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Page 10 <br />Prepared for: City of Eugene <br />Prepared by: PNW Economics, LLC <br />Market & Financial Analysis of Gordon Lofts MUPTE Program Application <br />Table 7 – Gordon Lofts Apartments Effective Rents Per Foot with Amenity Based Income Competitive Position <br />Amenity Based Income Conclusions <br />PNW Economics fully expects that Gordon Lofts apartments will earn unit rent premiums because of <br />views, corner units, balconies or decks, and other unit-specific features. However, all such rent <br />premiums are standard project planning and should be reflected in orthodox unit mix and rent <br />reporting. We view it as a missed opportunity for the Applicant to display varying unit rents by project <br />floor, unit type, and location in the building in the Rent Diagram on page 39 of the MUPTE application <br />as well as averaged in the table on application page 2. <br />Having said that, it is our finding that total effective rents with documented Amenity Based Income are <br />implausibly high compared to the prevailing rental apartment market now and in the near future. <br />10% to 20% market premiums over existing downtown projects would be conventional. But rents <br />28% to 57% above the competition strain market credibility based on information available in the <br />MUPTE application as well as additional apartment market information gathered by PNW Economics <br />during application review. <br />The key analysis in this document, a financial pro forma evaluation of project measures of success <br />without and with MUPTE, will therefore consider two rent scenarios for City consideration: <br />1.Achievable Market Rents: Assumed market rents that are closer to documented Gordon Lofts <br />average rents on page 2 of the application, but adjusted for project delivery in two years and <br />exclude Amenity Based Income. <br />2.Applicant-Assumed Market Rents: Average rents documented on page 2 of the application, <br />along with Amenity Based Income as assumed by the applicant, adjusted for project delivery in <br />two years. <br />First on Park First on Park <br />Unit Type Proposed Broadway Place Broadway Place <br />Studio $3.15 $2.54 $2.14 24%48% <br />One bedroom $3.16 $2.29 $2.05 38%54% <br />Two bedroom $3.00 $2.23 $1.79 35%67% <br />Subtotals/Averages $3.14 $2.46 $2.01 28%57% <br />Monthly Rent Subject Rent Per Sq. Ft. Premium vs.: <br />October 17, 2018, Work Session – Item 2