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III. COST OF THE AGREEMENT TO THE AGENCY This section presents the total cost of the DDA to the Agency, as well as the "net cost" of the project after consideration of the project revenues. The net cost can be either an actual cost, when expenditures exceed receipts, or a net gain, when revenues created by implementation of the Agreement exceed expenditures. A. Estimated Cost to the Agency For this agreement, the net costs for the Agency are estimated to be: (Estimated) Site Assemblage (Purchased Land in late 1980's) $3,200,000 Environmental Review 8.500 Total x Revenues to the Agency $3,208,500 Per the terms of the Agreement, the Agency will sell the Developer Parcel to the Developer for the agreed upon price in the DDA. The revenues to the Agency will be received in installments, as follows: $1,500,000 due upon close of escrow; ■ An additional one-time payment of from $0 up to $500,000, paid between Years 1 to 5, based upon the performance of the Project. The formula for calculation of this ratio is contained within the DDA Please refer to Table 1 for a detailed summary of the Agency cash flows. For purposes of this analysis, the additional payment is assumed to occur at the end of year 2 of operation, and is estimated to be $200,000. This amount is based on the midpoint range of fair reuse value ($1.5 million to $1.9 million) less the upfront payment of $1.5 million at close of escrow. As shown from Table 1, the present value of these payments is $1,660,000. Also, as shown from Table 2, the present value of the property tax increment from the Project is estimated at $1,090,000. Therefore, the net revenue stream to the Agency is estimated to be $2,750,000. 19100/0001-001 AW 165 KEYSER MARSTON ASSOCIATES INC Pape 7