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item expenses used in the proforma. It is important to note that these cost estimates are projections of first year expenses only. We have been advised that they have been adjusted for inflation using market data and inflation values. In order to check the accuracy of the O& M projections, Marion County evaluated each component of MMC's expenses and compared them with our own buildings. Labor, cost accounting procedures and different utility rates account for some differences in the distribution of county building expenses. The county's Facility Management Department estimates $0.31 /sf for O& M. With the assistance of Arbuckle Costic we also received information on the newly constructed Robertson Building. This facility is privately owned and leased to the State of Oregon. Monthly O&M expenses are $0.23 /sf . While this seems low, the estimates for utility costs; minor maintenance, and janitorial services are comparable to MMC projections. It is also likely that the newness of the building and warranty on building equipment is holding first year O & M costs down. Marion County's current O& M costs for county buildings is higher than the projections used in the proforma. This is cause for some concern and is the result of our higher labor costs in some areas. We also have older buildings and systems in our inventory, some of which operate around the clock seven days a week. The projections for Courthouse Square assume market rates for some services such as janitorial. If we use our current labor force, the county's rate would rise to a range of $0.36 to 0.39. A policy decision has been made to contract out these services (such as janitorial) in order to meet proforma projections. Several questions have been raised about specific cost centers in the proforma. What is covered by the personnel figure of $0.25 /sf? A definition of this, and other items, is include in exhibit B. The cost esrimate is reasonably close to our labor costs except for employees at the top steps of their salary range. _ Have provisions been made for reserves? The county currently sets aside some reserves in our facility budget for major building expenses. These revenues are co-mingled and used, where nceded, on county buildings. The proforma's expense category in exhibit B, called major maintenance, is synonymous with capital reserves. Based on current projections, we believe the figure of $0.16 /sf added to existing building reserves is adequate. It should be noted however, that the county does not have a building replacement fund included in our rental formulas. This issue is currently under discussion by our internal finance committee. Have landscaping, security, outside maintenance and common area costs been included? Several of the cost centers in exhibit B, such as"other maintenance & minor maintenance" contain expenses to cover these needs. Management cost (overhead) is included as a component of the county's cost accounting system. All major cost centers include a charge back for management and this cost has been factored into the county's estimates. 2