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<br />III. COST OF THE AGREEMENT TO THE AGENCY <br /> <br />This section presents the total potential cost of the Project to the Agency that will be <br />expected to be funded with redevelopment agency tax increment funds. The "net cost" of <br />the Project after consideration of the cost recovery and revenues that will accrue to <br />redevelopment funds are also evaluated. The net cost can be either an actual cost, <br />when expenditures exceed receipts, or a net gain, when cost recovery and revenues <br />created by implementation of the DDA exceed expenditures. <br /> <br />A. Estimated Cost to the Agency <br />The costs to the Agency resulting from this transaction relate the following: <br /> <br />The Agency purchased the Property in September 2005 for $4,500,000. <br /> <br />The Agency will spend approximately $165,000 in relocation costs. <br /> <br />The Agency will spend approximately $139,000 in other predevelopment costs. <br /> <br />The Agency will provide a Predevelopment Loan to the Developer in the amount <br />of $727,000. The principal amount of this loan will be repaid when the <br />construction loan is funded. <br /> <br />The Agency will provide a loan to the Developer in the maximum amount of <br />$884,000 for capital costs related to renovating the Property. This loan is <br />to be repaid without interest at the end of a 55-year term, or if the <br />Developer agrees to extend the Regulatory Agreement, at the end of a <br />75-year term. <br /> <br />The Agency will provide an annual operating subsidy throughout the first 30 <br />operating years. The cumulative total of annual operating subsidy <br />payments to the Developer will not exceed $5,713,000 over the 30-year <br />period. <br /> <br />The Agency does not anticipate that it will use any debt to fund the obligations <br />under the DDA. Therefore, the Agency does not expect to incur an <br />interest cost related to the transaction. <br /> <br />As stated below, the total cost to the Agency generated by this transaction is estimated <br />at $12.13 million in nominal dollars and $8.35 million in present value terms. <br /> <br /> Net Present <br /> Total Nominal Value <br /> Cost (discounted at <br /> 6%) <br />Acquisition Cost $4,500,000 $4,500,000 <br />Relocation Costs $165,000 $165,000 <br />