The ‘Clearly Invalid’ and the more realistic ‘Alternative’ analyses consider the condo development in isolation.  They cover only one part of the New Building’s expected income streams.   An analysis that splits the building into mission-related and income-producing slices is a broader, fairer way of assessing the need for zoning variances on the income-producing areas of the New Building.

This spreadsheet shows the Return on Equity for the two major income-producing parts of the development by matching the revenue from condominium sales and school rental against the expense enabling those activities.  The result:

Note 1.  Rounded average of two methods for valuing classroom space captialized at 7%.  Rent for 5,136 sf of New Building space at 2006 rate produces $11,501,000; extrpolation of rent increases from 2004 through 2006 to application date of 2007 produces $12,413,000.

Note 2.  Cost of constructing condos is same as shown on Freeman/Frazier Assoc. submission and on the “Clearly Invalid” Alternative, excluding the imaginary Acquisition Cost, but including additional interest as used in ‘Alternative Analysis’.

Note 3.   Classrooms occupy 28% of the projected Annex (Community Facility) space, so Classroom Costs are 28% of the CF hard Construction costs (McQuilkin Associates “School” quote in  FFA letter dated 8 July ’08) and  soft Construction Costs (Schedule B2, FFA letter dated 24 October ‘07