hines based on contractor estimates . These unit costs are somewhat less than those derived by HR &A from the Marshall & Swift construction cost estimation software. e Per Hines and City staff. 4 Per Hines, and determined by HR&A to be generally reasonable based on current market conditions. Page 6 of 18 HR &A Advisors, IOC Alt No Benefits Residual Land Value Analysis v3 12-O313 B1-Dev COSt Alt 12 -03 -2013 Office /Retail Residential Total Soft Costs' City Permits & Fees (See App. C) 10,473,919 $20.93 $23.02 $ 8,276,803 $49.86 $36,143 $ 18,750,722 $ 20.93 $ 30.19 Public Benefit Payments Expo Buffer Contribution $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - TMAContribution $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - Bike Share Contribution $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - Big Blue Bus Contribution $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - Histodc Preservation Programs $ - $0.00 $0_00 $ - 0.00 $0 $ - $ $ Subtotal Public Benefit Payments $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $. - A &E /Other Professionals &0% x Hard Costs $ 8,040,396 $16.06 - $17.67 $ 3,280,223 $19.76 $14,324 $ 11,320,619 $ 12.63 It 18.23 Marketing/Leasing Commissions° $7.50 NSF $ - $0.00 $0.00 $ 1,245,000 $7.50 $5,437 $ 1,245,000 $ 1.39 $ 2.00 Residential Retail /Office $29.76 x xNSF $ 13,540,800 $27.05 $29.76 $ - $ 13,540,800 $ 15.11 $ 21.80 Legal & Accounting 0.5% x Hard Costs $ 670,033 $1.34 $1.47 $ 273,352 $1.65 $1,194 $ 943,385 $ 1.05 $ 1.52 Real Estate Taxes 1.25% x hard costs x 2 yrs. $ 3,350,165 $6.69 $7.36 $ 1,366,759 $8.23 $5,968 $ 4,716,925 $ 5.26 $ 7.60 Insurance 1.0% xHard Costs $ 1,340,066 $2.68 $2.95 $ 546,704 $3.29 $2,387 $ 1,886,770 $ 2.11 $ 3.04 Developer Fee 3.0% xHard - Soft Costs $ 5,142,659 $10.28 $11.30 $ 2,089,777 $12.59 $9,126 $ 7,232,436 $ 8.07 $ 11.65 Contingency 3.0% x Subtotal Soft Costs $ 1,276.741 2.55 $2.81 $ 512,359 $3_09 $2,237 $ 1,789,100 $ 2.00 $ 2.88 Subtotal Soft Costs $ 43,834,779 $87.58 $96.34 $ 17,590,977 $105.97 $76,816 $ 61,425,756 $ 68.55 $ 98.91 Subtotal Hand +Botts Costs $ 177,841,362 $355.33 $390.86 $ 72,261,356 $435.31 $315,552 $ 250,102,736 $ 279.13 $ 402.74 Financing Costs4 Loan Tenn (months) 24 Average Loan Balance 65.009k Construction Loan Interest Rate 5.50% $ 12,715,659 $25.41 $27.95 $ 5,166,687 $31.12 $22,562 $ 17,882,346 $ 19.96 $ 28.80 Construction Loan Interest $6.84 $ 1,264,574 $7.62 $5,522 $ 4,376,798 $ 4.88 $ 7.05 Construction Loan Fees 1.75% $ 3,112,224 $6.22 Permanent Loan Percent x Cost 68.00% $ 906,991 $1.81 $1.99 $ 368,533 $2.22 $1,609 $ 1.275,524 $ 1.42 $ 2.05 Permanent Loan Fees & Costs Subtotal Financing Costs 0.75% $ 16,734,874 $33.44 $36.78 $ 6,799,794 $40.96 $29,693 $ 23,534,668 $ 26.27 $ 37.90 Total Development Cost Hard + Soft +Financing $ 194,576,256 $388.76 $427.64 $ 79,061,150 $476.27 $345,245 $ 273,637,406 It 305.40 $ 440.64 Less: Commercial Lease -up Revenue" $24.49 x NSF Commercial S (12,255,457) $24.49 - $26.94 $ - $ (12,255,457) $ (13.68) $ (19.74) $1,192 per Unit $ - $0_00 $0_00 $ (272,963) -$1.64 -$1,192 $ (272,963) $ (0.30) $ (0.44) Less: Residential Lease -up Revenue" C $ 182320799 $364.28 $400.71 $ - 78,788,187 $474.63 $344,053 $ 261,108,986 $ 291.41 $ 420.47 Net Development ost ' Per Program Summary, Appendix A. 2 Per Hines based on contractor estimates . These unit costs are somewhat less than those derived by HR &A from the Marshall & Swift construction cost estimation software. e Per Hines and City staff. 4 Per Hines, and determined by HR&A to be generally reasonable based on current market conditions. Page 6 of 18 HR &A Advisors, IOC Alt No Benefits Residual Land Value Analysis v3 12-O313 B1-Dev COSt Alt 12 -03 -2013 Appendix 132: Development Costs Proposed Project Development Scenario Land Area Gross Bldg. Area (GSF) Residential Retail Office Net Leasable Areas (NSF) Residential Retail Office Residential Units Subterranean Parking (spaces) Levels 1 -2 Office/Retail Residential Level 3 Office /Retail Residential Project Elements Land Cost Hard Cost Construction Type Building Construction /GSF' Building Core & Shell Cost Demo On -Site Improvements' Nebraska 20' Fire Access Olympic Sidewalk 26th Street Sidewalk Stewart Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities' Surface Parking' Subterranean Parking Levels l -2 Level 3 Contingency Subtotal Hard Costs Assumptions Office /Retail Residential Total Per Appendix A 153,934 156,566 310,500 Per Appendix A 896,010 451,803 32,330 411,877 Per Appendix A 755,096 361,271 29,391 374,434 Per Appendix A 498 Per AppendixA 1,930 1,285 793 492 645 390 255 Office /Retail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF see Residual Value see Residual Value see Residual Value Varies III $150.00 III $202.00 111 Varies $ 66,631,050 $150.00 $155.00 $ 91,264,280 $252.62 $183,262 $ 157,895,330 $ 176.22 $ 206.37 $15 x Land Area $ 2,309,010 $5.20 $5.72 $ 2,348,490 $6.50 $4,716 $ 4,657,500 $ 5.20 $ 6.09 $407,177 Allocated $ 201,853 $0.45 $0.50 $ 205,314 $0.57 $412 $ 407,177 $ 0.45 $ 0.53 $290,040 Allocated $ 143,791 $0.32 $0.36 $ 146,249 $0.40 $294 $ 290,040 $ 0.32 $ 0.38 $46,751 Allocated $ 46,751 $0.11 $0.12 $ - $0.00 $0 $ 46,751 $ 0.05 $ 0.06 $11,066 Allocated $ - $0.00 $0.00 $ 11,068 $0.03 $22 $ 11,066 $ 0.01 $ 0.01 $1,350,000 Allocated $ 669,278 $1.51 $1.66 $ 680,722 $1.88 $1,367 $ 1,350,000 $ 1.51 $ 1.76 $38 xNSF Office $ 14,228,492 $32.03 $35.23 $ - $0.00 $0 $ 14,226,492 S 15.86 $ 18.60 $38 x NSF Retail $ 1,116,858 $2.51 $177 $ - $0.00 $0 $ 1,116,858 $ 1.25 $ 1.46 $2,900 per Unit $ - $0.00 $0.00 $ 1,444,200 $4.00 $2.9D0 $ 1,444,200 $ 1.61 $ 1.89 $1,000 per Space $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $30,000 per Space $ 23,778,300 $53.53 $58.88 $ 14,771,700 $40.89 $29,662 $ 38,550,000 $ 43.02 S 50.39 $35,000 per Space $ 13,663,650 $30.76 $33.84 $ 8,911,350 $24.67 $17,894 $ 22,575,000 $ 25.20 $ 29.51 5% x Subtotal Hard Costs $ 6,139,452 $13.82 $15.20 $ 5.989,169 $16.58 $12,_026 $ 12,128,621 $ 13.54 $ 15.85 $ 128,928,494 $290.24 $319.27 $ 125,772,543 $348.14 $252,555 $ 254,701,037 S 284.26 $ 332.90 Page 7 of 18 HRBA Advisers Alt 4 No Benefits Residual Land Value Analysis _J3_12 -0313 624Dev Cost - Project 12- 03-2013 Soft Costs, City Permits & Fees (See App. C) Public Benefit Payments Expo Buffer Contribution TMA Contribution Bike Share Contribution Big Blue Bus Contribution Historic Preservation Programs Subtotal Public Benefit Payments A &E /Other Professionals Marketing/Leasing Commission s4 Residential Retail /Office Legal & Accounting Real Estate Taxes Insurance Developer Fee Contingency Subtotal Soft Costs Subtotal Hard +Botts Costs Financing CosW $ 1.87 $ 2.18 10,548,097 $23.75 $26.12 $ 10,728,470 $29.70 $21,543 $ 21,276,567 $ 23.75 $ 27.81 $ 387.18 $ 453.42 $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $ - $0.00 $0.00 $ - $0.00 so $ - $ - $ - $31.06 $22,531 $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - Subtotal Financing Costs $ 16,078,125 0.00 $0.00 $ - $0.00 $o $ Hard + Soft +Financing $ 186,940,237 $ $462.92 $ 171,693,822 $ - $0.00 $0.00 $ - $0.00 $0 $ - $ - $ - 6.0% xHard Costs S 7,735,710 $17.41 $19.16 $ 7,545,353 $20.89 $15,153 $ 15,282,063 $ 17.06 $ 19.97 $7.50 x NSF $ - $O.DO $0.00 $ 2,709,533 $7.50 $5,441 $ 2,709,533 $ 3.02 $ 3.54 $29.76 xNSF $ 12,017,832 $27.05 $29.76 $ - $ 12,017,832 $ 13.41 $ 15.71 0.5% xHard Costs $ 644,642 $1.45 $1.80 $ 628,863 $1.74 $1,263 $ 1,273,505 $ 1.42 $ 1.66 1.25% x hard costs x 2 yrs. $ 3,223,212 $7.26 $7.98 $ 3,144,314 $B.70 $6,314 $ 6,367,526 $ 7.11 $ 8.32 1.0% x Hard Costs $ 1,289,285 $2.90 $3.19 $ 1,257,725 $3.48 $2,526 $ 2,547,010 $ 2.84 $ 3.33 3.0% x Hard +Soft Costs $ 5,253,472 $11.83 $13.01 $ 4,231,780 $11.71 $8,496 $ 9,485,252 $ 10.59 $ 12.40 3.0% x Subtotal Soft Costs $ 1,221,368 $2.75 3.02 $ 907,411 $2.51 $1.822 $ 2.128,779 $ 2.38 $ 2.78 $ 41,933,616 $94.40 $103.84 $ 31,154,449 $86.24 $62,559 $ 73,088,067 $ 61.57 $ 95.53 $ 170,862,112 $384.65 $423.11 $ 156,926,992 $434.37 $315,114 $ 327,789,104 $ 365.83 $ 428.43 Financing CosW $ 1.87 $ 2.18 $ 30,844,955 $ 34.42 $ 40.32 $ 358,634,059 $ 400.26 $ 468.74 $ (11,272,673) Loan Term (months) 24 $ (448,658) $ (0.50) $ (0.59) $ 346,912,726 $ 387.18 $ 453.42 Average Loan Balance 65.00% Construction Loan Interest Rate 5.50% Construction Loan Interest $ 12,216,641 $27.50 $30.25 $ 11,220,280 $31.06 $22,531 Construction Loan Fees 1.75% $ 2,990,087 $6.73 $7.40 $ 2,746,222 $7.60 $5,515 Permanent Loan Percent x Cost 68.00% Permanent Loan Fees &Costs 0.75% $ 871,397 $1_96 $2.16 $ 800,328 $122 $15 6_07 Subtotal Financing Costs $ 16,078,125 $36.20 $39.81 $ 14,766,830 $40.87 $29,652 Total Development Cost Hard + Soft +Financing $ 186,940,237 $420.84 $462.92 $ 171,693,822 $475.25 $344,767 Less: Commercial Lease -up Revenue $25.38 x NSF Commercial $ (11,272,673) - $25.38 $27.91 $ - Less: Residential Lease -up Revenue° $901 per Unit $ - $0_00 $0_00 $ (448,658) A114 --901 Net Development Cost $ 175,667,564 $395.46 $435.01 $ 171,245,164 $474.01 $343,866 , Per Program Summary, Appendix A. 3 Per Hines based on contractor estimates . These unit costs are somewhat less than those derived by HR &A from the Marshall & Swift construction cost estimation software. i Per Hines and City staff. 4 Per Hines, and determined by HR&A to be generally reasonable based on current market conditions. Page 8 of 18 $ 23,436,921 $ 26.16 $ 30.63 $ 5,736,309 $ 6.40 $ 7.50 $ 1.671,725 $ 1.87 $ 2.18 $ 30,844,955 $ 34.42 $ 40.32 $ 358,634,059 $ 400.26 $ 468.74 $ (11,272,673) $ (12.58) $ (14.73) $ (448,658) $ (0.50) $ (0.59) $ 346,912,726 $ 387.18 $ 453.42 HR &A Advisors, Inc.. Alt No Benefits Residual Land Value Analysis _v3_12 -03-13 B2 -Dev Cost - Project 12 -03 -2013 Appendix B3: Development Costs Tier 1 Project Development Scenario' Land Area Gross Bldg, Area (CSF) Residential Retail Once Net Leasable Areas (NSF) Residential Retail Office Residential Units Surface Parking (spaces) Subtenaneen Parking (spaces) �vels 1 -2 ORCe /Retail Residential Level Ofi lRetail Residential Project Elements Land Cost Had C.RO Construction Type Building ConstructioNGSF' Building Core & Shell Cost Dam0lOn -Site Improvements OnSite Improvements' Passageway -12' Olympic Sidewalk 26th Street Sidewalk Stewa t Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities Surface Parkings Subterranean Parking Levels l -2 Level Contingenty Subtotal Had Costs Solt Costs, City Permits & Fees (Bee App. C) Public Benefit Payments Expo Butter Contribution TMA Contribution Bike Share Contribution Big Blue Bus Contribution Historic Preservation Programs Subtotal Public Benefit Payments A &ElOther Professionals MarkednglLeasing Commissions' Residential Retail/Office Legal & Accounting Real Estate Taxes Insurena Developer Fee Contingency Subtotal Soft Costs - Subtoral Hard «Sorts Costs Assumptions Per AppendixA Per Appendix A Per Appendix Per Appendix Per AppendixA Varies Varies 515 xLand Area $18,350 Allocated $290,040 Allocated $46,751 Allocated $11,068 Allocated $1,350.000 Allocated $38 . HER Office $38 xNSF Retail $2,900 per Unit $1,00D per Space $30,000 per Space $351000 per So.. 5% x Subtotal Had Costs 6.0% xHard Costs $7.50 xNSF $29.76 . NSF 0.5% xHard Costs 1.25% x had costs x 2 yre. 1.0% x Hard Costs 3.0% x Had +Soft COSts 3.0% x Subtotal Soft Costs Dmm,noail 233,386 34,053 435,636 29.511 3]8,814 1,091 Office/Retail Per GSF Per NSF see Residual Value IIIB $0.00 SO.00 $135.00 $0.00 58.00 $ 63,407,981 $135.00 $155.25 $ 3,500,790 57.45 $8.57 S 18,350 $0.04 $0.04 $ 216,007 $0.46 $0.53 S 46,751 SDA0 $0.11 S SOM $0.00 S 1,014,721 $25.88 $29.76 S 14,394,932 $30.65 538.00 $ 1,125,218 $2.40 $38.00 8 52.60 $2.99 S - $0.00 $0.00 $ 32,730,000 $69.68 $80.14 $ - $0.00 $0.00 $ 5622,836 $12.40 $14.26 $ 122,279,5811 $260.34 $299.39 11.640.687 $24.78 $28.50 $ - $0.00 SO.00 $ - $0.00 58.00 $ - $0.00 $0.00 $ - $0.00 68.00 $ 0.00 $0.00 $ - $0.00 $0.80 $ ],336,7]5 $15.62 $17.95 3 - SOM $0.00 $ 12,154,728 $25.88 $29.76 S 611,398 $1.30 $1.50 S 3,056,990 56.51 VAB S 1,222,796 52.60 $2.99 S 4,749,089 $10.11 511.63 S 1,687.782 53.59 $413 S 46,306,503 $98.59 $113.38 s 168,586,091 $358.93 $412.77 Page 9 of 18 Residential 7],114 155,192 134,950 188 282 Residential Per NSF Per Unit see Residual Value IIIS $203.48 $ 31,578,249 $234.00 $167,969 $ 1,156,710 $6.57 $6,153 $ - $0.00 $0.00 $ 72,D33 80.00 $0.00 $ - $0.00 $0.00 $ 11.068 $0.00 $0.00 $ 335,279 $0.00 $0.00 $0.60 $0.60 8 - $0.00 $0.00 S 545.200 34,04 $2,900 S - $o.DO SD.OD $ 8,460,000 562.69 $45,000 $ - SO.DO $0 S 2,107,927 $15.62 $11,212 $ 44,266,466 $328.02 $235,460 S 3,846,258 $28.50 $20,459 $ - $0.00 $o.Do $ - $0.00 $O.DO $ - $0.00 $0.00 $ - $0.00 $0.00 $ 0.00 $0 00 $ - $0.00 $0.00 $ 2,655,988 $19.58 $14,128 $ 1,012,123 S7.$D $5,384 $ 221,332 51.64 $1,186 $ 1,106,662 58.28 $5,886 $ 642,655 53.28 $2,355 $ 1,605,545 $11.90 $8,545 $2,42 $ 326,846 5242 $1 738 $ 11,218,320 $83.13 $59672 $ 55,484,788 $411.15 5295,132 Total 310,500 624,881 543,3]5 1,3]3 1,3]3 1,091 282 TPtal Per GSF Per NSF see Residual Value $ 94,986,230 $ 152.01 $ 174.81 $ 4,557,5DO S 7.45 $ 8.57 $ 16,350 S 0.03 $ 0.03 $ 290,040 S 0.46 $ 0.53 $ 45,751 3 0.07 $ 0.09 $ 11,068 5 102 $ 0.02 $ 1,350,000 S 216 $ 2.48 $ 14,394,932 S 23.04 $ 26.49 S 1,125,218 $ 1.60 $ 2.07 $ 545,200 S 0.87 S 1.00 $ - 8 S - S 41,190,000 $ 65.92 $ 75.80 S $ - $ - S 7,930,765 $ 12.69 $ 14.60 $ 166,566.054 $ 266.52 $ 306.50 S 15,486,945 8 24.78 $ 28.50 $ S $ - S $ $ S $ S $ $ $ $ 9,992,763 $ 1$.99 $ 18.39 $ 1,012,123 $ 1.62 $ 1.86 $ 12,154,728 $ 19.45 $ 2237 $ 832,730 S 1.33 $ 1.53 $ 4,163,651 $ 6.66 $ 7.66 $ 1,665,461 S 2.67 $ 3.07 $ 6,355,634 S 10.17 $ 11.70 $ 2.016 529 S 3.22 $ 3 .71 $ 57,524,623 $ 92.06 $ 105.87 $ 224,070,8]] S 358.58 S 412,37 HR &A Advlems, Im. Alto No Benefils Residual Lend Value Analysis - 3_12 -03 -13 B3-Dev coal -Ver1 12-03 -2013 Page 10 of 18 Total- Per GSF Per NSF $ 16,021,067 $ 25.64 $ 29.46 $ 3.921.241 $ 6.28 $ T.22 $ 1.142,761 Assumptions 2.10 Offcemallad Per GSF Per NSF $ 245,155,946 Residential Per NSF Per Unit Financing Costs° (20.02) $ (163.13] $ (0.26) $ (0.30) $ 234,112,379 $ 374.65 $ 430.85 L.. Term (months) 24 Average Loan Balance 65.00% Constmdion Loan Interest Rate 5.50% Construction Loan Interest S 12,053,905 $25.66 529.51 $ 3,967,162 $29.40 $21,102 Construction Loan Fees 1 ,75% S 2,950,257 S6.2B $7.22 $ 970,984 $7.20 $5,165 Permanent Loan Pement x Cast 68.00% Permanent Loan Fees& Costs 0 ,75% S 859.789 $1.83 $2.11 $ 282.972 $210. $1 505 Subtotal Financing Costs S 15,863,951 $33.76 $38.84 $ 5,221,118 538.69 $27,772 Total Development Cost Hard + Soft + Financing $ 104,450,042 $392.71 $451.61 $ 60,705,904 $449.84 $322,904 Less: Commercial Lease -up Revenue° $23.17 x NSF Commercial $ (10,880,430) 423.17 426.64 $ - Less: Residen5a1 Lease-up Revenue $868 per Unit $ - $0_00 $0_00 $ (163137) X21 - NetDevelopmentCost $ 173,569,612 $369.54 $424.97 $ 60,542,767 $448.63 $322,036 All assumptions per HR &A review of market data, financial feasibility peer reviews of recent developments and HR&A experience, unless noted othentise. ° Per Hines based on contractor estimates. These unit costs are less than those derived by HR&A from the Marshall & SWIt construction cost estimation software. s Per Hines and City staff. ° Per Hines, and determined by HR &A to be generally reasonable, based on current market conditions. Page 10 of 18 Total- Per GSF Per NSF $ 16,021,067 $ 25.64 $ 29.46 $ 3.921.241 $ 6.28 $ T.22 $ 1.142,761 5 1.83 $ 2.10 $ 21,085,059 $ 33.74 8 38.80 $ 245,155,946 $ 392.32 $ 451.17 $ (10,880.430) $ (17.41) $ (20.02) $ (163.13] $ (0.26) $ (0.30) $ 234,112,379 $ 374.65 $ 430.85 HR &A Advisors. no. Alt 4 No Benefits Racial Land Value flm.Iesv31203.13 B3 -Oev Cost Tmer1 12- 0}2013 Appendix B4: Development Costs Zoning Compliant Project Development Scenario' Assumptions Offce/Retail Residential Total Land Area Per AppendLxA 310,500 - 310,500 Gross Bldg. Area (GSF) Per Appendix A 357,000 Residential " Retail - ORme 357,000 Net Leasable Areas {NSF) Per Appendix 310,500 Residential " Retail W. 310,500 Residential Units Per Appendix Surface Parking' Per AppentlixA 600 - 500 Subterranean Parking (spaces) Per Appendix A - Levels 1 -2 OficelRetail - Resitlential Level Offied /Retail - Residential Project Elements OfficelRetail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF Land Cost see Residual Value see Residual Value see Residual Value Ham Case Construction Type IIIB 1118 Building COnstmctioNGSF' Varies 5110.00 $0.00 Building Core B Shell Cast Vanes $ 39,270,000 $110.00 $126.47 $ - $0.00 $0.00 $ 39,270,000 $ 110.00 $ 126.47 Demo /On-Site Improvements $15 NLord Area 5 4,657,500 $13.05 $15.00 S - $0.00 $0.00 $ 4,557,500 S 13.05 $ 15.00 On -Site lmpmvemente $0.00 $0.00 $ 18,350 $ 005 S 0.06 Passagevray -12' $10,350 Allocated S 18.350 $0.00 $0.00 S - $ S Olympic Sidewalk $0 Allocated $ - $0.00 $0.00 $ - $000 $0.00 $ - 26th Street Sidewalk $0 Allocated $ - $0.00 $0.00 $ - SDO0 $0.00 $ - $ - $ - StewanSheetSid.lk $0 Allocated S - 50.00 $0.00 $ - $0.00 SO.DO $ - $ - $ - Utility Line Undergmunding $1,350.DOD Allocated S 1,350,DOO S378 $4.35 $ - $0.00 $0.00 $ 1.350,000 S 3.78 $ 4.35 Tenant Improvements $38 xNSF ORca S 11,799,000 $33.05 $38.00 S - $0.00 $0.00 S 11,799,000 $ 33.05 $ 38.00 Office $0.00 $0.00 S - $000 $0.00 $ - $ - $ Retail Tenant Improvements $38 xNSF Retail $ - S Residential Common Area Amenifiei $2,900 per Unit $ - 5 - $0.00 SD.00 $ - S - - Surface Parking 51,000 per Space $ 600,000 $1.68 $1.93 $ - $0.00 $0.00 $ 600,000 $ 1.68 S 1.93 Subterranean Parking $0.00 Sam $ - 80.00 $0.00 8 - $ - $ - Levels 1-2 $30,000 per Space S - $0.00 S - S - $ - Level3 $35,000 per Space S - $0.00 $0.00 $ - $0.00 Contingency 5% x Subtotal Hard! Costs S 2864.743 SB.OB ,$929 $ $0.00 $0.00 $ 2884743 S 8.08 $ 9.29 S 60,579,593 $169.69 $195.10 S - $0.00 $0.00 S 60,579,593 $ 169.69 S 195.10 Subtotal Hard Costs Soft C.Plal $21.39 $24.59 $ - $0.00 $0.00 $ 7,635,812 $ 21.39 $ 24.59 City Permits & Fees (See App. C) 7,635,812 Public Benefit Payments S - $0.00 $0.00 S - $0.00 $000 S - S - $ - Expo Buffer Contribution $ - $ $ TMA Contribution S - $0.00 $0.00 $ - $ $ - $ - Bike Share Contribution $ - $0.D0 $0.00 S - $ - Big Blue Bus Contribution $ - $0.00 $0.00 S - $0.00 $0.00 $ - $ - Hitters Preservation Programs $ $0.00 SD_OD $ $0.00 $0.00 $ $ 3 Subtotal Public Benefit Payments $ - $0.00 $0.00 $ - 5100 $0.00 S - $ - S - A &E /Other Professionals SD% x Hard Costs $ 3,634,776 $10.18 $11.71 $ - $0.00 $0.00 S 3.634,776 S 10.18 $ 11 .71 Marketing /Leasing Commissions4 S - $ - Residential $7.5D xNSF S - $0.00 $0.00 S - $0.00 $0.00 $ - Retail/Ofco $29.76 xNSF S 9,240,480 $25.88 $29.76 S - S 9,240,480 S 25.88 $ 29.76 0.5% xHard Costs $ 302,896 $0.85 $0.98 $ - $0.00 $0.00 $ 302,698 $ 0.85 $ 0.98 Legal B Accounting 1.25% x hard costs x 2 ym. $ 1,514,490 $4.24 $4.88 S - $0.00 $0.00 $ 1514,490 S 4.24 S 4.66 Real Estate Taxes 1.0% .Hard Costs $ 605,796 $1 .70 51.95 $ - $0.00 SD.OD $ 605,796 S 1.70 S 1.95 Insurance 3.0% xHard +Sea Costs $ 2,505,415 $7.02 $8.07 $ - $0.00 $0.00 S 2,505,415 $ 7.02 S 8.07 Developer Fee 3.0% Subtotal Soft Costs S 763,190 $..14 $_145 $ - SS0.00 $0.00 S 763,120 $ 2.14 $ 2.46 Contingency x 584.39 $ - $0.00 $0.00 5 26,202,857 $ 73.40 $ 84.39 Subtotal Soft Casts S 26,202,657 $73.40 $ - Man $0.00 $ 86,782,450 $ 243.09 $ 279.49 Subtotal Ham +Soft Costs $ 06,702,450 $243.09 $279.49 Page 11 of 18 HR&A Advisors, Ina. Alt No Benefits Residual Land Value Analyais v3 12 -03 -13 B4-Dev Cost - Compliant 12- 3Y2013 Page 12 of 18 HR&A Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis_ J3_ 1243-13 64-DBV cost - Compliant 12- 03-2013 Assumptions Office/Retail Per GSF Per NSF Residential Perri Per Unit Total Per GSF Per NSF Financing Cosh° Loan Term (months) 12 Average Loan Balance 65.00% Construction Loan Interest Rate 5.5% Construction Loan Interest $ 3,102,473 $8.69 $9.99 $ - $100 $0.00 $ 3,102,473 $ 8.69 S 9.99 Construction Loan Fees 1 .75% 6 1,518,693 $4.25 $4.89 $ - $0.00 $0.00 S 1,518,693 $ 4.25 $ 439 Permanent Loan Percent x Cost 68.DO% Permanent Loan Fees& Costs 0 .75% S 442.590 $124 $1.43 S - $000 0.00 S 442,590 S 124 $ 1.43 Subtotal Financing Costs $ 5,063,756 $14.18 $16.31 $ - $O.DO $0.00 $ 5,063,756 $ 14.18 $ 16.31 Total Development Cost Hard + Son +Financing $ 91,046,206 $257.27 5295.80 S - $0.00 $0.00 $ 91,846,206 $ 257.27 $ 295.80 Less: Commercial Lease -up Revenue' $19.08 x NSF Commercial $ (6,812,438) 419.08 421.94 S - $0.00 50.00 $ (6,812,438) $ (19.08) S (21.94) Less: coat nEal Lease -up Revenue° $0 per Unit $ - $0_00 SO_00 $ $0,00 $000 $ - $ 8 Net Development Cost $ 85,033,768 $238.19 $273.65 $ - 50.00 $0.00 S 85,033,760 S 238.19 $ 273.86 ' All assumptions per HR&A review of market dealt. financial feasibility peer reviews of recent developments and HR&A experience , unless noted otherwise. ' Per Hines based on contractor estimates. These unit costs are less then those derived by HR&A from the Marshall & SWit construction cost estimation sa ware. ' Per Hines and City staff. ° Per Hines, and determined by HR &A to be generally reasonable, based on cument market conditions. Page 12 of 18 HR&A Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis_ J3_ 1243-13 64-DBV cost - Compliant 12- 03-2013 Appendix C Proposed New Fees, Existing City Fees & Permit Costs HRSAAdvlaprs,lnc. Alt 4 No Benefi6 Resldual Lend Value Analysrs_v3 12 -0}13 6clly Coat 0emll 13 -03 -2013 Page 13 of 18 Alt.4 Reduced Zo110p-Omlmlumt Development SCenariol Assumptions Proieet Proposed Proiect Ind,1 Proiect Proiect Land Area 310,500 310,500 $10,500 310,500 Gross Bldg. Area (SF) 706,340 895,010 624,881 357,000 Residential Units Market Rate Units Studio 103 211 80 - 1 BR 45 69 35 - 1 BR Loft - 25 2 BR 75 94 2BR Townhouse' - 62 59 - 3 BR 6 13 5 Subtotal 229 474 179 - AHerdable Rate Units Stutlio - Extremely Lowlnceme 5 11 4 Studio - Very Low Income " - Low Income - - .Studio 18R- Extremely Low income 2 5 2 1BR -Very Low Income 1BR -Low Income - - 1 BR Loft - Very LOW Income - - - 2BR- Extremely Low Income 4 7 3 2 BR - Very Low Income 2 SIR -Low income 2 BR TOwnhou.4.m Low Income - - - 3 BR- Exbemely Low Income - 1 " 3 BR- Very Low Income - - Subtotal 12 24 9 Residential (Net Leasable SF) 151,473 346,744 134,950 Live-Work(Net Leasable SF) - 14,527 Retail (Net Leasable SF) 25,000 29,391 29,611 - Office (Net Leasable SF) 430.000 374,434 378,814 310,500 Planning Permits, $ - S - Development Review 515,568 per pmject $15,568 $ - DevelopmentAgreement $25.000 per project $ - $ 25,000 S - S - MultipleP.mutFee $1,684 pAr,r.jc t $1,684 $ 1,684 $ 1,684 $ 1,684 Architectural Review Board '$11684 per project $1,684 $ 1,684 $ 1,684 $ 1,684 Coastal Zone Concept Review $276 per project S - 5 - $ - $ - CECA categorical Exemption $14622 per pmject $ - $ - S - $ - Nega five DeUaratied 5251445 per project $ - $ - $ $ - EIR Allowance $ 1000000 $ 1.000000 $ - S Subtotal $ 1,010,936 $ 1,028,368 6 3,368 S 3,368 TIF Fees Market Rate -Areal $2,600 per unit $ 595,400 S 1,167,400 $ 45,400 $ - Afiordable $0.00 per unit $ - $ - S - $ - Retail -Areal 521.00 xNSF $ 525,000 $ 517,211 S 621,831 $ - Office-Area1 $9.70 .NSF' $ 4.171,000 $ 3772922 $ 3674.496 5 3011 850 Subtotal $ 5,291,400 $ 5,557,533 $ 4,761,727 S 3,011,650 Less: Credit for Existing Office (55K SF) $9 .70 .NSF $ (485,000) S (485,000) $ (485,000) $ (485,000) Less: Credit for Existing Industrial (135K SF) $1.20 .NSF 5 (183.6007 $ (183.600) $ (183600) $ (1831600) Subtotal Net Tlf 5 4,622,000 S 4,080,933 $ 4,093,127 $ 2,343260 HRSAAdvlaprs,lnc. Alt 4 No Benefi6 Resldual Lend Value Analysrs_v3 12 -0}13 6clly Coat 0emll 13 -03 -2013 Page 13 of 18 per Per Program Summary, Appendix A. s Per FV 2013 -14 City fees schedule, new Transportation Impact Fee per Ordinance No. 2420 (CCS), and draft linkage and parkslrecrestion fees as of July 2013. 3 For proposed Project only, assumes 2% x hard want for phrase ad. 4 Includes meter and captial facilities charge. HR&A AMSOts. Inn. Alt 4 No Benefi6 Residual Land Value Analysis v3_1243-13 c -city cost oetad 12 -012013 Page 14 of 18 Alb 4 Reduced Zon na- Compliant Assumptions Protect Proposed Protect Mort Protect Proiect Other Requirements° Proposed Alterable Linkage Fee Creative Office 5%x$156.91 xNSF $ 3,416,565 5 3,090,490 S 3,009,867 $ 2,467,076 Retail 5 %x$161.41 xNSF $ 201,763 $ 231,200 S 236,976 $ Subtotal $ 3618,328 $ 3,327,690 is 3248,843 5 2467,078 Less: Credit for Existing General Office 5 %x$18843 .NSF S (471,075) S (471,075) $ (471,075) $ (471,075) Less: Credit for Existing Industrial 5 %x$104.60 xNSF S (800,1907 S (8001907 $ (800190) $ (800190) Net Affordable Housing Linkage Fee $ 2,347,063 $ 2.056,425 S 1,97,578 $ 1,195,813 Proposed Pars adreation Fee Market Rate 0.l BR Units 25 %x$16,554 per Unit $ $12,498 $ 1,158,780 $ 475,928 5 - Market Rate 2- 3 SR Units 2$ %x$26,661 per Unit $ 539,885 $ 1,126,427 $ 426,576 $ - 016ce 25 %x$9.24 xNSF S 993,300 $ 898,500 $ 875,060 S 717,255 Retail 25%x$5.98 .NSF 3 37.375 $ 43.940 S 44,266 $ - Subtotal $ 2,183,058 $ 3,227,641 5 1,821,832 $ 717,255 Less: Credit for Existing Office 25%x$9.24 .NSF $ (115,500) $ (115,500) $ (115,500) $ (115,500) Less: Credit for Existing Industrial 25 %x$5.18 S (196,135) $ (198,135) $ (198135) S (198,1351 Net Pri kslR.. eatton Fee $ 1,869,423 $ 2,814,012 $ 1,508,197 $ 403,620 Arts Fees New ResidentiaVCOmmerdal 1.00% x$200ISF S 2,425,892 5 3,060.384 $ 2,173,499 $ 208,000 Tenant Improvements 1.00% xS50I5F $ 455,000 S 403,825 S 408,425 $ 155.250 Subtotal Arts Fee S 2,880,892 S 3,464,209 S 2,581,924 $ 363,250 Child Care Fee Residential $133.48 per unit $ 30,567 it 59,933 $ 23,893 $ - Fault 54.53 x NSF $ 113,250 $ 133,141 3 134,138 S - ORCe 56.34 xNSF $ 2726.200 $ 2,466,013 $ 2,401,681 $ 1,968570 Subtotal Child Care Fee S 2,610,017 $ 2,659.086 $ 2.559,712 $ 1,968,570 School Facilities Fee Residential $3.20 xNSF $ 484,714 $ 1,109,501 S 431,839 $ - Commeroial $0.51 xNSF $ 232,050 $ 213,360 S 206,297 8 158,355 Subtotal School Fadlities Fee $ 715,754 $ 1,322,661 $ 640,136 $ 158,355 Subtotal Other Requirements $ 10,604,159 $ 12,416,593 is 9,267,547 S 4,089,608 Bld,.rC.nstsuction Permits° Plan Check Residential 4+ stores $0.9127 xNSF $ 138,249 $ 316,473 S 123,169 $ - Commonest 00KSF $1.2790 .NSF $31,975 $37,591 $37,872 S - Ccmmemial > 10K SF14 stories $1.3521 xNSF $ 585,716 $ 510,028 $ 615,994 S 422,941 Mechanical $727 per project $727 $727 $727 $727 Electrical $727 per project $727 '$727 $727 $727 Plumbing $727 per project 5727 $727 $727 $727 Building Permitsllnspedions 51.0236 xNSF $ 155,048 $ 354,921 $ 136,135 $ - Multifamily 41 Stories Commercial l -Story $0.9782 xNSF $ 19,455 $ 22,872 S 23,043 $ - Commercial4 +stores $1.3581 xNSF $ 5133,983 $ 508,519 9 514,467 S 421,690 Tenant Improvements >101< SF $0.2782 xNSF $ 126,581 $ 112,344 $ 113,624 $ 86,381 Geotedfnical Reports $2,481 per project $ 2.481 S 2.481 $ 2,481 $ 2,461 Subtotal BIdg./Construclion Permits S 1,645,669 $ 1,067,416 $ 1,470,966 $ 935,674 Utility Fees2 Water Mete" $3,837 V4" meter per parwl $ 19,185 $ 19,185 S 15,348 $ 3,837 Fire Line Mete" $18.195 4" meter per parcel $ 90,975 $ 90,975 $ 72,780 S 18,195 Wastewater Capitai Facilities $1,168 per unit $ 182,206 S 374,928 $ 141,328 $ - Studio/1-BR Units 2 -BR +Units $1,557 per unit S 132,345 $ 275,589 S 104,319 $ - Commercial $M per 1,000 NSF $ 354,445 $ 314580 S 315,163 $ 241.680 Subtotal Utilities $ 779,158 $ 1,075,257 $ 651,938 $ 263,912 Total City Permits & Fees $ 10,750,722 $ 21,276,567 $ 15,486,945 S 7,635,812 GSF $26.55 $23.75 $24.78 $21.39 per Per Program Summary, Appendix A. s Per FV 2013 -14 City fees schedule, new Transportation Impact Fee per Ordinance No. 2420 (CCS), and draft linkage and parkslrecrestion fees as of July 2013. 3 For proposed Project only, assumes 2% x hard want for phrase ad. 4 Includes meter and captial facilities charge. HR&A AMSOts. Inn. Alt 4 No Benefi6 Residual Land Value Analysis v3_1243-13 c -city cost oetad 12 -012013 Page 14 of 18 Appendix D Net Operating Income Development Sem ion Assumptions Alt 4 Reduced Project Proposed Project Tier l Project Zonin,Lmrolitnt Project Land Area 310,500 310,500 310,500 310,500 Gross Bldg. Area (SF) 706,340 896,010 624,881 357,000 Residential Units Market Rate NSF NSF NSF NSF Studio 103 370 211 370 BO 370 - - 1 SR 45 - 530 69 530 35 530 - - i SR Loft - 580 25 560 - 541 - 2 BR 75 859 94 859 - 859 - - 2 SIR TOwnhouse - 980 52 980 59 904 - - 3 BR 6 1,307 13 1,307 5 1,307 Subtotal Market Rate 229 474 179 AHONable Studio - Extremely Low Income 6 365 11 365 4 365 Studio - Very Low Income - - 365 - - Studio - Low Income - - 361 - 2 - 548 1BR- Extremely Low Income 2 548 5 548 1BR -Very Low Income - - 548 - - 1BR- Low income - - 540 - - 1BRLOO- Very Low Income - 607 - 3 849 2SR- Extremely Low Income 4 me 7 349 2BR- Very Low Income - - 349 - 2BR -Low Income - Sun 2 BR Townhouse - Very Low Income - - 974 _ _ 1,232 _ - 3BR - EAremely Low Income - 1 1,232 - 3 BR- Very Low Income - 1.232 SubtotalARONable 12 24 9 - Retall(NetSF) 25.000 29,391 29,611 376,814 - 310,500 ORCe(NetSF) 430,000 374,434 Residential(Net SF) 166,000 361,271 134,950 100% - MarketRate( % official units) 131 81% 287,637 60% 128,489 95% Affordable (% orbital units) 31,71r3 19% 73,634 20% 6,460 5% Parking Spaces 362 100% 747 100% 282 100% - R arke tial Market Rate ( %onits) M 344 95% 711 95% 269 95% - Affordable (boftotalotal ununits) 18 5% 36 5% 14 5% - 600 ORcelRetail 1,219 1,189 1,091 Residential Per NSF Per Unit Per NSF Per Unit Per NSF Per Unit Per NSF Market Rate Apartments° $1,600 per uniimonth S 164,800 $4.32 $ 337,600 $4.32 S 128.000 $4.32 S - $0.00 Studio 1 B $2,500 per mandolin $ 112.500 $4.72 S 172,500 $4 .72 $ 87,500 $4 .72 S - $0.00 1 BR Loft $2,600 per unitlmonbh $ - $4.45 S 65,000 $4.48 $ - $0.00 $ - $0.00 2BR $3,175 per unitlmonth $ 23,125 53.70 S 298,450 $3.70 is - $0.00 is - 50.00 2 SR Townhouse $3,275 peruniVmonth $ - $3.34 $ 203,050 $3.34 is 193,225 $3.62 $ - $0.00 3BR $4.420 peruniVmonth S 26,520 $3.38 $ 57,460 $336 $ 22100 $338 $ - $0.00 Gross Rental Income per Month $ 541,945 $4.04 $2,367 $ 1,134,050 $3.94 $2,393 S 430,825 $3.35 $2,407 $ - $0.00 Gross Rental Income per Year 12 months $ 5,503,34D $48.45 $28,399 $ 13,606,]20 547.31 $28,710 $ 5,169,900 Si $26,882 $ - $0.00 Parking lncome(annual)n $110 'perspacelmonth $ 454,080 $3.38 $1,963 S 938,520 $3.26 51,980 S 354,420 $2.76 $1,980 $ - $0.00 Premium Income $205 perunitlyear $ 46,945 SD_35 $205 $ S7,170 $0_34 $205 $ 36,695 Si $205 $ - $0_00 (annual)' Other Misc. Income(annuaQa 3% x Gross Rental Income $ 195,100 $1.45 $852 $ 408,262 51.42 $861 $ 155,097 $1.21 $866 $ - 50.00 Total Gross Income $ 7,199,455 $53.64 531,439 $ 15,D52,672 $5223 $31,]5] $ 5,716,112 $44.49 $31.934 $ - $0.00 5.0% x Gross lncomelyear S (359973) -$266 -$1.572 IS (752.634) -52.62 -$1598 5 (285806) -$Z22 41597 $ $0.00 Less: Vacancy & Collection Least S 6,539,492 $50.95 $29,867 $ 14,30D,038 549]2 $30,169 S 5,430,306 542.26 $30,337 $ - $0.00 Effective Gross Income(EGI) Less: Operating Expenses& Milne. Fees $9,119 per undyear $ (2,088.251) 415.56 - $9,119 $ (4,322,406) - $15.03 - $9,119 S (1,632.301) 412 .70 - $9,119 $ - SOHO Less: Replacement Reserve° $150 per unitlyear $ (34,350) -$0.26 4150 $ (71,100) -$025 -$150 $ (26,850) -$0.21 -$150 S - $0.00 Less: Annual Community Benefit Payments $0.00 Residential Transit Subsidy $ - $0.00 $0.00 $ - $0.00 $0.0 S - $0.00 $0.00 $0 $0 $ - $ SO_00 Historic Presermlion Programs $ - 000 $0.00 S - $0.00 Soo Is - SSOD Net Operating Income- Market Rate Residential S 4,716,891 535.14 $20,598 $ 9,906,532 $34.44 520,900 $ 3,7]1,155 $29.35 $21,066 IS - Page 15 of 18 HR&A Advisors, inc. Alt 4 No Benefits Residual Land Value Analinds_v3 12 -0113 G-Net Cps Income 12-03 -2013 Page 15 of 18 HR &A Advisors, Inc. Aft 4 No Beri Residual Land VaWe Analys1sy3 12 -0}13 D-Net O's Income 12 -0 }2013 Assumotions Proposed Pro act' Tert Pro iectt Zon"naLOmpl'ant Pro act' Per NSF Per Unit Par NSF Per Unit Per Ni AfloNeble Ad.mn fist Studio- Extremely Low Income $340 per univinni S 2,040 $0.93 $ 3,740 50.93 $ 1,360 $0.21 $ - Studio - Very Law Income $567 per unitlmonth $ - $0.00 $ - $0.00 $ 'S - $000 $ Stutlio - Low Income S68D peruniVmonth $ - $0.00 $ - $0.00 - $0.00 $ - IBR - Extremely Low Income $389 peruniVmonth $ 778 $0.71 S 1,945 $0]1 $ 778 $0.12 $ $ 1BR- Very Low Income $648 peruniVmonth $ - 30.00 S - $0.00 $ - $0.00 $ ISR - Low Income $715 per unilftni $ - $0.00 $ - 50.00 $ - 5100 1SR Loft - Very Low Income $648 perunitlmonth S - $0.00 $ - $0.00 $ - $0.00 5 2SR- Extremely Low Income 5437 peruniVmonth $ 1,748 $0.51 $ 3,059 $0.51 S 1,311 $0.20 S $ 2BR -Very Low Income $729 peruniVmonth $ - $0.00 S - $0.00 $ - $0.00 $ 2BR -Low Income $875 per unillmonth $ - SD.00 S - $0.00 $ - 50.00 $ 2 SR Townhouse fiery Low Income $729 peruniVmonth S - $0.00 $ - $100 $ - 50.00 $0.00 S 3BR - Extremely Low Income 5486 peruniVmonth 5 - $0.00 $ 486 $0.39 $ - $0 $ 3 SR- Very Low Income $810 peruniVmonth S - $0.00 $ - $0.00 $ - -00 $ $0.00 Gross Rental Income per Month $ 4,566 50.14 $381 S 9,230 $0.13 $385 S 3,449 41,388 $0.53 56.41 $383 $4,599 $ _ 3060 Gross Rental Income per year 12 months $ 54,]92 $1.72 $4,566 $ 110,760 $1.50 $41615 $ Parking Income (unbundled parking assumed) $0 S - $0.00 $0 $ - $0.00 $0 $ 50.00 $0 $205 S - $O.DO Premium Income (annual? $205 per unhyear $ 2,460 $008 $205 $ 4,920 $0.07 $205 $ 1,845 $0.29 $ $0_00 3% x Gross Rental Income $ 1.644 $0.05 137 $ 3,323 $0_05 $138 S 1,242 $0_19 $138 Other Misc. Income(annuapa $ 56,896 $1.85 54,908 5 119,003 $1.62 Si $ 44,475 $6.88 34,942 $ $0.00 Total Gross Income 5.0% xGross Income $ (2945) -_$0.09 -$245 S (5950) - -$0.08 -$248 $ (2224) -$0.34 _$241 $ $00000 Less: Vacancy& Collection Loss° 5 55,951 $1.76 54,663 $ 113,05$ 51.54 $4,711 $ 42,251 56.54 $4,695 $ $10D Effective Gross Income (EGI) $9,119 unillear S (109,428) -$3.44 49,119 $ (218,856) 42.97 49,119 $ 182,071) 412]0 39,119 S - $0.00 Less: Operating Expenses & Mgmt. Fee° $150 per per urit)i $ (1800) - $006 $150 $ (36007 4005 _4150 S (1350) - -$0.21 4150 S $000 Less: Replacement Reserver S (55,277) -$1]4 44,606 S (109,403) 41.49 41 S (41,170) -$6.37 - $4,574 5 - $0.00 Net Operating Income- Affordable Residential Per NSF Per NSF Per NSF Per NSF Retail Average Ren9SFIM0nth(NNN)s $4.75 per NSFIrl $4.75 $4.75 $4 .75 $ 5 - - $0.00 SO.00 Gross Annual Rental Income (NNN) $ 1,425,DO0 $57.00 $ $ 1,6]5,28] (83.764) 557.00 4285 S $ 1,687.827 (84.391) 557.00 -2.85 $ $O.00 Less: Vacancy & Collection LOSS 5.0% S (71,250) -$2.85 $54.15 $ - $0.00 Effective Gross lntame(EGI) 3 1.353,750 $54.15 $ 1,591,523 $54.15 3 1.603,436 $ - 000 Less: Unreimbursed Operating Expenses 3.0% xEGI $ (40613) -3162 $ (4]]46) -$1.82 $ (48103) -51_62 3 1,313,137 552.53 $ 1,543,717 $52.53 $ 1,555,333 $52.53 $ - $0.00 Net Operating Income - Retail Per NSF per NSF Per NSF Party F Offcex Average Monthly Rent(FSG) per NSFlmonth S4.SD $4.50 5 $522.35 $4.35 $52.20 Average Annual Rent(FSG) per NSFtyear 554.00 $54,00 $ $54.00 20,219,436 $54.00 $ .20 19,]]4,091 $5220 $ 16,200,100 $52.20 Gross Annual Rental Income (FSG) $ 23,220,000 Parking Incomelyear Ind. Retailf $ 2822,]37 $7.54 S - $0.00 $ - $0.00 Alt 4IProposedProject $6.99 per NSFNear S 3,180,450 $7,40 $ 2,499,561 $6.60 $ - $0.00 Teri Project Si per NSFNear $ - $0.00 $ - $0.00 S - $0.00 S 1,080,540 $3_48 Zoning- COmpiant Project $3.48 per NSFNear $ - 30X0 $ - $000 $61.54 $ 19,7]4,091 $52.20 $ 16,208,100 $52.20 Gross Rental lncomelyear 5.0% $ 26,40D,450 S (1320023) $61.40 4 3.0] $ $ 23,042,1]3 (11521ll) -S3.OB $ (988705) -52.fi1 $ (810,405) -3261 Less: Vacancy& Collection LOSS 21AI) 4 558.46 S 18,785,386 549.59 S 15,397,695 549.59 Effective Gross Income(EGI) S 25,080,427 $58.33 $ Less: Annual Community Benefit Payments $0.00 S - $0.00 $ - $0.00 TMA Contribution $ - $0.00 S $ - - $0.00 $ - $0.00 $ 50.00 Bike Share Facility $ - SD.00 30.00 $ - $0.00 $ 30.00 Child Care Contribution $ - $0.00 $ - $0.00 5 - $0.00 $ $0.00 Historic Preservation Programs $ - $0.00 $ - $O.DO S $0.00 S $0.00 Van Pool Subsidy $ - $0.00 $ - $0.00 S - $0.00 $ $0.00 Parking Cash -Out Program NSFtyear S S $0.00 - $12.50 $ $ - (4,680,425) 412.50 $ (4,]35,1]5) 412.50 $ (3,881.250) 412.50 Less: Operating Expenses Taxes° $12.50 per 1.25 %x subtotal NOl x cap rate (5375,000) $ (3925384) -59.13 $ (34282151 49.16 5 (2]98,84]) -$7.39 $ (2294113) -$739 Less: Real Estate S 15,780,D43 536]0 S 13,781,424 $36.81 $ 11,251,364 $29.10 $ 9,222,332 $29.70 Net Operating Income - Office 5 21,754,794 $35,03 $ 25,122,330 532.84 5 16,536,682 $3043 S 9,222.332 Si Total Net Operating Income ' Per Program Summary, Appendix A. ¢ Per Hines, and verified by HR &A as reasonable assumptions based on current market conditions. ° Per Hines, includes purchase storage units at $50Imo, and Additional rent for pets at $251month. ° Per City's maximum AHPP rents, as modified by City Council action on June 11, 2013. ° Per HRBA. Accounts for a mix of retail tenants (assuming $3.5) psf per Mo.) and dining tenants (assumes 56.00 psf per mo.). s For Proposed Project and Tier 1 Project, weighted average of reserved monthly (5240: 10 %), unreserved monthly ($165; a0 %) and daily ($40: 5 %); for Zoning Compliant, $150 unreserved. r R&, estimates. Page 15 of 18 HR &A Advisors, Inc. Aft 4 No Beri Residual Land VaWe Analys1sy3 12 -0}13 D-Net O's Income 12 -0 }2013 Appendix E Residual Land Values Alt 4 Reduced Zoning- Compliant Development Scenario Assumptions Project Proposed Project Tier 1 Proiect Predec Land Area 310,500 310,500 310,500 310,500 Gross Bldg. Area (SF) 706,340 896,010 624,881 357,000 Residential Units 474 178 Market Rafe 228 211 80 Studio 103 69 35 i SR 45 1 BR Loft - 25 . 2 SR 75 94 59 - 2 SR Townhouse - 62 5 3 BR 6 13 9 Affordable 12 24 4 - Studio - Extremely Low Income 6 11 _ Studio - Very Low Income - Studio - Low Income - 2 _ 1 BR- Extremely Low income 2 5 - 1 SR - Very Low Income 1 BR - Low Income - _ 1 SR Loft - Very Low Income 3 _ 2 SR - Extremely Low Income 4 7 _ 2 SR- Very Low Income 2 SR - Low Income 2 BR Townhouse -Very Low Income - - - 38R- Extremely Low Income - 1 3 BR- Very Low Income - 166,000 361,271 134,950 - Residential (Net SF) 134 227 287,637 128,489 - M (% of total its) 31 773 73,634 6,460 - unit le (% of total units) Affordable Al 29,391 29,811 - (Net (Net SF) 25,000 430,000 374,434 378,814 310,500 Office (Net SF) O Office Project Value Per NSF Per Unil PerN F Per Unit Per NSF Per Unit Per NSF Resitlential - Market Rate 4,716,891 $35 $20,598 $ 9,906,532 $34 $20,900 $ 3,771,155 $29 $21,068 $ $ Net Operating Income From App,D $ Cap Rate 4.83% NOI /Cap Rate $ 97,759,399 $728 $426,697 $ 205,316,725 $714 $433,158 $ 76,156,653 $608 $436,641 $608 $ - $ Residential - Affordable From App, D $ (55.277) -$2 - $4,606 $ (109,403) -$1 54,558 $ (41,170) -$6 34,574 $ - $ Net Operating Income Cap Rater 4.83% NOI /Cap Rate $ (1,145,637) -$36 495,470 $ (2,267,420) -$31 - $94,476 S (853,264) -$132 - $94,607 S - $ - Value Retail Net Operating Income From App,D $ 1,313,137 $53 $ 1,543,7P $53 $ - 1,555,333 $53 $ _ $ Cap Rater 6.20% NOI /Cap Rate $ 21,179,629 $847 $ 24,699,629 $847 $ 25,085,016 $847 $ - $ - Value Office Net Operating Income From Apo,D $ 15,780,043 $37 $ 13,781,424 $37 $ 11,251,364 $30 $ 9,222,332 30 Cap Rater 6.28 NOI /Cap Rate $ 251,474.791 $5B5 $ 219,624,285 $ 179,304,606 $473 $ 146,969,441 Value $ 369,268,182 $595 $ 447,573,219 $585 $ 281,696,011 $518 $ 146,969,441 $473 Total Project Value Page 17 of 18 HRBA Advisors, Inc. At 4 No Benefits Residual land Value Analysis _ v3_i2 -03-13 E- Residual Values 12- 03-2013 t Average of the midpoint of the cap rate range per CBRE, Cap Rate Survey February 2013, Los Angeles area data; and and point estimates by Real Estate Research Corp., Real Estate Report, 2nd Quarter 2013, Los Angeles Area data 2 10 -15% typical, per HRBA. Page 18 of 18 HRSA Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis v3 12 -03.13 E- Residual Values 12- 032013 Alt 4 Reduced Zoning- Compliant Development Scenario' Assumptions Project Proposed Project Per NSF Tert Praia. t Per NSF Praise t Per NSF Residual Land Value Estimate Total Project Value From above $ 369,268,182 $595 $ 447,573,219 $585 $ 281,696,011 $518 $ 146,969,441 $473 Less: Developer ProfiO 10.00% x Total Protect Value $ (36,926,818) -$59 $ (44,757,322) 458 $ (28,169,601) 352 $ (14,696,944) -$47 Less: Total Net Development Cost From App, B S (261,108,986) -S438 $ (346,912,728) -$453 $ (234,112,379) -$431 $ (65,033,768) -$274 Residual Land Value Total $ 71,232,378 $98 $ 55,903,169 $74 $ 19,414,011 $35 $ 47,238,729 $152 Per SF Land Area $229 $180 $63 $152 t Average of the midpoint of the cap rate range per CBRE, Cap Rate Survey February 2013, Los Angeles area data; and and point estimates by Real Estate Research Corp., Real Estate Report, 2nd Quarter 2013, Los Angeles Area data 2 10 -15% typical, per HRBA. Page 18 of 18 HRSA Advisors, Inc. Alt 4 No Benefits Residual Land Value Analysis v3 12 -03.13 E- Residual Values 12- 032013 . FOR PROPOSED PROJECT 2600 28th Sttect, Suite 325, Santa Monica, CP 90405 T; 310581 -0900 ! F: 310 -` 111 -0910 ( vv %wr.hraadvisors.com MEMORANDUM To: Jing Yea, City of Santa Monica From: Paul J. Silvern Date: December 4, 2013 Re: Residual Land Value Implications of Alternative Affordable Housing Strategies for the Bergamot Transit Village Project Per your request, HR &A Advisors, Inc. prepared estimates of the change in residual land value for the proposed Bergamot Transit Village development ( "Project ") that would result from alternative affordable housing strategies under discussion between City staff and Hines, LLC, the Project applicant. The analysis is intended to provide one measure of the financial implications that the alternative strategies could have on the Project. The analysis necessarily employs several simplifying assumptions that are noted below. The analysis follows the same basic format of the residual land value analyses that we have prepared for the Project to date. But instead of comparing alternative development scenarios, this analysis looks only at the proposed Project, but under three different assumptions about the affordable housing obligation that City staff has discussed with Hines in the course of negotiating the terms and conditions of a Development Agreement. In brief, these alternative affordable housing strategies are as follows: • Minimum Affordable Housing Production Program Requirement. This strategy is the recently amended minimum requirement under the Zoning Code, that a development project include five percent of total units affordable to extremely low- income households, with maximum incomes equal to 30 percent of Median Area Income (AMI) for Los Angeles County. Based on the Project particulars, this would result in 24 units for that income level. • City Staff Recommendation for 66 Affordable Units. Consistent with the 2010 Land Use and Circulation Elements of the City's General Plan, a development of the scale associated with the proposed Project must provide above - average community benefits in order to secure City entitlements approval through a Development Agreement. City staff has proposed that, as to affordable housing, the Project should include 66 units at a variety of below- market income levels, including the minimum 24 units affordable to extremely low - income households. Most of the additional units are affordable at the "workforce housing" level of 150 -180 percent of AMI, with correspondingly higher maximum allowable rents. • City Staff Recommendation for 93 Affordable Units. Under the terms of the draft Development Agreement, the Project will be required to pay a new affordable housing HRAA Advisors, Inc. I Los Angeles j New York j Washington, D.C. "linkage fee" to mitigate the affordable housing impacts generated by its commercial use components, should that pending requirement be enacted by the City Council. City staff has recommended that in lieu of paying that fee (which HR &A estimates would total about $2.1 million, after accounting for certain credits related to existing land uses at the Project site), that Hines construct a total of 93 units at a variety of below- market income levels, also including the minimum 24 units affordable to extremely low- income households. Most of the 27 additional units are in the moderate- income and workforce housing income levels. To assist City staff, Hines and City decision makers in assessing these alternative affordable housing strategies, HR &A prepared comparative residual land value estimates for the proposed Project. In each case, we assume that the physical characteristics of the Project remain the same (i.e., same design, same total gross and net floor area, same amount of creative office use and retail uses, and same 498 total apartments and live -work units). The only change is the number and distribution of apartments by bedroom size and rent level. As a simplifying assumption, we assume that the increases in below- market rate units between strategies is offset by a corresponding decrease in the number of market rate apartments, and that the corresponding change applies to units by bedroom size. That is, each additional unit in the latter two affordable housing strategies, by bedroom size, would result in a reduction of a market rate unit of the same bedroom size. We also assume, for calculation convenience, that the average size of each unit, by number of bedrooms per unit, and rent, applies in each case. Thus, the only differences among the scenarios tested are: (1) the number of market rate and affordable units; and (2) the distribution of those units by bedroom size. The affordable units distribution for all three scenarios was provided to HR &A by City staff. The resulting changes in market rate units are based on HR &A's like- for -like adjustments, as noted above. Table 1 provides a comparison of the apartment unit distribution for the proposed Project with the other two affordable housing strategies that are under discussion. R&A ADVISORS, INC. BERGAMOT I RAPIST VILLAGE AFFORDABLE HOUSING STRATEGIES RLV IMPACTS Table 1 498 Apartment Distribution by Unit Size and Income Level for Alternative Affordable Housing Strategies, Bergamot Transit Village 474 Proposed Project 405 with City Staff Proposed Project Proposed Project Recommendation with City Staff with 5 %Extremely for 66 Affordable Recommendation for Residential Unit Mix Low - Income Units Units 93 Affordable Units Total Units 498 498 498 Market Rafe Units 474 432 405 Studio 211 189 178 1 BR 69 61 57 1 BR Loft- LiveiWork 25 25 25 2 BR 94 83 71 2 BR Townhouse 62 62 62 3 BR 13 12 12 Market Rate Units Net SF (NSF) 5 5 5 Studio NSF 370 370 370 1 BR NSF 530 530 530 1 BR Loft NSF 580 580 580 2 BR NSF 859 859 859 2 BR Townhouse NEE 980 980 980 3 BR NSF 1,307 1,307 1,307 Affordable Rate Units 24 66 93 Studio - Extremely Low Income 11 11 11 Studio - Very Low Income - - - Studio - Low Income - 1 1 Studio - Moderate Income - 3 5 Studio - 130 %xAMI - 16 16 Studio - 150 %xAMI - 2 11 Studio - 180 %xAMI - - 1BR- Extremely Low Income 5 5 5 1BR -Very Low Income - - ' 16R -Low Income - 1 1 1BR- Moderate Income - - 1 1 BR- 130 %xAMI - 5 5 1 BR- 150 %xAMI - 2 5 1 BR- 180 %xAMI - - - 2 FIR - Extremely Low Income 7 7 7 2BR -Very Low Income - - - 2BR -Low Income - - - 2 BR - Moderate Income - - 2BR- 130 %xAMI - - - 2BR- 150 %xAMI - - 2 BR -180% xAMI - 11 23 3 BR - Extremely Low Income 1 1 1 3 BR- Very Low Income - - 3 BR - Low Income - - - 3 BR - Moderate Income - - - 3BR- 130 %xAMI - - - 3BR- 150 %xAMI - - - 3BR- 180 %xAM9 Affordable Units Net SF (NSF) Studio 365- 365 365 1 BR 548 546 548 2 BR 849 849 849 3 BR 1,232 1,232 1,232 Sources: Planning &Community Development Dept, City of Santa Monica; Hines, LLC Prepared by. HR &A Advisors, Inc. H3P.&A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE AFFORDABLE HOUSING STRATEGIES RLV IMPACTS 13 We modeled the residual land value implications of each affordable strategy using the same simulation model used to estimate the Value Enhancement for the proposed Project over smaller scale development concepts. The same development costs were applied in each case, except where the change in units distribution altered the calculation of City development fees. Net operating income calculation assumptions and income capitalization assumptions were also held constant. No other community benefits beyond the affordable housing requirement are included in the analysis. Table 2, on the next page, provides an overall summary of the analysis results, using a format similar to HR &A's previous Value Enhancement analyses. The primary conclusions of the analysis are as follows: • Both City Staff Recommendations for Affordable Housing Requirements Would Reduce the Project's Residual Land Value. As compared with the base case requirement of 24 units affordable to extremely low- income households, the Community Benefit affordable housing strategy (i.e., 66 units) results in a residual land value reduction of about $5.1 million. The Enhanced Community Benefit strategy result is a residual land value reduction of about $7.8 million. Although the additional affordable units are primarily at the moderate - income and workforce housing levels, which result in a progressively overall positive net operating income and capitalized value for the affordable units component of the Project (as compared to net losses in the AHPP base case), these net gains are less than the NOI and capitalized value losses associated with the corresponding reductions in the number of market rate units. • The Incremental Residual Land Value Impact of the City Staff's Recommendation for 93 Affordable Units Exceeds the Amount of the Proposed Linkage Fee. The incremental reduction in residual land value between the Community Benefits strategy (i.e., 66 units) and the Enhanced Community Benefits strategy (i.e., 93 units) is about $2.7 million. This is equal to about 129 percent of the net linkage fee ($2.1 million) that would be applicable to the Project's commercial space, based on the HR &A fee calculation. All of the calculation details supporting the summary presented in Table 2 are included in Attachment A to this memo. We are available to answer any questions you or others may have about this analysis. HR?.A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE AFFORDABLE HOUSING STRATEGIES RLV IMPACTS 1 4 Residual Land Value Estimate Total ProjeclValue $ 447,573,219 $ 441,608,731 $ 438,329,166 Less: DevelooerProfit $ (44,757,322) $ (44,160,873) $ (43,832,917) Less: Total Net Development Cost $ Market rate residential total includes 25 Live -Work units. For certain City development fee calculation however, these Live -Work units are treated as creative office space. Prepared by HRSA Advisors, Inc. FiL'&A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE AFFORDABLE HOUSING STRATEGIES PLV IMPACTS 1 5 Table 2 Residual Land Value Summary of Results Alternative Affordable Housing Strategies for the Bergamot Transit Village Proposed Project Proposed Project Proposed with City Staff with City Staff Project with 6% Recommendation Recommendation Extremely Low- for 66 Affordable for 93 Affordable Income Units Units Units Program Summary LUCETier 3 3 3 Permit Requirement DA DA DA # Parcels 5 - 5 5 Bldg. Height (Feet) 81 81 81 Stores ( #) 6 -7 6 -7 6 -7 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 896,010 896,010 Floor Area Rafio(FA.R)- Gross Area 2.89 2.89 2.89 Floor Area Ratio(FAR) - Net Area 2.47 2.47 2.47 Net Leasable Areas Residential (NSF) 361,271 361,271 361,271 Market Rate Units' 474 432 405 Affordable Units 24 66 93 Total Units 498 498 498 Retail (NSF) 29,391 29,391 29,391 Office (NSF) 374,434 374,434 374,434 Development Costs Land Costs See Below See Below See Below Hard Costs $ 254,701,037 $ 254,701,037 $ 254,701,037 Soft Costs City Permits and Fees - $ 21,276,567 $ 21,059,402 $ 20,843,537 Public Benefit Payments $ - $ - $ Other Soft Costs $ 51,811,500 $ 51,798,274 $ 51,785,129 Financing Costs $ 30,844,955 $ 30,823,276 $ 30,801,726 Total Development Cost $ 358,634,060 $ 358,381,989 $ 358,131,429 Less: Lease -up Revenue $ (11,721,331) $ (11,721,331) $ (11,721,331) Net Development Cost $ 346,912,728 $ 346,660,668 $ 346,410,098 Net Operating Income (NO]) Residential - Market Rate $ 9,906,532 $ 9,098,501 $ 8,521,269 Residential - Affordable $ (109,403) $ 410,841 $ 829,834 Retail $ 1,543,777 $ 1,543,777 $ 1,543,777 Office $ 13,781,424 $ 13,781,424 $ 13,781,424 Total Net Operating Income $ 26,122,329 $ 24,834,543 $ 24,676,304 Project Component Values Residential - Markel Rate $ 205,316,725 $ 188,569,969 $ 176,606,611 Residential- Affordable $ (2,267,420) $ 8,514,839 $ 17,198,632 Retail $ 24,899,629 $ 24,899,629 $ 24,899,629 Office $ 219,624,285 $ 219,624,287 $ 219,624,287 Total Project Value $ 447,673,219 $ 441,606,731 $ 438,329,166 Residual Land Value Estimate Total ProjeclValue $ 447,573,219 $ 441,608,731 $ 438,329,166 Less: DevelooerProfit $ (44,757,322) $ (44,160,873) $ (43,832,917) Less: Total Net Development Cost $ Market rate residential total includes 25 Live -Work units. For certain City development fee calculation however, these Live -Work units are treated as creative office space. Prepared by HRSA Advisors, Inc. FiL'&A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE AFFORDABLE HOUSING STRATEGIES PLV IMPACTS 1 5 ATTACHMENT A Residual Land Value Calculation Models for Alternative Affordable Housing Strategies for the Bergamot Transit Village R A ADVISORS, INC. BEP.GAMOT TRANSIT VILLAGE VALUE ENHANCEMENT -WITH NO BENEFITS Alternative Affordable Housing Scenarios Residual land Value Analysis -Summery of Results - Bergamot Transit Village Project - No Community Benefits Program Summary (see App. A) LUCE Tier Proposed Project Proposed Project with City Staff with City Staff Proposed Project Recommendation Recommendation with 5% Extremely for 66 Affordable for 93 Affordable Development Scenario Low - Income Units Units Units LUCE Tier 3 3 3 Permit Requirement DA DA DA # Parcels 5 5 5 Bldg. Height (Feet) 81 81 81 Stories (9) 6-7 6 -7 6.7 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 896,010 896,010 Floor Area Ratio(FAR) - Gross Area 2.89 2.89 2.89 Floor Area Ratio(FAR) - Net Area 2.46 2.46 2.46 Net Leasable Areas Residential (SF) 361,271 361,271 361,271 Market Rate Units' 474 432 405 Affordable Units 24 66 93 Total Units 498 498 498 Retail (SF) 29,391 29,391 29,391 Office (SF) 374,434 374,434 374,434 Development Costs (see App. B & C) Land Costs See Below See Below See Below Hard Costs $ 254,701,037 $ 254,701,037 $ 254,701,037 Soft Costs City Permits and Fees $ 21,276,567 $ 21,059,402 $ 20,643,537 Public Benefit Payments $ - $ - $ - Other Soft Costs $ 51,811,500 $ 51,798,274 $ 51,785,129 Financing Costs $ 30,844,955 $ 30,823,276 $ 30,801,726 Total Development Cost $ 358,634,059 $ 358,381,989 $ 358,131,429 Less: Commercial Lease -up Revenue $ (11,272,673) $ (11,272,673) $ (11,272,673) Less: Residential Lease -up Revenue 5 (448.658) $ (448,658) $ (448,658) Net Development Cost $ 346,912,728 $ 346,660,658 $ 346,410,098 Net Operating Income (1,101) (see App. D) Residential- Market Rate Effective Gross Income $ 14,300,038 $ 13,102,709 $ 12,275,214 Less: All Operating Expenses $ (4,393,506) $ (4,004,208) $ (3753,945) Net Operating Income $ 9,906,532 $ 9,098,501 $ 8,521,269 Residential - Affordable Effective Gross Income $ 113,053 $ 1,022,595 S 1,691,851 Less: All Operating Expenses $ (222,456) $ (611,754) $ (862,017 Net Operating Income $ (109,403) $ 410,841 $ 829,834 Retail Effective Gross Income $ 1,591,523 $ 1,591,523 $ 1,591,523 Less: All Operating Expenses $ (47,746 $ (47,746) $ (47,746) Net Operating Income $ 1,543,777 $ 1,543,777 $ 1,543,777 Office Effective Gross Income $ 21,890,064 $ 21,890,064 S 21,890,064 Less: All Operating Expenses $ (8,108,640 $ (8,108,640) S (8,108,540) Net Operating Income $ 13,781,424 $ 13,781,424 $ 13,781,424 Total Net Operating Income $ 25,122,329 $ 24,834543 $ 24,676,304 Page 1 of 14 HR&A Advisors, Inc. Affordable Housing Alternatives NO Benefits Residual Land Value Analysis v2_12 -0313 Summary 12 -03 -2013 Markel rate residential total includes 25 Live -Work units. For certain tarty oevelopmem Tee caicoianons, nowcvci, these Live-Work units are treated as creative offica, space HR &A Advisors, Inc. Affordable Housing Alternatives No Benefts Residual Land Value Analysis v2_12 -03 -13 Summary Page 2 of 14 12 -D3 -2013 Proposed Proiect Proposed Project with City Staff with City Staff Proposed Project Recommendation Recommendation with 6% Extremely for 66 Affordable for 93 Affordable Development Scenario Low - Income Units Units Units Project Component Values (see App. E) Residential- Market Rate NOI $ 9,906,532 $ 9,098,501 $ 8,521,269 Cap Rate 4.83% 4.83% 4.83% Value $ 205,316,725 $ 188,569,969 $ 176,606,611 Residential- Affordable NOI $ (109,403) $ 410,641 $ 629,834 Cap Rate 4.83% 4.83% 4.83% Value $ (2,267,427) $ 8,514,839 $ 17,198,632 Retail NO1 $ 1,543,777 S 1,543,777 $ 1,543,777 Cap Rate 6.20% 6.20% 6.20% Value $ 24,899,629 $ 24,899,629 $ 24,899,629 Office NO1 $ 13,781,424 $ 13,781,424 $ 13,781,424 Cap Rate 6.28% 6.28% 6.28% Value $ 219,624,285 $ 219,624,287 $ 219,624,287 Total Project Value $ 447673,219 $ 441,608,731 $ 438,329,166 Residual Land Value Estimate Total Project Value $ 447,573,219 $ 441,608,731 $ 438,329,166 Less: Developer Profit $ (44,757,322) $ (44,160,873) $ (43,832,917) Less: Total Net Development Cost $ (346,912,728) $ (346,660,658) $ (346,410,098) Markel rate residential total includes 25 Live -Work units. For certain tarty oevelopmem Tee caicoianons, nowcvci, these Live-Work units are treated as creative offica, space HR &A Advisors, Inc. Affordable Housing Alternatives No Benefts Residual Land Value Analysis v2_12 -03 -13 Summary Page 2 of 14 12 -D3 -2013 Appendix A Physical Parameters HRB.AAdvisors, Inc.. Affordable Housing Alternatives No Benefits Residual Land Value Analysis_v2 Program Page 3 of 14 12 -03 -2013 Proposed Project Proposed Project Proposed Project with City Staff with City Staff wjth 5% Recommendation Recommendation Extremely Low- for 66 Affordable for 93 Affordable Development Scenario Income Units Units Units 3 LUCE Tier 3 DA 3 DA DA Permit Requirement 5 5 # Parcels 5 81 81 81 Max. Bldg. Height (Feet) 6 -7 6-7 Stories ( #) Land Area (SF) 6 -7 310,500 310,500 310,500 Gross Bldg. Area (SF)3 896,010 896,010 896,010 451,803 Residential 451,803 451,803 32,330 32,330 Retail 32,330 411,877 411,877 411,877 Office Floor Area Ratio (FAR) -Gross SF 2.88 2.89 2.89 Floor Area Ratio (FAR) -Net SF 2.46 2.46 2.46 Net Leasable Areas (Net SF)' 765,096 765,096 765,096 361,271 Residential 361,271 361,271 29,391 29,391 Retail 29,391 Office 374,434 374,434 374,434 Residential Unit Mix' 498 498 432 498 405 Market Rate Units 474 189 178 Studio 211 69 61 57 1 SR 1 BR Loft- LiveNVork 25 25 25 71 2 BR 94 62 83 62 62 2 BR Townhouse 13 12 12 3 BR Market Rate Units Net SF (NSF) 370 370 Studio NSF 370 530 530 530 1 BR NSF 580 580 580 1 SR Loft NSF 859 859 859 2 BR NSF 980 960 980 2 BR Townhouse NSF 1,307 1,307 1,307 3 BR NSF HRB.AAdvisors, Inc.. Affordable Housing Alternatives No Benefits Residual Land Value Analysis_v2 Program Page 3 of 14 12 -03 -2013 HRBA Advisors, Inc.. Affordable Housing Alternatives No Benefits Residual Land Value Analysis—v2 12-03 -1 12 -03 -2013 Page 4 of 14 Proposed Proiect Proposed Project Proposed Proiect with City Staff with City Staff with 5% Recommendation Recommendation Extremely Low- for 66 Affordable for 93 Affordable Development Scenario Income Units Units Units Affordable Rate Units 24 66 11 93 11 Studio - Extremely Low Income 11 _ Studio - Very Low Income - 1 1 Studio - Low Income 3 5 Studio - Moderate Income - 16 16 Studio - 130% x AMI - 2 11 Studio - 150 %xAMI Studio -180 %xAM] S 5 1 BR - Extemely Low Income 5 1 BR - Very Low Income - 1 1 1 SR -Low Income - 1 1BR- Moderate Income - 5 5 1 BR- 130 %xAMI - 2 5 1 BR- 150 %xAMI - 1 BR- 180 %xAMI - 7 7 2 SR - Extemely Low Income 7 _ 2 BR - Very Low Income - 2 BR - Low Income 2BR - Moderate Income 2BR - 130 %xAMI - 2 SIR - 150 %xAMI - 11 23 2BR- 180 %xAMI " 1 1 3 BR - Extemely Low Income 1 _ 3 BR- Very Low Income - 3 BR - Low Income 3 SR - Moderate Income 3BR- 130 %xAM] 3 BR - 150% x AMI 3 SR -180% x AMI " Affordable Units Net SF (NSF) 365 365 Studio 365 548 548 546 1 BR 849 849 2 R 1,232 1,232 1 232 3 S BR HRBA Advisors, Inc.. Affordable Housing Alternatives No Benefits Residual Land Value Analysis—v2 12-03 -1 12 -03 -2013 Page 4 of 14 Parking' Surface Parking (spaces) - - Subterranean Parking (spaces) 1,936 1,936 Levels 1 -2 1,297 1,297 Office /Retail 797 797 Residential 500 500 Level 639 639 Office /Retail 392 392 Residential 247 247 Construction Period (months) 24 24 Per Hines; Draft EIR; and City staff. ] Per Hines and City staff. 5 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). 4 Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). 1,936 1,297 797 500 639 392 247 24 HRBAAdvisors, Inc.. Affordable Housing Alternatives No Benefits Residual Land Value Analysis—v2 12-03-13 A- Program Page 5 of 14 12 -03 -2013 Appendix 62: Development Costs Proposed Project Development Scenari' Land Area Gross Bldg. Area (GSF) Residential Retail Office Net Leasable Ames (NSF) Residential Retail Office Residential Units Subterranean Parking (spaces) Levels l -2 Office/Retail Residential Leve13 Office/Retail Residential Project Elements Land Cost Hard Case Construction Type Building Construction /GSF Building Core 8 Shell Cost Demo On -Site Improvements' Nebraska 20' Fire Access Olympic Sidewalk 26th Street Sidewalk Stewart Street Sidewalk Utility Line Undergmunding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities' Surface Parking' Subterranean Parking Levels 1 -2 Level 3 Contingency Subtotal Hard Costs 390 255 Per NSF Per ^Unit Total Per GSF Per NSF Office /Retail Per GSF Per�SF Residential see Residual Value see Residual Value see Residual Value III Varies Varies $ $15 x Land Area $ $407,177 Allocated $290,040 Total $46,751 Office /Retail Residential 310,500 Assumptions 153,934 156,566 896,010 Per Appendix Per $2,900 per Unit Per Appendix 451,803 per Space $35,000 32,330 5% x Subtotal Hard Costs 11,068 411,877 $ 765,096 Per Appendix A $1,367 361,271 1,350,000 14,228,492 $ $ 15.88 29,391 18.60 $0.00 $0 $0 374,434 496 $ 1.25 It 1.46 $0.00 $4.00 1,930 Per Appendix 1,444,200 1,285 Per Appendix A $0.00 $0 $ - 793 492 645 390 255 Per NSF Per ^Unit Total Per GSF Per NSF Office /Retail Per GSF Per�SF Residential see Residual Value see Residual Value see Residual Value III Varies Varies $ $15 x Land Area $ $407,177 Allocated $290,040 Allocated $46,751 Allocated $11,066 Allocated $1,350,000 Allocated $38 x NSF Office $38 x NSF Retail $2,900 per Unit $1,000 per Space $30,000 per Space $35,000 per Space 5% x Subtotal Hard Costs III $150.00 66,631,050 $150.00 $165.00 $ 2,309,010 $5.20 $5.72 $ $ 201,863 $ 143,791 $ 46,751 $ 669,278 $ 14,228,492 $ 1,116,858 $0.45 $0.50 $032 $0.36 $0.11 $0.12 $0.00 $0.00 $1.51 $1.66 $32.03 $35.23 $2.51 $2.77 $0.00 $0.00 $0.00 $0.00 $ 23,778,300 $53.53 $58.88 $ 13,663,650 $30.76 $33.84 $. 6,139,452 $13.82 1$ 5 20 $ 128,928,494 $290.24 $319.27 Page 6 of 14 III $202.00 157,895,330 $ 176.22 $ 206.37 91,264,280 $252.62 $183,262 $ 4,657,500 $ 5.20 $ 6.09 2,346,490 $6.50 $4,716 $ $ 2D5,314 $ 146,249 $ 11,066 $ 680,722 S $ 1.444,200 $ 14,771,700 $ 8,911,350 $ 5,989,169 $ - 125,772,543 $0.57 $412 $ 407,177 $ 0.45 $ 0.53 0.38 $0.40 $294 $ 290,040 $ 0.32 $ $ 0.06 $0.00 $0 $ 46,751 $ 0.05 $ 0.01 $ 0.01 $0.03 $22 $ 11,068 1.51 $ .1.76 $1.88 $1,367 $ $ 1,350,000 14,228,492 $ $ 15.88 $ 18.60 $0.00 $0 $0 $ 1,116,858 $ 1.25 It 1.46 $0.00 $4.00 $2,900 $ 1,444,200 $ 1.61 $ 1.89 $0.00 $0 $ - $ - $ - $40.89 $29.662 $ 38,550,000 $ 43.02 $ 25.20 $ $ 50.39 29.51 $24.67 $17,894 $ 22,575,000 12,128,621 $ 13.54 $ 15-85 $1155 8 1$ 2026 $ 254,701,037 $ 264.26 $ 332.90 $348.14 $252,555 $ HRBA Advisors, Inc.. ARONable Housing Alternatives No Benefits Residual Land Value A e' Dev CZ_12 -0 ect 12 -032013 Soft Costs' City Permits & Fees (See App. C) Public Benefit Payments Expo Buffer Contribution TMA Contribution Bike Share Contribution' Big Blue Bus Contribution Historic Preservation Programs Subtotal Public Benefit Payments A&E /Other Professionals < Marketing /Leasing Commissions Residential Retail /Office Legal & Accounting Real Estate Taxes Insurance Developer Fee Contingency Subtotal Soft Costs Subtotal Hard +Suits Costs Financing Costs` Loan Term (months) Average Loan Balance Construction Loan Interest Rate Construction Loan Interest Construction Loan Fees Permanent Loan Percent x Cost Permanent Loan Fees & Costs 10,548,097 $23.75 $26.12 $ 1D,728,470 $29.70 $21,543 $ 21,276,567 $ 23.75 $ 27.81 $0.00 $0 $ - $o.00 $0.00 $ - $0.00 $0 $ - $0.00 $D.00 $ _ $0.00 $o $ - $0.00 $0.00 $ - $o.00 $0 $ - $0.00 $0.00 $ ° Per Hines, and determined by HR&A generally $ - $0.00 $0.00 $ - $0.00 $20.89 $0 $15,153 $ _ 7,735,710 $0.00 $17.41 $0.00 $19.16 $ $ 7546,353 6.0% xHard Costs $ 2,709,533 $ 3.02 $ 3.54 $ 12,017,832 $0.00 $0.00 $ 2,709,533 $7.50 $29.76 x NSF k NSF $ $ 12,017,632 $.05 $.76 $ 628,863 0.5% xHard Costs $ 644,642 $1 .45 $1 $7.26 $1 $1.60 $7.98 $ $ 3144314 1.25% x hard costs x 2 yrs. $ 3,223,212 $2.90 $3.19 $ 1,257,725 1.0% x Hard Costs $ 1,289,285 $11'10 $1221 $ 4,553,634 3.0% x Hard I Soft Costs $ 4.931.618 1211,712 $2.73 $3.00 $ 817.067 3.0% x Subtotal 50ft COata $ 41,602,106 $93.65 $103.02 $ 31488959 $ $ 170,530,602 $383.90 $422.29 $ 157,258,502 24 55.00% 5.50% $ 12,192,938 $27.45 $30.19 $ 11,243,983 $ 2,984,286 $6.72 $7.39 $ 2,752,024 1.75% 68.00% $ 869,706 $1__96 $2__15 $ 802,018 0.75% $ g 16,046,930 $36.12 $39.74 $ $0.00 $0 $ - $ - $ $ - - $0.00 $0 $ - $ $ - - $ - $0.00 $o $ - $ - $ - $o.00 $0 $ - ° Per Hines, and determined by HR&A generally $0.00 $20.89 $0 $15,153 $ $ 15,282,063 $ $ - 17.06 $ $ - 19.97 $7.50 $5,441 $ 2,709,533 $ 3.02 $ 3.54 $ 12,017,832 $ 13.41 $ 15.71 $1.74 $1,263 $ 1,273,505 $ 1.42 $ 1.66 8.32 $B.70 $6,314 $ 6,367.526 $ 7.11 $ $ 3.33 $3.48 $2,526 $ 2,547,010 $ 2.84 12.40 $12.60 $9.144 $ 9,485,252 $ 10.59 $ 2.78 $254 $1842 $ 2,128,779 $ 2.38 $ $87.15 $63,225 $ 73,086,067 $ 81.57 $ 95.53 $435.29 $315.780 $ 327,789,1D4 $ 365.83 $ 428.43 $31.12 $22,578 $ 23,436,921 26.16 39 $7.62 $5,526 $ 5,736,310 $ 6.40 $ .50 $222 $1610 $ 1,671,724 $ 1.87 $ 2.18 $40.96 $29,715 $ 30,844,955 $ 34.42 $ 40.32 Subtotal Financing Costs 196,577,532 $420.02 $462.03 $ 172,056,527 $476.25 $345,495 Hard + Soft + Financing $ Total Development Cost 11272,673) $25.36 x NSF Commercial $ ( - $25.38 . - $27.91 $0_,00 $ qqg 656) -$1.24 - $ Less: Commercial Lease -up Revenue` $901 per Unit $ $0_00 $394.65 $434.11 $ 171,607,869 $475.01 $344,594 Less: Residents] Lease -up Revenue' $ 175,3D4,859 Net Development Cost 7-P er Program Summary, Appendix A. less than those derived by HR&A from the Marshall & Swifl construction cost estimation so ware. 2 Per Hines based on contractor estimates . These unit costs are somewhat s Per Hines and City staff. to be reasonable based on current market conditions. ° Per Hines, and determined by HR&A generally Page 7 of 14 $ 358,634,059 $ 400.26 $ 466.74 $ (11,272,673) $ (12.58) $ (14.73) $ l448,658) $ 0.50 $ 0.59 $ 346,912,728 $ 387.18 $ 453.42 HR&A Advisors, Inc.. Affordable Housing AltemaAVes No Benefits Residual Land Value An8 Dis Cost-P0 ect 12- 012013 Appendix C Proposed New Fees, Existing City Fees & Permit Costs Development Scenario' Land Area Grass Bldg. Area (SF) Residential Units Ma Mat Rafe Units Studio 1 S 1 BR Loft 2 BR 2 BR Townhouse 3 SR Subtotal Affordable R.I. Units Studio - Extremely Low Income Studio -Very Low Income Studio - Law Income Studio. Moderate Income Studio -130 %x AMI Studio- 150 %x AMI Studio -180 %x AMI 1 BR - Extremely Low Income 1 SR -Very Low Income 1 BR - Low Income 1 BR - Moderate Income 1 BR- 130 %x AMI 1 SR- 150 %x AMI 1 BR -1B0 %x AMI 2 SR - Extremely Low Income 2 BR. Very Low Income 2 BR -Low Income 2 BR - Moderate Income 2 BR -130% x AMI 2 BR -150 %x AMI 2 BR -180 %x AMI 3 BR- Extremely Low Income 3 BR- Very Low Income 3 SR - Low Income 3 SR. Moderate Income 3 BR -130 %x AMI 3 BR -150 %x AMI 3 SR -180 %x AMI Subtotal Residential (Net Leasable SF) Live -Work (Net Leasable SF) Retail (Net Leasable SF) office (Net Leasable SF) Planning Pefmit,2 Development Review Development Agreement Multiple Permit Fee Architectural Review Board Coastsi Zone Concept Review CEGA Categorical Exemption Negative Dectaration EIR Subtotal p d Project Prp,aad Prefect Page 6 of 14 HR&A Advlaors, Inc. AHordeblc Heusing Ntemetives No Benefits Recldual Land Value Analysis v2_12 -03 -13 cclry Cost Derail 12.0 }2013 dh Dior Staff with City Staff proposed project Recommendation Recommendation with 5 %Extremely for 66 Affordable for 93 Affordable Assumptions - Income units units 310,500 Units 310,500 310,500 896,010 896,010 896,010 211 189 118 69 61 51 25 25 25 94 83 11 62 62 62 13 12 12 414 432 405 11 11 11 1 1 " g 5 16 6 2 5 5 5 1 " 1 5 5 2 5 23 -1 1 _ 1 1 24 66 93 346,744 346,944 366,144 14,527 14.521 14,521 29,391 29,391 29,391 314,434 314,434 374,434 $15,568 per project $ $ 25,000 $ $ 25,000 $ $ 25,000 525,000 per project 1. $84 $ $1,664 per project $ 1,684 $ 1,684 $ 1,684 $ 6 Per Project $ $ - S $27 $216 Per project $ $14,622 Per Project $ $ $ - S $ 44 $25.5 per Drojed S 1000.000 $ 1000.000 $ 1000.000 Allowance 5 $ 1,028,368 $ 1,026,604 $ 1,026,684 Page 6 of 14 HR&A Advlaors, Inc. AHordeblc Heusing Ntemetives No Benefits Recldual Land Value Analysis v2_12 -03 -13 cclry Cost Derail 12.0 }2013 MF Fees Market Rate -Area 1 Affordable Retail -Area 1 Office -Area 1 Subtotal Less: Credit for Existing Office (55K SF) Less: Credit for Existing Industrial (135K SF) Subtotal Net W Other Requirements' Proposed Alfombie Linkage Fee Creative ONCe Retail Subtotal Less: Credit for Existing General Once Lesa. Credit for Existing Industrial Net Affordable Housing Linkage Fee proposed ParkslRecreation Fee Market Rate 0 -1 BR units Market Rate 23 BR units Office Retail Subtotal less: Credit for Existing Office Less: Credit for Existing Industrial Net ParkslRecreation Fee Arts Fee' New ResidernallCOmmerdid Tenant Improvements Subtotal Ads Fee CIrld Care Fee Residential Retail Office Subtotal Child Care Fee School Facilities Fee Residential commercial Subtotal School Facilities Fee Subtotal Other Requirements BIdg.ICOnstmction Permds2 Plan Check Residential 4+ stories Commercial <10K SF Oommermai 110K SF14 stones Mechanical ElecMcel Plumbing Buildng Petmitsllnspedlons Mult family 4+ Stores Commend.] IStory Commercial 4+ stories Tenant Improvements >101( SF Geotechnical Reports Subtotal Bldg./Construction Permits Page 9 of 14 HRBA Advisors, Inc. Affordable Housing Pltematives No Benefits Residual Land Value Analysis n 13 -03.13 C.Cby Cost Deta0 12 -03.2013 tl Project Proposed Project Ith Cit., Staff xvrth CN Staff Proposed Profed Recommendation Recommendation 'MS °(.Extremely for 66 Affordable for 93 Affordable Assumotions Lowbncome JN" gyjts per unit S 1,167,400 E 1,058,200 $ 988,000 $2,600 $0.00 r unit $ px - $ $ 61],211 $ 61],211 $21 .00 NSF S xNSF S $1],211 3T/2922 S 3772922 $ 3]]2.922 $9 ,]g 6 5,557,533 $ 5,448.333 $ 5,3]8,133 $9.70 x NSF $ (485,00) $ (485,00) $ 600) $ 485,000) (183600) xNSF 5 (1836 600) § (1836 $120 $ 4,868,933 E 0.]]9,733 $ 4,709,533 x NSF $ 3,090,490 $ 3,090,490 $ 3,090,490 237,200 5 % x $158.91 xNSF § 23]200 E 237,200 $ 5%x §161.41 S 3,32].690 $ 332].690 S 3.321690 5% x 8168.43 x NSF $ (4]1,0]5) $ $ (4]10]5) $ (855,425 ) $ (4]1,0]5) (656, 5 %x §104.60 xNSF § (866,425 2056.425 $ 2,056,425 5 2,056,425 $ 25%x$16,554 Per Unit $ 1,158,]80 S 1,138,086 $ 1,046.444 $ 1.966,461 25 %x$26,661 Per Unit 3 $ 1126.42] 3 898500 $ 898,5D0 $ 898,500 25 %x§9.24 x NSF xNSF $ 43,940 $ 43,940 $ 43.940 25%x $5.98 S 3,22],64] $ 3,126.972 $ 2,964,91 25 %x39.24 xNSF $ (115,500) $ $ (115,500) § (198135) S (115,500) (198135) 25 %x$5.18 § (198135) 2,613,33] $ 2,6]1,2]6 S 2,914,012 $ x S2001SF $ 3,060,3B4 $ 3,060,364 $ 3,060,384 403.825 1.00% x$5016F § 403.825 3 403,825 $ 1.OD% S 3,464,209 $ 3,464,209 $ 3,464,209 $133.48 unit $ PxrNSF 59,933 $ 54,326 $ 133,141 $ 50,722 133,141 $4.53 $ 133,141 $ 2466013 $ 2,466,013 S 2496013 56.34 xNSF $ § 2,659,086 $ 2,653,480 S 2,649,876 $3.20 x NSF $ 1,109,501 $ 1,109,501 § 213,360 $ 1,109,501 213,360 40.51 x NSF $ 213360 5 S 1,322,861 $ 1,322,861 $ $ 1,322,861 12,416,593 $ 12,310,312 $ 12,164,647 xNSF § 316,4]3 $ 316,473 $ 316,473 $3!,591 $0.912] 81.2]90 x NSF $3128 $37.591 516028 $ 51 D,028 §1.$721 x NSF $ 510$72 $ SR] $727 $727 $72] Per Prated $]2] $]27 $727 $72] ro ad Pe r P 1 $727 $]2] $727 5727 Per Project $1.0236 .NSF 9 354,927 $ 354,92] $ 228]2 $ 354,927 22,872 §0.]]82 xNSF $ 22,8]2 $ 508,519 $ 508,519 $ 508,519 31.3551 x NSF $ $ 112.344 S 112,344 $ 112.344 $0.2752 xNSF $ 2481 § 2.481 $2,481 Per ProleProject 1,667,416 $ 1,867,416 E 1,86],416 $ Page 9 of 14 HRBA Advisors, Inc. Affordable Housing Pltematives No Benefits Residual Land Value Analysis n 13 -03.13 C.Cby Cost Deta0 12 -03.2013 Utility Feesa proposed Project Proposed Project $ w8h City Saff with City Staff Proposed Project $ 3 for w.t Extremely ilh for 66 Affordable 93 Affordable 4a Assumptions Low4ncome Units Units Units Utility Feesa 53,83] 3l4 "meter per parcel $ 19,185 $ 19,185 $ 3 19,185 90,9]5 Water Mater' $18,195 v, meter per Parcel S g09]5 $ 50.5]5 Fire Line Meter Wastewater Capital Facilities per unit 5 374,928 $ 374,928 $ 3]4,928 275,589 Studioll -BR Units $1,168 $1557 per unit $ 275,569 $ 2]5,569 314580 S S 314,580 2 -BR +Units SM per 1,00D NSF S 314580 S 1,075,257 $ 1,075,257 Commercial S 1,075,257 S Subtotal Utilities S 21,276, 8 21,05 S 20 , 843,537 Total City PermiLS 8 Fees $23.]3.7 5 523.523.5 0 $23.26 per GSF Per Program Summary, Appendlx A. Transportation Impact Fee per ONlnance No. 2420 (CCS), and draft linkage and parkslrecleation fees as of Per FY 201 }14 City tees schedule, new JuN 2013. Assumes 2% x hard cost for on-sins art. - 4 Includes meter and oaptial foolides charge. HRBA Addl am, Inc. Aflorcow,iHausln8 atemeWes No Benefits Residual Ind Vera AnelydI Cost0 113 f2 -0}2013 Page 10 of 14 Appendix D Net Operating Income Page i 1 of 14 HR&A Advisors, Inc Affontable Housing Ati -plMas No Beretta Resldual Land Value Analysls_v2_12 -03 -13 0-Net Opslnrome 12 -03.2013 Proposed Pro'epl with CiN Stan Proposed Project with 5% External, Recommendation for 66 Affordable Proposed Proxat win ON Staff Development Scenario' Assumptions Low4ncome Units Units Recommendation for 93 Affordable Units Land Area 310,500 310,500 310,500 Gross Bldg Area (SF) 896,010 896,010 - 896,010 Residential Units Market Rate NSF NSF NSF Studio 211 370 189 370 178 370 1 SR 69 530 61 530 57 530 1 BR Loft 25 580 25 580 25 580 2 SR 94 859 83 859 71 859 62 9B0 62 980 62 980 2 SR 7ovm1ouse 13 1,307 12 1,307 12 1,307 3 BR Subtotal Market Rafe 474 432 405 Afforable 11 355 11 11 365 Studio - Extremely Low Income .365 365 - 365 Stutlio - Very Low income - 365 - 1 365 1 365 Stutlio - Law Income - 365 5 365 Stutlio - Moderate income - 365 3 365 16 365 Studio - 130 %xAMI - 365 16 365 11 365 Studio - 150 %xAMI - 365 2 365 365 Studio - 180 %xAMI - 365 - 365 5 548 10R- Extremely Low Income 5 548 5 548 548 1SR -Very Low income - 548 - 548 - 1 548 1 SR - Low Income - 548 1 548 1 548 1BR- Moderate Income - 548 - 548 5 548 1 BR- 130 %xAMI - 548 5 548 5 548 1 SIR. 150 %xAMI - 548 2 548 548 1 SIR -180 %xAMI - 548 - 648 - 7 849 28R- Becamely Low Income 7 849 7 849 $49 2BR -Very Low Income - 849 - 849 - 849 2 SR - Low Income - 849 - 849 849 2BR - Moderate Income - 849 849 049 2BR- 130 %xAMI - 849 - 649 - 849 2 FIR - 150 %xAMI - 849 849 23 849 28R- 180 %xAMI - 849 11 849 1 1.232 3 BR - Extremely Low Income 1 1,232 1 1.232 1,232 3 BR- Very Law Income - 1,232 - 1,232 - 1,232 3BR -Low Income - 1,232 - 1232 1,232 3 SIR - Moderate Income - 1,232 1'232 1'232 3 SIR - 130 %xAMI 1,232 1'232 1'232 3BR - 150 %xAMI - 1,232 1'232 3 ER- 180 %xAll 1,232 1 1,232 1 1,232 Subtotal Affordable 24 66 93 Retail (Net SF) 29,391 29,391 29,391 Once (Net SF) 374,434 374,434 374,434 Residential (Net SF) 361,271 361,271 264,501 73% 361,271 248,003 69% Mallet Rate Ps of total units) 287,637 73,634 80% 20% 96,770 27% 113,266 31% Affordable its of total units) Parking Spaces 747 100% 747 100% 747 100% Residential 711 95% 648 87% 608 111% Mallet Rate 36 5% 99 13% 140 19% of tatotalunits) Affordable I% of total units) 1189 OffcelReteii 1,189 1,189 Page i 1 of 14 HR&A Advisors, Inc Affontable Housing Ati -plMas No Beretta Resldual Land Value Analysls_v2_12 -03 -13 0-Net Opslnrome 12 -03.2013 Page 12 0114 HRSA Advisors, Ins. Affordable Housing AlternaWea No Benefin Residual Land Value Analysl x212 -0113 D -Net ore locome 12 -012013 Proposed Pro ectwith City Staff PrProosed P t with 5 % Extremely Recommendation for 66 Affordable Proposed P "ctwth Clv Staff Assumptions Low4nc ed Units Units Recommendation for 93 Affordable Units Residential Per NSF Per Unit Per NSF Per Unit Per NSF Per Unit Marker Rafe Apartments s $1,600 per unitlmonth $ 337,60D 54.32 $ 302400 $4.32 $ 264,80D 54.32 Studio 1 SR $2,500 per unitlmonth S 172,500 $4.72 S 152,500 5472 $ 142,500 $472 1 ER LOO 52,600 per uetmorth S 65,000 $4.48 $ 65,000 $4.48 $ 65,000 $4.46 2 D 53,175 per unitlmonth $ 298,450 $3.70 $ 263,525 $3.70 $ 225,425 $3.70 2 SR Townhouse $3,275 per unitlmonth $ 203,050 $3.34 $ 203,050 $3.34 S 203,050 $3.34 3 D $4,420 per unitlmonth $ 5746D $338 S 53,040 $3.38 $ 53.040 $3.38 5 1,134,06D $3.94 $2,393 $ 1,039,515 $3.93 $2,406 $ 973,815 $3.93 $2,404 Gross Rental Income per Month 12 months $ 13,608,720 $47.31 $28,710 $ 12,474,180 $47.16 $28,875 S 11,685,780 $47.12 $2B,854 Gross Rental Income per Year Parking Income (annual)s $110 per spacetmonih $ 938,520 53.26 $1,980 $ 855,360 $3.23 51,980 $ B01,900 $3.23 $1,980 $205 per uniVyear S 97,170 $0_34 5205 S 88,560 9033 3205 $ 83.025 $133 205 Premium lncome(annua8a 3% x Gross Rental Income 5 408,262 $1.42 $851 $ 374,225 $1.41 $866 $ 350,573 $1.41 5856 Other Misc. Income(annvags $ 15;052,672 $52.33 $31,757 $ 13,792,325 $52.14 $31,927 $ 12,921,278 $52.10 $31,904 Total Gross Income 5.0% x Gross lncome/year $ (752534) ,$3,62 - -51586 $ (689616) 42.61 41596 S (646064) 42.611 }]395 Less: Vacancy& Collection LOSS° S 14,300,038 $49.72 $30,169 S 13,102,709 $49.54 930,330 $ 12,275,214 $49.50 $30,309 Eff.dowe Gross Income (EGI) Fee $9,119 per uniVyear $ (4,322406) - $15.03 - $9.119 S (3,939,408) 414,89 - 59,119 $ (3,693,195) - $14.69 49.119 Less: Operating Expenses&M0mt. $150 uniVyear $ (71,100) 40.25 -$150 $ (64,800) -5014 -$150 $ (60,750) $Q00 $1$0 Less: Replacement Reserves per Less: Annual Community Renest Payments $0.00 $0.0 S - $0.00 $0 Residential Transit Subsidy $ S - - $0.00 000 $0.0 $_DO $ 5 - - $0.00 Sao 9 - $000 1100 Historic Preservation Programs $ 9.906,532 534.44 $20.900 $ 9,098,501 534.40 $21,061 $ 8,521,269 $34.36 $21,040 Net Operating Income- Market Rate Residential Affordable Apartments $340 per unitlmonth $ 3,740 $0.93 $ 3,]40 80.93 S 3.]40 $0.93 Studio - Extremely Low Income $ - $0.00 S - $0.00 $ Studio Very Law Income $567 Per unitlmonth $0.00 S 907 $2.48 $ 907 $2.48 Studio - Low Income $907 per unt /month S - $ 3,741 $3.42 $ 6,235 $3.42 Studio - Moderate Income $1,247 per unitlmonth $ - $0.00 $ 23,584 $4.04 S 23,564 $4.04 Studio - 130 %x AMI $1,474 per unitlmonth $ - $0.00 $0.00 $ 3,402 $4.66 9 18,711 54.66 Studio- 150 %x AMI $1,701 per uniVmonth $ - $ - $0.00 S - So.OD Studio - 180 %x AMI $2,041 per uniVmonth $ - .$0.00 1,945 9071 $ 1,945 $0.71 IER - Extremely Low Income $389 per vn!Vm.rth $ 1,945 $071 9 $ - $0.00 $ - $O.DD 1SR -Very Low Income $648 per unitlmonth S - $0.00 $ 1,037 $1.89 S 1,037 $1.89 ISR - Law Income $1,037 per unt/montb $ - $0.00 - $0.00 $ 1,426 $260 1 DR - Moderate Income $1425 per unitlmonth $ - $D,00 $0.00 $ 5 6,425 $3.07 $ 6,425 $3.07 1 SIR 130 %x AMI $1665 Per unitlmonth S - $0.00 5 3,888 $3.55 $ 9,720 $3.55 1 BR- 150 %x AMI $1,944 per vnitlmonln S - $ - $0.00 $ - $0.00 1 BR- 180 %x AMI $2,333 per unitlmonth $ - $0.00 $ 3,059 $0.51 $ 3,059 $0.51 2BR - Extremely Law Income $437 per uniVmonth $ 3,059 $D.51 $0.00 S $0.00 2BR -Very Low Income $729 per unitlmonth $ - $100 $ $ - - $0.00 S - 50.00 2BR -Law Income $1,166 per unitlmonth $ - $0.00 $0.00 $ - $0.00 2 SIR - Moderate Income $1,604 per umi /month S - $0.00 S $ - - $0.00 $ - $0.00 2 SR- 130 %x AMI $1,895 per unitlmonth S - $0.00 $0.00 5 $0.00 2 SR- 150 %x AMI 52,187 per uniVmonth $ - $0.00 $ $ - 28,864 $3.09 S 60,352 $3.09 2BR- 180 %x AMI $2,624 per umUmonih $ - $0.00 5 486 50.39 $ 486 50.39 3 D - Extremely Low Income $486 per unitlmonth $ 486 $0.39 $0.00 $ $0.00 3BR -Very LOW Income 9810 per unthronth S - $0.D0 5 - $0.00 $ - $0.00 3 BR- Low Income 51,296 per uniVmonth S - $0.00 $ - $0.00 S - $0.00 35R- Income $1,782 per unitlm0nth $ - $100 $ - $0.00 $ - $0.00 130%x AMI 3BR- 130 %x AMI $2,106 per unitlmonth $ - $ 9 - $0.00 $ - 3BR - 150 %x AMI $2430 per unitlmonth S - $0.00 9 - 2.916 $23] $ 2,916 $2.00 52.37 3BR - 180 %x AMI 82,916 per uniVmonlM1 3 - $0.00 50.00 $0.89 $1,303 5 142,543 $1.25 $1,533 Gross Rental Income per Month $ $ 9,230 110,760 $0.13 $1.50 $385 $41615 $ $ 85,994 1,031,928 $10.66 $15,635 S 1,710,516 $1540 518,393 Gross Rental Income per Year 12 months 50.00 $0 $ - $0.00 $0 $ $0.00 $0 Parking Income (unbundled perking assumed) $0 S - $205 S 13,530 $0.14 $205 $ 19,D55 $0.17 5205 Premium Income(annual)o $205 per uniVyear 5 4,920 3,323 $O.D] $O05 $13B $ 30,958 0.32 $469 $ 51,315 $0.45 Offer Misc Income (annual)' 3% x Gross Rental Income S $ 119,003 S1.$2 $4,958 $ 1,076,416 $11.12 $16,309 $ 1,780,896 $15.72 819,149 Total Gross Income 5.0% xGross Income S (5950.14) 40.08 4248 $ (53821) 40.56 4615 S (89045) -50.]9 4957 Less: Vacancy & Collection LOSS° $ 113,053 $1.54 $4711 S 1,022,595 $10.57 $15,494 $ 1,691,851 $14.94 $18,192 Effective Gross Income (EGI) $9,119 uniVyear $ (218,656) -$2.97 - 59,119 $ (601,854) 46.22 49,119 $ (848,067) 47.49 49,119 Less: Operating Expenses& Mgmt. Fees $150 per per brivyear $ (3600) 40.05 -$150 $ (9900) -$0.10 -$15D $ (13950) -$0.12 -3150 Less: Replacement Reserves $ (109,403) -SIAS - $4,558 $ 410,841 $4.25 56,225 $ 829,834 $7.33 $8,923 Net Operating Income- Affordable Residential Page 12 0114 HRSA Advisors, Ins. Affordable Housing AlternaWea No Benefin Residual Land Value Analysl x212 -0113 D -Net ore locome 12 -012013 HR&A Advisors, Inc Affordable Housing Alternatives No Benefit Spacial Lam Value Analysis _v2_12-03-13 0.Nd Op, Income Page 13 of 14 12 43 -2013 Proposed Proiect with Citv SUtt Proposed Pro act with 5% Extremely Recommendafion for 66 Affords ble Proposed Project with City Staff Assumptions Low4ncome Units Units Recommendation for 93 Affordable Units Retail Per NSF Per JgF Average RenVSFlMOnth (NNN)s 54.95 per NSFlmonth $139,607 $139,607 $139,607 Gross Annual Rental Income(NNN) 12 months 5 1,675,287 $57.00 $ 1,675,287 $57.00 S 1,675,287 $57.00 Less: Vacancy & Calendar LOSS 5.0% S (83,764) -52.85 S (83764) ALL $ (831764) -$285_ Effective Gross Income(EGI) $ 1,591,523 $54.15 $ 1,591,523 $54.15 $ 1,591,523 $1 15 Less: Unreimbursed Operating Expenses 3.0% xEGI S (477461 4162 S (47,746) -$162 $ (47946) 4162 Net Operating Income - Retail $ 1,543,777 $5253 $ 1,543,777 $52.53 $ 1,543,777 $5253 Officer Average Monthly Sent(FSG) $4.50 per NSFlmonth $4.50 $4.50 $4.50 Avis., Annual Rent(FSG) per NSFlyear $54.00 $54.00 $54.00 Gross Annual Rental Income(F$G) 12 months $ 20,219,436 $54.90 $ 20,219436 $54.00 $ 20.219,436 $54.00 Parking IncomeNear (Ind. Rears Proposed Project $6.99 per NSFlyear $ 2,822,737 $7.54 $ 2,822,737 $7.54 S 2,822,737 $7.54 Gross Rental lncomNYear $ 23,042,173 $61.54 $ 23,042,173 $61.54 S 23,042,173 $61.54 Less: Vacancy & Collection Loss 5.0% S (1.1521091 -$3.08 $ (1152,109) 43,0ll $ (1.152,1097 -3.08 Efiedive Gross Income (EGI) S 21,890,064 $58.46 S 21,890,064 $58.46 $ 21,890,064 $58.46 Less: Annual Community Benefit Payments TMA Contribution - S - $0.00 $ - $0.00 $ - $0.00 Bike Share Facility $ - $0.00 $ - $0.00 $ - $0.00 Child Care Contribution $ - $0.00 $ - $0.00 S - $0.00 Historic Preservation Programs $ - $0.00 $ - $0.00 $ - $0.00 Van Pool Subsidy $ - $0.00 $ - $0.00 3 - $0.00 Parking Cash -Out Program $ - S0.00 $ - $0.00 S - $0.00 Less: Operating Expenses $12.50 per NSFlyear $ (4,650,425) 512.50 $ (4,680,425) - $12.50 $ (4,660,425) 512.50 Less: Real Estate Taxes' 135 %xsuodtal NOixcaprate $ (3428,215) -69.16 S (3,428,216) .$9.16 $ (3428215) - NetOperatingIncome -Office $ 13,781,424 $36.81 S 13,781,424 $36.81 $ 13,781,424 $36.81 Total Net Operating income $ 25,122,329 $32,84 $ 24,834,543 $32.46 $ 24,676,304 S32.25 Per Program Summary, Appendix A a Per Hines, and verified by HR&A as reasonable assumptions based on current market conditions. ' Per Hines, includes purchase storage units at $501mo, and additional rent for pets at $25lmonth. 4 Per City's maximum AHPP rents, as modified by Oily Council action on June 11. 2013. s Per HR&A. Accounts for a my of retail tenants (assuming $3.50 pat per mc.) and dining tenants (assumes $6.00 psi per mo.). 6 For Proposed Project and Tier 1 Project, wsighted average of reserved monthly (S240; 10 %), unreserved monthly (5165; 80 %) and daily (840: 5 %); for Zoning Compliant, $150 unreserved. ' HR&A estimates. HR&A Advisors, Inc Affordable Housing Alternatives No Benefit Spacial Lam Value Analysis _v2_12-03-13 0.Nd Op, Income Page 13 of 14 12 43 -2013 Appendix E Residual Land Values Real Estate Report, 2nd Quarter 2013, Los Angeles Area data a 10 -15% typical, per HR&A. HRBA Advisers, Inc Affordable Housing Alternatives No Benefits Residual Land Value Analysis_v2_12 -03.13 E- Residual Values Page 14 of 14 12 -03 -2013 Proposed Project with City Staff Proposed Project with 5% Extremely Recommendation for 66 Affordable Proposed Proiect with Cmr Staff Development Seenarjo' Assumptions Low - Income Units Units Recommendation for 93 Affordable Units Land Area 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,D10 896,010 896,010 Residential Units 498 498 498 Market Rate 474 432 405 Affordable 24 fib 93 Residential (Net SF) 361,271 361,271 361,271 Market Rate (% of total units) 287,637 287,637 287,537 Affordable (% of total units) 73,634 73,634 - 73,634 Retail (Net SF) 29,391 29,391 29,391 Office (Net SF) 374,434 374,434 374,434 Project Value Residential - Market Rate PerN F Per Unit Per NSF Per Unit Per NSF Per Unit Net Operating Income From App, D $ 9,906,532 $34 $20,900 $ 9,096,501 $32 $21,061 $ 8,521,269 $30 $21,040 Cap Rate' 4.83% Value NO1 /Cap Rate $ 205,316,725 $714 $433,158 $ 186,569,969 $656 $436,505 $ 176,606,611 $614 $436,066 Residential - Affordable Net Operating Income From App, D $ (109,403) -$1 44,558 $ 410,641 $6 $6,225 $ 629,634 $11 $6,923 Cap Rate' 4.83% Value NO1 /Cap Rate $ (2,267,427) -$31 - $94,476 $ 6,514,839 $116 $129,013 $ 1Z198,632 $234 $184,932 Retail Net Operating Income From App, D $ 1,543,777 $53 $ 1,543,777 $53 $ 1,543,777 $53 Cap Rate' 6.20% Value NO[/Cap Rate $ 24,899,629 $647 $' 24,899,629 $847 $ 24,899,629 $847 Office Net Operating Income From Apo,D $ 13,781,424 $37 $ 13,781,424 $37 $ 13,781,424 $37 Cap Rate' 616% Value NO1 /Cap Rate $ 219,524,265 $587 $ 219,624,287 $587 $ 219,624,267 587 Total Project Value $ 447,573,219 $585 $ 441,608,731 $577 $ 4$8,329,166 $573 Residual Land Value Estimate Total Project Value From above $ 447,573,219 $585 $ 441,608,731 $577 $ 438,329,166 $573 Less: Developer Proffto 10.00% x Total Project Value $ (44,757,322) -$58 $ (44,160,873) -$58 $ (43,832,917) X57 Less: Total Net Development Cost From App, B $ (346,912,728) -$453 $ (346,660,658) - 53- $ (346,410,098) - 71 Residual Land Value Total $ 55,903,169 $74 $ 50,767,200 $66 $ 48,086,151 $45 Per SF Land Area $180 $164 $155 t Average ofthe midpoint of the cap rate range per CBRE, Cap Rate Sury ey, February 2013, Los Angeles area data; and and point estimates by Real Estate Research Corp., Real Estate Report, 2nd Quarter 2013, Los Angeles Area data a 10 -15% typical, per HR&A. HRBA Advisers, Inc Affordable Housing Alternatives No Benefits Residual Land Value Analysis_v2_12 -03.13 E- Residual Values Page 14 of 14 12 -03 -2013 ►_lk lrr_Tya IT, I=1►rIPA . . Anal 7e. Advise. Act. 700 South Flower Street, Suite 2730, Los Angeles, CA 90017 T: 3'10 -58"1 -0900 € F: 310- 581 -0910 1 wwvv.hraadvisors.corn MEMORANDUM To: Jing Yea, City of Santa Monica From: • Paul J. Silvern Date: January 20, 2014 Re: Financial Feasibility of the Bergamot Transit Village Project, Draft EIR Alternative 4 (Reduced Project) and Alternative 4- Modified (60% Commercial) Per your request, this memorandum summarizes the results of modeling the financial feasibility of the Bergamot Transit Village development ( "Project "), as currently proposed by Hines 261h Street, LLC ( "Hines "), and two alternatives to the Project. The first is Alternative 4, Reduced Project ( "Alternative 4 "), as contained in the Project's Draft Environmental Impact Report (EIR); the second is a modified version of Alternative 4, in which 60 percent of the net floor area is used for creative office and retail uses ( "Alternative 4- Modified "), rather than 73 percent as in Alternative 4. The purpose of this analysis is to provide guidance to City staff, City decision makers and the public about whether Alternative 4 and Alternative 4- Modified are economically "feasible" within the meaning of the California Environmental Quality Act.' While the model results attached to this memo are similar in form to analyses we previously prepared for the Planning Commission, this analysis differs in fundamental ways. Among these differences are: ° A focus on "financial feasibility" rather than "value enhancement." This means that the total development cost used in the feasibility analysis includes a fixed land value for all scenarios tested, rather than deriving scenario - specific land values based on minimum acceptable feasibility assumptions, as was done for the value enhancement analysis. • This analysis utilizes metrics that are indicators of financial feasibility, including return on total development cost and developer profit margin, rather than residual land value. ° This analysis includes the estimated one -time and recurring annual costs of certain community benefits that have been negotiated by City staff and Hines, whereas the previous value enhancement analyses specifically excluded community benefit costs. ' "Feasible" means capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic environmental, social, and technological factors." Calif. Public Resources Code, Section 21061.1 (emphasis added). HR&A Advisors, Inc. I Los Angeles I New York I Washington, D.C. ® This analysis also includes updated affordable housing requirements for the Project, consisting of 93 units, or 20 percent of the Project's total unit count (not including live -work units), and specific distributions of those units by household income levels. This some 20 percent of affordable units, and proportional distributions by income level, were then applied to the residential floor area for Alternative 4 (i.e., 48 affordable units) and Alternative 4- Modified (68 affordable units). Table 1 provides a comparison of the physical and other characteristics of the Project, Alternative 4 and Alternative 4- Modified. Among other things, it shows that: • Relative to the Project. Alternative 4 features 189,670 less gross floor area and 144,096 less net floor area overall. Alternative 4 also features a much larger proportion of commercial floor area than in the Project (73% vs. 53 %), and a correspondingly smaller proportion of residential floor area (27% vs. 47 %). • Relative to Alternative 4. Alternative 4- Modified features slightly more ( +11,536 gross s.f.) gross floor area, but the same net floor area (621,000 net s.f.) as Alternative 4. Alternative 4- Modified also features a floor area allocation that is 60 percent commercial and 40 percent residential. That is, Alternative 4- Modified has a larger share of commercial floor area than in the Project (60% vs. 53 %), but less than in Alternative 4 (60% vs. 73 %). And correspondingly, Alternative 4- Modified has a somewhat lesser share of residential floor area than in the Project (40% vs. 47 %), but considerably more than in Alternative 4 (40% vs. 27 %). These land use allocation differences among the Project, Alternative 4 and Alternative 4- Modified have direct impacts on the financial feasibility of each development scenario. HRB:A Aavisoks, INC. BERGAMOT TRANSIT VILLAGE FINANCIAL FEASIBILITY ANALYSIS 1 2 Table 1 Physical Characteristics of the Project, Alternative 4 and Alternative 4- Modified Development Scenarios Alt. 4- Modified Reduced Alt. 4 Reduced Project (60% Proposed Project Project Comm'[) LUCE .Tier 3 3 3 Permit Requirement DeVop't Agmt. Devlop't Agmt. DeNop't Agmt. # Parcels 5 5 5 Bldg. Height (Feet) 81 81 81 Stories ( #) 6 -7 6 -7 6 -7 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 706,340 717,876 Floor Area Ratio (FAR) - Gross Area 2.89 2.27 2.31 Floor Area Ratio (FAR) - Net Area 2.46 2.00 2.00 Net Leasable Area 765,096 100 %r 621,000 100 %r 621,000 100% Residential (NSF) 361,271 47 %r 166,000 27 %r 248,400 40% Market Rate Units 405 193 274 Affordable Units (20 %)' 93 48 68 Total Units 498 241 342 Retail (NSF) 29,391 4 %r 25,000 4 %r 22,600 4% Office (NSF) 374,434 49 %r 430,000 69 %r 350,000 56% Subterranean Parking Spaces ( #) 1,936 1,581 1,509 7 For the Project, the 20% affordable unit count is based on 473 total units, not including the 25 live-work units. For Alt. 4 and Alt. 4- Modified, no live -work units are assumed. Therefore the 20% affordable unit counts in those scenarios are based on 241 and 342 total units, respectively. Sources: Santa Monica Planning & Community Development Dept.; Hines 26th Street, LLC; Atkins Global Prepared by HR &A Advisors, Inc. Table 2 on the following page compares the key components of the financial feasibility analysis results for the Project, Alternative 4 and Alternative 4- Modified. Note the following: ® Land Value and Many Other Analysis Assumptions are Held Constant. A number of key analysis values and calculation assumptions are held constant across the three development scenarios so that the financial feasibility differences are primarily the result of differences in land use mix, rather than changes in internal calculation assumptions. For example, the land value used in this analysis (i.e., the current Assessed Value of about $76.3 million, reflecting the site's purchase by Hines in 2007) is the same in each case. Similarly, all hard costs, soft costs and financing cost calculation assumptions are identical, but applied to scenario- specific floor areas and dwelling unit and parking counts. Similarly, the same calculation factors are used in all three scenarios to calculate Net Operating Income (i.e., rent, other income and operating expense factors) and Total Project Value (i.e., income capitalization rates). HR &A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE FINANCIAL FEASIBILITY ANALYSIS 1 3 Table 2 Financial Feasibility Summary forthe Project, Alternative 4 and Alternative 4- Modified Alt. 4- Modified Alt. 4 Reduced Reduced Project Analysis Components Proposed Project Project (60 %Comm'l Development Costs Land Costs Hard Costs 76,300,000 $ 76,300,000 $ 76,300,000 254,858,537 $ 200,141,924 $ 200,575,323 Soft Costs City Permits and Fees $ 20,591,889 $ 18,618,082 $ 17,181,227 Public Benefit Payments $ 2,285,000 $ 1,854,650 $ 1,854,650 Other Soft Costs $ 51,609,693 $ 44,350,485 $ 50,263,738 Financing Costs $ 30,991,376 $ 24,933,220 $ 25,395,231 Total Development Cost $ 436,636,495 $ 366,198,361 $ 371,570,168 Less: Commercial Lease -up Revenue $ (10,249,079) $ (11,547,900) $ (9,456,588) Less: Residential Lease -up Revenue $ (450,500) $ (217,141) $ (308,142) Net Development Cost $ 425,936,916 $ 354,433,320 $ 361,805,438 Net Operating Income (NOI) Residential - Market Rate $ 8,518,769 $ 4,091,143 $ 4,912,118 Residential - Affordable $ (472,623) $ (243,935) $ (330,328) Retail $ 1,543,777 $ 1,313,137 $ 1,187,076 Office $ 13,575,219 $ 15,542,447 $ 12,662,800 Total Net Operating Income $ 23,165,142 $ 20,702,792 $ 18,381,638 Project Component Values Residential - Market Rate $ 176,554,798 $ 84,790,539 $ 101,084,691 Residential - Affordable $ (9,795,295) $ (5,055,648) $ (7,162,155) Retail $ 24,899,629 $ 21,179,629 $ 19,146,387 Office $ 216,338,146 $ 247,688,394 $ 201,797,606 Total Project Value $ 407,997,278 $ 348,602,914 $ 314,866,529 Prepared by HR &A Advisors, Inc. HP. &A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE FINANCIAL FEASIBILITY ANALYSIS 1 4 ® Higher Total Value of Commercial Uses, Relative to Residential Uses, Drives the Feasibility Results. Based on the modeling, although commercial uses (creative office and retail) feature a somewhat larger total development costs per net square foot than residential, the capitalized value of the commercial space net operating income is much larger than the net value of residential space after accounting for the negative capitalized value of the affordable housing units. Thus, Alternative 4, with the largest share of total floor area in commercial use, generates the highest total net operating income relative to total development cost (i.e., return on total development cost), despite the fact that its total floor area is 19 percent less than the proposed Project. ® None of the Development Scenarios Would Be Considered "Feasible" by Conventional Real Estate Industry Metrics, and Alternative 4- Modified is Significantly "Less Feasible" Than the Project or Alternative 4. In our experience, the return on cost for development scenarios like those tested herein should be about 7.0 percent (i.e., about one percentage point more than the weighted average income capitalization rate for all of the land uses). The returns on cost for all three scenarios fall short of this threshold, with Alternative 4- Modified showing the lowest return of the three scenarios (5.08 %). Alternative 4 has the highest return on cost (5.84 %), and the return on cost for the Project falls between these two cases (5.44 %). We believe most developers would expect to see positive profit margins equal to at least 10 percent of total project value in order to proceed with a development of this complexity. Here again, all three development scenarios fall short of this threshold. Alternative 4- Modified has by for the most negative developer profit margin (i.e., total capitalized value minus total development cost) at -$46.9 million. Alternative 4 is closest to breakeven ( -$5.8 million), and once again, the Project falls in between ( -$17.9 million). It should be noted, however, that despite these negative profit margins, the analysis includes a three percent fee to manage development implementation, which totals about $9.2 million for the Project and $7.6 million for the other two scenarios. While it is conceivable that Hines, or another developer, would consider incurring the low returns implied by the above results for the Project and Alternative 4 (e.g., in order to stake out a competitive position in the City's real estate market, particularly over a long holding period), it is not likely that any developer would proceed with Alternative 4- Modified, based on the results of this analysis. For the reasons noted above (i.e., the financial burden of the fixed land cost and the relatively lower capitalized value of the residential uses (market and affordable) relative to commercial uses), even smaller and more residentially- oriented alternatives would generate financial feasibility results that are even more negative than those shown in Table 2. All of the calculation details supporting the above summary and conclusions are included in Attachment A to this memo. HR &A ADVISORS, INC. BERGAMOT TRANSIT VILLAGE FINANCIAL FEASIBILITY ANALYSIS 1 5 Attachment A Financial Feasibility Model for the Proposed Project, Alternative 4 (Reduced Project) and Alternative 4- Modified (60% Commercial) HR &A ADvisORs, INC. BERGAMOT TRANSIT VILLAGE FINANCIAL FEASIBILITY ANALYSIS 1 6 Financial Feasibility- Proposed Project; Alt 4 (Reduced Project); Alt 4 Modified (60% Commercial) Bergamot Transit Village Project Program Summary (see App. A) Development Scenarios Alt. 4- Modified Alt.4 Reduced Reduced Pro act Proposed Pro ct Proiect (60%COmm% LUCE Tier 3 3 3 Permit Requirement Devlop't Agml. Devlop't Agmt. DeNOp't Agml. # Parcels 5 5 5 Bldg. Height (Feet) 81 81 81 Stories (#) 6 -7 6-7 6 -7 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 706,340 717,876 Floor Area Ratio(FAR) - Gross Area 2.89 2.27 2.31 Floor Area Ratio(FAR) - Net Area 2.46 2.00 2.00 Net Leasable Area 765,096 621,000 621,000 Residential (NSF) 361,271 166,000 248,400 Market Rate Units' 405 193 274 Affordable Units 93 48 68 Total Units 498 241 342 Retail (NSF) 29,391 25,000 22,600 Offoe (NSF) 374,434 430,000 350,000 Subterranean Parking Spaces (iN 1,936 1,581 1,509 Development Costs (see App. B & C) Land Costs $ 76,300,000 $ 76,300,000 $ 76,300,000 Hard Costs $ 254,858,537 3 200,141,924 $ 200,575,323 Soft Costs City Permits and Fees $ 20,591,889 $ 16,618,082 $ 17,181,227 Public Beneirit Payments $ 2,285,000 $ 1,854,650 $ 1,854,650 Other Soft Costs $ 51,609,693 $ 44,350,485 $ 50,263,738 financing Costs $ 30,991,376 $ 24,933,220 $ 25,395,231 Total Development Cost $ 436,636,495 $ 366,198,361 $ 371,570,168 Less: Commerce] Lease -up Revenue 8 (10,249,079) $ (11,547,900) $ (9,456,588) Less: Residential Lease -up Revenue S (450.500) $ (217,141) $ (308,142) Net Development Cost $ 425 936,916 $ 354,433,320 $ 361,805,438 Net Operating Income (NOI) (see App. D) Residential- Market Rate Effective Gross Income $ 12,275,214 $ 5,881,473 $ 7,419,156 Less: All Operating Expenses $ (3,753,945) $ (1,790,330) $ (2,539,706) Net Operating Income $ 8,518,769 $ 4,091,143 $ 4,877,336 Residential - Affordable Effective Gross Income $ 389,394 $ 200,977 $ 284,718 Less: All Operating Expenses $ (862,017) 8 (444,912) $ (630,292) Net Operating Income $ (472,623) $ (243,935) $ (345,574) Retail Effective Gross Income $ 1,591,523 $ 1,353,750 $ 1,223,790 Less: All Operating Expenses $ (47,746) 3 (40,613) $ (36,714) Net Operating Income $ 1,543,777 $ 1,313,137 $ 1,187,076 Office Effective Gross Income 3 21,890,064 $ 25,080,427 $ 20,429,250 Less: All Operating Expenses $ (8,314,845) $ (9,241,280) $ (7,766,450) Net Operating Income $ 13,575,219 $ 15,542,447 $ 12,662,800 Total Net Operating Income $ 23,165,142 $ 20,702,792 $ 18,381,638 HR&A Advisors, Inc. Financial Feasibility Analyses Land at AV -With Benefits _v2_01- 19.14.xlsx Page 1 of 19 Summary 01 -19 -2014 c is im uinu, is pmpmcu- iJi— nluuum —IV-1n UII — umcu ni me —pp- III iy detail, these units were hovever, considered a creative office use for purposes of calculating certain City development fees. HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV -W th Benefits _v2_01- 19- 14.xlsx Page 2 of 19 Summary 01 -19 -2014 Alt. 4- Modified Alt.4 Reduced Protect Development Scenario Proposed Proiect Reduced Proiect (60 % Cori Project Component Values (see App. E) Residential- Market Rate NO] $ 8,518,769 $ 4,091,143 $ 4,877,336 Cap Rate 4.83% 4.83% 4.83% Value $ 176,554,798 $ 84,790,539 $ 101,084,691 Residential - Affordable NO] $ (472,623) $ (243,935) $ (345,574) Cap Rate 4.83% 4.83% 4.83% Value $ (9,795,295) $ (5,055,648) $ (7,162,155) Retail NOI $ 1,543,777 $ 1,313,137 $ 1,187,076 Cap Rate 6.20% 6.20% 6.20% Value $ 24,899,629 $ 21,179,629 $ 19,146,387 Office NO( $ 13,575,219 $ 15,542,447 $ 12,662,800 Cap Rate 6.28% 6.28% 6.28% Value $ 216,338,146 $ 247,688,394 $ 201,797,606 Total Protect Value $ 407,997,278 $ 348,602,914 $ 314,866,529 c is im uinu, is pmpmcu- iJi— nluuum —IV-1n UII — umcu ni me —pp- III iy detail, these units were hovever, considered a creative office use for purposes of calculating certain City development fees. HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV -W th Benefits _v2_01- 19- 14.xlsx Page 2 of 19 Summary 01 -19 -2014 Appendix A Physical Parameters, Units Mix & Parking Page 3 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.x1sx A- Program 01 -19 -2014 Development Scenarios Alt. 4•Modifie3 Proposed Alt 4 Reduced Reduced Protect Physical Parameters Project' Project' (60% Comm'h' LUCE Tier 3 3 3 Permit Requirement Devlop't Agmt. Devlop't Agmt. Devlop't Agmt. # Parcels 5 5 5 Max. Bldg. Height (Feet) 81 81 81 Stories ( #) 6 -7 6 -7 6 -7 Land Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF)' 896,010 706,340 717,876 Residential 451,803 205,640 308,016 Retail 32,330 27,500 24,860 Office 411,877 473,000 385,000 Floor Area Ratio (FAR) -Gross SF 2.89 2.27 2.31 Floor Area Ratio (FAR) -Net SF 2.46 2.00 2.00 Net Leasable Areas (Net SF)' 765,096 621,000 621,000 Residential 361,271 166,000 248,400 Retail 29,391 25,000 22,600 Office 374,434 430,000 350,000 Residential Unit Mix2 Total Units 498 241 342 Market Rate Units 405 193 274 Studio 178 83 119 1 BR 57 28 39 1 BR Loft- Live/Work 25 12 17 2 BR 71 34 49 2 BR Townhouse 62 30 42 3 BR 12 6 8 Market Rate Units Net SF (NSF) Studio NSF 370 370 370 1 SR NSF 530 530 530 1 BR Loft NSF 580 580 541 2 BR NSF 859 859 859 2 BR Townhouse NSF 980 980 904 3 BR NSF 1,307 1,307 1,307 Page 3 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.x1sx A- Program 01 -19 -2014 Page 4 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Alt. 4- Modified Proposed Alt 4 Reduced Reduced Proiect Proiect' Proiect' (60% Comm'1)2 Affordable Rate Units 93 48 68 Studio - Extremely Low Income 11 6 6 Studio -Very Low Income - - - Studio - Low Income 1 - 1 Studio - Moderate 5 3 4 Studio - 130 %xAMI 16 8 12 Studio - 150% x AM[ 11 6 8 Studio - 180% x AM[ - - - 1 SR - Extremely Low Income 5 3 4 1 BR - Very Low Income - - - 1 SR - Low Income 1 1 SR - Moderate 1 - - 1 SIR - 130 %xAMI 5 3 4 1 SIR - 150 %xAMI 5 3 4 1 SIR - 180 %xAMI - - - 2 BR - Extremely Low Income 7 4 5 2 BR - Very Low Income - - - 2 SR - Low Income - - - 2 BR - Moderate - - - 2BR- 130 %xAMI - - - 2 SIR - 150 %xAMI - - - 2 SR - 180% x AM[ 23 12 17 3 BR - Extremely Low Income 1 - - 3 SR- Very Low Income - _ - - 3 SIR - Low Income - - - - 3 SR - Moderate - - - 3 SIR - 130 %xAM[ - - - 3 SIR - 150 %xAMI - - - 3 SIR - 180 %xAMI 1 - 1 Affordable Units Net SF (NSF) Studio 365 365 365 1 BR 548 548 548 2 BR 849 849 849 3BR 1,232 1,232 1,232 Page 4 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Construction Period (months) 24 24 24 ' Per Hines; Draft EIR; and City staff. 2 Per Hines and City staff. 3 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 5 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses—Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Proposed Alt 4 Reduced Reduced Project Project' Project' (60% Comm,I)3 Parking° Surface Parking (spaces) - - - Subterranean Parking (spaces) 1,936 1,581 1,509 Levels 1 -2 1,297 1,297 1,509 Office /Retail 797 935 996 Residential 500 362 513 Leve13 639 284 - Office /Retail 392 284 - Residential 247 - - Construction Period (months) 24 24 24 ' Per Hines; Draft EIR; and City staff. 2 Per Hines and City staff. 3 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 5 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses—Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Appendix B1: Development Costs Proposed Project Development Scenario' Land Area Gross Bldg. Area (GSFF) Residential Retail Office Net Leasable Areas (NSF) Residential Retail Office Residential Units Subterranean Parking (spaces) Levels l -2 Office /Retail Residential Level Office/Retail Residential Project Elements Land Cost Hard Cost' Construction Type Building Construction/GSF2 Building Core & Shell Cost Demo On -Site Improvement's Nebraska 20' Fire Access Olympic Sidewalk 26th Street Sidewalk Stewart Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities' Subterranean Parking Levels 1 -2 Level Contingency Subtotal Hard Costs Assumptions Office /Retail Residential Total Per Appendix A 153,934 156,566 310,500 Per Appendix A 896,010 451,803 Varies 32,330 411,877 Per Appendix A $176.22 765,096 Varies 361,271 66,631,050 $150.00 29,391 $ 91,264,280 $252.62 374,434 $ 157,895,330 Per Appendix A $206.37 498 x Land Area Per Appendix A 2,309,010 $5.20 1,936 $ 2,348,490 $6.50 1,297 $ 797 $ 5.20 $6.09 $407,177 Allocated 500 201,863 $0.45 $0.50 $ 639 392 247 Office /Retail Per GSF Per NSF Residential Per NSF Per UnR Total Per GSF Per NSF $ 37,826,615.78 $ 38,473,384 $ 76,300,000 Page 6 of 19 HR &A Advisors, Inc.. Financial Feasibility Analyses_Lard at AV -With Benefits_v2_01- 19- 14.xlsx 81 -Dev Cost -Projeq 01 -19 -2014 1118 1118 IRS Varies $150.00 $202.00 $176.22 Varies $ 66,631,050 $150.00 $165.00 $ 91,264,280 $252.62 $183,262 $ 157,895,330 $ 176.22 $206.37 $15 x Land Area $ 2,309,010 $5.20 $5.72 $ 2,348,490 $6.50 $4,716 $ 4,657,500 $ 5.20 $6.09 $407,177 Allocated $ 201,863 $0.45 $0.50 $ 205,314 $0.57 $412 $ 407,177 $ 0.45 $0.53 $290.040 Allocated $ 143.791 $0.32 $0.36 $ 146,249 $0.40 $294 $ 290,040 $ 0.32 $0.38 $46,751 Allocated $ 46,751 $0.11 $0.12 $ - $0.00 $0 $ 46,751 $ 0.05 $0.06 $11,068 Allocated $ - $0.00 $0.00 $ 11,068 $0.03 $22 $ 11,068 $ 0.01 $0.01 $1,350,000 Allocated $ 669,278 $1.51 $1.66 $ 680,722 $1.88 $1,367 $ 1,350,000 $ 1.51 $1.76 $38 x NSF Office $ 14,228,492 $32.03 $35.23 $ - $0.00 $0 $ 14,228,492 $ 15.88 $16.60 $38 x NSF Retail $ 1,116,858 $2.51 $2.77 $ - $0.00 $0 $ 1,116,858 $ 1.25 $1.46 $2,900 per Unit $ - $0.00 $0.00 $ 1,444,200 $4.00 $2,900 $ 1,444,200 $ 1.61 $1.89 $30,000 per Space $ 23,910,000 $53.83 $59.21 S 15,000,000 $41.52 $30,120 $ 38,910,000 $ 43.43 $50.86 $35,000 per Space $ 13,720,000 $30.89 $33.98 $ 8,645,000 $23.93 $17,359 $ 22,365,000 $ 24.96 $29.23 5% x Subtotal Hard Costs $ 6,148.855 $13.84 $15.23 $ 5,987.266 $16.57 $12,023 $ 12,136,121 $ 13.54 $15.86 $ 129,125,947 $290.69 $319.76 $ 125,732,590 $348.03 $252,475 $ 254,858,537 $ 284.44 $333.11 Page 6 of 19 HR &A Advisors, Inc.. Financial Feasibility Analyses_Lard at AV -With Benefits_v2_01- 19- 14.xlsx 81 -Dev Cost -Projeq 01 -19 -2014 Soft Costs' City Permits & Fees (See App. C) 10,208,660 $22.98 $25.28 $- 10,383,229 $28.74 $20,850 $ 20,591,889 $ 22.98 $26.91 Public Benefit Payments" Expo Buffer Contribution $ 1,055,619 $2.38 $2.61 $ 944,381 $2.61 $1,896 $ 2,000,000 $ 2.23 $2.61 TMA Contribution $ 15,834 $0.04 $0.04 $ 14,166 $0.04 $28 $ 30,000 $ 0.03 $0.04 Bike Share Contribution $ 10,556 $0.02 $0.03 $ 9,444 $0.03 $19 $ 20,000 $ 0.02 $0.03 Public Transit Enhancement $ 84,450 $0.19 $0.21 $ 75,550 $0.21 $152 $ 160,000 $ 0.18 $0.21 Historic Preservation Programs $ 39,586 $0.09 $0.10 $ 35,414 $0.10 $71 $ 75,000 $ 0.08 $0_10 Subtotal Public Benefit Payments $ 1,206,045 $2.72 $2.99 $ 1,078,955 $2.99 $2,167 $ 2,285,000 $ 2.55 $2.99 A &E /Other Professionals 6.0% x Hard Costs $ 7,747,557 $17.44 $19.19 $ 7,543,955 $20.88 $15,149 $ 15,291,512 $ 17.07 $19.99 Marketing /Leasing Commissions° Residential $7.50 x NSF $ - $0.00 $0.00 $ 2,709,533 $7.50 $5,441 $ 2,709,533 $ 3.02 $3.54 Retail/Office $29.76 xNSF $ 12,017,832 $27.05 $29.76 $ - $ 12,017,832 $ 13.41 $15.71 Legal &Accounting - 0.5% xHard Costs $ 645,630 $1.45 $1.60 $ 628,663 $1.74 $1,262 $ 1,274,293 $ 1.42 $1.67 Real Estate Taxes 1.25% x hard costs x 2 yrs. $ 3,228,149 $7.27 $7.99 $ 3,143,315 $8.70 $6,312 $ 6,371,463 $ 7.11 $8.33 Insurance 1.0% xHard Costs $ 1,291,259 $2.91 $3.20 $ 1,257,326 $3.48 $2,525 $ 2,548,585 $ 2.84 $3.33 Developer Fee 3.0% x Hard +Soft Costs $ 4,964,132 $11.18 $12.29 $ 4,262,830 $11.80 $8,560 $ 9,226,962 $ 10.30 $12.06 Contingency 3.0% x Subtotal Soft Costs $ 1,239,278 2.79 3.07 $ 930,234 $2.57 $1,868 $ 2,169,512 $ 2.42 $2_84 Subtotal Soft Costs $ 42,548,542 $95.79 $105.36 $ 31,938,040 $88.40 $64,133 $ 74,486,582 $ 83.13 $97.36 Subtotal Hard +Soft. Costs $ 171,674,489 $386.47 $425.12 $ 157,670,630 $436.43 $316,608 $ 329,345,119 $ 367.57 $430.46 Financing Costs" Loan Tern (months) 24 Average Loan Balance 65.00% Construction Loan Interest Rate 5.50% Construction Loan Interest $ 12,274,726 $27.63 $30.40 $ 11,273,450 $31.20 $22.637 $ 23,548,176 $ 26.28 $30.78 Construction Loan Fees 1.75% $ 3,004,304 $6.76 $7.44 $ 2,759,236 $7.64 $5,541 $ 5,763,540 $ 6.43 $7.53 Permanent Loan Percent x Cost 68.00% Permanent Loan Fees &Costs 0.75% $ 875,540 $1_97 $2_17 $ 804,120 $2.23 $1.615 $ 1,679,660 $ 1.87 $2.20 Subtotal Financing Costs $ 16,154,570 $36.37 $40.00 $ 14,836,806 $41.07 $29,793 $ 30,991,376 $ 34.59 $40.51 Total Development Cost Land +Hard Soft +Financing $ 225,655,675 $508.00 $558.80 $ 210,980,820 $584.00 $423,656 $ 436,636,495 $ 487.31 $570.70 Less: Commercial Lease -up Revenues $25.38 x NSF Commercial $ (10,249,079) - $23.07 - $25.38 $ - $ (10,249,079) $ (11.44) - $13.40 Less: Residential Lease -up Revenue" $901 per Unit $ - $0_00 $0_00 $ (450,500) 1.25 -$905 $ (450,500) $ (0,50) $0.59 Net Development Cost $ 215,406,596 $484.92 $533.42 $ 210,530,320 $582.75 $422,752 $ 425,936,916 $ 475.37 $556.71 ' Per Program Summary, Appendix A. Per Hines based on contractor estimates. These unit costs are somewhat less than those derived by HR&A from the Marshall & Swift construction cost estimation software. 3 Per Hines and City staff. 4 Per City staff, based on latest negotiations with Hines for the Project. Project's benefit costs per NSF were then applied to the to the NSF of Alt. 4 and Alt. 4 Modified. s Per Hines, and determined by HR &A to be generally reasonable based on current market conditions. Page 7 of 19 HR&A Advisors, Inc.. Financial Feasibility Analyses Land at AV -With Benefits v2 0I- 19- 14.xlsx B1 -Dev Cost-Project 01 -19 -2014 Financial Feasibility- Proposed Project; Alt 4 (Reduced Project); Alt 4 Modified (60% Commercial) Bergamot Transit Village Project Program Summary (see App. A) Development Scenarios Alt. 4- Modified Alt.4 Reduced Reduced Pro act Proposed Pro ct Proiect (60%COmm% LUCE Tier 3 3 3 Permit Requirement Devlop't Agml. Devlop't Agmt. DeNOp't Agml. # Parcels 5 5 5 Bldg. Height (Feet) 81 81 81 Stories (#) 6 -7 6-7 6 -7 Site Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 706,340 717,876 Floor Area Ratio(FAR) - Gross Area 2.89 2.27 2.31 Floor Area Ratio(FAR) - Net Area 2.46 2.00 2.00 Net Leasable Area 765,096 621,000 621,000 Residential (NSF) 361,271 166,000 248,400 Market Rate Units' 405 193 274 Affordable Units 93 48 68 Total Units 498 241 342 Retail (NSF) 29,391 25,000 22,600 Offoe (NSF) 374,434 430,000 350,000 Subterranean Parking Spaces (iN 1,936 1,581 1,509 Development Costs (see App. B & C) Land Costs $ 76,300,000 $ 76,300,000 $ 76,300,000 Hard Costs $ 254,858,537 3 200,141,924 $ 200,575,323 Soft Costs City Permits and Fees $ 20,591,889 $ 16,618,082 $ 17,181,227 Public Beneirit Payments $ 2,285,000 $ 1,854,650 $ 1,854,650 Other Soft Costs $ 51,609,693 $ 44,350,485 $ 50,263,738 financing Costs $ 30,991,376 $ 24,933,220 $ 25,395,231 Total Development Cost $ 436,636,495 $ 366,198,361 $ 371,570,168 Less: Commerce] Lease -up Revenue 8 (10,249,079) $ (11,547,900) $ (9,456,588) Less: Residential Lease -up Revenue S (450.500) $ (217,141) $ (308,142) Net Development Cost $ 425 936,916 $ 354,433,320 $ 361,805,438 Net Operating Income (NOI) (see App. D) Residential- Market Rate Effective Gross Income $ 12,275,214 $ 5,881,473 $ 7,419,156 Less: All Operating Expenses $ (3,753,945) $ (1,790,330) $ (2,539,706) Net Operating Income $ 8,518,769 $ 4,091,143 $ 4,877,336 Residential - Affordable Effective Gross Income $ 389,394 $ 200,977 $ 284,718 Less: All Operating Expenses $ (862,017) 8 (444,912) $ (630,292) Net Operating Income $ (472,623) $ (243,935) $ (345,574) Retail Effective Gross Income $ 1,591,523 $ 1,353,750 $ 1,223,790 Less: All Operating Expenses $ (47,746) 3 (40,613) $ (36,714) Net Operating Income $ 1,543,777 $ 1,313,137 $ 1,187,076 Office Effective Gross Income 3 21,890,064 $ 25,080,427 $ 20,429,250 Less: All Operating Expenses $ (8,314,845) $ (9,241,280) $ (7,766,450) Net Operating Income $ 13,575,219 $ 15,542,447 $ 12,662,800 Total Net Operating Income $ 23,165,142 $ 20,702,792 $ 18,381,638 HR&A Advisors, Inc. Financial Feasibility Analyses Land at AV -With Benefits _v2_01- 19.14.xlsx Page 1 of 19 Summary 01 -19 -2014 c is im uinu, is pmpmcu- iJi— nluuum —IV-1n UII — umcu ni me —pp- III iy detail, these units were hovever, considered a creative office use for purposes of calculating certain City development fees. HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV -W th Benefits _v2_01- 19- 14.xlsx Page 2 of 19 Summary 01 -19 -2014 Alt. 4- Modified Alt.4 Reduced Protect Development Scenario Proposed Proiect Reduced Proiect (60 % Cori Project Component Values (see App. E) Residential- Market Rate NO] $ 8,518,769 $ 4,091,143 $ 4,877,336 Cap Rate 4.83% 4.83% 4.83% Value $ 176,554,798 $ 84,790,539 $ 101,084,691 Residential - Affordable NO] $ (472,623) $ (243,935) $ (345,574) Cap Rate 4.83% 4.83% 4.83% Value $ (9,795,295) $ (5,055,648) $ (7,162,155) Retail NOI $ 1,543,777 $ 1,313,137 $ 1,187,076 Cap Rate 6.20% 6.20% 6.20% Value $ 24,899,629 $ 21,179,629 $ 19,146,387 Office NO( $ 13,575,219 $ 15,542,447 $ 12,662,800 Cap Rate 6.28% 6.28% 6.28% Value $ 216,338,146 $ 247,688,394 $ 201,797,606 Total Protect Value $ 407,997,278 $ 348,602,914 $ 314,866,529 c is im uinu, is pmpmcu- iJi— nluuum —IV-1n UII — umcu ni me —pp- III iy detail, these units were hovever, considered a creative office use for purposes of calculating certain City development fees. HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV -W th Benefits _v2_01- 19- 14.xlsx Page 2 of 19 Summary 01 -19 -2014 Appendix A Physical Parameters, Units Mix & Parking Page 3 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.x1sx A- Program 01 -19 -2014 Development Scenarios Alt. 4•Modifie3 Proposed Alt 4 Reduced Reduced Protect Physical Parameters Project' Project' (60% Comm'h' LUCE Tier 3 3 3 Permit Requirement Devlop't Agmt. Devlop't Agmt. Devlop't Agmt. # Parcels 5 5 5 Max. Bldg. Height (Feet) 81 81 81 Stories ( #) 6 -7 6 -7 6 -7 Land Area (SF) 310,500 310,500 310,500 Gross Bldg. Area (SF)' 896,010 706,340 717,876 Residential 451,803 205,640 308,016 Retail 32,330 27,500 24,860 Office 411,877 473,000 385,000 Floor Area Ratio (FAR) -Gross SF 2.89 2.27 2.31 Floor Area Ratio (FAR) -Net SF 2.46 2.00 2.00 Net Leasable Areas (Net SF)' 765,096 621,000 621,000 Residential 361,271 166,000 248,400 Retail 29,391 25,000 22,600 Office 374,434 430,000 350,000 Residential Unit Mix2 Total Units 498 241 342 Market Rate Units 405 193 274 Studio 178 83 119 1 BR 57 28 39 1 BR Loft- Live/Work 25 12 17 2 BR 71 34 49 2 BR Townhouse 62 30 42 3 BR 12 6 8 Market Rate Units Net SF (NSF) Studio NSF 370 370 370 1 SR NSF 530 530 530 1 BR Loft NSF 580 580 541 2 BR NSF 859 859 859 2 BR Townhouse NSF 980 980 904 3 BR NSF 1,307 1,307 1,307 Page 3 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.x1sx A- Program 01 -19 -2014 Page 4 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Alt. 4- Modified Proposed Alt 4 Reduced Reduced Proiect Proiect' Proiect' (60% Comm'1)2 Affordable Rate Units 93 48 68 Studio - Extremely Low Income 11 6 6 Studio -Very Low Income - - - Studio - Low Income 1 - 1 Studio - Moderate 5 3 4 Studio - 130 %xAMI 16 8 12 Studio - 150% x AM[ 11 6 8 Studio - 180% x AM[ - - - 1 SR - Extremely Low Income 5 3 4 1 BR - Very Low Income - - - 1 SR - Low Income 1 1 SR - Moderate 1 - - 1 SIR - 130 %xAMI 5 3 4 1 SIR - 150 %xAMI 5 3 4 1 SIR - 180 %xAMI - - - 2 BR - Extremely Low Income 7 4 5 2 BR - Very Low Income - - - 2 SR - Low Income - - - 2 BR - Moderate - - - 2BR- 130 %xAMI - - - 2 SIR - 150 %xAMI - - - 2 SR - 180% x AM[ 23 12 17 3 BR - Extremely Low Income 1 - - 3 SR- Very Low Income - _ - - 3 SIR - Low Income - - - - 3 SR - Moderate - - - 3 SIR - 130 %xAM[ - - - 3 SIR - 150 %xAMI - - - 3 SIR - 180 %xAMI 1 - 1 Affordable Units Net SF (NSF) Studio 365 365 365 1 BR 548 548 548 2 BR 849 849 849 3BR 1,232 1,232 1,232 Page 4 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses_ Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Construction Period (months) 24 24 24 ' Per Hines; Draft EIR; and City staff. 2 Per Hines and City staff. 3 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 5 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses—Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Proposed Alt 4 Reduced Reduced Project Project' Project' (60% Comm,I)3 Parking° Surface Parking (spaces) - - - Subterranean Parking (spaces) 1,936 1,581 1,509 Levels 1 -2 1,297 1,297 1,509 Office /Retail 797 935 996 Residential 500 362 513 Leve13 639 284 - Office /Retail 392 284 - Residential 247 - - Construction Period (months) 24 24 24 ' Per Hines; Draft EIR; and City staff. 2 Per Hines and City staff. 3 Per Hines and City staff for Project; HR &A estimate for other scenarios (1.15 x NSF). Assumes Tier 1 parking is provided at the same overall ratios as the Proposed Project (i.e., 2.65 spaces /1,000 NSF of office /retail and 1.52 spaces /residential unit). Page 5 of 19 HR&AAdvisors, Inc.. Financial Feasibility Analyses—Land at AV -With Benefts_v2_01- 19- 14.xlsx A- Program 01 -19 -2014 Appendix B1: Development Costs Proposed Project Development Scenario' Land Area Gross Bldg. Area (GSFF) Residential Retail Office Net Leasable Areas (NSF) Residential Retail Office Residential Units Subterranean Parking (spaces) Levels l -2 Office /Retail Residential Level Office/Retail Residential Project Elements Land Cost Hard Cost' Construction Type Building Construction/GSF2 Building Core & Shell Cost Demo On -Site Improvement's Nebraska 20' Fire Access Olympic Sidewalk 26th Street Sidewalk Stewart Street Sidewalk Utility Line Undergrounding Office Tenant Improvements Retail Tenant Improvements Residential Common Area Amenities' Subterranean Parking Levels 1 -2 Level Contingency Subtotal Hard Costs Assumptions Office /Retail Residential Total Per Appendix A 153,934 156,566 310,500 Per Appendix A 896,010 451,803 Varies 32,330 411,877 Per Appendix A $176.22 765,096 Varies 361,271 66,631,050 $150.00 29,391 $ 91,264,280 $252.62 374,434 $ 157,895,330 Per Appendix A $206.37 498 x Land Area Per Appendix A 2,309,010 $5.20 1,936 $ 2,348,490 $6.50 1,297 $ 797 $ 5.20 $6.09 $407,177 Allocated 500 201,863 $0.45 $0.50 $ 639 392 247 Office /Retail Per GSF Per NSF Residential Per NSF Per UnR Total Per GSF Per NSF $ 37,826,615.78 $ 38,473,384 $ 76,300,000 Page 6 of 19 HR &A Advisors, Inc.. Financial Feasibility Analyses_Lard at AV -With Benefits_v2_01- 19- 14.xlsx 81 -Dev Cost -Projeq 01 -19 -2014 1118 1118 IRS Varies $150.00 $202.00 $176.22 Varies $ 66,631,050 $150.00 $165.00 $ 91,264,280 $252.62 $183,262 $ 157,895,330 $ 176.22 $206.37 $15 x Land Area $ 2,309,010 $5.20 $5.72 $ 2,348,490 $6.50 $4,716 $ 4,657,500 $ 5.20 $6.09 $407,177 Allocated $ 201,863 $0.45 $0.50 $ 205,314 $0.57 $412 $ 407,177 $ 0.45 $0.53 $290.040 Allocated $ 143.791 $0.32 $0.36 $ 146,249 $0.40 $294 $ 290,040 $ 0.32 $0.38 $46,751 Allocated $ 46,751 $0.11 $0.12 $ - $0.00 $0 $ 46,751 $ 0.05 $0.06 $11,068 Allocated $ - $0.00 $0.00 $ 11,068 $0.03 $22 $ 11,068 $ 0.01 $0.01 $1,350,000 Allocated $ 669,278 $1.51 $1.66 $ 680,722 $1.88 $1,367 $ 1,350,000 $ 1.51 $1.76 $38 x NSF Office $ 14,228,492 $32.03 $35.23 $ - $0.00 $0 $ 14,228,492 $ 15.88 $16.60 $38 x NSF Retail $ 1,116,858 $2.51 $2.77 $ - $0.00 $0 $ 1,116,858 $ 1.25 $1.46 $2,900 per Unit $ - $0.00 $0.00 $ 1,444,200 $4.00 $2,900 $ 1,444,200 $ 1.61 $1.89 $30,000 per Space $ 23,910,000 $53.83 $59.21 S 15,000,000 $41.52 $30,120 $ 38,910,000 $ 43.43 $50.86 $35,000 per Space $ 13,720,000 $30.89 $33.98 $ 8,645,000 $23.93 $17,359 $ 22,365,000 $ 24.96 $29.23 5% x Subtotal Hard Costs $ 6,148.855 $13.84 $15.23 $ 5,987.266 $16.57 $12,023 $ 12,136,121 $ 13.54 $15.86 $ 129,125,947 $290.69 $319.76 $ 125,732,590 $348.03 $252,475 $ 254,858,537 $ 284.44 $333.11 Page 6 of 19 HR &A Advisors, Inc.. Financial Feasibility Analyses_Lard at AV -With Benefits_v2_01- 19- 14.xlsx 81 -Dev Cost -Projeq 01 -19 -2014 Appendix 62: Development Costs Alternative 4- Reduced Project Development Scenario' Assumptions Office /Retail Residential Total Land Area Per Appendix 22D,015 90,485 310,500 Gross Bldg. Area (GSF) Per Appendix 706,340 Residential 205,840 Retail 27,500 Once 473,000 Net Leasable Areas (NSF) Per AppendixA 621,000 Residential 166,000 Retail 25,000 Office 430,000 Residential Units Per AppendixA 241 Subterranean Parking (spaces) Per AppendixA 1,581 Levels 1 -2 1,297 Office /Retail 935 Residential 362 Level 284 Office /Retail 284 Residential - Project Elements Office /Retail Per GSF Per NSF Residential Per NSF Per Unit Total Per GSF Per NSF Land Cost S 37,826,616 $ 38,473,384 $ 76,300,000 Hard Cost Construction Type IIIB IIIB - IIIB Building Constuclion /GSF' Varies $150.00 $203.73 $188.42 Building Core & Shell Cost Varies $ 75,075,000 $150.00 $165.00 $ 411934,920 $252.62 $174,004 $ 117,009,920 $165.66 $188.42 Demo $15 xLand Area $ 3,300,225 $6.59 $7.25 $ 1,357,275 . $8.18 $5,632 $ 4,657,500 $6.59 $7.50 On -Site Improvements' Nebraska 20' Fire Access $407,177 Allocated $ 288,518 $0.58 $0.63 $ 118,659 $0.71 $492 $ 407,177 $0.58 $0.66 Olympic Sidewalk $290,040 Allocated $ 205,517 $0.41 $0.45 $ 84,523 $0.51 $351 $ 290,040 $0.41 $0.47 26th Street Sidewalk $46,751 Allocated $ 46,751 $0.09 $0.10 $ - $0.00 $0 $ 46,751 $0.07 $0.08 Stewart Street Sidewalk $11,068. Allocated $- - $0.00 $0.00 $ 11,068 $0.07 $46 $ 11,068 $0.02 $0.02 Utility Line Undergrounding $1,350,000 Allocated $ 956,586 $1.91 $2.10 $ 393,414 $2.37 $1,632 $ 1,350,000 $1.91 $2.17 Office Tenant Improvements $38 x NSF Office $ 16,340,000 $32.65 $35.91 $ - $0.00 $0 $ 16,340,000 $23.13 $26.31 Retail Tenant Improvements $38 x NSF Retail $ 950,000 $1.90 $2.09 $ - $0.00 $0 $ 950,000 $1.34 $1.53 Residential Common Area Amenities' $2,900 per Unit $ - $0.00 $0.00 $ 698,900 $4.21 $2,900 $ 698,900 $0.99 $1.13 Subterranean Parking Levels 1 -2 $30,000 per Space $ 28,050,000 $56.04 $61.65 $ 10,860,000. $65.42 $45,062 S 38,910,000 $55.09 $62.66 Leve13 $35,000 per Space $ 9,940,000 $19.86 $21.85 $ - $0.00 $0 $ 9,940,000 $14.07 $16.01 Contingency 5% x Subtotal Hard Costs $ 6,757,630 $13.50 $14.85 $ 2,772,938 $16.70 $11.506 $ 9,530,568 $13.49 $15.35 Subtotal Hard Costs $ 141,910,228 $283.54 $31189 $ 58,231,696 $350.79 $241,625 $ 200,141,924 $283.35 $322.29 Page 8 of 19 HR&A Advisors, Ina Financial Feasibility Analyses Lantl at AV-With Benefits v2_01- 19- 14.xlsx 82 -0ev Cost Alt 4 01 -19 -2014 Per Program Summary. Appendix A. Per Hines based on contractor estimates. These unit costs are somewhat less than those derived by HR&A from the Marshall & Swift construction cost estimation software. Per Hines and City staff. Per City staff, based on latest negotiations with Hines for the Project. Project's benefit costs per NSF were then applied to the to the NSF of Alt. 4 and Alt. 4 Modified. " Per Hines, and determined by HR&A to be generally reasonable based on current market conditions. Page 9 of 19 HR &A Advisors, Inc. Financial Feasibility Analyses Lend at AV -With Benefits _U2_Ot- 19.14.xlsx B2 -0ev Cost Alt 4 01 -19 -2014 Assumptions Office /Retail Per GSF Per NSF Residential Per GSF Per NSF Total Per GSF Per NSF Soft Costs' City Permits & Fees (See App. C) 13,192,443 $26.36 $28.99 $ 5,425,639 $32.66 $22,513 $ 18,618,082 $26.36 $29.98 Public Benefit Payments° Expo Buffer Contribution $ 1,169,393 $2.38 $2.61 $ 433,932 $2.61 $1,801 $ 1,623,326 $2.30 $2.61 TMA Contribution $ 17,841 $0.04 $0.04 $ 6,509 $0.04 $27 $ 24,350 $0.03 $0.04 Bike Share Contribution $ 11,894 $0.02 $0.03 $ 4,339 $0.03 $18 $ 16,233 $0.02 $0.03 Public Transit Enhancement $ 95,151 $0.19 $0.21 $ 34,715 $0.21 $144 $ 129,866 $0.18 $0.21 Historic Preservation Programs $ 44,602 $0.09 $0.10 $ 16,272 0.10 ,$68 $ 60,675 $0_09 $0.10 Subtotal Public Benefit Payments $ 1,358,882 $2.72 $2.99 $ 495,768 $2.99 $2,057 S 1,854,650 $2.63 $2.99 A &E /Other Professionals 6.0% x Hard Costs $ 8,514,614 $17.01 $18.71 $ 3,493,902 $21.05 $14,498 $ 12,008,516 $17.00 $19.34 Marketing /Leasing Commissions" Residential $7.50 xNSF $ - '$0.00 $0.00 $ 1,245,000 $7.50 $5,156 $ 1,245,000 $1.76 $2.00 Retail /Office $29.76 x NSF $ 13,540,600 $27.05 $29.76 $ - $ 13,540,800 $19.17 $21.80 Legal & Accounting 0.5% x Hard Costs $ 709,551 $1.42 $1.56 $ 291,158 $1.75 $1,208 $ 1,000,709 $1.42 $1.61 Real Estate Taxes 1.25% x hard costs x 2 yrs. $ 3,547,756 $7.09 $7.80 S 1,455,792 $8.77 $6,041 $ 5,003,548 $7.08 $8.06 Insurance 1.0% xHand Costs $ 1,419,102 $2.84 $3.12 S 582,317 $3.51 $2,416 $ 2,001,419 $2.83 $3.22 Developer Fee 3.0% x Hard, Soft Costs $ 5,525,601 $11.04 $12.14 $ 2,136,638 $12.87 $8,866 $ 7,662,439 $10.85 $12.34 Contingency 3.0% x Subtotal Soft Costs $ 1,434,268 $2.87 $3.15 $ 453,786 $2.73 $1,883 $ 1,888,054 $2_67 $3_04 Subtotal Soft Costs $ 49,243,217 $98.39 $108.23 $ 15,580,000 $93.86 $64,647 $ 64,823,217 $91.77 $104.39 Subtotal Hard +Botts Costs $ 191,153,444 $381.92 $420.12 $ 73,811,696 $444.65 $306,273 $ 264,965,141 $375.12 $426.67 Financing Costs° Loan Term (months) 24 Average Loan Balance 65.00% Construction Loan Interest Rate 5.50% Construction Loan Interest $ 13,667,471 $27.31 $30.04 $ 5,277,536 $31.79 $21,698 $ 18,945,007 $26.82 $30.51 Construction Loan Fees 1.75% $ 3,345,185 $6.68 $7.35 $ 1,291,705 $7.78 $5,360 $ 4,636,890 $6.56 $7.47 Permanent Loan Percent x Cost 68.00% Permanent Loan Fees & Costs 0.75% $ 974,883 1.95 $2_14 $ 376,440 $2.27 $1,562 $ 1,351,323 $1_91 $2_18 Subtotal Financing Costs $ 17,987,539 $35.94 $39.53 $ 6,945,681 $41.84 $28,820 $ 24,933,220 $35.30 $40.15 Total Development Cost Land + Hand + Soft +Financing $ 246,967,599 $493.44 $542.79 $ 119,230,761 $718.26 $494,733 $ 366,198,361 $518.44 $589.69 Less: Commercial Lease -up Revenue" $25.38 x NSF Commercial $ (11,547,900) 423.07 425.38 $ - $ (11,547,90D) - $16.35 - $18.60 Less: Residential Lease -up Revenue" $901 per Unit $ - $0_00 $0_00 $ (217,141) - 1.31 -$901 $ (217,141) -$0.31 -$0.35 Net Development Cost $ 235,419,699 $470.37 $517.41 $ 119,013,620 $716.95 $493,832 $ 354,433,320 5501.79 $570.75 Per Program Summary. Appendix A. Per Hines based on contractor estimates. These unit costs are somewhat less than those derived by HR&A from the Marshall & Swift construction cost estimation software. Per Hines and City staff. Per City staff, based on latest negotiations with Hines for the Project. Project's benefit costs per NSF were then applied to the to the NSF of Alt. 4 and Alt. 4 Modified. " Per Hines, and determined by HR&A to be generally reasonable based on current market conditions. Page 9 of 19 HR &A Advisors, Inc. Financial Feasibility Analyses Lend at AV -With Benefits _U2_Ot- 19.14.xlsx B2 -0ev Cost Alt 4 01 -19 -2014 Appendix B3: Development Costs Alt 4 - Modified (Reduced Project with 60% Commercial) Development Scenario' Assumptions - Land Area $ 14,610 Per Appendix A Gross Bldg, Area (GSF) $ 9,740 Per Appendix A Residential $ n,920 $0.19 Retail $ 36,525 $0.09 Office $ 1,112,790 $2.72 Net Leasable Area. (NSF) $ 6,878,238 Per Appendix A Residential 6 - $0.00 Retail $ 11,088,576 $27.05 Office $ 573,187 $1.40 Residential Units $ 2,865,933 Per Appendix A Subterranean Parking (spaces) $ 1,146,373 Per Appendix A Levels 1 -2 $ 4,443352 $10.84 Offceftetail $ 1,652,971 $4.03 Residential is 46,942,646 $114.53 Level $ 200.575,323 $ 279.40 $ OffcelRetail It 17.101.227 $ 23.93 $ Residential Project Elements Land Cost Hand Cost' Construction Type Building ConstmdloNGSF1 Varies Building Core & Shell Cost Varies Demo /O,Rts Improvements $15 xLand Area On-Site Improvements' Passageway -12' $18,350 Allocated Olympic Sidewalk $290,040 Allocated 261h Street Sidewalk $46)51 Allocated Stewart Street Sidewalk $11,068 Allorwtetl Utility Una Undergrounding $1,350,000 Allocated Office Tenant Improvements $38 xNSF Office Retail Tenant Improvements $38 x NSF Retail Residential Common Area Amenities $2,900 per Unit Surface Panting' $1,000 per space Subterranean Parking Levels 1-2 $30,000 per Space Level $35,000 par$pace Contingency 5% x Subtotal Hard Cents Subtotal Hard Costs Soft Costs' City Pmmits & Fees (See App. C) Public Benefit Payments° Expo Buffer Contribution TMA Contribution Bike Share Contribution Public Transit Enhancement Historic Preservation Programs Subtotal Public Behalf Payments A&E /Other Professionals 6.0% xHard Costs Marketing/Leasing Commissions Residential $7.50 xNSF Retail /Office $29.76 . NSF Legal& Accounting 0.5% xHerb Costs Real Estate Taxes 1.25% x hard costs x 2 yrs. Insurance 1.0% xHard Costs Developer Fee 3.0% . Hard +Soft COSts Contingency 3.0% x Subtotal Soft Casts Subtotal Soft Costs Subtotal Hard a Send Costs OfficelRetail 1-x7,275 24,860 385,000 22.600 350,000 996 OfficeRietail Per GSF Per NSF is 37,826,616 HIS 8150.00 3 61,479,000 $15100 $165.00 $ 2,659,125 $6.49 $7.14 3 18,350 $0.04 $0.05 6 165,594 $0.40 $0.44 5 46,751 50.11 $0.13 S $ ]]0,761 $ 13,300,000 $32.45 $38.00 S 858,800 $2.10 338.00 S $ - $D.OD $0.00 $ 29,880,000 $72.90 $80.19 $ - $0.00 $0.00 S 5,458,219 $13.32 $14S5 _ $ 114,637,300 5,2]9.]0 $307.67 9,809.351 $23.93 526.33 $ 973,995 52.38 $2.61 $ 14,610 $0.04 $0.04 $ 9,740 $0.02 $0.03 $ n,920 $0.19 $0.21 $ 36,525 $0.09 $0.10 $ 1,112,790 $2.72 $2.99 $ 6,878,238 $16.76 618.46 6 - $0.00 $0.00 $ 11,088,576 $27.05 $29.76 $ 573,187 $1.40 $1.54 $ 2,865,933 $6.99 $7.69 $ 1,146,373 $2.80 $3.08 $ 4,443352 $10.84 $11.93 $ 1,652,971 $4.03 $4.44 is 46,942,646 $114.53 $125.99 $ 161,579,946 $394.23 $433.56 Page 10 or 19 Residential 133,225 308,016 248,400 342 513 Residential Per NSF Per Unit $ 38,473,384 1116 $203.73 $ 62,750,606 $252.62 $183.482 $ 1,998,375 $8.04 $5,843 S - $0.00 $0.00 $ 124,446 SD.00 $0.00 $ - SO.OD $0.00 $ 11,068 $0.00 $0.00 $ 579,239 3D.OD $0.00 $0.00 $0.00 $ - $0.00 $0.00 $ 991,600 $3.99 $2,900 $ - $0.00 $0.00 $ 15,390,000 $61.96 545,000 $ - SD.OD $0 $ 4,092,287 $15.47 11966 $ 85,938,023 $345.97 $251,281 $ ],371,8]6 $29.68 $21,555 $ 649,330 $2.61 $1.899.00 $ 9,740 $0.04 $28.00 $ 5,493 $0.03 $19.00 is 51,11 50.21 5152.00 Is 24,350 $0.10 $71.00 is 741,660 52.99 $2,169.00 $ 5,156,281 $20.76 $15,077 $ 1,863,000 $7.5D $5,447 is 429,690 .73 $1,256 $8 $ 2,148,451 .65 $6,282 $ 859,3130 $3 53.46 $2,513 $ 3,135,257 $$2.62 $9,167 3262 $ 651,174 $1904 It 22,356.968 $90.00 $65,371 $ 108,294,991 $435.9] $316,652 Total 310,50D ]1],6]6 621,000 1,509 1,509 996 513 Total Per GSF Per NSF $ 76,300,000 $200.05 2.26 It 0.03 $ 0.02 $ 0.18 $ 0.08 $ 2.61 0.04 D.03 0.21 0.10 $ 124,229,808 S 173.05 $ 200.05 It 4,657,500 S 6.49 $ 7.50 $ 18,350 S 103 $ 0.03 to 290040 S OAD $ 0.47 $ 46 751 S 0.07 $ 0.08 $ 11,068 $ 0.02 $ 0.02 $ 11350,000 $ 1.86 $ 2.17 $ 13,300,000 S 18.53 $ 21.42 $ 858,800 $ 1.20 $ 1.38 is 991,800 S 1.36 It 1.60 $ 45.27D ODD $ 63.06 $ 72.90 $ S $ is 9,551,206 $ 13.30 $ 15.38 $ 200.575,323 $ 279.40 $ 322.99 It 17.101.227 $ 23.93 $ 27.67 $ 1,623,326 $ $ 24,350 $ $ 16,233 $ $ 129,866 $ $ 60.675 $ 2.26 It 0.03 $ 0.02 $ 0.18 $ 0.08 $ 2.61 0.04 D.03 0.21 0.10 $ 1.654,650 $ 2.56 $ 2.99 $ 12.034,519 S 16.76 $ 19.38 $ 1,863,000 $ 2.60 $ 3.00 $ 11,01 $ 15.45 $ 17,56 $ 1,002,877 $ 1.40 6 1.61 $ 5,014,383 $ 6.99 $ 8.07 $ 2,005,753 $ 2.79 $ 3.23 $ ],5]8,609 $ 10.56 3 12.20 $ 2,304,145 $ 3.21 $ 3.71 3 69.299.614 $ 91 $ 111.59 $ 269,874,937 $ 375.94 $ 434.58 HR&A Advisers, Inc. Financial Feasibility Analyses_Land at AV-With Benefits _v2 01- 19-14xlsx 931 Cost -Alt 4 -Mod 01 -19 -2014 Total Per GSF Per NSF $ 19,296,058 $ 26.88 $ 31.07 $ 4,722,811 $ 6.58 $ 7.61 $ 1,376.362 $ 1.92 $ 212 $ 25.395.231 $ 35.38 $ 40.89 $ 371,570,168 $ 517.60 $ 598.34 5 (9,456,588) $ (13.17) $ (15.23) 6 (308,142) $ (0.43) $ (0.50) $ 361,805,438 8 503.99 5 582.62 HR&AAdvlsms.lnp. Financial Feesltith Analyses _Land atAV -WM Benefils_v2 01- 1944.xlsx B }Dev (tost -Ab FMod Page 11 of19 01 -19 -2014 Assumptions Per GSF Per NSF Residential Per NSF Per Unit Financing Costs" Loan Term (months) 24 Average Loan Balance $5.00% Construction Loan Interest Rate Construction Loan Interest $ 11,552,966 $28.19 $31.01 $ 7,743,092 $31.17 $22,641 Construction Loan Fees 1.75% $ 2,827,649 $6.90 $7.59 $ 1,895,162 $7.63 55,541 Permanent Loan Percent x Cost 68.00% Permanent Loan Fees & Costs 0.75% $ 824.058 $2.01 $22.21 $ 552,304 $22,22 $11,615 Subtotal Financing Costs $ 15,204,573 $37.10 $40.81 $ 10,190,558 $41.02 $29,797 Total Development Cost Land + Hard + Soft +Financing $ 214,611,235 $523.62 $575.98 $ 156,958,933 $631.88 $458,944 Less: Commercial Lame-up Revenues $25.38 x NSF Commercial $ (9,456,588) 423.07 425.38 5 - Less: Residential Leasevp Revenue" $901 per Unit $ - $0_00 $0_00 $ (308.142) yi 24 S9y01 Net Development Cost $ 205,154,647 $500.55 $550.60 $ 156,650,791 $630.64 6458,043 All assumptions per HR&A review of market data, financial feasibility peer reviews of recent developments and HRSA experience, unless noted othervAse. Per Hines based on contractor estimates. These unit costs are less than those derived by HR &A from the Marshall & Swdfl constm bion cost estimation software. o Per Hines and City staff. 4 Per City staff, based on latest negotiations Win Hines for the Project. Project's beneflt costs per NSF were then applied to the to the NSF of AIL 4 and AIL 4 Modified. s Per Hines, and determined by HR &A to be generalty reasonable, based on current market conditions. Total Per GSF Per NSF $ 19,296,058 $ 26.88 $ 31.07 $ 4,722,811 $ 6.58 $ 7.61 $ 1,376.362 $ 1.92 $ 212 $ 25.395.231 $ 35.38 $ 40.89 $ 371,570,168 $ 517.60 $ 598.34 5 (9,456,588) $ (13.17) $ (15.23) 6 (308,142) $ (0.43) $ (0.50) $ 361,805,438 8 503.99 5 582.62 HR&AAdvlsms.lnp. Financial Feesltith Analyses _Land atAV -WM Benefils_v2 01- 1944.xlsx B }Dev (tost -Ab FMod Page 11 of19 01 -19 -2014 Appendix C Proposed New Fees, Existing City Fees & Permit Costs HR&A Advisors, Inc. Finenclol Feaslbiliy Amtyses Land at AV -Wth Benefits v2_0149- 14.xlcx PCiy cost Detail 01 -19 -2014 Page 12 of 19 Alt. 4- Modified Proposed AIL 4 Reduced Rod ... d Pro ject Development Scenario, Assumptions Proieot Protect (60% Contain Land Area 310,500 310,500 310,500 Gross Bldg. Area( SF) 696,010 706,340 71],8]6 Residential Units Merkel Rafe Units Studio 178 83 119 1 BR 57 28 39 1 SR Loft 25 12 17 2 BR 71 34 49 2 S Townhouse 62 30 42 3 B 12 6 8 Subtotal Market Rate Units 405 193 274 Allmdable Rate Units Studio - Extremely Low Income 11 6 8 Studio - Very Low Income _ _ _ Stutlio - Low Income 1 - 1 Studio - Motlerate 5 3 4 Studio - 130 %x AMI 16 8 12 Studio - 150 %x AMI 11 5 B Studio - 180 %x AMI - - - 1BR- Extremely Low Income 5 3 4 1SR -Very Low Income - - - 1BR -Low Income 1 - - 1BR- Moderate 1 - - ISR- 130 %x AMI 5 3 4 1BR- 150 %x AMI 5 3 4 1BR- 180 %x AMI - - - 2SR- Extremely Low Income 7 4 5 2BR -Very Low Income - - - 2BR -Low income - - - 28R- Moderate - - - 26R- 130 %x AMI - - - 2BR- 150 %x AMI - - - 2 BR -160 %x AMI 23 12 17 3 BR - Extremely LOW Income 1 - - 3 BR- Very Low Income - - - 3BR -Low Income - - - 3 SIR - Moderate - - - 3 SIR - 130 %x AMI - - - 3BR- 150 %x AMI - - - 3 BR -180 %x AMI 1 1 Subtotal Affordable Units 93 48 68 Residential (Net Leasable SF) - 346 ,744 166,000 248,400 Live- WOrk(Net Leasable $F) 14,527 - - Retail(NetLeasableSF) 29,391 25,000 22,600 Office (Net Leasable SF) 374,434 430,000 350,000 Planning PermBS° Development Review $15,568 perproject $ - S - S - Development Agreement $25.000 perproject $ 25,000 S 25,000 $ 25,000 Multiple Permit Fee $1,884 perproject $ 1,684 $1.664 $ L6$4 AmM1itectural Review Board $1,684 per project $ 1,684 $116$4 S 1,6$4 Coastal Zone Concept Review S276 perproject It - S - S - CEOA Categorical Exemption $14,622 per project $ - $ - S - Negative Declaration $25,445 per project $ - $ - $ - EIR Allowance $ 1.000.000 S 1.000.000 S 1.000.000 Subtotal $ 1,028,368 $ 1,028,368 $ 1,028,368 HR&A Advisors, Inc. Finenclol Feaslbiliy Amtyses Land at AV -Wth Benefits v2_0149- 14.xlcx PCiy cost Detail 01 -19 -2014 Page 12 of 19 HRBA Advbom, Inc. Financial F- sibllity Analyses Lend at AV -WtM1 Benefits J2 01 -0S14.xlsx C-City Cost Detail 014W(114 Page 13 of 19 Alt. 4- Modified Proposetl Alt.4 Reduced Reduced Project Assumntinns Protect Proi.M 160 %COmm'11 IF Fees Market Rate -Areas $2,600 per unit S 986,000 $ 501,BDO $ 712,400 Affordable $0.D0 per unit S - $ - $ - Remil -Area 1 $21.00 x NSF S $17,211 $ 525,000 $ 474,600 Office -Area 1 $9.70 x NSF S 3.772,922 S 4,171,000 $ 3,395,000 Subtotal $ 5,378,133 $ 5,197,800 $ 4,562,000 Less: Credit for Existing ORCe (SON SF) $9.70 x NSF S (485,000) $ (485,000) $ (485,000) Less: Credit for Existing Industrial (135K SF) $1.20 xNSF S (183,800) $ (183,600) $ (183,600) Subtotal Net IF $ 4,709,533 $ 4,529,200 $ 3,913,400 Other Requirements2 Proposed Affordable Linkage Fee Creative office 5 %x$158.91 xNSF $ 3,090,490 $ 3,416,565 - $ 2,780,925 Retail 5°%x$161.41 xNSF $ 237.200 $ 201.763 S 182,393 Subtotal $ 3,327,690 $ 3,618,328 5 2,963,318 Less: Credit for Existing General Office 5 %x$188.43 xNOS $ (471,075) S (471,075) 5 (471,075) Less: Credit for Existing Industrial 5 %x$104.60 xNSF $ (800,1901 S (800190) S (800,190) Net Affordable Housing Linkage Fee $ 2,D56,425 S 2,347,063 S 1,692,053 Proposed Parks(Recreation Fee Market Rate 0-1 OR Units 25 %x$16,554 per Unit $ 869,085 5 509,036 $ 724,238 Market Rate 2 -3 BR Units 25 %x526,681 per Unit $ 966,461 $ 466,568 $ 659,860 Office 25 %x$9.24 xNSF $ 898,50D S 993,30D S 606,500 Retail 25 %x$5.98 .NSF $ 43.940 $ 37.375 S 33,787 Subtotal $ 2,777,986 $ 2,DO6,279 S 2,226,385 Less: Credit for Existing Office 25 %x$9.24 xNSF $ (115,500) S (115,50D) S (115,500) Less: Credit for Existing Industrial 25 %x$5.18 $ (198.135) S (198,135) $ (198,135) Net Parks/Recreation Fee $ 2,454,351 S 1,692,644 S 1,912,750 Arts Fees New ResidendelhCOmmercial 2.00% xS200ISF $ 3,060,384 S 2,484,OOD S 2,484,000 Tenant Improvements 2.00% x$501SF $ 403,825 S 455,000 S 372,600 Subtotal Arts Fee $ 3,464,209 $ 2,939,000 S 2,656,600 Child Care Fee Residential 8133.48 per unit $ $0,722 S 25,762 S 36,574 Retail $4.53 xNSF $ 133,141 $ 113,250 S 102,378 Office $6.34 x NSF $ 2,466,013 S 2,726,200 S 2.219,000 Subtotal Child Care Fee $ 2,649,876 $ 2,665,212 S 2357,952 School Facilities Fee Residential $3.20 x NSF $ 1,063,094 $ 531,200 S 794,880 Commercal $0.51 x NSF $ 213,360 S 232.050 $ 190,026 Subtotal School Facilities Fee S 1,276654 $ 763,250 $ 984,906 Subtotal Other Requirements $ 11,911,315 $ 10,607,169 $ 9,804,261 Bldg./Construction Permits2 Plan Check Residential 4+ stories $0.9127 xNSF $ 316,473 S 151.508 S 226,715 Commerda1 k10K SF $1.2790 .NSF $37,591 $31,975 $28,905 Commercal>10K SF/4 stories 513621 xNSF $ 510,D28 $ 585.716 $ 476,746 Mechanical $727 per project $727 8727 $727 Electrical $727 per project $727 $727 $727 Plumbing $727 per project 5727 5727 $727 Building Permitsllnspections Multi - family 4+ Stories 31.0236 xNSF $ 354,927 $ 169,918 S 254,262 Commercial 1Sm, 50.7782 xNSF $ 22,872 $ 19,455 S 17,587 Commercal 4 + stories $1.3561 xNSF $ 506,519 $ 583,983 S 475,335 Tenant Improvements >10K SF 30+2782 xNSF $ 112,344 $ 126,581 $ 103,657 Geotechnicel Reports $2,481 per project $ 2.481 $ 2.481 $ 2.481 Subtotal SIdg fCOnstruction Permits $ 1,867,416 $ 1,673,798 $ 1,587,869 HRBA Advbom, Inc. Financial F- sibllity Analyses Lend at AV -WtM1 Benefits J2 01 -0S14.xlsx C-City Cost Detail 014W(114 Page 13 of 19 HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV-With BenefiS v2 01- 19-14.xlcx C- City Cost Detail 01- 142014 Page 14 of 19 Alt &Modified Proposed Alt 4 Reduced Reduced Protect Assumoften. Proiecl Prof.. t f60 %COmm'11 Utility Fees Water Meter4 $3,637 34'meter per parcel $ 19,185 $ 19,185 $ 19,185 Fire Line Meter $18,195 4" meter per parcel $ 90,975 $ 90,975 $ 90,975 Wastewater Capital Facilities Studioll-BR Units $1,168 per unit $ 374,928 $ 161,040 $ 256,960 2-SRI Units $1,557 per unit $ 275,569 $ 133,902 $ 189,954 Commercial $779 per 1,000 NSF 5 314,580 $ 354.445 $ 290,255 Subtotal Utilities 5 1,075,257 $ P9,547 $ 847,329 Total City Permits S Fees 5 20,591,809 $ 10,610,002 $ 17,101,227 per GSF $22.98 $26.36 $23.93 Per Program Summary, Appendix A. Per FY 2013-14 City fees schedule, new Transportation Impact Fee per Ordinance No. 2420 (CCS), and draft linkage and parks4eaeation fees as of Jul, 2013. o For proposed Project only, assumes 2 %x hard at for on -site art. 4 Includes meter and capital facilities charge. HRBA Advisors, Inc. Financial Feasibility Analyses Land at AV-With BenefiS v2 01- 19-14.xlcx C- City Cost Detail 01- 142014 Page 14 of 19 Appendix D Net Operating Income HRBA Advisors, Inc. Financial Feasibility Analyses _Land at AV -Wtli Benefits v3 01- 19- 14xtst D-Net 0, Income Page 16 of 19 01 -19 -0014 Alt. &Modified Reduced Project Development Scenario' Assumptions Pro posed Project' Alt 4 Reduced Projects M0%Co...)' Land Area 310,500 310,500 310,500 Gross Bldg. Area (SF) 896,010 706,340 717,876 Residential Units 496 241 342 Menial Rate NSF NSF NSF Studio 178 370 83 370 119 370 1 BR 57 530 28 530 39 530 1 SR Loft 25 580 12 580 17 541 2 BR 71 859 3a 859 49 659 2 BR Townhouse 62 980 30 980 42 904 3 BR 12 1,307 6 1,307 8 1,307 Subtotal Mantra! Rate 405 193 274 Affordable Studio - Eternal, Low Income 11 365 6 365 8 355 Studio - Very Law Income - 365 - 365 - 355 Studio - Law Income 1 355 - 365 1 365 Studio - Moderate 5 365 - 3 365 4 355 Studio - 130 %x AMI 16 365 8 355 12 365 Studio - 150 %x AMI 11 365 6 365 6 365 Studio- 180 %x AMI - 365 - 365 - 365 iBR - Extremely Low Income 5 548 3 548 4 546 iBR - Very Law Income - 548 - 546 - 548 iBR - Law Income 1 548 - $48 - 548 1 BR- Moderate 1 546 - 548 - 548 1 BR- 130 %x AMI 5 548 3 548 4 548 1 BR- 150 %x AMI 5 548 3 548 4 548 1 BR- 180 %x AMI - 548 - 548 - 548 2BR - Extremely Law Income 7 849 - 4 649 5 849 2 SR - Very Low Income - 849 - 649 - 849 2BR -Low Income - 649 - 649 - 849 2BR- Moderate - 849 - 849 - 849 2BR - 130 %x AMI - 849 - 649 - 849 2BR - 150 %x AMI - 849 - 849 - 849 2BR - 180 %x AMI 23 849 12 649 17 849 3SR- Extremely Low Income 1 1,232 - 1,232 - 1,232 3 BR- Mary Law income - 1,232 - 1,232 - 1,232 3BR -Law Income - 1,232 - 1,232 - 1,232 3BR - Moderate - 1,232 - 1,232 - 1,232 3BR- 130 %x AMI - 1,232 - 1,232 - 1,232 3BR - 150 %x AMI - 1,232 - 1,232 - 1,232 3 BR -180% x AMI 1 1,232 1,232 1 1,232 Subtotal Affordable 93 48 Be Retail (Net SF) 29,391 25,OOD 22,600 Office (Net SF) 374,434 430.000 350,000 Residential (Net SF) 361,271 166,000 248,400 Market Rate ( %of total units) 293805 81% 132,938 60% 199,011 30% Affordable (% of total units) 67,466 19% 33.062 20% 49,389 20% Parking Spaces Residential 747 100% 362 100% 513 100% Market Rate ( %oftotal units) 608 61% 290 80% 411 BD% Affordable I% of total units) 140 19% 72 20% 102 20% Office/Retail 1,189 1.219 996 HRBA Advisors, Inc. Financial Feasibility Analyses _Land at AV -Wtli Benefits v3 01- 19- 14xtst D-Net 0, Income Page 16 of 19 01 -19 -0014 HR &A Advisers. Inc. Pm.nd.l Fe.plalty Anetyses land of AV -Wirt Benefils_v2 01- 19.14.d- 0.NetCpsIncome Page 16 of 19 01 -19 -2014 Alt. 4- Modified Reduced Project Assumptions Proposed Projects Alt 4 Reduced Projects (60% Co...[), Residential Per NSF Per Unit Per NSF Per Unit Per NSF Per Unit Ma Met Rate Apartments' Studio $1,600 per unitlmanth 5 284,800 $4.32 $ 132,800 $4.32 $ 190,400 $4.32 1 SR $2,500 per uniVmpnth S 142,500 5472 $ 70,000 S4 .72 $ 97,5DO $4.92 1 BR Loft $2,600 peruniVmonth S 65.000 54.48 $ 31,200 54.48 $ 44,200 $0.00 2SR 53,175 peruniVmonth S 225,425 5370 $ 107,950 53.70 S 78,400 $0.00 2 SR Townhouse $3,275 per unit/month $ 203,050 $3.34 $ 96,250 $3.54 $ 137,550 $3.62 3BR $4,420 peruniVmonth S 53.040 $3.38 $ 26,520 $3.36 S 35.360 3.38 Gross Rental Income per Month $ 973,815 $3.31 $2,404 $ 466,720 $3.51 $2,418 $ 563,410 $2.93 $2,129 Gross Rental Income per Year 12 months $ 11,685,780 $39.77 $28,854 $ 5.600,840 $42.13 $29,019 $ 7,000,920 $35.18 $25,551 Parking Income (.a...1) $110 per spacelmohth $ 801,900 $2.73 $1,980 $ 382,800 $2.88 $1,983 $ 542,520 $273 $1,980 Premium Income(annualQ $205 per unitlyear $ 831025 $0_28 $205 $ 39.565 $130 205 S 56.170 $0_28 $205 Other Misc. Income(annua[)" 3% x Gros. Rental Income $ 350.573 $1.19 $866 $ 168,019 $1.26 $871 $ 210,028 $1.06 $767 Total Gross Income $ 12,921.276 $43.96 $31,904 $ 6.191,024 $46.57 $32,078 $ 7,809,638 $39.24 $28,502 Less: Vacancy& Collection Losse 5.0% s Gross lncomelyear $ (646.064) -52.20 - $1.595 $ (309551) -$2.33 41 604 $ (390.482) -196 -1425 EfiecllVe Gross Income(EGI) $ 12,275,214 $41.73 $30,309 $ 5,881,473 $44.24 $3D,474 S 7,419.156 $37.28 $27.077 Less: Operating Expenses & Mgmt. Fee" $9,119 per uniVyear $ (3,693,195) 412.57 49.119 $ (1,759,967) -$1324 - $9,119 $ (2,498,606) 412.56 49,119 Less: Replacement Reserve" $150 Per uniVyear $ (60,750) 40.21 4150 $ (28,950) 4022 4150 $ (41,100) -$0.21 4150 Less: Annual Community Benefit Payments Historic Preservation Programs (split wlOffce) $ (2,500) -00.01 6.2 $ (1.413) -$001 47 S (2.114) 40.01 -$e Net Operating Income- Market Rate Residential $ 8,518,769 $28.99 $21,034 $ 4,091,143 $3D77 $21,198 5 4,677.336 $24.51 $17.800 Affp"dable Apartments Studio - Extremely Low Income $340 peruniVmonth $ 3,740 $0.93 $ 2,040 $0.93 S 2,720 $0.93 Stutlio - Very Law Income $567 peruniVmonth $ - $1.55 S - $1.55 $ - $1.55 Studio - Law Income $907 peruniVmonth $ 340 $2.48 5 - 52.48 S 340 $2.48 Stutlio - Moderate $1.247 peruniVmonth $ 1,700 $3.42 $ 1,020 $3.42 $ 1,360 $3.42 Studio - 130 %x AMI $1474 peruniVmonth S 5,440 $4.04 $ 2,720 $4.04 $ 4,080 $4.04 Studio - 150 %x AMI $1,701 per vriVmonth $ 3,740 $4.66 $ 2,040 $4.66 S 2,720 $4.66 Studio - 180 %x AMI $2,041 peruniVmonth $ - $5.59 8 - $5.59 $ - $5.59 1 SIR - Extremely Law Income $389 per uni4month $ 1,700 $0.71 S 1,020 $0 .71 $ 1,360 $071 1BR -Very Law Income 3646 peruniVmonth $ - $1.16 $ - $1.18 $ - $1.18 1BR -Low Income $1.037 per unlVmonth $ 340 $1.89 $ - $1.89 $ - $1.89 1 BR - Moderate $1426 peruniVmonth $ 340 $2.60 $ - $2.60 $ - $2.60 1 SIR- 130 %x AMI $1,685 peruniVmonth S 1,700 $3.07 $ 1,020 $3.07 $ two $3.07 1 BR- 150 %x AMI $1,944 per untmonth $ 1,700 $3.55 $ 1,020 $3.55 $ 1,350 $3.55 1 BR- 160 %x AMI $2.333 per unithmonth $ - $4.26 $ - $4.26 S - $4.25 2 SIR Extremely Low Income 5437 peruniVmonth $ 2,380 $0.51 S 1,360 $0.51 $ 1,700 $0.51 28R -Very Low Income $729 peruniVmonth $ - $0.86 S - $0.86 $ - $0.86 2 SIR -Low Income $1,166 per uniUmonth $ - $1.37 S - $1.37 $ - $1.37 2BR - Moderate $1,604 per unNmonth $ - $1.89 $ - $1.89 $ - $1.89 2 SIR - 130 %x AMI $1.895 per uniVmonth $ - $2.23 $ - $2.23 $ - $123 2 SR- 150 %x AMI $2,187 per uniVmonth $ - $2.58 S - $2.58 $ - $2.58 2BR- 180 %x AMI $2,624 per uniUh.hin $ 7,820 $3.09 S 4,080 $3.09 $ 5,780 $3.09 3 SIR - Extremely Low Income '$486 per uniUmonth $ 340 $0.39 S - $0.39 $ - $0.39 33R -Very Law Income 5810 per unklmon01 S - $0.65 S - $0.66 $ - $0.66 3BR -Low income $1,296 per unNmonth $ - $1.05 S - $1.05 $ - $1.05 3 SIR - Moderate $1,782 per unNmonth $ - $1.45 S - $1.45 $ - $1.45 3 SIR - 130 %x AMI $2,106 per uniVmonth S - $1.71 $ - $1.71 $ - $1.71 3 SIR = 150 %x AMI $2,430 per unNmonth $ - $1.97 S - $1.97 $ - $1.97 3 SIR - 180 %x AMI $2,916 per uniVmonth S 340 $2.37 S $2.37 $ 340 $2.37 Gross Rental Income per Month $ 31,620 $047 5340 S 16,320 $0.49 $340 $ 23,120 $0.47 $340 Gross Rental Income per Year 12 months S 379,440 $5.62 $,080 S 195,840 $5.92 $4,080 $ 277,440 $5.62 $4,080 Parking lncome(unbundled parking assumed) $0 $ - $0.00 $0 S - $0.00 $0 $ - $0.00 $0 Premium Income (annual)' 5205 per uniVyear S 19,065 $0.28 $205 $ 9,640 $0.30 $205 $ 13,940 $0.28 $205 Other Misc. Income(annulle 3% x Gross Rental Income $ 11,383 $0_17 $122 5 5.675 $0.18 $122 $ 8.323 SO_17 $122 Total Gross Income $ 409,888 $6.08 54,407 S 211,555 $6.40 $4,407 $ 299,703 $6.67 54,407 Less: Vacancy& Collection Lease 5.0% xGross Income $ (20,494) -030 -220 S (10.578) 40.32 --$22.4 $ (14,965) -SSO_30 Effective Gross Income(EGI) S 389,394 $5.77 54,167 $ 200,977 $6.08 $4,187 $ 284718 55.76 34,187 Less: Operating Expenses &MgmL Fee° $9,119 per uniVyear S (848,067) - $12.57 - $9,119 $ (437,712) - $13.24 49,119 $ (620,092) - $12.56 49,119 Less: Replacement Reserve° $150 per tn"o., S (13.950) -$150 S (7,200) 0.22 -150 $ (10,200) 40.21 4150 Net Operating Income- ARONable Residential S (472,523) -$7.01 - $5,082 $ (243,935) 47.38 45,082 $ (345,574) -57.00 - $5,082 HR &A Advisers. Inc. Pm.nd.l Fe.plalty Anetyses land of AV -Wirt Benefils_v2 01- 19.14.d- 0.NetCpsIncome Page 16 of 19 01 -19 -2014 Retail Average Rea1ISFMOnth (NNN)a Gross Annual Rental Income (NNN) Less: Vacancy & Collection Loss ERective Gross Income (EGI) Less: Unreimbumad Operating Expenses Net Operating Income- Retail Of i Average Monthly Rent (FSG) Average Annual Rent (FSG) Gross Annual Rental Income (FSG) Parking In ameNear(inc1. Retail° Gross Rental Ineom.Niuir Less: Vacancy & Collection Loss Effective Gross Income (EGI) Less: Annual Community Benefit Payments' TMA Contribution (100 %) Bike Share Facility (100%) Child Cate Contribution (100 %) Historic Preservation Programs (shared Win Mkt. Res) Less: Operating Expenses Less: Real Estate Taxes' Net Operating Income- ORice Total Net Operating Income 8 23,165,142 $30.28 $ 20,702,792 633.34 $ 16,381,638 $29.80 ' Per Program Summary, Appendix A. Per Hines, and verified by HR&A as reasonable assumptions based on current market conditions. Per Hines, includes purchase storage units at $50 /mo. and additional rent for pets at S25 1month. 4 Per City's maximum AHPP rents, as modified by City Council action on June 11, 2013, e Per HR& A . Accounts for a mix of retail tenants (assuming $3.50 psf per mo.) and dining tenants (assumes $6.00 psf per mpJ. e For Proposed Project and Tier 1 Project, weighted average of reserved monthly (5240; 10 %), preserved monthly ($155; BD o) and daily ($40; 5 %); for Zoning Compliant, $15o unreserved. a Per City staff, based on latest negotiations Wth Hines for the Project. Project's bereft costs per NSF were than applied to the to the NSF of AIL 4 and Alt. 4 Modified. 8 HR&A estimates. HR&A Advieom, Inc. Financial Feasibility Analysea_Land at AV -V Ah BeneNa v2 91- 19- 14.xlax o -Net pa Income Page 17 of 19 e1- 192014 Ak.4- MUdfied Reduced Project Assumptions Proposed Project' Alt 4 Reduced Pro'ece (60 % Comm'])' Per NSF Per NSF Per NSF $4 .75 per NSF /month $4.75 $4.75 $4.75 $ 1,675,267 $57.00 $ 1,425,000 $57,D0 $ 1,2138,200 $57.00 5.0% S (83,764) -$2.85 S (71,250) -$2.85 $ (64,410) 4285 $ 1,591,523 $54.15 3 1,353,750 554.15 $ 1,223,790 $54.15 3.0% x EGI S (47,746) -$1.62 $ (40,613) -$1.62 $ (36,714) 41.62 $ 1,543,777 $52.53 S 1,313,137 552.53 $ 1,187,076 $52.53 per NSF/month $4.50 $4.50 $4.50 per NSFNear Mci $54.00 $54.00 S 20,219,436 $54.00 $ 23,220,000 $54.00 $ 18,900,000 $54.00 $6.99 per Ni S 2.822,737 $7.54 $ 3,180,450 $7.40 $ 2,604,474 57.44 S 23,042,173 $61.54 $ 26,400,450 $61.40 $ 21,504,474 $61.44 5.0% S (1152,109) -$308 $ (1,320,023 43.07 $ (1,075,224) 43.07 S 21,890,064 $58.46 $ 25,080,427 $5833 $ 20,429,250 $56.37 Allowance S (30,000) 40.08 $ (34,400) 40.08 $ (26,000) -SDXS Allowance S (25,000) -$0.07 $ (30,100) 40.07 $ (24,500) 4D.07 Allowance S (200,00D) 40.53 S (227,900) 40.53 $ (185,500) 4D.53 Allowance S (2.500) 40.01 $ (4,3D0) 4101 $ (3,500) 40.01 $12.50 per NSF/year 5 (4,68D,425) 412.50 $ (5,375,000) - $12.50 $ (4,375,000) - $12.50 1.25 %x subtotal NOl x cap rate S (3.376,920) 49.02 $ (3,866,280) 48.99 $ (3,149,950) -59.00 S 13,575,219 336.26 $ 15,542,447 $36.15 $ 12,662,600 $36.18 Total Net Operating Income 8 23,165,142 $30.28 $ 20,702,792 633.34 $ 16,381,638 $29.80 ' Per Program Summary, Appendix A. Per Hines, and verified by HR&A as reasonable assumptions based on current market conditions. Per Hines, includes purchase storage units at $50 /mo. and additional rent for pets at S25 1month. 4 Per City's maximum AHPP rents, as modified by City Council action on June 11, 2013, e Per HR& A . Accounts for a mix of retail tenants (assuming $3.50 psf per mo.) and dining tenants (assumes $6.00 psf per mpJ. e For Proposed Project and Tier 1 Project, weighted average of reserved monthly (5240; 10 %), preserved monthly ($155; BD o) and daily ($40; 5 %); for Zoning Compliant, $15o unreserved. a Per City staff, based on latest negotiations Wth Hines for the Project. Project's bereft costs per NSF were than applied to the to the NSF of AIL 4 and Alt. 4 Modified. 8 HR&A estimates. HR&A Advieom, Inc. Financial Feasibility Analysea_Land at AV -V Ah BeneNa v2 91- 19- 14.xlax o -Net pa Income Page 17 of 19 e1- 192014 Appendix E Feasibility Metrics Development Scenario' Land Area Gross Bldg. Area (SF) Residential Units Market Rate Affordable Residential (Net SF) Market Rate (9% of total units) Affordable I% of total units) Retail (Net SF) Office (Net SF) Project Value Residential- Market Rate Net Operating Income Cap Rate' Value Residential - Affordable Net Operating Income Cap Rate' Value Retail Net Operating Income Cap Rate' Value Office Net Operating Income Cap Rate' Value Total Project Value Assumptions Proposed Project Alt Reduced Project 310,500 310,500 896,010 706,340 498 241 405 193 93 48 361,271 166,000 81.3% 80.1% 18.7% 19.9% 29,391 25,000 374,434 430,000 Per NSF Per Unit Per NSF Per Unit From App,D $ 8,518,769 $29 $21,034 $ 4,091,143 $31 $21,198 4.83% NO1 /Cap Rate $ 176,554,798 $601 $435,938 $ 84,790,539 $638 $439,329 From App,D $ (472,623) -$7 - $5,082 $ (243,935) -$7 45,082 4.83% NO1 /Cap Rate $ (9,795,295) -$145 - $105,326 $ (5,055,648) - $153 - $105,326 From App, D S 1,543,777 $53 $ 1,313,137 $53 6.20% NOI /Cap Rate $ 24,899,629 $847 $ 21,179,629 $847 From App, D $ 13,575,219 $36 $ 15,542,447 $36 6.28% NOI /Cap Rate $ 216,338,146 576 $ 247,688,394 76 $ 407,997,278 $533 $ 348,602,914 $561 Page 18 of 19 Alt 4- Modified Reduced Project (60% Comm.) 310,500 717,676 342 274 68 248,400 80.1% 19.9% 22,600 350,000 Per NSF Per Unit $ 4,877,336 $25 $17,800 $ 101,084,691 $508 $366,922 $ (345,574) -$7 - $5,082 $ (7,162,155) 4145 4105,326 $ 1,187,076 $53 $ 19,146,387 $847 $ 12,652,800 $36 $ 201,797,606 577 $ 314,866,529 $507 HRBAAdvisors, Inc. Financial Feasibility Analyses Land at AV -With Senefts_v2_01- 19- 14.xlsx E Feasibility Metrics 01 -1 &2014 Feasibility Metrics Return on Total Development Cost' Net Operating Income Total Development Cost Return on TDC (NOI /TDC) Developer Profit Margin' Total Project Value Less: Total Development Cost Profit Margin Amount Percent Alt. 4-Modified Reduced Project Assumptions Proposed Project Alt 4 Reduced Project (60% Comm.) $ 23,165,142 $ 425,936,916 5.44% $ 407,997,278 $ (425,936.916) (17,939,636) -4.4% $ 20,702,792 $ 354,433,320 5.84% $ 348,602,914 $ (354,433,320) $ (5,830,406) .1.7% Average ofthe midpoint of the cap rate range per CBRE, Cap Rate Survey February 2013, Los Angeles area data; and point estimates by Real Estate Research Corp., Real Estate Report, 2nd Quarter 2013, Los Angeles Area data. Weighted average Cap Rate+ 1.0 = 7.0% typical, per HRBA. a 10-15% typical, per HRBA. Page 19 of 19 $ 18,381,638 $ 361,605,436 5.08% $ 314,666,529 $ (361,805,438) $ (46,938,909) .14.9% HRaA Advisors, Inc. Finandal Feasibilit/ Analyses Land at AV -Wth Benefls v2_01- 19-14.4sx E- Feasibility Metrics 01- 1a2o14 MAY 2012 LETTER • APPLICANT ELECTING TO PROJECT May 9, 2012 ling Yeo, AICP Special Projects Manager City of Santa Monica 1685 Main Street, Room 212 Santa Monica, CA 90401 Dear Ms. Yeo: As we have progressed through the entitlement process over the course of the last five years, our project has evolved considerably. We have relied heavily on the principles of the LUCE to shape its evolution. In addition, during that time, we have gone through dozens of design iterations as we responded to the feedback we were given by the community and at each of our public hearings. In good faith, we endeavored to incorporate that feedback to the fullest extent feasible so that the project would evolve into one of which we could all be proud. At the March 2011 float -up hearing, we heard the opinions of the City Council and the community loud and clear. The project that was presented was considered too large and too institutional in appearance. In direct response, we hired a highly- respected urban planner and completely redesigned the project to incorporate virtually all of the feedback that was given. This included reducing the scale of the project by nearly 200,000 square feet (over 20%), despite the fact that it is located directly across from the future Expo light rail station and its density at that time was already well below the maximum density allowed by the LUCE. We presented a completely redesigned project to the City Council at a second float -up in August of last year and received a 6 -1 favorable vote to move forward with the environmental review and negotiation of a Development Agreement. At the August float -up, the community and the Council emphasized that traffic is the most important remaining issue. City Staff was asked to ensure that the traffic impact of our project was thoroughly studied in the EIR, and that we pay attention to and.respond to the results of the traffic study. Additionally, Mayor Pro -tem Davis and Councilmember O'Day specifically stated that while they did not want to "re- litigate" the LUCE, they would prefer to see a higher percentage of residential uses on the site. Before addressing the analysis presented by the DEIR, we believe it is important to analyze traffic impacts within the context of the LUCE. The LUCE reduces traffic by implementing a strategy that concentrates future development around transit nodes while preserving the scale and character of the remaining 96% of the City. As the EIR for the LUCE proved, implementing the LUCE would reduce traffic (including PM peak trips, corridor travel times, and vehicle miles traveled) vs. both existing conditions with no new development and the 1984 general plan. Development of this project is critical to implementing the LUCE and achieving its promised traffic reductions. Additionally, our proposed development for this site is substantially smaller in scale than what was contemplated by the LUCE and studied in its EIR. With that said, we understand that the primary concern associated with new development (and our development in particular) is traffic. As such, and with the benefit of complete information with respect to traffic, we have spent a considerable amount of time and effort reviewing the development alternatives for the site in order to fully understand their potential impacts. The City's Draft EIR, including the traffic study, comprehensively studied a diverse range of project alternatives in order to provide decision - makers with all of the necessary information required in order to make an informed decision. We have independently reviewed each of the project alternatives and vetted the City's traffic analysis by engaging our own consultants. Through our detailed review we found: • Alternative 1(the No Project Alternative) fails to implement the LUCE because it retains the existing warehouse in its vacant condition. Moreover, Alternative 1 is neither legally tenable nor a financially feasible alternative. • Alternative 2 (the Zoning Compliant Alternative) would have a reduced scale, but it would not be a transit - oriented or neighborhood serving development, not provide a vibrant mix of uses, and not include aggressive TDM strategies to reduce traffic. As a result, Alternative 2 would fail to implement the LUCE and also would generate more PM peak trips than would Alternative 3. • Alternative 3 (the Greater Residential Project Alternative) would significantly reduce traffic in comparison to the Proposed Project but is financially inferior. • Alternative 4 (the Reduced Project Alternative) includes 55,000 square feet more of office uses and less residential uses as compared to Alternative 3, and would generate more PM peak trips than would Alternative 3 with a TDM performance target. After our review, we determined that Alternative 3 when accompanied by a TDM performance target would be most effective at reducing traffic and addressingthe community's preference for more housing and less commercial development. In direct response to concerns about traffic, and at the request of Mayor Pro -tem Davis, Councilmember O'Day, and others in the community, we again significantly redesigned the project to include more residential uses and reduce the total amount of commercial uses. We submitted a design package to the City which eliminates another 137,000 square feet of commercial uses from the project. This revision results in the project's mix of uses moving from 60% commercial /40% residential on the increment (above the existing improvements) to 35% commercial /65% residential. In total, the project becomes an incremental 170,000 square feet of creative arts uses plus 498 residential units (with associated ground floor retail). Please accept this letter as our formal indication that we intend to pursue a project substantially similar to Alternative 3 as studied in the DEIR. In making our decision to eliminate 137,000 sf of commercial uses and replace those uses with residential uses, we took into consideration that the majority of the PM peak trips generated by the residential uses on the site are inbound PM trips which flow counter to the primary existing traffic congestion. Only 35% of PM peak trips for the residential uses are outbound trips as compared to 83% of the PM peak trips for the office uses.' Our adoption of Alternative 3 will substantially reduce the vehicle trips that matter most -- outbound PM peak trips. In further response to concerns about traffic, we have developed and are proposing an aggressive Transportation Demand Management (TDM) program with performance targets to further reduce vehicle ' ITE "Trip Generation Manual" (8ih ed.). trips. We are committing to establishing a performance standard that would reduce PM peak trips by a minimum of 15% and a target of 30% below the trip generation of the Proposed Project in the DEIR. We recognize that the mix of uses for Alternative 3 favors residential over commercial (i.e., 35% commercial and 65% residential on the increment) while the LUCE targets 60% commercial and 40% residential development for the Bergamot Transit Village District. However, it is important to note that this is an area - wide goal for the Bergamot Transit Village District as a whole; it is not site specific. Given the predominance of existing commercial uses in the area, the revised project will still provide an appropriate mix of uses which will assist the City in achieving the target balance for the District over time. Thus, the revised project continues to be fully compliant with the LUCE. In addition, given the recent dissolution of Community Redevelopment Agencies at the state level, privately - funded construction of new affordable housing has become an increasingly critical need within the City. With the shift toward more residential, we will be offering an additional 17 affordable units on -site, bringing our total to 50 on -site affordable units for the project. We have worked hard to make the project a true transit - oriented development and incorporate design elements, open space, and community serving retail uses that provide an engaging pedestrian experience. We have incorporated bicycle facilities, transformed the streetscape, and designed an activated public plaza that will provide a vibrant community space and act as a gateway for Santa Monica. We are doing everything we can to reduce traffic, while creating a sustainable, transit - oriented, mixed -use project that embodies the goals and policies of the LUCE and is financially feasible. Throughout ourfive -year process we have continued to listen to the community and have responded in good faith to its feedback in order to deliver a project which balances the many competing objectives of the community while fully implementing the collective vision of the LUCE. We look forward to the remainder of the process and to seeing this project through to completion. Sincerely, Colin P. Shepherd Hines cc: Rod Gould David Martin EIR Certification Resolution City Council Meeting: January 28, 2014 Santa Monica, California RESOLUTION NO. (City Council Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA CERTIFYING THE FINAL ENVIRONMENTAL IMPACT REPORT ON THE BERGAMOT TRANSIT VILLAGE CENTER WHEREAS, a Notice of Preparation of an Environmental Impact Report for the Bergamot Transit Village Center was issued on November 16, 2008; and WHEREAS, a Notice of Completion of a Draft Environmental Impact Report was published on January 12, 2012 in compliance with the California Environmental Quality Act and the City of Santa Monica CEQA Guidelines; and WHEREAS, the Draft Environmental Impact Report was circulated for a 60 -day period which ended on March 12, 2012; and WHEREAS, the Draft EIR analyzed the potential development of the Bergamot Transit Village Center; and WHEREAS, the Final EIR was published in July 2013; and 1 eff44 WHEREAS, on December 4, 2013, the Planning Commission reviewed and considered the Final EIR and recommended that the City Council certify it; and WHEREAS, the City Council has reviewed and considered the contents of the Final EIR in its decision - making process; and WHEREAS, on January 28, 2014 the City Council, as Lead City Agency, reviewed the Final EIR; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council has reviewed and considered the information contained in the Final Environmental Impact Report on the Bergamot Transit Village Center ( "Final EIR ") prior to acting on the project. SECTION 2. The City Council certifies that the Final EIR for the project was presented to the City Council, that the Final EIR for the project was completed in full compliance with State law and City CEQA Guidelines, that there was adequate public review of the Draft Environmental Impact Report, that it has considered all comments on the Draft Environmental Impact Report and responses to comments, that the Final Environmental Impact Report adequately discusses all significant environmental issues, 2 eff99 that the Final Environmental Impact Report reflects the independent judgement and analysis of the City, and that the City Council has reviewed and considered the information contained in the Final Environmental Impact Report in its decision - making process prior to acting on the projects. SECTION 3. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: 3 eff44 ♦ l RESOLUTION ADOPTING 1. p RESOLUTION NO. (City Council Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA MAKING FINDINGS NECESSARY TO APPROVE THE BERGAMOT TRANSIT VILLAGE CENTER PROJECT, ADOPTING A STATEMENT OF OVERRIDING CONSIDERATION, AND MITIGATION MONITORING PLAN WHEREAS, a Draft Environmental Impact Report was prepared in January 2012 and a Final Environmental Impact Report (Final EIR) was prepared in July 2013 which analyzes the environmental effects of the Bergamot Transit Village Center Project; and WHEREAS, the Santa Monica City Council, as Lead City Agency, reviewed the Final Environmental Impact Report in full compliance with State and City CEQA Guidelines; and WHEREAS, on January 28, 2014, the City Council certified that the Final Environmental Impact Report was prepared in full compliance with State and City CEQA Guidelines, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. Consistent with Article IV, Section 12 of the City of Santa Monica CEQA Guidelines and Section 15128 of the State CEQA Guidelines, the Initial Study /Notice of Preparation determined that the following environmental impacts were not considered potentially significant and were not addressed further in the Final Environmental Impact Report: Agriculture and Forestry Resources and Mineral Resources. SECTION 2. Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines and Section 15091 and 15092 of the State CEQA Guidelines, and as eff45 detailed in the Final EIR, the City Council finds that impacts would be less than significant without mitigation for land use /planning, noise (operational), population /housing, and public services. SECTION 3. Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines and Sections 15091 and 15092 of the State of California CEQA Guidelines, the City Council finds that most impacts resulting from the proposed project can be reduced to an acceptable level. More specifically, significant environmental effects related to biological resources, cultural resources, geology /soils, greenhouse gas emissions, hazards /hazardous materials, hydrology /water quality, and noise (construction - related) can feasibly be avoided and have been eliminated or substantially lessened to less than significant. (a) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts on biological resources. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's biological resource impacts to below levels of significance: MM4.3 -1 Avoidance of Nesting Birds. To prevent impacts to nesting birds protected under the MBTA and California Fish and Game Code, the project applicant shall enforce the following: a. Where suitable vegetation and structures for nesting birds occur within 200 feet of project construction activities, all phases of project eff45 construction shall avoid the general nesting season (March 1 through August 31). b. If construction cannot avoid the general nesting season, the project applicant shall retain a qualified biologist to conduct a pre- construction survey for nesting birds prior to clearing, grading and /or construction activities on the project site. The survey shall be conducted within 72 hours prior to the start of construction. C. If any nesting birds are present within or immediately adjacent to the proposed project construction area, the following shall be required: The project applicant shall retain a qualified biologist to flag and demarcate the location of all nesting birds and monitor construction activities. Temporary avoidance of active bird nests, including the enforcement of an avoidance buffer of 25 to 200 feet, as determined by the qualified biological monitor, shall be required until the qualified biological monitor has verified that the young have fledged or the nest has otherwise become inactive. Documentation of the nesting bird surveys and any follow -up monitoring, as necessary, shall be provided to the City within 10 days of completing the final survey or monitoring event. MM4.3 -2 Mature Tree Preservation. Prior to commencement of construction activities and /or the removal or planting of any public tree species within the project area, the project applicant shall coordinate with the City of Santa Monica Director of Recreation and Parks and the City of Santa Monica Director of General Services to obtain the proper tree permits and delineate any applicable Tree Protection Zone eff45 areas, in compliance with the City of Santa Monica Tree Code and the City of Santa Monica Urban Forest Master Plan. MM4.3 -3 Tree Relocation and Removal Plan. Prior to commencement of construction activities and /or the removal or planting of any public tree species within the project area, the project applicant shall prepare a Tree Relocation and Removal Plan in accordance with the City of Santa Monica Urban Forest Master Plan that clearly identifies the public trees to be impacted, the reasons for the proposed removals or relocations, and shall contain the following information: a. The appraised value of the tree in relation to its relocation cost b. Existing utilities and other elements of the City's infrastructure C. The suitability of the tree for relocation, i.e., tree age, health, root and canopy structure d. The mature size of the tree e. Impact the relocated tree will have on the new site f. Long term and short term maintenance and irrigation requirements g. Chances of surviving relocation h. Public input obtained as part of the project's community design process i. Environmental benefits of the tree j. Aesthetic and /or cultural value The final Tree Relocation and Removal Plan shall be approved by the City Council. MM4.3 -4 Coral Tree Replacement. Coral trees removed as a result of the proposed project and that cannot be relocated shall be replaced on a 2:1 basis. eff45 Replacement coral trees shall consist of a minimum of 36 -inch box trees. The replacement coral trees shall be planted within the Olympic Boulevard median to the extent that a relocation site is available as identified by the City of Santa Monica's Community Forester. If a relocation site within the Olympic Boulevard median is not available, another suitable relocation site may be identified by the City of Santa Monica's Community Forester. (b) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts to cultural resources. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's cultural resources impacts to below levels of significance: MM4.5 -1 In the event that any prehistoric or historic - period subsurface archaeological features or deposits, including locally darkened soil ( "midden "), that could conceal cultural deposits, animal bone, obsidian, and /or mortar are discovered during demolition /construction - related earth- moving activities, all ground- disturbing activity within a 100 -meter radius of the resources shall be halted immediately, and the City of Santa Monica Planning and Community Development Director shall be notified within 24 hours. The project applicant shall retain an archaeologist who meets the Secretary of the Interior's professional qualifications for Archaeology. The Planning and Community Development Director shall consult with the archeologist to assess the significance of the find. Impacts to any significant resources shall be mitigated to a less- than - significant level through data eff45 recovery or other methods determined adequate by the Planning and Community Development Director and that are consistent with the Secretary of the Interior's Standards for Archaeological Documentation. If Native American archaeological, ethnographic, or spiritual resources are discovered, all identification and treatment of the resources shall be conducted by a qualified archaeologist and Native American representatives who are approved by the local Native American community as scholars of the cultural traditions. In the event that no such Native American is available, persons who represent tribal governments and /or organizations in the locale in which resources could be affected shall be consulted. When historic archaeological sites or historic architectural features are involved, all identification and treatment is to be carried out by historical archaeologists or architectural historians who meet the Secretary of the Interior's professional qualifications for Archaeology and /or Architectural History. MM4.5 -2 Should paleontological resources be identified at any project construction sites during any phase of construction, the construction manager shall cease operation within a 100 -meter radius of the discovery and immediately notify the City of Santa Monica Planning and Community Development Department. The project proponent shall retain a qualified paleontologist to provide an evaluation of the find and to prescribe mitigation measures to reduce impacts to a less -than- significant level. In considering any suggested mitigation proposed by the consulting paleontologist, the Planning and Community Development Department shall determine whether avoidance is necessary and feasible in light of factors such eff45 as the nature of the find, project design, costs, land use assumptions, and other considerations. If avoidance is unnecessary or infeasible, other appropriate measures (e.g., data recovery) shall be instituted. Work may proceed on other parts of the project site while mitigation for paleontological resources is carried out. MM4.5 -3 If human remains are discovered during any demolition /construction activities, all ground- disturbing activity within a 100 -meter radius of the remains shall be halted immediately, and the Los Angeles County coroner shall be notified immediately, according to Section 5097.98 of the state Public Resources Code and Section 7050.5 of California's Health and Safety Code. If the remains are determined by the County coroner to be Native American, the Native American Heritage Commission (NAHC) shall be notified within 24 hours, and the guidelines of the NAHC shall be adhered to in the treatment and disposition of the remains. The project applicant shall also retain a professional archaeologist with Native American burial experience to conduct a field investigation of the specific site and consult with the Most Likely Descendant, if any, identified by the NAHC. As necessary, the archaeologist may provide professional assistance to the Most Likely Descendant, including the excavation and removal of the human remains. The City of Santa Monica Planning and Community Development Director shall be responsible for approval of recommended mitigation as it deems appropriate, taking account of the provisions of state law, as set forth in CEQA Guidelines Section 15064.5(e) and Public Resources Code Section 5097.98. The project applicant shall implement approved mitigation, to be verified by the City of Santa Monica Planning and Community Development Director, before the resumption of ground- eff45 disturbing activities within a 100 -meter radius of where the remains were discovered. (c) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to geology /soils. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's impacts related to geology /soils to below levels of significance: MM4.6 -1 Prior to issuance of a grading permit, a California - licensed Civil Engineer (Geotechnical) shall prepare and submit to the City of Santa Monica Building and Safety Department a detailed soils and geotechnical analysis. An evaluation of onsite faulting, which may require subsurface exploration using methods such as trenching, shall be performed in accordance with the City of Santa Monica's Guidelines for Geotechnical Reports (City of Santa Monica, 2010 or successor thereto) in order to establish fault locations and potential recency of activity. The report shall include soil sampling and laboratory testing of materials to provide detailed recommendations for grading, chemical and fill properties, expansive soils, soil erosion, and landscaping. MM4.6 -2 The proposed project shall comply with the recommendations of the final soils and geotechnical report, which shall be reviewed and approved by the City in accordance with all applicable rules and regulations. These recommendations shall be implemented in the design of the project, including but eff45 not limited to measures associated with building setbacks, building placement, building design, site preparation, fill placement, temporary shoring and permanent dewatering, groundwater seismic design features, excavation stability, foundations, soil stabilization, establishment of deep foundations, concrete slabs and pavements, surface drainage, cement type and corrosion measures, erosion control, shoring and internal bracing, and plan review. MM4.6 -3 The proposed project structure shall not be supported directly on the landfill materials. If the landfill materials could not be completely removed, the structures within the limits of the landfill material shall be supported on pile foundations. (d) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to greenhouse gas emissions. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's impacts related to greenhouse gas emissions to below levels of significance: MM4.7 -1 In accordance with SMMC Section 8.108.110, or any successor thereto, the Applicant shall ensure that all construction projects divert at least 70 percent of all construction debris from landfills. In addition, the project shall use green building materials, following the City's Green Building Ordinance, which may include the use of salvageable materials from existing buildings on -site. This can eff45 take the form of re -use of entire structures, re -use or repurposing of significant elements, such as beams or trusses, and recycling materials within the new project such as grinding paving and asphalt for use as base material at the site. These activities will increase the sustainability of the site through reduced waste materials from demolition, reduced need for new materials on site, and reduction of the ancillary transportation impacts from off -haul and delivery of materials to the site. MM4.7 -2 The Applicant shall ensure that all residential and commercial developments increase electrical energy efficiency by 20 percent beyond the 2008 Standards for Title 24 Part 6 energy efficiency standards or meet the 2013 California Building Code, whichever is more stringent. The Applicant shall achieve this reduction through methods such as (but not limited to) the following: a. The Applicant shall ensure that ENERGY STAR Appliances are utilized in all residential uses. b. Use light emitting diode (LED) based energy efficient street lighting. C. Use occupancy sensors for all areas allowed by code, such as offices and conference rooms. d. The projects' interior building lighting shall use compact fluorescent light bulbs or equivalently efficient lighting to the satisfaction of the City of Santa Monica Building and Safety Department. e. Use Energy Efficient Roofing Materials. All roofing materials shall be Energy Star® certified. All roof products shall also be certified to meet American Society for Testing and Materials (ASTM) high emissivity requirements. Documentation of compliance with this measure shall be provided to the City of eff45 Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -3 The Applicant shall ensure that all residential and commercial developments increase natural gas efficiency by 20 percent beyond the 2008 Standards for Title 24 Part 6 energy efficiency standards or meet the 2013 California Building Code, whichever is more stringent. The Applicant shall achieve this reduction through methods such as (but not limited to) the following: • Exterior wall systems will be fully insulated beyond minimum 2008 Standards for Title 24 Part 6 energy efficiency standards. • Glazing will specify insulated Low -E glass with thermal break window frame systems. • Where feasible, incorporate passive solar design features into the buildings, which may include roof overhangs or canopies that block summer shade, but that allow winter sun, from penetrating south facing windows. • Increase in insulation such that heat transfer and thermal bridging is minimized. • Limit air leakage through the structure or within the heating and cooling distribution system to minimize energy consumption. • Incorporate dual -paned or other energy efficient windows. • Incorporate energy efficient space heating and cooling equipment. • Or other measures that will increase the energy efficiency of building envelope in a manner that when combined with the other options listed above exceeds current Title 24 Standards (Title 24, Part 6 of the California Code of Regulations; Energy Efficiency Standards for Residential and Non eff45 Residential Buildings, as amended September 11, 2008; Cool Roof Coatings performance standards as amended September 11, 2006) by a minimum of 20 percent or meet the 2013 California Building Code, whichever is more stringent. Documentation of compliance with this measure shall be provided to the City of Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -4 The Applicant shall include the use of or contribution to increased renewable energy power generation such that at least 45 percent of the project's electricity comes from renewable sources. This would be achieved by methods such as (but not limited to) the following: Incorporate solar panels into the electrical system. • Incorporate cool roofs /light - colored roofing Documentation of compliance with this measure shall be provided to the City of Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -5 The Applicant shall include electrical outlets on the exterior of new buildings to reduce emissions from gas - powered landscape maintenance equipment. Documentation of compliance with this measure shall be provided to the City of Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the eff45 City prior to issuance of certificate of occupancy. MM4.7 -6 The Applicant shall ensure that all residential and commercial development reduce indoor water consumption by a minimum of 20 percent from 2008 Title 24 standards or meet the 2013 California Building Code, whichever is more stringent. The Applicant shall achieve this reduction through methods such as (but not limited to) the following: • Install low -flow or waterless fixtures in public and residential restrooms, including but not limited to toilets, dishwashers, shower heads, washing machines, etc. • Control the flow of water to the garbage disposal. • Ensure water pressure and flows to dishwashers are set a minimum required setting. • Install flushometer (tankless) toilets with water- saving diaphragms and coordinate automatic systems with work hours so that they don't run continuously in public restrooms. Documentation of compliance with this measure shall be provided to the City of Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -7 The Applicant shall ensure that all residential and commercial development reduce outdoor water consumption by a minimum of 10 percent from 2008 Title 24 standards or meet the 2013 California Building Code, whichever is more stringent. The Applicant shall achieve this reduction through methods such as eff45 (but not limited to) the following: • Utilize water - efficient irrigation systems and drought tolerant plant palette and insure that sprinklers are directing water to landscape areas, and not to parking lots, sidewalks or other paved areas. • Adjust the irrigation schedule for seasonal changes. • Use brooms, squeegees, and wet/dry vacuums to clean surfaces before washing with water; do not use hoses as brooms; sweep or blow paved areas to clean, rather than hosing off (applies outside, not inside). • Avoid washing building exteriors or other outside structures. • Sweep and vacuum parking lots /sidewalks /window surfaces rather than washing with water. • Use a shut -off nozzle on all hoses that can be adjusted down to a fine spray so that water flows only when needed. • Install automatic rain shutoff device on sprinkler systems. Documentation of compliance with this measure shall be provided to the City of Santa Monica Building and Safety Division for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -8 The Applicant shall reduce waste through recycling and composting such that 70 percent of waste is diverted from the landfill. Prior to issuance of a building permit, the applicant shall demonstrate that the proposed project incorporates exterior storage areas for recyclables and green waste and adequate recycling containers located in public /common areas pursuant to the adopted standards. Documentation of compliance with this measure shall be provided to the eff45 City of Santa Monica Building and Safety Department for review and approval. Installation of the identified design features or equipment will be confirmed by the City prior to issuance of certificate of occupancy. MM4.7 -9 In lieu of mitigation measures MM4.7 2 through MM4.7 8, the project applicant may provide a quantitative accounting of GHG emissions to the City utilizing an alternative emissions reduction strategy for each phase of development within the proposed project such that the following requirements are met: • The reduction scenario must be submitted to and approved by the City before a building permit can be obtained. • The reduction scenario must detail the proposed measures and the reduction percentage from overall project emissions. The reduction scenario must, at a minimum, meet the existing regulatory standards at the time it is submitted. • The reduction scenario must be compliant with the City - implemented TDM requirements. • The reduction scenario must reduce total project emissions (mobile plus nonmobile) to below 10,000 MT CO2e annually. (e) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to hazards /hazardous materials. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will eff45 reduce the project's impacts related to hazards /hazardous materials to below levels of significance: MM4.8 -1 Prior to demolition and /or construction activities, the proposed project site shall be tested for asbestos and lead by a licensed contractor. The asbestos report shall be submitted to the South Coast Air Quality Management District for review and approval. In addition, copies of the asbestos report and the lead report shall be provided to the City of Santa Monica Building and Safety Division prior to the issuance of demolition permits. The contractor shall follow all applicable local, state, and federal codes and regulations related to the treatment, handling, and disposal of asbestos and lead if the proposed project requires asbestos and /or lead abatement. MM4.8 -2 Prior to the issuance of grading permits for the project site, the site developer(s) shall conclude all investigation and /or remediation activities. It shall be the responsibility of the site developer(s) to complete such investigation and /or remediation prior to construction of the project. Remediation shall be accomplished in a manner that reduces risk to below applicable standards and shall be completed prior to issuance of any occupancy permits. Closure report or other reports regarding investigation and /or remediation activities regarding groundwater and /or soil shall be submitted to LARWQCB and /or DTSC for review and approval. Approved reports that document the successful completion of required remediation activities, for contaminated soils and groundwater shall be submitted to the Santa Monica Fire Department and the City of Santa Monica Water Resources Division eff45 prior to the issuance of grading permits for site development. No construction shall occur in the affected area until reports have been accepted by the City. MM4.8 -3 In the event that previously unknown or unidentified soil and /or groundwater contamination that could present a threat to human health or the environment is encountered during construction at the project site, construction activities in the immediate vicinity of the contamination shall cease immediately. A qualified environmental specialist (e.g., a licensed Professional Geologist [PG], a licensed Professional Engineer [PE] or similarly qualified individual) shall conduct an investigation to identify and to determine the level of soil and /or groundwater contamination. If contamination is encountered, a Risk Management Plan shall be prepared and implemented that (1) identifies the contaminants of concern and the potential risk each contaminant would pose to human health and the environment during construction and post - development and (2) describes measures to be taken to protect workers, and the public from exposure to potential site hazards. Such measures could include a range of options, including, but not limited to, physical site controls during construction, remediation, long -term monitoring, post- development maintenance or access limitations, or some combination thereof. Depending on the nature of contamination, if any, appropriate agencies shall be notified (e.g., Santa Monica Fire Department). If needed, a Site Health and Safety Plan that meets Occupational Safety and Health Administration requirements shall be prepared and in place prior to commencement of work in any contaminated area. eff45 MM4.8 -4 A Human Health Risk Assessment (HRA) shall be prepared to analyze potential concerns associated with possible hazardous emissions from the landfills and to determine if the hazardous emissions pose any actual endangerment to the project site. (f) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to hydrology /water quality. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's impacts related to hydrology /water quality to below levels of significance: MM4.9 -1 If temporary and /or permanent dewatering on the project site is required, the Applicant shall obtain a dewatering permit from the City of Santa Monica Water Resources Protection Program prior to the issuance of a grading permit. Soil and groundwater testing to a minimum depth of 50 feet shall be conducted to the satisfaction of the Water Resources Protection Program staff. If contaminated groundwater is discovered on site, treatment and discharge of the contaminated groundwater shall be conducted in compliance with applicable regulatory requirements including the Los Angeles Regional Water Quality Control Board standards. MM4.9 -2 The Applicant shall design storm drain facilities (i.e., on -site detention facility) to ensure that the capacity flow does not exceed 1.8 cfs per acre per County of Los Angeles restriction on capacity limitation to the Pico - Kenter Canyon eff45 drain for the proposed project. Prior to any construction activities, the Applicant shall apply for a permit with the County of Los Angeles to obtain final approval to connect to the Pico- Kenter Canyon drain. The Applicant also shall submit storm drain facilities plans to the City of Santa Monica Department of Public Works to meet any additional conditions required by the City and approval to ensure that the flow capacity allowed by the County of Los Angeles are not exceeded. (g) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to construction - related noise effects. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for the project that will reduce the project's impacts related to construction - related noise effects to below levels of significance: MM4.12 -1 The Applicant's construction contracts shall require implementation of the following construction best management practices (BMPs) by all construction contractors and subcontractors working in or around the project site to reduce construction noise levels: • The Applicant and its contractors and subcontractors shall ensure that construction equipment is properly muffled according to manufactures specifications or as required by the City's Department of Building and Safety, whichever is the more stringent. • The Applicant and its contractors and subcontractors shall place noise- generating construction equipment and locate construction staging areas away eff45 from sensitive uses, where feasible, to the satisfaction of the Department of Building and Safety. • The Applicant and its contractors and subcontractors shall implement noise attenuation measures which may include, but are not limited to, noise barriers or noise blankets to the satisfaction of the City's Department of Building and Safety. MM4.12 -2 The Applicant's contracts with its construction contractors and subcontractors shall include the requirement that construction staging areas, construction worker parking and the operation of earthmoving equipment within the project site, are located as far away from vibration- and noise - sensitive sites as possible. Contract provisions incorporating the above requirements shall be included as part of the project's construction documents, which shall be reviewed and approved by the City. MM4.12 -3 The Applicant shall require by contract specifications that heavily loaded trucks used during construction shall be routed away from residential streets to the extent possible. Contract specifications shall be included in the proposed project construction documents, which shall be reviewed by the City prior to issuance of a grading permit. (h) The Final EIR determined that without mitigation the proposed project could result in significant adverse impacts related to construction - related transportation /traffic effects. Consistent with Article VI, Section 12 of the City CEQA Guidelines and Section 15091 and 15092 of the State of California CEQA Guidelines and as detailed in the Final EIR, the City Council finds that the following mitigation measures have been required for eff45 the project that will reduce the project's impacts related to construction - related transportation /traffic effects to below levels of significance: MM 4.4 -1 The Applicant shall prepare, implement and maintain a Construction Impact Mitigation Plan for review and approval prior to issuance of a building permit to address manage traffic during construction and shall be designed to: a. Prevent traffic impacts on the surrounding roadway network b. Minimize parking impacts both to public parking and access to private parking to the greatest extent practicable c. Ensure safety for both those constructing the project and the surrounding community d. Prevent substantial truck traffic through residential neighborhoods The Construction Impact Mitigation Plan shall be subject to review and approval by the following City departments: Public Works, Fire, Planning and Community Development, and Police to ensure that the Plan has been designed in accordance with this mitigation measure. This review shall occur prior to issuance of grading or building permits. It shall, at a minimum, include the following: Ongoing Requirements throughout the Duration of Construction ® A detailed Construction Impact Mitigation Plan for work zones shall be maintained. At a minimum, this shall include parking and travel lane configurations; warning, regulatory, guide, and directional signage; and area sidewalks, bicycle lanes, and parking lanes. The plan shall include specific information regarding the project's construction activities that may disrupt normal pedestrian and traffic flow and the measures to address these eff45 disruptions. Such plans shall be reviewed and approved by the Strategic and Transportation Planning Division prior to commencement of construction and implemented in accordance with this approval. ® Work within the public right -of -way shall be performed between 9:00 AM and 4:00 PM. This work includes dirt and demolition material hauling and construction material delivery. Work within the public right -of -way outside of these hours shall only be allowed after the issuance of an after -hours construction permit. ® Streets and equipment shall be cleaned in accordance with established PW requirements. Trucks shall only travel on a City- approved construction route. Truck queuing /staging shall not be allowed on Santa Monica streets. Limited queuing may occur on the construction site itself. ® Materials and equipment shall be minimally visible to the public; the preferred location for materials is to be on -site, with a minimum amount of materials within a work area in the public right -of -way, subject to a current Use of Public Property Permit. ® Any requests for work before or after normal construction hours within the public right -of -way shall be subject to review and approval through the After Hours Permit process administered by the Building and Safety Division. • Provision of off - street parking for construction workers, which may include the use of a remote location with shuttle transport to the site, if determined necessary by the City of Santa Monica. Project Coordination Elements That Shall Be Implemented Prior to Commencement of Construction eff45 ® The Applicant shall advise the traveling public of impending construction activities (e.g., information signs, portable message signs, media listing /notification, and implementation of an approved traffic control plan). ® The Applicant shall obtain a Use of Public Property Permit, Excavation Permit, Sewer Permit, or Oversize Load Permit, as well as any Caltrans permits required, for any construction work requiring encroachment into public rights -of -way, detours, or any other work within the public right -of -way. ® The Applicant shall provide timely notification of construction schedules to all affected agencies (e.g., Big Blue Bus, Police Department, Fire Department, Public Works Department, and Planning and Community Development Department) and to all owners and residential and commercial tenants of property within a radius of 500 feet. ® The Applicant shall coordinate construction work with affected agencies in advance of start of work. Approvals may take up to two weeks per each submittal. ® The Applicant shall obtain Strategic and Transportation Planning Division approval of any haul routes for earth, concrete, or construction materials and equipment hauling. SECTION 4. Consistent with Article IV, Section 12 of the City of Santa Monica CEQA Guidelines and Section 15091, 15092, and 15093 of the State of California CEQA Guidelines, the City Council finds that significant adverse environmental effects in the areas of aesthetics, air quality (construction and operation), and transportation /traffic (operation) cannot feasibly be avoided or mitigated to below a level of significance. eff45 Nevertheless, these impacts are found to be acceptable due to overriding considerations as discussed in Section 6. (a) The Final EIR determined that the proposed project would result in significant adverse impacts related to aesthetics impacts. Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines, and as detailed in the Final EIR, the City Council finds that the project would result in the removal of two coral trees within the Olympic Boulevard median to accommodate eastbound left -turn lanes in to the site. Although mitigation measure 4.3-4 would require the replacement of the coral trees to be removed on a 2:1 basis, and these replacement coral trees shall be planted within the Olympic Boulevard median to the extent that a relocation site is identified by the City's Community Forester, it cannot be definitely determined at this time i if the replacement coral trees would be planted within the Olympic Boulevard median (which is identified by the City's Open Space Element as a green street with scenic value). Therefore, this is impact is considered significant and unavoidable. (b) The Final EIR determined that the proposed project would result in significant adverse impacts to air quality. Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines, and as detailed in the Final EIR, the City Council finds that project construction and operation would generate air pollutant emissions that would exceed South Coast Air Quality Management District standards. The following mitigation measures would be implemented to reduce impacts; however impacts would remain significant and unavoidable. eff45 MM4.2 -1 The Applicant shall require by contract specifications that all diesel - powered equipment used will be retrofitted with after - treatment products (e.g., engine catalysts and diesel particulate filters). The engine catalysts shall achieve a minimum reduction of 15 percent for NOX from manufacturer specifications. The diesel particulate filters shall meet EPA Tier 3 standards, consistent with CARS approved Truck and Bus Regulation requirements in affect at the time the contract is approved. Contract specifications shall be included in project construction documents, which shall be reviewed by the City of Santa Monica prior to issuance of a grading permit. MM4.2 -2 The Applicant shall require by contract specifications that all heavy - duty diesel - powered equipment operating and refueling at the project site use low - NOX diesel fuel to the extent that it is readily available and cost effective (up to 125 percent of the cost of California Air Resources Board diesel) in the South Coast Air Basin (this does not apply to diesel - powered trucks traveling to and from the project site). Contract specifications shall be included in project construction documents, which shall be reviewed by the City of Santa Monica prior to issuance of a grading permit. MM4.2 -3 The Applicant shall require by contract specifications that all heavy - duty diesel - powered equipment operations at the project site will utilize a phased -in emission control technology in advance of a regulatory requirement such that 30 percent of the fleet will meet USEPA Tier 4 engine standards for particulate matter control (or equivalent) starting in 2013 and for the duration of the project, consistent eff45 with CARB approved Truck and Bus Regulation requirements in affect at the time the contract is approved. MM4.2 -4 The Applicant shall require by contract specifications that construction equipment engines be maintained in good condition and in proper tune per manufacturer's specification for the duration of construction. Contract specifications shall be included in project construction documents, which shall be reviewed by the City of Santa Monica prior to issuance of a grading permit. MM4.2 -5 The Applicant shall require by contract specifications that construction operations rely on the electricity infrastructure surrounding the construction site rather than electrical generators powered by internal combustion engines. Contract specifications shall be included in project construction documents, which shall be reviewed by the City of Santa Monica prior to issuance of a grading permit. MM4.2 -6 As required by South Coast Air Quality Management District Rule 403 — Fugitive Dust, all construction activities that are capable of generating fugitive dust are required to implement dust control measures during each phase of project development to reduce the amount of particulate matter entrained in the ambient air. These measures include the following: a. Application of soil stabilizers to inactive construction areas b. Quick replacement of ground cover in disturbed areas C. Watering of exposed surfaces three times daily d. Watering of all unpaved haul roads three times daily eff45 e. Covering all stock piles with tarp f. Reduction of vehicle speed on unpaved roads g. Post signs on -site limiting traffic to 15 miles per hour or less h. Sweep streets adjacent to the project site at the end of the day if visible soil material is carried over to adjacent roads i. Cover or have water applied to the exposed surface of all trucks hauling dirt, sand, soil, or other loose materials prior to leaving the site to prevent dust from impacting the surrounding areas j. Install wheel washers where vehicles enter and exit unpaved roads onto paved roads to wash off trucks and any equipment leaving the site each trip MM4.2 -7 The Applicant shall require by contract specifications that construction - related equipment, including heavy -duty equipment, motor vehicles, and portable equipment, shall be turned off when not in use for more than 5 minutes. Diesel- fueled commercial motor vehicles with gross vehicular weight ratings of greater than 10,000 pounds shall be turned off when not in use for more than 5 minutes. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. MM4.2 -8 The Applicant shall require by contract specifications that construction parking be configured to minimize traffic interference during the construction period and, therefore, reduce idling of traffic. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. eff45 MM4.2 -9 The Applicant shall require by contract specifications that temporary traffic controls are provided, such as a flag person, during all phases of construction to facilitate smooth traffic flow. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. MM4.2 -10 The Applicant shall require by contract specifications that construction activities that would affect traffic flow on the arterial system be scheduled to off -peak hours (9:30 am to 4:00 pm). Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica MM4.2 -11 The Applicant shall require by contract specifications that trackout roads will meet SCAQMD Table XI C standards to achieve a 46 percent reduction in PM10.The construction contractor shall install gravel bed trackout apron (3 inches deep, 25 feet long, 12 feet wide per lane and edged by rock berm or row of stakes) to reduce mud /dirt trackout from unpaved truck exit routes. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. MM4.2 -12 The Applicant shall require by contract specifications that the architectural coating (paint and primer) products used have a VOC rating of 125 grams per liter or less. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. eff45 MM4.2 -13 The Applicant shall require by contract specifications that materials that do not require painting be used during construction to the extent feasible. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. MM4.2 -14 The Applicant shall require by contract specifications that pre - painted construction materials be used to the extent feasible. Contract specifications shall be included in the proposed project construction documents, which shall be approved by the City of Santa Monica. MM4.2 -15 Prior to issuance of a building permit, the Applicant shall demonstrate that the design of the proposed buildings or structures exceeds current Title 24 requirements (as provided for in the 2010 California Green Building Code [Title 24, Part 11]) by a minimum of 15 percent or the 2013 California Green Building Code, whichever is more stringent, subject to review by the City of Santa Monica. Documentation of compliance with this measure shall be provided to the Planning Department for review and approval prior to issuance of the permit. Installation of the identified design features or equipment will be confirmed by the City of Santa Monica prior to certificate of occupancy. Any combination of the following design features may be used to fulfill this mitigation provided that the total increase in efficiency meets or exceeds the more stringent of 15 percent or the 2013 California Green Building Code: a. Increase in insulation such that heat transfer and thermal bridging is �I eff45 b. Limit air leakage through the structure or within the heating and cooling distribution system to minimize energy consumption C. Incorporate dual -paned or other energy efficient windows d. Incorporate energy efficient space heating and cooling equipment e. Incorporate energy efficient light fixtures f. Incorporate energy efficient appliances g. Incorporate energy efficient domestic hot water systems h. Incorporate solar panels into the electrical system i. Incorporate cool roofs /light - colored roofing j. Or other measures that will increase the energy efficiency of building envelope in a manner that when combined with the other options listed above exceeds current Title 24 Standards (as provided for in the 2010 California Green Building Code [Title 24, Part 11]) by a minimum of 15 percent or meets the 2013 California Green Building Code, whichever is more stringent. MM4.2 -16 The Applicant shall ensure that designs include all illumination elements to have controls to allow selective use as an energy conservation measure. MM4.2 -17 Prior to issuance of any certificate of occupancy, the Applicant shall demonstrate that all interior building lighting supports the use of compact fluorescent light bulbs or equivalently efficient lighting to the satisfaction of the City of Santa Monica. MOW MM4.2 -18 The Applicant shall ensure that maintenance activities during operation of the proposed project requiring the reapplication of architectural coating (paint and primer) shall use products that have a low to no VOC rating. The Final EIR determined that the proposed project would result in significant adverse impacts from transportation /traffic (intersection delay). Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines, and as detailed in Final EIR in Section 4.3, the City Council finds that the proposed project would result in traffic- related impacts that would exceed significance thresholds. Mitigation measures MM4.16 -1 through MM4.16 -10 as listed below would reduce impacts; however, mitigation measures MM4.16 -6 through MM4.16 -10 cannot be guaranteed since they would require the approval of Caltrans and /or the Los Angeles Department of Transportation. Therefore, the proposed project would result in significant and unavoidable impacts at 20 intersections based on the Highway Capacity Manual methodology and 11 intersections under the Critical Movement Analysis methodology for Approval Year (2012) Plus Project conditions. Additionally, the proposed project would result in significant and unavoidable impacts at 21 intersections based on the Highway Capacity Manual methodology and 11 intersections based on the Highway Capacity Manual methodology under Future Year (2030) Plus Project conditions. Under Approval Year (Year 2012) Plus Project conditions and Future Year (2030) Plus Project conditions, the following mitigation measures shall be required at impacted intersections: MM4.16 -1 At the intersection of Lincoln Boulevard and Ocean Park Boulevard the traffic signal shall be modified from protected to protected - permitted left -turn eff45 phasing for the eastbound and westbound approaches. The provision of some combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. The City of Santa Monica shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. MM4.16 -2 At the intersection of 23rd Street and Ocean Park Boulevard, an exclusive right -turn lane shall be added on the eastbound approach. To accommodate the right turn lane the existing eastbound through lane approach shall be shifted approximately two feet to the north to provide room for a functional right -turn lane. Peak period parking restrictions shall be implemented for the first 75 feet of parking (approximately three parking spaces) closest to the intersection (eastbound on Ocean Park Boulevard west of 23rd Street) to allow for vehicles to make eastbound right turns onto 23rd Street from Ocean Park Boulevard during the peak periods and when space is available outside of peak periods. Restriping and peak period parking restriction signage at the eastbound approach of this intersection shall be required. MM4.16 -3 At the intersection of Cloverfield Boulevard and Santa Monica Boulevard, the left -turn phasing for the westbound leg of the Cloverfield Boulevard and Santa Monica Boulevard intersection shall be modified from a protected phase to a permitted - protected phase. The provision of a combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. The City of Santa Monica shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. eff45 MM4.1 -4 At the intersection of 26th Street and Wilshire Boulevard, the protected - permitted phasing for the eastbound and westbound left -turn movements shall be modified to permitted phasing. Temporary signage during a period of adjustment for motorists and the provision of some combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. The City of Santa Monica shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. MM4.16 -5 At the Stewart Street and Olympic Boulevard intersection, the traffic signal shall be modified to provide protected - permitted left -turn phasing for northbound and eastbound approaches. The provision of a combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. The City of Santa Monica shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. MM4.16 -6 At the intersection of Centinela Avenue and the 1 10 Westbound Ramps, the left -turn phasing at the northbound approach shall be converted from protected to permitted - protected. The provision of some combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. The City of Santa Monica shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. Implementation of this improvement would require LADOT approval, a Caltrans Encroachment Permit, and Caltrans review and approval of a traffic report and engineering plans. Developer shall use its good faith reasonable efforts to obtain eff45 such approval, including filing application plans, specifications, and studies that provide sufficient information and details to enable the City of Los Angeles to evaluate implementing the mitigation measure. MM4.16 -7 At the intersection of Walgrove Avenue and Rose Avenue, the westbound approach to shall be converted from a shared left/through /right lane to a shared through /left -turn lane and one right -turn lane. If public ROW is needed to accommodate a right -turn lane on the westbound approach, the relocation of street lights, signage, and utilities along the westbound approach and the removal of two parking spaces is required. Implementation of this improvement would require LADOT approval. Developer shall use its good faith reasonable efforts to obtain such approval, including filing application plans, specifications, and studies that provide sufficient information and details to enable the City of Los Angeles to evaluate implementing the mitigation measure. MM4.16 -8 At the intersection of Centinela Avenue and Venice Boulevard, signal phasing operations shall be modified by converting both the eastbound and the westbound left -turn phases from exclusively protected left -turn phasing to protected - permissive left -turn phasing. The eastbound left -turn and the westbound left -turn signals shall act simultaneously to avoid driver confusion. Implementation of this improvement would require LADOT approval. Developer shall use its good faith reasonable efforts to obtain such approval, including filing application plans, specifications, and studies that provide sufficient information and details to enable the city of Los Angeles to evaluate implementing the mitigation measure. eff45 MM4.16 -9 At the intersection Barrington Avenue and Olympic Boulevard, the left -turn phasing for the eastbound leg shall be modified from a permitted phase to a protected - permitted phase. LADOT shall monitor the operation of this intersection and adjust the signal timing and phasing as appropriate. The provision of a combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. Implementation of this improvement would require LADOT approval. Developer shall use its good faith reasonable efforts to obtain such approval, including filing application plans, specifications, and studies that provide sufficient information and details to enable the City of Los Angeles to evaluate implementing the mitigation measure. MM4.16 -10 At the intersection of Federal Avenue and Wilshire Boulevard, a northbound right -turn overlap shall be installed and the shared through /left -turn lane on the southbound approach on Federal Avenue shall be configured to an exclusive left -turn lane. The provision of a combination of new signage, controller cabinets, poles, mast arms, detectors, and /or signal heads shall be required. Implementation of this improvement would require LADOT approval. Developer shall use its good faith reasonable efforts to obtain such approval, including filing application plans, specifications, and studies that provide sufficient information and details to enable the City of Los Angeles to evaluate implementing the mitigation measure. With implementation of mitigation measures MM4.16 -1 through MM4.16 -5 and MM4.16 -7 through MM4.16 -10, impacts to nine intersections would be reduced to a less -than- significant level based on both the City of Santa Monica's HCM methodology and the City of Los Angeles` CMA. With implementation of mitigation measure MM4.16 -6, proposed eff45 project impact to the intersection of Centinela Avenue with the 1 -10 Westbound Ramps would be reduced to a less than- significant level under the HCM methodology, but no feasible mitigation is available to reduce the proposed projects impact to a less -than- significant level under the CMA methodology. Accordingly, the proposed project would result in a significant and unavoidable impact to the intersection of Centinela Avenue with the 1 -10 Westbound Ramps, even with mitigation. Because five of the impacted intersections where feasible mitigation has been identified are located partially or wholly within the City of Los Angeles, approval of mitigation measures MM4.16 -6 through MM4.16 -10 by LADOT cannot be guaranteed. Accordingly, impacts at these five intersections are considered significant and unavoidable until the proposed mitigation measure is approved by the LADOT. Additional mitigation measures to reduce significant impact related to intersections were considered. However, as discussed in further detail in the Traffic Study (Appendix 12 to the Final EIR), these measures are rejected since they would require the taking of public or private property for public right of way in order to implement the proposed physical mitigations. The infeasibility of mitigation is due primarily to impacted intersections being fully built out and would therefore require the acquisition of public or private property for public ROW to implement the proposed physical mitigations and could negatively impact the built environment and existing pedestrian network. Additionally, because the proposed project would generate more than 1 trip and thus would exceed the City of Santa Monica's significance criteria, the proposed project would result in significant and unavoidable impacts on five neighborhood street segments: • Yale Street north of Colorado Avenue eff45 ® Idaho Avenue east of Bundy Avenue Nebraska Avenue west of Stanford Street ® Nebraska Avenue east of Centinela Avenue ® 23rd Street south of Ocean Park Boulevard Additionally, based on the application of the City of Los Angeles` significance criteria to City of Los Angeles segments for neighborhood traffic impacts, the following segment would be impacted by the proposed project: ® Idaho Avenue east of Centinela Avenue Therefore, the following mitigation measure is proposed: MM4.16 -11 In accordance with the L.A. CEQA Thresholds Guide and in consultation with LADOT, one of the following traffic calming measures shall be installed on Idaho Avenue east of Centinela Avenue and a Neighborhood Traffic Management Program shall be prepared. • Speed humps • Signalized mid -block pedestrian crosswalks • Traffic signal timing modifications • Additional stop signs • Speed limit reductions • Diverters or semi - diverters • Cul -de -sac or street closure • Chokers or narrowing of street widths • Turn restrictions Implementation of MM4.16 -11 would reduce impacts on the segment of Idaho Avenue based on the City of Los Angeles criteria to a less- than- significant level; however;, since eff45 this street is owned and controlled by the City of Los Angeles, the proposed mitigation measure must be approved by the LADOT, which cannot be guaranteed. For street segments within the City of Santa Monica, short of full closure of these affected street segments (which would not be acceptable since these streets serve adjacent land uses and carry vehicles that would then need to shift to other nearby streets), no feasible mitigation is available to reduce impacts the number of potential project - related vehicle trips on the impacted street segments within the City of Santa Monica based on the City of Santa Monica Criteria to a less- than - significant level (less than one trip per day). SECTION 5. The Final EIR found that the No Project Alternative would be environmentally superior to the proposed project on the basis of the minimization or avoidance of physical environmental impacts. However, the CEQA Guidelines require that if the environmentally superior alternative is the No Project alternative, that the EIR also identify an environmentally superior alternative among the other alternatives. The EIR identified Alternative 4 as the environmentally superior alternative. Consistent with Article VI, Section 12 of the City of Santa Monica CEQA Guidelines and Section 15091, 15092, and 15093 of the State of California CEQA Guidelines, and as detailed in Final EIR Chapter 5.0, the City Council finds that the No Project/No Development Alternative (Alternative 1) would not achieve any of the project objectives and would not be considered a feasible alternative that would be implemented by the applicant. Based on the other project alternatives, the No Project/Reasonable Foreseeable Alternative (Alternative 2) would result in the least amount of development and would eliminate most significant impacts; however, none of the objectives of the proposed project or goals of the LUCE would be achieved. The No Project/Reasonable Foreseeable Alternative would be inconsistent with Bergamot Area Plan policies (e.g. LU19.2, UF1.1, UF1.2, UF1.5, and eff45 UF4.1) to include a mix of uses or circulation improvements that would support the future Bergamot LRT station nor would it encourage the use of alternative transportation ultimately reducing the amount of vehicle miles traveled in the City and improving air quality and traffic conditions in the City. As explained below, the EIR identified Alternative 4 as the environmentally superior alternative although it is not a feasible alternative. Based on a financial feasibility analysis, Alternative 4 would not be considered economically feasible based on conventional real estate metrics although the same conclusion was drawn for the proposed project. As a result, it is possible that the applicant could proceed with Alternative 4 since it results in a developer profit margin that is greater than the proposed project. In determining the feasibility of alternatives, the issue is considered at two distinct points in the administrative review process: first in the EIR and next, by the decision maker during project approval [see California Native Plant Soc. V. City of Santa Cruz (2009) 177 Cal.App.4th 957]. Courts have given decision - making bodies discretion in evaluating whether the alternatives are actually feasible. At project approval, the agency considers whether specific economic, legal, social, technological, or other considerations make infeasible the mitigation measures or alternatives identified in the EIR. Thus, broader considerations of policy come into play when the decision - making body is considering actual feasibility than when the EIR preparer is first assessing the potential feasibility of the alternatives. Alternative 4 has a mix of 73% commercial and 27% residential, which is inconsistent with the LUCE land use target for the Bergamot area of 60% commercial and 40% residential. The Bergamot Area Plan further supported this goal with Policy LU1.3 that establishes the same land use target although this target is intended to only apply on a eff45 district -wide basis. The project site is one of the largest in the Bergamot Transit Village district at approximately 7 acres, representing roughly a fifth of the district's land area. In addition, the proposed project is the only pending development application in the Bergamot Transit Village zoning district and is the only unoccupied property in the district, making it reasonable to assume that it is the property most likely to redevelop. If the land use mix of the project were to be significantly changed from the proposed 55% commercial and 45% residential, the district -wide land use target established by the LUCE and Bergamot Area Plan could be impeded. Alternative 4 also includes approximately 55,000 more square feet of creative office space than the proposed project. After the publication of the Draft EIR, the applicant elected to pursue a project substantially similar to Alternative 3 in response to direction from the City Council to explore project alternatives that included more housing. Changing the proposed project at this juncture to be substantially similar to Alternative 4 would be inconsistent with the policy direction previously given by the City Council for the proposed project. Therefore, based on the above, the City Council disagrees with the conclusion of the EIR that Alternative 4 is a feasible alternative and rejects it as undesirable and infeasible from a policy standpoint. SECTION 6. The preceding Findings, although based primarily on conclusions in the Final EIR, have not attempted to describe the full analysis of each environmental impact contained in the Final EIR. Instead, the Findings incorporate by reference the discussions and analyses in the Final EIR and supporting reference documents supporting the Final EIR's determinations regarding the nature and severity of the impacts of the project and mitigation measures designed to address those impacts. In making these findings, the City Council ratifies, adopts, and incorporates into these eff45 findings the analysis and explanation in the Final EIR and ratifies, adopts, and incorporates in these findings the determinations and conclusions of the Final EIR. SECTION 7. The Final EIR found that the project would result in significant unavoidable adverse impacts in the areas of aesthetics, air quality (construction and operation), and traffic /transportation. Consistent with Article VI, Section 13 of the City CEQA Guidelines and Section 15093 of the State of California CEQA Guidelines, the City Council hereby makes a Statement of Overriding Considerations and finds that the benefits of the project outweigh its unavoidable environmental impacts based on the reasons stated below. The benefits identified are each one, in and of themselves, sufficient to make a determination that the adverse environmental effects are acceptable. The applicant will provide the following project and community benefits required by Article 2.7 of the Development Agreement, which is incorporated herein by reference: a $200,000 annual contribution to childcare, education, and youth training subsidies ® a $2,000,000 contribution for parks that can be used for the Buffer Park located on Exposition Boulevard or other open space improvements within a one -mile radius of the project site ® approximately two acres of on -site open space with a construction value of $4.7M ® a $160,000 contribution towards public transit improvements ® a $3M total contribution towards the ongoing funding needs of a Transportation Management Organization and bikeshare, including on -site office space for the TMO eff45 ® $350,000 total contribution towards historical and cultural heritage initiatives in underserved communities with priority for the Pico Neighborhood ® Six new street and sidewalk easements totaling approximately two acres with construction value of $1.71M ® Commitment to local hiring best practices including advanced recruitment, commitment to interview qualified candidates, and a 30% local hiring goal ® Six student internships per calendar year ® Striving for net zero water and energy use for the project • Up to 93 units of on -site affordable and workforce housing covering a broad spectrum of unit size and affordability between 30% and 180% AM[ SECTION 8. Consistent with Public Resources Code Section 21081.6, the City Council adopts the Mitigation Monitoring and Reporting Program, which is included as Chapter 11 of the Final EIR, to mitigate or avoid significant effects of the project on the environment, as detailed in Sections 3 and 4 of this resolution, and to ensure compliance during project implementation. SECTION 9. Consistent with Section 21081.6(d) of the California Environmental Quality Act, the documents which constitute the record of proceedings for approving this project are located in the Planning and Community Development Department, 1685 Main Street, Room 212, Santa Monica, California. The custodian of these documents is Jing Yeo, Special Projects Manager. eff45 SECTION 10. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: 045 Reference: Resolution No. 10797 (CCS)