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May 25, 2010 -Execution Copy The following information on the amount of the DFSI for Kaiser Phase 1 which would otherwise be applicable is included for information purposes only. If the Project was subject to DFSI for Kaiser Phase 1 at the current City rates, the amounts would be as follows based on a review by City staff. The Hospital Support Building would be assessed using a combination of the medical office rate (182,529 square feet at $4.55 per square foot), the general office rate (34,820 square feet at $3.25 per square foot), and the hospital rate (57,651 square feet at $1.50 per square foot). The distribution of rates reflects proposed uses as determined by the City Engineer in consultation with Kaiser. The total DFSI for the Hospital Support Building would be $943,672. The DFSI rate for the hospital portion of Phase 1 would be $1.50 per gross building square foot ($1.50 x 436,000 (est) _ $654,000). Therefore the total DFSI calculation for Kaiser Phase 1 was estimated to be $1,597,672. Section 3.05. Taxes to be Paid by Develo ear. (a) Real Propert,~. It is anticipated that the Kaiser Medical Center Project will be substantially exempt from Real Property taxes under the charitable exemption. Developer agrees to continue to pay real property taxes in accordance with all applicable laws and regulations. Developer shall pay real property taxes on the all property and improvements until such time as it qualifies for exemption. The Retail Project shall pay real property taxes in accordance with all applicable laws and regulations and Developer shall also pay special real property assessments and other such fees that are not subject to Developer's charitable exemption. (b) Sales and Use Taxes. Developer shall pay sales tax on applicable retail sales at the Kaiser Medical Center Project on certain uses, such as pharmacy and optical sales, as required by law. The Retail Project is anticipated to be a major generator of sales tax revenue. Developer agrees to facilitate meetings between its general contractor and the City to discuss the feasibility of registering the City as the place of business for the purpose of allocating use and sales tax to the City for purchases made by said general contractor. (c) Utility User Taxes. Developer shall pay utility user taxes on the Project in accordance with all applicable City laws. (d) Business License Tax. Although nonprofit operations are exempt from the business license tax, all for-profit entities are required to pay the City's business license tax in accordance with City laws. Developer's affiliated for profit medical group shall pay the City's business license tax consistent with applicable City laws, based on a per physician charge at the "Services" rate. (e) 911 Tax. The Project shall be subject to and pay the 911 Tax in accordance with City law in effect at the time payment is due. Page 9 of 36 1424669.1 Kaiser Medical Center and Retail Project Development Agreement