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Patrick Brama Analysis of Request for Assistance — Adrenaline Sports Center July 12, 2017 Page 2 SOURCES Developer Financing - 1st Mortgage Developer Equity TOTAL SOURCES Amount 4,316,717 1,079,179 5,395,896 80.00% 20.00% 100.00% USES Acquisition Costs Construction Costs Professional Services Financing Costs Developer Fee TOTAL USES Amount % of Cost Per Bldg. Sq. Ft. 450,846 8.36% 4,096,300 75.92% 450,000 8.34% 98,750 1.83% 300,000 5.56% 5,395,896 100.00% $7 $64 $7 $2 $5 $84 Generally, this project meets the expectations of an industrial building as it relates to the total development costs, financing structure, projected revenues, and developer fee. Following are our findings relating to the analysis completed for the development: • The developer is proposing permanent financing for 80% of the project costs and will bring 20% in equity, or approximately $1,079,179. This financing structure is in line with typical industrial projects. • The total development costs for this project are approximately $5.4 million, or $84 per square foot. This total development cost in within industry standards for a project of this nature. • The developer fee of $300,000 is 5.6% of total development costs. For a project of this nature, we would expect to see a developer fee between 3% and 5%. The fee is at the higher end of this range. • Proposed rents are $6.00 per square foot. This rate is consistent with what Adrenaline has agreed to pay for the space it will be leasing. • The projected cash -on -cost return on investment (net operating income / total project costs) by year five (5) is 7.05% without assistance and 7.97% with assistance. Year five is chosen for this analysis as it is the year after the City payments end. Industrial developers are typically seeking a cash -on -cost return of between 7% and 9%. With the requested assistance, this project falls within the typical industry threshold for returns on investment.