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Risks/Options/Variables: The Proforma contains some risks and variables that are noteworthy. They include: 1. Construction estimates are tentative and subject to fmal design and competitive bidding. 2. Utility and labor costs may exceed estimates over the next two years. 3. Interest rates may climb prior to obtaining final financing. 4. Demand for class A& B office space may drop resulting in higher vacancy rates and longer leasing time. 5. The amount of parking required/desired, including the 59 above ground spaces, and the associated cost has not been fmalized. 6. Costs associated with remodeling of the Franklin Building and Courthouse have been estimated but, aze not included as a Courthouse Square expense. 7. A change in the cost sharing formula between transit and the county could shift actual expenses. (There are currently two formulas which are based on the original design). 8. A change in Salem's Streetscape funding could alter cost estimates to complete the project. 9. Until such time as a private partner is selected to develop the north pad, the financial impacts on the total project are unknown. Once SPOC gives iYs approval to the project, an RFP could be issued. 10 Additional environmental cleanup costs may be incurred during the excavation phase. Opportunities: There are several options under consideration that can minimize risks noted above. In addition, these options have the potential to reduce the service impact of the higher project rents. They include: 1. The project contingency fund is $3.6 million. A reduction in the actual use of the project contingency has the potendal to reduce the rental rate by up to $0.10 /sf or more. Z. Profits generated from commercial leases in the Franklin Bldg. and Courthouse Square could be used to offset assessments to county departments. 3. The ability to invest in quality and energy efficient building systems can reduce long term maintenance costs. The proforma represents a best guess estimate of expenses for a building which is at least two years from occupancy and still must undergo detailed design review and construction bidding. It does not take into account the benefits or impacts that private development of the north pad will have on the project. Subject to the risks and variables noted above, we believe all relevant data and costs have been identified. The county must rely on its consultants to constantly review and update these projections as the project proceeds. 3