SR-10-20-2015-8A
City Council
Report
City Council Special Meeting: October 20, 2015
Agenda Item: 8.A
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To: Mayor and City Council
From: David Martin, Director, Planning and Community Development , Planning and
Community Development
Andy Agle, Director
Subject: Discussion of Concept Plans for a proposed Development Agreement
(14DEV-003) for a 12-story (148 feet), 420,000 square-foot mixed-use
development consisting of approximately 195 hotel rooms, 206,800 square
feet of office space, 42,200 square feet of retail space, 48 affordable
residential units, 12,000 square feet of cultural space, 51,000 square fee t of
public open space, and 1,143 parking spaces within a four-level subterranean
parking garage at 1301 4th Street.
Recommended Action
Staff recommends that the City Council:
1) Review and discuss the applicant's conceptual plan,
2) Provide direction regarding the appropriateness for the development of the site
and potential community benefits to be negotiated as part of the proposed
development agreement before it returns for formal City Council consideration,
and
3) Review and comment on the conceptual business terms and direct staff to initiate
the negotiations on the Disposition and Development Agreement (DDA) and
Ground Lease Agreement for the proposed project.
Executive Summary
On December 10, 2013, (Attachment A) Council authorized staff to execute an
Exclusive Negotiating Agreement (ENA) with the development team led by Metropolitan
Pacific Capital, Clarett West, and DLJ West Capital (“Development Team”) to develop
the Site. Council directed staff to provide a six-month progress update during the
exclusive negotiating period. Council also directed the Development Team to complete
a design study of an 84-foot height scenario and outline the tradeoffs related to the two
different height scenarios.
On June 10, 2014, (Attachment B) Council reviewed the Development Team’s design
study and analysis of trade-offs between an 84-foot height scenario and 148-foot height
scenario. Council gave direction to staff and the Development Team to begin the public
entitlement process with the 148-foot scenario as the base project. Following the
Council’s direction, the applicant submitted a Development Agreement application.
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The Development Team is proposing that the City consider a Development Agreement
to permit a new mixed-use building located at 1301 4th St. The project involves the
construction of a 12-story building (148 feet in height) that would consist of a 195 -room
hotel, 48 affordable housing units, approximately 206,800 square feet of office, 42,200
square feet of ground-floor retail, approximately 12,000 square feet of cultural space, a
bike center, approximately 51,000 square feet of public open space, an additional
37,000 square feet of semi-public open space (hotel terrace), and approximately 1,143
parking spaces in a subterranean garage.
The project site consists of nine contiguous parcels comprising 112,000 square feet
enveloped by 4th Street, Arizona Avenue, and 5th Street. The site is currently developed
with surface parking lots and two one-story commercial buildings (Bank of America and
Chase Bank). Pursuant to the City’s Interim Zoning Ordinance No. 2490, a
Development Agreement is required for projects located in the Downtown Core land use
designation where proposed buildings exceed 32 feet in height.
The Planning Commission held a float-up discussion on the project on June 3, 2015
(Attachment C). In recommending that Council initiate DA negotiations, the Planning
Commission expressed significant concerns regarding the amount of office space
proposed in the project. As a result, in addition to presenting the project as proposed by
the applicant, this report provides information regarding the impacts and trade-offs
associated with altering the mix of project uses. In particular, staff and the City’s
economic consultants have evaluated order-of-magnitude impacts to the project, ground
rent and the identified public objectives associated with significant changes in the land -
use program. The evaluated changes include eliminating all office use, replacing all
office uses with market-rate residential or hotel uses, reducing the office use by 50
percent, and replacing 50 percent the office use with hotel use.
The report also discusses the project within the context of the Downtown Specific Plan
and provides a general assessment of the costs if a public park were to be built on the
site. Finally, the report proposes conceptual business terms for the Council’s
consideration, based on the economics of the currently proposed project.
Background
The project consists of 9 parcels with a total of 112,000 squ are feet enveloped by 4th
Street, Arizona Avenue, and 5th Street. The site has 350 feet of frontage along 4 th Street
and 5th Street and 320 feet of frontage along Arizona Avenue. The site is currently
developed with two one-story commercial buildings (Bank of America, Chase Bank),
surface parking lots, and 4th Court alley.
Surrounding uses along 4th Street, 5th Street and Arizona Avenue include Parking
Structure #3, a three-story bank, a two-story retail building, the former post office
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building, one- to three-story commercial buildings, and a three-story parking structure.
A pending development agreement application (15ENT -0225) for a four-story (84’)
movie theater is proposed on 4th Street on the Parking Structure #3 site. The history of
the City's purchase of the property and RFP process are summarized in Attachment D ,
which includes a number of associated documents that are attached to this report .
On May 12, 2015, (Attachment M) Council authorized the extension of the ENA term
with the Development Team through December 19, 2015 with an additional three-month
option at the discretion of the City Manager to enable the parties to complete the float-
up process with the Planning Commission and Council prior to the preparation of the DA
and DDA.
Community Meeting
On September 8, 2014, (Attachment N) the applicant held a community meeting for the
project attended by approximately 95 people at the Santa Monica Main Library. There
was support for the project design, inclusion of public open space, and the muse um.
Concerns were expressed regarding the height of the project and potential traffic
impacts and that the land should be used for a public park instead of the proposed
project. The complete meeting summary is attached to this report (Attachment Q).
ARB Concept Review
Prior to Council’s consideration of the two massing scenarios, the Architectural Review
Board reviewed the project on April 21, 2014 (Attachment O) to provide some
preliminary feedback to the applicant. On December 15, 2014, (Attachment P) the
project was conceptually reviewed by the Architectural Review Board as part of the
formal development agreement process. The Board was generally supportive of the
project design but expressed some concern about the south elevation of the project and
the need for more perspectives that showed the mass and scale of the project from the
ground level. The Board also indicated that the quality and texture of surface materials
and further study regarding the “hinges” in the building design would be important in
future submittals. Broader comments were also made about access and circulation
from a vehicular and pedestrian experience perspective, the texture and color of the
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plant palette and landscape concepts, and questions regarding how the plaza would be
activated.
Planning Commission Float-Up Review
On June 3, 2015, the Planning Commission had a float-up discussion of the proposed
project and voted 4-1 to recommend that the Council move forward with the
development agreement with the following direction:
Prepare a parking utilization and rates/operations study to inform the amount of
parking to be included in the project
Include less office space and more housing in the project
Consider opportunities to fund park expansion elsewhere in Santa Monica (e.g.
Civic Center) from revenue generated by the project
Include an aggressive TDM program and play a lead role in TMA formation
Discussion
Development Agreement Process
Within the DA process, a float-up provides an opportunity for the Council to review the
proposed conceptual development plan. Pursuant to guidelines established by Council
for development agreements, the following are the next steps for the project following
float-up review, if the Council chooses to initiate DA negotiations:
Environmental Review
Planning Commission hearing
City Council hearing
ARB hearing (post DA approval)
The project would require a General Plan Amendment due to the proposed height of the
project.
Disposition and Development Agreement (DDA) Process
Disposition and development agreements (DDAs) are negotiated contracts between the
City and its private development partner that specify and govern the City’s proprietary
interests in the development of City-owned property. A DDA sets forth the terms of the
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development of a property and is considered following Council’s approval of a project’s
entitlements and development agreement. An executed DDA remains in place while a
developer is pursuing building permits and construction financing and establishes a
developer’s performance requirements that must be met in order to execute a ground
lease agreement. The ground lease controls the use of the property and stipulates the
business terms and obligations such as the amount of ground rent, term of the lease,
permitted uses and assignment, and other project requirements. Because the project is
located on City-owned land, a Disposition and Development Agreement and associated
Ground Lease would be negotiated for the project. The DDA would be processed
concurrently with the Development Agreement. The Ground Lease would be executed
upon the occurrence of certain conditions precedent as set forth in the DDA.
Project Components
The proposed project consists of an approximately 420,000 square -foot, 12-story, 148-
foot high building (Attachment W). The project proposes approximately 1,143 parking
spaces within a four-level subterranean parking garage. T able 1 provides the project
mix of uses.
Table 1: Project Use Mix (approximate square feet)
Use Floor Area (SF) Floor Area % of Total
Hotel 117,000 28%
Residential 40,300 9.5%
Office 206,800 49%
Retail 42,200 10%
Cultural 12,000 3%
Bike Center 1,700 0.4%
Total 420,000 100%
Public Open Space 51,700
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The Council was presented with the following project program at the June 10, 2014
meeting. The program has largely remained unchanged as staff and the Development
Team seek Council direction on what modifications or reductions to the development
program and related impact to ground rent and public objectives would be acceptable,
based on Planning Commission and community feedback. It is anticipated, as the
project progresses through the entitlement process, that the program may change in
response to comments from the Planning Commission, City Council, and community.
Hotel: The hotel component is proposed on floors 8 to 12 of the project and
would include approximately 195 rooms. The Development Team has committed
to operating the hotel as a union hotel.
Residential: The residential component is proposed on floors 5 to 7 of the project
and would include 48 units affordable to 50% income households.
Office: The office component is proposed on the mezzanine level up to Floor 7 of
the project and would include approximately 206,800 square feet.
Retail: The retail component is proposed with approximately 42,200 square feet
of ground-floor space including a marketplace for smaller neighborhood -serving
vendors.
Cultural: The cultural component is proposed with an approximately 12,000
square feet ground-floor space. The applicant is currently in discussions with the
Zimmer Children’s Museum to occupy the space.
Bike Center: The project would include a bike center with services to be
determined but it is anticipated that at minimum, the bike center would provide a
bike valet and repair function. Given the limited ground floor area available for
the retail and cultural space, it is not anticipated that the bike center would be of
the size and scale of the existing City-owned Bike Center on Colorado Avenue.
Open Space: The project proposed approximately 51,700 square feet of public
open space including 38,200 square feet on the ground floor and 13,500 square
feet on a second floor terrace that would be fully programmed. An additional
37,300 square feet of semi-public open space would be available on the hotel
terrace. Private open space associated with the office and residential tenants
would total approximately 36,000 square feet.
Parking: The project proposes approximately 1,143 parking spaces in a four -
level subterranean garage. 339 of the parking spaces are public parking spaces
that would address the potential need for additional Downtown public parking
identified in the Downtown Parking Study completed by Walker Parking
Consultants. An additional 181 parking spaces are proposed, primarily to serve
visitors to project tenants. This would create potentially 520 parking spaces open
to the public. The remaining 623 parking spaces are intended to be allocated as
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reserved parking for the project tenants (e.g. employees, hotel guests) with some
of those spaces made available for public parking when they are unused.
Building Mass + Modulation
The proposed building design is contemporary and presents a unique “hinge” design
that reduces the perceived mass of the building from the street level, maximizes ground
floor and upper level open space in the project, and also increases opportunities for
natural light and ventilation for project tenants. The design addresses all four sides of
the parcel and is conducive to increasing pedestrian permeability. A significant portion
of the ground floor is provided as fully programmed, public open space particularly
along Arizona Avenue where the project steps back to mid -block towards the southern
part of the site, maximizing the openness of the largest public space. In addition to the
public open space described above, the project also proposes approximately 21,750
square feet of private open space on second and fifth floors for the residential and office
components of the project. The project steps back the upper floors to approximately
mid-block on 4th and 5th Streets pushing the majority of the building mass towards the
southern end of the project site. A 75-foot stepback from the Arizona Avenue property
line starts on the second “bar” of the building (Levels 2-4), increases to 133 feet for the
third “bar” of the building (Levels 5-7), and increases further to 254 feet for the highest
floors of the project (Levels 8-12). Along 4th and 5th Streets, the building reaches to
approximately 4 feet from the property lines but the building mass is reduced through
stepbacks as the project progresses to the higher levels.
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Figure 1: Project Rendering
Pedestrian-Oriented Design
The ground floor of the project includes approximately 38,200 square feet of public open
space including the major plaza on Arizona Avenue and the second floor terrace that
would both be fully programmed in order to activate the spaces. Ground floor retail
spaces surround the Arizona Avenue plaza and wrap around to 4th and 5th Streets
activating all street frontages surrounding the project. In addition, smaller scale pocket
parks and plazas are located on all three street frontages allowing for more reflective
open spaces. One of the pocket parks is associated primarily with the cultural space.
The plaza facing Arizona Avenue would be the location of a seasonal ice rink and would
otherwise be programmed with activities to be managed by a single-purpose entity with
input from an advisory committee consisting of community stakeholders. The sidewalks
around the project are 18-20 feet in width between the building face and the curb,
consistent with the Draft DSP, supporting a pedestrian -oriented environment around the
project site.
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Parking and Circulation
Vehicle Parking
The project proposes approximately 1,143 parking spaces. Of those spaces, 804 are
allocated for the project, including 181 that are spaces primarily serving project tenant
visitors. An additional 339 public spaces would address the potential need for additional
Downtown public parking identified in the Downtown Parking Study completed by
Walker Parking Consultants. The following table outlines the project’s parking
requirement pursuant to the Draft DSP. Since the Draft DSP does not include a parking
ratio for cultural facilities, the parking ratio from the Zoning Ordinance Update for
cultural facilities was used.
Table 2: Proposed and Required Vehicle Parking
Land Use Draft DSP Standards Draft DSP Required Proposed
Hotel 117,000 sf
195 rooms 8,000 sf
bar/lounge
0.5 spaces/guest room + 1 space for
each 250 sf used for meetings and
banquets. Other uses such as bars,
restaurants, retail and services which
are open to the general public shall
provide parking as required for the use
at a rate ½ the individual rate (1
space/50sf).
98 + addtl pkg for
meeting/banquet space
(outdoor terrace may be
incl) + 80 for bar/lounge =
178 + addtl pkg for
meeting/banquet space
(outdoor terrace may be
incl)
178
Multi-Family
Residential 48
units Affordable
8 Studios
25 1BR
11 2BR
4 3BR
Studio - 0.5 spaces/unit
1BR - 1 space/unit
2BR+ - 1.5 space/unit
Guest - 1 space/10 units
Minimum requirements for units with
deed restrictions on maximum allowable
rent below 120% shall be halved
52/2 = 26 + 5 guest = 31 31
Office 206,800 sf 1 space/500 sf 414 414
Retail 42,200 sf Less than 5000 sf - 1 space/500 sf
5000 sf or more - 1 space/300 sf
84 - 141 141
Cultural 12,000 sf 1 space/500 sf 24 40
Minimum Required Parking Range 731 - 788 + addtl hotel pkg
for banquet/meeting space
804
Maximum Allowable Parking Range 804 - 867 + addtl hotel pkg
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for banquet/meeting space
Additional Public Parking 339 339
The proposed 1,143 spaces exceed the maximum allowable parking per the Draft DSP.
The amount also exceeds the potential required parking for the project by 16 to 73
spaces, which could vary depending on the size of the individual retail tenant spaces
and allowances for hotel parking for any banquet or meeting space. The Draft DSP
states that no more than 900 parking spaces shall be built as part of one parking
structure unless analysis clearly shows peak demand hours that are different from the
identified peak of the connecting street network. Additional analysis would be
necessary regarding the excess parking and its impacts on the Downtown circulation
system. This analysis would be included in the project Environmental Impact Report.
Staff has been working with the applicant on the project’s parking design and circulation
and initial concerns regarding vehicle stacking and maneuvering through the parking
structure have been addressed. Valet parking is proposed for the parking that would be
available to primarily hotel guests, with the pick-up function located within the
subterranean garage. Valet-assisted parking would be offered during peak usage
periods, which means that tandem parking spaces would be opened, allowing for
drivers to leave their keys with the valet attendant if their car needs to be moved. Valet
drop-off is proposed on 5th Street which may allow for the drop-off area to expand and
contract depending on demand and hours of the day. Staff would continue to work with
the applicant on the valet function, parking design, access, and circulation.
In the Planning Commission’s float-up discussion, concern was expressed about the
number of parking spaces proposed. Table 2 indicates required project parking
pursuant to the Draft DSP, however, the amount of parking could change depending on
the project mix, particularly the office and retail com ponents. Further, there may be
opportunities to consider shared parking by on-site uses that have varying peak parking
demands throughout the day to encourage efficient use of available parking spaces.
The additional 339 public parking spaces could also be reviewed with the amount either
reduced or combined with the parking spaces serving the Retail and Cultural space.
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Given the amount of parking being proposed in a Downtown Core location, an objective
is for the parking to be integrated into the City’s existing network of public parking
structures. An operational agreement between the City and Developer is anticipated
that outlines terms of how the structure should be operated to maintain consistency with
key operational elements of public parking structures. Staff and the applicant would
continue to discuss the terms of such an operating agreement that may address parking
rates, wayfinding and signage, and maintenance. The Developer has conceptually
agreed to operate the public parking consistent with the City’s public parking rates and
operating standards.
Bicycle Parking
The project also proposes a bike center with services to be determined although the
applicant has proposed a bike valet service. Bicycle parking is yet to be integrated into
the project plans. The following table illustrates the project’s bicycle parking
requirements and the proposed bicycle parking:
Table 3: Proposed and Required Bicycle Parking
Use Draft DSP
Standards
Draft DSP
Required
Proposed
Project
Long-Term Bicycle Parking
Retail 1/1500 sf; min 4 42,200/1500 =
28
28
Cultural 1/1500 sf; min 4 12,000/1500 =
8
8
Office 1/500 sf, min 4 206,800/500 =
414
414
Hotel 0.25/room 195*0.25 = 49 49
Residential 1/bedroom, min 2 1*67 = 67 67
Total 574 574
Short-Term Bicycle Parking
Retail 1/1000, min 4 42,200/1000 =
42
42
Cultural 1/1000, min4 12,000/1000 = 12
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12
Office 1/8000, min 4 206,800/8000
= 26
26
Hotel 8/hotel 8 8
Residential 0.1/bedroom 67*0.1 = 7 7
Total 98 98
The project would include a TDM program based on the Draft TDM ordinance with
augmented requirements for the transportation allowance.
The alignment of the parking garage access points, particularly on 4th Street, would
need further staff evaluation in relation to traffic lights and crosswalks to ensure there
are no pedestrian/vehicular conflicts.
Sustainability
The applicant’s sustainability proposal is based on aligning with the City of Santa
Monica Sustainable City Plan Targets for 2020 and includes the following elements:
LEED Gold v2009
20% energy improvement over Title 24
24% reduction in indoor water use
30% reduction in wastewater generation
90% construction waste reduction
Grid connected solar PV system
Although the project is targeting LEED Gold certification, in line with the Sustaina ble
City Plan’s target for new municipal buildings, staff recommends that the project achieve
a LEED version 4 Platinum rating or consideration should be given for superior energy
and water conservation elements integrated into the building design that may be
unrelated to a rating system. The project would include a greywater system that would
recycle greywater on site to fulfill the demand for toilet flushing and some of the hotel
laundry demand. In addition, high efficiency fixtures and appliances as we ll as low
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water use landscape and irrigation system would reduce water demand. Approximately
10,000 square feet of photovoltaic cells would be installed on the roof and shade
structures within the development at an approximate total of 100kWp capacity. I n
addition, the feasibility of site energy generation such as a micro turbine would be
investigated with the potential to reuse waste heat for pool heating and building
conditioning. The Development Team’s sustainability goals and objectives are outlined
in Attachment S.
Public Objectives/Proposed Community Benefits
On November 13, 2012, (Attachment I) Council endorsed specific public objectives for
the site that were included in the RFP. In recommending the Development Team to
Council, staff concluded that the project proposal successfully achieved the public
objectives. The following are public objectives that have been incorporated into the
project and would be identified as either significant project features or community
benefits in the Development Agreement, as applicable:
Public Open Space and Management: Approximately 51,700 square feet of
public open space of which the ground floor and second -floor terrace would be
fully programmed with an annual operating budget of $860,000. Staff would
continue to meet with the Development Team regarding the revenue and funding
of the programming and how that relates to the operating budget, financial
reporting mechanisms, the open space programming governance structure,
potential operating guidelines to ensure full public access and participation, and
how best to integrate the new programming with existing events and programs.
Affordable Housing: 48 units affordable to households making no more than 50
percent of the area median income. The Developer is partnering with
Community Corporation of Santa Monica to own and operate the housing.
Cultural Space: The project would also include a 12,000 square foot cultural
space. A management program and funding plan for the cultural space would
need to be developed to ensure its long-term viability. The Development Team is
currently in discussions with the Zimmer Children’s Museum. The Development
Team has committed to providing a below-market rent for the cultural use
throughout the term of the ground lease.
Parking and Circulation: Approximately 339 public parking spaces to be operated
by the Developer. Additional spaces may be made available to the public if not
used by project tenants. The project plans show space for a bicycle center that
may provide bike valet and services to be determined.
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Ground-Floor Activation: Ground floor neighborhood serving retail to activate 4th
Street, 5th Street and Arizona Avenue plaza including a marketplace for smaller,
unique vendors, even though that type of re tail use is expected to generate lower
rents than retail franchise tenants.
Exceptional Architecture and Sustainable Design: Iconic architecture with
proposal for LEED Gold Certification and project elements to align with
Sustainable City Plan.
Public Access to Views: Publicly accessible upper floor terraces and a roof -top
deck would be open to the public.
Flexible Development Approach: Design ensures long-term flexibility of use.
The Ground Lease would specify permitted uses in the project.
Fiscal Impacts: The annual ground lease is estimated to start at approximately
$1.3 million with annual tax revenue estimated at approximately $6 million.
In addition to the public objectives to be provided by the project and endorsed by
Council, staff would recommend that additional contributions towards historic
preservation initiatives, an augmented Transportation Impact Fee, and contributions
towards utility infrastructure upgrades be negotiated as part of the Development
Agreement. It is anticipated that the amount and nature of affordable housing, cultural
space, and public space programming would exceed the contributions that would have
otherwise been negotiated for childcare, cultural arts, affordable housing, and parks and
recreation.
Open Space Programming and Management
The ground floor open space and second-floor upper plaza would be the primary public
gathering places in the project. Other public spaces include the 5th Street pocket park
associated primarily with the cultural space and another pocket park on the 4th Street
side of the project. Other public areas are associated with the hotel use with the terrace
extending from the hotel lobby and the rooftop deck. These spaces would be
programmed year-round with amenities associated with on-site uses (e.g. outdoor
dining, kiosks, seating), public events and activities (e.g. exercise classes,
performances, screenings, workshops, festivals), and public markets. The applicant
has submitted a community event and open space management plan (Attachm ent T).
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Staff anticipates continuing to work with the applicant to refine the open space
programming. The open space on the main and upper plaza would be where the vast
majority of community-oriented programming would take place. City staff would not be
directly involved in the active management of the open space. It is anticipated that a
framework for use of the open space would include:
1) Development of a management structure
2) Parameters regarding the ratio of rented/paid space and time to community
program space and time
3) Operating parameters for programming that may include access to events,
frequency of sampling, and signage
4) Operating parameters for baseline features of the plaza such as kiosks and
vending carts
5) Coordination with existing community programs in and near Downtown Santa
Monica to minimize conflicts
6) Development of an Annual Budget
7) Annual report measuring activity levels including metrics such as participation
levels in programs by community members broken down by age and gender,
crime statistics, and success in collaborative efforts with other stakeholders and
community institutions.
Private events such as product launches, filming, and receptions may take place in
various locations throughout the open space except for the pocket parks and would be
limited to approximately 20 percent of the average weekly public programming hours.
Public events other than those considered to be on-site amenities are proposed to take
place a minimum of 30 hours per week for structured public programs suc h as classes,
presentations, and concerts. A minimum of 60 hours per week of unstructured public
activities and site amenities is also proposed. It is anticipated that there could be a
minimum of six special events annually such as craft fairs and specialty markets. There
would be an annual calendar of events at the beginning of each calendar year that
would be coordinated with the event schedules of other City venues in order to minimize
or eliminate conflicts with nearby events on the Third Street Promenade, Downtown
Farmer’s Market, and Santa Monica Pier, in addition to other venues that offer similar
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community programing such as Miles Playhouse, 1450 Ocean Avenue, and Tongva
Park.
The open space is anticipated to have an annual operating budget of $860,000 with
funding coming from a variety of sources including contributions from property
ownership, stall and kiosk rental, corporate sponsorships for particular activities, naming
rights, and private event rentals. Based on information provided in the RFP, it is
anticipated that over time, the annual operating budget might shift from predominantly
being funded by property ownership to sponsorship and rental revenue so the space
becomes self-sustaining. Staff has had discussions with the Development Team
regarding the nature of corporate sponsorships and naming rights and that funding from
advertising revenue be done in a manner that ensures the open space remains
unrestricted public open space. Staff recommends that a portion of the budget be
dedicated towards community-oriented programming free of commercial gain.
Biederman Redevelopment Ventures (“Biederman”) would be responsible for the
project’s open space programming efforts at start up until the open space programs are
fully established. Currently, it is expected that Biederman would transition to an
advisory role once the management of the open space is stabilized . After Biederman’s
role transitions to an advisory capacity, staff recommends that the open space
management structure include the employment of a knowledgeable entity with
significant experience in community-oriented programming with primary responsibility
for creating the programming with input from an advisory committee. The open space
programming would be developed in consultation with an advisory committee made up
of Downtown stakeholders (e.g. Downtown Santa Monica Inc.), knowledgeable
community members, and staff from the City’s Community and Cultural Services
Department. The Development Team anticipates that the open space would be in the
same ownership as the office, retail, and parking subdivision; however, funding to
support the maintenance, management, and security for the open space would be
undertaken with combined contributions from the office, retail, and hotel uses.
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Residential Use Affordability and Unit Mix
The Development Team has provided a potential unit mix for the affordable housing
including identifying Community Corporation of Santa Monica as the proposed owner
and manager of the affordable housing. As a result of the Development Team’s
community outreach, feedback has been received from various entities interested in the
target population of the affordable housing including artists, seniors, and hotel workers.
Another population to consider would be the City’s Master Wait List for Affordable
Housing, of which 3,919 of those who applied are Santa Monica residents or workers.
According to the City’s Housing Division, the vast majority of households on the waitlist
need smaller units at deep affordability levels.
In order to provide housing suitable for working artists, the units would need to be
designed to accommodate the range of activities associated with working studios.
These include compliance with Building and Fire Codes for commercial and residential
space, inclusion of floor drains, slop sinks, flooring and finishes that support a working
studio, high volume gallery-type space, consideration for ventilation with flexibility for
installation of mechanical ventilation if necessary, consideration for storage of
potentially toxic or hazardous materials related to art production, loading dock access,
and electrical power. Typically, such units are located on the ground floor due to the
need for access. As a result, there would likely be challenges in designing artists units
due to their location in the upper floors of a multi-story building.
Given Santa Monica’s aging population with persons aged 55 and over representing
approximately 25 percent of the population, seniors may be considered an appropriate
target population. There currently are limited options for affordable senior housing in
Santa Monica.
Another population to consider would be hotel workers, since the project includes a
hotel use. This could also be expanded to include all Downtown workers. While there
are many Downtown workers employed in the entertainment and technology industries
that tend to pay higher wages, this is balanced by food services and hospitality that tend
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to pay lower wages. Fair Housing law would limit the ability of the housing to be
restricted to hotel workers or Downtown workers. However, housing could be marketed
toward local workers, with the City’s local preferences giving such workers an edge in
competing for housing. As Downtown workers who cannot afford market-rate housing
earn a range of incomes, the affordability levels of the housing would affect which
workers would qualify. Note that 60 percent of Area Median Income (AMI) is the
maximum threshold at which affordable housing can qualify for tax credits.
The currently conceptualized mix of apartment sizes could accommodate a variety of
needs, including smaller households, seniors, workers with smaller families, and
workers with larger families.
Analysis of Alternative Uses
To support Council’s consideration of the project, the following provides conceptual
information regarding potential changes in the proposed mix of uses in the project, as
well as an evaluation of using the site as a public park.
Alternative Use Mixes
At staff’s request, the City’s consulting economist on the project, Keyser Marston &
Associates (KMA), has prepared an order-of-magnitude tradeoff analysis of how
alternative uses would impact the project’s ability to achieve the identified public
objectives and to pay ground rent to the City (Attachment V). The tradeoff analysis is in
response to concerns raised by the Planning Commission and others regarding the
amount of office space in the project. While the analysis is not intended to provide
precise program alternatives that are certain to be physically and financially feasible, it
is intended to provide an overview of the financial implications, as well as associated
impacts to public objectives, if the use program is altered. Staff requested KMA’s
evaluation of five alternatives, including:
Replacement of all office use with market rate residential use
Replacement of all office use with hotel use
Elimination of all office use
Replacement of 50 percent of the office use with hotel use
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Elimination of 50 percent of the office use
KMA’s study also evaluates order-of-magnitude impacts on four of the identified public
objectives, including the public parking, programmed open space, bike center, cultural
use, and affordable housing, from changes in use and associated project value. The
impacts to the value of the project, as well as the associated effects on the public
objectives and ground rent, vary by scenario, as summarized in Table 4.
Table 4: Conceptual Summary of Impacts of Project Changes
Scenario Ground
Rent
Estimated Financial Gap to
Support Public Objectives
1 Proposed Project $1.35M None
2 Replace All Office with Market Rate
Housing $0 $42.2M
3 Replace All Office with Hotel $0 $12.6M
4 Eliminate All Office $0 $26.5M
5 Replace 50% of Office with Hotel $0 $2.7M
6 Eliminate 50% of Office $0 $7.6M
Implicit in the analysis is the assumption that the public objectives take precedence over
the ground rent, and that if the project is altered, the ground rent will be reduced before
public objectives are sacrificed. Some of the results were surprising to staff and KMA.
For example, the residential market is currently very strong within Santa Monica and the
region, as rents continue to rise and the demand for housing is very deep. However,
replacing office with housing was the weakest performer among the alternatives.
The two primary reasons are: (1) the construction of the building is very expensive
relative to the rents that housing can achieve and (2) the building does not lend itself
easily to residential use, resulting in a significant loss of leasable space.
The hotel market is also very strong and typically can support high -value construction.
However, there is a loss in leasable space when the portions of the building planned for
office are converted to hotel use, resulting in an alternative that has less value than the
proposed office use. Any changes that involve an increase in hotel use, while likely
eliminating ground lease revenues to the City, would result in increased transient
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occupancy taxes. However, a larger hotel use may be considered a more speculative
development with a higher risk profile. A riskier profile could make it more difficult to
obtain equity investors and permanent financing, potentially resulting in delays in
commencing construction and delivering the public objectives.
For any of the options that involve a reduction or elimination of office use without
replacement by another use, a significant overhaul of the project design would be
expected. Replacement of the office use with an alternative use would also affect the
project design, though the impacts are not expected to be as significant.
The primary trade-off associated with alternative uses is the impact on the four identified
public objectives. Two of the public objectives, ground-floor activation and exceptional
architecture, are expected to be available under any of the alternatives. Two other
public objectives, project flexibility and public access to views, may be impacted by
some of the alternatives, although there is no clear cost associated with addressing
those public objectives. If the Council wishes to move forward with the project, and
desires a change in the office use, staff seeks direction on prioritization among the
public objectives. Based on community feedback to date, Table 5 provides a potential
prioritization of the remaining public objectives and their associated costs:
Table 5: Conceptual Summary of Costs of Public Objectives
Priority Public Objective Associated Cost
1 Programmed Open Space/Bike Center $31.4 million
2 Affordable Housing $10.9 million
3 Public Parking $22.8 million
4 Cultural Space $6.2 million
Because the KMA analysis has been completed at a conceptual level, staff cautions
against using it to craft a precise alternative program, particularly because design
specifics that have not been tested, and different assumptions regarding costs and
revenues could significantly affect the estimates. However, it does provide a useful
framework for determining which public objectives could be reduced in association with
project changes. If Council agrees with the prioritization of objectives identified above,
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the following are the model project changes and the associated general adjustments to
project objectives:
Table 6: Conceptual Project Changes and Public Objectives
Scenario Potential Change in Public Objectives
1 Proposed Project None
2 Replace All Office with Market
Rate Housing
Eliminate cultural space, public parking,
affordable housing, and some open space
3 Replace All Office with Hotel Eliminate cultural space and some public
parking
4 Eliminate All Office Eliminate cultural space, public parking, and
some affordable housing
5 Replace 50% of Office with Hotel Eliminate some cultural space
6 Eliminate 50% of Office Eliminate cultural space and some public
parking
Just as it may not be feasible to eliminate a specific amount of office space (due to
architectural realities), it would also be difficult to reduce a specific amount of the public
objectives, because parking and affordable housing have a certain number of parking
spaces and apartments per floor, and the cultural space and open space are on the
ground-floor and second-floor levels and would likely need to be replaced if they were
reduced. As a result, if Council wishes to move forward with the project while altering
the project uses, potential Council motions could include directing staff to work with the
Development Team to:
replace as much office space with hotel space as possible, while maintaining the
programmed open space, affordable housing, and as much public parking as
possible, or
eliminate as much office space as possible, without replacement, while
maintaining the programmed open space and as much affordable housing as
possible, or
similar variations based on the Council’s preferences related to project uses and
public objectives.
With such direction, staff would work with the Development Team to optimize the public
objectives while minimizing uses that are not favored for the project.
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Public Park Alternative
During the public meetings and Planning Commission discussion regarding the project,
some community members have favored using the site as a public park. Given the
site’s location, a park at the site would most likely be successful if it were d esigned as
an urban or downtown park, rather than a neighborhood park. Examples of successful
urban parks include Pioneer Courthouse Square in Portland and Bryant Park in New
York City. Successful urban parks are typically distinguished by a focus on creating
features and programs that ensure that the park is used by a variety of community
members throughout the day, including weekdays, weekends and evenings. Another
characteristic of such successful urban parks, including Pioneer Courthouse Square
and Bryant Park, are public/private partnerships whereby the parks are programmed,
managed, and operated by non-profit entities.
While a typical neighborhood park may be successful with trees, grass, and little
programming, such a park can be challenging in a n urban environment, particularly
because one segment of a community can take over a park and make other members
of a community feel unwelcome. Bryant Park in New York City provides a prime
example. In spite of its location adjacent to a public library and surrounded by an
incredible density of residents, workers, and shoppers, the simple and unprogrammed
park became a place that most people feared. The park was turned around by a set of
measures related to programming, careful management of amenities, a nd features such
as food pavilions. Today, Bryant Park is one of the most treasured urban parks in the
United States.
Creating a successful public park on the site would require the level of design and
programming that has made other urban parks successful. The need at the location
would be heightened because it currently has very few “eyes on the park” from adjacent
buildings, which largely turn their backs on the site. Because of the great fondness that
the community has developed for the seasonal ice skating rink on the site, systems that
allow for easy conversion of a portion of the park to the skating rink would likely be
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necessary. Given the City’s recent experience with Tongva Park, in addition to the
continuing increase in construction costs for public open spaces, costs to build a park at
the site could range from $10 million to $25 million, depending on the features desired
in the park. In addition, the leases of the current on -site banks would need to be
addressed. Buying the banks out of their leases could cost between $5 million and $10
million. To avoid paying the buy-out costs, the park would need to be delayed until
2025, when both leases will have expired.
If the proposed public parking were desired under the park, it would add an additional
$17 million to $20 million to the cost of the park, though some of the costs would be
offset by the capitalized value of the net parking revenue. On-going costs would include
maintenance and programming of the park, estimated at $1 million to $3 million per
year, depending on the design and desired level of programming.
LUCE and Draft Downtown Specific Plan Consistency
While ability to achieve public objectives is one method to determine tradeoffs in use
mix, another method might be to view the project from a land use public policy
perspective of the uses to be created within the project and downtown . Further
discussion regarding the project in the context of the Draft Downtown Specific Plan is
provided below.
The project is located within the LUCE Downtown Core designation, which defers to the
1984 General Plan and Bayside Specific Plan until the adoption of a Downtown Specific
Plan. The Draft DSP was released for public review in February 2014 and the project is
analyzed in comparison to the proposed development standards of the Draft DSP.
The western portion of the project is located in the Downtown Core designation and the
eastern portion of the project is located in the Core Neighborhood Transition
designation of the Draft DSP. It is anticipated that the project and public review of the
Draft DSP would proceed concurrently and as a result, staff recommends that the Draft
DSP inform the project’s development during the review process. The project would be
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consistent with the general plan in effect at the time the project is formally considered by
City Council. Based on an initial review of the project’s basic development standards,
the project is inconsistent with the Draft DSP in the following areas as detailed in the
Project Compliance Table provided in Attachment R.
Building Height
The portion of the project east of 4th Court alley is designated Core Neighborhood
Transition in the Draft DSP with a maximum height of 76 feet. The portion of the project
west of 4th Court alley is designated Downtown Core with a maximum height of 84 feet.
The proposed project is 148 feet and therefore, does not comply with the Draft DSP. At
the June 10, 2014 meeting, Council gave direction to proceed with the 148 -foot high
scenario as the project to be studied as part of the public process with direction to also
study other height scenarios as part of the project’s EIR. As proposed, the project
would require a general plan amendment for building height.
One of the concerns that has been raised regarding the proposed height is that it could
set a precedent that obligates the City to approve other new, taller buildings in the
Downtown. Council addressed the issue when considering the project on
June 10, 2014, explaining that it is a unique, publicly owned site, where explicit and
distinct public objectives have been identified, unlike virtually every other site in the
area. Council also commented that the unique design helps to mitigate the potential
negative effects of the height.
Maximum Floor Plate Ratios
The Core Neighborhood Transition portion of the project would need to have a
maximum floor plate ratio of 80 percent of the ground floor at Floor 3, 70 percent at
Floor 4, and 50 percent at Floor 5 and above. In the Downtown Core portion of the
project, the project would need to have a maximum floor plate ratio of 80 percent of the
ground floor at Floor 4, 70 percent at Floor 5, and 50 percent at Floor 6. The project
has a ground floor plate of 70,500 square feet.
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Table 7: Required and Proposed Maximum Floor Plate Ratios
Floor Gross SF Core Ngbhd
Transition
Maximum Floor
Plate Ratio (%)
Downtown Core
Maximum Floor
Plate Ratio (%)
% of
Ground
Floor
Complies?
Floor 3 57,900 80 -- 82 No
Floor 4 57,900 70 80 82 No
Floor 5 26,700 50 70 38 Yes
Floor 6 26,700 50 50 38 Yes
Floor 7 26,700 50 50 38 Yes
Floor 7A 11,600 50 50 16 Yes
Floor 8 25,900 50 50 37 Yes
Floor 9 25,900 50 50 37 Yes
Floor 10 25,900 50 50 37 Yes
Floor 11 25,900 50 50 37 Yes
Floor 12 25,900 50 50 37 Yes
The project complies with the maximum floor plate ratio standard for each designation
with the exception of the 3rd and 4th floors which exceed the maximum floor plate ratio
by 2 percent and 12 percent, respectfully. However, the innovative design and
significant building setback and stepbacks serve to reduce the perceived mass of the
building from the ground level surrounding the project site and are appropriate trade -offs
to consider for this minor exceedance of the Draft DSP development standard.
Office and Residential Uses
The proposed project includes approximately 49 percent of the total square feet as
office space. The Planning Commission clearly expressed concern regarding the
amount of office space proposed in the project and recommended that more housing be
included in the project. In providing direction regarding the project use mix, Council
should also consider the broader goals outlined in the Draft DSP with regards to office
space in the Downtown area.
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A recent USC study evaluated the before-and-after impacts of the new light rail transit
service using Phase 1 of the Expo Light Rail Line and concluded that the Expo Light
Rail Line reduced vehicle miles travelled (VMT) among households living with one -half
mile of the Expo Line Stations. Additionally, studies have also indicated that workers
have a greater propensity than residents to take transit in areas closest to transit.
Consequently, the creative office use on the project site is located in an ideal location to
increase the probability for transit use (i.e. within ¼ mile). Further trip reduction is more
effective for non-residential uses due to predictability in commute behavior, ability to
affect commute trips, and ability to offer financial incentives.
The Draft DSP builds upon the strategy adopted in the LUCE and presents a similarly
balanced approach to address the competing priorities of additional housing, economic
sustainability, and trip reduction. The Draft DSP recognizes that the vitality of the
creative industry is a critical piece of Santa Monica’s healthy and diverse economy.
Maintaining the ability for businesses to start-up, grow, and evolve within Santa Monica
is an important competitive advantage to avoid creative businesses relocating to West
Los Angeles, Playa Vista, and other areas that compete for these companies. The Draft
DSP acknowledges that a major economic challenge is office space availability, which
limits expansion opportunities for existing businesses and impedes new businesses
from locating in Santa Monica.
The Draft DSP similarly recognizes the need to continue to support housing in the
Downtown area with development incentives such as additional height and floor area
ratio (FAR) for housing projects. However, in order to appropriately address the current
jobs/housing imbalance, housing units need to be available for a range of incomes
beyond what is identified as affordable housing in the Affordable Housing Production
Program (AHPP). Such housing may include workforce housing that is targeted at
workers with incomes between moderate income and 180% of area median income.
The construction of housing at rents affordable to Downtown workers’ incomes would
provide opportunities for these employees to work and live in the same area. The co -
location of housing, neighborhood-serving retail and personal services, and employment
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supports daily vehicle trips reductions. There is a need to give equal consideration to
the economic and housing needs of the City with the overarching goal being trip
reduction. The project provides 48 housing units affordable to households making up to
50 percent of the area median income. While addressing the housing needs of one of
the neediest segments of the community, it does not address the housing needs of
those with higher incomes who nonetheless are unable to afford market-rate housing in
Santa Monica. The project could address trip reduction through the TDM Plan and
contributions to transportation improvements and programs that are difficult to fund,
such as the citywide Transportation Management Association.
Conceptual Business Terms
Staff from the Economic Development Division and the City Attorney’s office, with
assistance from KMA, have evaluated the economic feasibility of the proposed
development program as outlined in the project’s original proposal pro forma
(Attachment U).
Since Council’s authorization of exclusive negotiations on December 10, 2013, staff and
the Development Team have negotiated a frame work of conceptual business terms
based on the proposed development program for the project. The proposed terms
include ground lease term, ground rent, rent escalations, and profit participation
formula. If supported in concept by Council, the terms and obligations would provide the
basis for negotiation of a disposition and development agreement (DDA) and ground
lease. Council would consider a DDA and ground lease in coordination with
consideration of a DA.
The summary of proposed business terms and obligations, based on the current
program scope, is as follows and is outlined further in Attachment X:
Subdivision: The project would consist of three separate but integrated ground
leases: the deed-restricted affordable housing ground lease, the hotel ground
lease, and the remaining lease consisting of the office, retail, cultural space,
open space, and parking.
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Term: Each ground lease would concurrently have a 55-year base term with
either one or two options of 22 years each, pending further economic analysis.
Annual ground lease payments: The affordable housing component would make
no ground lease payments. The annual ground lease rent for the remaining
ground leases (hotel and office/retail/parking) would be an initial amount of
$1,300,000 annually, subject to escalations every five years not less than 5
percent and not more than 15 percent, based on CPI.
Construction rent: $100,000 for the first lease year, $150,000 for the second
lease year, and $200,000 for the remainder of the construction period.
Profit participation: The City would receive a share of additional profits in the
event of a sale of the project or a project component, refinance, or sale of tax
credits.
Should the Council desire to pursue a significant change in the project uses, as
discussed above under Alternative Uses, the ground rent would likely be affected and
some of the other conceptual business terms may need to be reconsidered.
Alternative Actions
In addition to the recommended action, Council could consider the following with
respect to the project:
A1. Continue discussion for analysis of additional options with agreement from the
applicant.
A2. Direct staff not to enter into DA and DDA negotiations.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action.
Prepared By: Jing Yeo, Special Projects Manager
Approved Forwarded to Council
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Attachments:
A. December 10, 2013 City Council Meeting
B. June 10, 2014 City Council Meeting
C. June 3, 2015 Planning Commission Meeting
D. 4th-5th & AZ Summary of Preliminary City Council and RFP Process
E. December 14, 2010 City Council Meeting
F. May 10, 2011 City Council Meeting
G. January 26, 2012 Downtown Specific Plan Workshop Summary
H. April 10, 2012 City Council Meeting
I. November 13, 2012 City Council Meeting
J. 4th/5th & Arizona RFP Proposals
K. July 10, 2013 City Council Information Item re: RFP Proposals
L. August 27, 2013 City Council Meeting
M. May 12, 2015 City Council Meeting
N. Plaza at Santa Monica Community Meeting Video September 8, 2014
O. April 21, 2014 Architectural Review Board Meeting
P. December 15, 2014 Architectural Review Board Meeting
Q. 4th/5th & Arizona Community Meeting Summary
R. Development Standards Comparison Table
S. 4th/5th & Arizona Applicant's Sustainability Proposal
T. The Plaza Open Space Management Plan
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U. MetropolitanProforma May2013
V. KMA Scenarios
W. Project Plans
X. Conceptual Business Terms
Summary of 4th/5th & Arizona Project
Preliminary City Council and RFP Process
The parcels were purchased by the City between 2007 and 2010. On December 14,
2010, Council endorsed guiding principles for the Site and approved initiation of a
community planning process. In March 2011, the Planning Commission and Downtown
Santa Monica Inc. held two community workshops to solicit community input on the
future of the Site. The results of those meetings and an update on the visioning process
were presented to Council at a Study Session on May 10, 2011. Another community
workshop was held on January 26, 2012, to discuss alternatives for development of the
Site within the context of the Downtown Specific Plan process.
On April 10, 2012, Council authorized the issuance of a Request for Qualifications
(RFQ) to solicit development team qualifications for the Site. On November 13, 2012,
Council directed staff to issue an RFP to the top three teams that were selected through
the RFQ. At that time, Council adopted development objective s that were incorporated
into the RFP, including:
The development of programmable gathering space,
Ground-floor retail, restaurant, and cultural space,
A mix of uses such as retail, cultural, office, hotel, and residential,
Exceptional architecture and sustainable design,
Public access to views,
A minimum of 339 public parking spaces,
A highly flexible development approach, and
The incorporation of concepts identified in the Downtown Specific Plan process.
On February 1, 2013, staff issued the RFP to solicit proposals from development teams
led by Forest City Development, Metropolitan Pacific Capital, and Related California,
and received their proposals on May 1, 2013. The proposals and the RFP are available
online at www.smgov.net/4thandarizona. Upon receiving the proposals, staff completed
a review and due diligence process. An evaluation panel comprised of eight City staff
members from Planning and Community Development, Community and Cultural
Services, Public Works, and Housing and Economic Development, as well as two real
estate finance consultants from Keyser Marston Associations (KMA), reviewed the
proposals and conducted interviews with the three development teams. Staff issued an
Information Item on July 10, 2013 summarizing the evaluation panel’s review of each
proposal against the selection criteria and recommending selection of the Metro Pacific
team comprised of Metropolitan Pacific Capital, Clarett West Development, DLJ Real
Estate Capital, and their designers and consultants.
On August 27, 2013, staff sought Council approval to enter into exclusive ne gotiations
with the Metro Pacific team with direction from Council to pursue affordable housing as
part of the development. Council directed staff to pose several follow-up questions to
two of the three applicant teams—Metropolitan Pacific Capital and Related California—
and to return to Council with additional information.
One of the questions was regarding whether and how each team could achieve a
potential 84-foot building scenario, given that Council had directed staff to study a
maximum height of 84 feet in the Downtown Specific Plan Environmental Impact Report
(EIR) on August 13, 2013. Upon review of each team’s responses to Council’s
questions, the evaluation panel found that the team led by Metropolitan Pacific Capital,
Clarett West, and DLJ West Capital (“Development Team”) continued to best address
the RFP evaluation criteria, development objectives, and Council’s identified priorities.
Figure 1: Original Proposal in response to RFP
On December 10, 2013, Council authorized staff to execute an Exclusive Negotiating
Agreement (ENA) with the development team led by Metropolitan Pacific Capital, Clarett
West, and DLJ West Capital (“Development Team”) to develop the Site. Council
directed staff to provide a six-month progress update during the exclusive negotiating
period. Council also directed the Development Team to complete a design study of an
84-foot height scenario and outline the tradeoffs related to different height scenarios.
On June 10, 2014, City Council reviewed the Development Team’s design study and
analysis of trade-offs between an 84-foot height scenario and 148-foot height scenario.
The Council gave direction to staff to begin the process with the Development Team
looking at the 148-foot scenario as the base project and proceeding with the public
process. The Council also commented on a number of other issues including the mix of
uses, suggestions for other community benefits including historic preservation, and that
other height and massing scenarios should be analyzed but to proceed with studying
the 148-foot scenario so as not to preclude options.
September 8, 2014 Community Meeting Summary
Applicant Information:
Applicant: Metropolitan Pacific Capital, Clarett West Development &
DLJ Real Estate Capital Partners
Contact: John Warfel
Contact Phone: 310-395-7300
Email: info@theplazaatsantamonica.com
Meeting Information:
Meeting Date: September 8, 2014
Location: Santa Monica Public Library, Multi-purpose room
No. of Participants: 95+
Project Information:
Address: 4th/5th and Arizona
Lot SF: 112,000
Total SF 420,000
SF Breakdown: Low Income Residential (~42,000)
Commercial (~249,000)
Hotel (~117,000)
Cultural (~12,000)
No. of Units: 48 very low income housing units
FAR: 3.75
Height: 148 feet at highest point
Project Description
The Plaza at Santa Monica is a 420,000 SF mixed use building to be developed on the
City owned site at 4th and Arizona in downtown Santa Monica. The building’s design is
shaped around the public realm, beginning with a ground level Grand Plaza at the
corner of 4th and Arizona and continuing with open space that rises through all levels of
the building.
The building is designed as a series of five, block-long bars that step up and back from
the Grand Plaza towards the center of the block, providing elevated gardens and
terraces at each level.
Ground Floor Uses and Street Life
The uses on the Ground level ensure that the Plaza at Santa Monica amplifies
downtown’s active street life. By combining different scales of programmable open
space as well as neighborhood serving and regional retail, a cultural institution, and
public amenities including a large public plaza, pocket parks, public art, pedestrian
improvements, and bicycle facilities, the project extends and augments the activity of
the surrounding streets.
Along Arizona, a 20,750 SF Grand Plaza is oriented towards the vibrancy of the Third
Street Promenade. An embedded hydraulic system at the corner of 4th and Arizona can
easily shift from a summer fountain to a winter skating rink, or a dry plaza that can host
concerts or markets. The corner of 5th and Arizona features an additional plaza that
embraces the historic post office building across Arizona.
The ground floor is anchored by two main programs – retail and culture. Retail lines the
streets along 4th and 5th and along the Grand Plaza on Arizona. A porous marketplace
facing the Plaza acts as a pedestrian shortcut between Arizona and 5th. Deeper into
the building, a 12,000 SF cultural space connects to a pocket park along 5th Street.
This space has the potential to bring to Santa Monica a satellite space for a major arts
institution. Alternatively, it could operate as a children’s art museum.
Mix of Uses on Upper Levels
Uses on the upper levels are chosen to respond to the current needs of the downtown
core while providing the necessary diversity of users that can ensure the building will be
activated at all times.
The upper levels feature three different types of uses: workspaces (levels 2-4),
workspace and affordable housing (levels 5-7), and a hotel (levels 8-12). Sky lit atriums
and “mixing chambers” connect the different workspace programs allowing multiple
disciplines within the building to come together in spaces that foster creative and
entrepreneurial energy. The exterior terraces further enhance interaction between the
building’s tenants as well as the visiting public.
Levels 2-4 feature large floor plates and a 30’x 30' structural grid that can respond to
downtown’s need for large workspace areas. The building’s unique inside/outside
attitude, abundant access to outdoor landscaped terraces, and the flexibility afforded by
the structural grid will make it a prime workspace for many kinds of work typologies,
from creative workspace and entrepreneurial workspaces to spaces catering to the
surge in the tech industry.
Levels 5-7 have thinner floor plates that will include 48 low income residential units on
the eastern end and smaller, flexible workspaces to the west. These bars spill out onto
the fifth floor terrace to the north. To the south, there is a large covered terrace.
Floors 8-12 house an approximately 200-room hotel with unobstructed views of the city,
beach and mountains. The hotel overlooks a lush garden terrace that is accessible from
street level and serves as an extension of the hotel lobby and bar. A wellness hub of
fitness, spa, lounges and bars rises through the hotel, emerging on the roof terrace next
to the hotel pool. Another hub provides elevator access from the ground floor to the
roof terrace where there are reflecting pools and public viewing areas.
Sustainability and LEED Certification
The building’s design embraces sustainability. The building’s terraced form allows for
green roofs, and every terrace will be landscaped. The terraces will capture storm
water and can be irrigated by treated grey water from the building.
The building systems will be designed to optimize access to natural day lighting and
ventilation. Large areas of the facade will be operable which allows the building to open
up to balconies and terraces, and gives users the chance to enjoy the ocean breeze
and unique light quality, emphasizing the indoor/outdoor lifestyle of Santa Monica.
Taking advantage of its mixed-use nature, the building will incorporate an energy-
resilient system that uses the different cycles of programs within the mixed-use
typology, for example using surplus energy from the workspaces to heat water for the
hotel.
The development will meet LEED Gold certification.
Public Open Space and Views
From the Grand Plaza along Arizona Avenue to the rooftop observation deck, the
building’s many terraces offer an array of outdoor activities that come alive at different
times of the day. The Grand Plaza provides over 20,750 SF of contiguous open space.
An additional 17,450 SF of ground floor open space is also provided in a series of
smaller plazas and pocket parks. A spiral stair and elevator affords direct access from
the Grand Plaza to a 13,500 SF second level public terrace with a lawn area and band
shell. At the hotel level, 37,300 SF of shared open space is included on the lobby
terrace and roof top deck. The building’s open space terraces lift downtown’s vibrant
streets into the skyline and create opportunities for the public to experience 360 degree
views of the city, the ocean and the mountains.
Access and Parking Strategy
The project is designed to take advantage of its close proximity to a variety of
transportation alternatives. Bicycle commuting is encouraged by integrating a bike
center (equipped with showers and lockers), a bike path, and a bike share station.
Pedestrian activity is encouraged by the inclusion of wide, 18’ sidewalks, street
furniture, landscaping, plazas, and pocket parks. The Expo light rail line will terminate
just 2 ½ blocks from the site and numerous bus lines pass within a block.
The development will include a new east/west paseo that will bisect the city block where
the project site is located, replacing the northern half of the existing north/south alley.
The new east/west paseo will provide a mid-block passage from 4th to 5th streets,
reconnecting the street grid for vehicles, bicyclists, and pedestrians alike. The paseo
will give access to the project’s loading areas and will include a dedicated bike lane and
access to the project’s bicycle facilities.
The parking is designed to integrate with downtown’s existing parking facilities and to
build on the City’s “park once” and shared parking philosophies. Entrances to the
subterranean parking garage will be on 4th and 5th Streets next to the paseo. The
garage is designed for maximum flexibility by ensuring that all levels are interconnected.
This flexibility will allow the garage to respond to changes in parking demand on an
hourly, daily, and weekly basis as well as any major shifts in the future parking needs of
downtown Santa Monica. Initially, the approximately 1,220 space garage will be
operated with approximately 580 public parking spaces, including 339 replacement
spaces, plus an additional 640 spaces that will be reserved for tenants of the
development during certain hours. The public parking spaces will be available for all
downtown Santa Monica visitors and will be operated as an extension of the City of
Santa Monica’s public parking program with parking rates matching the rates in the city
owned downtown structures. The reserved spaces will flow in and out of the public
parking supply depending on tenant demand and the hours of operation of the various
uses in the project.
Meeting Summary
The City of Santa Monica and the Plaza at Santa Monica development and design team
held a community meeting on Monday, September 8th at 7pm in the Multi-Purpose
Room of the Santa Monica Library.
Outreach included invites to the following neighborhood groups: NOMA, Northeast
Neighbors, Santa Monica Mid-City Neighbors, Wilshire Montana Neighbors Association,
Pico Neighborhood Association, Friends of Sunset Park, Ocean Park Association,
Downtown Study Group, Downtown Santa Monica, Inc., and the SM Chamber Board.
Additionally, emails were sent to residents who contacted the team about the project
and paper invites were mailed to approximately 2,900 neighbors within 1,000 feet of the
project site.
We estimate that approximately 95 people attended the meeting and we also received a
number of written comment cards (see transcript of spoken and written comments).
Attendees were comprised of both people who liked the project and those who voiced
concerns. Some attendees liked the design open space and inclusion of a union hotel.
Younger attendees said that they looked forward to taking their families to the museum
and utilizing the bike station and ample parking. Some attendees were also excited
about the rooftop bar and elevated open spaces. Others liked the design, but felt that it
was too tall and opposed any development on the site whatsoever and instead want a
public park. Traffic mitigation was also mentioned as a concern.
Transcript of Questions/Comments from the Community
• What will you do to ‘dazzle’ residents?
• There’s a need for passive open space.
• Very impressive. The objectives for the project were defined years ago, and
community priorities have changed.
• There should be a view of the back side of the project.
• The City does not have the ability to fund a subterranean parking lot if there’s just
a park above it.
• Define the housing component. Will it be affordable?
• What kind of affordable housing amenities will be provided?
• Will the hotel be union?
• How much would it cost to cancel the project?
• The project should be updated to remove the post office.
• Will the project pay all City fees? Will the 1% for arts be used for the project?
• How will the parking work? What will it cost? What will parking rates be?
• This building is amazing looking and solves a lot of problems, including parking.
• What is the total number of parking spaces? How many residents will there be?
How many stores?
• Will the ice skating rink stay?
• The reference to the Downtown Specific Plan is not complete; there was a lot left
out. The project does not comply with the plan. Commend the beautiful design,
but it doesn’t belong in this City. It will block light and the ocean breeze.
• Describe the process for determining the height.
• It’s a remarkable design, exceeds the amount of open space on the existing lot.
Applaud the effort to create the design. The process for vetting height occurred
through community meetings.
• Beautiful design that reflects community input.
• Does the raised open space work? Is there any experience in other cities with
this?
• The project is exquisite. The question is whether it belongs in Santa Monica. It’s
just too big.
• How many jobs will be created by the project? What will be done to insure local
hiring?
• How much revenue will be generated for the City? This would be a draw for
residents. Would love to see Santa Monica move in this direction.
• It’s important that the public space area be programmed and monitored. Don’t
want just another park. How do you plan to activate it?
• Beautiful design. Commend you, the City, and the community. It answers what
the community wants in a sensitive way. What other community benefits would
be supported by the project, like Tongva Park?
• This land is our land. What will a park look like? Is there an alternative with a
park and a union hotel?
• Typical to use the term ‘park’ and ‘open space’ for rooftop gardening.
• There’s no need for a 12-story building on public land. It must be our
community’s vision and we don’t want this. It shouldn’t have office space, which
induces traffic.
• Wonderful project. The mix works very well. It’s an iconic project that Santa
Monica deserves.
• Will there be hosts or rangers to help with the activation of public space?
• This project is not needed in Santa Monica. It will bring too much noise and
pollution. We need a museum, a playground, daycare or school, and parking.
• Looks great. Any 3-bedroom apartments? Secure bike parking? Incentives for
employee bike commuting?
• As a Santa Monica resident, love this project. What is the approval process?
• Phenomenal project.
• How much did the City pay for the land? What will the return-on-investment be?
• What will happen to the bank branch on the site?
• Very difficult to pull off a grass park in this space. This kind of programming is
needed. Will the City process require a look at changing some of the office space
to residential?
• It’s too big and has too much traffic.
• Where will the water come from during this severe drought?
• How much additional landscaping was added from the previous version?
• Really excited about the project. What would the hours be for amenities like the
yoga classes?
• The community wanted and asked for an 84 foot height limit. It hasn’t been
mentioned. Honesty and transparency is needed.
• What types of programming will there be for young professionals seeking a
happy hour drink?
Sign-In List
Amy Aukstikalnis -Welch Consulting*
Danilo Bach
Paul Bailey –Guest of Gloria Garvin*
Kate Bransfield
Ellen Brennan
Brenda Burns
Leslie Butchko
Jill Chapin
Trisia Crane
Karen Croner
John Dahl
Stacy Dalglesh
Carol Dickinson
Kevin Flick
Gloria Garvin
Frank Gruber
Ellen Hannan
Carl Hansen -Santa Monica Chamber*
Edward Hunsaker
Zina Joseph
Katherine Kennedy –Guest of Laura Wilson*
Peter Knot -Guest of Brenda Burns*
Ellis Kroman
Carol Landsberg
David & Melissa Looby
John Mann
Catherine McCabe
Nancy Morse
Maggie Outh
Taffy Patton -19th Street Residents Coalition*
John Petz
Manju Raman -The Huntley Hotel Assistant General Manager*
Eaton Saker
Ted Sugawa –Chase Bank *
Ann Thanawalla
Daniel Wescot –Guest of Laura Wilson*
Marc Wiesenfeld Laura Wilson
Unite Here Local 11 (30+ guests)
*for identification purposes only
ATTACHMENT R
Development Standards
Project Compliance Table
Development
Standard
1984 LUCE /
BSC3 & C3C
Draft DSP
[Downtown Core
(DC)& Core
Neighborhood
Transition (CNT)]
Proposed Project Compliance
Height/Stories
1984 LUCE: 84’ / 6
stories
BSC3: 56’ / 4
stories
C3C: 76’ / 6
stories
DC: 84’
CNT: 76’
148’ / 12 stories No
FAR
1984 LUCE: 3.0
BSC3: 3.0
C3C: 2.5
DC: 4.0
CNT: 3.75
3.75 No
Ground Floor
Commercial Sq Ft N/A N/A 42,200 sf of
ground floor retail Yes
Commercial
Ground Floor
Frontage /
Commercial Space
Depth
N/A
DC: 60% of
frontage/75’ depth
CNT: 60% of
frontage/50’ depth
Commercial
frontage:
approximately 50-
100%
Commercial space
depth:
approximately 90’
Yes
Ground Floor to
Floor Height N/A 18 feet 18 feet Yes
Floor-to-Ceiling
Height N/A 8 feet 8-12 feet Yes
Floor Plate Ratios N/A See Table 4 of
staff report
See Table 4 of
staff report Yes*
Building Frontage
Line: Widened
Sidewalk
N/A 15 feet 18-20 feet Yes
Open Space N/A
30% of lot area
(20% at grade,
10% above grade)
38,200 sf at grade;
13,500 sf at Floor
2
Yes
Private Deck Sq Ft
Average N/A N/A
Residential units
will have private
open space or
common courtyard
Yes
LEED Certification N/A
LEED Gold or Cal
Green Tier 2 green
building standards
LEED Gold Yes
*Indicates compliance with one standard but not another due to split land use designation/zone
SMP | 04-23-2015
SUSTAINABILITY
AGENDA
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
vision:
high efficiency integrated design that responds to its
environment
objectives:
•Alignment with the City of Santa Monica Sustainability
Plan
•LEED Gold
•20% energy improvement over title 24
•24% reduction in indoor water use
•30% reduction in wastewater generation
•90% construction waste reduction
•A solar PV system (grid connected)
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
sustainable city plan:
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
resource conservation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
so
l
i
d
w
a
s
t
e
•Generation
•Landfilled
•Diversion
•Do not exceed year 2000 levels
•Reduce per capita generation to 2.4
lbs/person/day
•Achieve 85% diversion rate
The development will incorporate a “whole of
life” materials strategy, a section of which will
address operational waste diversion through
the provision of recycling receptacles as well as
storage within the building for separated
recyclables. The materials strategy will also
outline how the owner will work with vendors
to reduce packaging used within the
development to reduce the overall generation
of waste per capita.
wa
t
e
r
u
s
e
•Total citywide use (Self Sufficiency)
•Total citywide use (Per Capita)
•Percent local vs. imported
•Potable vs. non-potable
•Reduce water demand by 1,300,000
gallons per day (GPD)
•Reduce per capita use to 123 gallons per
capita per day (GPCD) (500,000 GPD)
•Increase to 100% local
•Upward trend in non-potable use
A grey water system will recycle grey water on
site to fulfill the demand for toilet flushing
within the building, as well as a proportion of
the hotel laundry demand. In addition, high
efficiency fixtures and fittings, as well as a low
water use landscape and irrigation system will
be included to reduce overall water demand.
en
e
r
g
y
u
s
e
•Total municipal use
•Total citywide use
•Efficiency
•Efficiency
•Reduce use 10%
•Reduce use 10%
•Demonstrate incremental progress
towards achieving reduction in energy
use intensity
•Increase efficiency in existing
buildings to achieve reductions of 1
million kWh annually
The development is targeted to not only meet
the Santa Monica requirement of a 15%
improvement over Title 24, but to better this
by a further 5%. This would result in an
increase in efficiency that would reduce
average EUI in the City of Santa Monica.
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
resource conservation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
re
n
e
w
a
b
l
e
e
n
e
r
g
y
u
s
e
•Total use
•Total use from clean distributed
generation in Santa Monica
•At least 50% of all electricity should come
from renewable sources
•Total use from clean distributed
generation in SM- Install 7.5MW of
solar citywide
•Total use from clean distributed
generation in SM – Install 1 MW of solar
on city operated facilities
Approximately 10,000 sq. ft. of PV will be
installed on the roof and shade structures
within the development at an approximate
total of 100kWp capacity. In addition, the
feasibility of high efficiency on site energy
generation such as a 200kW micro turbine will
be investigated, with the potential to produce
energy on site, and reuse waste heat for pool
heating and building conditioning.
gr
e
e
n
c
o
n
s
t
r
u
c
t
i
o
n
•New Construction
•O&M
•Residential
•Non-Residential
•100% of new municipal buildings
achieving LEED GOLD certification
•Demonstrate 100% of existing
municipal buildings achieving LEED
GOLD certification
•Demonstrate incremental increase in
the percentage of residential
buildings achieving energy efficiency
and green construction certifications
•Demonstrate incremental increase
in the percentage of non-
residential buildings achieving
energy efficiency and green
construction certifications
The development is currently targeting a LEED
v2009 Gold rating, in line with the
requirements of the City Plan for new
municipal buildings, and above the minimum
rating of SILVER required by the Santa Monica
Municipal Code
so
l
i
d
wa
s
t
e
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
environmental & public health:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Ai
r
Q
u
a
l
i
t
y
•# Days ambient air quality
standards exceeded
•Zero days ambient air quality
standards exceeded The development’s unique design provides for
a significant amount of green area on site.
This aids in increasing the air quality locally as
well as in the City as a whole.
Re
s
i
d
e
n
t
i
a
l
Ho
u
s
e
h
o
l
d
Ha
z
a
r
d
o
u
s
W
a
s
t
e
•Total volume collected
•Number and percent of
households participating
•Cumulative number of participants
•No target
•Number and percent of households
participating- Upward trend
•Cumulative number of participants - 50%
cumulative participation
The development will provide a facility that
assists in the disposal of hazardous waste from
all of the residential units.
Ur
b
a
n
R
u
n
o
f
f
Re
d
u
c
t
i
o
n
•Effective impervious area
•Total acreage treated
•Gallons polluted runoff treated
•Annual reduction
•Annual increase
•Annual increase
The provision of extensive green area within
the development will increase the overall
impervious area within the City. Passive and
landscape strategies will treat runoff for reuse
on site.
Fr
e
s
h
,
L
o
c
a
l
,
Or
g
a
n
i
c
Pr
o
d
u
c
e
•Percent of fresh, local, organic
produce served at city facilities
•Percent fresh, local, organic produce
served at community institutions:
(SMMUSD,
SMC, Hospitals)
•Sustainable food commitment
•15% of total
•15% of total
•100% of City food purchases comply
with Santa Monica Sustainable Food
Commitment
The development will include a local,
sustainable, organic garden on one or more of
the outdoor decks that will serve the
restaurants within the development, and can
also be used as a teaching garden for the local
community.
SMP | 04-23-2015
The Plaza @ Santa Monica | Sustainability goals and objectives
environmental & public health:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Fa
r
m
e
r
s
Ma
r
k
e
t
•Total sales
•Percent organic
•Percent low chemical
•Percent conventional
•Annual increase
•Annual increase
•Annual increase
•No target
An artisanal food marketplace with local
vendors is a main feature of the retail portion
of the development. The marketplace will be
integrated programmatically with the
downtown Santa Monica Framer’s Market.
Fo
o
d
Ch
o
i
c
e
s
•Residential reduction in meat
and dairy consumption
•15% reduction The owner with work with vendors and
restaurateurs within the development to
encourage provision of non-meat and non-
dairy food options.
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
transportation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
IN
T
R
O
D
U
C
T
I
O
N
Vehicle trip reduction and the use of alternative modes of transportation are inherent in the design of the project. Additionally, an extensive Transport
Demand Management plan will be included with the development. Combined, they will address each of the transportation goals within the city plan.
The projects transportation strategies are listed below.
1.Bicycle Facilities - Extensive bicycle facilities are an integral part of the projects design including:
i.Bicycle parking for occupants and visitors
ii.Space for a Breeze bike share station
iii.A bike center with showers and lockers
2.Transit Options - The project is strategically located in the heart of DTSM within easy walking distance of the Expo line and major bus lines.
3.Transportation Demand Management TDM - A project wide TDM will incentivize the reduction of Average Vehicle Ridership (AVR) and the use of
alternative modes of transportation for all occupants of the development including employers with less than 50 employees.
4.Pedestrian Improvements - Pedestrian travel will be improved dramatically by improving the pedestrian experience with significant pedestrian
oriented design elements including:
i.widened sidewalks
ii.activated street facades
iii.street furniture, landscaping and other streetscape improvements
iv.pedestrian passageways and linkages through the development site
v.pocket parks adjacent to the pedestrian way
5.Car Share - Dedicated parking spaces for car share
6.Electric Vehicles - Electric Charging Stations/Fast Charge Station
7.Fleet Vehicles - The use of electric fleet vehicles for maintenance and hotel
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
transportation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Mo
d
a
l
s
p
l
i
t
•Number of trips by type, citywide
•Average vehicle ridership
(AVR) of Santa Monica
businesses with more than
50 employees
•Pedestrian travel volumes
•Bike traffic volumes
•An upward trend in the use of
sustainable (bus, bike, pedestrian,
rail) modes of transportation -
Drive alone max: 60%, Bike + Walk
+ Transit minimum: 25%, Bike +
Walk: 15%
•2 for Santa Monica businesses with
more than 50 employees
•Annual increase
•Annual increase
1. Bicycles Facilities, 2. Transit Options, 3. TDM
VM
T
•Total
•Total per capita
•Downward trend
•Downward trend
1. Bicycles Facilities, 2. Transit Options, 3. TDM
Re
s
i
d
e
n
t
i
a
l
;
Us
e
o
f
Su
s
t
.
Tr
a
n
s
p
o
r
t
•Percent of residents who have
intentionally not used their car
but have instead used a
sustainable mode of
transportation in the past month
•Upward trend 1. Bicycles Facilities, 2. Transit Options, 3. TDM
Su
f
f
i
c
i
e
nc
y
o
f
tr
a
n
s
p
o
rt
op
t
i
o
n
s
•Percent of households with high
quality transit service within ½
and ¼ mile
•100% of households within ½ mile 2. Transit Options
Pe
d
e
s
t
r
i
a
n
Fa
c
i
l
i
t
i
e
s
•Complete sidewalks
•Public/private pathways
•Crosswalk enhancements
•Signal Timing enhancements
•Annual increase 4. Pedestrian Improvements
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
transportation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Bi
k
e
f
a
c
i
l
i
t
i
e
s
•Percent of bike network completed
•Total miles of bike lanes and paths
installed or upgraded
•Total Bikeshare usage
•Number of bikes parked by bike valet
•100%
•Annual increase
•Annual increase
•Annual increase
1. Bicycle Facilities
Ve
h
i
c
l
e
U
s
e
•Total number of automobiles
maintained per person
•Percent of total automobiles
that are qualified ZEV/PZEV or
better
•Total Carshare usage
•10% reduction
•Annual percentage increase
•Annual increase
2. Transit Options
Tr
a
n
s
i
t
s
e
r
v
i
c
e
s
•Annual ridership on Santa Monica Big
Blue Bus (BBB)
•Percent of residents who have
ridden the BBB in the past year
•Annual ridership on MTA routes
originating in Santa Monica
•Annual Expo light rail ridership
•Annual increase
•Annual increase
•Annual increase
•Annual increase
2. Transit Options, 3. TDM
2. Transit Options, 3. TDM
2. Transit Options, 3. TDM
2. Transit Options, 3. TDM
Al
t
e
r
n
a
t
i
v
e
Fu
e
l
e
d
Ve
h
i
c
l
e
s
•Percent of the city fleet
vehicles using alternative fuels
•80% of fleet 3. TDM
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
transportation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Tr
a
v
e
l
V
o
l
u
m
e
s
•Auto corridor travel times
•Peak Hour Trips
•Signal Timing
•Bus travel time
•No increase
•No net new PM trips
•100% completion
•No increase
1. Bicycles Facilities, 2. Transit Options, 3. TDM
1. Bicycles Facilities, 2. Transit Options, 3. TDM
2. Transit Options, 3. TDM
4. Pedestrian Improvements
St
r
e
e
t
S
a
f
e
t
y
•Number of collisions
o Vehicle-Vehicle
o Vehicle-Pedestrian
o Vehicle-Bicyclist
o Bicyclist-Pedestrian
o Bicyclist-Bicyclist
•Downward trend
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
sustainable local economy:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Co
s
t
o
f
Li
v
i
n
g
•Median household income in
relation to cost of living
•Median household income in
relation to living wage standard
•Percent of tenants rent-burdened
•No target
•90% of median household incomes
meet or exceed the living wage
standard
The hotel portion of the development will be a
union hotel providing well-paying union jobs
and benefits.
The project will be built with union labor
providing a significant number of high paying
union construction jobs.
Ec
o
n
o
m
i
c
He
a
l
t
h
•Number of businesses
•Number of employees
•Annual payroll
•No net loss
•No net loss
•Increasing trend
The retail, commercial, and hotel elements of
the program facilitate an increase in businesses
and employees within the City.
Re
s
o
u
r
c
e
Ef
f
i
c
i
e
n
c
y
of
Lo
c
a
l
B
u
s
i
n
e
s
s
•Ratio of energy use to total economic
activity by business sector
•Ratio of total water use to total
economic activity by business
sector
•Downward trend
•Downward trend
The extensive energy efficiency and water
efficiency strategies detailed earlier in this
submission combined with the retail,
commercial, and hotel elements of the
program will result in a reduction in the ratio of
energy use and water to economic activity.
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
housing:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Pr
o
d
u
c
t
i
o
n
o
f
Af
f
o
r
d
a
b
l
e
H
o
u
s
i
n
g
•Number of new housing units
produced in Santa Monica
affordable to:
o Very low income households
o Low income households
o Moderate
o Market rate
•Number of new housing units
produced in Santa Monica
affordable to:
o At least 428
o At least 263
o At least 283
o At least 700
48 new affordable housing units are currently
included as part of this development. The units
will be available to very low income
households.
Di
s
t
.
O
f
Af
f
o
r
d
a
b
l
e
Ho
u
s
i
n
g
•Distribution of low income
housing by neighborhood
•No target The new affordable housing units will be
located in a mixed use development in
Downtown Santa Monica, improving the
distribution of low income housing throughout
the City.
Af
f
o
r
d
a
b
l
e
H
o
u
s
i
n
g
fo
r
S
p
e
c
i
a
l
N
e
e
d
s
•Number of new or rehabilitated
affordable housing units for
families, seniors, the disabled
and other special needs groups
as a percentage of all new or
rehabilitated affordable housing
development
•Upward trend A proportion of the affordable housing within
the development will be designed to address
the requirements for disabled occupants.
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
housing:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Pr
o
d
u
c
t
i
o
n
o
f
“L
i
v
a
b
l
e
”
H
o
u
s
i
n
g
•Percent of new units within ¼
mile of:
o Transit stop
o Open space
o Grocery store
•Upward trend All of the new affordable housing units are
within a quarter mile of numerous transit
stops. Multiple plazas, pocket parks, and open
spaces within the development will be
available to the project’s housing occupants. A
grocery store is within 1 ½ blocks of the site.
Pr
o
d
u
c
t
i
o
n
o
f
Gr
e
e
n
Ho
u
s
i
n
g
Percent of new and substantially-rehabilitated
housing that achieves LEED certification at
LEED Silver or higher
•Upward trend The development is currently targeting a LEED
v2009 Gold rating, which is above the
minimum target of a SILVER rating.
community education and civic participation:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Pa
r
t
i
c
i
p
a
t
i
o
n
i
n
Ne
i
g
h
b
o
r
h
o
o
d
Or
g
a
n
i
z
a
t
i
o
n
s
•Percent of Santa Monica residents
that are represented by an active
neighborhood organizations
•Upward trend An initiative of the open space programming
for the development will be to support and
host neighborhood organizations, promoting
wider participation w9ithin these
organizations.
SMP | 04-23-2015
The Plaza at Santa Monica | Sustainability goals and objectives
human dignity:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Re
s
i
d
e
n
t
s
’
Pe
r
c
e
p
t
i
o
n
o
f
Sa
f
e
t
y
•Percent of Santa Monica residents
who are satisfied with city efforts to
reduce crime and protect public safety
•Upward trend The site design, pedestrian engagement, and
created access are intended to not only
improve the perception of safety, but create a
safer environment for the occupants, visitors,
and neighboring developments.
arts and culture:
Indicator City of Santa Monica Target
for 2020
The Plaza at Santa Monica
Strategies
Su
p
p
o
r
t
f
o
r
t
h
e
A
r
t
s
•Financial support for city arts grants
•Charitable giving in the arts
•Square footage of city property
leased for cultural uses at
below market rates
•Annual Increase (blended) The development includes numerous
performance spaces, exhibition areas, pocket
parks, and public open space. Programming in
these spaces will be supported by an $850,000
annual programming budget that will be
professionally managed in conjunction with the
City’s Department of Cultural Affairs, DTSM Inc.
and local stakeholders. The project also
includes a 12,000 SF children’s museum that
will provide programs to all of Santa Monica.
THE PLAZA AT SANTA MONICA
COMMUNITY EVENT AND OPEN SPACE MANAGEMENT PLAN
APPROACH & GOALS
The public plazas, courtyards, and terraces of The Plaza at Santa Monica are designed to supplement the city’s
open space infrastructure and provide a permanent home for the seasonal ice rink and the Zimmer Children’s
Museum, as well as venues for public events, specialty markets, and other activities that cannot be
accommodated in the City’s other parks and public areas. The Plaza’s unique design as well as a stable source
of funding allows for the creation of public space that can be actively managed and programmed, all in a
controlled but flexible environment that will be conducive to a wide variety of activities.
By actively programming the public spaces with a wide variety of uses, safety and security can be maintained in
a friendly and cost-effective manner. Thorough and consistent maintenance and upkeep of the public areas will
ensure that the environment remains appealing for years to come. The goal is not just to draw visitors to the
project, but also to encourage Santa Monicans to enjoy the public realm, to stay downtown, to stroll over to
the promenade, to visit the library, and to return to downtown over and over again by providing a rotating
variety of daily and episodic activities. The project and programs will be designed to appeal to two primary
constituent groups: local residents and workers, who are the primary users of The Plaza, and visitors to
downtown Santa Monica.
CHARACTER OF THE SPACE
At the heart of our plan is the notion of dynamism: the character of the spaces will change depending on the
time of year, time of day, and day of the week. The variety of programming—there will be dozens of activities
and amenities available to visitors—and the rotating calendar of events will create different experiences at
different times and in different seasons. In addition, the tiered plan of the buildings allows and encourages
individuals to experience a variety of spaces in different ways.
The public plazas at street-level, the courtyards, and the elevated terrace are designed and programmed to
engage the public in a broad range of activities at a broad range of times throughout the year. The major
street-level plaza anchored at the corner of 4th and Arizona is intended to be the most active of the public
spaces, home to large gatherings, fairs, events, and the seasonal ice skating rink. When it’s not being used as a
dedicated event space, the main plaza will host a variety of more localized programs, small performances, and
other activities.
Smaller courtyards oriented towards 4th and 5th Streets and at the corner of 5th and Arizona are intended to
serve as quieter spaces, with less intensive programming. These courtyards will serve as comfortable meeting
spots and places for smaller groups to gather. They will also feature low-impact amenities such as smaller art
installations to interest visitors to the building. The 5th Street courtyard will serve as a children’s play area
during the Zimmer’s hours of operation.
The elevated public terrace is a raised garden that will serve as a home to activities that require a more
contained environment, such as art classes, book club meetings, and more intimate performances. Its lawn
panel will host fitness classes and other programs not suited for a hard surface.
The publicly accessible hotel lobby and rooftop viewing terraces will offer stunning views of the Pacific, the
building’s terraced gardens and the public plaza, and beautiful panoramas of the city.
MANAGEMENT & USE OF THE SPACE
The public spaces in The Plaza at Santa Monica will be operated by a Public Space Manager, a special purpose
entity guided by Biederman Redevelopment Ventures. This Public Space Manager will be responsible for
coordinating hospitality functions, managing daily amenities, programs, events, operators, and sponsors, as well
as keeping the public spaces safe, clean, and in good repair. The Public Space Manager will be responsible for
coordinating the programming mix and schedule with the City’s Community and Cultural Services Department,
Downtown Santa Monica, Inc. and with other local institutions such as the Santa Monica Public Library and the
Santa Monica Farmers Market. The Public Space Manager will be guided by a board of advisors that will
include representatives from key stakeholders. On a day-to-day basis, these activities will be led by a dedicated
Open Space Director trained and supervised by Biederman, along with additional staff responsible for
individual programs, markets, classes, and coordination with programming partners.
Security, hospitality, and maintenance functions will be staffed with a combination of dedicated in-park
personnel and staff shared with the common areas of the building (for example, daytime security officers will be
solely focused on the public spaces, while overnight security will be shared between the building and the
plazas). Uniformed Public Space Hosts will assist visitors with a range of amenities and programs, from giving
directions to offering assistance with Wi-Fi connections, to checking out ping-pong paddles and balls. These
hosts will function as a friendly face of The Plaza’s security infrastructure, and operate as a first line of
communication and surveillance. As needed, the hosts will be supplemented by dedicated security officers and
event staff. Vendors, concessionaires, and program instructors will be third party contractors operating under
the supervision of the Public Space Director.
PUBLIC ACCESS
The Plaza at Santa Monica is by design a very open and public space – the interaction and interplay of different
spaces and people is the essence of the concept and is key to the success of the project as a whole. The
majority of open spaces in the project, including the main plaza, smaller courtyards, and elevated terrace, will be
entirely open to the general public the great majority of the time. Year-round, The Plaza at Santa Monica will
feature a wide array of curated public programs offered free or at nominal charge. Certain other programs,
such as ice skate rentals and rink time, will be available for a fee. Concessions such as food kiosks and market
stalls will charge for their products.
The Plaza will also host private events and programs including media events, receptions, charity events, and
other private affairs. The private events will take place concurrently with the public programming in discrete
areas of the open space. Even during private events, The Plaza at Santa Monica will maintain spaces,
amenities and programs that are free and open to the public. This is possible because of the project’s unique
design and broad variety of open spaces.
All areas of The Plaza at Santa Monica are universally accessible, embracing both the letter and spirit of the
Americans with Disabilities Act.
PROGRAMMING
At this early stage in the planning process, it is premature to propose an exact calendar of events. However,
there are two guiding principles that will be used to shape the specific programs in The Plaza at Santa Monica.
First, public outreach is a key component of the development team’s strategy to program and activate the
public spaces in the project – the mix of programs will only be successful if it is shaped by members of the
community. Second, coordination with other cultural institutions is essential to making sure that programs and
events aren’t duplicative of other programs operated elsewhere in Santa Monica. Events will not be successful
if they are competing with other established programs, or events held elsewhere at the same time.
As the project goes from concept to reality, the Public Space Manager will hold public workshops focused
solely on the programs, activities, classes, and other amenities that the public—especially those who live and
work nearby—want to see in the public spaces. The team will combine the input collected at the public
workshops with information collected in dozens of interviews and several focus groups with stakeholders,
including local property owners, business owners, public officials, the City’s Community and Cultural Services
Department and Downtown Santa Monica, Inc., and other groups involved with downtown Santa Monica’s
public spaces.
Site amenities, for example kiosks, game carts, bike amenities, will be available to the public, free of charge, any
time the public spaces are open and the weather is suitable. There will also be free, public Wi-Fi access. And,
of course, there will be plenty of convenient and movable seating for visitors to the public spaces to take
advantage of these offerings.
Daily, semi-weekly, weekly, and episodic classes and activities will be layered on top of these site amenities. A
third layer of programming will be provided by seasonal and special events, and by the introduction of new
events and festivals. Please refer to the attached sample list of activities for examples of the types of
programming envisioned for the site.
Programming will begin in the morning when the open space opens and run into the evening as necessary
(outdoor movies, for example, may end later than other activities). Programs and events will be scheduled at
various times of day to reach certain demographics and to encourage activity during off hours. For example,
weekday afternoons will feature programs aimed at families with young children and seniors because nearby
office workers and local residents are at their jobs. All scheduling will be coordinated with other events
downtown and their organizers through the Open Space Coordination Committee.
The wide dimensions of the main street-level plaza can accommodate events that currently don’t have a home
in Santa Monica, and it is contemplated that major new events will be produced in partnership with the City’s
Department of Cultural Affairs and DTSM.
MINIMUM STANDARDS FOR PUBLIC PROGRAMS
The Plaza will provide a minimum of 30 hours per week of structured public programs, including classes,
concerts, presentations, and other public activities, and a minimum of 60 hours per week of unstructured public
activities and site amenities. In addition, The Plaza expects to host a minimum of 6 special events annually
such as specialty markets, holiday gifts and crafts fairs, a pumpkin patch, and an artisan food market that works
in conjunction with the Farmer’s Market.
LIMITITATIONS ON COMMERCIAL ACTIVITIES
Commercial activities will be limited to 20% of the average weekly public programming hours. These activities
may include private receptions, parties, product launch events, or filming activities where public access is
excluded from portions of The Plaza’s open space. Product demonstrations and sampling will be limited to
two times per week. When private programs and events do occur, special attention will be paid to balance the
impact of the events on the public programming. For purposes of clarity, the winter ice rink and public
markets are not to be considered commercial programs.
LIMITATIONS ON SIGNAGE AND COMMERCIAL ATTRIBUTION
While program sponsors are essential to the long term success of programs at The Plaza, it is important to
remember that the primary purpose of The Plaza is to be a public park, not an advertising venue. All
attribution will be tasteful, appropriate, and clearly secondary to the primary function of the public spaces.
CHOOSING VENDORS, OPERATORS, AND SPONSORS
The nature of the public programming will take into account the proximity to public transit and the various
other modes of arrival available to visitors, the demand for certain types of programming, the needs of the
immediately surrounding neighborhood and building occupants, and the desires of the Santa Monica
community. In selecting tenants and operators, preference will be given to those with roots in the community,
especially non-profit organizations interested in expanding their programs to a wider audience.
SUSTAINABILITY
The Plaza at Santa Monica is designed in its entirety with environmental goals in mind. This is not just limited
to the building’s sustainable construction practices, water-wise landscape, and systematic recycling plan, but it
also extends to the operation of the public spaces as well. Vendors and food concessionaires will be required to
use recycled or biodegradable products, in compliance with the City’s green ordinances. Maintenance staff will
use cleaning products without harmful biological or chemical contaminants, and will minimize the use of water
in cleaning public spaces. Many of the public programs in the public spaces will focus on teaching the benefits
of conservation and waste reduction, with particular emphasis on outreach to young people.
COORDINATION WITH OTHER VENUES
As mentioned previously, the Open Space Manager for The Plaza will be responsible for coordinating meetings
of an Open Space Coordination Committee no less than quarterly. The OSCC will be tasked with providing
guidance on programming and scheduling matters. The OSCC will be a collaborator in producing a master
calendar of programs and events in the City, so as to avoid scheduling conflicts and cannibalization of programs
with other venues. The OSCC will be comprised of representatives from the city and the community,
including:
Community & Cultural Services
Downtown Santa Monica, Inc.
Project tenants including Hotel, Retailers, and Office tenants
Project residents
Zimmer Museum
Representatives from City Parks and Recreation
Santa Monica Public Library
DTSM
Emeritus College, Santa Monica College, Samohi
Santa Monica Police Department
MONITORING AND METRICS
The Open Space Manager and BRV will evaluate operations at The Plaza on a regular basis to assess the health
and effectiveness of the programming efforts. Key metrics will include: park user counts including ratio of
male to female park visitors; participation levels in programs and classes; crime data in and around the park; and
incidents of quality of life problems including littering and graffiti. Qualitative analysis will include observation
of paths of travel through the open spaces, observation of usage patterns, observations of park host
interactions with visitors, interviews of park users, and interviews of stakeholders.
The Plaza at Santa Monica Open Space Program - Sample List of Activities
SITE AMENITIES - Set up & Monitored by Open Space Hosts
Gathering Areas/Seating
Kiosks/Carts
High-speed WIFI
Bike Amenities
HOSTED DAILY ACTIVITES - Hosted by Open Space Hosts
Games Cart/Reading Library
Active Games (Ping Pong/Table Games…)
Outdoor Library (Books/magazines)
MARKETS
Artisan Food Market in Conjunction w/ Farmers Market
Holiday Markets/Pumpkin Patch/Seasonal Fare
Specialty Markets
PUBLIC EVENTS - Recurring
Art Installations/Artist in Residence
Children's Activities (Imagination Playground, Storytime, Puppets…)
Exercise/Dance/Yoga Classes/Walking Club
Workshops/Classes (Book Club, Crafts, Knitting)
PUBLIC EVENTS - Periodic
Ice Rink
Theater/Screenings
Performances (Music/Dance/Art/Poetry)
Educational Demonstrations
Product Demonstrations
Seasonal Festivals & Events
PRIVATE EVENTS *
Product Launch Events
Banquets & Receptions
Filming
Galas/Charity Events
SPONSORED EVENTS
Product Placement
Sampling
Attributable Sponsorships
* Private events will take place in specified areas. The remaining open space will be open to the public.
F. FINANCIAL ANALYSIS OF
DEVELOPMENT
134 THE PLAZA AT SANTA MONICA
Attachment X – Original Proposal Pro Forma
The table above presents the estimated devel-
opment budget for the project.
Please see the following pages for a more
detailed review of the underlying assumptions
of the budget presented.
Pro Forma Development Budget
(All $ in 000s, except psf values)
DDA & RFP Costs Total
Consultant Fees $530
Closing & Legal Costs 350
Total DDA & RFP Costs $880
Entitlement Total
Entitlement Design $3,000
Entitlement Legal/CEQA/Zoning 1,500
Entitlement Pre-Construction (with GC)772
Other Entitlement Costs 350
Total Entitlement Costs $5,622
Municipal Costs Total
Municipal Fees & Permits $10,000
Bonds 100
Total Municipal Costs $10,100
Hard Costs Unit Per Unit Total
Public Plaza & Grade Level Site & Offsite 69,141 sf $108 PSF $7,438
Outdoor Terraces 94,591 sf $97 PSF 9,195
Parking (including excavation) 1,220 stalls $37,168 /stall 45,345
Retail 40,271 sf $280 PSF 11,259
Cultural / Museum 12,046 sf $282 PSF 3,398
Of¿ce and Flex Of¿ce 257,804 $226 PSF 58,319
Hotel 127,308 sf $374 PSF 47,553
Service Area & Bike Stations 10,753 sf $264 PSF 2,839
Total Construction Costs 448,182 sf $414 PSF $185,346
Retail TIs 40,271 sf $50 PSF 2,014
Of¿ce TIs and FF&E
237,180 sf $50 PSF 12,059
Hotel FF&E 225 keys $30,000 /Key 6,750
Construction Cost Escalation 3.0%28,484
Hard Cost Contingency 10.0%23,465
Total Hard Costs (Incl. Contingency & Escalation)$258,118
Includes $200k of general FF&E
Soft Costs Total
Insurance $3,170
Legal Costs 2,250
Design (Arch. Eng. Consult.)6,000
Testin g & Inspection 2,000
Marketing and Consultant Costs 200
Real Estate Taxes 2,957
Developer Fee (3% of Hard Costs)7,744
Retail Leasing Commissions 1,449
Of¿ce Leasing Commissions 4,923
Bank Tenant Relocation Costs 2,000
Hotel Preopening Costs 3,192
Administrative Costs 70
Soft Cost Contingency 5.0%1,673
Total Soft Costs $84 PSF $37,587
Total Unlevered Development Costs $312,348
Financing Costs Total
Loan Closing Costs & Fees $3,730
Capitalized Interest Reserve 14,331
Total Financing Costs $18,061
Total Development Costs $330,409
+ Operating Losses 896
Total Development Costs & Operating Losses $331,305
135 FINANCIAL ANAL<SIS OF DE9ELOPMENT
Construction Period Sources and Uses
(All $ in 000s, except psf values)
Construction Period Sources Amount %
Construction Loan $215,348 65.0%
Equity Investment 115,957 35.0%
Total Construction Period Sources $331,305 100.0
Construction Period Uses Amount %
DDA & Ground Lease 1egotiation Costs $880 0.3%
Entitlement Costs 5,622 1.7%
Municipal Payments 10,100 3.0%
Hard Costs 258,118 77.9%
Soft Costs 37,629 11.4%
Financing Costs 18,061 5.5%
Subtotal — Construction Uses $330,409 99.7%
Operating Losses During Stabilization 896 0.3%
Total Construction Period Uses $331,305 100.0
Construction Loan Financing Assumptions
Total Investment Requirement (Net of Project Cash Flow) $331,305
Loan-to-Cost 65%
Construction Debt $215,348
Interest Rate L + 300
Amortization Interest Only
Note Implies stabilized debt yield of 11.1%
The tables above reÀect the sources and uses
of funds for the project¶s development.
³Construction Period Uses´ reÀect the
total development costs including operating
losses presented in our development budget
on the previous page. Net operating losses are
part of project uses, and represent losses the
completed project will e[perience upon open-
ing in the immediate months after construction.
³Construction Period Sources´ reÀect our
e[pected eTuity investment and construction
loan amount. The construction loan ¿nancing
assumptions are also summari]ed above, and
further discussed on the subseTuent page.
136 THE PLAZA AT SANTA MONICA
Summary of Development Assumptions
Entitlement and DDA Finalization
As described in our Schedule of Performance in
Section C, we expect to spend two years entitling
the project, by working with and responding to
changes from community and City stakeholders.
As outlined in the Pro Forma Development Budget,
we forecast spending $5.6 million while pursu-
ing our CEQA approvals and entitlements. This
includes $3 million of fees spent on furthering the
project¶s design and architecture and $772,000 for
our general contractor to provide input in the de-
sign and engineering of the project. In addition, we
estimate that the CEQA review process, which we
assume will involve an MND, to cost $1.5 million.
This sum is to cover consultant, land-use and other
legal costs. Finally, in an effort to ensure that the
project is correctly designed and programmed in
response to the community’s needs and is viable
for potential operators, we anticipate spending
$350,000 on marketing and operations consul-
tants.
Concurrently with the entitlement process, we
expect to negotiate the DDA and ground lease with
the City. We estimate legal and other costs associ-
ated with negotiating and executing the DDA and
ground lease to total $350,000. Consultant fees
spent to date through the RFP process are approxi-
mately $530,000, bringing the DDA and RFP costs
to $880,000 total. Entitlement and DDA costs are
not inÀated in our analysis.
Municipal Costs
Total municipal fees to the City, including impact
fees, entitlement fees, plan check fees and build-
ing permit fees are $10 million in our budget. In
addition, we estimate surety and bonding costs of
$100,000.
Hard Costs
The Pro Forma Development Budget presents our
estimates for hard costs by use. As illustrated by
our Schedule of Performance in Section C, we as-
sume project construction to start after three years
of entitlement and predevelopment work, and last
approximately 30 months. We assumed Type 1
concrete frame construction, and as described in
our Design Proposal, twelve stories above ground
with four levels of underground parking. We have
consulted with Morley Construction for indica-
tive construction pricing for our project given our
conceptual designs. As previously listed in our Pro
Forma Development Budget, construction hard
costs are expected to total $185 million in current
dollars, excluding tenant improvements, FF&E
costs and a contingency allowance. The following
provides a description and estimated costs of con-
struction (in current dollars) for each component of
the project as currently designed
Public Plaza and Grade-Level Site & Offsite
Work This represents costs for demolition, site
utilities, landscaping, irrigation and other such
costs for the ground Àoor, totaling $7.4 mil-
lion. The site work is assumed to be performed
across approximately 70,000 square feet of
total on-site and off-site area. This also includes
approximately $190,000 for infrastructure costs
to accommodate the public ice-skating rink. In
addition, we’ve forecast a $100,000 cost for the
construction of the water feature on the ground
Àoor.
Outdoor Terraces Our design includes four
levels of outdoor terraces above the ground Àoor
on each of the rooftops of the building, totaling
about 95,000 square feet. Construction costs,
including landscaping, irrigation and glass rail-
ings total $9.2 million.
Parking (including excavation) The construction
of the below-grade parking level is estimated
to cost $45.3 million, representing approxi-
mately $37,000 per stall. This includes costs for
excavation and earthwork, shoring and founda-
tion work, along with direct costs for the parking
equipment and infrastructure.
Retail and Cultural Construction of the ground
Àoor retail space is forecasted to total $11.3
million, representing about $280 per square foot
(“psf”). This represents construction of a “warm
shell” with H9AC, power distribution, and 18-foot
storefront glass. This estimate excludes costs
for tenant improvements, for which we carry
a separate allowance. In addition, the 12,000
square foot cultural space on the ground Àoor is
expected to cost $3.4 million to construct.
Of¿ce and Flex-Of¿ce Construction of the six
stories of of¿ce and Àex-of¿ce space, totaling
258,000 square feet, is projected to cost $58 mil-
lion. This also represents a “warm-shell” ready
for occupancy, short of any tenant improve-
ments. The cost also provides for balconies on
the perimeter of all of¿ce Àoors.
Hotel Construction of the ¿ve-story, 225-room
hotel is forecasted to cost $47.6 million. This
estimate represents a “turn-key” build-out, but
does not account for speci¿c design ¿nishes in
hotel rooms and common areas, furniture and
other hotel equipment, which are budgeted
separately and described further in this section
within the summary of the project’s ramp up and
operations.
Bike Station and Service Areas As described in
our Design Proposal, the ground Àoor provides
for a bike center for visitors of the project to
use. In addition, the ground Àoor will include a
loading-dock and other service areas for the
retail, cultural and hotel uses. Estimated costs to
construct the service area and bike station total
$2.8 million.
Other costs related to retail and of¿ce tenant im-
provements, and of¿ce and hotel FF&E investment
are included in hard costs. The assumptions for
each are described further in this section along with
the summary of our project ramp up and opera-
tions.
As the project’s construction is expected to
commence approximately three years from today,
we assumed construction cost escalation of 3% per
annum on all hard costs, yielding a $28.5 million
total increase. We are also carrying a hard cost
contingency of 10%. This contingency amounts to
$23.5 million, including the contingency on tenant
improvements and FF&E investment.
Soft Costs
We have budgeted $38 million in soft costs for
the project, which will be expended during the
12-month predevelopment stage through the end
of construction. As discussed in the Schedule of
Performance, the predevelopment period is desig-
nated for ¿nalizing the project’s design and taking
the plans from a conceptual stage to full construc-
tion documentation. This will require substantial in-
put from the architects and other consultants, who
will continue to be involved with the project during
construction. We anticipate spending $6 million in
design, architectural and engineering fees from
predevelopment through project construction. We
also forecast spending $3.2 million on insurance
and administrative costs during predevelopment.
Legal costs, including costs for negotiating the
GMP construction contract, and costs associated
with lease negotiations with tenants, are antici-
pated to total $2.3 million.
During construction, we anticipate spending
$2 million on testing and inspection fees that we
will pay our technical consultants. An additional
$200,000 is anticipated for fees for operational
consultants and project marketing. Real estate
taxes paid prior to the project’s opening are also in-
cluded, and are estimated using the current millage
rate for Downtown Santa Monica of approximately
1.14%, applied to the sites estimated land value
and hard costs spent to date as of the assessment
date. Soft costs also include a budgeted developer
fee based on 3% of all hard costs, which is pro-
jected to be paid to the development team through
the construction period. We’ve also included a $2
million allowance to cover the costs of relocating
the existing bank tenants currently operating on
the site. The soft costs described above are not
inÀation-adjusted in our analysis, and reÀect our
expectations of actual future costs.
Hotel preopening costs and of¿ce and retail
leasing commissions are part of the soft costs
budget and described in further detail within the
summary of our project ramp up and operations.
Financing Costs
We estimate the construction loan sized at 65%
of total developments costs, yielding a maximum
amount of $215 million. Loan proceeds will be
drawn over the course of the construction period
as needed to fund direct construction costs. We
expect the construction loan to have no amortiza-
tion, with an interest rate of approximately 300
basis points above LIBOR. These assumptions are
based on feedback we’ve received from lenders
and loan brokers and from our own experience
securing construction ¿nancing. Our development
budget includes loan closing costs of $3.7 million,
assuming an upfront fee of 1.5% of the maximum
loan amount paid to our lenders and mortgage
brokers and $500,000 of additional closing costs.
13 FINANCIAL ANAL<SIS OF DE9ELOPMENT
Capitalized interest reserve of $14.3 million repre-
sents the total monthly interest expense accrued
on the construction loan through maturity, to the ex-
tent the cost is not funded by property cash Àows.
The construction loan is assumed to be repaid with
proceeds from the permanent loan ¿nancing in
2021, when the project reaches stabilization.
138 THE PLAZA AT SANTA MONICA
Total
Entitlement and Predevelopment Construction Ramp-up and Initial Stabilization
DEVELOPMENT COSTS (UNLEVERED)2013 2014 2015 2016 2017 2018 2019 2020 2021
DDA/Ground Lease Negotiation Costs
Consultant Fees (Including RFP Costs)($530)($530)$0 $0 $0 $0 $0 $0 $0 $0
Closing Costs & Ground Lease Legal (350)(292)(58) 0 0 0 0 0 0 0
Total DDA Negotiation Costs ($880)($821)($58)$0 $0 $0 $0 $0 $0 $0
Total Entitlement Costs ($5,622)$0 ($3,436)($2,186)$0 $0 $0 $0 $0 $0
Total Municipal Costs (10,100)0 (247)(494)(8,014)(646)(646)(54)0 0
Total Hard Costs (258,118)0 0 0 (40,434)(99,098)(89,236)(29,350)(1,737)0
Total Soft Costs (37,629)0 (13)(2,339)(8,114)(7,397)(9,519)(10,246)(720)0
Total Unlevered Development Costs ($312,348)($821)($3,754)($5,019)($56,562)($107,141)($99,401)($39,650)($2,457)$0
PROJECT INCOME
Revenues
Retail Revenue $10,309 $0 $0 $0 $0 $0 $281 $2,845 $3,540 $3,643
Of¿ce Revenue 29,923 0 0 0 0 0 0 2,129 13,210 14,585
Hotel Revenue 60,823 0 0 0 0 0 0 8,229 23,495 29,098
Parking Revenues 10,771 0 0 0 0 0 880 2,697 3,544 3,650
Museum Revenue 2,014 0 0 0 0 0 102 620 637 655
Public Space Revenues 2,842 0 0 0 0 0 123 762 912 1,045
Total Revenues $116,682 $0 $0 $0 $0 $0 $1,386 $17,282 $45,338 $52,676
Expenses
Retail Expenses ($1,171)$0 $0 $0 $0 $0 ($32)($321)($403)($415)
Of¿ce Expenses (6,162)0 0 0 0 0 0 (1,069)(2,494)(2,598)
Hotel Expenses (37,831)0 0 0 0 0 0 (5,428)(14,831)(17,572)
Parking Expenses (3,278)0 0 0 0 0 (382)(937)(965)(994)
Museum Expenses (281)0 0 0 0 0 (14)(86)(89)(91)
Public Space Expenses (2,441)0 0 0 0 0 (117 )(712)(768)(844)
Property Ta x (12,203)0 0 0 0 0 (628)(3,782)(3,858)(3,935)
Total Expenses ($63,366)$0 $0 $0 $0 $0 ($1,174)($12,336)($23,406)($26,449)
Project NOI Before Capital Reserves $53,316 $0 $0 $0 $0 $0 $212 $4,946 $21,932 $26,226
CapEx Reserves ($1,872)0 0 0 0 0 (1)(191)(636)(1,044)
Project NOI Before Ground Rent $51,444 $0 $0 $0 $0 $0 $211 $4,755 $21,296 $25,182
Project Ground Rent (3,900)0 0 0 0 0 0 (1,300)(1,300)(1,300)
Total Project NOI After Ground Rent $47,544 $0 $0 $0 $0 $0 $211 $3,455 $19,996 $23,882
Unlevered Cash Flow ($821)($3,754)($5,019)($56,562)($107,141)($99,190)($36,195)$19,996 $23,882
Project Cash Flow (Up to Stabilization)
(All $ in 000s)
The table presents our estimated development
costs over time (e[cluding ¿nancing costs),
and annual revenues and e[penses during the
project¶s ramp up. The data is presented in
three phases 1) Entitlement and Predevelop-
ment, 2) Construction, and 3) Ramp-up and
Initial Stabilization.
Further detail on development costs, which
are spent over the ¿rst two phases, can be
found on the preceding pages. The last phase
presents the ¿rst three years of the project¶s
operations. The year 2021 represents the
project¶s ¿rst full calendar year of stabilized
operations.
Please see the following pages for further
detail on the project¶s operations through
ramp-up and initial stabilization.
139 FINANCIAL ANAL<SIS OF DEVELOPMENT
Annual Stabilized Project Revenues and E[penses (12-Months Ending Dec-2021)
(All $ in 000s)
Untrended Trended Assumptions
(Current Dollars) (InÀation-Adjusted) Unit of Measurement Revenue Rate (Current Dollars)
Revenues
Retail Revenues $2,938 $3,643 40,271 rentable sf $5.00 psf per month (NNN) $1.40 psf NNN reimbursements 5% vacancy/loss factor
Of¿ce Revenues 11,527 14,585 237,180 rentable sf $4.50 psf per month (FSG) 10% vacancy/loss factor
Hotel Revenues 22,687 29,098 225 rooms $325 ADR and 85.0% Occupancy
Public Space Programming Revenues 992 1,045 See Section E along with the following pages for details on potential public space revenue streams
Museum Revenues 536 655 12,046 rentable sf $30,000, or $2.49 psf, per month
Parking Revenues 2,885 3,650 See notes on the folllowing pages for parking revenue assumptions
Total Project Revenues $41,565 $52,676
Operating Expenses
Retail Expenses ($330)($415)
Of¿ce Expenses (2,054)(2,598)
Hotel Expenses (13,700) (17,572)
Public Space Expenses (860)(844)
Museum Expenses (72)(91)
Parking Expenses (785)(994)
Property Taxes (3,769)(3,935)
Total Project Level Operating Expenses ($21,571) ($26,449) See the following pages for further details on operating expenses
Stabilized Project NOI Before Capital Reserves $19,994 $26,226
Capital Reserves (945)(1,044) See the following pages for details on capital reserves
Stabilized Project NOI Before Ground Rent $19,049 $25,182
Project Ground Rent (1,300)(1,300) See the following pages for further details on the assumed ground rent
Stabilized Project NOI After Ground Rent $17,749 $23,882
Unlevered Development Costs $312,348
Return on Cost 7.65%
The table presents project revenues and
e[penses upon stabilization in 2021, which
reÀects the second full calendar year of the
project¶s operations. Data is presented both
³untrended,´ in current-dollars without any ad-
justment for inÀation, and separately, ³trend-
ed,´ assuming revenue and cost inÀation of 3
per year. The following pages provide further
details on the operating assumptions underly-
ing the information.
The ³Return on Cost´ above represents the
ratio of the stabilized project NOI after ground
rent to ³Unlevered Development Costs,´ which
represents total developments costs e[cluding
¿nancing. Further detail on development costs
can be found on the preceding pages.
140 THE PLAZA AT SANTA MONICA
Project Ramp Up and Operations
Public Plaza and Outdoor Terraces
The project is designed with extensive plaza and
outdoor terrace areas for the public’s use and en-
joyment. The ground Àoor includes a public plaza
of over 20,000 square feet along 4th Street and
Arizona, in addition to approximately 9,000 square
feet of other ground level “pocket parks” open to
the public. The project’s design also includes a
13,000 square foot public terrace on the second
story, overlooking the ground Àoor plaza level. As
described in Section E, we expect the public plaza
and terraces to be utilized for a variety of programs
and special events.
We estimate that the annual operating costs for
the project’s public space will total approximately
$860,000 per year upon stabilization (in current
dollars). Speci¿cally, direct costs to market and
operate the events and programming outlined in
Section E are estimated to run $200,000 per year.
Landscaping and maintenance are estimated to
cost an additional $265,000 per year. Other ex-
penses, including security, insurance and admin-
istrative costs are projected to total $400,000 per
year.
We’ve had extensive discussions with Bie-
derman Redevelopment Ventures to formulate
estimates on various revenue streams that could
help offset the abovementioned costs. We envision
revenue generated from a variety of programs that
would bene¿t the general public, including art and
¿tness classes, vendor kiosks, outdoor food and
beverage stations and special event programming.
In addition, private events, corporate sponsor-
ships and potential naming opportunities are also
expected to generate incremental revenue. When
considering the annual expenses and various
revenue streams, we expect the public space com-
ponent of the project to break-even or potentially
generate a slight pro¿t in the long-run.
Cultural Area
Our project is currently designed to include 12,000
square feet of ground-Àoor museum or exhibit
space, which we believe would be a welcomed
addition to Downtown Santa Monica. We’ve had
discussions with a number of potential operators,
including the Zimmer Children’s Museum, which
is reÀected in our ¿nancial analysis. We assumed
a monthly rent of $30,000 based on our conver-
sations with the Zimmer. The implied rental rate
of approximately $2.50 per square foot (“psf”)
represents a signi¿cant discount to rents for the
project’s neighboring retail tenants, projected at
$5.00 per square foot (as described below). Oper-
ating expenses were assumed to be in-line with the
overall retail component of $0.50 per square foot
per month, as discussed below.
Retail Leasing and Operating Assumptions
The ground Àoor retail level is currently designed to
provide approximately 40,000 square feet of retail
space. We estimate that 50% of the retail space
will be pre-leased (before the end of construction),
with the remaining space fully leased six months
after the project’s opening. We assume an average
rental rate of $5.00 psf per month, “triple-net,” for
the retail level, consistent with current market rents
for ground Àoor retail space on streets adjacent
to the Third Street Promenade. Retail revenues
presented in our ¿nancial exhibits are inclusive of
tenant “triple-net” reimbursements of $1.40 psf,
which represent reimbursement for management
fees, property taxes and other operating expenses.
Tenant improvement allowances are estimated to
average $50 psf. Leases are assumed to aver-
age a term of ten years, with leasing commissions
estimated to total 6% of the base rent over the ¿rst
¿ve years of lease term and 3% over the next ¿ve
years.
Upon stabilization, we assume a general
vacancy and collection loss of 5% and property
management fees of 3% of revenue. Other retail
operating expenses (excluding property taxes and
reserves) are estimated at $0.50 psf per month,
yielding total retail operating expenses, before
tenant reimbursements, of $330,000 per year (in
current dollars) upon stabilization.
Of¿ce and Flex Of¿ce Leasing and Operating
Assumptions
The project’s of¿ce space (including the Àex of¿ce)
totals approximately 237,000 rentable square feet
across six stories. We estimate that approximately
50% of the of¿ce space will be pre-leased prior to
the end of construction, while the remaining portion
will be leased after the end of construction at a rate
of 16,000 square feet per month. Thus, the of¿ce
component is assumed to achieve stabilization
within the ¿rst year of the project’s opening.
We assume an average rental rate of $4.50 psf
per month, full-service gross, for the project’s of¿ce
space. This rate is supported by current rents at
comparable Class A of¿ce buildings in Downtown
Santa Monica. The newness of our product and the
scarcity of large Àoor-plate creative of¿ce space in
the Downtown Core are expected to put upward
pressure on these rents.
First generation tenant improvement allow-
ances for of¿ce tenants are estimated to average
$50 psf. Of¿ce leases are assumed to average a
term of ¿ve years, with leasing commissions esti-
mated to total 6% of the base rent over the lease
term. Upon stabilization, we assume a general
vacancy and collection loss of 10%.
Property management fees are estimated at 3%
of of¿ce revenue. Other of¿ce operating expenses
(excluding property taxes and capital reserves) are
projected at $0.60 psf per month, resulting in $2.1
million of annual expenses upon stabilization (in
current dollars).
We have designed our project, particularly the
building Àoor plates and circulation, to accom-
modate multifamily residential units on Àoors ¿ve
through seven in lieu of of¿ce space. Substituting
this use in our ¿nancial model has minimal impact
to the estimated yield or cash-on-cash returns.
Therefore, although the attached analysis as-
sumes six levels of of¿ce space (including the Àex
of¿ce space), constructing multifamily units on
Àoors ¿ve, six and seven is entirely feasible given
our Àexible design and the negligible impact of this
substitution on our project-level returns.
Hotel Capital Investment and Operating
Assumptions
The hotel is currently designed with 225 rooms on
the top ¿ve levels of the project. We envision the
hotel operated as a full-service loft-style hotel by
an independent hotel manager that specializes in
high-end urban locations. We estimate an upfront
FF&E investment of $30,000 per room, or approxi-
mately $7 million total (in current dollars), for spe-
ci¿c design ¿nishes in hotel rooms and common
areas, furniture and other hotel equipment. The ho-
tel’s “pre-opening” period will begin approximately
three months prior to the end of construction and
span about nine months. This period is designated
to allow for the hiring and training of the sales and
marketing personnel and operations team, the in-
stallation and ramp up of the reservations systems
and other equipment and IT installation, along with
the furnishing and ¿nal designing of the hotel. In
all, the pre-opening period (excluding the FF&E
investment) is forecasted to cost approximately
$2.7 million (in current dollars), which is in-line with
the team’s experience developing other full-service
hotels as well as guidance from hotel operators.
The hotel is forecasted to open six months after
the end of construction, and assumed to achieve
stabilization within 18 months of its opening. There-
fore, since the hotel is the last portion of the project
to reach stabilization, overall project stabilization
is assumed to be reached in the second year
of the project’s opening. Upon stabilization, we
forecast an average daily rate of $325 (in current
dollars) and occupancy of 85%, consistent with
current metrics for comparable full-service hotels
in the Downtown Santa Monica area. While the
hotel is ramping up in the ¿rst year of operations,
we expect the rate and occupancy achieved to be
signi¿cantly lower than the above levels, with a
RevPAR penetration of 70%. Based on extensive
conversations with potential operators and assum-
ing unionized labor, we project the hotel to operate
at a gross operating pro¿t margin (net of room
expenses and administrative expenses) of 45%
once it is stabilized. Management fees are esti-
mated at 4% of total revenue. In all, hotel operating
expenses (excluding reserves) are estimated to be
$13.7 million (in current dollars) upon stabilization.
After accounting for a 4% FF&E reserve and an
allocation of property taxes (based on share of total
gross square footage), the hotel is projected to
have a net operating income margin of 31% upon
stabilization.
Parking Operations
The subterranean parking garage includes 1,220
stalls that will serve the various uses of the project
in addition to provide parking to the general public.
We developed our ¿nancial projections for the
project’s parking based on extensive discussions
with Standard Parking, which, along with its af¿li-
ate, Central Parking, is an experienced mixed-use
garage operator with locations in Santa Monica.
Approximately 580 spaces are allocated to
the project’s retail and cultural components and
the general public. Such spaces include the
141 FINANCIAL ANAL<SIS OF DEVELOPMENT
replacement of the 339 existing spaces in Park-
ing Structure 3. Retail and public parking patrons
are estimated to park for an average duration of
three hours during weekdays and 2.6 hours during
weekends (including Friday night), with each spot
turning three times on weekdays and ¿ve times on
weekends. These estimates are consistent with
current parking patterns at other Downtown Santa
Monica lots operated by Standard Parking. Our
assumptions reÀect the current daily parking rates
for the City’s Downtown Structures. Using this rate
structure, we estimate the average weekday stay
costing $2.50 per patron and weekend stay costing
$1.50 per patron (in current dollars).
Approximately 490 spaces are designated for
tenants of the project’s of¿ce space. The project’s
of¿ce tenants are expected to require monthly
parking permits at a rate of three spaces per thou-
sand square feet of of¿ce area, while the Àex of¿ce
is estimated at a rate of one space per thousand
square feet. Monthly spaces were projected to
generate $160 per reserved space and $120 per
unreserved space.
The project’s hotel will use approximately 150
parking spaces. We project that less than one
in every three occupied hotel rooms will require
overnight parking, which is supported by current
data that suggests that the vast majority of Santa
Monica hotel patrons do not drive a car but use
other means of transportation. Overnight hotel
parking rates are estimated to be $30, consistent
with current rates at comparable Downtown Santa
Monica hotels. Employee parking is also projected
assuming one hotel employee per occupied room,
with 50% of employees requiring a parking space
while the rest using other transportation means.
In sum, total annual net parking revenue (net of
sales tax) is forecasted to be $2.9 million (in current
dollars). Stabilized parking operating expenses
are forecasted to be approximately $785,000 per
year, consisting of $600,000 of employee and
employee-related expenses, with the balance
comprised of repairs and maintenance, insurance,
management fees and administrative costs. Under
the above assumptions, the project’s parking is
forecasted to yield an annual net operating income
of $2.1 million (in current dollars).
Capital Reserves
Capital improvement reserves are based on each
of the project’s various components, and represent
funds set aside for long-term capital expenses
and repairs. Replacement reserves for the retail
and of¿ce components are estimated at $0.15 per
occupied square foot per annum, yielding approxi-
mately $40,000 per year (in current dollars). Hotel
FF&E reserves were calculated assuming 4% of
gross hotel revenue, which yields approximately
$900,000 per year upon stabilization (in current
dollars).
InÀation Adjustments
All of the above development cost, revenue and
operating expense ¿gures are stated at today’s
dollars. Our ¿nancial analysis assumes revenue
and cost inÀation of 3% per annum. Hence, the
project’s opening in 2019 reÀects approximately
six years of inÀation applied to the aforementioned
¿nancial ¿gures.
Property Taxes and Ground Rent
Property taxes for the project are estimated us-
ing the current millage rate for Downtown Santa
Monica of approximately 1.14%, applied to the pro-
ject’s estimated land value and hard costs. Annual
direct assessments of approximately $400,000 are
also added to calculate total property taxes after
construction completion.
We believe that the project can sustain a
ground rent of between $1.0-1.5 million. We used
$1.3 million as a representative amount in our
analysis. Additional information on the ground
rent payment is provided further in this section
within the summary of the proposed ground lease
structure.
142 THE PLAZA AT SANTA MONICA
Permanent Sources and Uses
(All $ in 000s, except psf values)
Permanent Sources
Permanent Loan $278,625 70.0%
Stabilized Equity 119,411 30.0%
Total Permanent Sources $398,035 100.0
Permanent Uses Amount %
Construction Loan Repayment $215,348 54.1%
Retained Equity Value 119,411 30.0%
Return of Equity from Permanent Loan Financing 56,806 14.3%
Financing Costs 6,471 1.6%
Total Permanent Uses $398,035 100.0
Stabilized Project Value and Loan Amount
Stabilized Net Operating Income (year-end 2021) $23,882
Cap Rate 6.00%
Stabilized Value $398,035
Loan-to-Value 70%
Loan Amount $278,625
Financing Assumptions (Permanent Loan)
Loan-to-Value 70%
Loan Amount $278,625
Interest Rate 5.00%
Amortization 30 years
Loan Constant 6.44%
Annual Debt Service $17,949
The analysis presents our methodology for
projecting the permanent sources of funds, or
in other words, the project¶s capital structure
upon stabilization.
In order to derive the permanent loan
amount, we ¿rst estimated the stabilized value
of the project by applying a 6 capitalization
rate to the stabilized net operating income. :e
then assumed a 70 loan-to-value to estimate
the permanent loan amount. The difference
between the stabilized value and the perma-
nent loan amount reÀects the implied stabilized
eTuity value presented above. Our permanent
sources reÀect the above calculated perma-
nent loan and stabilized eTuity values.
Permanent uses include the repayment
of the construction loan, the upfront ¿nanc-
ing costs for closing the permanent loan,
the implied eTuity value (based on 70 LTV
described above) and proceeds distributed
to eTuity holders from the permanent loan
¿nancing.
The bottom chart presents the e[pected
terms for the permanent loan.
143 FINANCIAL ANAL<SIS OF DEVELOPMENT
Stabilized Return on ETuity
(All $ in 000s)
Stabilized Net Operating Income (year-end 2021)$23,882
Less Stabilized Debt Service (17,949)
Operating Equity Cash Flow $5,934
Initial Equity Investment $115,957
Less Return of Equity from Permanent Loan Financing (56,806)
Invested Equity Remaining $59,150
Return on Invested Equity (cash-on-cash) 10.0%
The table presents the return on eTuity that
we are projecting upon reaching stabilization
after re¿nancing our construction loan with a
permanent loan. The return on eTuity is derived
by calculating the ratio of operating eTuity cash
Àow to invested eTuity remaining.
³Operating ETuity Cash Flow´ is calculated
by subtracting stabilized debt service (pre-
sented on the preceding page) from stabilized
net operating income.
³Invested ETuity Remaining´ represents
the initial amount of eTuity invested less the
proceeds distributed to eTuity holders from the
permanent loan ¿nancing (presented on the
preceding page).
The team¶s threshold internal rate of return
is 15±20.
144 THE PLAZA AT SANTA MONICA
145 FINANCIAL ANAL<SIS OF DEVELOPMENT
Stabilized Year #Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11 Yr. 12
Calendar Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Revenues
Retail Revenues $3,643 $3,748 $3,857 $3,969 $4,085 $4,203 $4,326 $4,451 $4,581 $4,714 $4,851 $4,992
Of¿ce Revenues 14,585 15,022 15,473 15,937 16,415 16,907 17,415 17,937 18,475 19,030 19,600 20,188
Hotel Revenues 29,098 29,971 30,871 31,797 32,751 33,733 34,745 35,787 36,861 37,967 39,106 40,279
Public Space Programming Revenues 1,045 1,076 1,108 1,142 1,176 1,211 1,247 1,285 1,323 1,363 1,404 1,446
Museum Revenues 655 674 693 713 733 754 775 797 820 843 867 892
Parking Revenues 3,650 3,759 3,872 3,988 4,108 4,231 4,358 4,489 4,624 4,762 4,905 5,052
Total Project Revenue $52,676 $54,251 $55,874 $57,546 $59,267 $61,040 $62,866 $64,747 $66,684 $68,679 $70,734 $72,850
Operating Expenses
Retail Expenses ($415) ($427) ($440) ($453) ($467) ($481) ($495) ($510) ($525) ($540) ($556) ($573)
Of¿ce Expenses (2,598) (2,676) (2,756) (2,839) (2,924) (3,012) (3,102) (3,195) (3,291) (3,390) (3,492) (3,597)
Hotel Expenses (17,572) (18,099) (18,642) (19,202) (19,778) (20,371) (20,982) (21,612) (22,260) (22,928) (23,615) (24,324)
Public Space Expenses (844) (869) (896) (922) (950) (979) (1,008) (1,038) (1,069) (1,101) (1,134) (1,169)
Museum Expenses (91) (94) (97) (100) (103) (106) (109) (112) (116) (119) (123) (127)
Parking Expenses (994) (1,024) (1,054) (1,086) (1,119) (1,152) (1,187) (1,222) (1,259) (1,297) (1,336) (1,376)
Property Taxes (3,935) (4,013) (4,094) (4,176) (4,259) (4,344) (4,431) (4,520) (4,610) (4,702) (4,796) (4,892)
Total Project Operating Expenses ($26,449) ($27,204) ($27,979) ($28,778) ($29,599) ($30,444) ($31,314) ($32,209) ($33,130) ($34,078) ($35,053) ($36,057)
Project NOI Before Capital Reserves $26,226 $27,048 $27,895 $28,768 $29,668 $30,596 $31,552 $32,538 $33,554 $34,601 $35,681 $36,794
Capital Reserves (1,044) (1,075) (1,108) (1,141) (1,175) (1,210) (1,247) (1,284) (1,323) (1,362) (1,403) (1,445)
Project NOI Before Ground Rent $25,182 $25,972 $26,787 $27,627 $28,493 $29,385 $30,305 $31,254 $32,231 $33,239 $34,278 $35,349
Project Ground Rent (1,300) (1,300) (1,300) (1,495) (1,495) (1,495) (1,495) (1,495) (1,719) (1,719) (1,719) (1,719)
Project NOI After Ground Rent $23,882 $24,672 $25,487 $26,132 $26,998 $27,890 $28,810 $29,759 $30,512 $31,520 $32,558 $33,629
Total Project Margin 45% 45% 46% 45% 46% 46% 46% 46% 46% 46% 46% 46%
Rollover Leasing Costs
Rollover Retail TI Reserves ($125) ($129) ($132) ($136) ($140) ($145) ($149) ($153) ($158) ($163) ($168)
Rollover Of¿ce TI Reserves (774) (797) (821) (845) (871) (897) (924) (952) (980) (1,009) (1,040)
Total Rollover TI Allowance Reserves ($898) ($925) ($953) ($982) ($1,011) ($1,042) ($1,073) ($1,105) ($1,138) ($1,172) ($1,207)
Rollover Retail Leasing Commission Reserves ($102) ($105) ($108) ($111) ($115) ($118) ($122) ($125) ($129) ($133) ($137)
Rollover Of¿ce Leasing Commission Reserves (685) (705) (726) (748) (770) (794) (817) (842) (867) (893) (920)
Total Rollover Leasing Commissions Reserves ($787) ($810) ($834) ($859) ($885) ($912) ($939) ($967) ($996) ($1,026) ($1,057)
Total Leasing Costs ($1,685) ($1,736) ($1,788) ($1,841) ($1,897) ($1,953) ($2,012) ($2,072) ($2,135) ($2,199) ($2,265)
Operational Cash Flow (Net of Rollover Leasing Costs) $23,882 $22,987 $23,752 $24,344 $25,156 $25,994 $26,857 $27,747 $28,440 $29,385 $30,360 $31,365
Return on Cost (Operation Cash Flow / Unlevered Costs) 7.6% 7.4% 7.6% 7.8% 8.1% 8.3% 8.6% 8.9% 9.1% 9.4% 9.7% 10.0%
20-<ear Stabilized Returns
(All $ in 000s, except psf values)
146 THE PLAZA AT SANTA MONICA
Yr. 13 Yr. 14 Yr. 15 Yr. 16 Yr. 17 Yr. 18 Yr. 19 Yr. 20
2033 2034 2035 2036 2037 2038 2039 2040
$5,138 $5,287 $5,442 $5,600 $5,763 $5,931 $6,104 $6,282
20,794 21,418 22,060 22,722 23,404 24,106 24,829 25,574
41,487 42,732 44,014 45,335 46,695 48,095 49,538 51,024
1,489 1,534 1,580 1,628 1,676 1,727 1,778 1,832
917 943 970 998 1,026 1,056 1,086 1,117
5,204 5,360 5,521 5,687 5,857 6,033 6,214 6,400
$75,030 $77,275 $79,587 $81,969 $84,422 $86,948 $89,550 $92,230
($590) ($608) ($626) ($644) ($663) ($683) ($704) ($725)
(3,704) (3,816) (3,930) (4,048) (4,169) (4,294) (4,423) (4,556)
(25,054) (25,805) (26,579) (27,377) (28,198) (29,044) (29,915) (30,813)
(1,204) (1,240) (1,277) (1,315) (1,355) (1,395) (1,437) (1,480)
(130) (134) (138) (142) (147) (151) (156) (160)
(1,417) (1,459) (1,503) (1,548) (1,595) (1,643) (1,692) (1,743)
(4,990) (5,090) (5,192) (5,296) (5,402) (5,510) (5,620) (5,732)
($37,089) ($38,152) ($39,245) ($40,371) ($41,529) ($42,720) ($43,947) ($45,209)
$37,941 $39,123 $40,342 $41,598 $42,893 $44,228 $45,603 $47,021
(1,489) (1,533) (1,579) (1,627) (1,675) (1,726) (1,777) (1,831)
$36,452 $37,590 $38,763 $39,972 $41,218 $42,502 $43,826 $45,190
(1,719) (1,977) (1,977) (1,977) (1,977) (1,977) (2,274) (2,274)
$34,733 $35,613 $36,786 $37,994 $39,240 $40,525 $41,552 $42,917
46% 46% 46% 46% 46% 47% 46% 47%
($173) ($178) ($183) ($189) ($194) ($200) ($206) ($212)
(1,071) (1,103) (1,136) (1,170) (1,205) (1,242) (1,279) (1,317)
($1,244) ($1,281) ($1,319) ($1,359) ($1,400) ($1,442) ($1,485) ($1,530)
($141) ($145) ($150) ($154) ($159) ($164) ($169) ($174)
(948) (976) (1,005) (1,035) (1,067) (1,099) (1,131) (1,165)
($1,089) ($1,121) ($1,155) ($1,190) ($1,225) ($1,262) ($1,300) ($1,339)
($2,332) ($2,402) ($2,475) ($2,549) ($2,625) ($2,704) ($2,785) ($2,869)
$32,401 $33,210 $34,311 $35,446 $36,615 $37,821 $38,767 $40,048
10.4% 10.6% 11.0% 11.3% 11.7% 12.1% 12.4% 12.8%
The e[hibit presents the unlevered operating
cash Àows for the twenty-year period following
project stabilization.
The last line of the table presents the annual
return on cost, which reÀects the ratio of
operating cash Àow (net of leasing costs) for
a given year, to total unlevered development
costs of $312.3 million, presented earlier in this
section (see Pro Forma Development Budget).
For more detail on the operating assump-
tions used above, please refer to the following
page.
147 FINANCIAL ANAL<SIS OF DEVELOPMENT
Long-Run Operating Assumptions
Revenue & Expense Assumptions
Long-run revenue is forecasted assuming each
revenue stream grows at 3% per annum after sta-
bilization. Operating expenses, excluding property
taxes, are also assumed to grow at the long-run in-
Àation target rate of 3% per annum. Property taxes
are assumed to grow at 2% per year, consistent
with California Proposition 13.
Assumptions Affecting the Project¶s
Economic Feasibility
The project’s feasibility is dependent on the avail-
ability of construction loan ¿nancing at the time
when the project is entitled, which is currently
forecasted to occur in the second half of 2015. DL-
Real Estate Capital Partners has proven its ability
to secure construction ¿nancing in even dif¿cult
economic environments, evinced by the close of
the $130 million construction loan for the Boulevard
6200 mixed-use development in May 2012. That
said, the team is nonetheless subject to the risks
of the overall construction loan market. As outlined
in the exhibits earlier in this section presenting our
construction sources & uses, we assume a con-
struction loan in the amount of 65% loan-to-cost
at a rate of 300 basis points over LIBOR. These
metrics are based on initial indications we received
from our relationship lenders and brokers. We used
market forecasts for future LIBOR rates, which are
expected to rise to 3.0% by 2019, to project our
interest costs. A lack of construction ¿nancing or a
dramatic increase in market interest rates above
what is forecasted would meaningfully impact the
economics of the project.
The cost and length of time for the project’s
entitlement process also affects its economic
feasibility. Currently, we expect the length of time
from RFP team selection until ¿nal entitlement
to span two years. One underlying assumption
includes a reduced CEQA review process (of six
months total), as we expect to work with the City to
ensure our project is included in the future Down-
town Speci¿c Plan EIR. Based on the above timing
estimates, we expect the entitlement process to
cost approximately $5.4 million. Additional time or
expense for entitlement costs will put pressure on
the feasibility of the project.
Municipal costs also bear a signi¿cant impact
on the feasibility of the project. Based on the City’s
current fee schedule and discussions with land-
use attorneys, we estimate total municipal costs
of $10.1 million. We also assume that approxi-
mately 50% of the total of¿ce space will be used as
creative of¿ce space, thereby providing a partial
exception to the Park and Housing fees assessed
on newly built of¿ce product. Increases in the City’s
municipal fee structure can affect the feasibility of
the project as it is currently designed.
The feasibility of the project is also predicated
on an ef¿cient and cost-effective relocation of the
two existing bank tenants on the site. Currently,
our development budget includes a $2 million
allowance to cover the costs of negotiating and
relocating the two bank tenants.
The hard costs are expectantly the most
signi¿cant share of the project’s total development
budget. As discussed, we consulted with Morley
Construction in order to forecast hard costs. The
estimates we received were based on the current
conceptual designs presented. However, the hard
costs are only preliminary estimates and can be
affected by a variety of factors, both speci¿c to
the project and market factors outside the team’s
control. We applied a 3% annual inÀation factor
to the estimates and included a 10% contingency
in our budget. Hard cost escalations beyond the
¿gures projected will directly impact the economics
of the project.
Ground Rent
Ground lease payments start at the initial assumed
rent amount of $1.3 million and increase by 15%
every ¿ve years. The ¿rst increase of 15% in 2024
represents the sixth year of the project’s opera-
tions. Further detail on the assumed ground rent
can be found later in this section in our discussion
of the proposed ground lease terms.
Rollover Leasing Costs
In order to project long-run leasing costs, we
assumed a certain level of turnover in the retail
and of¿ce components. Each year after the ¿rst
stabilized year, we assume 10% of the retail
tenancy and 20% of the of¿ce tenancy (by square
footage) “rolls,” or expires. This is consistent with
our assumption during our ¿rst generation lease up
of ¿ve-year average lease terms for of¿ce space
and ten-year average lease terms for retail. Of
the expiring leases, 75% are assumed to renew
while 25% are assumed to vacate. All new and
renewing retail leases are assumed to have a term
of 10 years, while new/renewing of¿ce leases are
assumed to have a ¿ve-year term.
Retail tenants that renew are assumed to re-
quire a $15 per square foot (“psf”) tenant improve-
ment allowance (in current dollars), while of¿ce
tenants that renew are assumed to require a $5 psf
tenant improvement allowance (in current dollars),
consistent with other commercial projects owned
and operated by the team. New retail tenants
taking vacated space are assumed to require a $50
psf tenant improvement allowance while new of¿ce
tenants are assumed to require a $35 psf tenant
improvement allowance (in current dollars). Leas-
ing commissions for new leases are calculated
assuming a 6% commission on the ¿rst ¿ve-year’s
of base rent, and in the case of retail tenants, a 3%
commission on the last ¿ve year’s of base rent.
All tenant improvement allowances quoted
above in current dollars are inÀated at 3% per
annum from today and through the 20-year period
presented in the analysis.
148 THE PLAZA AT SANTA MONICA
Potential Responsibilities and Obligations for
the City to Accept
Although the team will spearhead the major steps
required to bring the project to fruition, the City’s
help and initiative will be crucial in certain steps in
the process. Firstly, we will request for the City’s
cooperation during the entitlement process and
request priority processing of our applications in
order to meet the timeline set out in our Schedule
of Performance. As previously mentioned, we also
expect to work with City staff to assure that our pro-
ject is incorporated into the EIR for the Downtown
Speci¿c Plan (“DSP”). Accordingly, we anticipate
the project’s inclusion in the DSP EIR to result in a
streamlined CEQA process.
Finally, the development is not possible without
a renegotiation of the leases with the two existing
bank tenants. We will request the City’s coopera-
tion in negotiating with the tenants and exploring
other locations for them while the project is under
construction. Although, we will take the lead in
negotiations, the City’s resources and coopera-
tion will be helpful in achieving an expedited and
ef¿cient resolution of the matter.
Proposed Ground Lease Term and Structure
We are proposing a ground lease with the following
terms, which we believe are both advantageous to
the City of Santa Monica while also fostering the
success of the project. We propose a ground lease
with an initial term of 99 years. Based on guidance
we’ve received from construction lenders, a mini-
mum 99-year term is essential in order to secure
proper construction and permanent ¿nancing for
the project. Our proposal includes one 55-year
extension option after the initial 99-year term.
Our ¿nancial projections imply that the devel-
opment can sustain a ground lease payment in the
range of $1.0 to $1.5 million annually. The speci¿c
payment within this range will depend somewhat
on other cost savings or abatements that the City
may be able to facilitate. We have assumed that
these payments commence at the delivery of the
project, and escalate by 15% every ¿ve years. For
the purposes of running our pro forma, we have
assumed a starting annual payment of $1.3 million,
slightly higher than the midpoint of our feasible
range.
Financial Contingencies Imposed on the
Proposal
This proposal is contingent on securing construc-
tion loan ¿nancing before the commencement
of construction. We are con¿dent that we can
successfully leverage our extensive relationships
with lenders and mortgage bankers to source debt
¿nancing for the project. As previously mentioned,
DL- Real Estate Capital Partners successfully
closed on a $130 million construction loan in May
2012 with a syndicate of banks led by Bank of
America, for its 600,000 square foot mixed-use
development in Hollywood. We have had prelimi-
nary conversations with our existing relationship
banks on potential terms for a debt ¿nancing of
the project. As previously mentioned, our ¿nan-
cial analysis assumes a construction loan in the
amount of 65% of total development costs, at a rate
of 300 basis points over LIBOR.
The proposal is also premised on the assump-
tions previously described in this section. There-
fore, the ground lease terms proposed are contin-
gent on certain parameters that affect the ¿nancial
feasibility of the project. Speci¿cally, our ground
lease structure is contingent on the project’s FAR
of 3.75 and building height of 148 feet. Achieving
this scale is required in order for the ground lease
structure to be economically feasible, and in order
for our project to generate suf¿cient revenues to
enable us to provide the public bene¿ts outlined in
our proposal.
149 FINANCIAL ANAL<SIS OF DEVELOPMENT
500 SOUTH GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 PHONE 213.622.8095
1510.001.SM:KHH
WWW.KEYSERMARSTON.COM 19305.012.002
ADVISORS IN: Real Estate Redevelopment Affordable Housing Economic Development
SAN FRANCISCO A. Jerry Keyser Timothy C. Kelly Kate Earle Funk Debbie M. Kern Reed T. Kawahara David Doezema
LOS ANGELES Kathleen H. Head James A. Rabe Gregory D. Soo-Hoo Kevin E. Engstrom Julie L. Romey
SAN DIEGO Paul C. Marra
ATTACHMENT U
MEMORANDUM
To: Andy Agle, Director of Housing and Economic Development
City of Santa Monica
From: Kathleen Head
Tim Bretz
Date: October 11, 2015
Subject: Plaza at Santa Monica: Alternatives Testing Analysis
At your request, Keyser Marston Associates, Inc. (KMA) prepared conceptual pro forma
analyses for the prospective development of the 2.57-acre property known as the 4th and
Arizona Site (Site). The purpose of the KMA analysis is to provide the City of Santa
Monica (City) with order-of-magnitude estimates of the value supported by the Site
under the scope of development being proposed by the Metropolitan Pacific
development team (Developer), and under five additional conceptual development
scenarios.
BACKGROUND STATEMENT
The Developer was selected by the City in a Request for Qualifications (RFQ) process,
followed by a Request for Proposals (RFP) process. The private scope of development
being proposed by the Developer (Proposed Project) is described in the following table:
Office 206,800 square feet
Retail 42,200 square feet
Hotel 195 rooms
Parking 788 spaces
In addition, the City is proposing to require the Developer to provide the following uses:
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Public Parking 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 units
To provide the City with context in evaluating the financial characteristics of the
Proposed Project, KMA prepared conceptual pro forma analyses for the Proposed
Project and five alternative development scopes that use the Proposed Project as the
foundation. The development scenarios tested in the analyses are as follows:
Alternative Project Scope
1 Proposed Project
2 The 206,800 square foot office component is removed and replaced
by 165 market-rate apartments.
3 The 206,800 square foot office component is removed and replaced
by 228 additional hotel rooms.
4 The 206,800 square foot office component removed, and no
alternative space is added.
5 The 206,800 square foot office component is reduced by 100,000
square feet, and replaced with 110 additional hotel rooms.
6 The 206,800 square foot office component is reduced by 100,000
square feet, and no alternative space is added.
An analysis of the City required uses indicates that each use generates insufficient
revenue to fund 100% of the costs associated with the development of the use. The
resulting financial gaps diminish the land value that can be supported by the Site. To
assist in the comparative evaluation, the financial gap associated with each of these City
required uses is estimated for each development scenario being tested.
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EXECUTIVE SUMMARY
The purpose of this analysis is to provide order-of-magnitude estimates of the ground
lease payments and City required uses that can be supported by the development of the
Site. However, it is important to understand that the alternative development scopes are
strictly conceptual in nature. Therefore, this analysis should only be used to provide an
understanding of the relative financial characteristics of the alternatives being tested.
The results of the comparative analysis are summarized in the following table:
Alternative
Scope
Supportable
Ground
Lease
Payment
Required
Reduction in
City Required
Uses
1 Proposed Project $1,354,000 1 0%
2 No Office / 165 Market Rate
Apartments
$0 $42,174,000 /
63%
3 No Office / 228 Additional
Hotel Rooms
$0 $12,566,000 /
19%
4 No Office / No Alternative Use $0 $26,543,000 /
42%
5 Office Reduced by100,000 Sf
/ 110 Additional Hotel Rooms
$0 $2,686,000 /
4%
6 Office Reduced by 100,000 Sf
/ No Alternative Use
$0 $7,729,000 /
11%
The following key findings can be derived from the following analysis:
1. The net cost associated with providing 339 public parking spaces, programmed
open space 1,700 square feet of bike storage space, 12,000 square feet of
cultural space, and 48 affordable housing units is estimated to range from $62.9
million to $71.2 million across the six alternatives being evaluated
a. The net cost equates to between $561 and $636 per square foot of land
area.
1 The Developer’s proposal set the annual ground lease payment at $1.3 million. The $54,000
difference should be considered inconsequential at this point in the process.
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b. Based on the results of the KMA analysis, the total project needs to have
a floor area ratio (FAR) in the range of 3.75 to 1 to generate sufficient
value to offset the net costs associated with the uses being required by
the City.
2. Office use is a major driver of the project economics. The substitution of market-
rate apartments or additional hotel rooms cannot fully compensate for a
significant reduction in the amount of office space.
3. If the City wishes to significantly reduce the amount of office space provided in
the project, it will likely be necessary to scale back the scope of the uses being
required by the City.
ANALYSIS
The six alternative development scopes are described in Table 1, and the pro forma
analysis results are summarized in Table 2. The complete pro forma analyses are
provided in Exhibits I through VI.
Alternative 1: Proposed Project (Exhibit I)
Scope of Development
Office 206,800 square feet
Retail 42,200 square feet
Hotel 195 rooms
Parking
Project 788 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 420,000 square feet
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Gross Supportable Land Value
The gross land value supported by the proposed mix of private uses is estimated at
$84.8 million. This equates to $757 per square foot of land area.
Land Value Offsets
The estimated net costs for the uses being required by the City are:
City Required Use Net Costs
Public Parking $22,771,000
Open Space / Bike Storage 31,415,000
Cultural Space 6,172,000
Affordable Housing 10,886,000
Total $71,244,000
Per Square Foot of Land Area $636
Net Land Value and Supportable Ground Lease Payment
The estimated net land value and ground lease payment supported by the Proposed
Project are shown in the following table:
Total
Per Square
Foot
Gross Supportable Land Value $84,781,000 $757
(Less) Land Value Offsets (71,244,000) ($636)
Net Land Value $13,537,000 $121
It is assumed that the ground lease payment will be set at 10% of the net land value.
For the Proposed Project, this equates to a base ground lease payment of $1,354,000
per year.
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Alternative 2: Office Replaced with Market Rate Apartments (Exhibit II)
Scope of Development
Market Rate Apartments 165 units
Retail 42,200 square feet
Hotel 195 rooms
Parking
Project 589 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 420,000 square feet
Gross Supportable Land Value
The gross land value supported by the private uses included in Alternative 2 is estimated
at $25.3 million, or $226 per square foot of land area. This dramatic decrease in the
supportable land value is largely attributable to the following factors:
1. The project’s design features do not allow for the market rate apartment
component to be developed at typical efficiencies. This reduces the number of
apartment units that can effectively be provided.
2. The project is being developed using Type I construction and prevailing wage
requirements. The premium costs associated with this construction type cannot
be supported given the currently achievable market rents.
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Land Value Offsets
The City required uses are estimated to produce the following net costs:
City Required Use Net Costs
Public Parking $19,090,000
Open Space / Bike Storage 31,361,000
Cultural Space 6,172,000
Affordable Housing 10,855,000
Total $67,478,000
Per Square Foot of Land Area $602
Estimated Financial Gap
The estimated shortfall between the gross land value supported by the private uses in
Alternative 2, and the costs associated with providing the uses required by the City, is
presented in the following table:
Total
Per Square
Foot
Gross Supportable Land Value $25,304,000 $226
(Less) Land Value Offsets (67,478,000) ($602)
Estimated Financial Gap ($42,174,000) ($377)
As can be in the preceding table, the costs to provide the uses being required by the City
exceed the gross supportable land value by $42.2 million. To achieve financial feasibility
under Alternative 2, the City would need to forgo any ground lease payments, and
reduce the net cost of the City required uses by approximately 63%.
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Alternative 3: Office Replaced with Additional Hotel Rooms (Exhibit III)
Scope of Development
Retail 42,200 square feet
Hotel 423 rooms
Parking
Project 488 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 420,000 square feet
Gross Supportable Land Value
The gross land value supported by the private uses included in Alternative 3 is estimated
at $53.0 million. This equates to $473 per square foot of land area.
Land Value Offsets
The uses being required by the City are estimated to generate the net costs presented in
the following table:
City Required Use Net Costs
Public Parking $17,204,000
Open Space / Bike Storage 31,361,000
Cultural Space 6,172,000
Affordable Housing 10,855,000
Total $65,592,000
Per Square Foot of Land Area $586
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Estimated Financial Gap
The following table presents the difference between the gross land value supported by
Alternative 3 and the estimated net costs for the City required uses:
Total
Per Square
Foot
Gross Supportable Land Value $53,026,000 $473
(Less) Land Value Offsets (65,592,000) ($586)
Estimated Financial Gap ($12,566,000) ($112)
The estimated costs to provide the City required uses exceed the gross supportable land
value by $12.6 million. To fill this gap it would be necessary to forgo any ground lease
payments, and to reduce the net cost of the City required uses by approximately 19%.
Alternative 4: Office Removed – No Replacement Use (Exhibit IV)
Scope of Development
Retail 42,200 square feet
Hotel 195 rooms
Parking
Project 374 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 213,200 square feet
Gross Supportable Land Value
The gross land value supported by the private uses included in Alternative 4 is estimated
at $36.3 million. This equates to $324 per square foot of land area.
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Land Value Offsets
Under the Alternative 4 scope of development, it is possible to eliminate the fourth level
of subterranean parking, which reduces the costs associated with the public parking.
The resulting net costs associated the uses being required by the City are estimated as
follows:
City Required Use Net Costs
Public Parking $14,941,000
Open Space / Bike Storage 31,361,000
Cultural Space 6,172,000
Affordable Housing 10,389,000
Total $62,863,000
Per Square Foot of Land Area $561
Estimated Financial Gap
Despite the fact that the cost to provide the City required uses are reduced, the land
value supported by the smaller project is insufficient to cover the net costs for the City
required uses. The estimated financial shortfall is presented in the following table:
Total
Per Square
Foot
Gross Supportable Land Value $36,320,000 $324
(Less) Land Value Offsets (62,863,000) ($561)
Estimated Financial Gap ($26,543,000) ($237)
To fill the estimated gap of $26.5 million, no ground lease payment can be charged, and
the net costs of the City required uses would need to be reduced by approximately 42%.
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Alternative 5: Office Reduced & Replaced with Hotel Rooms (Exhibit V)
Scope of Development
Office 106,800 square feet
Retail 42,200 square feet
Hotel 305 rooms
Parking
Project 643 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 420,000 square feet
Gross Supportable Land Value
The gross land value supported by the private uses included in Alternative 5 is estimated
at $65.8 million. This equates to $588 per square foot of land area.
Land Value Offsets
The uses being required by the City are estimated to generate the net costs presented in
the following table:
City Required Use Net Costs
Public Parking $20,099,000
Open Space / Bike Storage 31,361,000
Cultural Space 6,172,000
Affordable Housing 10,855,000
Total $68,487,000
Per Square Foot of Land Area $611
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Estimated Financial Gap
The difference between the gross land value supported by Alternative 5 and the
estimated net costs for the City required uses is as follows:
Total
Per Square
Foot
Gross Supportable Land Value $65,801,000 $588
(Less) Land Value Offsets (68,487,000) ($611)
Estimated Financial Gap ($2,686,000) ($24)
As can been seen in the preceding table, the gross supportable land value under the
Alternative 5 development scope is nearly sufficient to cover the net costs associated
with the City required uses. However, it is important to remember that this nearly
breakeven scenario does not support any ground lease payments.
Alternative 6: Office Reduced – No Replacement Use (Exhibit VI)
Scope of Development
Office 106,800 square feet
Retail 42,200 square feet
Hotel 195 rooms
Parking
Project 588 spaces
Public Spaces 339 spaces
Open Space / Bike Storage 51,000 square feet public space
37,000 square feet semi-public space
1,700 square foot bike storage
Cultural Space 12,000 square feet
Affordable Housing 48 Units
Total Square Feet of Building Area 320,000 square feet
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Gross Supportable Land Value
The gross land value supported by the private uses included in Alternative 6 is estimated
at $59.8 million. This equates to $534 per square foot of land area.
Land Value Offsets
The net costs associated the uses being required by the City are estimated as follows:
City Required Use Net Costs
Public Parking $19,073,000
Open Space / Bike Storage 31,361,000
Cultural Space 6,172,000
Affordable Housing 10,855,000
Total $67,461,000
Per Square Foot of Land Area $602
Estimated Financial Gap
The estimated financial shortfall under Alternative 6 is presented in the following table:
Total
Per Square
Foot
Gross Supportable Land Value $59,832,000 $534
(Less) Land Value Offsets (67,461,000) ($602)
Estimated Financial Gap ($7,629,000) ($68)
The Alternative 6 scope of development exhibits a $7.6 million gap. To fill this gap it
would be necessary to forgo any ground lease payments, and to reduce the net costs of
the City required uses by approximately 11%.
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CONCLUSIONS
The following fundamental conclusions can be derived from the preceding alternatives
testing analysis:
1. The net costs associated with the uses being required by the City range from
$62.9 million to $71.2 million across the six alternatives evaluated in this
analysis:
a. The net costs equate to $561 to $636 per square foot of land area.
b. To offset the estimated net costs, the project will need to be developed at
a FAR in the range of 3.75 to 1.
2. The office use is the most profitable of the private uses proposed to be
developed on the Site. Hotel development also exhibits very strong economic
characteristics. Comparatively, market rate apartments do not perform well given
both the design inefficiencies and the premium costs associated with Type I
construction.
3. If the size of the office component is reduced significantly, in order for the project
to achieve financial feasibility, it will likely be necessary to modify the scope of
the uses being required by the City.
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Summary - Scope; trb 1 of 4
TABLE 1
DEVELOPMENT SCOPE
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
ALTERNATIVE 1:ALTERNATIVE 2:ALTERNATIVE 3:
PROPOSED
PROJECT
OFFICE REMOVED
/ MARKET RATE
APARTMENTS
ADDED
OFFICE REMOVED
/ HOTEL ADDED
I.Gross Building Area (SF)
Office Component 206,800 0 0
Retail Component 42,200 42,200 42,200
Hotel Component 117,000 117,000 323,800
Market Rate Apartment Component 0 206,800 0
Bike Storage Space 1,700 1,700 1,700
Culural Space Component 12,000 12,000 12,000
Affordable Housing Component 40,300 40,300 40,300
Total GBA 420,000 420,000 420,000
II.Allocation of Parking By Use
Office Component 414 0 0
Retail Component 141 141 141
Hotel Component 178 178 292
Market Rate Apartment Component 0 215 0
Public Parking Spaces 339 339 339
Culural Space Component 24 24 24
Affordable Housing Component 31 31 31
Total Parking Spaces 1,127 928 827
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Summary - Scope; trb 2 of 4
TABLE 1
DEVELOPMENT SCOPE
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Gross Building Area (SF)
Office Component
Retail Component
Hotel Component
Market Rate Apartment Component
Bike Storage Space
Culural Space Component
Affordable Housing Component
Total GBA
II.Allocation of Parking By Use
Office Component
Retail Component
Hotel Component
Market Rate Apartment Component
Public Parking Spaces
Culural Space Component
Affordable Housing Component
Total Parking Spaces
ALTERNATIVE 4:ALTERNATIVE 5:ALTERNATIVE 6:
OFFICE REMOVED
/ NO ADDITIONAL
USES
100,000 SF OFFICE
CONVERTED TO
HOTEL
100,000 SF OFFICE
REMOVED / NO
ADDITIONAL USES
0 106,800 106,800
42,200 42,200 42,200
117,000 217,000 117,000
0 0 0
1,700 1,700 1,700
12,000 12,000 12,000
40,300 40,300 40,300
213,200 420,000 320,000
0 214 214
141 141 141
178 233 178
0 0 0
339 339 339
24 24 24
31 31 31
713 982 927
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Summary - Finance; trb 3 of 4
TABLE 2
PRO FORMA ANALYSIS
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
ALTERNATIVE 1:ALTERNATIVE 2:ALTERNATIVE 3:
PROPOSED
PROJECT
OFFICE REMOVED
/ MARKET RATE
APARTMENTS
ADDED
OFFICE REMOVED
/ HOTEL ADDED
I.Estimated Construction Costs
Office Component $117,598,000 NA NA
Retail Component 23,599,000 $23,599,000 $23,599,000
Market Rate Apartment Component NA 99,920,000 NA
Hotel Component 94,270,000 94,270,000 220,298,000
Private Parking Component 48,188,000 32,961,000 25,531,000
Total Project Construction Costs $283,655,000 $250,750,000 $269,428,000
II.Estimated Net Operating Income
Office Component $12,450,000 NA NA
Retail Component 2,942,000 $2,942,000 $2,942,000
Market Rate Apartment Component NA 4,920,000 NA
Hotel Component 9,130,000 9,130,000 19,786,000
Private Parking Component 2,227,000 1,720,000 2,648,000
Total Project Net Operating Income $26,749,000 $18,712,000 $25,376,000
III.Estimated Supportable Private Investment
Office Component $184,444,000 NA NA
Retail Component 42,029,000 $42,029,000 $42,029,000
Market Rate Apartment Component NA 98,400,000 NA
Hotel Component 114,125,000 114,125,000 247,325,000
Private Parking Component 27,838,000 21,500,000 33,100,000
Total Project Value $368,436,000 $276,054,000 $322,454,000
IV.Estimated Gross Supportable Land Value
Office Component $66,846,000 NA NA
Retail Component 18,430,000 18,430,000 18,430,000
Market Rate Apartment Component NA (1,520,000)NA
Hotel Component 19,855,000 19,855,000 27,027,000
Private Parking Component (20,350,000)(11,461,000)7,569,000
Total Supportable Land Value $84,781,000 $25,304,000 $53,026,000
Per SF of Land Area $757 $226 $473
V.Land Value Offsets
Public Parking Financial Gap $22,771,000 $19,090,000 $17,204,000
Open Space / Bike Storage Financial Gap 31,415,000 31,361,000 31,361,000
Cultural Space Financial Gap 6,172,000 6,172,000 6,172,000
Affordable Housing Financial Gap 10,886,000 10,855,000 10,855,000
Total Land Value Offsets ($71,244,000)($67,478,000)($65,592,000)
Per SF of Land Area ($636)($602)($586)
Net Supportable Land Value / (Financial Gap)$13,537,000 ($42,174,000)($12,566,000)
Per SF of Land Area $121 ($377)($112)
VI.Supportable Lease Payment @ 10% of Land Value $1,354,000 $0 $0
VII.Required Reduction in Net Cost of City Required Uses 0%63%19%
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Summary - Finance; trb 4 of 4
TABLE 2
PRO FORMA ANALYSIS
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Construction Costs
Office Component
Retail Component
Market Rate Apartment Component
Hotel Component
Private Parking Component
Total Project Construction Costs
II.Estimated Net Operating Income
Office Component
Retail Component
Market Rate Apartment Component
Hotel Component
Private Parking Component
Total Project Net Operating Income
III.Estimated Supportable Private Investment
Office Component
Retail Component
Market Rate Apartment Component
Hotel Component
Private Parking Component
Total Project Value
IV.Estimated Gross Supportable Land Value
Office Component
Retail Component
Market Rate Apartment Component
Hotel Component
Private Parking Component
Total Supportable Land Value
Per SF of Land Area
V.Land Value Offsets
Public Parking Financial Gap
Open Space / Bike Storage Financial Gap
Cultural Space Financial Gap
Affordable Housing Financial Gap
Total Land Value Offsets
Per SF of Land Area
Net Supportable Land Value / (Financial Gap)
Per SF of Land Area
VI.Supportable Lease Payment @ 10% of Land Value
VII.Required Reduction in Net Cost of City Required Uses
ALTERNATIVE 4:ALTERNATIVE 5:ALTERNATIVE 6:
OFFICE REMOVED
/ NO ADDITIONAL
USES
100,000 SF OFFICE
CONVERTED TO
HOTEL
100,000 SF OFFICE
REMOVED / NO
ADDITIONAL USES
NA $60,715,000 $60,715,000
$23,591,000 23,599,000 23,599,000
NA NA NA
94,250,000 158,633,000 94,270,000
18,652,000 37,237,000 35,269,000
$136,493,000 $280,184,000 $213,853,000
NA $6,374,000 $6,374,000
$2,912,000 2,942,000 2,942,000
NA NA NA
9,057,000 14,331,000 9,131,000
1,440,000 2,431,000 1,847,000
$13,409,000 $26,078,000 $20,294,000
NA $94,430,000 $94,430,000
$41,600,000 42,029,000 42,029,000
NA NA NA
113,213,000 179,138,000 114,138,000
18,000,000 30,388,000 23,088,000
$172,813,000 $345,985,000 $273,685,000
NA $33,715,000 $33,715,000
18,009,000 18,430,000 18,430,000
NA NA NA
18,963,000 20,505,000 19,868,000
(652,000)(6,849,000)(12,181,000)
$36,320,000 $65,801,000 $59,832,000
$324 $588 $534
$14,941,000 $20,099,000 $19,073,000
31,361,000 31,361,000 31,361,000
6,172,000 6,172,000 6,172,000
10,389,000 10,855,000 10,855,000
($62,863,000)($68,487,000)($67,461,000)
($561)($611)($602)
($26,543,000)($2,686,000)($7,629,000)
($237)($24)($68)
$0 $0 $0
42%4%11%
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACHMENT I
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Proposed; trb 1 of 30
APPENDIX A
OFFICE COMPONENT
PROPOSED PROJECT
EXHIBIT I
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Proposed; trb 2 of 30
EXHIBIT I - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OFFICE COMPONENT: TYPE I CONSTRUCTION
206,800 SF OFFICE GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 206,800 Sf Office GBA $265 /Sf Office GBA $54,802,000
Office Tenant Improvement Costs 206,800 Sf Office GBA $50 /Sf Office GBA 10,340,000
Contractor Fees/General Requirements 14.0%Construction Costs 9,120,000
Builder's Risk Insurance 2.0%Construction Costs 1,303,000
Contingency Allowance 10.0%Other Direct Costs 7,557,000
Total Direct Costs 206,800 Sf GBA $402 /Sf GBA $83,122,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $8,312,000
Public Permits & Fees/Impact Fees 206,800 Sf GBA $16.00 /Sf GBA 3,309,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 2,494,000
Marketing & Leasing Costs 206,800 Sf Office GBA $3.00 /Sf Office GBA 620,000
Development Management 4.0%Direct Costs 3,325,000
Contingency Allowance 5.0%Other Indirect Costs 903,000
Total Indirect Costs $18,963,000
III.Financing Costs
Construction Loan Interest 2 $117,598,000 Financed 5.50%Interest $9,055,000
Financing Fees
Construction Loan $117,598,000 Financed 2.50 Points 2,940,000
Permanent Loan 3 $140,739,000 Financed 2.50 Points 3,518,000
Total Financing Costs $15,513,000
IV.Total Construction Costs 206,800 Sf GBA $569 /Sf GBA $117,598,000
1
2
3 Based on a 5.75% capitalization rate and a 65% loan-to-value ratio.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the OFFICE
COMPONENT.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Proposed; trb 3 of 30
EXHIBIT I - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
OFFICE COMPONENT: TYPE I CONSTRUCTION
206,800 SF OFFICE GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Office Rental Income
Office Income 1 206,800 Sf Office GBA $90.00 /Sf Office GBA $18,612,000
(Less) Vacancy & Collection Allowance 10%Office Income (1,861,000)
Effective Gross Income $16,751,000
II.Office Operating Expenses
Office Operating Expenses 206,800 Sf Office GBA $17.00 /Sf Office GBA $3,516,000
Open Space CAM Charge 2 206,800 Sf Office GBA $0.16 /Sf Office GBA 34,000
Cultural Space CAM Charge 3 206,800 Sf Office GBA $0.39 /Sf Office GBA 81,000
Office Management Fee 4%Effective Gross Income 670,000
Office Operating Expenses $4,301,000
III.Office Net Operating Income $12,450,000
1
2
3
Equates to $7.50 per square foot per month on a full service gross basis.
See EXHIBIT I - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
See EXHIBIT I - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Proposed; trb 4 of 30
EXHIBIT I - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
OFFICE COMPONENT: TYPE I CONSTRUCTION
206,800 SF OFFICE GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $12,450,000
Threshold Stabilized Return 1 6.75%
Supportable Private Investment $184,444,000
II.Supportable Land Value
Supportable Private Investment $184,444,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX A - TABLE 1)(117,598,000)
III.Supportable Land Value $66,846,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $66,846,000
(Less) Open Space Costs 2 (See EXHIBIT I - APPENDIX F - TABLE 2)(17,750,000)
(Less) Museum Costs 2 (See EXHIBIT I - APPENDIX G - TABLE 2)(3,487,000)
V.Supportable Land Value Net Public Amenity Costs $45,609,000
1
2
3 The museum costs equal the OFFICE COMPONENT'S pro rata share of the museum costs.
Based on a 5.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.00% margin.
The open space costs equal the OFFICE COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Proposed; trb 5 of 30
APPENDIX B
EXHIBIT I
PROPOSED PROJECT
RETAIL COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Proposed; trb 6 of 30
EXHIBIT I - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,599,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,599,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,872,000 Financed 2.50 Points 797,000
Total Financing Costs $3,204,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,599,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Proposed; trb 7 of 30
EXHIBIT I - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.17 /Sf Retail GBA 7,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.40 /Sf Retail GBA 17,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.18 /Sf Retail GBA $894,000
III.Retail Net Operating Income $2,942,000
1
2
3
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT I - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
See EXHIBIT I - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Proposed; trb 8 of 30
EXHIBIT I - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,942,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $42,029,000
II.Supportable Land Value
Supportable Private Investment $42,029,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX B - TABLE 1)(23,599,000)
III.Supportable Land Value $18,430,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,430,000
(Less) Open Space Costs 2 (See EXHIBIT I - APPENDIX G - TABLE 2)(3,622,000)
(Less) Museum Costs 3 (See EXHIBIT I - APPENDIX F - TABLE 2)(712,000)
Supportable Land Value Net Public Amenity Costs $14,096,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The open space costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Proposed; trb 9 of 30
EXHIBIT I
APPENDIX C
HOTEL COMPONENT
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Proposed; trb 10 of 30
EXHIBIT I - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 195 Rooms $200,000 /Room $39,000,000
Hotel FF&E Costs 195 Rooms $45,000 /Room 8,775,000
Contractor Fees/General Requirements 14.0%Construction Costs 6,689,000
Builder's Risk Insurance 2.0%Construction Costs 956,000
Contingency Allowance 10.0%Other Direct Costs 5,542,000
Total Direct Costs 117,000 Sf GBA $521 /Sf GBA $60,962,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $6,096,000
Public Permits & Fees/Impact Fees 117,000 Sf GBA $16.00 /Sf GBA 1,872,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,829,000
Pre-Opening/Working Capital 195 Rooms $20,000 /Room 3,900,000
Development Management 4.0%Direct Costs 2,438,000
Contingency Allowance 5.0%Other Indirect Costs 807,000
Total Indirect Costs $16,942,000
III.Financing Costs
Construction Loan Interest 2 $94,270,000 Financed 5.50%Interest 4,666,000
Financing Fees
Construction Loan $94,270,000 Financed 2.50 Points 2,357,000
Permanent Loan 3 $87,919,000 Financed 2.50 Points 2,198,000
Total Financing Costs $16,366,000
IV.Total Construction Costs 117,000 Sf GBA $810 /Sf GBA $94,270,000
195 Rooms $483,400 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Assumes an 18-month construction period with a 60% average outstanding balance.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Proposed; trb 11 of 30
EXHIBIT I - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 195 Rooms $350 /Room/Night $18,933,000
Food & Beverage 20%Gross Sales $27,700 /Room 5,409,000
Other 10%Gross Sales $13,900 /Room 2,705,000
Gross Income $27,047,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $3,787,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 3,786,000
Other 50%of Dept. Sales $6,900 /Room 1,353,000
(Less) Total Distributed Expenses $8,926,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $1,893,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 1,623,000
Utilities 3%Gross Income $4,200 /Room 811,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 811,000
(Less) Total Undistributed Expenses $5,138,000
IV.Management Fees 3.0%Gross Revenues $4,159 /Room $811,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,630 /Room $1,488,000
Open Space CAM Charge 3 117,000 Sf GBA $0.17 /Sf GBA 20,000
Cultural Space CAM Charge 4 117,000 Sf GBA $0.39 /Sf GBA 46,000
Insurance 1.5%Gross Income $2,100 /Room 406,000
FF&E Reserves 4%Gross Income $5,500 /Room 1,082,000
(Less) Total Fixed Expenses $3,042,000
VI.Net Operating Income 34%Gross Revenues $9,130,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT I - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT I - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Proposed; trb 12 of 30
EXHIBIT I - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $9,130,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $114,125,000
II.Supportable Land Value
Supportable Private Investment $114,125,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX C - TABLE 1)(94,270,000)
III.Supportable Land Value $19,855,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $19,855,000
(Less) Open Space Costs 2 (See EXHIBIT I - APPENDIX F - TABLE 2)(10,043,000)
(Less) Museum Costs 3 (See EXHIBIT I - APPENDIX G - TABLE 2)(1,973,000)
V.Supportable Land Value Net Public Amenity Costs $7,839,000
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
3 The museum costs equal the HOTEL COMPONENT'S pro rata share of the museum costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Proposed; trb 13 of 30
EXHIBIT I
APPENDIX D
PRIVATE PARKING COMPONENT
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Proposed; trb 14 of 30
EXHIBIT I - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space $4,083,000
2nd-Level Subterranean 312 Spaces $34,500 /Space 10,764,000
3rd-Level Subterranean 303 Spaces $46,000 /Space 13,938,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 4,030,000
Builder's Risk Insurance 2.0%Construction Costs 576,000
Contingency Allowance 10.0%Other Direct Costs 3,339,000
Total Direct Costs 757 Spaces $48,500 /Space $36,730,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $3,673,000
Public Permits & Fees/Impact Fees 757 Spaces $1,000 /Space 757,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,102,000
Development Management 4.0%Direct Costs 1,469,000
Contingency Allowance 5.0%Other Indirect Costs 350,000
Total Indirect Costs $7,351,000
III.Financing Costs
Construction Loan Interest 2 $48,188,000 Financed 5.50%Interest $2,385,000
Financing Fees
Construction Loan $48,188,000 Financed 2.50 Points 1,205,000
Permanent Loan 3 $20,679,000 Financed 2.50 Points 517,000
Total Financing Costs $4,107,000
IV.Total Construction Costs 757 Spaces $63,657 /Space $48,188,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Assumes an 18-month construction period with a 60% average outstanding balance.
Direct costs assume prevailing wage requirements will be imposed on the Project.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Proposed; trb 15 of 30
EXHIBIT I - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 414 Spaces $200 /Space/Month $994,000
Retail 2 141 Spaces $10 /Space/Day 386,000
Hotel Rooms 3 98 Spaces $40 /Space/Day 1,087,000
Hotel Bar/Lounge 4 80 Spaces $10 /Space/Day 73,000
Cultural 5 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $2,606,000
II.Parking Operating Expenses 757 Spaces $500 Expense/Space $379,000
III.Parking Net Operating Income $2,227,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Proposed; trb 16 of 30
EXHIBIT I - APPENDIX D - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,227,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $27,838,000
II.Supportable Land Value
Supportable Private Investment $27,838,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX D - TABLE 1)(48,188,000)
III.Supportable Land Value ($20,350,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Proposed; trb 17 of 30
EXHIBIT I
APPENDIX E
PUBLIC PARKING COMPONENT
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Proposed; trb 18 of 30
EXHIBIT I - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space $0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 0 Spaces $46,000 /Space 0
4th-Level Subterranean 339 Spaces $57,500 /Space 19,493,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,729,000
Builder's Risk Insurance 2.0%Construction Costs 390,000
Contingency Allowance 10.0%Other Direct Costs 2,261,000
Total Direct Costs 339 Spaces $73,400 /Space $24,873,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,487,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 746,000
Development Management 4.0%Direct Costs 995,000
Contingency Allowance 5.0%Other Indirect Costs 228,000
Total Indirect Costs $4,795,000
III.Financing Costs
Construction Loan Interest 2 $32,246,000 Financed 5.50%Interest $1,596,000
Financing Fees
Construction Loan $32,246,000 Financed 2.50 Points 806,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $2,578,000
IV.Total Construction Costs 339 Spaces $95,121 /Space $32,246,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Proposed; trb 19 of 30
EXHIBIT I - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Public Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Proposed; trb 20 of 30
EXHIBIT I - APPENDIX E - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
1,127 PARKING SPACES
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX E - TABLE 1)(32,246,000)
III.Estimated Financial Gap ($22,771,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Proposed; trb 21 of 30
EXHIBIT I
APPENDIX F
OPEN SPACE COMPONENT
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Proposed; trb 22 of 30
EXHIBIT I - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $31,415,000 Financed 5.50%Interest 1,555,000
Financing Fees $31,415,000 Financed 2.50 Points 785,000
Total Financing Costs $4,340,000
IV.Total Construction Costs $31,415,000
1
2 Based on Developer estimate.
3 Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
Direct costs assume prevailing wage requirements will be imposed on the Project.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Proposed; trb 23 of 30
EXHIBIT I - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT I - APPENDIX F - TABLE 1)$31,415,000
VI.Allocation of Open Space Construction Costs
Office Component 57%Total Open Space Construction Costs $17,750,000
Retail Component 12%Total Open Space Construction Costs 3,622,000
Market Rate Apartment Component 0%Total Open Space Construction Costs 0
Hotel Component 32%Total Open Space Construction Costs 10,043,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 57%Total Open Space Operating Deficit $34,000
Retail Component 12%Total Open Space Operating Deficit 7,000
Market Rate Apartment Component 0%Total Open Space Operating Deficit 0
Hotel Component 32%Total Open Space Operating Deficit 20,000
1 Any deficit in the net operating income for the open space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Proposed; trb 24 of 30
EXHIBIT I
APPENDIX G
CULTURAL SPACE COMPONENT
PROPOSED PROJECT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Proposed; trb 25 of 30
EXHIBIT I - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA $3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest $306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
2
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Proposed; trb 26 of 30
EXHIBIT I - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT I - APPENDIX G - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 57%Total Cultural Space Construction Costs $3,487,000
Retail Component 12%Total Cultural Space Construction Costs 712,000
Market Rate Apartment Component 0%Total Cultural Space Construction Costs 0
Hotel Component 32%Total Cultural Space Construction Costs 1,973,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 57%Total Cultural Space Operating Deficit $81,000
Retail Component 12%Total Cultural Space Operating Deficit 17,000
Market Rate Apartment Component 0%Total Cultural Space Operating Deficit 0
Hotel Component 32%Total Cultural Space Operating Deficit 46,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any Cultural Space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Proposed; trb 27 of 30
APPENDIX H
AFFORDABLE HOUSING COMPONENT
PROPOSED PROJECT
EXHIBIT I
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Proposed; trb 28 of 30
EXHIBIT I - APPENDIX H - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 29 Spaces $46,000 /Space 1,334,000
4th-Level Subterranean 2 Spaces $57,500 /Space 115,000
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,705,000
Builder's Risk Insurance 2.0%Construction Costs 244,000
Contingency Allowance 10.0%Other Direct Costs 1,413,000
Total Direct Costs 40,300 Sf Residential GBA $386 /Sf Residential GBA $15,539,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,554,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 466,000
Marketing & Leasing Costs 2.0%Direct Costs 311,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 290,000
Total Indirect Costs $6,081,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $18,301,000 Financed 3.00%Interest 631,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $18,301,000 Financed 2.50 Points 458,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,244,000
IV.Total Construction Costs 40,300 Sf Residential GBA $567 /Sf Residential GBA $22,864,000
48 Units $476,300 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Proposed; trb 29 of 30
EXHIBIT I - APPENDIX H - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3 Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Proposed; trb 30 of 30
EXHIBIT I - APPENDIX H - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
PROPOSED PROJECT
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT I - APPENDIX H - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,987,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,886,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,978,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,978,000
(Less) Total Construction Costs (See EXHIBIT I - APPENDIX H - TABLE 1)(22,864,000)
III.Estimated Financial Gap 48 Units ($227,000)/Unit ($10,886,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.9 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACHMENT II
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Mkt Rate - Mkt Rate Res; trb 1 of 30
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
EXHIBIT II
APPENDIX A
MARKET RATE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Mkt Rate - Mkt Rate Res; trb 2 of 30
EXHIBIT II - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
MARKET RATE HOUSING COMPONENT: TYPE I CONSTRUCTION
206,800 SF RESIDENTIAL GBA: 165 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 206,800 Sf Residential GBA $265 /Sf Residential GBA $54,802,000
Residential FF&E Costs 165 Units $2,000 /Unit 330,000
Contractor Fees/General Requirements 14.0%Construction Costs 7,718,000
Builder's Risk Insurance 2.0%Construction Costs 1,103,000
Contingency Allowance 10.0%Other Direct Costs 6,395,000
Total Direct Costs 206,800 Sf Residential GBA $340 /Sf Residential GBA $70,348,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $7,035,000
Public Permits & Fees/Impact Fees 165 Units $20,000 /Unit 3,300,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 2,110,000
Marketing & Leasing Costs 2.0%Direct Costs 1,407,000
Development Management 4.0%Direct Costs 2,814,000
Contingency Allowance 5.0%Other Indirect Costs 833,000
Total Indirect Costs $17,499,000
III.Financing Costs
Construction Loan Interest 2 $99,920,000 Financed 5.50%Interest $7,694,000
Financing Fees
Construction Loan $99,920,000 Financed 2.50 Points 2,498,000
Permanent Loan 3 $75,247,000 Financed 2.50 Points 1,881,000
Total Financing Costs $12,073,000
IV.Total Construction Costs 206,800 Sf Residential GBA $483 /Sf Residential GBA $99,920,000
165 Units $605,600 /Unit
1
2
3 Assumes a 4.25% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the MARKET RATE
HOUSING COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month absorption period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Mkt Rate - Mkt Rate Res; trb 3 of 30
EXHIBIT II - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
MARKET RATE HOUSING COMPONENT: TYPE I CONSTRUCTION
206,800 SF RESIDENTIAL GBA: 165 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Market Rate Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 17 Units $2,592 /Unit/Month 529,000
One-Bedroom Units 67 Units $3,348 /Unit/Month 2,692,000
Two-Bedroom Units 64 Units $4,428 /Unit/Month 3,401,000
Three-Bedroom Units 16 Units $4,968 /Unit/Month 954,000
Laundry & Miscellaneous Income 165 Units $10 /Unit/Month 20,000
Gross Residential Income $7,596,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (380,000)
Effective Gross Income $7,216,000
II.Residential Operating Expenses
General Operating Expenses 165 Units $5,500 /Unit $908,000
Open Space CAM Charge 2 165 Units $206 /Unit 34,000
Cultural Space CAM Charge 3 165 Units $491 /Unit 81,000
Property Taxes 4 165 Units $7,718 /Unit 1,273,000
Residential Operating Expenses $2,296,000
III.Residential Net Operating Income $4,920,000
1
2
3
4
Equates to an average market rent of $5.30/sf/month.
Based on a 4.25% capitalization rate.
See EXHIBIT II - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
See EXHIBIT II - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Mkt Rate - Mkt Rate Res; trb 4 of 30
EXHIBIT II - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
MARKET RATE HOUSING COMPONENT: TYPE I CONSTRUCTION
206,800 SF RESIDENTIAL GBA: 165 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $4,920,000
Threshold Stabilized Return 1 5.00%
Supportable Private Investment $98,400,000
II.Supportable Land Value
Supportable Private Investment $98,400,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX A - TABLE 1)(99,920,000)
IV.Supportable Land Value 165 Units ($9,000)/Unit ($1,520,000)
V.Supportable Land Value Net Public Amenity Costs
Supportable Land Value ($1,520,000)
(Less) Open Space Costs 2 (See EXHIBIT II - APPENDIX F - TABLE 2)(17,720,000)
(Less) Museum Costs 3 (See EXHIBIT II - APPENDIX G - TABLE 2)(3,487,000)
Supportable Land Value Net Public Amenity Costs ($22,727,000)
1 Based on a 4.25% capitalization rate drawn from Situs RERC etimates for the 1st Quarter 2015 for the Los Angeles Region and a 0.75% margin.
2
3 The museum costs equal the MARKET RATE HOUSING COMPONENT'S pro rata share of the museum costs.
The open space costs equal the MARKET RATE HOUSING COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Mkt Rate Res; trb 5 of 30
EXHIBIT II
APPENDIX B
RETAIL COMPONENT
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Mkt Rate Res; trb 6 of 30
EXHIBIT II - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,599,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,599,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,872,000 Financed 2.50 Points 797,000
Total Financing Costs $3,204,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,599,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Mkt Rate Res; trb 7 of 30
EXHIBIT II - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.17 /Sf Retail GBA 7,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.40 /Sf Retail GBA 17,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.18 /Sf Retail GBA $894,000
III.Retail Net Operating Income $2,942,000
1
2
3 See EXHIBIT II - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT II - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Mkt Rate Res; trb 8 of 30
EXHIBIT II - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,942,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $42,029,000
II.Supportable Land Value
Supportable Private Investment $42,029,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX B - TABLE 1)(23,599,000)
III.Supportable Land Value $18,430,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,430,000
(Less) Open Space Costs 2 (See EXHIBIT II - APPENDIX F - TABLE 2)($3,616,000)
(Less) Museum Costs 3 (See EXHIBIT II - APPENDIX G - TABLE 2)($712,000)
Supportable Land Value Net Public Amenity Costs $14,102,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The open space costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Mkt Rate Res; trb 9 of 30
EXHIBIT II
APPENDIX C
HOTEL COMPONENT
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Mkt Rate Res; trb 10 of 30
EXHIBIT II - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 195 Rooms $200,000 /Room $39,000,000
Hotel FF&E Costs 195 Rooms $45,000 /Room 8,775,000
Contractor Fees/General Requirements 14.0%Construction Costs 6,689,000
Builder's Risk Insurance 2.0%Construction Costs 956,000
Contingency Allowance 10.0%Other Direct Costs 5,542,000
Total Direct Costs 117,000 Sf GBA $521 /Sf GBA $60,962,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $6,096,000
Public Permits & Fees/Impact Fees 117,000 Sf GBA $16.00 /Sf GBA 1,872,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,829,000
Pre-Opening/Working Capital 195 Rooms $20,000 /Room 3,900,000
Development Management 4.0%Direct Costs 2,438,000
Contingency Allowance 5.0%Other Indirect Costs 807,000
Total Indirect Costs $16,942,000
III.Financing Costs
Construction Loan Interest 2 $94,270,000 Financed 5.50%Interest 4,666,000
Financing Fees
Construction Loan $94,270,000 Financed 2.50 Points 2,357,000
Permanent Loan 3 $87,919,000 Financed 2.50 Points 2,198,000
Total Financing Costs $16,366,000
IV.Total Construction Costs 117,000 Sf GBA $810 /Sf GBA $94,270,000
195 Rooms $483,400 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Mkt Rate Res; trb 11 of 30
EXHIBIT II - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 195 Rooms $350 /Room/Night $18,933,000
Food & Beverage 20%Gross Sales $27,700 /Room 5,409,000
Other 10%Gross Sales $13,900 /Room 2,705,000
Gross Income $27,047,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $3,787,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 3,786,000
Other 50%of Dept. Sales $6,900 /Room 1,353,000
(Less) Total Distributed Expenses $8,926,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $1,893,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 1,623,000
Utilities 3%Gross Income $4,200 /Room 811,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 811,000
(Less) Total Undistributed Expenses $5,138,000
IV.Management Fees 3.0%Gross Revenues $4,159 /Room $811,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,630 /Room $1,488,000
Open Space CAM Charge 3 117,000 Sf GBA $0.17 /Sf GBA 20,000
Cultural Space CAM Charge 4 117,000 Sf GBA $0.39 /Sf GBA 46,000
Insurance 1.5%Gross Income $2,100 /Room 406,000
FF&E Reserves 4%Gross Income $5,500 /Room 1,082,000
(Less) Total Fixed Expenses $3,042,000
VI.Net Operating Income 34%Gross Revenues $9,130,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT II - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT II - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Mkt Rate Res; trb 12 of 30
EXHIBIT II - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $9,130,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $114,125,000
II.Supportable Land Value
Supportable Private Investment $114,125,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX C - TABLE 1)(94,270,000)
III.Supportable Land Value $19,855,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $19,855,000
(Less) Open Space Costs 2 (See EXHIBIT II - APPENDIX F - TABLE 2)($10,025,000)
(Less) Museum Costs 3 (See EXHIBIT II - APPENDIX G - TABLE 2)($1,973,000)
V.Supportable Land Value Net Public Amenity Costs $7,857,000
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
3 The museum costs equal the HOTEL COMPONENT'S pro rata share of the museum costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Mkt Rate Res; trb 13 of 30
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
EXHIBIT II
APPENDIX D
PRIVATE PARKING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Mkt Rate Res; trb 14 of 30
EXHIBIT II - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
558 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space 4,083,000
2nd-Level Subterranean 312 Spaces $34,500 /Space 10,764,000
3rd-Level Subterranean 104 Spaces $46,000 /Space 4,784,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 2,748,000
Builder's Risk Insurance 2.0%Construction Costs 393,000
Contingency Allowance 10.0%Other Direct Costs 2,277,000
Total Direct Costs 558 Spaces $44,900 /Space $25,049,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,505,000
Public Permits & Fees/Impact Fees 558 Spaces $1,000 /Space 558,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 751,000
Development Management 4.0%Direct Costs 1,002,000
Contingency Allowance 5.0%Other Indirect Costs 241,000
Total Indirect Costs $5,057,000
III.Financing Costs
Construction Loan Interest 2 $32,961,000 Financed 5.50%Interest $1,632,000
Financing Fees
Construction Loan $32,961,000 Financed 2.50 Points 824,000
Permanent Loan 3 $15,971,000 Financed 2.50 Points 399,000
Total Financing Costs $2,855,000
IV.Total Construction Costs 558 Spaces $59,070 /Space $32,961,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Mkt Rate Res; trb 15 of 30
EXHIBIT II - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
558 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 0 Spaces $200 /Space/Month $0
Retail 2 141 Spaces $10 /Space/Day 386,000
Market Rate Apartments 3 215 Spaces $150 /Space/Month 387,000
Hotel Rooms 4 98 Spaces $40 /Space/Day 1,087,000
Hotel Bar/Lounge 5 80 Spaces $10 /Space/Day 73,000
Cultural 6 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $1,999,000
II.Parking Operating Expenses 558 Spaces $500 Expense/Space $279,000
III.Parking Net Operating Income $1,720,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5
6 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes the following parking ratios: 0.50 spaces/studio unit; 1.0 space/one-bedroom unit; 1.50 spaces/two-bedroom and larger units; and 1.0 guest
spaces/10 apartment units. The parking ratios are halved if the units are restricted to rents below 120% AMI.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - Mkt Rate Res; trb 16 of 30
EXHIBIT II - APPENDIX D - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
558 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $1,720,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $21,500,000
II.Supportable Land Value
Supportable Private Investment $21,500,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX D - TABLE 1)(32,961,000)
III.Supportable Land Value ($11,461,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Mkt Rate Res; trb 17 of 30
EXHIBIT II
APPENDIX E
PUBLIC PARKING COMPONENT
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Mkt Rate Res; trb 18 of 30
EXHIBIT II - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 197 Spaces $46,000 /Space 9,062,000
4th-Level Subterranean 142 Spaces $57,500 /Space 8,165,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,412,000
Builder's Risk Insurance 2.0%Construction Costs 345,000
Contingency Allowance 10.0%Other Direct Costs 1,998,000
Total Direct Costs 339 Spaces $64,800 /Space $21,982,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,198,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 659,000
Development Management 4.0%Direct Costs 879,000
Contingency Allowance 5.0%Other Indirect Costs 204,000
Total Indirect Costs $4,279,000
III.Financing Costs
Construction Loan Interest 2 $28,565,000 Financed 5.50%Interest $1,414,000
Financing Fees
Construction Loan $28,565,000 Financed 2.50 Points 714,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $2,304,000
IV.Total Construction Costs 339 Spaces $84,263 /Space $28,565,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Mkt Rate Res; trb 19 of 30
EXHIBIT II - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - Mkt Rate Res; trb 20 of 30
EXHIBIT II - APPENDIX E - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX E - TABLE 1)(28,565,000)
III.Estimated Financial Gap ($19,090,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Mkt Rate Res; trb 21 of 30
EXHIBIT II
APPENDIX F
OPEN SPACE COMPONENT
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Mkt Rate Res; trb 22 of 30
EXHIBIT II - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $30,687,000 Financed 5.50%Interest 1,519,000
Financing Fees $30,687,000 Financed 2.50 Points 767,000
Total Financing Costs $4,286,000
IV.Total Construction Costs $31,361,000
1
2 Based on Developer estimate.
3
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the OPEN SPACE
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Mkt Rate Res; trb 23 of 30
EXHIBIT II - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 206,800 Sf Residential GBA 57%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT II - APPENDIX F - TABLE 1)$31,361,000
VI.Allocation of Open Space Construction Costs
Office Component 0%Total Open Space Construction Costs $0
Retail Component 12%Total Open Space Construction Costs 3,616,000
Market Rate Apartment Component 57%Total Open Space Construction Costs 17,720,000
Hotel Component 32%Total Open Space Construction Costs 10,025,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 206,800 Sf Residential GBA 57%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 0%Total Open Space Operating Deficit $0
Retail Component 12%Total Open Space Operating Deficit 7,000
Market Rate Apartment Component 57%Total Open Space Operating Deficit 34,000
Hotel Component 32%Total Open Space Operating Deficit 20,000
1 Any deficit in the net operating income for the open space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Mkt Rate Res; trb 24 of 30
EXHIBIT II
APPENDIX G
CULTURAL SPACE COMPONENT
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Mkt Rate Res; trb 25 of 30
EXHIBIT II - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPAC E GBA
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA $3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest $306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
2
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the CULTURAL SPACE
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Mkt Rate Res; trb 26 of 30
EXHIBIT II - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPAC E GBA
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 206,800 Sf Residential GBA 57%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT II - APPENDIX G - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 0%Total Cultural Space Construction Costs $0
Retail Component 12%Total Cultural Space Construction Costs 712,000
Market Rate Apartment Component 57%Total Cultural Space Construction Costs 3,487,000
Hotel Component 32%Total Cultural Space Construction Costs 1,973,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 206,800 Sf Residential GBA 57%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 0%Total Cultural Space Operating Deficit $0
Retail Component 12%Total Cultural Space Operating Deficit 17,000
Market Rate Apartment Component 57%Total Cultural Space Operating Deficit 81,000
Hotel Component 32%Total Cultural Space Operating Deficit 46,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any Cultural Space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Mkt Rate Res; trb 27 of 30
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
EXHIBIT II
APPENDIX H
AFFORDABLE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Mkt Rate Res; trb 28 of 30
EXHIBIT II - APPENDIX H - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 31 Spaces $46,000 /Space 1,426,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,702,000
Builder's Risk Insurance 2.0%Construction Costs 243,000
Contingency Allowance 10.0%Other Direct Costs 1,410,000
Total Direct Costs 40,300 Sf Residential GBA $385 /Sf Residential GBA $15,509,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,551,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 465,000
Marketing & Leasing Costs 2.0%Direct Costs 310,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 289,000
Total Indirect Costs $6,075,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $18,264,000 Financed 3.00%Interest 630,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $18,264,000 Financed 2.50 Points 457,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,242,000
IV.Total Construction Costs 40,300 Sf Residential GBA $566 /Sf Residential GBA $22,826,000
48 Units $475,500 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Mkt Rate Res; trb 29 of 30
EXHIBIT II - APPENDIX H - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Mkt Rate Res; trb 30 of 30
EXHIBIT II - APPENDIX H - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / MARKET RATE APARTMENTS ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT II - APPENDIX H - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,981,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,879,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,971,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,971,000
(Less) Total Construction Costs (See EXHIBIT II - APPENDIX H - TABLE 1)(22,826,000)
III.Estimated Financial Gap 48 Units ($226,000)/Unit ($10,855,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.9 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACMENT III
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - More Hotel; trb 1 of 26
EXHIBIT III
APPENDIX A
RETAIL COMPONENT
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - More Hotel; trb 2 of 26
EXHIBIT III - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,599,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,599,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,872,000 Financed 2.50 Points 797,000
Total Financing Costs $3,204,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,599,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - More Hotel; trb 3 of 26
EXHIBIT III - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.17 /Sf Retail GBA 7,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.40 /Sf Retail GBA 17,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.18 /Sf Retail GBA $894,000
III.Retail Net Operating Income $2,942,000
1
2
3 See EXHIBIT III - APPENDIX F - TABLE 2 for allocation of museum CAM charges.
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT III - APPENDIX E - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - More Hotel; trb 4 of 26
EXHIBIT III - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,942,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $42,029,000
II.Supportable Land Value
Supportable Private Investment $42,029,000
(Less) Total Construction Costs (See EXHIBIT III - APPENDIX A - TABLE 1)(23,599,000)
III.Supportable Land Value $18,430,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,430,000
(Less) Open Space Costs 2 (See EXHIBIT III - APPENDIX F - TABLE 2)($3,616,000)
(Less) Museum Costs 3 (See EXHIBIT III - APPENDIX E - TABLE 2)($712,000)
Supportable Land Value Net Public Amenity Costs $14,102,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The open space costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - More Hotel; trb 5 of 26
EXHIBIT III
APPENDIX B
HOTEL COMPONENT
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - More Hotel; trb 6 of 26
EXHIBIT III - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
323,800 SF HOTEL GBA: 423 HOTEL ROOMS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 423 Rooms $220,000 /Room $93,135,000
Hotel FF&E Costs 423 Rooms $45,000 /Room 19,050,000
Contractor Fees/General Requirements 14.0%Construction Costs 15,706,000
Builder's Risk Insurance 2.0%Construction Costs 2,244,000
Contingency Allowance 10.0%Other Direct Costs 13,014,000
Total Direct Costs 323,800 Sf GBA $442 /Sf GBA $143,149,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $14,315,000
Public Permits & Fees/Impact Fees 323,800 Sf GBA $16.00 /Sf GBA 5,181,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 4,294,000
Pre-Opening/Working Capital 423 Rooms $20,000 /Room 8,467,000
Development Management 4.0%Direct Costs 5,726,000
Contingency Allowance 5.0%Other Indirect Costs 1,899,000
Total Indirect Costs $39,882,000
III.Financing Costs
Construction Loan Interest 2 $220,298,000 Financed 5.50%Interest 10,905,000
Financing Fees
Construction Loan $220,298,000 Financed 2.50 Points 5,507,000
Permanent Loan 3 $190,532,000 Financed 2.50 Points 4,763,000
Total Financing Costs $37,267,000
IV.Total Construction Costs 323,800 Sf GBA $680 /Sf GBA $220,298,000
423 Rooms $520,400 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - More Hotel; trb 7 of 26
EXHIBIT III - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
323,800 SF HOTEL GBA: 423 HOTEL ROOMS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 423 Rooms $350 /Room/Night $41,102,000
Food & Beverage 20%Gross Sales $27,700 /Room 11,743,000
Other 10%Gross Sales $13,900 /Room 5,872,000
Gross Income $58,717,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $8,220,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 8,220,000
Other 50%of Dept. Sales $6,900 /Room 2,936,000
(Less) Total Distributed Expenses $19,376,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $4,110,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 3,523,000
Utilities 3%Gross Income $4,200 /Room 1,762,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 1,762,000
(Less) Total Undistributed Expenses $11,157,000
IV.Management Fees 3.0%Gross Revenues $4,162 /Room $1,762,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,617 /Room $3,225,000
Open Space CAM Charge 3 323,800 Sf GBA $0.17 /Sf GBA 54,000
Cultural Space CAM Charge 4 323,800 Sf GBA $0.39 /Sf GBA 127,000
Insurance 1.5%Gross Income $2,100 /Room 881,000
FF&E Reserves 4%Gross Income $5,500 /Room 2,349,000
(Less) Total Fixed Expenses $6,636,000
VI.Net Operating Income 34%Gross Revenues $19,786,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT III - APPENDIX F - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT III - APPENDIX E - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - More Hotel; trb 8 of 26
EXHIBIT III - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
323,800 SF HOTEL GBA: 423 HOTEL ROOMS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $19,786,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $247,325,000
II.Supportable Land Value
Supportable Private Investment $247,325,000
(Less) Total Construction Costs (See EXHIBIT III - APPENDIX B - TABLE 1)(220,298,000)
III.Supportable Land Value $27,027,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $27,027,000
(Less) Open Space Costs 2 (See EXHIBIT III - APPENDIX F - TABLE 2)($27,745,000)
(Less) Museum Costs 3 (See EXHIBIT III - APPENDIX E - TABLE 2)($5,460,000)
V.Supportable Land Value Net Public Amenity Costs ($6,178,000)
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - More Hotel; trb 9 of 26
OFFICE REMOVED / HOTEL ADDED
EXHIBIT III
APPENDIX C
PRIVATE PARKING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - More Hotel; trb 10 of 26
EXHIBIT III - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
457 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space 4,083,000
2nd-Level Subterranean 312 Spaces $34,500 /Space 10,764,000
3rd-Level Subterranean 3 Spaces $46,000 /Space 138,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 2,098,000
Builder's Risk Insurance 2.0%Construction Costs 300,000
Contingency Allowance 10.0%Other Direct Costs 1,738,000
Total Direct Costs 457 Spaces $41,800 /Space $19,121,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,912,000
Public Permits & Fees/Impact Fees 457 Spaces $1,000 /Space 457,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 574,000
Development Management 4.0%Direct Costs 765,000
Contingency Allowance 5.0%Other Indirect Costs 185,000
Total Indirect Costs $3,893,000
III.Financing Costs
Construction Loan Interest 2 $25,531,000 Financed 5.50%Interest $1,264,000
Financing Fees
Construction Loan $25,531,000 Financed 2.50 Points 638,000
Permanent Loan 3 $24,589,000 Financed 2.50 Points 615,000
Total Financing Costs $2,517,000
IV.Total Construction Costs 457 Spaces $55,867 /Space $25,531,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - More Hotel; trb 11 of 26
EXHIBIT III - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
457 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 0 Spaces $200 /Space/Month $0
Retail 2 141 Spaces $10 /Space/Day 386,000
Hotel Rooms 3 212 Spaces $40 /Space/Day 2,352,000
Hotel Bar/Lounge 4 80 Spaces $10 /Space/Day 73,000
Cultural 5 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $2,877,000
II.Parking Operating Expenses 457 Spaces $500 Expense/Space $229,000
III.Parking Net Operating Income $2,648,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - More Hotel; trb 12 of 26
EXHIBIT III - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
457 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,648,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $33,100,000
II.Supportable Land Value
Supportable Private Investment $33,100,000
(Less) Total Construction Costs (See EXHIBIT III - APPENDIX C - TABLE 1)(25,531,000)
III.Supportable Land Value $7,569,000
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - More Hotel; trb 13 of 26
EXHIBIT III
APPENDIX D
PUBLIC PARKING COMPONENT
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - More Hotel; trb 14 of 26
EXHIBIT III - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 298 Spaces $46,000 /Space 13,708,000
4th-Level Subterranean 41 Spaces $57,500 /Space 2,358,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,249,000
Builder's Risk Insurance 2.0%Construction Costs 321,000
Contingency Allowance 10.0%Other Direct Costs 1,864,000
Total Direct Costs 339 Spaces $60,500 /Space $20,500,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,050,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 615,000
Development Management 4.0%Direct Costs 820,000
Contingency Allowance 5.0%Other Indirect Costs 191,000
Total Indirect Costs $4,015,000
III.Financing Costs
Construction Loan Interest 2 $26,679,000 Financed 5.50%Interest $1,321,000
Financing Fees
Construction Loan $26,679,000 Financed 2.50 Points 667,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $2,164,000
IV.Total Construction Costs 339 Spaces $78,699 /Space $26,679,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - More Hotel; trb 15 of 26
EXHIBIT III - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - More Hotel; trb 16 of 26
EXHIBIT III - APPENDIX D - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT III - APPENDIX D - TABLE 1)(26,679,000)
III.Estimated Financial Gap ($17,204,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - More Hotel; trb 17 of 26
EXHIBIT III
APPENDIX E
OPEN SPACE COMPONENT
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - More Hotel; trb 18 of 26
EXHIBIT III - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $30,687,000 Financed 5.50%Interest 1,519,000
Financing Fees $30,687,000 Financed 2.50 Points 767,000
Total Financing Costs $4,286,000
IV.Total Construction Costs $31,361,000
1
2 Based on Developer estimate.
3
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - More Hotel; trb 19 of 26
EXHIBIT III - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
###
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 323,800 Sf Hotel GBA 88%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT III - APPENDIX E - TABLE 1)$31,361,000
VI.Allocation of Open Space Construction Costs
Office Component 0%Total Open Space Construction Costs $0
Retail Component 12%Total Open Space Construction Costs 3,616,000
Market Rate Apartment Component 0%Total Open Space Construction Costs 0
Hotel Component 88%Total Open Space Construction Costs 27,745,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 323,800 Sf Hotel GBA 88%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 0%Total Open Space Operating Deficit $0
Retail Component 12%Total Open Space Operating Deficit 7,000
Market Rate Apartment Component 0%Total Open Space Operating Deficit 0
Hotel Component 88%Total Open Space Operating Deficit 54,000
1 Any deficit in the net operating income for the open space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - More Hotel; trb 20 of 26
EXHIBIT III
APPENDIX F
CULTURAL SPACE COMPONENT
OFFICE REMOVED / HOTEL ADDED
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - More Hotel; trb 21 of 26
EXHIBIT III - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA 3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest 306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
3
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - More Hotel; trb 22 of 26
EXHIBIT III - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 323,800 Sf Hotel GBA 88%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT III - APPENDIX F - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 0%Total Cultural Space Construction Costs $0
Retail Component 12%Total Cultural Space Construction Costs 712,000
Market Rate Apartment Component 0%Total Cultural Space Construction Costs 0
Hotel Component 88%Total Cultural Space Construction Costs 5,460,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 323,800 Sf Hotel GBA 88%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 0%Total Cultural Space Operating Deficit $0
Retail Component 12%Total Cultural Space Operating Deficit 17,000
Market Rate Apartment Component 0%Total Cultural Space Operating Deficit 0
Hotel Component 88%Total Cultural Space Operating Deficit 127,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any Cultural Space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - More Hotel; trb 23 of 26
OFFICE REMOVED / HOTEL ADDED
EXHIBIT III
APPENDIX G
AFFORDABLE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - More Hotel; trb 24 of 26
EXHIBIT III - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 31 Spaces $46,000 /Space 1,426,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,702,000
Builder's Risk Insurance 2.0%Construction Costs 243,000
Contingency Allowance 10.0%Other Direct Costs 1,410,000
Total Direct Costs 40,300 Sf Residential GBA $385 /Sf Residential GBA $15,509,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,551,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 465,000
Marketing & Leasing Costs 2.0%Direct Costs 310,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 289,000
Total Indirect Costs $6,075,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $18,264,000 Financed 3.00%Interest 630,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $18,264,000 Financed 2.50 Points 457,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,242,000
IV.Total Construction Costs 40,300 Sf Residential GBA $566 /Sf Residential GBA $22,826,000
48 Units $475,500 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - More Hotel; trb 25 of 26
EXHIBIT III - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - More Hotel; trb 26 of 26
EXHIBIT III - APPENDIX G - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / HOTEL ADDED
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT III - APPENDIX G - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,981,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,879,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,971,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,971,000
(Less) Total Construction Costs (See EXHIBIT III - APPENDIX G - TABLE 1)(22,826,000)
III.Estimated Financial Gap 48 Units ($226,000)/Unit ($10,855,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.9 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACHMENT IV
OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - No Office; trb 1 of 26
EXHIBIT IV
APPENDIX A
RETAIL COMPONENT
OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - No Office; trb 2 of 26
EXHIBIT IV - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,591,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,591,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,547,000 Financed 2.50 Points 789,000
Total Financing Costs $3,196,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,591,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - No Office; trb 3 of 26
EXHIBIT IV - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.38 /Sf Retail GBA 16,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.90 /Sf Retail GBA 38,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.90 /Sf Retail GBA $924,000
III.Retail Net Operating Income $2,912,000
1
2
3 See EXHIBIT IV - APPENDIX F - TABLE 2 for allocation of museum CAM charges.
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT IV - APPENDIX E - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - No Office; trb 4 of 26
EXHIBIT IV - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,912,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $41,600,000
II.Supportable Land Value
Supportable Private Investment $41,600,000
(Less) Total Construction Costs (See EXHIBIT IV - APPENDIX A - TABLE 1)(23,591,000)
III.Supportable Land Value $18,009,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,009,000
(Less) Open Space Costs 2 (See EXHIBIT IV - APPENDIX E - TABLE 2)($8,313,000)
(Less) Museum Costs 3 (See EXHIBIT IV - APPENDIX F - TABLE 2)($1,636,000)
Supportable Land Value Net Public Amenity Costs $8,060,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The open space costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - No Office; trb 5 of 26
EXHIBIT IV
APPENDIX B
HOTEL COMPONENT
OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - No Office; trb 6 of 26
EXHIBIT IV - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 195 Rooms $200,000 /Room $39,000,000
Hotel FF&E Costs 195 Rooms $45,000 /Room 8,775,000
Contractor Fees/General Requirements 14.0%Construction Costs 6,689,000
Builder's Risk Insurance 2.0%Construction Costs 956,000
Contingency Allowance 10.0%Other Direct Costs 5,542,000
Total Direct Costs 117,000 Sf GBA $521 /Sf GBA $60,962,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $6,096,000
Public Permits & Fees/Impact Fees 117,000 Sf GBA $16.00 /Sf GBA 1,872,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,829,000
Pre-Opening/Working Capital 195 Rooms $20,000 /Room 3,900,000
Development Management 4.0%Direct Costs 2,438,000
Contingency Allowance 5.0%Other Indirect Costs 807,000
Total Indirect Costs $16,942,000
III.Financing Costs
Construction Loan Interest 2 $94,250,000 Financed 5.50%Interest 4,665,000
Financing Fees
Construction Loan $94,250,000 Financed 2.50 Points 2,356,000
Permanent Loan 3 $87,216,000 Financed 2.50 Points 2,180,000
Total Financing Costs $16,346,000
IV.Total Construction Costs 117,000 Sf GBA $810 /Sf GBA $94,250,000
195 Rooms $483,300 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - No Office; trb 7 of 26
EXHIBIT IV - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 195 Rooms $350 /Room/Night $18,933,000
Food & Beverage 20%Gross Sales $27,700 /Room 5,409,000
Other 10%Gross Sales $13,900 /Room 2,705,000
Gross Income $27,047,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $3,787,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 3,786,000
Other 50%of Dept. Sales $6,900 /Room 1,353,000
(Less) Total Distributed Expenses $8,926,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $1,893,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 1,623,000
Utilities 3%Gross Income $4,200 /Room 811,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 811,000
(Less) Total Undistributed Expenses $5,138,000
IV.Management Fees 3.0%Gross Revenues $4,159 /Room $811,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,569 /Room $1,476,000
Open Space CAM Charge 3 117,000 Sf GBA $0.38 /Sf GBA 45,000
Cultural Space CAM Charge 4 117,000 Sf GBA $0.91 /Sf GBA 106,000
Insurance 1.5%Gross Income $2,100 /Room 406,000
FF&E Reserves 4%Gross Income $5,500 /Room 1,082,000
(Less) Total Fixed Expenses $3,115,000
VI.Net Operating Income 33%Gross Revenues $9,057,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT IV - APPENDIX F - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT IV - APPENDIX E - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - No Office; trb 8 of 26
EXHIBIT IV - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $9,057,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $113,213,000
II.Supportable Land Value
Supportable Private Investment $113,213,000
(Less) Total Construction Costs (See EXHIBIT IV - APPENDIX B - TABLE 1)(94,250,000)
III.Supportable Land Value $18,963,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,963,000
(Less) Open Space Costs 2 (See EXHIBIT IV - APPENDIX E - TABLE 2)($23,048,000)
(Less) Museum Costs 3 (See EXHIBIT IV - APPENDIX F - TABLE 2)($4,536,000)
V.Supportable Land Value Net Public Amenity Costs ($8,621,000)
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
3 The museum costs equal the HOTEL COMPONENT'S pro rata share of the museum costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - No Office; trb 9 of 26
OFFICE REMOVED / NO ADDITIONAL USES
EXHIBIT IV
APPENDIX C
PRIVATE PARKING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - No Office; trb 10 of 26
EXHIBIT IV - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
343 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space 4,083,000
2nd-Level Subterranean 201 Spaces $34,500 /Space 6,935,000
3rd-Level Subterranean 0 Spaces $46,000 /Space 0
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 1,543,000
Builder's Risk Insurance 2.0%Construction Costs 220,000
Contingency Allowance 10.0%Other Direct Costs 1,278,000
Total Direct Costs 343 Spaces $41,000 /Space $14,059,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,406,000
Public Permits & Fees/Impact Fees 343 Spaces $1,000 /Space 343,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 422,000
Development Management 4.0%Direct Costs 562,000
Contingency Allowance 5.0%Other Indirect Costs 137,000
Total Indirect Costs $2,870,000
III.Financing Costs
Construction Loan Interest 2 $18,652,000 Financed 5.50%Interest $923,000
Financing Fees
Construction Loan $18,652,000 Financed 2.50 Points 466,000
Permanent Loan 3 $13,371,000 Financed 2.50 Points 334,000
Total Financing Costs $1,723,000
IV.Total Construction Costs 343 Spaces $54,379 /Space $18,652,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - No Office; trb 11 of 26
EXHIBIT IV - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
343 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 0 Spaces $200 /Space/Month $0
Retail 2 141 Spaces $10 /Space/Day 386,000
Hotel Rooms 3 98 Spaces $40 /Space/Day 1,087,000
Hotel Bar/Lounge 4 80 Spaces $10 /Space/Day 73,000
Cultural 5 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $1,612,000
II.Parking Operating Expenses 343 Spaces $500 Expense/Space $172,000
III.Parking Net Operating Income $1,440,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Private Parking - No Office; trb 12 of 26
EXHIBIT IV - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
343 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $1,440,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $18,000,000
II.Supportable Land Value
Supportable Private Investment $18,000,000
(Less) Total Construction Costs (See EXHIBIT IV - APPENDIX C - TABLE 1)(18,652,000)
III.Supportable Land Value ($652,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - No Office; trb 13 of 26
OFFICE REMOVED / NO ADDITIONAL USES
EXHIBIT IV
APPENDIX D
PUBLIC PARKING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - No Office; trb 14 of 26
EXHIBIT IV - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 80 Spaces $34,500 /Space 2,760,000
3rd-Level Subterranean 259 Spaces $46,000 /Space 11,914,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 2,054,000
Builder's Risk Insurance 2.0%Construction Costs 293,000
Contingency Allowance 10.0%Other Direct Costs 1,702,000
Total Direct Costs 339 Spaces $55,200 /Space $18,723,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,872,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 562,000
Development Management 4.0%Direct Costs 749,000
Contingency Allowance 5.0%Other Indirect Costs 176,000
Total Indirect Costs $3,698,000
III.Financing Costs
Construction Loan Interest 2 $24,416,000 Financed 5.50%Interest $1,209,000
Financing Fees
Construction Loan $24,416,000 Financed 2.50 Points 610,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $1,995,000
IV.Total Construction Costs 339 Spaces $72,024 /Space $24,416,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - No Office; trb 15 of 26
EXHIBIT IV - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Parking - No Office; trb 16 of 26
EXHIBIT IV - APPENDIX D - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT IV - APPENDIX D - TABLE 1)(24,416,000)
III.Estimated Financial Gap ($14,941,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - No Office; trb 17 of 26
EXHIBIT IV
APPENDIX E
OPEN SPACE COMPONENT
OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - No Office; trb 18 of 26
EXHIBIT IV - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $30,687,000 Financed 5.50%Interest 1,519,000
Financing Fees $30,687,000 Financed 2.50 Points 767,000
Total Financing Costs $4,286,000
IV.Total Construction Costs $31,361,000
1
2 Based on Developer estimate.
3
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - No Office; trb 19 of 26
EXHIBIT IV - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 27%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 73%Total GBA
Total GBA 159,200 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT IV - APPENDIX E - TABLE 1)$31,361,000
VI.Allocation of Open Space Construction Costs
Office Component 0%Total Open Space Construction Costs $0
Retail Component 27%Total Open Space Construction Costs 8,313,000
Market Rate Apartment Component 0%Total Open Space Construction Costs 0
Hotel Component 73%Total Open Space Construction Costs 23,048,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 27%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 73%Total GBA
Total GBA 159,200 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 0%Total Open Space Operating Deficit $0
Retail Component 27%Total Open Space Operating Deficit 16,000
Market Rate Apartment Component 0%Total Open Space Operating Deficit 0
Hotel Component 73%Total Open Space Operating Deficit 45,000
1 Any deficit in the net operating income for the open space will be covered by the Retail and Hotel Components. The Affordable Housing Component will
not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - No Office; trb 20 of 26
EXHIBIT IV
APPENDIX F
CULTURAL SPACE COMPONENT
OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - No Office; trb 21 of 26
EXHIBIT IV - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA 3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest $306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
2
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - No Office; trb 22 of 26
EXHIBIT IV - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 27%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 73%Total GBA
Total GBA 159,200 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT IV - APPENDIX F - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 0%Total Cultural Space Construction Costs $0
Retail Component 27%Total Cultural Space Construction Costs 1,636,000
Market Rate Apartment Component 0%Total Cultural Space Construction Costs 0
Hotel Component 73%Total Cultural Space Construction Costs 4,536,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 0 Sf Office GBA 0%Total GBA
Retail Component 42,200 Sf Retail GBA 27%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 73%Total GBA
Total GBA 159,200 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 0%Total Cultural Space Operating Deficit $0
Retail Component 27%Total Cultural Space Operating Deficit 38,000
Market Rate Apartment Component 0%Total Cultural Space Operating Deficit 0
Hotel Component 73%Total Cultural Space Operating Deficit 106,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Retail and Hotel Components. The Affordable Housing Component
will not be subject to any Cultural Space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - No Office; trb 23 of 26
OFFICE REMOVED / NO ADDITIONAL USES
EXHIBIT IV
APPENDIX G
AFFORDABLE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - No Office; trb 24 of 26
EXHIBIT IV - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 31 Spaces $34,500 /Space 1,070,000
3rd-Level Subterranean 0 Spaces $46,000 /Space 0
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,652,000
Builder's Risk Insurance 2.0%Construction Costs 236,000
Contingency Allowance 10.0%Other Direct Costs 1,369,000
Total Direct Costs 40,300 Sf Residential GBA $374 /Sf Residential GBA $15,055,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,506,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 452,000
Marketing & Leasing Costs 2.0%Direct Costs 301,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 286,000
Total Indirect Costs $6,005,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $17,731,000 Financed 3.00%Interest 612,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $17,731,000 Financed 2.50 Points 443,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,210,000
IV.Total Construction Costs 40,300 Sf Residential GBA $553 /Sf Residential GBA $22,270,000
48 Units $464,000 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - No Office; trb 25 of 26
EXHIBIT IV - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - No Office; trb 26 of 26
EXHIBIT IV - APPENDIX G - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT IV - APPENDIX G - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,899,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,789,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,881,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,881,000
(Less) Total Construction Costs (See EXHIBIT IV - APPENDIX G - TABLE 1)(22,270,000)
III.Estimated Financial Gap 48 Units ($216,000)/Unit ($10,389,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.7 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACHMENT V
OFFICE REDUCED & REPLACED WITH ADDITIONAL HOTEL ROOMS
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Plus 100,000 Hotel; trb 1 of 30
EXHIBIT V
APPENDIX A
OFFICE COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Plus 100,000 Hotel; trb 2 of 30
EXHIBIT V - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 106,800 Sf Office GBA $265 /Sf Office GBA $28,302,000
Office Tenant Improvement Costs 106,800 Sf Office GBA $50 /Sf Office GBA 5,340,000
Contractor Fees/General Requirements 14.0%Construction Costs 4,710,000
Builder's Risk Insurance 2.0%Construction Costs 673,000
Contingency Allowance 10.0%Other Direct Costs 3,903,000
Total Direct Costs 106,800 Sf GBA $402 /Sf GBA $42,928,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $4,293,000
Public Permits & Fees/Impact Fees 106,800 Sf GBA $16.00 /Sf GBA 1,709,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,288,000
Marketing & Leasing Costs 106,800 Sf Office GBA $3.00 /Sf Office GBA 320,000
Development Management 4.0%Direct Costs 1,717,000
Contingency Allowance 5.0%Other Indirect Costs 466,000
Total Indirect Costs $9,793,000
III.Financing Costs
Construction Loan Interest 2 $60,715,000 Financed 5.50%Interest $4,675,000
Financing Fees
Construction Loan $60,715,000 Financed 2.50 Points 1,518,000
Permanent Loan 3 $72,054,000 Financed 2.50 Points 1,801,000
Total Financing Costs $7,994,000
IV.Total Construction Costs 106,800 Sf GBA $568 /Sf GBA $60,715,000
1
2
3 Based on a 5.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the OFFICE
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Plus 100,000 Hotel; trb 3 of 30
EXHIBIT V - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Office Rental Income
Office Income 1 106,800 Sf Office GBA $90.00 /Sf Office GBA $9,612,000
(Less) Vacancy & Collection Allowance 10%Office Income (961,000)
Effective Gross Income $8,651,000
II.Office Operating Expenses
Office Operating Expenses 106,800 Sf Office GBA $17.00 /Sf Office GBA $1,816,000
Open Space CAM Charge 2 106,800 Sf Office GBA $0.32 /Sf Office GBA 34,000
Cultural Space CAM Charge 3 106,800 Sf Office GBA $0.76 /Sf Office GBA 81,000
Office Management Fee 4%Effective Gross Income 346,000
Office Operating Expenses $2,277,000
III.Office Net Operating Income $6,374,000
1
2
3
Equates to $7.50 per square foot per month on a full service gross basis.
See EXHIBIT V - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
See EXHIBIT V - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Plus 100,000 Hotel; trb 4 of 30
EXHIBIT V - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $6,374,000
Threshold Stabilized Return 1 6.75%
Supportable Private Investment $94,430,000
II.Supportable Land Value
Supportable Private Investment $94,430,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX A - TABLE 1)(60,715,000)
III.Supportable Land Value $33,715,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $33,715,000
(Less) Open Space Costs 2 (See EXHIBIT V - APPENDIX F - TABLE 2)(17,720,000)
(Less) Museum Costs 3 (See EXHIBIT V - APPENDIX G - TABLE 2)(3,487,000)
V.Supportable Land Value Net Public Amenity Costs $12,508,000
1
2
3 The museum costs equal the 'S pro rata share of the museum costs.
The open space costs equal the OFFICE COMPONENT'S pro rata share of the site improvement and open space costs.
Based on a 5.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Plus 100,000 Hotel; trb 5 of 30
EXHIBIT V
APPENDIX B
RETAIL COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Plus 100,000 Hotel; trb 6 of 30
EXHIBIT V - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,599,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,599,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,872,000 Financed 2.50 Points 797,000
Total Financing Costs $3,204,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,599,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Plus 100,000 Hotel; trb 7 of 30
EXHIBIT V - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.17 /Sf Retail GBA 7,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.40 /Sf Retail GBA 17,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.18 /Sf Retail GBA $894,000
III.Retail Net Operating Income $2,942,000
1
2
3 See EXHIBIT V - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT V - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Plus 100,000 Hotel; trb 8 of 30
EXHIBIT V - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,942,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $42,029,000
II.Supportable Land Value
Supportable Private Investment $42,029,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX B - TABLE 1)(23,599,000)
III.Supportable Land Value $18,430,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,430,000
(Less) Open Space Costs 2 (See EXHIBIT V - APPENDIX F - TABLE 2)(3,616,000)
(Less) Museum Costs 3 (See EXHIBIT V - APPENDIX G - TABLE 2)(712,000)
Supportable Land Value Net Public Amenity Costs $14,102,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The open space costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Plus 100,000 Hotel; trb 9 of 30
EXHIBIT V
APPENDIX C
HOTEL COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Plus 100,000 Hotel; trb 10 of 30
EXHIBIT V - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
217,000 SF HOTEL GBA: 305 HOTEL ROOMS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 305 Rooms $220,000 /Room $67,192,000
Hotel FF&E Costs 305 Rooms $45,000 /Room 13,744,000
Contractor Fees/General Requirements 14.0%Construction Costs 11,331,000
Builder's Risk Insurance 2.0%Construction Costs 1,619,000
Contingency Allowance 10.0%Other Direct Costs 9,389,000
Total Direct Costs 217,000 Sf GBA $476 /Sf GBA $103,275,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $10,328,000
Public Permits & Fees/Impact Fees 217,000 Sf GBA $16.00 /Sf GBA 3,472,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 3,098,000
Pre-Opening/Working Capital 305 Rooms $20,000 /Room 6,108,000
Development Management 4.0%Direct Costs 4,131,000
Contingency Allowance 5.0%Other Indirect Costs 1,357,000
Total Indirect Costs $28,494,000
III.Financing Costs
Construction Loan Interest 2 $158,633,000 Financed 5.50%Interest 7,852,000
Financing Fees
Construction Loan $158,633,000 Financed 2.50 Points 3,966,000
Permanent Loan 3 $138,002,000 Financed 2.50 Points 3,450,000
Total Financing Costs $26,864,000
IV.Total Construction Costs 217,000 Sf GBA $730 /Sf GBA $158,633,000
305 Rooms $519,400 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Plus 100,000 Hotel; trb 11 of 30
EXHIBIT V - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
217,000 SF HOTEL GBA: 305 HOTEL ROOMS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 305 Rooms $350 /Room/Night $29,653,000
Food & Beverage 20%Gross Sales $27,700 /Room 8,472,000
Other 10%Gross Sales $13,900 /Room 4,236,000
Gross Income $42,361,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $5,931,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 5,930,000
Other 50%of Dept. Sales $6,900 /Room 2,118,000
(Less) Total Distributed Expenses $13,979,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $2,965,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 2,542,000
Utilities 3%Gross Income $4,200 /Room 1,271,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 1,271,000
(Less) Total Undistributed Expenses $8,049,000
IV.Management Fees 3.0%Gross Revenues $4,162 /Room $1,271,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,647 /Room $2,336,000
Open Space CAM Charge 3 217,000 Sf GBA $0.09 /Sf GBA 20,000
Cultural Space CAM Charge 4 217,000 Sf GBA $0.21 /Sf GBA 46,000
Insurance 1.5%Gross Income $2,100 /Room 635,000
FF&E Reserves 4%Gross Income $5,500 /Room 1,694,000
(Less) Total Fixed Expenses $4,731,000
VI.Net Operating Income 34%Gross Revenues $14,331,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT V - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT V - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Plus 100,000 Hotel; trb 12 of 30
EXHIBIT V - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
217,000 SF HOTEL GBA: 305 HOTEL ROOMS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $14,331,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $179,138,000
II.Supportable Land Value
Supportable Private Investment $179,138,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX C - TABLE 1)(158,633,000)
III.Supportable Land Value $20,505,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $20,505,000
(Less) Open Space Costs 2 (See EXHIBIT V - APPENDIX F - TABLE 2)(10,025,000)
(Less) Museum Costs 3 (See EXHIBIT V - APPENDIX G - TABLE 2)(1,973,000)
V.Supportable Land Value Net Public Amenity Costs $8,507,000
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
3 The museum costs equal the HOTEL COMPONENT'S pro rata share of the museum costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Plus 100,000 Hotel; trb 13 of 30
EXHIBIT V
APPENDIX D
PRIVATE PARKING COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Plus 100,000 Hotel; trb 14 of 30
EXHIBIT V - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
612 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space $4,083,000
2nd-Level Subterranean 312 Spaces $34,500 /Space 10,764,000
3rd-Level Subterranean 158 Spaces $46,000 /Space 7,268,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 3,096,000
Builder's Risk Insurance 2.0%Construction Costs 442,000
Contingency Allowance 10.0%Other Direct Costs 2,565,000
Total Direct Costs 612 Spaces $46,100 /Space $28,218,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,822,000
Public Permits & Fees/Impact Fees 612 Spaces $1,000 /Space 612,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 847,000
Development Management 4.0%Direct Costs 1,129,000
Contingency Allowance 5.0%Other Indirect Costs 271,000
Total Indirect Costs $5,681,000
III.Financing Costs
Construction Loan Interest 2 $37,237,000 Financed 5.50%Interest $1,843,000
Financing Fees
Construction Loan $37,237,000 Financed 2.50 Points 931,000
Permanent Loan 3 $22,574,000 Financed 2.50 Points 564,000
Total Financing Costs $3,338,000
IV.Total Construction Costs 612 Spaces $60,845 /Space $37,237,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Plus 100,000 Hotel; trb 15 of 30
EXHIBIT V - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
612 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 214 Spaces $200 /Space/Month $514,000
Retail 2 141 Spaces $10 /Space/Day 386,000
Hotel Rooms 3 153 Spaces $40 /Space/Day 1,698,000
Hotel Bar/Lounge 4 80 Spaces $10 /Space/Day 73,000
Cultural 5 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $2,737,000
II.Parking Operating Expenses 612 Spaces $500 Expense/Space $306,000
III.Parking Net Operating Income $2,431,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Plus 100,000 Hotel; trb 16 of 30
EXHIBIT V - APPENDIX D - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
612 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,431,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $30,388,000
II.Supportable Land Value
Supportable Private Investment $30,388,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX D - TABLE 1)(37,237,000)
III.Supportable Land Value ($6,849,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Plus 100k Hotel; trb 17 of 30
EXHIBIT V
APPENDIX E
PUBLIC PARKING COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Plus 100k Hotel; trb 18 of 30
EXHIBIT V - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space $0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 143 Spaces $46,000 /Space 6,578,000
4th-Level Subterranean 196 Spaces $57,500 /Space 11,270,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,499,000
Builder's Risk Insurance 2.0%Construction Costs 357,000
Contingency Allowance 10.0%Other Direct Costs 2,070,000
Total Direct Costs 339 Spaces $67,200 /Space $22,774,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,277,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 683,000
Development Management 4.0%Direct Costs 911,000
Contingency Allowance 5.0%Other Indirect Costs 211,000
Total Indirect Costs $4,421,000
III.Financing Costs
Construction Loan Interest 2 $29,574,000 Financed 5.50%Interest $1,464,000
Financing Fees
Construction Loan $29,574,000 Financed 2.50 Points 739,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $2,379,000
IV.Total Construction Costs 339 Spaces $87,239 /Space $29,574,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Plus 100k Hotel; trb 19 of 30
EXHIBIT V - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Public Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Plus 100k Hotel; trb 20 of 30
EXHIBIT V - APPENDIX E - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX E - TABLE 1)(29,574,000)
III.Estimated Financial Gap ($20,099,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Plus 100k Hotel; trb 21 of 30
EXHIBIT V
APPENDIX F
OPEN SPACE COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Plus 100k Hotel; trb 22 of 30
EXHIBIT V - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $30,687,000 Financed 5.50%Interest 1,519,000
Financing Fees $30,687,000 Financed 2.50 Points 767,000
Total Financing Costs $4,286,000
IV.Total Construction Costs $31,361,000
1
2 Based on Developer estimate.
3
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Plus 100k Hotel; trb 23 of 30
EXHIBIT V - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT V - APPENDIX F - TABLE 1)$31,361,000
VI.Allocation of Open Space Construction Costs
Office Component 57%Total Open Space Construction Costs $17,720,000
Retail Component 12%Total Open Space Construction Costs 3,616,000
Market Rate Apartment Component 0%Total Open Space Construction Costs 0
Hotel Component 32%Total Open Space Construction Costs 10,025,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 57%Total Open Space Operating Deficit $34,000
Retail Component 12%Total Open Space Operating Deficit 7,000
Market Rate Apartment Component 0%Total Open Space Operating Deficit 0
Hotel Component 32%Total Open Space Operating Deficit 20,000
1 Any deficit in the net operating income for the open space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Plus 100k Hotel; trb 24 of 30
EXHIBIT V
APPENDIX G
CULTURAL SPACE COMPONENT
100,000 SF OFFICE CONVERTED TO HOTEL
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Plus 100k Hotel; trb 25 of 30
EXHIBIT V - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA $3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest 306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
2
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Plus 100k Hotel; trb 26 of 30
EXHIBIT V - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT V - APPENDIX G - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 57%Total Cultural Space Construction Costs $3,487,000
Retail Component 12%Total Cultural Space Construction Costs 712,000
Market Rate Apartment Component 0%Total Cultural Space Construction Costs 0
Hotel Component 32%Total Cultural Space Construction Costs 1,973,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 57%Total Cultural Space Operating Deficit $81,000
Retail Component 12%Total Cultural Space Operating Deficit 17,000
Market Rate Apartment Component 0%Total Cultural Space Operating Deficit 0
Hotel Component 32%Total Cultural Space Operating Deficit 46,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any Cultural Space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Plus 100,000 Hotel; trb 27 of 30
100,000 SF OFFICE CONVERTED TO HOTEL
EXHIBIT V
APPENDIX H
AFFORDABLE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Plus 100,000 Hotel; trb 28 of 30
EXHIBIT V - APPENDIX H - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 31 Spaces $46,000 /Space 1,426,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,702,000
Builder's Risk Insurance 2.0%Construction Costs 243,000
Contingency Allowance 10.0%Other Direct Costs 1,410,000
Total Direct Costs 40,300 Sf Residential GBA $385 /Sf Residential GBA $15,509,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,551,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 465,000
Marketing & Leasing Costs 2.0%Direct Costs 310,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 289,000
Total Indirect Costs $6,075,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $18,264,000 Financed 3.00%Interest 630,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $18,264,000 Financed 2.50 Points 457,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,242,000
IV.Total Construction Costs 40,300 Sf Residential GBA $566 /Sf Residential GBA $22,826,000
48 Units $475,500 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Plus 100,000 Hotel; trb 29 of 30
EXHIBIT V - APPENDIX H - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3 Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Plus 100,000 Hotel; trb 30 of 30
EXHIBIT V - APPENDIX H - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE CONVERTED TO HOTEL
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT V - APPENDIX H - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,981,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,879,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,971,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,971,000
(Less) Total Construction Costs (See EXHIBIT V - APPENDIX H - TABLE 1)(22,826,000)
III.Estimated Financial Gap 48 Units ($226,000)/Unit ($10,855,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.9 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
A TTACHMENT U
1510001.SM:KHH
19305.012.002
ATTACHMENT VI
OFFICE REDUCED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Minus 100K Office; trb 1 of 30
EXHIBIT VI
APPENDIX A
OFFICE COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Minus 100K Office; trb 2 of 30
EXHIBIT VI - APPENDIX A - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 106,800 Sf Office GBA $265 /Sf Office GBA $28,302,000
Office Tenant Improvement Costs 106,800 Sf Office GBA $50 /Sf Office GBA 5,340,000
Contractor Fees/General Requirements 14.0%Construction Costs 4,710,000
Builder's Risk Insurance 2.0%Construction Costs 673,000
Contingency Allowance 10.0%Other Direct Costs 3,903,000
Total Direct Costs 106,800 Sf GBA $402 /Sf GBA $42,928,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $4,293,000
Public Permits & Fees/Impact Fees 106,800 Sf GBA $16.00 /Sf GBA 1,709,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,288,000
Marketing & Leasing Costs 106,800 Sf Office GBA $3.00 /Sf Office GBA 320,000
Development Management 4.0%Direct Costs 1,717,000
Contingency Allowance 5.0%Other Indirect Costs 466,000
Total Indirect Costs $9,793,000
III.Financing Costs
Construction Loan Interest 2 $60,715,000 Financed 5.50%Interest $4,675,000
Financing Fees
Construction Loan $60,715,000 Financed 2.50 Points 1,518,000
Permanent Loan 3 $72,054,000 Financed 2.50 Points 1,801,000
Total Financing Costs $7,994,000
IV.Total Construction Costs 106,800 Sf GBA $568 /Sf GBA $60,715,000
1
2
3 Based on a 5.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the OFFICE
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Minus 100K Office; trb 3 of 30
EXHIBIT VI - APPENDIX A - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Office Rental Income
Office Income 1 106,800 Sf Office GBA $90.00 /Sf Office GBA $9,612,000
(Less) Vacancy & Collection Allowance 10%Office Income (961,000)
Effective Gross Income $8,651,000
II.Office Operating Expenses
Office Operating Expenses 106,800 Sf Office GBA $17.00 /Sf Office GBA $1,816,000
Open Space CAM Charge 2 106,800 Sf Office GBA $0.32 /Sf Office GBA 34,000
Cultural Space CAM Charge 3 106,800 Sf Office GBA $0.76 /Sf Office GBA 81,000
Office Management Fee 4%Effective Gross Income 346,000
Office Operating Expenses $2,277,000
III.Office Net Operating Income $6,374,000
1
2
3
Equates to $7.50 per square foot per month on a full service gross basis.
See EXHIBIT VI - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
See EXHIBIT VI - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Office - Minus 100K Office; trb 4 of 30
EXHIBIT VI - APPENDIX A - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
OFFICE COMPONENT: TYPE I CONSTRUCTION
106,800 SF OFFICE GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $6,374,000
Threshold Stabilized Return 1 6.75%
Supportable Private Investment $94,430,000
II.Supportable Land Value
Supportable Private Investment $94,430,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX A - TABLE 1)(60,715,000)
III.Supportable Land Value $33,715,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $33,715,000
(Less) Open Space Costs 2 (See EXHIBIT VI - APPENDIX F - TABLE 2)(17,720,000)
(Less) Museum Costs 3 (See EXHIBIT VI - APPENDIX G - TABLE 2)(3,487,000)
V.Supportable Land Value Net Public Amenity Costs $12,508,000
1
2
3 The museum costs equal the OFFICE COMPONENT'S pro rata share of the museum costs.
The open space costs equal the OFFICE COMPONENT'S pro rata share of the site improvement and open space costs.
Based on a 5.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Minus 100K Office; trb 5 of 30
EXHIBIT VI
APPENDIX B
RETAIL COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Minus 100K Office; trb 6 of 30
EXHIBIT VI - APPENDIX B - TABLE 1
ESTIMATED CONSTRUCTION COSTS
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 42,200 Sf Retail GBA $265 /Sf Retail GBA $11,183,000
Retail Tenant Improvement Costs 42,200 Sf Retail GBA $50 /Sf Retail GBA 2,110,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,566,000
Builder's Risk Insurance 2.0%Construction Costs 224,000
Contingency Allowance 10.0%Other Direct Costs 1,508,000
Total Direct Costs 42,200 Sf Retail GBA $393 /Sf Retail GBA $16,591,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,659,000
Public Permits & Fees/Impact Fees 42,200 Sf Retail GBA $16.00 /Sf Retail GBA 675,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 498,000
Marketing & Leasing Costs 42,200 Sf Retail GBA $3.00 /Sf Retail GBA 127,000
Development Management 4.0%Direct Costs 664,000
Contingency Allowance 5.0%Other Indirect Costs 181,000
Total Indirect Costs $3,804,000
III.Financing Costs
Construction Loan Interest 2 $23,599,000 Financed 5.50%Interest $1,817,000
Financing Fees
Construction Loan $23,599,000 Financed 2.50 Points 590,000
Permanent Loan 3 $31,872,000 Financed 2.50 Points 797,000
Total Financing Costs $3,204,000
IV.Total Construction Costs 42,200 Sf GBA $559 /Sf Retail GBA $23,599,000
1
2
3 Assumes a 6.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the RETAIL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance, and a 6-month lease-up period with a 100% average outstanding
balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Minus 100K Office; trb 7 of 30
EXHIBIT VI - APPENDIX B - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Retail Rental Income
Retail Income 1 42,200 Sf Retail GBA $84.00 /Sf Retail GBA $3,545,000
CAM Reimbursements 42,200 Sf Retail GBA $17.00 /Sf Retail GBA 717,000
Gross Retail Income $4,262,000
(Less) Vacancy & Collection Allowance 10.0%Gross Income (426,000)
Effective Gross Income $3,836,000
II.Retail Operating Expenses
Retail CAM Expenses 42,200 Sf Retail GBA $17.00 /Sf Retail GBA $717,000
Open Space CAM Charge 2 42,200 Sf Retail GBA $0.17 /Sf Retail GBA 7,000
Cultural Space CAM Charge 3 42,200 Sf Retail GBA $0.40 /Sf Retail GBA 17,000
Retail Management Fee 4%Effective Gross Income 153,000
Retail Operating Expenses 42,200 Sf Retail GBA $21.18 /Sf Retail GBA $894,000
III.Retail Net Operating Income $2,942,000
1
2
3 See EXHIBIT VI - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
Equates to a lease rate of $7.00 per square foot per month on a triple net basis.
See EXHIBIT VI - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Retail - Minus 100K Office; trb 8 of 30
EXHIBIT VI - APPENDIX B - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
RETAIL COMPONENT: TYPE I CONSTRUCTION
42,200 SF RETAIL GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $2,942,000
Threshold Stabilized Return 1 7.00%
Supportable Private Investment $42,029,000
II.Supportable Land Value
Supportable Private Investment $42,029,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX B - TABLE 1)(23,599,000)
III.Supportable Land Value $18,430,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $18,430,000
(Less) Open Space Costs 2 (See EXHIBIT VI - APPENDIX F - TABLE 2)(3,616,000)
(Less) Museum Costs 3 (See EXHIBIT VI - APPENDIX G - TABLE 2)(712,000)
Supportable Land Value Net Public Amenity Costs $14,102,000
1 Based on a 6.00% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 or the Los Angeles Region, plus a 1.00% margin.
2
3 The museum costs equal the RETAIL COMPONENT'S pro rata share of the museum costs.
The public amenity costs equal the RETAIL COMPONENT'S pro rata share of the site improvement and open space costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Minus 100K Office; trb 9 of 30
EXHIBIT VI
APPENDIX C
HOTEL COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Minus 100K Office; trb 10 of 30
EXHIBIT VI - APPENDIX C - TABLE 1
ESTIMATED CONSTRUCTION COSTS
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 195 Rooms $200,000 /Room $39,000,000
Hotel FF&E Costs 195 Rooms $45,000 /Room 8,775,000
Contractor Fees/General Requirements 14.0%Construction Costs 6,689,000
Builder's Risk Insurance 2.0%Construction Costs 956,000
Contingency Allowance 10.0%Other Direct Costs 5,542,000
Total Direct Costs 117,000 Sf GBA $521 /Sf GBA $60,962,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $6,096,000
Public Permits & Fees/Impact Fees 117,000 Sf GBA $16.00 /Sf GBA 1,872,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 1,829,000
Pre-Opening/Working Capital 195 Rooms $20,000 /Room 3,900,000
Development Management 4.0%Direct Costs 2,438,000
Contingency Allowance 5.0%Other Indirect Costs 807,000
Total Indirect Costs $16,942,000
III.Financing Costs
Construction Loan Interest 2 $94,270,000 Financed 5.50%Interest 4,666,000
Financing Fees
Construction Loan $94,270,000 Financed 2.50 Points 2,357,000
Permanent Loan 3 $87,928,000 Financed 2.50 Points 2,198,000
Total Financing Costs $16,366,000
IV.Total Construction Costs 117,000 Sf GBA $810 /Sf GBA $94,270,000
195 Rooms $483,400 /Room
1
2
3 Assumes a 6.75% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the HOTEL
COMPONENT.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Minus 100K Office; trb 11 of 30
EXHIBIT VI - APPENDIX C - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Hotel Income
Room Rate 1 195 Rooms $350 /Room/Night $18,933,000
Food & Beverage 20%Gross Sales $27,700 /Room 5,409,000
Other 10%Gross Sales $13,900 /Room 2,705,000
Gross Income $27,047,000
II.Distributed Expenses
Rooms 20%of Dept. Sales $19,400 /Room $3,787,000
Food & Beverage 70%of Dept. Sales $19,400 /Room 3,786,000
Other 50%of Dept. Sales $6,900 /Room 1,353,000
(Less) Total Distributed Expenses $8,926,000
III.Undistributed Expenses
General & Administration 7%Gross Income $9,700 /Room $1,893,000
Franchise Fees 0%Gross Income $0 /Room 0
Marketing 6%Gross Income $8,300 /Room 1,623,000
Utilities 3%Gross Income $4,200 /Room 811,000
Maintenance & Property Operation 3%Gross Income $4,200 /Room 811,000
(Less) Total Undistributed Expenses $5,138,000
IV.Management Fees 3.0%Gross Revenues $4,159 /Room $811,000
V.Fixed Expenses
Property Taxes 2 1.1%Hotel Value $7,628 /Room $1,487,000
Open Space CAM Charge 3 117,000 Sf GBA $0.17 /Sf GBA 20,000
Cultural Space CAM Charge 4 117,000 Sf GBA $0.39 /Sf GBA 46,000
Insurance 1.5%Gross Income $2,100 /Room 406,000
FF&E Reserves 4%Gross Income $5,500 /Room 1,082,000
(Less) Total Fixed Expenses $3,041,000
VI.Net Operating Income 34%Gross Revenues $9,131,000
1 Assumes a 76% occupancy rate.
2 Based on a 6.75% capitalization rate.
3
4 See EXHIBIT VI - APPENDIX G - TABLE 2 for allocation of museum CAM charges.
See EXHIBIT VI - APPENDIX F - TABLE 2 for allocation of open space CAM charges.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Hotel - Minus 100K Office; trb 12 of 30
EXHIBIT VI - APPENDIX C - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
HOTEL COMPONENT: TYPE I CONSTRUCTION
117,000 SF HOTEL GBA: 195 HOTEL ROOMS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $9,131,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $114,138,000
II.Supportable Land Value
Supportable Private Investment $114,138,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX C - TABLE 1)(94,270,000)
III.Supportable Land Value $19,868,000
IV.Supportable Land Value Net Public Amenity Costs
Supportable Land Value $19,868,000
(Less) Open Space Costs 2 (See EXHIBIT VI - APPENDIX F - TABLE 2)(10,025,000)
(Less) Museum Costs 3 (See EXHIBIT VI - APPENDIX G - TABLE 2)(1,973,000)
V.Supportable Land Value Net Public Amenity Costs $7,870,000
1 Based on a 6.75% capitalization rate drawn from Situs RERC estimates for the 1st Quarter 2015 for the Los Angeles Region, plus a 1.25% margin.
2 The open space costs equal the HOTEL COMPONENT'S pro rata share of the site improvement and open space costs.
3 The museum costs equal the 'S pro rata share of the museum costs.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Minus 100K Office; trb 13 of 30
EXHIBIT VI
APPENDIX D
PRIVATE PARKING COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Minus 100K Office; trb 14 of 30
EXHIBIT VI - APPENDIX D - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
588 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 142 Spaces $28,750 /Space $4,083,000
2nd-Level Subterranean 312 Spaces $34,500 /Space 10,764,000
3rd-Level Subterranean 134 Spaces $46,000 /Space 6,164,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Contractor Fees/General Requirements 14.0%Construction Costs 2,942,000
Builder's Risk Insurance 2.0%Construction Costs 420,000
Contingency Allowance 10.0%Other Direct Costs 2,437,000
Total Direct Costs 588 Spaces $45,600 /Space $26,810,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,681,000
Public Permits & Fees/Impact Fees 588 Spaces $1,000 /Space 588,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 804,000
Development Management 4.0%Direct Costs 1,072,000
Contingency Allowance 5.0%Other Indirect Costs 257,000
Total Indirect Costs $5,402,000
III.Financing Costs
Construction Loan Interest 2 $35,269,000 Financed 5.50%Interest $1,746,000
Financing Fees
Construction Loan $35,269,000 Financed 2.50 Points 882,000
Permanent Loan 3 $17,151,000 Financed 2.50 Points 429,000
Total Financing Costs $3,057,000
IV.Total Construction Costs 588 Spaces $59,981 /Space $35,269,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Minus 100K Office; trb 15 of 30
EXHIBIT VI - APPENDIX D - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
588 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Parking Income
Office 1 214 Spaces $200 /Space/Month $514,000
Retail 2 141 Spaces $10 /Space/Day 386,000
Hotel Rooms 3 98 Spaces $40 /Space/Day 1,087,000
Hotel Bar/Lounge 4 80 Spaces $10 /Space/Day 73,000
Cultural 5 24 Spaces $10 /Space/Day 66,000
Gross Parking Income $2,126,000
II.Parking Operating Expenses 557 Spaces $500 Expense/Space $279,000
III.Parking Net Operating Income $1,847,000
1 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of office space.
2 Assumes a parking ratio of 3.3 spaces per 1,000 square feet of retail space. Assumes that the spaces average 75% occupancy.
3
4
5 Assumes a parking ratio of 2.0 spaces per 1,000 square feet of cultural space. Assumes that the spaces average 75% occupancy.
Assumes a parking ratio of 0.5 spaces per hotel room. Based on a daily charge of $40, a 76% occupancy rate, and a 100% utilization rate.
Assumes a parking ratio of 10.0 spaces per 1,000 square feet of bar/lounge space. Assumes that the spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Priv Pkg - Minus 100K Office; trb 16 of 30
EXHIBIT VI - APPENDIX D - TABLE 3
ESTIMATED SUPPORTABLE LAND VALUE
PRIVATE PARKING COMPONENT: TYPE I CONSTRUCTION
588 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $1,847,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $23,088,000
II.Supportable Land Value
Supportable Private Investment $23,088,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX D - TABLE 1)(35,269,000)
III.Supportable Land Value ($12,181,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Minus 100K Office; trb 17 of 30
EXHIBIT VI
APPENDIX E
PUBLIC PARKING COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Minus 100K Office; trb 18 of 30
EXHIBIT VI - APPENDIX E - TABLE 1
ESTIMATED CONSTRUCTION COSTS
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space $0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 198 Spaces $46,000 /Space 9,108,000
4th-Level Subterranean 141 Spaces $57,500 /Space 8,108,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,410,000
Builder's Risk Insurance 2.0%Construction Costs 344,000
Contingency Allowance 10.0%Other Direct Costs 1,997,000
Total Direct Costs 339 Spaces $64,800 /Space $21,967,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,197,000
Public Permits & Fees/Impact Fees 339 Spaces $1,000 /Space 339,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 659,000
Development Management 4.0%Direct Costs 879,000
Contingency Allowance 5.0%Other Indirect Costs 204,000
Total Indirect Costs $4,278,000
III.Financing Costs
Construction Loan Interest 2 $28,548,000 Financed 5.50%Interest $1,413,000
Financing Fees
Construction Loan $28,548,000 Financed 2.50 Points 714,000
Permanent Loan 3 $7,039,000 Financed 2.50 Points 176,000
Total Financing Costs $2,303,000
IV.Total Construction Costs 339 Spaces $84,212 /Space $28,548,000
1
2
3 Assumes a 7.00% capitalization rate and a 65% loan-to-value ratio.
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Minus 100K Office; trb 19 of 30
EXHIBIT VI - APPENDIX E - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Public Parking Spaces Revenue 1 339 Public Spaces $10 /Space/Day $928,000
II.Parking Operating Expenses 339 Spaces $500 Expense/Space $170,000
III.Parking Net Operating Income $758,000
1 Based on information provided by the City. This equates to the required amount of public parking the Developer must provide on-site. Assumes that the
spaces average 75% occupancy.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Public Pkg - Minus 100K Office; trb 20 of 30
EXHIBIT VI - APPENDIX E - TABLE 3
ESTIMATED FINANCIAL GAP
PUBLIC PARKING COMPONENT: TYPE I CONSTRUCTION
339 PARKING SPACES
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Supportable Private Investment
Net Operating Income $758,000
Threshold Stabilized Return 1 8.00%
Supportable Private Investment $9,475,000
II.Estimated Financial Gap
Supportable Private Investment $9,475,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX E - TABLE 1)(28,548,000)
III.Estimated Financial Gap ($19,073,000)
1 Based on a 7.00% capitalization rate plus a 1.00% margin.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Minus 100K Office; trb 21 of 30
EXHIBIT VI
APPENDIX F
OPEN SPACE COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Minus 100K Office; trb 22 of 30
EXHIBIT VI - APPENDIX F - TABLE 1
ESTIMATED CONSTRUCTION COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Site Improvement Costs 112,000 Sf Land $67 /Sf Land $7,500,000
Open Space Costs 88,000 Sf Land $110 /Sf Land 9,680,000
Bike Station & Service Area Costs 1,700 Sf Bike Station GBA $300 /Sf Bike Station GBA 510,000
Contractor Fees/General Requirements 14.0%Construction Costs 2,477,000
Builder's Risk Insurance 2.0%Construction Costs 354,000
Contingency Allowance 10.0%Other Direct Costs 2,052,000
Total Direct Costs $22,573,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $2,257,000
Public Permits & Fees/Impact Fees 0
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 677,000
Marketing & Leasing Costs 2.0%Direct Costs 451,000
Development Management 4.0%Direct Costs 903,000
Contingency Allowance 5.0%Other Indirect Costs 214,000
Total Indirect Costs $4,502,000
III.Financing Costs
Bank Lease Buyout 2 $2,000,000
Construction Loan Interest 3 $30,687,000 Financed 5.50%Interest 1,519,000
Financing Fees $30,687,000 Financed 2.50 Points 767,000
Total Financing Costs $4,286,000
IV.Total Construction Costs $31,361,000
1
2 Based on Developer estimate.
3
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Open Space - Minus 100K Office; trb 23 of 30
EXHIBIT VI - APPENDIX F - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
OPEN SPACE COMPONENT: TYPE I CONSTRUCTION
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Open Space Revenue
Open Space Management Revenue $860,000
Bike Station & Service Area Revenue 0
Gross Open Space Revenue $860,000
II.Open Space Operating Expenses
Open Space Management Expenses $860,000
Bike Station & Service Area Expenses 1,700 Sf Bike Station GBA $3.00 /Sf Bike Station GBA 61,000
Open Space Operating Expenses $921,000
III.Open Space Net Operating Income ($61,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Open Space Construction Costs (See EXHIBIT VI - APPENDIX F - TABLE 1)$31,361,000
VI.Allocation of Open Space Construction Costs
Office Component 57%Total Open Space Construction Costs $17,720,000
Retail Component 12%Total Open Space Construction Costs 3,616,000
Market Rate Apartment Component 0%Total Open Space Construction Costs 0
Hotel Component 32%Total Open Space Construction Costs 10,025,000
VII.GBA Percentage Allocation for Open Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Open Space Operating Deficit $61,000
IX.Allocation of Open Space CAM Charges 1
Office Component 57%Total Open Space Operating Deficit $34,000
Retail Component 12%Total Open Space Operating Deficit 7,000
Market Rate Apartment Component 0%Total Open Space Operating Deficit 0
Hotel Component 32%Total Open Space Operating Deficit 20,000
1 Any deficit in the net operating income for the open space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any open space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Minus 100K Office; trb 24 of 30
EXHIBIT VI
APPENDIX G
CULTURAL SPACE COMPONENT
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Minus 100K Office; trb 25 of 30
EXHIBIT VI - APPENDIX G - TABLE 1
ESTIMATED CONSTRUCTION COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Cultural Space Costs 12,000 Sf Cultural Space GBA $300 /Sf Cultural Space GBA 3,600,000
Contractor Fees/General Requirements 14.0%Construction Costs 504,000
Builder's Risk Insurance 2.0%Construction Costs 72,000
Contingency Allowance 10.0%Other Direct Costs 418,000
Total Direct Costs $4,594,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $459,000
Public Permits & Fees/Impact Fees 12,000 Sf Cultural Space GBA $16 /Sf Cultural Space GBA 192,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 138,000
Marketing & Leasing Costs 2.0%Direct Costs 92,000
Development Management 4.0%Direct Costs 184,000
Contingency Allowance 5.0%Other Indirect Costs 53,000
Total Indirect Costs $1,118,000
III.Financing Costs
Construction Loan Interest 2 $6,172,000 Financed 5.50%Interest $306,000
Financing Fees $6,172,000 Financed 2.50 Points 154,000
Total Financing Costs $460,000
IV.Total Construction Costs $6,172,000
1
2
Direct costs assume prevailing wage requirements will be imposed on the Project.
Assumes an 18-month construction period with a 60% average outstanding balance, and no lease-up period.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; Cultural - Minus 100K Office; trb 26 of 30
EXHIBIT VI - APPENDIX G - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME & ALLOCATION OF COSTS
CULTURAL SPACE COMPONENT: TYPE I CONSTRUCTION
12,000 SF CULTURAL SPACE GBA
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Cultural Space Revenue 12,000 Sf Cultural Space GBA $2.00 /Sf Cultural Space GBA $288,000
II.Cultural Space Expenses 12,000 Sf Cultural Space GBA $3.00 /Sf Cultural Space GBA 432,000
III.Cultural Space Net Operating Income ($144,000)
IV.GBA Percentage Allocation
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
V.Total Cultural Space Construction Costs (See EXHIBIT VI - APPENDIX G - TABLE 1)$6,172,000
VI.Allocation of Cultural Space Construction Costs
Office Component 57%Total Cultural Space Construction Costs $3,487,000
Retail Component 12%Total Cultural Space Construction Costs 712,000
Market Rate Apartment Component 0%Total Cultural Space Construction Costs 0
Hotel Component 32%Total Cultural Space Construction Costs 1,973,000
VII.GBA Percentage Allocation for Cultural Space CAM Charges
Office Component 206,800 Sf Office GBA 57%Total GBA
Retail Component 42,200 Sf Retail GBA 12%Total GBA
Market Rate Apartment Component 0 Sf Residential GBA 0%Total GBA
Hotel Component 117,000 Sf Hotel GBA 32%Total GBA
Total GBA 366,000 Sf GBA 100%Total GBA
VIII.Total Cultural Space Operating Deficit $144,000
IX.Allocation of Cultural Space CAM Charges 1
Office Component 57%Total Cultural Space Operating Deficit $81,000
Retail Component 12%Total Cultural Space Operating Deficit 17,000
Market Rate Apartment Component 0%Total Cultural Space Operating Deficit 0
Hotel Component 32%Total Cultural Space Operating Deficit 46,000
1 Any deficit in the net operating income for the Cultural Space will be covered by the Office, Retail and Hotel Components. The Affordable Housing
Component will not be subject to any Cultural Space CAM charge.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Minus 100K Office; trb 27 of 30
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
EXHIBIT VI
APPENDIX H
AFFORDABLE HOUSING COMPONENT
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Minus 100K Office; trb 28 of 30
EXHIBIT VI - APPENDIX H - TABLE 1
ESTIMATED CONSTRUCTION COSTS
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Direct Costs 1
Building Costs 40,300 Sf Residential GBA $265 /Sf Residential GBA $10,680,000
Parking Costs
1st-Level Subterranean 0 Spaces $28,750 /Space 0
2nd-Level Subterranean 0 Spaces $34,500 /Space 0
3rd-Level Subterranean 31 Spaces $46,000 /Space 1,426,000
4th-Level Subterranean 0 Spaces $57,500 /Space 0
Residential FF&E Costs 48 Units $1,000 /Unit 48,000
Contractor Fees/General Requirements 14.0%Construction Costs 1,702,000
Builder's Risk Insurance 2.0%Construction Costs 243,000
Contingency Allowance 10.0%Other Direct Costs 1,410,000
Total Direct Costs 40,300 Sf Residential GBA $385 /Sf Residential GBA $15,509,000
II.Indirect Costs
Architecture, Engineering & Consulting 10.0%Direct Costs $1,551,000
Public Permits & Fees/Impact Fees 48 Units $20,000 /Unit 960,000
Taxes, Insurance, Legal & Accounting 3.0%Direct Costs 465,000
Marketing & Leasing Costs 2.0%Direct Costs 310,000
Developer Fee 2 14%Eligible Basis 2,500,000
Contingency Allowance 5.0%Other Indirect Costs 289,000
Total Indirect Costs $6,075,000
III.Financing Costs
Construction Loan Interest
Series A Bond 3 $2,092,000 Financed 3.00%Interest $72,000
Series B Bond 4 $18,264,000 Financed 3.00%Interest 630,000
Financing Fees
Series A Bond $2,092,000 Financed 2.50 Points 52,000
Series B Bond $18,264,000 Financed 2.50 Points 457,000
Tax Credit Fees 5 31,000
Total Financing Costs $1,242,000
IV.Total Construction Costs 40,300 Sf Residential GBA $566 /Sf Residential GBA $22,826,000
48 Units $475,500 /Unit
1
2
3
4
5 Based on a $2,000 application fee, a $410 per unit monitoring fee, and 1% of the gross Tax Credits for one year.
Direct costs assume prevailing wage requirements will be imposed on the Project. KMA assumes TYPE I construction standards for the AFFORDABLE
HOUSING COMPONENT.
Equal to the maximum amount allowed by TCAC.
Includes debt on 75% of the Tax Credit Equity that will not be funded during construction. Assumes an 18-month construction period with a 60%
average outstanding balance, and a 3-month lease-up period with a 100% average outstanding balance.
Equal to the unfunded construction costs minus the Series A Bond amount; an 18-month construction period with a 60% average outstanding balance;
and a 3-month absorption period with a 100% average outstanding balance.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Minus 100K Office; trb 29 of 30
EXHIBIT VI - APPENDIX H - TABLE 2
ESTIMATED STABILIZED NET OPERATING INCOME
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Affordable Housing Income 1
Manager's Unit (Two-Bdrm)1 Unit $0 /Unit/Month $0
Studio Units 8 Units $702 /Unit/Month 67,000
One-Bedroom Units 25 Units $746 /Unit/Month 224,000
Two-Bedroom Units 10 Units $893 /Unit/Month 107,000
Three-Bedroom Units 4 Units $1,029 /Unit/Month 49,000
Laundry & Miscellaneous Income 48 Units $10 /Unit/Month 6,000
Parking Revenue 2 31 Spaces $75 /Space/Month 28,000
Gross Residential Income $481,000
(Less) Vacancy & Collection Allowance 5%Gross Residential Income (24,000)
Effective Gross Income $457,000
II.Affordable Housing Operating Expenses
General Operating Expenses 48 Units $5,500 /Unit $264,000
Parking Operating Expenses 31 Spaces $500 Expense/Space 16,000
Property Taxes 3 10,000
Replacement Reserve 48 Units $250 /Unit 12,000
Affordable Housing Operating Expenses $302,000
III.Affordable Housing Net Operating Income $155,000
1
2
3 Limited to the estimated property tax overrides. Assumes that the affordable units will be awarded a property tax welfare exemption accorded to non-
profit developers that own and operate apartment units that are restricted to households that earn less than 80% of the County median income.
Based on 2015 Tax Credit rents published by the TCAC for 50% AMI households net the applicable 2014-2015 utility allowances published by the City.
Parking must be uncoupled from apartment rents. The affordable units can use one parking space at no cost. Alternatively, these tenants can receive a
rent reduction equal to 1/2 of the prevailing parking rent. The Developer will implicitly receive 1/2 of the market rate parking charge for the affordable
units.
ATTACHMENT U
Prepared by: Keyser Marston Associates, Inc.
Filename: 4th Az_10 11 15; AH - Minus 100K Office; trb 30 of 30
EXHIBIT VI - APPENDIX H - TABLE 3
ESTIMATED FINANCIAL GAP
AFFORDABLE HOUSING COMPONENT: TYPE I CONSTRUCTION
4% TAX CREDITS & TAX-EXEMPT MULTIFAMILY BONDS
40,300 SF RESIDENTIAL GBA: 48 APARTMENT UNITS
100,000 SF OFFICE REMOVED / NO ADDITIONAL USES
THE PLAZA AT SANTA MONICA
SANTA MONICA, CALIFORNIA
I.Estimated Outside Funding Sources
Tax-Exempt Multifamily Bond
Net Operating Income 1 $155,000 NOI (See EXHIBIT VI - APPENDIX H - TABLE 2)
Income Available for Mortgage 1.15 DCR $134,783 Debt Service
Interest Rate 5.00%Interest Rate 6.44%Mortgage Constant
Permanent Loan $2,092,000
Tax Credit Equity
Gross Tax Credit Value 2 $8,981,000
Syndication Rate $1.10 /Tax Credit Dollar
Net Tax Credit Equity $9,879,000
Deferred Developer Fee $0
Total Outside Funding Sources $11,971,000
II.Estimated Financial Gap
Total Outside Funding Sources $11,971,000
(Less) Total Construction Costs (See EXHIBIT VI - APPENDIX H - TABLE 1)(22,826,000)
III.Estimated Financial Gap 48 Units ($226,000)/Unit ($10,855,000)
1 Based on a 30-year amortization period.
2 Assumes the use of 4% Tax Credits. Assumes a $20.9 million requested unadjusted eligible basis, which includes a $0.0 million voluntary basis reduction,
a 130% difficult-to-develop premium, and a 3.30% Tax Credit Rate.
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
LANDSCAPE PLAN
L101
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SCALE: 1" = 40'-0"
20'40'80'0'0'
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DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
SITE PLAN & GROUND FLOOR
L102
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LEVEL 1
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
SITE PLAN & GROUND FLOOR
L103
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SCALE: 1" = 20'-0"
10'20'40'0'
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LEVEL 1
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
LANDSCAPE PLAN
L104
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SCALE: 1" = 40'-0"
20'40'80'0'0'
N
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
LANDSCAPE PLAN
L105
0'0'0'0'
SCALE: 1" = 40'-0"
20'40'80'0'0'
N
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
LANDSCAPE PLAN
L106
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20'40'80'0'0'
N
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
LANDSCAPE PLAN
L107
0'0'0'0'
SCALE: 1" = 40'-0"
20'40'80'0'0'
N
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
PLANTING SECTIONS
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TYPICAL ASSEMBLY SHRUBS + TREE
2" UNIT PAVERS
20" PEDESTAL
4" RIGID INSULATION
1" WATERPROOFING
TOTAL: 27"
24" SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 27"
TREE SOIL DEPTH 42"
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TYPICAL ASSEMBLY TURF
2" UNIT PAVERS
8" PEDESTAL
4" RIGID INSULATION
1" WATERPROOFING
TOTAL: 15"
12" SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 15"
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
PLANTING SECTIONS
L109
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10'20'40'0'
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SHRUB + TURF STRATEGY 1
2" UNIT PAVERS
20" PEDESTAL
4" RIGID INSULATION
1" WATERPROOFING
TOTAL: 27"
24" SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 27"
TREE SOIL DEPTH 42"
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
PLANTING SECTIONS
L110
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STRATEGY 2
2" UNIT PAVERS
1" PEDESTAL
4" RIGID INSULATION
1" WATERPROOFING
TOTAL: 8"
24" SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 27"
42" TREE SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 45"
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
PLANTING SECTIONS
L111
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SCALE: 1" = 20'-0"
10'20'40'0'
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2'
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STRATEGY 3
2" UNIT PAVERS
8" PEDESTAL
4" RIGID INSULATION
1" WATERPROOFING
TOTAL: 15"
12" SOIL DEPTH
3" DRAINAGE/RETENTION MAT
TOTAL: 15"
DESIGN TEAM
OMA
OLIN
VTBS
METROPOLITAN PACIFIC REAL ESTATE GROUP
CLARETTE WEST DEVELOPMENT
DLJ REAL ESTATE CAPITAL PARTNERS
CONTACT: JOHN WARFEL PH: (310) 576-4882
1301-1333 4TH STREET - 1324-1334 5TH STREET
SANTA MONICA, CA 90401
THE PLAZA AT SANTA MONICA
PLANTING SECTIONS
L112
0'0'0'0'0'
SCALE: 1" = 20'-0"
10'20'40'0'
N
Exhibit W
4th and Arizona
Conceptual Business Terms
PROVISION
TERMS
Ground Lease
Term
55-year base term with either one or two, 22-year
options (77 or 99 years total, pending further
economic analysis). There would be three separate
ground leases: (i) affordable housing, (ii) hotel, and
(iii) the remaining uses (office, retail, cultural space,
open space and parking).
Ground Lease
Payments
The Affordable Housing Parcel would have no
ground lease payments.
The ground lease payments for the other two ground
leases (Hotel and Office/Retail/Parking) would be as
follows:
During the Construction Period rent shall equal
$100,000 for the first lease year, $150,000 for
the second lease year, and $200,000 for the
remainder of the Construction Period.
Upon the expiration of the Construction Period,
rent shall be $1,300,000 annually, allocated
between the hotel parcel ground lease and the
ground lease for the balance of the Project.
The $1,300,000 annual rent shall be increased
by CPI on the fifth (5th) anniversary from the
end of the Construction Period and every five
years thereafter, provided that the increase
shall not be less than 5% or greater than 15%
in any escalation period through the expiration
of the initial 55 year lease term.
Profit Sharing If the Project is sold within the first ten years of
operation then the City would receive a one-time
payment of the percentage amount (still to be
negotiated) of the net sales proceeds received by
Developer which is greater than Developer’s
Minimum Return, if any, by which the net sales
proceeds exceed Developer’s Minimum Return. The
Developer’s Minimum Return is the total Project
costs which include tenant improvement costs and
commissions plus an annual ten percent return.
However, if the Project has not been sold by the
tenth year of the completion of construction and if the
then fair market value of Developer’s leasehold
interest in the Project is greater than Developer’s
Minimum Return, Developer shall pay to the City the
Profit Participation Percentage by the amount, if any,
by which the hypothetical net sales proceeds exceed
Developer’s Minimum Return.
Provisions would be included to address profit
sharing if the Developer sells its interest in the
Project in stages, sells tax credits that it receives in
connection with the affordable housing component of
the Project or refinances the Project for an amount in
excess of Developer’s Minimum Return.
Bank Relocation Developer would be responsible for payment of lease
termination fees and the costs of relocating the two
banks that are currently on the Site and for acquiring
approvals for and covering the costs of demolition of
existing structures as necessary.
The project costs were estimated at approximately $400 million per the
original proposal and development program and the project’s economics
were established in the Developer’s original pro forma attached.