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the lack of truly comparable sales and the numerous adjustments that would have to be made to recent sales, primary reliance is establishing the reuse value has been placed on the use of the income approach to value. The income approach is based upon the income and cost characteristics of the proposed project. For the purpose of determining the reuse value of the land, the residual value can be defined as the difference between the development cost of the project, excluding land, and the total amount the developer (or investor) can afford to invest. The amount the developer can afford is based upon the projected net operating income revenue generated by the project, the present and anticipated money market conditions which impact the cost to finance the project, and the required rate of return on the investment warranted. The economics of the proposed Project must be determined on the basis of the costs and revenues generated by the Project as a whole. This section of the report presents the estimates of the development costs and revenues for each of the uses and the assumptions made to determine these estimates. A. Development Costs Development cost estimates are based on information provided by the proposed Developer, Creekside Center Associates, Inc. These estimates were examined for reasonableness by Agency staffand Keyser Marston Associates, Inc. The cost estimates appear to be reasonable for the quality of project required by the Agency. However, KMA has not conducted an independent evaluation of the construction costs. Overall, it is important to note that, per the Agreement, the Developer is responsible for designing and developing a high quality retail center with architectural and site upgrades of higher quality than would typically be found in a neighborhood shopping center. The estimated development costs reflect the costs to meet these requirements. Table 1 presents the estimated direct and indirect development costs for the proposed Project. These components are to be financed and owned by the Developer. As shown in Table 1, the total development costs, before land, are estimated at $9.3 million, or $115 per square foot of rentable building area. The major assumptions behind the development cost estimate are as follows: The retail shell cost, inclusive of tenant improvements, is estimated to average $66.80 per sq. ft. of rentable area for the 80,500 sq.ft. of rentable retail space. The retail shell costs reflected are higher than typical for a neighborhood shopping center. 190 KEYSER MARSTON ASSOCIATES I N C. Page 10 19100J0001-=.doc