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costs including construction labor & materials, marketing, construction period interest, indirect construction costs and a small contingency. The Redeveloper, for the purpose of preparing the pro forma, is not building the proposed office building on the current Dorso property. The pro fnrma for this part of the development includes selling the land to another office building developer or user for $3.15 million. This is the same price used in our original financial analysis. The Net Income of $22.0 million represents the total sources less total uses before any income taxes. This pro fom�a analysis is preliminary but does represent the Redeveloper's best estimate of revenues and expenses at this time. Housing unit numbers, types and selling price are all market driven and will occur over a period of years. The commercial retail mix could change with a corresponding adjustment to the value of the property. If an office development cannot be built on the Dorso property, other developmentoptions are possible. The amounts shown here are generally expressed in actual dollar amounts. Only the tax increment amounts are shown as present values. The projected net income amount does not appear unreasonable for this level of development and we assume the Redeveloper is hoping to achieve a higher rate of return on their investment than the amount shown. Based on the preliminary information provided to us and assuming the use of the gap strategies, acceptable market conditions and interest rates, it is our opinion that the Redeveloper has complied with the second paragraph of Section 74b) of the Contract for Exclusive Negotiations. _,.. �_, .,t.,. �,�,..,,..�.. _. �..k,. , ., .s. .. • Page 2