Exhibit 3: Reuse Area Disposition Framework Analysis — Alameda City Council, January 16, 2024

LAMEDA POINT REUSE AREA

DISPOSITION FRAMEWORK ANALYSIS
Prepared for:

City of Alameda
Prepared by:

Keyser Marston Associates, Inc.

Januar
y 2023
Exhibit 4

TABLE OF CONTENTS

1.0 SUMMARY ..................................................................................................................... 1

1.1 Focus on Reuse Area ............................................................................................... 1

1.2 Overview of Findings ................................................................................................ 1

1.3 Infrastructure Needs ................................................................................................. 4

1.4 Alternatives ............................................................................................................... 4

1.5 Potential Framework for Selecting Reuse Area Assets for Sale ................................ 6

2.0 INTRODUCTION ............................................................................................................ 8

2.1 Existing Lease Income .............................................................................................12

2.2 Existing Uses of Net Lease Income .........................................................................13

2.3 Past Building Sales ..................................................................................................14

3.0 LEASE AND SALE ALTERNATIVES FOR AN INDIVIDUAL BUILDING .....................15

4.0 PORTFOLIO-SCALE ANALYSIS .................................................................................17

4.1 Scenario Description ................................................................................................17

4.2 Common Assumptions .............................................................................................18

4.3 Order of Magnitude Sales Proceeds Estimate .........................................................19

4.4 On-Going Lease and Tax Revenue Estimates .........................................................20

4.5 Lease Revenue Estimate with Sale of Non-Tidelands Assets ..................................23

5.0 QUALITATIVE FACTORS ............................................................................................ 24

5.1 Attraction of Tenants ................................................................................................24

5.2 Building Maintenance and Upgrades .......................................................................25

5.3 Taking Economic Development Considerations into Account in Leasing .................26

5.4 Water Infrastructure Agreement ...............................................................................26

5.5 Brief Discussion of Outside Examples .....................................................................27

6.0 CAVEATS AND LIMITATIONS .....................................................................................29

List of Tables
Table 2-1. Gross Lease Income by Area / Property Type ............................................................................................ 12 Table 2-2. Summary of Lease Income ($Millions) ........................................................................................................ 13 Table 2-3. Use of Net Lease Income ($Millions) .......................................................................................................... 13 Table 2-4. Past Alameda Point Building Sales ............................................................................................................. 14 Table 3-1. Illustrative Lease and Sale Scenarios for an Individual Building ................................................................. 16 Table 4-1. Disposition of Non-Residential Building Area by Scenario .......................................................................... 18 Table 4-2. Order of Magnitude Sales Proceeds Estimate ............................................................................................ 19 Table 4-3. On-Going Lease and Tax Revenues ($Millions Per Year) .......................................................................... 21 Table 4-4. Net Lease Revenue with Sale of Non-Tidelands Assets ($Millions/Year) ................................................... 23

Appendix Tables

Part A. Illustration of Sale and Lease Alternatives for an Individual Building Table A-1 Summary
Table A-2 Supporting Analysis

Part B. Reuse Area Sale Scenarios
Table B-1 Reuse Area Asset Sale Scenarios - Summary
Table B-2 Disposition Scenarios - Building Area and Net Lease Income Table B-3 High-Level Estimate of Sales Proceeds Range, Reuse Area Table B-4a Property Tax and Other Revenue - With Improvements to Buildings Following Sale Table B-4b Property Tax and Other Revenue - Without Improvements to Buildings Following Sale

Part C. Summary Data on Existing Lease Income
Table C-1 Existing Lease Income and Budgeted Uses
Table C-2 Property Management Costs and Allocation by Type Table C-3 Residential Property Net Income
Table C-4 Building Inventory and Rental Income by Location and Property Category Table C-5 Existing Rent Detail by Building

Part D. Market Data - Building Values
Table D-1 Prior Alameda Point Building Sales and Purchase Option Pricing Table D-2 Published Cap Rate Surveys
Table D-3 Warehouse Building Sales
Table D-4 R&D and Light Manufacturing Building Sales
Table D-5 Assessed Values of Previously Sold Buildings

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1.0 SUMMARY

This report presents an analysis of sale versus lease alternatives for buildings at Alameda Point within areas planned for reuse (“Reuse Area”), which is generally located west of Pan Am Way.

The report provides:

 A comparison of cash flows generated by lease and sale scenarios at the level of an individual building;

 Order of magnitude estimates of sale proceeds and operating revenues under a range of scenarios for disposition of all or portions of the Reuse Area portfolio; and

 A discussion of non-financial considerations including attraction of quality tenants to Alameda Point and encouraging private investment into buildings.

1.1 Focus on Reuse Area

This report is focused on alternatives for non-residential buildings within the Reuse Area of Alameda Point, generally west of Pan Am way. The Reuse Area is unique from other areas of Alameda Point given it encompasses a historic district on the National Register of Historic Places where buildings are planned for adaptive reuse and existing street alignments cannot be fundamentally changed. This contrasts with areas planned for new development where existing structures are planned to be demolished and replaced with new uses. Likewise, alternatives for existing residential uses within the Reuse Area are not a focus because considerations differ and may be better addressed through a separate effort in coordination with plans for adjacent areas where new residential is planned.

1.2 Overview of Findings

The following discussion provides a summary of the analysis findings:

1. Individual Building Comparison – The individual building comparison shows sale and lease alternatives have a similar net present value financial result, taking into account sales proceeds, net lease income during the period the building is held, and incremental tax revenues. Obvious distinctions are that:

 Buildings sales generates lump sum proceeds that could be used to fund infrastructure.

 Holding buildings provides a lease revenue stream that can fund operational costs over time.

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2. Hangars – The former hangars and aircraft-related buildings along Monarch and West Tower are the premium assets within the Reuse Area portfolio. Collectively the hangars generate over 40% of lease revenue base-wide and 90% of revenue within the Reuse Area. The hangars are proven income-generating assets and have the largest potential to generate sales proceeds, estimated in the approximate range of $110 to $160 million1, or approximately two thirds of the estimated total proceeds for the Reuse Area as a whole. Sales proceeds estimates are preliminary and order of magnitude in nature.

3. Other Reuse Area – Aside from the hangars, a substantial portion of the other space in the Reuse Area that is available to be sold is vacant. The vacant Bachelor’s Enlisted Quarters (BEQ) represents over half of the building square footage. Aggregate sales proceeds are preliminarily estimated in the approximate range of $50 to $90 million, with vacant building values based on their land value given unknowns regarding rehab costs and because some may not be salvageable. Estimates include the BEQ, although a small portion is still Navy-owned and thus cannot be sold unless the Navy-owned portion were carved out.

4. Funding Operations – The ability to fund on-going base reuse expenses was tested under a series of scenarios for disposition of all or portions of the Reuse Area assets.

Sufficient lease revenues are estimated to be available for ongoing expenses in each scenario. The loss of lease revenue is partially offset by increased tax revenues and CFD special taxes.

Theoretically, focusing building sales on vacant properties would produce the most favorable financial result because it adds buildings to the tax roll without forgoing lease revenue. However, remaining vacant space will likely require a larger investment to bring online, impacting marketability and potential proceeds. The City may achieve more favorable results by pursuing disposition of more challenging properties once upgraded infrastructure to serve these properties is underway.

5. Attracting Private Investment – Buildings at Alameda Point are being leased in “as is” condition, with tenants responsible for maintenance, repairs, and improvements desired for occupancy, in addition to triple net expenses such as utilities and insurance. Rent credit is sometimes provided for capital repairs. This allows lease revenue to be generated with minimal upfront investment. Alameda has had success fostering a unique array of tenants using this approach, from high-tech startups to Spirits Alley. A drawback to requiring tenants to fund necessary improvements is that the pool of tenants is limited

1 Estimate includes buildings 11, 12, 20, 21, 22, 24, 25, 41, 400, and 400A. Building 41, 400 and 400A are included, although still Navy-owned, as they have received a Finding of Suitability for Transfer (FOST). Although FOST parcels were deemed suitable for transfer by the Navy, the City has not accepted the transfer due to environmental conditions affecting the sites and has estimated transfer is at least five years away. Building 39 is not included because it is subject to the Tidelands Trust and cannot be sold. Building 5 is not included due to remaining hazardous materials and because it has not received a FOST.

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to those willing and able to provide upfront funds, who wish to use the space as is, have a long time-horizon for leasing decisions, or who have an overriding desire to be at Alameda Point. Transformative upgrades to buildings and major investments needed to bring more challenging vacant space online are less likely under a structure where landlord investment is minimized.

A well-capitalized private landlord is likely to approach leasing differently and would generally be incentivized to proactively invest in building upgrades and address deferred maintenance issues where the cost of improvements can be amortized through higher rents. Tenants often prefer to pay a higher rent for space delivered in a quality condition without a need to invest their own upfront capital. Precedents at Alameda Point include Buildings 9 (Kairos Power) and 91 (Almanac), which were significantly upgraded through private investment following a sale to a private party. Major renovations of this scale are predicated on delivery without an encumbrance of an existing long term lease, which prevents recovery of costs through higher rents.

A private owner-user who purchases the building they occupy will have an incentive to maintain the building in good condition and may be more willing to invest in upgrades that fit their own specific needs and budget than they would as a tenant, although buildings previously purchased by end users at Alameda Point (Buildings 40 and Building 23) do not appear to have been substantially upgraded by purchasers based on a review of assessed values.

An alternative to an outright sale is conveyance of a long-term leasehold interest, such as 99-years. This will similarly facilitate private investment in upgrading buildings by providing a mechanism for the private party to achieve a return on their investment through rents and / or a subsequent sale of the leasehold interest. For Tidelands Trust properties, sale is precluded, so a long-term lease structure provides an alternative.

Leases could be structured to provide upfront payment if funds for infrastructure are the priority, with the trade-off being reduced payments over time.

6. New Development Areas – New Development Areas within Alameda Point are not the focus of this report. New Development Areas are located primarily east of Pan Am Way and include buildings that are planned to be demolished and replaced as new development occurs (see Map 1, page 9). Within New Development Areas, private developers are generally made responsible for completion of new infrastructure pursuant to the terms of disposition and development agreements (DDAs). Buildings within New Development Areas generally will need to be retained until agreements are in place with a developer to complete required infrastructure and redevelop the property. Sale of individual buildings without a commitment to redevelop the property or complete needed infrastructure is not advised as it would fragment ownership and make new development more challenging.

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1.3 Infrastructure Needs

Replacement of deteriorating Navy infrastructure at Alameda Point is necessary to support both existing and new uses. Ideally this would occur prior to the 2027 expiration of agreements with East Bay Municipal Utility District to operate existing water infrastructure. On-going use of deteriorating infrastructure comes with a risk of an unexpected failure.

The City’s 2020 Master Infrastructure Plan (MIP) for Alameda Point identifies aggregate infrastructure costs of $631 million base-wide
2, encompassing new development areas, the
Reuse Area, perimeter flood protection, and parks and open space. Within the Reuse Area specifically, Phase 1 of infrastructure replacement has been funded through $35 million in prior building sales. The cost of Phases 2 and 3 of the Reuse Area backbone infrastructure was previously estimated at approximately $56 million, as of 2019, but has not yet been funded. This $56 million estimate includes backbone streets in the Reuse Area and associated utilities, identified on Map 3 on page 11, but does not include remaining streets that were not designated as backbone streets, which constitute an additional cost that has not been estimated.

As noted above, within New Development Areas, private developers are being made responsible for completion of backbone infrastructure through the terms of disposition and development agreements.

The estimated cost of the MIP improvements equates to an average of approximately $1.7 million per developable acre as of 2020. As disposition proceeds, the City will need to continue to be cognizant of the need to recover at least a fair share of infrastructure costs from each property, either through sale proceeds or a DDA requirement to directly complete the infrastructure. This will enable the City to remain on track to complete the necessary infrastructure.

1.4 Alternatives

The following discussion broadly outline alternatives regarding the Reuse Area assets:

Sale – The City has pursued a strategy of selling individual buildings with use of proceeds to finance infrastructure. With this strategy, the City funds infrastructure through property sales, resulting in a gradual transition to private use and management over time. Amendments to the Surplus Lands Act in 2019 interrupted implementation; however, an exemption from the Surplus Lands Act became effective January 1, 2023. This approach has sometimes been described as the City serving as a “master developer,” because the City is completing the infrastructure, but does not entail risks like those a private master developer might take as improvements are only funded when sales proceeds are in hand. As sales occur, funds are accumulated and budgeted

2 The $631 million cost figure identified in the 2020 Master Infrastructure Plan does not include certain improvements that were already funded or that are being completed through active development projects such as Site A.

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strategically as part of the City’s regular capital improvement project (CIP) budgeting process.

Sale proceeds for the Reuse Area are estimated in the approximate range of $160 to $250 million, not including properties in Tidelands Trust or those that have not yet received a Finding of Suitability for Transfer (FOST) from the Navy3. Aggregate estimated proceeds are sufficient to fund Phases 2 and 3 of the Reuse Area backbone infrastructure and contribute to other needs. Once buildings are sold, the City will no longer control leasing decisions, but retains its zoning and land use regulatory powers, consistent with how the City regulates land use for all other private properties in the City.

Long Term Hold – An alternative to selling buildings would be to hold Reuse Area assets over the long term with re-investment of lease revenues in a combination of operational needs and infrastructure improvements. This maintains an on-going revenue stream, City control over the property and leasing decisions, with continued exposure to real estate upsides such as increases in rents and downsides such as a recession or unexpected repair issues. A challenge of a long-term hold strategy would be generation of adequate funding for infrastructure replacement. Existing lease revenue specifically derived from the Reuse Area totals approximately $6 million after deducting an allocable share of third party management costs.

Were lease income leveraged through issuance of debt, proceeds are preliminary estimated in the range of approximately $35 to $40 million4. Estimated supportable debt is less than estimated infrastructure costs for Phase 2 and 3 of the Reuse Area. Buildings that are currently vacant present an opportunity to build up lease revenues over time or to generate sales proceeds that do not impact existing lease revenues. In broad terms, a long-term hold strategy prioritizes City control and on-going lease income over the pace of infrastructure improvements.

Mixed Sale and Long-Term Hold – Pursuing a mix of building sales and reserving some assets for a longer-term hold blends the two approaches and would provide a mix of sales proceeds to fund capital and lease revenues that could be used for operational needs. A mixed approach can be thought of as a phasing strategy for managing the transition to private ownership over time. An objective would be to balance a range of considerations including selecting assets for sale strategically to maximize their value and realize the benefit of investments the City is making in infrastructure, reserving properties that are currently not well-positioned for sale for a later phase, minimizing risks like failing infrastructure, and ensuring remaining lease revenues are adequate for operational needs while base reuse activities are ongoing.

Portfolio Sale – The entire portfolio could be sold to a private master developer in phases, with the developer made responsible for infrastructure improvements and becoming the beneficiary of the lease revenues. This was explored in the early 2000s as part of a previous proposal for

3 Estimate includes Buildings 41, 400, and 400A, which are in Navy ownership but have received a Finding of Suitability for Transfer, although transfer is likely five or more years away. 4 Assumes 2X debt coverage (results in approximately $3 million in debt service), 6% interest, 30 year term, 12% cost of issuance and debt service reserve fund. The City should consult its municipal advisor regarding any potential debt issuance. This estimate assumes the Reuse Area would need to pay its own way and that revenues from new development areas would not be pledged.

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Alameda Point that the City did not move forward with. A private master developer might bring an entrepreneurial approach and institutional investment capital but will require a significant return on investment. Selling the entire portfolio to a master developer would allow the City to shift responsibility for funding and management of infrastructure improvements and oversight of maintenance and leasing to the private developer while limiting the City’s role to enforcing the terms of agreements and its normal regulatory role over development projects. Downsides are that the City would lose a significant measure of direct control and flexibility. The value or amount of infrastructure completed may be reduced due to a need to “make room” in the overall financial picture for a substantial developer return. Lease revenues would likely phase out more quickly as property transferred to the master developer in larger phases. Of course, much would depend on the specific terms ultimately agreed to with a private master developer. It’s helpful to keep in mind that a primary role for a master land developer is to fund infrastructure and land improvements in advance of there being salable parcels to fund the cost of those improvements, thus requiring a substantial upfront “at risk” investment in land development. In the case of the Reuse Area, the City already has saleable buildings that can be used to fund infrastructure.

1.5 Potential Framework for Selecting Reuse Area Assets for Sale

Should the City resume sales of Reuse Area buildings to generate funds for infrastructure replacement, the following identifies a set of suggested criteria for identifying assets to sell versus hold.

1. Selection of Reuse Area Assets for Sale – Following are suggested criteria for prioritizing buildings to be offered for sale:

a) Expected to generate substantial proceeds.

b) Benefited by new infrastructure.

c) Upon vacancy when a potential purchaser will be positioned to make improvements to the building and recover costs through a new lease.

d) In connection with an opportunity to attract a catalytic user or use providing significant public benefits, jobs, or furthering economic development or other goals for Alameda Point.

2. Selecting Reuse Area Assets to Hold – Following are suggested criteria for prioritizing assets to retain:

a) Public facilities and Tidelands Trust properties, which are needed for public purposes or are not eligible to be sold.

b) Not benefited by new infrastructure that is complete or underway.

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c) Control over leasing decisions to preserve specific uses is strongly desired. For example, uses that provide broader benefits to Alameda Point or the community.

d) Properties that have not been conveyed from the Navy and thus are not yet available to be sold.

The above criteria provide a broad framework for prioritizing assets to sell versus hold; however, the City may wish to maintain sufficient flexibility to take advantage of unique or unexpected opportunities that may present themselves and to continue to adapt as conditions change.

Criteria apply to the Reuse Area only. As discussed above, buildings in the New Development Areas will generally need to be retained until agreements are in place to redevelop the property and complete required infrastructure.

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2.0 INTRODUCTION

This report was prepared for the City of Alameda (City) to provide an analysis of sale versus lease alternatives for buildings at Alameda Point within the Reuse Area. A range of considerations related to the decision to lease or sell assets within the Reuse Area are evaluated, including the following:
 Generation of funds for infrastructure improvements,
 Funding of on-going base reuse expenses,
 Generation of tax revenues,
 Attraction of tenants to Alameda Point, and
 Attraction of private investment to improve buildings.

Alameda Point includes areas planned for new development (Development Area) and areas planned for reuse of existing buildings (Reuse Area). The Reuse Area is primarily west of Pan Am Way and the Development Area is primarily east of Pan Am Way. The focus of the analysis is on the Reuse Area where buildings are intended to be adaptively reused. Within the Development Areas, buildings will generally need to be retained until agreements are in place with a developer to complete required infrastructure and redevelop the property. Sale of individual buildings without a commitment to redevelop the property or complete needed infrastructure is not advised as it would fragment ownership and make new development more challenging.

The following pages provide three maps of Alameda Point:

 Map 1 shows the location of the Reuse Area and Development Area.

 Map 2 shows ownership and the location of each of the buildings. The map identifies areas subject to Tidelands Trust and thus not available for sale, areas with remaining hazardous clean up, and properties that were previously sold or that have existing disposition plans in place.

 Map 3 shows the backbone infrastructure phasing plan for the Reuse Area. There are three phases identified. The first phase is underway, the second and third phases are not yet funded.

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Map 1. Reuse Areas and Development Areas

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Map 2. Ownership and Building Location Map

*
* Although FOST parcels have been deemed suitable for transfer by the Navy, the City has not accepted transfer due to presence of PFAS contamination. Transfer may be 5+ years out.

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2.1 Existing Lease Income

Table 2-1 provides a summary of existing lease income from Alameda Point by area and property type. Nearly $17 million in gross lease income is generated, before third party property management and maintenance costs. Figures are inclusive of expected leases for Building 11, 19 and 39 that were the subject of recent RFPs. Of the nearly $17 million in annual gross lease income, the Reuse Area generates approximately $7.7 million, the Enterprise Area generates approximately $5.7 million, rental of the paved areas in the Northwest Territories generate $1 million, residential units (including the “big whites”) generate $1.86 million, and $0.5 million is from utility recoveries, the Site A and West Midway development sites, and the WETA ferry operations and maintenance facility.

Of the $7.7 million in Reuse Area lease income, $6.9 million (90%) derives from former hangars and other larger aircraft-related buildings (includes $0.95 million from Building 39, which is subject to Tidelands Trust). The hangars have proven to be among the most attractive assets at Alameda Point due to their large clear spans and heights and views to the San Francisco Bay. Other leased buildings within the Reuse Area eligible to be sold (i.e., excluding those subject to Tidelands Trust or with remaining hazardous materials), generate a comparatively modest $0.65 million.

Table 2-1. Gross Lease Income by Area / Property Type
Annual Gross Rent ($Millions)

1. Reuse Area (Non-Residential)
Hangars $5.98
Other Leased Buildings $0.65
Properties with Incomplete Hazardous Mitigation $0.10
Subject to Tidelands Trust $0.95
Subtotal $7.68

2. Enterprise District / East Side Seaplane Lagoon
Leased Buildings and Land $3.16
Properties with Incomplete Hazardous Mitigation $1.81
Subject to Tidelands Trust $0.74
Subtotal $5.71

3. West Midway / Site A Project Sites $0.16

4. WETA facility $0.07

5. Northwest Territory License Income $1.02

6. Water / Utility Reimbursements $0.27

7. Residential (67 market rate units) $1.86
Total Gross Lease Income $16.77
Note: Figures represent gross lease income prior to deduction of expenses. Figures include lease income from proposed leases for Buildings 11, 19, and 39. See Table C-5 for detail.

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Third party costs of management, maintenance, and security for the leased assets total $3.56 million per year. In addition, $550,000 is for leasing commissions, leaving approximately $12.7 million in net lease income after expenses, as summarized in Table 2-2.

Table 2-2. Summary of Lease Income ($Millions)
Commercial Residential Total
Annual Gross Rental Income $14.91 $1.86 $16.77
Third Party Prop Mgmt and Maint. ($2.79) ($0.76) ($3.56) Leasing Commissions (1) ($0.55) incl above ($0.55)
Net Lease Income $11.56 $1.10 $12.66
Sources: River Rock FY2022-23 Budget, proposed leases for Building 19, 39 and 11, City of Alameda FY 2022-23 Budget. (1) Commissions budgeted at $550,000 but vary based on leasing activity.

2.2 Existing Uses of Net Lease Income

Table 2-3 summarizes budgeted uses of net lease revenue. Approximately $0.9 million is used for debt service, $3.6 million for base reuse professional services, staff and overhead, $0.4 million for economic development, $0.6 million for public works staff and cost allocation charges and $1.8 million for utilities and equipment repair, of which water charges under an EBMUD agreement are by far the largest expense. Figures exclude the direct third-party property management and leasing costs that are deducted from net lease income in Table 2-2.

Approximately $5.3 million remains for capital needs based on $12.7 million in net revenue inclusive of additional income from re-leasing Buildings 11, 19 and 39.

Table 2-3. Use of Net Lease Income ($Millions)
Base Reuse

Professional Services, Legal (1) $2.04 Legal, environmental, engineering, water resources, real estate, title etc.

Staff - Allocated to Leasing $0.33
Staff - All Other Base Reuse $0.65
Cost Allocation Charges $0.55
Office Expense $0.06
Subtotal $3.62

Economic Development $0.36 staff and cost allocation charges Lease Revenue Bond Debt $0.87 continues to 2033
Public Works Staff, Cost Alloc. $0.64 staff and cost allocation charges Water, utilities, equip. repair $1.84 Water expense is largest item Total Operating Expenses & Debt $7.33

Available for Capital or Reserves $5.33 balance of net revenue, $1.4 M budgeted for big whites painting in 22-23

Total $12.66
Source: Expenses are based on City of Alameda FY 2022-23 Budget.

Available revenues are adjusted to reflect expected leasing of Building 11, 19 and 39. See Appendix Table C-1 for additional details. (1) Property management costs and leasing commissions are deducted in calculating net lease income in Table 2-2 and thus not included here.

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2.3 Past Building Sales

The City previously pursued a strategy of selling buildings to fund the cost of replacing failing infrastructure within the Reuse Area. Five buildings within the Reuse Area were sold, as shown in Table 2-4. Approximately $35 million in gross sales proceeds were realized from these sales.

Proceeds are being used to fund the first phase of infrastructure replacement within the Reuse Area, currently under construction. Sales occurred through leases with purchase options, a structure that was necessary to allow time for the process of mapping a salable parcel.

Purchase options were also included in leases for Buildings 21 and 41 but expired without being exercised.

Table 2-4. Past Alameda Point Building Sales
Building (Tenant Name) Year (1) Size SF Price Price/SF
Building 23 (Natel Energy) 2015 63,656 $8,000,000 $126 Building 40 sale (Bladium) 2017 105,768 $7,900,000 $75 Building 8 (Storehouse Lofts) 2016 270,000 $10,300,000 $38 Building 91 (Almanac) 2015 40,800 $3,000,000 $74
Building 9 (Kairos Power) 2015 80,907 $5,500,000 $68
Total 561,131 $34,700,000
(1) Reflects year purchase option price was determined rather than the year the sale closed.

Expansion of the Surplus Lands Act enacted in 2019 interrupted pursuit of the strategy of selling Reuse Area buildings to finance infrastructure. However, enactment of AB 2319 in September 2022 exempts Alameda Point as of January 1, 2023, allowing greater flexibility in the disposition of assets moving forward.

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3.0 LEASE AND SALE ALTERNATIVES FOR AN INDIVIDUAL BUILDING

This section provides an illustrative comparison of lease and sale scenarios at the level of an individual building. The purpose is to allow financial results to be compared in a simple manner across a consistent period. The analysis uses an example hangar building that is similar in size to Buildings 11, 12 and 41.

The four scenarios are:

A. Lease for ten years and sell at the end of the hold period.

B. Sell in Year 1, without a renovation by the purchaser.

C. Sell in Year 1, with a subsequent renovation by the purchaser that adds assessed value.

D. 30-year lease, with a renovation by the lessee and a sale the end of the term.

Hold periods vary; however, a sale is assumed at the end of the hold period for all scenarios to recognize the value of the asset in a consistent manner. Results are summarized in Table 3-1.

The comparison reflects a projection of the following revenue streams combined:
(1) Lease income,
(2) Sales proceeds,
(3) City tax revenues,
(4) Alameda Point Services District (CFD 17-1) special taxes, which commence at the earlier of five years after sale or issuance of a certificate of occupancy.

Cash flows are converted to a present value to allow comparison of revenues over different time periods. Present value calculations use a 6% discount rate5 selected to approximate the City’s borrowing costs. As shown in Table 3-1, the present value of cash flows under the four scenarios are similar, with all scenarios within 12% of one another.

5 For example, a dollar received in Year 2 is estimated to be worth 94% as much as a dollar received in Year 1 (94% = 100% - 6% discount rate). Although 6% is somewhat higher than yields reflected in recent trading of the City's tax- exempt debt, a somewhat higher rate was selected due to the recent upward trend in rates and nature of the revenue stream.

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Table 3-1. Illustrative Lease and Sale Scenarios for an Individual Building Building Type Hangar
Building Area 110,000 SF

Combined Net Rental Income, Sales Proceeds,
and Incremental Tax Revenues ($Thousands)
A. B. C. D.

Year
Lease,
Sell after 10
Years
Sale in Year 1
Sale in Year 1 +
AV added by
Renovation
Long Term Lease, Lessee
Renovation with Costs
Credited, Sale Year 30
1 $112 $19,500 $19,500 ($404)
2 $1,103 $62 $62 ($372)
3 $1,142 $63 $295 ($43)
4 $1,182 $64 $302 ($9)
5 $1,223 $65 $309 $27
6 $1,266 $175 $316 $64
7 $1,311 $180 $323 $101
8 $1,356 $184 $331 $140
9 $1,404 $189 $339 $180
10 $25,732 $194 $347 $222
11 to 29 $4,212 $4,838 $8,394 $30,839
30 $330 $328 $554 $70,134
Nominal 30-Year Total $40,375 $25,842 $31,072 $100,878 Present Value (1) $24,366 $22,002 $24,326 $21,793

(1) Present value in Year 1 calculated using a 6% discount rate, based on estimated City borrowing cost.

See Appendix Table A-2 for supporting analysis.

Scenario A, where the building is held for ten years before being sold, is most favorable on a present value basis, and is slightly higher than Scenario C where the building is sold immediately and improved by the new owner.

Scenarios B and C, where the building is sold in year 1, are most favorable in terms of maximizing upfront revenues. Once the buildings are sold, on-going revenues are limited to City tax revenues and CFD special taxes, which are less than lease revenues.

Scenario D illustrates a longer term lease in which the City identifies a lessee who will commit to a more significant capital investment in exchange for a longer lease term and a credit against rent payments to amortize the cost. Sales proceeds at the end of the 30-year term are estimated to be enhanced based on the improvements made by the lessee.

Scenarios reflect assumptions noted in Appendix Table A-2. Actual revenues in each scenario are subject to actual lease and sale terms and will depend on future market conditions.

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4.0 PORTFOLIO-SCALE ANALYSIS

This section provides an estimate of potential sales proceeds, lease revenues, and tax revenues in a series of scenarios regarding sale of all or portions of the Reuse Area portfolio.

Consistent with the individual building analysis in the prior section, the following revenue streams are addressed:
(1) Lease income,
(2) Sales proceeds,
(3) City tax revenues, and
(4) Alameda Point Services District (CFD 17-1) special taxes.

4.1 Scenario Description

The following specific scenarios are addressed as part of the portfolio-scale analysis.

 Scenario 1: Continue to Lease (Existing) – Scenario 1 represents the existing condition in which the City continues to lease the assets it currently owns, except the West Midway and Site A project sites are assumed to be sold. Scenario 1 represents a “base case” for comparison.

 Scenario 2: Sell Entire Reuse Area – Scenario 2 represents sale of the entire Reuse Area including all buildings potentially eligible to be sold at this time.

 Scenario 2a: Sell Phase 1 Infrastructure Area – Scenario 2a reflects sale of buildings served by Phase 1 of the Reuse Area infrastructure improvements currently under construction. This includes Buildings 41 and 92, as well as Building 114 and the site of former Building 101, east of the Storehouse Lofts. Building 41 is held by the Navy, and although it has received a Final Finding of Suitability for Transfer, acceptance by the City is estimated to be five or more years away due to environment conditions affecting the site.

 Scenario 2b: Sell Phase 1 and 2 Infrastructure Area – Scenario 2b reflects sale of buildings served by Phase 1 and 2 of the Reuse Area infrastructure improvements. This includes sale of buildings 11, 12, 24, 25, 19, 400 and 400A in addition to those included in Scenario 2a. Building 400 and 400A are held by the Navy, and although they have received a Final Finding of Suitability for Transfer, acceptance by the City is estimated to be five or more years away due to environment conditions affecting the properties.

 Scenario 3: Retention of Core Leased Portfolio – Scenario 3 assumes retention a core lease portfolio along Monarch and West Tower generating the majority of lease revenue within the Reuse Area. Buildings to be sold include 41, 92, 525, 29 and those that are currently vacant. This scenario maximizes lease income to the City while focusing disposition

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on assets that do not generate significant revenue and those that are served by the Phase 1 infrastructure.
 Scenario 4: Sell Hangars Only – The hangar buildings are the most marketable assets in the Reuse Area. Scenario 4 illustrates a scenario in which the focus of building sales is on these more marketable assets, except for those on Tidelands.

Table 4-1 summarizes the square footage of non-residential building area to be sold and retained in each scenario.

Table 4-1. Disposition of Non-Residential Building Area by Scenario Scenario 1 Scenario 2 Scenario 2a Scenario 2b Scenario 3 Scenario 4 Description of Assets Sold existing
condition
Entire Reuse
Area, excl.

Tidelands / Haz
Reuse Area
Served by
Ph1 Infra
Reuse Area
Served by
Ph1&2 Infra
Vacant
Bldgs + 41,
92, 525, 29
Hangars
Only
Buildings Sold (Sq.Ft.)
Leased none 836,812 198,311 602,898 238,329 686,915
Vacant none 926,647 76,895 289,273 711,660 214,967
Site A / W Midway Sites 563,703 563,703 563,703 563,703 563,703 563,703 563,703 2,327,162 838,909 1,455,874 1,513,692 1,465,585 Buildings Retained (Sq.Ft.)
Leased 1,652,513 851,545 1,490,046 1,085,459 1,450,028 1,001,442 Vacant 2,176,650 1,214,159 2,063,911 1,851,533 1,429,146 1,925,839 Public / Quasi Public Uses 234,277 234,277 234,277 234,277 234,277 234,277 4,063,440 2,299,981 3,788,234 3,171,269 3,113,451 3,161,558

Total (Sq.Ft.) 4,627,143 4,627,143 4,627,143 4,627,143 4,627,143 4,627,143

4.2 Common Assumptions

The scenarios each assume retention of buildings that:
 Are currently used for public purposes, City Hall West, for example.  Are subject to the Tidelands Trust and not eligible for sale; and  Have remaining hazardous materials, are in Navy ownership, and have not received a Finding of Suitability for Transfer (e.g., Building 5).

Disposition of the West Midway, Site A, and RESHAP project sites is assumed under all scenarios consistent with existing and proposed Disposition and Development Agreements.

Non-residential buildings within these project sites do not generate significant lease income.

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All scenarios show results prior to disposition of buildings within the Enterprise District and the 67 existing market rate residential units within the Main Street Specific Plan Area. While these assets are expected to be sold, the assumption is sale would occur as part of later phases of development. The decision whether to lease or sell buildings within the Reuse Area is the current decision point and thus the analysis focuses on how alternatives for the Reuse Area influence existing revenues without assuming other changes. Section 4.5 provides a separate estimate of lease revenues that would remain after disposition of all properties in the Enterprise District and the market rate residential units.

4.3 Order of Magnitude Sales Proceeds Estimate

Table 4-2 provides an order of magnitude estimate of potential sales proceeds in each scenario.

Sales proceeds estimates are considered “high level” preliminary ranges. Buildings are assumed to be sold “as is” without any backbone infrastructure obligations (the City would use sales proceeds to fund the infrastructure). Common valuation assumptions are applied for these order of magnitude estimates without individualized assessment of condition or value. Estimates are based on applying a capitalization rate range of 5% to 7%, this is generally consistent with the range reflected in prior building sales at Alameda Point as well as the comparable sales included in a recent appraisal for Building 92. Estimates are toward the lower end of the range of building sales comparisons included in Appendix D. Values for vacant buildings are conservatively estimated based on their underlying land value, without attributing value to the building itself, using a preliminary non-residential land value range of $1 to $2 million per acre.

This approach is driven by the fact that vacant buildings may require substantial investment prior to occupancy, and some may not be salvageable and will need to be demolished. Actual proceeds will vary from estimates based on market conditions at the time of sale, the specific features or condition of the building, repair or upgrade costs, conditions placed on sale such as restrictions on use or requirements to make specific improvements, availability of new infrastructure at the time of sale, and other factors.

Table 4-2. Order of Magnitude Sales Proceeds Estimate
Scenario Name Scenario 1 Scenario 2 Scenario 2a Scenario 2b Scenario 3 Scenario 4 Description of Assets Sold existing
condition
Entire Reuse
Area, excl.

Tidelands / Haz
Reuse Area
Served by
Ph1 Infra
Reuse Area
Served by
Ph1&2 Infra
Vacant Bldgs +
41, 92, 525, 29
Hangars
Only
Preliminary Sales Proceeds
Estimate ($Millions) none $159 to $250 $33 to $50 $105 to $156 $61 to $105 $109 to $162

% Estimated Proceeds
Derived from Sale of
Vacant Buildings
(more uncertain, longer-term)

28% 22% 15% 55% 8%

Sale of the entire reuse area (Scenario 2) is estimated to generate approximately $159 to $250 million in proceeds. Sale of buildings served by Phase 1 of the adaptive reuse infrastructure

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(Scenario 2a) generates an estimated $34 to $50 million in proceeds, while sale of both the Phase 1 and 2 areas generates $105 to $156 million (Scenario 2b).

Scenario 3 assumes retention of a core lease portfolio comprised of hangars along West Tower and Monarch. Of the remaining buildings to be sold in Scenario 3, over half of estimated proceeds are derived from vacant properties, such as the BEQ, which are likely to be more challenging projects for a potential purchaser to undertake. Accordingly, the estimate of potential sales proceeds at $61 to $105 million is more uncertain and sale of some properties may be best pursued after new infrastructure is in place or underway to remove uncertainty for buyers and improve marketability.

Scenario 4 reflects sale of assets focused on hangars and large aircraft-related buildings, which are the most marketable assets in the Reuse Area portfolio. The buildings are nearly fully leased (or have leases in process), except Building 400, and thus are proven income-generating assets with the surest potential to generate substantial sales proceeds in the near term. The estimated range of proceeds is approximately $109 to $162 million. Since the hangars generate the largest share of lease income, sale of these buildings results in the largest reduction in operating revenues.

4.4 On-Going Lease and Tax Revenue Estimates

Table 4-3 provides an estimate of on-going lease revenues, base reuse expenses, and tax revenues. Lease income decreases with the sale of assets while tax revenues increase as properties are added to the roll and become subject to the CFD special taxes that apply within Alameda Point. Added tax revenues are generally not sufficient to offset the loss of lease revenue, resulting in a net decrease in on-going revenue as leased buildings are sold.

Scenario 2, with sale of the entire Reuse Area that is eligible to be sold, results in a decrease in available lease revenue after expenses of $3.7 million, which is offset by an increase in tax revenue of $3.3 million, for a net decrease in revenue of $0.4 million.

Scenario 3, with retention of the core leased portfolio, results in a $2.1 million increase in net revenue, mainly because the majority of buildings sold are vacant. Sale of vacant buildings does not reduce lease revenues but does increase tax revenues through addition of the properties to the roll and the subsequent improvements assumed to make the buildings useable. On paper, this is a favorable scenario but is likely to be more challenging to implement and will likely take longer to achieve due to reliance on sale of more challenging assets.

Scenario 4, in which only the hangars are sold, is the least favorable from an operating revenue standpoint because it involves the sale of buildings that currently generate the largest share of lease income and does not assume the sale of more challenging assets that would add significant assessed value to the tax roll if improved. However, as noted above, it generates substantial sales proceeds to fund infrastructure.

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Table 4-3. On-Going Lease and Tax Revenues ($Millions Per Year) Scenario Name Scenario 1 Scenario 2 Scenario 2a Scenario 2b Scenario 3 Scenario 4 Description of Assets Sold existing
condition
Entire Reuse
Area, excl.

Tidelands / Haz
Reuse Area
Served by Ph1
Infra
Reuse Area
Served by
Ph1&2 Infra
Vacant Bldgs
+ 41, 92, 525,
29 Hangars Only
Net Lease Income (Table B-2)(1) $12.5 $7.1 $12.2 $8.3 $12.1 $7.4 Base Reuse Exp (Tbl B-1) (2) $7.3 $5.6 $6.9 $6.2 $6.5 $6.1 Net Lease Income Available $5.2 $1.5 $5.3 $2.1 $5.6 $1.3 Delta vs. existing none ($3.7) $0.1 ($3.1) $0.4 ($3.9)

Added City Tax Revenue
(Table B-4a) none $1.8 $0.3 $0.8 $1.1 $0.7
Added Services District
Taxes CFD 17-1 (Table B-4a) $0.0 $1.5 $0.2 $0.8 $0.7 $0.8 Total Incremental Taxes $0.0 $3.3 $0.5 $1.5 $1.7 $1.5

Incremental Taxes + Net
Avail. Lease Income $5.2 $4.8 $5.8 $3.6 $7.3 $2.8
Delta vs. existing $0.0 ($0.4) $0.6 ($1.6) $2.1 ($2.4) (1) Net of property management, maintenance, and leasing commissions. See Table B-2 for details. Estimate assumes property management costs reduce as assets under management are reduced. Scenario 1 amount varies slightly from net figure cited in Table 2-2 due to removal of income from West Midway and Site A project sites.
(2) See Table B-1 for details. Assumes expenses related to oversight of leased assets are scaled back as assets under management are sold.

Following is a description of the major components of the annual revenue estimates in Table 4-3.

 Net Lease Income (see Table B-2) – Existing net lease income is $12.5 million in Scenario 1 after deduction of third party property management, maintenance and leasing commissions, and removing lease income generated by the West Midway and Site A project sites. Net income is reduced as buildings are sold. Third party expenses are assumed to decrease as assets under management are reduced. See Appendix Table B-2 for supporting estimates.

 Alameda Point Base Reuse Expenses (see Table B-1) – Base Reuse departmental expenses include staff, debt service, professional services, cost allocation charges, utilities and repair costs. Property management costs and leasing commissions are deducted from net lease income and thus are not included in the Base Reuse expense line item in Table 4-3. Table B-1 provides supporting estimates. Estimates assume debt service, economic development, public works staff, and two thirds of base reuse staff costs are fixed. Approximately one third of base reuse staff resources is dedicated to oversight of leased assets and on-going staff time allocated to this activity is assumed to reduce as buildings are sold. Utility costs, primarily water costs under an EBMUD short

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term agreement, are assumed to decrease as buildings are sold to fund new infrastructure, as this will allow buildings to connect to the EBMUD system and relieve the City of this expense. Estimates are designed to reflect on-going costs. The City will also likely incur one-time staff and third party costs in the process of selling property that are not specifically included in on-going expense estimates in Table 4-3.

 City Tax Revenues (see Table B-4a) – Incremental City tax revenues are realized through addition of properties to the tax roll following sale to a private owner and improvements to the properties after sale adding assessed value. For purposes of this analysis, the tax revenues considered are limited to those directly impacted by ownership, as other revenues such as business licenses accrue to the City whether buildings are leased or sold. Increased assessed values drive three separate City revenue streams, which are included in the estimates presented in Table 4-3:
a. General Fund property taxes,6
b. City over-ride property tax levy dedicated to the library, c. Property taxes in-lieu of vehicle license fees, which increase in proportion to assessed value.

Assessed value estimates reflect the mid-point of estimated sales prices plus the assessed value estimated to be added by improvements after sale. Improvement values for leased buildings are based on that for previously sold buildings shown in Table D-5, which include a mix of buildings improved after sale as well as buildings that did not undergo major renovation. For vacant buildings, a more substantial renovation is assumed to be necessary to make the buildings useable. The supporting analysis is provided on Table B-4a. Due to uncertainty about the extent of improvements after sale, a separate estimate is provided in Table B-4b without any renovation.

 Alameda Point Services District Special Taxes (CFD 17-1) (see Table B-4a) – When buildings transfer to private ownership, they will become subject to special taxes under Alameda’s CFD 17-1 services district five years after transfer or following issuance of a certificate of occupancy, if sooner. Special taxes are collected to fund maintenance and service expenses at Alameda Point. Reuse Area properties that have annexed into CFD 17-1 have been assigned to Zone 2, which has a special tax rate of $0.85 per square foot per year for non-residential property for FY 2022-23.

6 Alameda Point is in a former redevelopment area. Therefore, property taxes are comprised of “residual” and pass through payments to be received by the City through the redevelopment dissolution waterfall.

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4.5 Lease Revenue Estimate with Sale of Non-Tidelands Assets

Table 4-4 provides an estimate of lease revenues that would remain near an "end state" assuming sale of all assets except Tidelands, including those within the Enterprise Area, those undergoing remaining cleanup, and the market rate residential. At this point, existing lease revenue debt would presumably have been repaid and base reuse activities would become more limited and focused on stewardship of remaining properties, or transition to funding through tax revenues. As shown, approximately $2 million in annual revenue would remain (current revenue derived from the applicable properties, without inflation to future years) to finance activities at this stage.

Table 4-4. Net Lease Revenue with Sale of Non-Tidelands Assets ($Millions/Year) Tidelands Properties $1.5
Northwest Territories License Revenue $0.7
Total $2.2
Note: amounts are net of an allocable share of property management and leasing commissions.

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5.0 QUALITATIVE FACTORS

Alameda Point has fostered a unique array of tenants from Spirits Alley to high-tech startups.

The decision to continue leasing buildings versus sale to private parties will influence the continued evolution of Alameda Point. This section discusses additional qualitative considerations in the decision to lease or sell, including attraction of tenants, maintenance and improvement of buildings, and economic development.

5.1 Attraction of Tenants

The decision to hold or sell buildings has implications for leasing, investment in improvements, and the types of tenants likely to be attracted to Alameda Point.

The City generally leases buildings at Alameda Point in “as is” condition. Tenants are responsible for maintenance, repairs, and improvements desired for occupancy, in addition to triple net expenses such as utilities and insurance. In some cases, credit toward rent is provided as an offset for capital repairs and improvements that are completed by tenants.

An advantage of placing the burden of capital repairs and improvements on tenants is that it minimizes upfront investment and avoids investing in improvements on a speculative basis. The approach is generally in line with how other public agencies with comparable assets have approached leasing. Public investment into buildings is minimized while generating current lease income to fund base reuse activities and fostering growth of a unique array of tenants at Alameda Point. Drawbacks are that it will tend to limit the pool of tenants who consider Alameda Point and is less likely to result in significant building upgrades.

Placing the burden of improvements on tenants tends to limit the pool of tenants to those who:

1. Are willing to provide upfront funds for necessary repairs or improvements or are interested in use of the space in “as is condition.”

2. Can commit to a long enough lease that incurring upfront costs makes financial sense.

3. Have a long enough time horizon in making leasing decisions to allow repairs to occur in advance or are willing to accommodate the work during occupancy.

4. Have a strong commitment to Alameda Point or the space is uniquely suited to their needs.

While Alameda Point has been successful in attracting tenants under these conditions, others may not be interested in leasing under these terms, particularly in situations where improvement needs are more substantial. Where a landlord invests in improvements to deliver the space free of maintenance issues or funds improvements required for tenant occupancy, tenants will pay a higher rent for the space. Benefits of proactive landlord investments include:

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 Investing in renovations to upgrade building systems, address deferred maintenance and replacement needs, build out office areas, and otherwise deliver the space in good useable condition will be helpful in attracting tenants that are looking for high quality space and who may not otherwise consider leasing at Alameda Point.  Completion of repairs and upgrades on a proactive basis will reduce the time required to deliver the space to a tenant, which will be attractive to tenants with a short time horizon for leasing decisions.
 Tenants may prefer a higher rent to leasing space that requires them to fund significant improvements upfront, allowing a tenant’s capital to be used for their core business.  Buildings that are currently in poor condition may be unleasable without a significant speculative investment by the landlord.

5.2 Building Maintenance and Upgrades

Tenants on shorter term leases will generally have less incentive to be proactive about building repairs and replacement needs since they have a shorter term perspective and more limited financial incentive compared to a building owner. A private landlord will have a greater financial incentive to be proactive about maintenance issues and to invest in building upgrades to the extent the cost of improvements can be amortized through higher market rents or add value to the asset with potential to generate a profit upon sale.

Precedents for building sales at Alameda Point to developers include Buildings 8 (Storehouse lofts), 9 (Kairos Power) and 91 (Almanac). Buildings were sold to private parties who then made substantial investments in renovation. Renovations to Buildings 9 and 91 are estimated to have added in the range $24 million and $6 million to the tax roll, respectively, while renovation of Building 8 does not appear to yet be fully reflected on the tax rolls.

A private owner-user who purchases the building they occupy will also have an interest in maintaining the building in good condition. Some owner-users might be more willing to invest in upgrades beyond what can be justified from a pure real estate investment perspective. Owner- users will tend to focus on their own specific needs and priorities and are unlikely to invest in building improvements unless necessary or desired for their own use.

Precedents for building sales to owner-users at Alameda Point include Building 40 (Bladium) and Building 23 (Natel Energy). Assessed values for these buildings appear to reflect inflation of their sale price without a significant addition of assessed value from improvements following the sale.

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5.3 Taking Economic Development Considerations into Account in Leasing

As landlord, the City has had an ability to take a broader array of considerations into account in leasing decisions at Alameda Point, beyond purely financial. Staff reports regarding leasing decisions have included information on the number of jobs tenants are projected to add.

Tenants have sought to highlight what makes them a desirable business for Alameda or touted the promise of their technology. Through its role as a landlord, the City has had the ability to weigh considerations that extend into an economic development realm, alongside the specific business terms for proposed leases and the credit quality of tenants.

Alameda Point has a track record of nurturing high-tech startups such as Astra Space and Saildrone. Startups typically operate at a loss and rely on successive rounds of venture capital to maintain operations. Given their nature, high-tech startups tend to be more at risk of going out of business, since they depend on securing future rounds of funding, which is subject to conditions in the venture capital markets, investor appetite for risk, and successful development of their product. Should a tenant go out of business during a market downturn, it may prove more difficult to release vacated space, resulting in a loss of income. Credit quality of tenants also affects private owner’s ability to borrow against the asset, which in turn affects the ability to finance improvements, financial returns to the owner, and the building value. Because of this, it’s possible a private landlord would require more onerous terms for certain tenants to mitigate credit risk or may be less inclined to lease to early-stage startups, depending on market conditions. The flip side is that a private landlord may be in a better position to expedite leasing decisions and make speculative improvements to buildings, which would be beneficial for startups expanding quickly who need to secure space to support their growth and who may be averse to deploying finite venture capital to fund improvements to real estate.

5.4 Water Infrastructure Agreement

The existing Navy infrastructure at Alameda Point does not meet East Bay Municipal Utility District (EBMUD) standards and EBMUD will not accept and operate the water system on a permanent basis until it is replaced. EBMUD is currently operating the system under a “short term agreement”. This existing short term agreement does not provide for extension beyond 2027. Should the EBMUD agreement expire before installation of the new water infrastructure, the City would need to contract with another provider to take responsibility for required water testing and would need to seek a modification of the drinking water permit. For this reason, the City’s Public Works department has advised that it is in the best interest of the City to replace as much of the aging infrastructure at Alameda Point as possible before expiration of the short term agreement.

Existing buildings are not able to be directly served by EBMUD until infrastructure is replaced.

Following replacement of infrastructure, buildings will be required to connect to the EBMUD system and will be required to pay connection charges. The City agreed to pay these charges

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when incurred, up to a cap, with respect to some prior building sales. The analysis assumes buyers will be responsible for future connection charges.

5.5 Brief Discussion of Outside Examples

The following provides a brief discussion of approaches used by other jurisdictions. None are prefect comparisons. Selections are not intended as a recommendation of a particular model and are provided to add additional context.

 Port of San Francisco – The Port of San Francisco has a large portfolio of properties along the San Francisco waterfront extending from India Basin on the southern waterfront to piers at Fort Mason. Much of the property is subject to the Tidelands Trust and thus cannot be sold. The Port receives income from parking, short term leases of existing buildings and property, shipping, and cruise facility charges, long term building leases, and long term ground leases. Major development projects for which a private development partner is responsible for substantial public and private improvements are typically structured as long term ground leases. This structure provides the private partner adequate time to recover the cost of upfront improvements. It also allows private leasehold improvements constructed on the property to be sold to another party while the Port retains ownership of the underlying land. Lease income is used to fund Port staff and operations costs, a range of capital improvement projects along the waterfront, and debt service on bonds. The pandemic and related economic fallout on San Francisco from increased remote work has impacted the Port’s revenues, in particular parking revenues, participation rents from leases for restaurants, hotels, and other uses heavily affected by the pandemic.

 Oakland Army Base – The City of Oakland has disposed of property within portions of the former Oakland Army base through conveyance of a long term ground lease interest to a development team comprised of the California Capital and Investment Group (CCIG) and Prologis. Major funding for infrastructure improvements, including an intermodal rail terminal, was provided through a State of California Trade Corridor Improvement Fund (TCIF) grant created through Proposition 1B, passed in 2006. The development team managed construction of public improvements but was not responsible for funding. Private development of warehouse and logistics facilities occurred on long-term ground lease parcels with the developer responsible for construction of the private improvements.

 McClellan Air Force Base – This former military facility was in service from 1936 until 2001 and served as one of the Air Force’s primary aircraft maintenance and logistics facilities in the pacific rim. At closure, there were approximately 7 million square feet of existing commercial and industrial buildings, plus undeveloped land available for future development. The County of Sacramento was granted a Lease in Furtherance of

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Conveyance (LIFOC), as occurred in Alameda. The County entered into a purchase and sale agreement in 2001 with private developer McClellan Business Park LLC. The PSA conveyed the County’s leasehold interest under the LIFOC and committed to the transfer of fee title as property was conveyed from the Airforce. The purchase price was advanced by the County through a note to the developer to be paid over six years. The developer committed to a set of minimum infrastructure improvements, but it was recognized additional improvements beyond the minimums would be necessary to achieve the planned buildout. Improvements in excess of minimums were eligible to be credited against the purchase price. In effect, the asset was conveyed in a relatively streamlined fashion to a single private entity who assumed the revenues and costs and was permitted to manage it as a large business park. In addition to private capital, public financing tools such as CFD bonds were used. The same developer was part of a master developer team that Alameda was in negotiations with two decades ago but did not move forward with. The property is now known as McClellan Business Park.

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6.0 CAVEATS AND LIMITATIONS

While we believe the estimates and projections contained in this report to be reasonable in consideration of the scope of the analysis and the information available to KMA at the time of preparation, no assurances are provided by KMA as to the certainty of projected lease revenues, assessed values, tax revenues, expenses, or sales proceeds. Actual amounts may be higher or lower than projected and are subject to future market conditions, actual terms of lease or sale, specific maintenance or replacement needs, among other factors.

KMA is not advising or recommending any action be taken by the City with respect to any prospective new or existing municipal financial products or issuance of municipal securities (including with respect to the structure, timing, terms and other similar matters concerning such financial products or issues). KMA is not acting as a municipal advisor and does not assume any fiduciary duty, including, without limitation, a fiduciary duty pursuant to Section 15B of the Exchange Act. The City should discuss any such information and material contained in this report with internal and/or external advisors and experts, including its own municipal advisors, that it deems appropriate before acting on the information.

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Appendix Tables

Part A. Illustration of Sale and Lease Alternatives for an Individual Building Table A-1 Summary
Table A-2 Supporting Analysis

Part A
Illustration of Sale and Lease Alternatives
for an Indivdiual Building

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Table A-1
Illustrative Comparison of Lease and Sale Alternatives for an Individual Building Alameda Point
City of Alameda, CA
$Thousands
Building Type Hangar
Building Sq.Ft. 110,000
A. B. C. D.

Year
Lease,
Sell after 10 Years
Sale in Year 1, No
Renovation
Sale in Year 1 + AV
added by Renovation
30-Year Lease, Lessee
Renovation & costs
credited to rent,
Sale Yr 30
Table A-2 Table A-2 Table A-2 Table A-2
1 $112 $19,500 $19,500 ($404)
2 $1,103 $62 $62 ($372)
3 $1,142 $63 $295 ($43)
4 $1,182 $64 $302 ($9)
5 $1,223 $65 $309 $27
6 $1,266 $175 $316 $64
7 $1,311 $180 $323 $101
8 $1,356 $184 $331 $140
9 $1,404 $189 $339 $180
10 $25,732 $194 $347 $222
11 to 29 $4,212 $4,838 $8,394 $30,839
30 $330 $328 $554 $70,134
30-Year Total $40,375 $25,842 $31,072 $100,878
Present Value (1)
$24,366 $22,002 $24,326 $21,793
(1) Present value in Year 1 calculated using a 6% discount rate. Discount rate is intended as generally representative of the City's borrowing costs. Although 6% is somewhat higher than yields reflected in recent trading of the City's tax-exempt debt, a somewhat higher rate was selected due to the recent upward trend in rates and nature of the revenue stream.

Combined Net Rental Income, Sales Proceeds,
and Incremental Tax Revenues ($Thousands)
Illustrative Lease and Sale Scenarios for an Individual Building Prepared by: Keyser Marston Associates
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Table A-2
Illustrative Comparison of Lease vs. Sale Alternatives for an Individual Building Alameda Point
City of Alameda, CA
$Thousands
Year: 1 2 3 4 5 6 7 8 9 10 11 to 29 30
Example Hangar Building Page 1 of 4
Building Area 110,000 SF
A. Lease, With Sale at End of Hold Period
Rental Income
Base Rent (NNN) (w/3.5% esc) $0.95 /SF/Mo. $1,254 $1,298 $1,343 $1,390 $1,439 $1,489 $1,541 $1,595 $1,651 $1,709 PM/Maint. (1) 8% gross ($100) ($104) ($107) ($111) ($115) ($119) ($123) ($127) ($132) ($136) Replace/Repair Reserve 4% gross ($50) ($52) ($54) ($56) ($58) ($60) ($62) ($64) ($66) ($68) City Expense Allocation (2) 3% gross ($38) ($39) ($40) ($42) ($43) ($45) ($46) ($48) ($50) ($51) Cap Impvt / Repair Credit (3) ($418) $0 $0 $0 $0 $0 $0 $0 $0 $0 Leasing Commissions (4) ($536) $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Income $112 $1,103 $1,142 $1,182 $1,223 $1,266 $1,311 $1,356 $1,404 $1,453 Sales Proceeds at End of Hold Period
Base Rent (NNN) $1,709
Reserves & non-recoverable 5% gross ($85)
Net Income $1,624
Gross Sales Proceeds 6.5% exit cap(5) $24,979
Sales Com / Seller Closing Cost 4% sale price ($999)
Net Sales Proceeds $23,980
Incremental Tax Revenues (after sale)
General Fund Prop Tax 21.90% of 1% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,249 $80 Library Prop Tax Levy 0.0210% levy $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $120 $8 Prop Tax In-Lieu of VLF $0.62 $1000 AV $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $354 $23 Transfer Tax (one time) $12 /$1,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $0 $0 CFD 17-1 (after 5 years) $0.85 / SF $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,489 $220 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $4,212 $330
Total Cash Flows $40,375 $112 $1,103 $1,142 $1,182 $1,223 $1,266 $1,311 $1,356 $1,404 $25,732 $4,212 $330 NPV 6% discount $24,366
Note:
(1) See Table C-2.
(3) Illustrative, based on 50% of rent credited, initial 8-months of term. (4) 5% for first five years of term and 2.5% for Years 6-10 for landlord and tenant broker. @50% rent, 8 mo.
(2) Reflects base reuse staff time allocable to management, oversight, budgeting, staff reports, and reporting for leased assets as a share of gross lease revenue. (5) Cap rate assumptions are generally consistent with that assumed for the City's Building 92 appraisal and reflect the data in Table D-1 and D-2. The cap rate at the end of a hold period is estimated at 0.5% above a Year 1 sale to reflect the possibility of somewhat worse market conditions in the future.

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Table A-2
Illustrative Comparison of Lease vs. Sale Alternatives for an Individual Building Alameda Point
City of Alameda, CA
$Thousands
Year: 1 2 3 4 5 6 7 8 9 10 11 to 29 30

Page 2 of 4 ends

B. Sale, With No Improvements Following Sale
Sales Proceeds
Base Rent (NNN) $0.95 /SF/Mo. $1,254
Reserves & non-recoverables 5% gross ($63)
Net Income $1,191
Gross Sales Proceeds 6% cap rate $20,000
Sales Com / Seller Closing Cost 4% sale price ($800)
Net Sales Proceeds $19,200
Incremental Tax Revenues
General Fund Prop Tax 21.90% of 1% $44 $45 $46 $46 $47 $48 $49 $50 $51 $52 $1,220 $78 Library Prop Tax Levy 0.0210% levy $4 $4 $4 $4 $5 $5 $5 $5 $5 $5 $117 $7 Prop Tax In-Lieu of VLF $0.62 $1000 AV $12 $13 $13 $13 $13 $14 $14 $14 $15 $15 $345 $22 Transfer Tax (one time) $12 /$1,000 $240 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 CFD 17-1 (after 5 years) $0.85 / SF $0
$0 $0 $0 $0 $108 $112 $115 $118 $122 $3,156 $220
$300 $62 $63 $64 $65 $175 $180 $184 $189 $194 $4,838 $328 Total Cash Flows $25,842 $19,500 $62 $63 $64 $65 $175 $180 $184 $189 $194 $4,838 $328 NPV 6% discount $22,002
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Table A-2
Illustrative Comparison of Lease vs. Sale Alternatives for an Individual Building Alameda Point
City of Alameda, CA
$Thousands
Year: 1 2 3 4 5 6 7 8 9 10 11 to 29 30
C. Sale + Major Upgrades Following Sale Page 3 of 4
Sales Proceeds
Base Rent (NNN) $0.95 /SF/Mo. $1,254
Reserves & non-recoverables 5% gross ($63)
Net Income $1,191
Gross Sales Proceeds 6% cap rate $20,000
Sales Com / Seller Closing Cost 4% sale price ($800)
Net Sales Proceeds $19,200
Incremental Tax Revenues +$400/SF in assessed value added by improvements to site, base building, tenant improvements.

Assessed Value $20,000 $20,400 $64,808 $66,104 $67,426 $68,775 $70,150 $71,553 $72,984 $74,444 $110,620 General Fund Prop Tax 21.90% of 1% $44 $45 $142 $145 $148 $151 $154 $157 $160 $163 $3,798 $242 Library Prop Tax Levy 0.0210% levy $4 $4 $14 $14 $14 $14 $15 $15 $15 $16 $364 $23 Prop Tax In-Lieu of VLF $0.62 $1000 AV $12 $13 $40 $41 $42 $43 $43 $44 $45 $46 $1,075 $69 Transfer Tax (one time) $12 /$1,000 $240 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 CFD 17-1 (after COO) $0.85 / SF $0 $0 $99 $102 $105 $108 $112 $115 $118 $122 $3,156 $220 $300 $62 $295 $302 $309 $316 $323 $331 $339 $347 $8,394 $554 Total Cash Flows $31,072 $19,500 $62 $295 $302 $309 $316 $323 $331 $339 $347 $8,394 $554 NPV 6% discount $24,326
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Table A-2
Illustrative Comparison of Lease vs. Sale Alternatives
Alameda Point
City of Alameda, CA
$Thousands
Year: 1 2 3 4 5 6 7 8 9 10 11 11 to 29 30
Building Area 110,000 SF Page 4 of 4
D. 30-Year Lease, Lessee Renovation with Rent Credits, Sale at End of Term Rental Income
Base Rent (NNN) $0.95 /SF/Mo. $1,254 $1,292 $1,330 $1,370 $1,411 $1,454 $1,497 $1,542 $1,589 $1,636 $1,685 $42,329 $2,955 River Rock PM/Maint. (1) 8% gross ($100) ($103) ($106) ($109) ($113) ($116) ($119) ($123) ($127) ($131) ($134) ($3,377) ($236) Replace/Repair Reserve 4% gross ($50) ($52) ($53) ($55) ($56) ($58) ($60) ($62) ($64) ($65) ($67) ($1,693) ($118) City Expense Allocation (2) 3% gross ($38) ($39) ($40) ($41) ($42) ($44) ($45) ($46) ($48) ($49) ($51) ($1,270) ($89) Rent Credit for Lessee Improvements (3) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($1,208) ($6,039) $0 Leasing Commissions (4) ($263) ($263) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Income ($404) ($372) ($77) ($43) ($8) $28 $65 $104 $143 $183 $225 $29,950 $2,513 Sales Proceeds, End of Hold Period
Base Rent (NNN) $1.50 /SF/Mo. (5)
$4,666
Reserves & non-recoverables 5% gross ($148)
Net Income $4,518
Gross Sales Proceeds 6.5% exit cap (6) $69,511
Sales Com / Seller Closing Cost 4% sale price ($2,780)
Net Sales Proceeds $66,731
Incremental Tax Revenues
Added Assessed Value (lessee improvements) (7) $0 $0 $11,000 $11,220 $11,444 $11,673 $11,907 $12,145 $12,388 $12,636 $12,888 $294,375 $18,776 General Fund Prop Tax 21.90% share of 1% $0 $0 $24 $25 $25 $26 $26 $27 $27 $28 $28 $645 $41 Library Prop Tax Levy 0.0210% levy $0 $0 $2 $2 $2 $2 $3 $3 $3 $3 $3 $62 $4 Prop Tax In-Lieu of VLF $0.62 $1000 AV $0 $0 $7 $7 $7 $7 $7 $8 $8 $8 $8 $183 $12 Transfer Tax (one time) $12 /$1,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $834 $0 $0 $33 $34 $35 $35 $36 $37 $37 $38 $39 $889 $891
Total Cash Flows $100,878 ($404) ($372) ($43) ($9) $27 $64 $101 $140 $180 $222 $264 $30,839 $70,134 NPV 6% discount $21,793
Note:
(1) See Table C-2.
(2) Reflects base reuse staff time allocable to management, oversight, budgeting, staff reports, and reporting for leased assets as a share of gross lease revenue. (3) Illustrative credit based on $11 M ($100/SF) lessee renovation and cost amortized at 7% interest over 15 years. (4) 5% for first five years of term and 2.5% for Years 6-10 for landlord and tenant broker. (5) Prior to escalation. Reflects assumed increase in achievable rent at end of lease term based on lessee improvements. (7) Estimated added assessed value of $100/SF based on lessee upgrades. (6) Cap rate assumptions are generally consistent with that assumed for the City's Building 92 appraisal and reflect the data in Table D-1 and D-2. The cap rate for sale at the end of a hold period is estimated at 0.5% above a Year 1 sale to reflect the possibility of somewhat worse market conditions in the future.

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Part B
Reuse Area Sale Scenarios

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Table B-1
Reuse Area Asset Sale Scenarios - Summary
Alameda Point
City of Alameda, CA
Scenario Name Scenario 1 Scenario 2 Scenario 2a Scenario 2b Scenario 3 Scenario 4 Description of Assets Sold existing condition Entire Reuse Area, excl. Tidelands / Haz
Reuse Area
Served by Ph1
Infra
Reuse Area
Served by Ph1&2
Infra
Vacant Bldgs +
41, 92, 525, 29.

Hangars Only
Preliminary Sales Proceeds Est. ($Millions) none $159 to $250 $33 to $50 $105 to $156 $61 to $105 $109 to $162 See Table B-3
28% 22% 15% 55% 8%
$M/Year $M/Year $M/Year $M/Year $M/Year $M/Year
Estimated Net Lease Income $12.5 $7.1 $12.2 $8.3 $12.1 $7.4 from remaining assets see Table B-2
Base Reuse Expenses (1)
Bond Debt Service (to 2033, $7.5M rem princ.) $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 Base Reuse Staff: leasing & PM (2)
$0.3 $0.2 $0.3 $0.2 $0.3 $0.2
Base Reuse Staff: all other $0.6 $0.6 $0.6 $0.6 $0.6 $0.6 Professional Svc/Legal, excl leasing com(3)
$2.0 $1.7 $1.9 $1.8 $1.9 $1.7
Economic Development Staff & cost alloc. $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 Office Expenses $0.06 $0.05 $0.05 $0.05 $0.04 $0.04
Cost Allocation Charges (4)
$0.7 $0.5 $0.6 $0.5 $0.6 $0.5
Public Works Staff $0.5 $0.5 $0.5 $0.5 $0.5 $0.5
Water, utilities, equipment repair/maint (5)
$1.8 $0.8 $1.6 $1.2 $1.3 $1.2
Subtotal Expense $7.3 $5.6 $6.9 $6.2 $6.5 $6.1
Net Available Lease Income $5.2 $1.5 $5.3 $2.1 $5.6 $1.3 Incremental Taxes from Sold Buildings (6)
Property Tax $1.3 $0.2 $0.6 $0.8 $0.5
Property Tax In-Lieu of VLF $0.4 $0.1 $0.2 $0.2 $0.1
Library Levy $0.1 $0.0 $0.1 $0.1 $0.0
Subtotal City Tax Revenue none $1.8 $0.3 $0.8 $1.1 $0.7 AP Services Dist. CFD 17-1 (commence 5 years after sale) $1.5 $0.2 $0.8 $0.7 $0.8 Total Incremental Taxes $3.3 $0.5 $1.5 $1.7 $1.5
Incremental Taxes + Net Avail. Lease Income $5.2 $4.8 $5.8 $3.6 $7.3 $2.8 Delta vs. existing ($0.4) $0.6 ($1.6) $2.1 ($2.4)
Notes:
(1) Not including property management and maintenance charges by RiverRock, which are already deducted from net lease income on Table B-2 . See Table C-1 for expense detail. (3) Excludes leasing commissions, which are deducted from net lease income. Professional services costs are estimated proportionate to changes in staff and office expenses. (4) Cost allocation charges for base reuse and public works are estimated proportionate to changes in other expenses incl. RiverRock expenses on Table B-2 but excluding debt service. (6) See Table B-4a. Includes on-going funds, without one-time transfer taxes. (2) Reflects the approximately 34% of base reuse staff time budget that relates to management, oversight, budgeting, staff reports, and reporting for leased assets. Analysis assumes staff time allocable to these activities could be reduced as leased inventory decreases. % proceeds from vacant buildings expected to be more
challenging to market, uncertain as to value, and likely representing longer-term opportunities.
(5) Utility and maint service expense estimated to decrease as infrastructure is replaced through sales proceeds, allowing connection to EBMUD service, and reducing water purchase and other expenses.

Estimated proportionate to sales proceeds as % of Master Infrastructure Plan budget for utility, street, and transportation ($374M with inflation to 2022).

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Table B-2
Disposition Scenarios - Building Area and Net Lease Income Alameda Point
City of Alameda, CA
Scenario Name Scenario 1 Scenario 2 Scenario 2a Scenario 2b Scenario 3 Scenario 4 Assets Sold
existing condition Entire Reuse Area,
excl. Tidelands /
Haz
Reuse Area
Served by Ph1
Infra
Reuse Area
Served by
Ph1&2 Infra
Vacant Bldgs
+ 41, 92, 525,

29. Hangars Only
Sold Buildings (Sq. Ft.)
Leased none 836,812 198,311 602,898 238,329 686,915
Vacant none 926,647 76,895 289,273 711,660 214,967
Site A / W Midway Sites (primarily vacant) 563,703 563,703 563,703 563,703 563,703 563,703 563,703 2,327,162 838,909 1,455,874 1,513,692 1,465,585 Retained Buildings (Sq.Ft.)
Leased 1,652,513 851,545 1,490,046 1,085,459 1,450,028 1,001,442 Vacant 2,176,650 1,214,159 2,063,911 1,851,533 1,429,146 1,925,839 Public / Quasi Public Uses 234,277 234,277 234,277 234,277 234,277 234,277 4,063,440 2,299,981 3,788,234 3,171,269 3,113,451 3,161,558 Total Building Sq. Ft. 4,627,143 4,627,143 4,627,143 4,627,143 4,627,143 4,627,143 $M/Year $M/Year $M/Year $M/Year $M/Year $M/Year
Commercial Lease Income
Lease Income
Existing Com. Lease Revenue (Table C-4) $14.9 $14.9 $14.9 $14.9 $14.9 $14.9 Less: Rev from Site A & West Midway areas ($0.2) ($0.2) ($0.2) ($0.2) ($0.2) ($0.2) Less: Lease Revenue Sold Buildings n/a ($6.6) ($0.7) ($5.0) ($0.9) ($6.0) Subtotal Lease Revenue $14.7 $8.1 $14.1 $9.7 $13.8 $8.8 PM/Maint. Expense within RiverRock Budget
Vacant Building Expenses (1)
($0.74) ($0.33) ($0.56) ($0.50) ($0.39) ($0.52)
Occupied Building Expenses (2)
($1.19) ($0.60) ($1.05) ($0.76) ($1.02) ($0.71)
General Point-Wide Expenses (3)
($0.59) ($0.59) ($0.59) ($0.59) ($0.59) ($0.59)
Port Ops & NW Territory (3)
($0.28) ($0.28) ($0.28) ($0.28) ($0.28) ($0.28)
Subtotal Com Prop Management Expense ($2.79) ($1.80) ($2.48) ($2.14) ($2.28) ($2.10) Leasing Commissions (4)
($0.55) ($0.30) ($0.53) ($0.36) ($0.52) ($0.33)
Net Commercial Lease Revenue $11.4 $6.0 $11.1 $7.2 $11.0 $6.3 Residential Net Lease Income (Table C-3) $1.1 $1.1 $1.1 $1.1 $1.1 $1.1 Combined Total $12.5 $7.1 $12.2 $8.3 $12.1 $7.4
(1) See Table C-2 for allocation of RiverRock budgeted expense by type. Vacant building expenses estimated proportionate to vacant building inventory. (2) See Table C-2 for allocation of RiverRock budgeted expense by type. Occupied building expenses estimated proportionate to occupied building inventory. (3) See Table C-2 for allocation of budgeted expenses by type. General Point-Wide, Port Ops and NW Territory expenses are not assumed to change with building inventory. (4) Leasing commissions are budgeted by the City at $550,000 but will vary based on leasing. For purposes of these scenarios, commissions are assumed to average approximately 3.75% of annual gross lease revenue, an estimate that assumes the average lease term is ten years.

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Table B-3
High-Level Estimate of Sales Proceeds Range, Reuse Area Alameda Point
City of Alameda, CA
Building
Area
Leased
Area
Reuse
Infra
No. Existing Tenant Sq.Ft. Sq.Ft. $/SF/Mo Annual $/SF/Mo Annual Low High Low High Phase Note Large Hangars and Aircraft-Related Buildings
11 Pending 110,561 110,561 $0.95 $1,260,000 $0.95 $1,260,000 $150 - $250 $16 - $27 2 12 Saildrone, Inc. 110,561 110,561 $0.92 $1,220,593 $0.92 $1,221,000 $150 - $210 $16 - $22 2 20 Auctions by the Bay 65,547 63,972 $0.46 $350,568 $0.95 $729,000 $150 - $220 $9 - $14 3 21 St George Spirits 66,014 65,000 $0.64 $496,831 $0.95 $741,000 $130 - $190 $8 - $12 3 22 Faction Brewing, Proximo Distillers 64,944 64,944 $0.63 $491,530 $0.95 $740,000 $150 - $210 $9 - $13 3 24 Rockwall Wine, Complete Coach 63,000 55,865 $0.80 $538,312 $0.94 $631,000 $150 - $210 $9 - $13 2 25 Alameda P Bev (BRIX), Urban Cellars 54,450 36,319 $0.73 $317,235 $0.95 $414,000 $150 - $210 $8 - $11 2 400A Google [Navy held w/FOST] 65,400 65,400 $0.76 $599,468 $0.95 $746,000 $150 - $220 $9 - $14 2 400 mostly vacant [Navy held w/FOST] 192,112 5,000 $0.50 $30,000 $0.32 $730,456 $50 - $70 $9 - $13 2 mostly vac, est @1/3 occ. bldg 41 Wrightspeed, Inc [Navy held w/FOST] 109,293 109,293 $0.51 $673,388 $0.95 $1,246,000 $150 - $220 $16 - $23 1 Subtotal 901,882 686,915 $5,977,925 $8,458,456 $121 - $180 $109 - $162 Other Leased Buildings
19 Office / Control Tower 20,881 20,881 $1.50 $375,858 $1.50 $375,858 $230 - $310 $5 - $6 2 92 Food Bank 89,018 89,018 $0.80 $854,573 $130 - $180 $11 - $15 1 to be released by APC per DDA 525 Auctions by the Bay 23,208 23,208 $0.78 $216,876 $0.90 $250,646 $150 - $210 $3 - $5 not incl. 29 Dreyfuss Capital Partner, Lava Mae 19,480 16,810 $0.28 $56,437 $0.28 $56,437 $50 - $60 $1 - $1 not incl.

Subtotal 152,587 149,917 $649,171 $1,537,514 $131 - $177 $20 - $27 Vacant Buildings
BEQ 498,646 none $34 - $68 $17 - $34 3
Building 114 / former 101 76,895 none $78 - $156 $6 - $12 1 Bldg 7/15/115/130/116 64,164 $62 - $140 $4 - $9 partial Chapel and Theater 34,927 $86 - $172 $3 - $6 not incl.

Other Vacant 34,358 none
708,990 $30 - $61
Total 1,763,459 836,832 $6,627,096 $9,995,970 $159 - $250 Subtotals
Reuse Area Infra Phase 1 275,206 198,311 $673,388 $2,100,573 $33 - $50 Reuse Area Infra Phase 2 616,965 404,587 $4,341,466 $5,378,314 $72 - $106 Reuse Area Infra Phase 3 695,151 193,916 $1,338,929 $2,210,000 $43 - $73 Vacant Buildings and 92, 525, 29, 41 949,989 238,329 $946,701 $2,407,656 $61 - $105 Note: Tidelands Trust properties and buildings subject to remaining hazardous conditions are not included in estimates. (2) High level and preliminary estimate of sales proceeds for planning purposes. Actual proceeds will vary depending on market conditions at the time of sale, property condition, conditions placed on sale, availability of backbone infrastructure at time of sale, among other factors. Estimated proceeds are net of 4% in sales commissions and seller closing costs. Estimates should be revised as market is tested and conditions change. (1) Preliminary price PSF range reflects cap rate range of 5% to 7% based on prior sales at Alameda Point and comparable sale data in Table D-4 and Table D-3 and 5% non-recoverable expense and reserve allowance. A wide band is identified based on variation in condition and expected timing of sale over a period of years. An offset is included where significant lease term remains at a lower rent.Building 11 pricing reflects a margin over an unsolicted purchase offer that was received.
not incl.

Contract Rent Estimated Market Rent
Prelim Price
PSF Est. (1)

Proceeds
($Millions) (2)
Preliminary estimate at $1-$2
M/acre of land as significant
improvements are likely required
for occupancy and some may
need to be demolished. Estimate
assumes infrastructure not buyer
cost.

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Table B-4a
Property Tax and Other Revenue - With Improvements to Buildings Following Sale Alameda Point
City of Alameda, CA
Building
Area
Leased
Area
General Fund Prop
Tax
Library Prop Tax
Levy
Prop Tax In-Lieu
of VLF
CFD 17-1
(after 5 years) (3) Total
No. Existing Tenant Sq.Ft. Sq.Ft. 21.9% share of 1% 0.021% $0.62 / $1000 AV $0.85 / SF Large Hangars and Aircraft-Related Buildings
11 Pending 110,561 110,561 744,000 22,244,000 14,370,000 $35,870,000 $78,574 $7,533 $22,304 $93,898 $202,309 12 Saildrone, Inc. 110,561 110,561 25,205,000 38,596,000 14,370,000 $27,761,000 $60,811 $5,830 $17,262 $93,898 $177,801 20 Auctions by the Bay 65,547 63,972 506,000 11,533,000 8,520,000 $19,547,000 $42,818 $4,105 $12,154 $55,668 $114,746 21 St George Spirits 66,014 65,000 4,142,000 10,903,000 8,580,000 $15,341,000 $33,605 $3,222 $9,539 $56,065 $102,430 22 Faction Brewing, Proximo Distillers 64,944 64,944 4,777,000 11,630,000 8,440,000 $15,293,000 $33,500 $3,212 $9,509 $55,156 $101,377 24 Rockwall Wine, Complete Coach Works 63,000 55,865 3,204,000 12,482,000 8,190,000 $17,468,000 $38,264 $3,668 $10,862 $53,505 $106,299 25 Alameda P Bev (BRIX), Urban Cellars 54,450 36,319 997,000 9,568,000 7,080,000 $15,651,000 $34,284 $3,287 $9,732 $46,244 $93,546 400A Google [Navy held w/FOST] 65,400 65,400 678,000 11,500,000 8,500,000 $19,322,000 $42,325 $4,058 $12,014 $55,543 $113,941 400 mostly vacant [Navy held w/FOST] 192,112 5,000 0 11,000,000 24,970,000 $35,970,000 $78,793 $7,554 $22,366 $163,158 $271,871 41 Wrightspeed, Inc [Navy held w/FOST] 109,293 109,293 1,096,000 19,681,000 14,210,000 $32,795,000 $71,838 $6,887 $20,392 $92,821 $191,938 Subtotal 901,882 686,915 $514,814 $49,354 $146,135 $765,957 $1,476,259 Other Leased Buildings
19 Office / Control Tower 20,881 20,881 1,944,000 7,444,000 2,710,000 $8,210,000 $17,984 $1,724 $5,105 $17,734 $42,547 92 Food Bank 89,018 0 0 13,000,000 11,570,000 $24,570,000 $53,821 $5,160 $15,278 $75,602 $149,861 525 Auctions by the Bay 23,208 23,208 2,019,000 4,011,000 3,020,000 $5,012,000 $10,979 $1,053 $3,116 $19,710 $34,858 29 Dreyfuss Capital Partner, Lava Mae 19,480 16,810 138,000 1,000,000 2,530,000 $3,392,000 $7,430 $712 $2,109 $16,544 $26,796 Subtotal 152,587 60,899 $90,215 $8,649 $25,608 $129,590 $254,062 Vacant Buildings
BEQ 498,646 0 0 25,500,000 199,460,000 $224,960,000 $492,781 $47,242 $139,880 $423,494 $1,103,397 Building 114 / former 101 76,895 0 0 9,000,000 30,760,000 $39,760,000 $87,095 $8,350 $24,723 $65,306 $185,474 Bldg 7/15/115/130/116 64,164 0 0 6,500,000 25,670,000 $32,170,000 $70,469 $6,756 $20,003 $54,494 $151,722 Chapel and Theater 34,927 0 0 4,500,000 13,970,000 $18,470,000 $40,459 $3,879 $11,485 $29,663 $85,485 Subtotal 708,990 0 0 45,500,000 269,860,000 315,360,000 $690,805 $66,226 $196,091 $572,956 $1,526,078 Total 1,763,459 747,814 $1,295,834 $124,228 $367,834 $1,468,503 $3,256,399 Reuse Area Infra Phase 1 275,206 109,293 1,096,000 41,681,000 56,540,000 97,125,000 $212,755 $20,396 $60,392 $233,729 $527,273 Reuse Area Infra Phase 2 616,965 404,587 32,772,000 112,834,000 80,190,000 160,252,000 $351,037 $33,653 $99,645 $523,980 $1,008,315 Reuse Area Infra Phase 3 695,151 193,916 9,425,000 59,566,000 225,000,000 275,141,000 $602,704 $57,780 $171,083 $590,383 $1,421,950 (1) Estimated AV based on mid-point of estimated sales price range. (3) CFD special tax commences at the earlier of five years after sale or issuance of a temporary or final certificate of occupancy. (2) Estimated based on average AV of improvements to buildings that are currently leased of $130/SF based on AV added to previously sold buildings (which reflects some buildings renovated after sale and some not) and $400/SF to buildings that are currently vacant, assuming substantial investment to make the buildings useable.

Incremental Revenue Following Sale Assessed Value
Existing Est w/sale(1)
Improvmts
after sale(2) Net Incr.

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Table B-4b
Property Tax and Other Revenue - Without Improvements to Buildings Following Sale Alameda Point
City of Alameda, CA
Building
Area
Leased
Area
General Fund Prop
Tax
Library Prop Tax
Levy
Prop Tax In-Lieu
of VLF
CFD 17-1
(after 5 years) (1) Total
No. Existing Tenant Sq.Ft. Sq.Ft. 21.9% share of 1% 0.021% $0.62 / $1000 AV $0.85 / SF Large Hangars and Aircraft-Related Buildings if none
11 Pending 110,561 110,561 744,000 22,244,000 0 $21,500,000 $47,096 $4,515 $13,369 $93,898 $158,878 12 Saildrone, Inc. 110,561 110,561 25,205,000 38,596,000 0 $13,391,000 $29,333 $2,812 $8,327 $93,898 $134,370 20 Auctions by the Bay 65,547 63,972 506,000 11,533,000 0 $11,027,000 $24,155 $2,316 $6,857 $55,668 $88,995 21 St George Spirits 66,014 65,000 4,142,000 10,903,000 0 $6,761,000 $14,810 $1,420 $4,204 $56,065 $76,499 22 Faction Brewing, Proximo Distillers 64,944 64,944 4,777,000 11,630,000 0 $6,853,000 $15,012 $1,439 $4,261 $55,156 $75,868 24 Rockwall Wine, Complete Coach Works 63,000 55,865 3,204,000 12,482,000 0 $9,278,000 $20,324 $1,948 $5,769 $53,505 $81,546 25 Alameda P Bev (BRIX), Urban Cellars 54,450 36,319 997,000 9,568,000 0 $8,571,000 $18,775 $1,800 $5,329 $46,244 $72,148 400A Google [Navy held w/FOST] 65,400 65,400 678,000 11,500,000 0 $10,822,000 $23,706 $2,273 $6,729 $55,543 $88,251 400 mostly vacant [Navy held w/FOST] 192,112 5,000 0 11,000,000 0 $11,000,000 $24,096 $2,310 $6,840 $163,158 $196,404 41 Wrightspeed, Inc [Navy held w/FOST] 109,293 109,293 1,096,000 19,681,000 0 $18,585,000 $40,711 $3,903 $11,556 $92,821 $148,991 Subtotal 901,882 686,915 $258,018 $24,735 $73,241 $765,957 $1,121,951 Other Leased Buildings
19 Office / Control Tower 20,881 20,881 1,944,000 7,444,000 0 $5,500,000 $12,048 $1,155 $3,420 $17,734 $34,357 92 Food Bank 89,018 89,018 0 13,000,000 0 $13,000,000 $28,477 $2,730 $8,083 $75,602 $114,892 525 Auctions by the Bay 23,208 23,208 2,019,000 4,011,000 0 $1,992,000 $4,364 $418 $1,239 $19,710 $25,731 29 Dreyfuss Capital Partner, Lava Mae 19,480 16,810 138,000 1,000,000 0 $862,000 $1,888 $181 $536 $16,544 $19,149 Subtotal 152,587 149,917 $46,777 $4,484 $13,278 $129,590 $194,129 Vacant Buildings, mostly unleasable
BEQ 498,646 0 0 25,500,000 0 $25,500,000 $55,858 $5,355 $15,856 $423,494 $500,563 Building 114 / former 101 76,895 0 0 9,000,000 0 $9,000,000 $19,715 $1,890 $5,596 $65,306 $92,507 Bldg 7/15/115/130/116 64,164 0 0 6,500,000 0 $6,500,000 $14,238 $1,365 $4,042 $54,494 $74,139 Chapel and Theater 34,927 0 0 4,500,000 0 $4,500,000 $9,857 $945 $2,798 $29,663 $43,264 Subtotal 708,990 0 0 45,500,000 0 45,500,000 $99,669 $9,555 $28,292 $572,956 $710,472 Total 1,763,459 836,832 $404,464 $38,775 $114,811 $1,468,503 $2,026,552 Reuse Area Infra Phase 1 186,188 109,293 1,096,000 28,681,000 0 27,585,000 $60,426 $5,793 $17,152 $158,127 $241,498 Reuse Area Infra Phase 2 616,965 404,587 32,772,000 112,834,000 0 80,062,000 $175,378 $16,813 $49,783 $523,980 $765,954 Reuse Area Infra Phase 3 695,151 193,916 9,425,000 59,566,000 0 50,141,000 $109,835 $10,530 $31,178 $590,383 $741,925 (1) Estimated AV based on mid-point of estimated sales price range. (2) CFD special tax commences at the earlier of five years after sale or issuance of a temporary or final certificate of occupancy.

Assessed Value Incremental Revenue Following Sale
Existing Est w/sale(1)
Improvmts
after sale Net Incr.

Prepared by: Keyser Marston Associates
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Part C
Summary Data on Existing Lease Income

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Table C-1
Existing Lease Income and Budgeted Uses
Alameda Point
City of Alameda, CA
A. Estimated Net Income From Leases
Commercial $11,565,000
Table C-2, includes pending leases
Residential $1,096,000 Table C-3
Total $12,661,000 Net of PM/Maint by RiverRock and budgeted leasing commissions B. Use of Existing Lease Income (Based on 22-23 Mid-Cycle Budget) 1 Lease Revenue Bond Debt Service $873,000 continues to 2033 2 Base Reuse
Professional Services $2,150,000 Environmental, Engineering, CFD, Economic consulting, Predator Mgmt, Loan Legal $440,000
Less: Leasing Commissions ($550,000) Budgeted amount, varies based on leasing. Deducted from net lease income.

Professional service, legal, excl leasing $2,040,000
Base Reuse Staff - Leasing $328,000 Management and oversight of leasing, property management.

Base Reuse Staff - All Other $645,000
Subtotal $973,000
Cost Allocation $551,000
Office Expense $59,000
Subtotal $3,623,000 on-going while base reuse in progress 3 Economic Development
Staff $317,000
Cost Allocation $39,000
$356,000
4 Public Works
Water, utilities, maint supplies & services $1,835,000
88% of budgeted expense is for water / EBMUD agreement
Public Works Staff Costs $512,000
Cost Allocation $126,000
$2,473,000
Total Operating Expenses & Debt $7,325,000
C. Lease Income Available for Capital $5,336,000 $1.4 M budgeted for big whites painting in 22-23 Prepared by: Keyser Marston Associates
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Table C-2
Property Management Costs and Allocation by Type
Alameda Point
City of Alameda, CA
%gross
Amount Note
Vacant
Buildings
Leased
Buildings
General
AP-wide

MARAD &
NW
Territory
Vacant
Buildings
Leased
Buildings
General
AP-wide
MARAD
& NW
Territory
Gross Rental Income 100% $14,906,798 assumes Bldg 11, 19, 39 leases includes NW territories revenue
River Rock Budget for FY 2022-23
RiverRock staff costs 6% $895,854 $44,793 $716,684 $134,378 $0 5% 80% 15% 0% RiverRock Mgmt fee 1% $220,860 $11,043 $176,688 $33,129 $0 5% 80% 15% 0% Maintenance staff 1% $176,758 $123,730 $53,027 $0 $0 70% 30% 0% 0% Maint supplies & repair 1% $86,862 $60,804 $26,059 $0 $0 70% 30% 0% 0% Trash - Maintenance 0% $5,300 $3,710 $1,590 $0 $0 70% 30% 0% 0% Asphalt, fencing, signage 1% $112,040 $67,224 $44,816 $0 $0 60% 40% 0% 0% Cleaning / Janitorial 0% $32,680 $1,634 $26,144 $4,902 $0 5% 80% 15% 0% Landscaping 2% $228,094 $144,867 $83,227 $0 $0 64% 36% 0% 0% Trash - landscaping 0% $54,000 $34,296 $19,704 $0 $0 64% 36% 0% 0% Electric 1% $147,780 $147,780 $0 $0 $0 100% 0% 0% 0%
Illegal dumping 0% $63,000 $0 $0 $63,000 $0 0% 0% 100% 0% Security 2% $349,926 $0 $0 $349,926 $0 0% 0% 100% 0%
Life Safety 1% $137,716 $96,401 $41,315 $0 $0 70% 30% 0% 0% Port Operations Expense 1% $160,080 $0 $0 $0 $160,080 0% 0% 0% 100% assume 60% reduction w/o MARAD Pier 2 trash 0% $36,000 $0 $0 $0 $36,000 0% 0% 0% 100%
NW territories commissions $85,200 $0 $0 $0 $85,200 0% 0% 0% 100% Total Expense 19% $2,792,150 $736,282 $1,189,253 $585,335 $281,280 Percent of Expenses 100% 26% 43% 21% 10%
Percent of Gross Revenue 19% 5% 8% 4% 2%
Leasing Commissions $550,000 consistent with 22-23 budget Net Commercial Income 78% $11,564,648
after property management costs and leasing commissions.

Source: RiverRock 22-23 budget .

Estimated Allocation by Cost Center
Percentage (1)
Estimated Allocation by Cost Center
Total Dollars
(1) Percentage allocations among vacant, occupied, Alameda Point-wide, MARAD and Northwest Territories costs are approximate and have been estimated by KMA based on supporting detail and discussions with River Rock.

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Table C-3
Residential Property Net Income
Alameda Point
City of Alameda, CA
No. Annual Annual
Units %gross Amount Per Unit
Rental Income
Ranch Homes 29 $949,000 $32,724
Big Whites 15 $589,000 $39,267
Townhomes 17 $398,000 $23,412
Vacant or designated for emergency housing 6
$0 $0
Gross Rent 67 $1,936,000 $28,896
water assessment $68,400 $1,021
Less: concessions ($48,000) ($716)
Less: vacancy / credit loss allowance ($96,800) ($1,445) Effective Gross Income 100% $1,859,600 $27,755
Operating Expense, Maintenance, Property Taxes
Maint, repair, landscaping 11% $213,650 $3,189
Yard maintenance 8% $143,000 $2,134
Management Fees 8% $148,768 $2,220 modified to reflect contract fee @8% gross Property Tax 6% $108,000 $1,612
Other Admin expenses 1% $22,700 $339
Unit turnover costs 2% $42,000 $627
Capital replacements 5% $85,800 $1,281
41% $763,918 $11,402
Net Residential Income 59% $1,095,682 $16,353
Prepared by: Keyser Marston Associates
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Table C-4
Building Inventory and Rental Income by Location and Property Category Alameda Point
City of Alameda, CA
Est of Allocable Estimated
Building Area Vacant Leased Area % Gross PM and Maint. Net Location and Property Category Sq.Ft. Sq.Ft. Sq.Ft. Leased Annual Rent Expenses (1)
Income

1. Reuse Area
Hangars 901,882 214,987 686,895 76% $5,977,925 $784,992 $5,192,933 Other Leased Buildings 152,587 2,670 149,917 98% 649,171 $132,674 $516,497 Vacant 708,990 708,990 0 0% 0 $193,017 ($193,017)
Incomplete Hazardous Mitigation 971,661 958,399 13,262 1% $99,855 $274,311 ($174,456) Subject to Tidelands Trust 184,494 78,494 106,000 57% $953,235 $134,723 $818,512$ Subtotal 2,919,614 1,963,540 956,074 $7,680,186 $1,519,717 $6,160,469

2. Enterprise District / East Side Seaplane Lagoon Development Area Leased Buildings 373,947 0 373,947 100% $3,157,356 $391,550 $2,765,806 Vacant 143,968 143,968 0 0% $0 $39,194 ($39,194)
Incomplete Hazardous Mitigation 312,766 60,662 252,104 81% $1,807,536 $267,455 $1,540,081 Subject to Tidelands Trust 78,868 8,480 70,388 89% $743,686 $82,073 $661,613 Subtotal 909,549 213,110 696,439 $5,708,578 $780,272 $4,928,306

3. West Midway / Site A Project Sites 563,703 527,859 35,844 6% $162,426 $175,546 ($13,120)

4. Public Use and City Facilities 234,277 $66,300 $0 $66,300

5. Northwest Territory and MARAD / Port Operations $1,018,000 $281,280 $736,720

6. Water / Utility Reimbursements $271,308 $0 $271,308

7. General AP-Wide Costs n/a $585,335 ($585,335)
Total 4,627,143 2,704,509 1,688,357 $14,906,798 $3,342,150 $11,564,648 Note: Includes lease income from pending leases for Buildings 11, 19 and 39.

See Table C-5 for building-level detail.
(1) See Table C-2 for basis for allocation of costs. Includes estimated leasing commissions consistent with Table C-2.

Prepared by: Keyser Marston Associates
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Table C-5
Existing Rent Detail by Building
Alameda Point
City of Alameda, CA
Lease Lease
Building Leased % Or last Expire Max w/
Bldg No Tenant/Description Sq.Ft. Sq.Ft. Leased FMV adj yr Date Options $/SF/Mo Annual Note

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1. Reuse Area
Large Hangars and Aircraft-Related Buildings
11 Pending 110,561 110,561 100% 2022 2032 2032 $0.95 $1,260,000 proposed terms 12 Saildrone, Inc. 110,561 110,561 100% 2017 2027 2032 $0.92 $1,220,593 Rent per 2022 amendment 20 Auctions by the Bay 65,547 63,972 98% 2012 2022 2032 $0.46 $350,568 fair market reset at option 21 St George Spirits 66,014 65,000 98% 2016 2026 2031 $0.64 $496,831 3% rent adjustments for renewal term 22 Faction Brewing 64,944 32,500 100% 2018 2028 2048 $0.84 $327,730 fair market reset at options 22 Proximo Distillers 32,444 2014 2024 2034 $0.42 $163,800 24 Rockwall Wine 63,000 40,868 89% 2018 2023 2023 $0.76 $372,808 FMV adjustment in 2018 24 Complete Coach Works 14,977 2015 2020 n/a $0.92 $165,504 currently MTM 25 Alameda P Bev (BRIX) 54,450 18,159 67% 2014 2024 n/a $0.87 $190,079 25 Urban Cellars 18,160 2016 2026 2031 $0.58 $127,155 fair market reset at renewal option 400A Google [Navy held w/FOST] 65,400 65,400 100% 2016 2023 2035 $0.76 $599,468 fair market reset at options, not yet transferred. 400 Mostly Vacant [Navy held w/FOST] 192,112 5,000 3% $0.50 $30,000 Not yet transferred, mostly vacant 41 Wrightspeed, Inc [Navy held w/FOST] 109,293 109,293 100% 2015 2022 expired $0.51 $673,388 MTM rent appears to trend from 2014 lease.

Subtotal 901,882 686,895 76% $5,977,925
Other Leased Buildings
19 Pending 20,881 20,881 100% 2022 2027 2032 $1.50 $375,858 proposed terms 92 Food Bank 89,018 89,018 n/a to be released by APC per DDA 525 Auctions by the Bay 23,208 23,208 100% 2017 2023 2033 $0.78 $216,876 fair market reset at option 29 Dreyfuss Capital Partner, Lava Mae 19,480 16,810 86% $0.28 $56,437 Subtotal 152,587 149,917 98% $649,171
Total Leased Buildings 1,054,469 836,812 79% $6,627,096 Vacant Buildings (most unleasable in current condition) 2, 3, 4 BEQ 498,646 Unleasable.
114 76,895 collapsed roof, likely to require demolition 16 39,130 Unleasable
18 25,747 formerly Auctions by the Bay
7 multi-suite lab/office 15,072
Other Vacant Buildings (<10,000 SF) 53,500
708,990 0 0% $0
Existing Rent
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Remaining hazardous materials
42 Pacific Fine Foods 2,969 2,969 100% $0.77 $27,568
43 Steeltown Winery, LLC 10,500 5,220 50% $0.63 $39,290 44 Wonky and Wonky Kitchen 5,073 5,073 100% $0.54 $32,997 5 Building 5 910,382 Not yet transferred
62 42,737 Unleasable
971,661 13,262 $99,855
Subject to Tidelands
39 Group Delphi 110,139 106,000 96% $0.75 $953,235 Subject of current RFP, offered at $0.95/SF 32 56,640 Unleasable, not yet transferred
10 17,715 Unleasable, not yet transferred
184,494 106,000 $953,235
Reuse Area Totals 2,919,614 956,074 7,680,186
Note: Not including buildings 8, 9, 17, 91, 23 and 40 which are in private or school district ownership.

Prepared by: Keyser Marston Associates
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2. Enterprise District and East Side Seaplane Lagoon
Leased Buildings
168 Maritime Administration 117,419 88,782 100% ?? 2026 $0.48 $508,629 168 Kai Concepts 28,637 2016 2022 n/a $0.62 $213,052 rent adjusted in 2019, may now be MTM 338 Container Storage, Inc (incl Bldg 608) 53,000 53,000 100% 2005 2021 $1.05 $668,367 may now be MTM 169 Williams Sonoma 86,710 43,355 100% MTM $0.50 $260,130 169 Pacific Pinball 43,355 2016 2023 2024 $0.37 $189,916 166 Power Engineering Construction 55,471 55,471 100% 2015 2025 2035 $0.57 $376,612 fair market reset at renewal options 616 Astra Space 26,606 26,606 100% MTM $0.82 $262,560
397 Astra Space Inc 18,585 18,585 100% MTM $0.70 $156,732 612 Advanced Roofing Service 4,000 4,000 100% $0.82 $39,540 163 Sustainable Technologies 12,156 12,156 100% $0.25 $36,000 Site1 NRC / Land $355,980 small portion is Tidelands
Site2 Amber Kinetics, Inc $45,600
Site3 KAI Concepts, LLC $44,238
Total Leased Buildings 373,947 373,947 $3,157,356
Vacant Buildings
530 82,251
410 34,668
542 15,563 Unleasable
Other Buildings <10,000 SF 11,486
Total Vacant Buildings 143,968
Remaining hazardous materials
360 Astra Space 179,070 179,070 100%month to month $0.55 $1,178,820 month to month 414 Sustainable Technologies 1,640 1,640 100%
Site4 Alameda Point Storage / Land MTM $192,720
372 18,513 Unleasable
14 Navigator Systems 61,753 31,394 51% $0.31 $118,668
170 Shimmick Corporation 51,790 40,000 77% month to month $0.66 $317,328 month to month Total with remaining remediation 312,766 252,104 $1,807,536 Prepared by: Keyser Marston Associates
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Subject to Tidelands
167 Matson Navigation Company 53,785 53,785 100% 2015 2025 2035 $0.66 $423,442 fair market reset at renewal options 15 NRC 16,603 16,603 100% MTM $1.13 $224,244
557 Vacant Space 5,780
292 Vacant Space 2,700
Site5 Astra Space Inc, Pier $60,000
Site6 AC Hornet Foundation $36,000
Subtotal Tidelands 78,868 70,388 $743,686
Enterprise / East of Lagoon Totals 909,549 696,439 $5,708,578

3. West Midway and Site A Project Sites
35 Small Size Big Mind 2,764 2,764 100%
$1.59 $52,725
78 Vacant Space 17,700 0 0%
113 Vacant Space 13,115 0 0%
117 Vacant Space 106,403 0 0%
118 Vacant Space 170,850 0 0%
152 Vacant Space 106,949 0 0%
162 Vacant Space 107,029 0 0%
459 Turnkey Show Productions 11,493 8,080 70% $0.31 $30,134 522 City of Alameda 2,400 0 0%
Site7 Rain Defense 25,000 25,000 100% $0.27 $79,568
West Midway / Site A Totals 563,703 35,844 $162,426
Prepared by: Keyser Marston Associates
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4. Public and Quasi-Public Uses
77 Alameda Naval Air Museum 21,136
75 City of Alameda- Rec & Parks Dept. 24,736
1 City Hall West 48,946
6 Fire Training Facility 39,580 Not yet transferred
60 O Club 29,538
134 Gymnasium 36,959
621 City of Alameda- Rec & Park 5,770
76 Pool 24,736
494 Alameda Police Dept 2,876
385 WETA n/a $66,300
Public and Quasi-Public Total 234,277 $66,300

5. Northwest Territory License Income $1,018,000

6. Utility Reimbursements $271,308
Alameda Point Grand Totals 4,627,143 1,688,357 $14,906,798 Prepared by: Keyser Marston Associates
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Part D
Market Data - Building Values

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Table D-1
Prior Alameda Point Building Sales and Purchase Option Pricing Alameda Point
City of Alameda, CA
Building/Description Year Size SF $/SF/Mo Annual Total $/SF Note Bldg 11 (SRMErnst 4/2022 offer) 2022 110,561 $0.95 $11.40 $22,112,200 $200 5.7% offer price, not completed sale Bldg 11 (SRMErnst 12/2022 offer) 2022 110,561 $0.95 $11.40 $24,876,225 $225 5.1% offer price, not completed sale Building 23 (Natel Energy) 2018 63,656 $0.55 $6.62 $8,000,000 $126 5.3% via 2015 purchase option Building 40 (Bladium) (1) 2017 105,768 $0.42 $4.98 $7,900,000 $75 6.7% via purchase option in 2000 lease, price by appraisal.

Building 21 (St. George Spirits) 2016 66,014 $0.54 $6.48 $8,000,000 $121 5.3% purchase option was not exercised Building 8 (Storehouse) 2016 270,000 $0.41 $4.87 $10,300,000 $38 12.8% via purchase option. Substantial improvements after sale Building 41 (Wright Speed) 2015 109,293 $0.43 $5.16 $8,000,000 $73 7.0% purchase option was not exercised Bldg 91 (SRMErnst) 2015 40,800 $0.45 $5.40 $3,000,000 $74 7.3% via purchase option. Substantial improvements after sale Bldg 9 (SRMErnst) 2015 80,907 $0.45 $5.40 $5,500,000 $68 7.9% via purchase option. Substantial improvements after sale high: $225
low: $38
(1) Indicated rent is based on appraisal conclusion of market rent.

Rent when option
granted (NNN) Price Implied
Cap Rate
Prepared by: Keyser Marston Associates
\\SF-FS2\wp\10\10004\059\Sale vs. lease analysis 1-31-23; 1/31/2023

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Table D-2
Published Cap Rate Surveys
Alameda Point
City of Alameda, CA
Published Cap Rate Surveys
Average
Range Report Date
IRR - Oakland
Class A Industrial 4.50% 2022
Class A flex/industrial 5.5% 2022
RERC Q1 2022
Warehouse 4.10% 2.7 - 6.0
R&D 6.10% 5.0 - 8.0
Flex 6.20% 5.0 - 8.0
PWC - warehouse - pacific region 3.80% Q3 2022
Cap Rate
Prepared by: Keyser Marston Associates
\\SF-FS2\wp\10\10004\059\Sale vs. lease analysis 1-31-23; 1/31/2023

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Table D-3
Warehouse Building Sales
Alameda Point
City of Alameda, CA
Address City Use % office Year Built Sold Size SF Total $/SF 47951 Westinghouse Dr Fremont Manufacturing 20% 1984 2021 82,408 $29,600,000 $359 5.0% 47550 Kato Rd Fremont Warehouse 0% 1973 2021 254,737 $80,008,182 $314 3.5% 42650-42660 Osgood Rd Fremont Warehouse 0% 1999 2021 38,760 $8,200,000 $212 4.0% 23520 Foley St Hayward Warehouse 0% 1976 2021 20,740 $4,417,880 $213 * 4.9% 1514-1586 Zephyr Ave Hayward Warehouse 0% 1994 2022 82,080 $29,017,000 $354 2953-2999 Teagarden St San Leandro Warehouse 23% 1972 2022 60,974 $19,721,847 $323 * 3.7% 3041-3057 Teagarden St San Leandro Warehouse 19% 1974 2022 45,024 $14,878,153 $330 * 3.7% 2106-2150 Edison Ave San Leandro Warehouse 30% 1971 2021 33,000 $4,857,270 $147 * 5.6% 2050-2090 Edison Ave San Leandro Warehouse 0% 1974 2021 31,714 $4,804,139 $151 * 5.6% 2002-2044 Edison Ave San Leandro Warehouse 0% 1976 2021 31,000 $4,239,686 $137 * 5.6% 2933-2939 Alvarado St San Leandro Warehouse 0% 1970 2022 53,805 $12,250,000 $228 2701-2747 Merced St San Leandro Warehouse 0% 1975 2022 78,520 $26,052,029 $332 * 2803-2831 Merced St San Leandro Warehouse 0% 1955 2022 56,630 $16,847,971 $298 * 2450 Alvarado St San Leandro Warehouse 0% 1961 2022 97,195 $20,260,140 $208 * 2480-2488 Baumann Ave San Lorenzo Warehouse 0% 1968 2022 121,686 $34,750,000 $286 1200 Whipple Rd Union City Warehouse 5% 1963 2022 257,500 $65,657,000 $255 Low: $137
High $359
Wtd Avg $279
* denotes allocated sale price from multi-building sale.

Source: CoStar
Price Reported
Cap Rate
Prepared by: Keyser Marston Associates
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Table D-4
R&D and Light Manufacturing Building Sales
Alameda Point
City of Alameda, CA
Address City Use Year Built Sold Size SF Total $/SF
3073 Teagarden St San Leandro Light Manufacturing 1973 2022 22,512 $5,800,000 $258 1387-1401 Marina Way S Richmond Light Manufacturing 1991 2022 64,800 $14,750,000 $228 2161-2179 Harbor Bay Pky Alameda Light Manufacturing 2005 2022 2,293 $850,000 $371 220 Alice St Oakland Light Manufacturing 1950 2021 11,250 $3,525,000 $313 1960-1980 Mandela Pky Oakland Light Manufacturing 1950 2021 194,556 $29,816,789 $153 * 1901 Poplar St Oakland Light Manufacturing 2021 51,823 $7,725,977 $149 * 26291 Production Ave Hayward Light Manufacturing 1972 2021 14,940 $3,518,426 $236 * 16440 Ashland Ave San Lorenzo Light Manufacturing 1962 2021 8,000 $2,395,000 $299 2181-2199 Harbor Bay Pky Alameda R&D 2005 2022 3,200 $1,400,000 $438 1621-1625 Neptune Dr San Leandro R&D 1989 2022 7,700 $2,800,000 $364 1414 Harbour Way S Richmond R&D 1932 2022 478,761 $103,652,000 $217 3114-3120 Diablo Ave Hayward R&D 1978 2022 12,559 $3,136,000 $250 1501 Harbor Bay Pky Alameda R&D 1985 2022 33,339 $8,134,500 $244 474 Roland Way Oakland R&D 1969 2022 11,850 $3,550,000 $300 8.7% cap rt 6603 Shellmound St Emeryville R&D 1996 2021 33,198 $30,214,113 $910 * 6601 Shellmound St Emeryville R&D 1960 2021 29,700 $5,785,887 $195 * 3200 Whipple Rd Union City R&D 2000 2021 89,020 $44,223,831 $497 * 3240 Whipple Rd Union City R&D 2001 2021 91,124 $41,713,391 $458 * 3280 Whipple Rd Union City R&D 2000 2021 76,214 $39,339,227 $516 * 3242-3260 Whipple Rd Union City R&D 2000 2021 65,960 $35,553,552 $539 * 1545 E 12th St Oakland R&D 2002 2021 3,703 $1,100,000 $297 1440 4th St Berkeley R&D 1948 2021 22,043 $10,025,000 $455 21212-21270 Cabot Blvd Hayward R&D 1982 2021 36,730 $9,070,000 $247 1391 W Grand Ave Oakland R&D 1945 2021 35,000 $5,217,938 $149 * 1424 Harrison St Oakland R&D 1984 2021 8,195 $2,500,000 $305 91 Bolivar Dr Berkeley R&D 1984 2021 32,000 $22,588,523 $706 * 2222 3rd St Berkeley R&D 1990 2021 3,000 $1,648,098 $549 * 600-630 Bancroft Way Berkeley R&D 1971 2021 48,038 $39,453,500 $821 26203 Production Ave Hayward R&D 1973 2021 48,038 $6,669,465 $139 * Price
Note
Prepared by: Keyser Marston Associates
\\SF-FS2\wp\10\10004\059\Sale vs. lease analysis 1-31-23; 1/31/2023

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Table D-4
R&D and Light Manufacturing Building Sales
Alameda Point
City of Alameda, CA
Address City Use Year Built Sold Size SF Total $/SF
Price
Note
3447 Investment Blvd Hayward R&D 1972 2021 25,359 $5,972,139 $236 * 3423 Investment Blvd Hayward R&D 1972 2021 20,534 $4,835,833 $236 * 3475 Investment Blvd Hayward R&D 1972 2021 15,352 $3,615,453 $236 * 26034 Eden Landing Rd Hayward R&D 1980 2021 4,709 $1,108,987 $236 * 1350 S Loop Rd Alameda R&D 1987 2021 38,921 $7,400,000 $190 5% cap rt 25861 Industrial Blvd Hayward R&D 1999 2021 76,020 $38,783,431 $510 * 25821 Industrial Blvd Hayward R&D 1998 2021 90,910 $34,258,033 $377 * 25841 Industrial Blvd Hayward R&D 2000 2021 73,920 $30,309,335 $410 * 25801 Industrial Blvd Hayward R&D 1998 2021 42,855 $22,729,340 $530 * 25901 Industrial Blvd Hayward R&D 1999 2021 36,932 $19,081,023 $517 * 25881 Industrial Blvd Hayward R&D 1999 2021 51,449 $9,838,836 $191 * 1410 Harbor Bay Pky Alameda R&D 2021 2021 100,000 $30,980,500 $310 shell condition 1430 Harbor Bay Pky Alameda R&D 2021 2021 92,000 $28,354,500 $308 shell condition 1955 North Loop Rd Alameda R&D 2020 2021 38,528 $11,558,500 $300 shell condition 2065 North Loop Rd Alameda R&D 2020 2021 37,714 $11,314,500 $300 shell condition 2115 North Loop Rd Alameda R&D 2020 2021 35,002 $10,501,000 $300 shell condition 2095 North Loop Rd Alameda R&D 2020 2021 31,748 $8,605,000 $271 shell condition 25001 Industrial Blvd Hayward Flex 1970 2022 190,286 $52,800,000 $277 440 25th St Oakland Flex 2020 2022 5,500 $3,000,000 $545 2607 7th St Berkeley Flex 1941 2021 12,107 $9,708,018 $802 * 26062 Eden Landing Rd Hayward Flex 1980 2021 12,107 $6,010,055 $496 * 26010 Eden Landing Rd Hayward Flex 1980 2021 24,200 $5,699,190 $236 * 3401 Investment Blvd Hayward Flex 1972 2021 20,112 $4,736,451 $236 * 26046 Eden Landing Rd Hayward Flex 1980 2021 16,280 $3,834,001 $236 * Low: $139
High $910
Wtd Avg $323
Prepared by: Keyser Marston Associates
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Table D-5
Assessed Values of Previously Sold Buildings
Alameda Point
City of Alameda, CA
Estimated of the
Building No. Building SF Secured Unsecured Total AV/SF Note 23 63,656 $8,409,360 $1,182,111 $9,591,471 $151 $0 appears to reflect inflation of sale price 40 105,768 $8,470,300 $293,670 $8,763,970 $83 $0 appears to reflect inflation of sale price 8 270,000 $19,189,760 $0 $19,189,760 $71 $30 renovation likely not yet fully reflected 91 40,800 $4,562,167 $5,302,190 $9,864,357 $242 $162 Improvements added AV to roll after sale. 9 80,907 $22,548,814 $9,463,622 $32,012,436 $396 $300 Improvements added AV to roll after sale. average: $98
average excl building 8: $116
With escalation at 3% $130 four years of escalation applied based on timing of prior sales.

FY 2022-23 Assessed Value Improvement AV Added
after Sale ($/SF)
Prepared by: Keyser Marston Associates
\\SF-FS2\wp\10\10004\059\Sale vs. lease analysis 1-31-23; 1/31/2023

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Alameda City CouncilJanuary 16, 2024

Alameda City Council
January 16, 2024