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<br /> . <br /> . LEVEL OF ASSISTANCE <br /> Exhibit III is identical to Exhibit II except that Site Costs are <br /> shown at $3.75 per square foot which amounts to $1,123,418. This <br /> increases the total project costs to $4,355,927. The mortgage <br /> principal cannot change since NOI has not increased. The Project <br /> simply requires more equity which in Exhibit III is shown as <br /> $1,658,779 and when equity is divided into cash flow the <br /> resulting cash-on-cash return in Year 1 is 3.77%. The 10-year <br /> annual average is 4.90%. <br /> The Site Costs of $3.75 per square foot is simply the total uses <br /> of $9,581,018 as shown on Exhibit VII of the December 7 Memo <br /> divided by the net useable square footage of land which is <br /> 2,558,172. Again, the $3.75 per square foot Site Cost assumes no <br /> City assistance of any kind other than the use of eminent domain <br /> to assemble parcels that cannot be acquired in a negotiated <br /> transaction. Actually, the $3.75 amount might be slightly <br /> . understated because it assumes that the City is willing to sell <br /> its land for a maximum of $1.25 per square foot and receive <br /> nothing for its carrying costs, acquisition costs, demolition <br /> costs and so forth. <br /> Exhibit III demonstrates that this Project will not be undertaken <br /> with Site Costs at $3.75 per square foot. A redeveloper would be <br /> better advised to invest its funds in debt issued by the U.S. <br /> government which, in today's market, can provide a guaranteed <br /> yield of 8%. Exhibit II which shows the Site Costs at $1.60 per <br /> square foot and a cash-on-cash return of 8% demonstrates that the <br /> Project is possible but not much reward for the risk. <br /> As indicated previously, the Redeveloper can do better than 8% if <br /> one of several factors change including reducing the Site Costs. <br /> As the Site Costs are reduced to below $1.00 per square foot the <br /> . 5 <br /> ---- <br />