Courthouse Square Internal Staff Team Minutes

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Courthouse Square Internal Staff Team ~ February 12, 1998 Minutes Summary Present: Marion County: Randy Curtis, Sheryl Derting, Carol Fischer, Randy Franke, Ralph Grim, Michael Hansen, David Hartwig, Hitesh Parekh, Larry Oglesby, Ken Roudybush, Billy Wasson; Sa1em Area Transit: Mark Wieprecht, 7ohn Whittington, Tom Wolfgram; Arbuckle Costic: Leonard Lodder; Melvin Mark Companies: Craig Lewis, Dan Petrusich Agenda: 1. Lease Study Report 2. SPOC Agenda 3. Budget Conclusion 1. Lease Studv Re ort Don Palmer of Palmer, Groth, & Pietka, Inc. (Portland) was introduced to staff and gave his presentation on the lease study. This was prepared as a financial tool and does not address additional costs for county employees travel to/from meetings with different locations and that Salem has a tight class A/B space and finding 114,000 sf couldn't be done. Our goal was to test construction costs (total cost of project minus transit grant $) based upon information provided against market rent if you can find space. The second part would test market rent against proposed ~ contract rent and future ownership 26 years out. Our approach was to measure costs and put into today's terms. Contract rent is the $1.30/sf that county would pay in the new building. Market rent came out to $1.47/sf ($1.56/sf full services minus 9 cents for property taxes). Market rent was azrived by surveying all class A/B existing space in Sa1em, looking at comparable quality, amenities, and overall construction. The table after page 8 shows the comparables and adjustments made for parking and taxes. Focus on the adjusted rents column to get the range for rents. We used a starting date of July 1, 1999 and 26 yeaz period to match bond financing. We used today's rate and trended up 3% to get to the 7/1/99 rate. Page 11 shows market rent today of $1.40 and by trending up 3%, it will be $1.47 in 1999. The contract rate of $1.30 has not moved. The parking rate of $47.22 has also been trended up 3% from $45.00. The first analysis is the market rent you would have to pay. The 2nd part of the chart is based on costs provided from the November proforma of $33,801,485, which includes the $5.3 million for land. This would be the worst case scenario. Tota1 construction costs minus transit grant would net $23,957,000. To convert to a price per square foot as requested in the agreement, the $23.9 million divided by 114,557 sf equates to $209.13. Computation for market rent if available would be $218.54. This is based on a 6.34% interest rate per the proforma of November, 1997. Today's rate is now 5.25%. As rate comes down, the differential will go higher. Concern was expressed that the land value number in the total costs number be adjusted and not include the $5.3 million appraisal value prior to demolition. Melvin Mark Companies will provide this new value to Don Palmer for inclusion. ~ The second part of the analysis was to test market rate against the contract rate, plus the benefit of Page 1 of 5