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Page 15 <br />Prepared for: City of Eugene <br />Prepared by: PNW Economics, LLC <br />Market & Financial Analysis of Gordon Lofts MUPTE Program Application <br />• The National Apartment Association 2017 survey of apartment developments aged 5 years or <br />newer nationwide reported an average of roughly $5,700-$5,800 in annual per-unit operating <br />expenses.1 <br />For pro forma financial analysis in the next section of this report, PNW Economics assumes operating <br />expenses including property taxes and land lease payments at $6,153 per apartment unit in the first <br />year of the project. The figure is achieved by adjusting the national average of roughly $5,800 by 3% <br />for two years. <br /> <br />Retail Operating Expenses <br />Page 41 of the Gordon Lofts MUPTE application documents that expected, first-year operating <br />expenses for retail space to be $76,568, or 20% of income from retail space including property taxes <br />($24,011) and lease payment to Lane County for the retail share of the development ($4,060). <br /> <br />But because the retail lease rate will be triple-net where tenants are responsible for operating expenses <br />including their own prorated share of property taxes. Therefore, annual operating expense of $76,568 <br />should be reduced by property tax burden ($24,011) to $52,557. Because project completion is assumed <br />to be two years out, annual retail operating expenses of $55,758 are assumed for the pro forma <br />financial analysis later in this document. $55,758 for year 1 retail operating expenses is achieved by <br />adjusting the current estimate of $52,557 by 3% for two years. <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />1 https://www.naahq.org/sites/default/files/naa-documents/about-membership/ies_executive_summary_2017.pdf <br />October 17, 2018, Work Session – Item 2