6.0. EDSR 11-13-1996 - Laserfiche WebLink

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Business Incubator Program Page 3 0 What are the financial implications of this project? Attached to this memo are the following items: • Business"Incubator Financial Projections • Business Incubator Concept • 1997 EDA Budget • EDA Statement of Financial Activity for month end October 31, 1996 As is indicated on the attached financial projections sheet, the annual cash flow in 1997 is $30,400, and in 1998 is $21,000. Major expenses affecting the start-up operation include approximately $22,500 in lease hold improvements and an additional $3,000 for signage. It is also important to note that staff is projecting in 1997 the average amount of square feet which will be leased is approximately 7,000, out of a total of 15,000 square feet available. Staff is anticipating that in 1998, we will obtain an average 80 percent leased facility (12,000 square feet). The other significant aspect of the financial projections sheet is the bottom line, worst case scenario for EDA financial exposure in this project. As is indicated, if all expenditures in 1997 and 1998 were to be undertaken, and not a single square foot was subleased to tenants, the total out-of-pocket costs to the EDA would be approximately $87,000. This is based upon receiving zero dollars in rent in all of 1997 and 1998. This is probably an unlikely scenario due to the fact that the EDA is proposing to sublease the space for $2.00 per square foot gross, which is approximately$5.00 per square foot below market rate. The initial two year investment for this program will more likely be equal to the annual cash flow as indicated on the financial projections sheet. This indicates an investment of$30,400 in 1997 and $21,000 in 1998. This investment is based upon an average of 7,000 square feet leased in 1997 and an average of 12,000 square feet leased in 1998. It should be noted that the financial projections are also based upon the fact that the EDA can lease the space from the private party at $1.53 per square foot. This figure has yet to be negotiated, and any changes to this figure would affect the annual cash flow.