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Draft Memorandum lune 11, 2013 EPSP Alternatives Infrastructure Cost Burden Review Page 2 Key Findings The key findings from this preliminary financial feasibility review are summarized in Figure 1 and further described below. • The initial financial feasibility screen suggests that four of the development alternatives are marginally feasible from the perspective of a real estate developer(s), while one is likely infeasible and the other is likely to be feasible. These findings are based on the relationship between potential finished building values and the required infrastructure investments and other costs necessary to create this value. Specifically, one feasibility measure suggests that all feasibility alternatives fall slightly above the acceptable range of 15 percent. However, the alternatives perform more favorably based on the Tax Burden Threshold test. • The six alternatives do not differ significantly in terms of infrastructure costs (i.e., type and amount of vertical development). While Alternative 6 appears to be the most feasible due to the largest number of residential units, larger differences between the alternatives are likely to depend on the relative market performance of specific product types, factors that have yet to be evaluated in detail. In addition, the likely success of all six alternatives from an economic perspective will require relatively positive market trends and that other unknown cost and risk factors fall within a reasonable range (e.g., infrastructure costs, entitlement changes, delays, etc.). • As in the prior EPS analysis, estimates of applicable development fees and connection charges have been included. These fees and charges are significant, especially for sewer and water services, and combined represent between 66 and 79 percent of the total backbone infrastructure burden. Development impact fees and utility connection ctarges are paid for by vertical developers (e.g., home builders) and thus could be at least partially discounted from the "rule-of-thumb" feasibility tests included herein. However, the size of these fees relative to typical development projects of this nature suggest that they should be considered as part of the assessment of overall project feasibility. • The results of the Infrastructure Cost Burden Review are preliminary and provide a high-level screen for"fatal flaws" in the alternative program use mixes. The intents to provide an early-stage assessment that helps to guide refinement of EPSP planning parameters. Future analysis should consider program phasing (e.g., market absorption relative to required infrastructure investment), more detailed assessments of specific real estate product types, and refined infrastructure cost analysis, including potential off-site costs, if any. P:1210001 21090EastPleasanton\Report\Infrasvunure Burden MemorandumWrafl f(6.10)121090_rnframmo61013.docx