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Economic & Planning Systems, Inc. Page 5 $45 $90 $135 $180 $225 $0 $55 $110 $165 $220 $275 $0 $50 $100 $150 $200 $250 $300 $0.00 $0.88 $1.76 $2.64 $3.52 $4.40Remodel Costs per Square FootMonthly Rent per Square Foot Displacement No Displacement Table 2. Maximum Building Investment for Break Even (Redwood City, San Francisco, Oakland) City Investment Amount ($ / Building Square Foot) No Displacement Cost High Displacement Cost Redwood City $220 $180 San Francisco $63 $37 Oakland $69 $29 EPS also conducted a sensitivity analysis to account for the fact that rents for individual buildings may deviate substantially from the median rent used in the calculations above. The line shown in Figure 3 represents the break-even threshold for remodel feasibility. Investment amounts below the line are financially feasible, while those above the line may not be feasible. In the “No Displacement” scenario, landlords can absorb higher remodel costs since they do not incur additional expenses from lost rent or relocation assistance. By contrast, the “Displacement” scenario reflects the added burden of these costs, lowering the feasible investment threshold. As illustrated, buildings with rents below the median would support proportionally lower investment costs, while higher-rent buildings could absorb more. By way of example a landlord renting a unit for $1.76 per square foot (half of the City’s median rent of $3.52 per square foot) could absorb remodel costs about $90 per square foot, including tenant displacement / relocation costs, and $110 per square foot without displacement. The following section examines how these feasible cost thresholds compare with typical remodel costs in the City, as indicated by historical building permit data. Figure 3. Feasibility Threshold for Remodel Investments Feasible Project Infeasible Project Median Rent ($3.52 PSF) Median Remodel Cost ($23 PSF) 9.A. - Page 79 of 84 184