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7.A. — Pag9RJ7,9f36andum <br />Financial Review of Proposed Sequoia Station Development <br />Figure 1: Existing Sequoia Station Site Plan' <br />7M] <br />CI la <br />O <br />W <br />Q <br />rc <br />a t ■ �{}H}µfNfHlfNfQ <br />Ile <br />M <br />■ <br />Fl CAMiNo REAL <br />WIEt8*W I <br />6.1.1►•111... <br />vette <br />Analytical Framework <br />SAFEWAYO <br />September 28, 2020 <br />Page 2 <br />IMI111111■t <br />OIDNAVT <br />For the purposes of this analysis, development feasibility is defined as a project that is likely to <br />generate a level of financial return typically needed to attract investment in the real estate <br />industry. EPS has evaluated this issue using a development pro forma model that simulates the <br />expected cash-flow from several building prototypes (e.g. a mixed-use office or residential <br />project). <br />As a proxy for development feasibility, EPS has estimated the likely residual land value for <br />alternative land use programs for the Sequoia Station site. Residual land value is defined as the <br />difference between total project development costs (including return on investment but excluding <br />land costs) and the market value of the finished product. Residual land value can provide a good <br />indication of what a real estate investor/developer might be willing to pay to acquire and <br />improve a site assuming the type of project under consideration can be built. <br />Table 1 summarizes five alternative land use concepts evaluated as part of this analysis. As <br />shown, EPS has compared the financial performance of two preliminary alternatives that roughly <br />correspond to those proposed by the developer against three hypothetical alternatives. The <br />hypothetical alternatives have been defined with input from City staff to test the economic <br />implications of critical land use parameters that are important to the planning process, including <br />1 Figure does not show existing below grade parking. <br />z:ySh ­­vIakl­uood... dl,aF= s­SII­vSa o SIIo ,S-o S11-I.mos_za_1111d,I93 <br />