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Analysis of the County's $1.30 rental rate ; Courthouse Square March 19, 1998 T'he county's project manager, Melvin Mark Company (MMC), has developed several proformas analyzing the monthly costs and rental rates relating to Courthouse Square. The proformas have been used to estimate the monthly rental rate charged to county departments. The most recent proforma estimates the rental rate at $1.30 /sf. Staff has used this rate in order to do budget and impact projections. However, we have not abandoned our goal of lowering the rate into the $1.20 range. For budgeting purposes, all savings generated in recent months have been placed in the contingency fund rather than used to reduce the rental rate. The proforma has two basic components. An analysis is includzd below: Debt Service: Debt Service for the project is estimated at approximately $1.00 /sf and represents the principle and interest payments on $21,115,717 in revenue bonds. The bonds will be repaid by using revenue generated from rent, leases, pazking and ground leases. It should be noted however, that ground lease revenue is not included in the proforma at this time. The specific terms of the financing package will not be determined until Bond Counsel completes the analysis of the project and the bonds are sold The amount to be financed includes an estimate of the payback of expenses akeady incurred, plus the associated fmancing costs. Debt service is affected by two variables, construction costs and interest rates. Construction costs are 6-8 months old and most likely reflect the 1997 construction environment. Final construction costs will not be available until the fall of 1998 when competidve bids are received. Interest rates have been updated constandy, and as a result of greater public occupancy in the building, is now based on a tax exempt rate of 5.25% amortized over 25 years. Although the county has received some indications that interest rates will remain low and construction costs may moderate as major construction projects in the Willamette Valley peak, there is a risk that costs associat~ with the debt service component will escalate' Given the fact that final design has not been completed and construction costs aze dated, it is likely that total project costs could still escalate as final design is completed. Operations & Maintenance: Operations & Maintenance (O & M) has been estimated at $0.30 /sf. These cost estimates were prepared by Melvin Mark Co. using their experience with the Robert Duncan Plaza Building in Portland. This building is occupied by government agencies. Attached, as exhibit A, is the line iSource: 12"' annual Coldwell Banker market update, 1-28-98.