BAE URBAN ECONOMICS, INC. (#2026438)

The following describes the work to be completed in response to the specific tasks that the City specified in its Request for Proposals. Task 1 – Initial Review and Peer Analysis of Developer Proformas To initiate this task, the lead consultants for BAE, NHA, and Jones Hall will participate in a virtual kick-off meeting with City staff to discuss the City’s objectives, review the overall project, and discuss the scope of work and timing of deliverables. In addition, the team will requ est copies of any relevant background materials for subsequent review. As part of this task, BAE will request that the developer provide working electronic spreadsheet versions of the financial models for the proposed regional sports facility. This will facilitate the BAE Team’s (and the City’s) due diligence on the proposal and enable the BAE Team and the City to more quickly test sensitivity of the model’s projected financial outcomes to variations in model inputs. BAE will: • Conduct a detailed review of all assumptions, methodologies, and projections within the developer’s submitted 20-year operating proforma(s), including assumptions regarding capital reserves/lifecycle replacement assumptions. o This will include reviewing the pro-formas to identify any errors or anomalies that may cast the project’s projected financial results into question and identify recommended modifications that would better represent the City’s interests and the resulting changes in the projected financial results. • Assess market, operating, revenue, cost, and attendance assumptions for reasonableness and consistency with relevant industry benchmarks. o As part of this task component, BAE will request operating details for other similar facilities operated by the developer for review and comparison with the operating assumptions included in the developer’s proforma for the proposed Pleasanton facility. o BAE will also request copies of any market analysis conducted by the developer for the proposed facility that would help to substantiate the expected trade area to be served, the projected balance of supply and demand for the proposed project and competing facilities, and the anticipated competitive positioning of the proposed facility vis-à-vis other existing, planned, and proposed facilities. BAE will conduct a peer review of the proponent’s market research and provide the City with an evaluation of the reliability of the information for use in the pro-forma projections. If the proponent is not able to provide such analysis at this time, BAE strongly recommends that the City of Pleasanton require the proponent to provide such analysis for peer review as a “next step” should the City decide to advance the project. o As part of this task component, BAE will reach out to operators of other similar facilities not operated by the proponent and request to interview management regarding key operating metrics that can serve as benchmarks for the assumptions used in the pro-forma for the proposed Pleasanton facility. For perspective, BAE will also consider the projections for the proposed project in relation to projected or Docusign Envelope ID: 28AAFB7A-F31B-469C-B172-17ACC0A628F6Docusign Envelope ID: 6F743673-03C8-43C0-95A5-67A331894F1D