The discrete component elements of occupancy cost considerations comprising the Occupancy Factor utilized within the analysis for each of the three different scenarios are; Rent, Real Estate Taxes, Personal Property Taxes, Insurance, Depreciation, Amortization, Maintenance, Utilities, Security, and IT Infrastructure cost.
The Rent factor was estimated by performing research on commercial and industrial property listings for lease or for sale in the Palmdale area. These estimated rental costs are utilized within the Government Owned Contractor Operated Facility and the Contractor Leased Facility scenarios. Estimated mortgage cost was utilized within the Contractor Owned Facility scenario.
The Real Estate Taxes and Personal Property Taxes factor is based on the General Tax percentage and any special voter-approved taxes for the Palmdale area. For the Government Owned Contractor Operated Facility scenario, the Real Estate Tax was not applied, as Property owned by the government is exempt from property tax.
The Insurance factor, representing premium expenses for the building and its contents, is comprised by estimated premium costs for an All Risk Policy, including earthquake, flood, boiler and machinery, providing the following specific categories of coverage: 1.) Real and Personal Property 2.) Business Interruption-Gross Earnings 3.) Business Interruption-Loss of Profits 4.) Extra Expense 5.) Accounts Receivable 6.) Leasehold Interest 7.) Rental Value and Rental Income 8.) Royalties 9.) Transit. This factor was applied consistently within all three scenarios.
The Depreciation and Amortization factor was applied within each scenario, proportionately to Plant Property and Equipment information available in the Aircraft Manufacture 10-K. Depreciation and Amortization is increased within the Contractor Owned Facility scenario, due to increased property ownership.
The Maintenance factor considerations include custodial functions, building maintenance, parking and paving costs, and environmental, health and safety costs. This factor was applied consistently within all three scenarios.
The Utilities factor was estimated based upon the average utility costs for similar type facilities of similar size. This factor was applied consistently within all three scenarios.
The Security factor provides for increased Security costs within both the Commercially Leased and Contractor Owned Facility scenarios, as government-provided security reduces the cost of this factor within the Government Owned Contractor Operated Facility scenario.
The IT Infrastructure factor represents cost considerations of Hardware, Software, Labor, and Downtime expenses. This factor was applied consistently within all three scenarios.