PROJECT PRO-FORMA INPUT TO CALCULATE ANNUAL
OPERATING COST FOR CALIFORNIA COMPARISON

The Annual Business Operating Cost Pro-forma has been prepared using the following information provided to us on your company
operations. If information was not obtained on a particular operating factor, we have used assumptions based on other similar business
operations. We would be pleased to change your project parameters if these are not correct. The Pro-forma information contains all the
basic data used in the operating cost calculation.

CALIFORNIA COMPARISON
ANNUAL BUSINESS OPERATING COSTS

The annual estimated business operating costs table summarizes the annual cost of labor, utilities and facilities for selected metropolitan areas.
Detailed calculations and source of costs of doing business for labor, utilities and facilities are provided in the following tables, which include costs
such as worker's comp, unemployment insurance, health insurance, gas and electricity, annual real estate (lease or purchase) and taxes.

CALIFORNIA COMPARISON
HOURLY WAGE COMPARISON 

Source: Economic Research Institute, 2013; Local labor market information agencies, 2013.
The detailed hourly wage comparison shows wages for the occupational titles included in the pro-forma, or those most closely related to the occupations provided by the client.
The wage data comes from the Economic Research Institute. The Economic Research Institute compiles data from a large number of both public and private  sources across the United States and Canada to produce wage and cost data. This source is very consistent across geographies and therefore provides a fair comparison of relative wage rates for the operating cost comparison.
The wage rates for each occupation are converted to annual wages, and then multiplied by the number of workers in that occupation based on the pro-forma specifications. The sum of these calculations for all occupations is equal to the total payroll shown in the annual operating cost table.

CALIFORNIA COMPARISON ESTIMATED LEASE, LAND, AND BUILDING COSTS

Source: NAI Global Market Reports, 2013; Means Construction Index, 2014; Local real estate contacts, 2013.

Footnote: Total annual payments are based on purchase and/or land and construction costs and/or lease costs.

This table calculates annual lease costs based on total building square footage and type of building, total construction and purchase costs.
The annual square foot lease rate information for office, industrial and high tech space are from local market reports from major national
brokerages or from interviews with local brokers. Lease rates for each metro area vary by building size for industrial buildings, where there are
six different size ranges. The square feet ranges are 0-4,999, 5,000-19,999, 20,000-39,999, 40,000-59,999, 60,000-99,999, and 100,000 or
more. Lease rates for office buildings are included for suburban and central business district Class A and B office space. There is only one rate
for high tech space. The appropriate annual rate is multiplied by the number of square feet specified in the pro-forma to calculate total annual
lease cost. Purchase costs are from the same source and are calculated in the same fashion.
For new construction, the user must specify the total number of acres, type of building, and number of square feet of built space. Land costs are
also from the Society of Industrial and Office Realtors and vary by four size ranges, 0-2, 2-5, 5-10, and 10 acres or more. Construction costs are
calculated using a base per square foot cost for either standard industrial, office class A CBD, office class B, office suburban or high tech
buildings. This base cost is then multiplied by a city-specific index. The construction cost information is taken from the Means Construction Cost
Indexes, which is a standard guide for cost estimating in the construction industry.
If there is new construction or a building purchase, the annual payment for land and building costs is equal to 12 times the amortized monthly
payment at 0.75 percent monthly interest over 240 months for the sum of land, construction and purchase costs.

CALIFORNIA COMPARISON ANNUAL UTILITY COSTS

Source: Edison Electric Institute, "Typical Residential, Commercial and Industrial Bills", 2013; Energy Information Administration, "Natural Gas Monthly", 2013; Raftelis Financial Consulting, 2012; Various Municipal Utility providers, 2013.

Utility costs include electricity, natural gas, water and sewer. Usage levels for each type of utility are specified in the pro-forma input. Rates for
each usage level for each type of utility are stored in the database. For electricity, the primary source was the Edison Electric Institute, Typical
Residential, Commercial and Industrial Bills. In a few cases, rates for particular utilities were not included in this source, and rate schedules were
obtained directly from providers. For natural gas, the rates are based on per thousand cubic feet costs for natural gas from the Energy
Information Administration, Natural Gas Monthly. For water and sewer, the primary source was the Raftelis Financial Consulting Group, Water
and Wastewater Rate Survey, which is a national survey of water and wastewater charges by city. For cities not included in this survey, rate
schedules were obtained directly from the water provider for the central city in a metro area.

CALIFORNIA COMPARISON PROPERTY TAX COST

Property taxes are calculated for personal property, which is specified as the capital investment amount in the pro-forma information, total land and building
cost in the case of new construction, plus the cost of any purchased buildings. For each metro area there is a tax rate and real and personal assessment
ratios. The product of the tax rate and the assessment ratio is the effective tax rate. The effective rate times the taxable property value is equal to the tax.
The property tax assessment ratios and rates are taken from individual city web sites, and state department of revenue web sites.

Source: Various State Revenue Departments and Tax Commissions, 2013; Local Assessors, 2013.