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• IV. VALUE OF THE INTEREST TO BE CONVEYED Reuse Value The reuse value for the Site is directly a function of the development economics for the specific development required to be constructed for the Project. The covenants and conditions of the Agreement require the construction of three 3- and 4 -story Class A office buildings with an exceptional level of amenities, including a restaurant, a landscaped plaza, parking deck, a high quality of building materials, as well as the obligation of the Developer to accomplish such development in an expeditious manner. Based upon the findings in the reuse valuation report prepared by KiMA, it is concluded that the cash payment with the conveyance of the Site of 52,513,412 is a fair consideration, given the specific conditions and covenants of the Agreement. In addition, the Developer is obligated to pay all assessments and governmental fees related to the Site, including the underground utility conversion fee and the City of San Leandro Development Fee for Street Improvements (DFSI). While it is anticipated that the high quality of materials, amenities, and improvements required under the DDA will increase development costs, this has been reflected in the analysis. If the specifications for the development of the Project were relaxed, resulting in lower development costs, a higher purchase price (reuse value) would be warranted. The KIVIA reuse valuation is attached to this report and incorporated herein by this reference. Estimated Value at Highest and Best Use KivIA has also estimated the value of the interests conveyed to the Developer if sold by the Redevelopment Agency at its highest and best use allowed under the redevelopment plan. KIILA concludes that the value of the Site, assuming that it is free and clear of all improvements and any other encumbrances, is approximately 542 million to 55.6 million (515 to 520 /sq.ft. of net usable land area) for a commercial land use, plus assumption of the assessment for undergrounding utilities. While the reuse value being paid to the Agency is less than the fair market value of the Site under the highest and best use, the Agency has determined that the high quality, first class office complex as provided in the DDA offers the best complementary use for other land uses and activities in the area. In addition, the Developer must incorporate into the Project architectural and site upgrades of a higher quality than would typically be found in a standard first class office complex and must build a parking deck. Furthermore, the Project must be developed in the near -term. Therefore, the Project will further the overall goals of the Plaza Redevelopment Project Area to revitalize the downtown commercial core and the Davis Street corridor in the vicinity of the Site. Keyser Marston Associates, Inc. 19096.026\002- 002.doc Page 10