Courthouse Square Internal Staff Team Minutes

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3. Evaluation of 5130 Rate Draft ~ Randy Curtis handed out a copy of his report on the proforma analysis. While the proforma is based on the $1.30 rental rate, we have not abandoned our goal of lowering the rate into the $1.20 range. The proforma has two basic components: debt service and operations & maintenance (O & 1Vn. Debt service is estimated at appro~mately $1.00/s.f. and represents principal/interest payments of $21,115, 717 on revenue bonds. Debt service is affected by two variables: construction costs, which are approximately 6-8 months old and interest rates currently at 5.25% amortized over 25 years. O& M costs have been estimated at $0.30/s.f. County Facilities Management ran a comparison with county buildings on the same components and came up with $0.31/s.f. Arbuckle Costic also provide information on the newly constructed Robertson Building in Salem and O& M expenses aze $0.23/s.f. for this building, which is new and warranty on building equipment is holding first O& M costs down. County's current O& M costs are higher than the projections used in the proforma. A policy decision has been made to contract out these services, if the county cannot reduce costs over the next two years. The next part of the report outlines some of the risks/options/vaziables of the proforma that are noteworthy: ~,, 1. Rental rate doesn't include building reserve fund. Discussion by staff changed terminology to sinking fund, rather than building reserve fund. 2. Construction estimates tentative/subject to fmal design & competitive bid. 3. Utility and labor costs may exceed estimates. 4. Interest rates may climb prior to fmal financing. 5. Demand for Class A& B office space may drop resulting in higher vacancy rates and longer 6. leasing time. Amount of parking required, including 59 above ground spaces, and associated costs not finalized. Parking issues have not been resolved and strategies need to be addressed with 7. the city of Salem. Costs for remodeling the Franklin Building and Courthouse have not been included. After staff discussion, this item will change phrasing to costs "have been established, and are not included as Courthouse Square expense". 8. Change in cost sharing formula between transit/county could shift expenses. Background was given on how original formula was determined in the land sale agreement. Transit is working to maintain the 42% and is working with FTA to keep it. A revisit to the formula will force blanks in current agreement to be redefined. 9. Change in Salem's Streetscape funding could alter cost estimates to complete project. Staff held discussions on this issue. City has budgeted $2 million for this project, but not sure which year it is in. The latest Pence/Kelly streetscape numbers based on city's current design standards were over the $2 million, and were presented to the city. ~ Pa e2of4 g