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29 <br />Potential Costs <br />4.Project Operating Shortfalls: At the time of this study, each of the large recreation <br />projects that are intended to be partially funded by the proposed PFD – 1). Upper Kittitas <br />County Community Recreation Center; 2). Ellensburg Community Fieldhouse; and 3). <br />Kittitas Valley Aquatic Center – have projected operating shortfalls in Year 1.24 Based on <br />information provided by Kittitas County, the proposed PFD has been identified as a as a <br />potential financing partner to support operations amounting to $3.1M annually. Under either <br />of the tested projection scenarios (Conservative and Moderate Scenario), accrued PFD <br />revenues will be sufficient to cover this level of operating funding, in addition to covering its <br />own operating expenses, assuming that the PFD is formed and funded in Q1-2027 and the <br />proposed projects are either under construction, triggering lease or debt service <br />repayments by the Project Sponsors, or operational in 2028. <br />The analysis presented herein is intended to demonstrate the PFD’s cumulative revenues <br />from the proposed 0.2 percent sales tax, if implemented. The PFD may in fact achieve <br />higher revenue accruals if taxable sales occur at a higher rate, as may be anticipated given <br />recent comparable tax performance, or if the proposed projects are phased. At this time, <br />PFD funding contributions to the proposed projects are flexible and can be adjusted over <br />time. Further due diligence by the PFD board of directors is recommended before finalizing <br />any operating subsidy for the proposed projects. Further, the PFD would need to budget <br />additional funds or reserves to recognize the potential for higher operating shortfalls than <br />projected or enter into agreements with other parties ameliorate that risk. <br />5.Costs Incurred by Kittitas County: The County will incur legal costs related to the <br />formation of the PFD. Further, if the County enters into agreements with the City and/or <br />community partners prior to formation of the PFD, or with the PFD after it is formed, this <br />may incur additional costs. <br />24.KITTITAS COUNTY DOCUMENTATION FOR REVIEW OF PFD FORMATION (MARCH 2026)