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9. Page 12 indicates that sales tax revenue from Costco would grow 3% per year for 25 years. What is the basis for this estimate? Historically, new Costco's have seen revenue growth for the first few years and then flat sales thereafter. Assuming 3%sales growth for 25 years in an era of increasing online sales (e.g.Amazon) and the likelihood of recession over this period makes this estimate unrealistic. Even using the unrealistic 3%annual sales increase the city would not break even on the deal for 20 years based on Costco revenue alone (Attachment 3). Payback would be 11 years for total revenue(Attachment 4). 10. Prudent investors perform a sensitivity analysis of potential return on investment when analyzing a new business or project. The city should run a number of scenarios evaluating potential sales and tax revenue return to evaluate the true benefits of the project. Using an unrealistic figure of 3%without examining other possibilities is a failure of the city's fiduciary responsibility to the taxpayers. 11. Is the city responsible for the full $6.8 million ($8.2 million with interest)of the tax sharing agreement if the sales don't materialize as expected, or if Costco abandons the project before the payment is made? Conclusion Even if you subscribe to the idea that the public should subsidize private development (which I don't), the risk/reward structure of this deal is way out of whack. Most of the risk (almost 90%of the infrastructure costs) are the responsibility of the city, and by far the biggest rewards go to Costco, as described below. Costco gross profit over 25 years=$830,000,000 (see attached spreadsheet) Potential City Revenue from Costco over 25 years=$25,000,000 (Attachment 3) Potential City total revenue from EDZ(including Costco)over 25 years=$76,000,000(Attachment 4) These results are using the city's numbers,which have already be shown to be faulty. Hardly an equitable deal considering the city has most of the risk for a reward equal to 2%of the city Operating Budget. What are our Values? The question of whether the public should subsidize Costco and Nearon is not really one of dollars and cents, but one of values. Do we want to use taxpayer dollars to maintain and enhance our community, provide for our existing roads and infrastructure, parks, police and fire services, cultural resources,the human needs of our residents, water and sewer systems, and environmental protection? Do we value a transparent, democratic local government that truly represents the public and presents projects and proposals in an honest and straightforward manner rather than a misleading way? Or would we spend our limited resources as a handout to a multibillion-dollar corporation whose business model is destructive to local economies and the environment to entice them to come to Pleasanton? Are willing to allow our public officials to deceive the community with misleading information and undermine the public, democratic process we have fought so hard for over the years just so we can have a Costco? 082917 SR Comments v2 Page 3