03-05-07 Special Called Joint Meeting of the La Porte Development Corporation Board of Directors and the La Porte City Council Minutes

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PROSPECTIVE FINANCIAL ANALYSIS V-3 UNDISTRIBUTED OPERATING EXPENSES Undistributed operating expenses are necessary to the operation of the property though not directly chargeable to a revenue-producing department and include Administrative and General, Marketing, Franchise Fees, Property Operations and Maintenance (PaM) and Utilities. Undistributed 0.9 Elltff' Dollars Per A It R "= Items Comparable Hotels Subject Hotel Projections Range Average Stabilized Year Adminstrative and General $3,861 - $6,655 $4,942 $4,600 Marketing $1,729 - $3,697 $2,609 $2,500 Franchise Fee (% of Rooms Rev) (1) 5.6% - 10.5% 8.1% 8.0% POM $2,137 - $3,387 $2,907 $2,900 Utilities $2,258 - $2,742 $2,552 $2,600 (1) All fees related to franchise expense are included in franchise fee, including marketing & reservation fees. Source: PKF Consulting FIXED EXPENSES Fixed expenses are necessary to maintain the property's availability to guests and, except for management fees, do not necessarily vary with performance. Fixed. ~~l': Dollars Per R~ J .~:~ Items Comparable Hotels Subject Hotel Projections Range Average Stabilized Year Management Fee (% of Total Rev) 2.2% - 4.2% 2.3% 3.0% Property Taxes (1) $144 - $1,845 $973 $1,000 Insurance $367 - $1393 $752 $750 (1) Property taxes are based on local taxes at competitive hotels. Source: PKF Consulting RESERVE FOR REPLACEMENT The reserve for replacement provides for the replacement of furniture, fixtures and equipment, as well as certain building finishes and systems. This reserve has been tiered at typical industry levels of 2% of total revenues in the first year, 3% in the second year, 4% in the third year and 5% thereafter. SCHEDULE OF PROSPECTIVE CASH FLOW BEFORE DEBT SERVICE The following schedules reflect the estimate of future operating performance of the subject hotel. The schedules are presented in stated year (inflated) dollars.