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HomeMy WebLinkAboutEDA AGN 05-28-08 Add. Docs. INTEROFFICE MEMORANDUM TO: SCO'IT CLARK: FROM: BRAD SCHAFER SUBJECT: HUSEr PARK PHASE I DEVELOPMENT DATE: 5/28/2008 CC: MIKE BJERKESETT We intend to develop, in conjunction with National Handicap Housing Institute (NHI-II), a two phasc 79-unit senior rcntal property on Outlot B, Huset Park. This is the 1.4 acre parcel located next to the round-a-bout in Phase 1. Phase I will be a 50-unit senior rental building to be built and operating by NIllll. Phase II will be a 29-unit senior rental building built and owned by Schafer Richardson and will be operated and managed by NI-IH1. It is likely tl,at the timeline for the construction of the two phases will be very close togethcr if not sltllultaneous. The two phases will have a velY similar appearance and will look to the casual obsclver to be one building. Parking will consist of a 43-stall surfacc parking lot and 29 underground garage stalls. I will let Mike Bjerkesett of NHI-II describe the exterior look and ftnishes as NtII-II will take the design lead on this project. I will also ask Mil<e to describe Phase 1's interior features and alnenities. The Phase II building will feature 29 one and two bedroom units along with 29 underground parking stalls. '1'he units will average approximately 820 square feet. The ftrst floor will be highlighted by a large community gatllering spacc that will include a ftreplace and small kitchen. Phase II will likely be financed using 4% tax credit housing bonds as Phasc II's projected "market rate" rents will likely meet the 4% Credit's affordability standards. (/) l!: f!:, Cl c ~' ZC <I: III 11:' ::) ~i I I ;;:; ~ !C 2>. '.. t- ''-.:'; ~ i ~ r.r' I I ~ ~:; ," ---...........-.-- ~'i 7' (, -' '''''''-0',-,'''' u_.._ " ~ ,,,:;:,,!) H'~' ,~) ~ '" {- It. ~ '1i1- , w......... Of... ro . .... gl;:~IM ~ , , ii~, \ -r" t --~ ~w-. ~~................ #I< """ f~r,'B" 'f'l ) t~, ' \,,....r'-"^~~v-~ F~-. 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Q).!;(B "oS .9 IT: 5 0 Z . ::> LI- Z a < :2: 0.: 0' u.. Z:>, ...>'" ~8 Z..... w 0.: 0.: a .u.. --' --' <( (J 0- 0' ,...., 0- I, 0- C") -0 , 1 - L() -0 I - --1Er ~ I Z lLl ::I: ~ I~ .~ I I I ~. 0[ lI) w iii' co Oll) .....:2 '00 ~o <.!)~ c;;Z wO 0:= ~:2 1-0 Zu <(. ,<.!)o wz u:J<( (; .0 E '" o 0 Q .~"O .i': "'''' 'c ill lJ).c :J u ~"e ~ g ~2 o,~ ill Q).2- u'-u.c;s Q)QoE~ (St/)o..:52:J 0.0<D=0 :S~tl:t2c2 f.... . -s :;:; c ~ .g. Q 0 Q)E~ >-.!!:! Q. (} ~ Q .o~5 ..:JWU) . . . , '0 C .s C .Q .~ o I o ~ D, '" ii 'c .2 '" o o Q ~ RESUME THE NATIONAL HANDICAP HOUSING INSTITUTE The National Handicap Housing Institute (NHHI) was incorporated in 1975 as a tax-exempt charitable organization providing services related to the development of barrier free housing for physically disabled young adults and seniors. NHHI has developed, co-developed and consulted on the development of 1,703 units of barrier free housing for low income mobility impaired young adults and for Seniors. In addition, NHHI has provided design related services and/or marketing consultation toward the successful development of other units. NHHI owns and manages eleven Section 202/Section 811 barrier free apartment buildings in Minnesota which are fully occupied with substantial waiting lists and has had ownership interests in two others. The Institute has conducted research on barrier free housing design and developed architectural and product specification standards that are functional and affordable. In this regard, model kitchens and bathrooms have been built to test accessibility by disabled people and virtually all brands and models of appliances and building hardware typically used in multi-family housing construction and specifications have been studied for their use by disabled persons. NHHI has also surveyed the housing needs and preferences of handicapped people as well as locational preferences to determine what housing features are needed to overcome problems resulting from specific disabilities. The Institute provides information and referral on the availability of barrier free housing in the Minneapolis/St. Paul, Minnesota area to a major degree and to out-state Minnesota to a lesser degree. Information on various housing assistance programs which handicapped people may be eligible for, as well as design and product information is aiso provided. The Institute has developed the design expertise necessary to assist architects, builders and owners with many of their problems in creating new buildings and adapting and retrofitting older structures to be accessible through interpreting the pertinent codes and making recommendations that meet and, hopefully, exceed them functionally and aesthetically at minimal cost. The Institute has a working knowledge of ADA and the requirements of 503 and 504 of the Rehabilitation Act of 1973 and can assist government and industry in meeting the affirmative action and accessibility requirements demanded by this important federal law. NHHI has shown exemplary capabilities in providing imaginative design solutions which overcome the problem of architectural barriers for the handicapped. 1 The Institute has surveyed many existing rental units and many public buildings to determine the degree of their accessibility to handicapped individuals. This information is circulated to interested individuals through our information and referral services, and staff are available to survey new public and private buildings and homes as they become available to the public and can make accessibility recommendations where necessary in this regard. The Institute has accumulated information on most all organizations (nationwide), agencies and individuals actively engaged in serving the housing needs of disabled persons, as well as other related service needs. Through the use of public service announcements, organizational newsletters, and general exposure of our products and services, NHHI has built a reputation as experts in the barrier free, multi-family housing field. Consequently, the Institute has direct access to thousands of mobility impaired people who need specialized housing design. These resources continue to be used by housing management firms to successfully market barrier free apartment units. NHHI also develops and helps implement special management programs to help building owners and managers to ensure the availability of independent living services for their residents. NHHI has served on advisory boards for Federal, State and Local government concerned and charged with providing services to the handicapped community, and the Institute is regularly called upon by government to give testimony and advice on issues related to handicap design and other services. Board members and staff of NHHI are present or former members of various organizations and groups that serve the handicapped community. Some of these groups are: The Minnesota State Council for the Handicapped, the Metropolitan Council Advisory Task Force on Transportation, the Minnesota Affirmative Action Association, The Minnesota Rehabilitation Association, the National Spinal Cord Injury Foundation, The City of Minneapolis' Human Services Task Force, Hennepin County CETA Advisory Committee, the DVR Ombudsman Project, the National Architectural and Transportation Barriers Compliance Board, the National Center for a Barrier Free Environment and the League of Disabled Voters. Staff of NHHI includes severely handicapped individuals who work regularly in design, housing development, and service provisions for disabled individuals nationwide. Specifically, NHHI's technical design staff responds to all design-related inquires for assistance working with public bodies, private industry, organizations and individuals, providing Code interpretation, facilities surveys, and formal design recommendations for 2 Accessibility to the handicapped within single-family homes, public buildings and private facilities, reviews plans and blueprints for modifications of new construction and renovation to determine Code compliance and functional usability, disseminates information on hardware, equipment and appliances used in modifications of existing facilities, or in new construction to ensure that specified products fulfill the functional use requirements of handicapped individuals. NHHI has programmed and planned several 503/504 Awareness Compliance and Technical Assistance Projects for business and public bodies. NHHI has published two important publications: SURVEY OF HANDICAPPED INDIVIDUAL'S HOUSING PREFERENCES - a study aimed at incorporating adaptability and flexibility in barrier free housing design; and PRODUCT INVENTORY OF HARDWARE, EQUIPMENT AND APPLIANCES FOR BARRIER FREE DESIGN - which is a catalog providing architects, developers and others with the information needed to better select home appliances and equipment for the handicapped. These publications have been circulated to organizations and individuals in all 50 states and several foreign countries. Further, NHHI developed in cooperation with the architectural firm, Hamel, Green & Abrahamson; A Technical Manual, "Barrier Removal for Physically Handicapped Civilian Employees" for the U.S. Army Corps of Engineers, Huntsville, Alabama. DEVELOPED.OWN AND MANAGE NHHI/ASI Bloomington Senior, 50 Units Bloomington Barrier Free Housing 24 Units St. Paul Barrier Free Housing 36 Units Robbinsdale Barrier Free Housing 25 Units Champlin Barrier Free Housing 24 Units Mankato Barrier Free Housing 41 Units Hopkins Barrier Free Housing 24 Units New Brighton Barrier Free 25 Units NHHI-Macomb, Inc. 100 Units NHHI/ASI Capitola, Inc. 25 Units NHHIIASI Davis, Inc. 21 Units NHHIIASI Brooklyn Park, Inc. 23 Units NHHI/ASI Bloomington, Inc., 21 Units Mounds View Supportive Housing, Inc. 3 CONTRACT DEVELOPMENT Developed/Own and Manage The Meadows Apartments, a 50 unit building designed for occupancy by low income Seniors in Bloomington, Minnesota. Secured construction financing from the U.S. Department of HUD in excess of $5,500,000. Also secured $500,000 in Hennepin County HOME funds. Secured land write-down funds of approximately $650,000 from the City of Bloomington. Developed NHHI Brooklyn Park, Inc., a 23-unit barrier free apartment building for low- income persons with physical disabilities in Brooklyn Park, Minnesota. Secured construction funds from U.S. Department of HUD, the Minnesota Housing Finance Agency, Hennepin County HOME funds and Federal Home Loan Bank funds totaling $1,742,800. Obtained local approvals including re-zoning and conditional use permits. Selected and assisted architect in designing the overall development and obtained contract bids from local contractors. Observed construction and supervised property management staff in marketing and rent-up. Continue to supervise property management. Developed NHHIIASI Mounds View, Inc, a 20-unit barrier free apartment building for low -income persons with physical disabilities in Mounds View, Minnesota. Helped secure funds as co-applicant with ASI totaling $1,822,200 from the U.S. Department of HUD, the Federal Home Loan Bank and the Minnesota Housing Finance Agency. Obtained local approvals including re-zoning and building code variances necessary for the disabled residents. Observed construction and supervised property management staff in marketing and rent-up. Continue to supervise property management. Developed NHHI/ASI Bloomington, Inc., a 21 unit barrier free apartment building for low-income persons with physical disabilities in Bloomington, Minnesota. Secured $1,764,200 in financing from the U.S. Department of HUD, the City of Bloomington and Hennepin County HOME funds. Obtained re-zoning and determined the presence of and supervised the clean-up of diesel range organics present from underground storage tanks. Selected and assisted the architect in designing the overall development and obtained contract bids from local contractors. Observed construction and supervised property management staff in marketing and rent-up. Continue to supervised property management. Development Consultant to Accessible Space Incorporated for a 15 unit barrier free apartment building for low-income persons with physical disabilities in Rochester Minnesota. Helped secure $1,750,000 from the U.S. Department of HUD, the Federal Home Loan Bank and the Minnesota Housing Finance Agency. Obtained re-zoning from the City. Selected and assisted the architect in designing the overall development and obtained contract bids from local contractors. Observed construction. Developed ASI Shakopee, Inc., a 23 unit apartment building for low-income persons 4 with physical disabilities in Shakopee, Minnesota. Helped secure $1,725,200 from the U. S. Department of HUD, the Federal Home Loan Bank sufficient to construct the building. Obtained local approvals for re-zoning and conditional use permits. Develop NHHIIASI Senior Bloomington, Inc., a 50 unit apartment building for low- income seniors in Bloomington, Minnesota. Co-applicant in securing $5,500,000 from the U.S. Department of HUD for construction and rent subsidies for five years. Development Consultant to ASI Austin, Texas, Inc. in Austin, Texas for a 24 unit barrier free apartment building. $1,698,500. Development Consultant to San Antonio Supportive Housing, Inc. in Live Oak, Texas for a 25 unit barrier free apartment building. $1,640,500. Development Consultant to Baytown Supportive Housing, Inc. in Baytown, Texas for a 25 unit barrier free apartment building. $1,476,100. Development Consultant to ASI Helena, Inc., in Helena, Montana for a 25 unit barrier free apartment building. $1,538,300. Development Consultant to Memphis Supportive Housing, Inc. in Memphis, Tennessee for a 24 unit barrier free apartment building. $1,387,170.00 Development Consultant to Hillcrest Apartments in Stillwater, Minnesota for a 24 unit barrier free apartment building for physically disabled young adults. $1,583,600.00 Development Consultant to ASI-Carson City, Inc. in Carson City, Nevada for a 24 unit barrier free apartments building. Development Consultant to ASI-Great Falls, Inc., in Great Falls, Montana for a 24 unit barrier free apartment building. Development Consultant to ASI-Willmar, Inc., in Willmar, Minnesota for a 22 unit barrier free apartment building. Development Consultant to ASI-Duluth II, Inc., in Duluth, Minnesota for a 25 unit barrier free apartment building. Development Consultant to ASI-Billings, Inc., in Billings, Montana for a 25 unit barrier free apartment building. Development Consultant to ASI-Las Vegas II, Inc., in Las Vegas, Nevada for a 25 unit barrier free apartment building. Development Consultant to ASI-Marshall, Inc., in Marshall, Minnesota for a 25 unit barrier 5 free apartment building. Development Consultant to ASI-Minot, Inc., in Minot, North Dakota for a 25 unit barrier free apartment building. Development Consultant to Prairie View Apartments in Austin, Minnesota, for a 24 unit barrier free apartment building. Development Consultant to William Raggio Plaza in Reno, Nevada for a 21 unit barrier free apartment building. Development Consultant for ASI-Spokane, Inc., in Spokane, Washington for a 21 unit barrier free apartment building. Development Consultant to West Apartments, for 24 units in Burnsville, Minnesota. Development Consultant to B.C. of Rochester, Inc. for a 6 unit group home in Rochester, Minnesota. Development Consultant to Quarry Heights Apartments in St. Cloud, Minnesota for a 24 unit apartment building. Development Consultant to Carole Haynes Apartments for a 24 unit apartment in Las Vegas, Nevada. Development Consultant to Eagle Watch Estates in Missoula, Montana for a 24 unit barrier free apartment building. Development Consultant to Dewey Apartments for a 18 unit apartment building in Jamestown, North Dakota. Development Consultant to Superior View Apartments for a 24 unit apartment building in Duluth, Minnesota. . Development Consultant to Moses Residence for an eight unit group home in Grand Rapids, Minnesota. Development Consultant to Northern Lights Apartments for a 25 unit barrier free apartment building in Brainerd, Minnesota. Development Consultant to Oakridge Apartments for a 26 unit barrier free apartment building in Rochester, Minnesota. Development Consultant to the Oakridge Apartments for a 28 unit barrier free apartment in Rochester, Minnesota. 6 Development Consultant to the Cooperage Apartments for a 14 unit apartment in Red Wing, Minnesota. Development Consultant to Winona Apartments for a 14 unit apartment building in Winona, Minnesota. Development Consultant to Winston Court for a 18 unit barrier free apartment building in Hibbing, Minnesota. Development Consultant to Newbrige Apartments for a 41 unit apartment building in Rochester, Minnesota. Co-Develop Bossen Terrace Apartments for a 66 unit townhomes in Minneapolis, Minnesota. Co-Develop Near North Village, a 154 unit apartment building in Springfield, Illinois. Co-Develop Seward Square Apartments, an 81 unit apartment building in Minneapolis, Minnesota. Co-Develop Lewis Park Apartments, a 103 unit apartment building in St. Paul, Minnesota. Co-Develop 2100 Bloomington Court, 90 unit apartment building in Minneapolis, Minnesota. 7 DESIGN CONSULTING-CLIENT LIST PARTIAL LISTING GOVERNMENT FACILITIES City of Duluth City of Brooklyn Center U. S. Army Corps of Engineers U.S. Department of Defense Sandstone HRA Minneapolis HRA Sl. Paul HRA Bloomington HRA Minneapoiis Armory Stillwater Prison State Capitol Cafeteria City of Sl. Paul Detoxification Center Veteran Administration Hospital Moorhead Schools Center for Education for Non-Traditional Students Red Wing Minnesota ARC Fond Du Lac Indian Reservation Kasson, Minnesota Alton, Minnesota Preston, Minnesota Hennepin County City of Fridley City of Coon Rapids Dade County HUD, Miami, Fla. Worthington, Minnesota Washington County Rosemount, Minnesota Moundsview Schools Inver Grove Schools CHURCHES Luther Seminary Sl. Lawrence Church Chester Park Church Sl. Mary's Greek Orthodox Como Park Church Gloria Deli Church Colonial Park Church Columbia Heights United Methodist Church PRIVATE CORPORATIONS Pillsbury Unisys Sabathani Building General Mills Playwrights Lab - Historical Society Fluidine Texas Terrace Nursing Home Group Home - Wellsprings Honeywell 8 MEDICAL FACILITIES Waconia Nursing Home Sister Kenny Institute Midway Hospital Angles Nursing Home Mercy Medical Center Mounds Park Hospitai Courage Center U of M Hospital MISCELLANEOUS Radisson Hotels Hyatt Hotels State Fair Grounds Anoka County Fair Grounds Mower County Fair Grounds Centro Cultural Chicano MESA Midwest Challenge Girl Scout Council Lewis Park Apartments Seward Square Apartments 2100 Bloomington Apartments Bossen Terrace Apartments Ataxia Foundation Apartments Calhoun Beach Club Grasslands Apartments Colorado Housing Finance Agency Near North Village Apartments Barrier Free Living, Inc. Petrie Development Corp. Realty Services Companies Pembco, Inc. Chafoulias Companies, Inc. Hamel, Green & Abrahamson Design Through Research, Inc. Miller, Hanson, Westerbeck, Berger, Inc. Accessible Space Apartments 9 '" 0 0 0 '" 0' 5' ..,. '" o. 0 l() 0 N (J) '" a. f'- 0 '" ":. N ~ c: 05 f'-' 0 0 0 ~ "'. co co N CD N ~ N N N ci '" ~. ~ ~ ~ ~ ~ ~ ~ ~ <J7 <J7 ~ "tl Q) ~ ':; 0- Q) 0:: "' '" "' c Cl c 0 -0 C "' 0 .in " .~ c .in '" ~ 0 "' " .S (/) - 'in " " 0" '" C U; 0 "' " " "tl " c 0 0 ~ c U " 0 0 0 "' '" c 0 Q) U 0) '" - 0 " - c Cl '" 0 LL '" Q) S c 0 U; 0 -0 '" 'S; U u n: "' 0 c '" 0 0 (/) -0 "" iil c '6 - '" -0 0 -' <( f- / L() J'- CD ~ ..... .... '" ~ ..... ~ 0 <J) '" '" N CD 0 .... 0 ~ ~ 0 (J) 0 0 <6 .... 0 0 <6 oJ 0 ..... N L() .... ~ N N ~ <F> <F> <F> <F> cD <F> <F> L() J'- N ~ ..... .... '" ~ ..... (J) 0 ~ (J) N Q) N 0 0 Ul CD .... ..... .... ~ ~ 0 0 Ul (J) 0 r-.: <6 Q. 0:5 r-.: ::I <6 ;: ..... ~ CD '" N <F> ~ N N <F> <F> tn <F> e <F> e cD .i:' 'C ...J <F> C3 Co - E ~ Q) e Co ~ .... e "'C Q) 0; Q) ::I > ~ - ro Q) 0 ~ Q) 0 > ~ c CD Q) '" "'C ~ l: "0 Q) X .J::: Q) Q) ~ Q) Q) '" Cf) X D- O> Ul & Ul 0 I- '" 0 0 Ul ~ l- e Q; N Ul Q) ro 0 Co Q) ro Ul x - 0 0 e > 0 x -0 Ul '" 0 ~ Q) '" <( l- I- G G 0.. 0 G l- I- ~ COLUMBIA HEIGHT SENIORS HOUSING PROJECT PROPOSED WORKOUT PLAN AND TAX ABATEMENT REQUEST Summary: New Perspective Senior Living (NPSL) is proposing a workout plan that requires a tax abatement program to revive the development of the Columbia Heights seniors housing project located on the east side of Hart Boulevard, 170 feet north of 37th Avenue NE, Columbia Heights, Minnesota 55125 with legal description as Lot 1, Block 1, Hart Lake Addition to Anoka County. Company Overview: NPSL is a developer, owner, and operator of seniors housing in the Midwest. NPSL is a mission driven organization committed to helping seniors preserve their independence as long as possible and age with dignity. We have 9 communities located in Minnesota, Wisconsin, Iowa and Illinois. We serve the needs of seniors across the congregate, assisting living and memory care/Alzheimer's spectrum. The company was founded in 1998 and has successfully financed, developed or acquired seniors housing communities totaling over $60 million in value. Our current portfolio is generating over $15M in revenue annually. A more detail summary of the companies experience can be found at the end of this proposal. THE WORKOUT PLAN Current status: the development of 52 units of seniors housing lead by Comforts of Home has ceased to move forward. . Financing has fallen through and construction has been halted for over 6 months. The site currently has improvements on it totaling $1 .2M consisting of a parking garage, elevator shaft and some site work. . At this point it is our opinion after conducting due diligence over the last 2 months that the existing principals involved in the transaction are unable to move things forward on their own. . It is also our opinion that the costs associated with the deal being delayed, the underground structure and site work all significantly impair any developer's ability to successfully bring this project to completion. In total we believe $1.1 M in savings need to be found to ensure the project is completed and is in a strong financial position to deliver on its promise to the future residents. Proposed project: we propose the acquisition of the land/improvements and the development of a 76 bed seniors housing project consisting of 44 assisting living and 32 memory care beds. This can be accomplished within the confines of the existing plans that have been approved but it may also involve the 151 floor footprint being slightly larger. We have validated the market demand with an expert 3rd party research firm. NPSL believes in serving the needs of all seniors in the community. As a result our plan includes the allocation of 10-20% of the beds of this project be set aside for elderly waiver Medicaid participants. The workout plan: We are in active discussions (either directly or indirectly) with all parties that have a stake in the deal and have indications on the terms they are willing to accept for the sake of moving things forward. . Indication from the bank leads us to believe they will accept repayment of their principle in full and forgiveness of back due interest expense which results in $190K of savings. . Given his obligations we believe Brian Winges of Comforts of Home will be willing to give up his equity interest in project for relief from his financial obligations. This results in $90K in savings. . We have indications from VSI Construction and its subcontractors that they are willing to accept 75c on the dollar for the existing $1.2m of improvements. This results in $288K in savings. . NPSL acting as the developer will forego its typical 3K per unit developer lease up fee. This results in $228K in savings. Summary Project Cost and Savings Required Gross Project Cost Land Cost Concessions Building Cost Concessions Developer Fee Concessions $11,401,049 ($280,000) Bank contributes 190K, Brian Winges 90K ($287,750) VSI and subs take 75c on the dollar ($228,000) Developer foregoes lease up fee Project Cost Target Project Cost Addition savings required $10,605,299 $10,283,809 ($321,490) Funded through tax abatement Total Savings ($1,117,240) . This leaves us with a $320K shortfall. We are looking to the city to help us bridge this gap with a tax abatement program. The table below illustrates the estimated tax income to the city. We are proposing an 80/20% developer/city split which results in the city earning roughly the same amount it has been historically. An 8-] 0 year tax abatement period would deliver the necessary savings. The targeted project is cost drives a 12% return on equity for our investors and is the minimum return we can offer to successfully raise the funds. See table below and on following page. Tax Forecast Assessed Value Tax Rate Total Tax City % Share City Tax Low $6.270.875 1.40% $87,792 40% $35,117 Proposed Developer/City Splits Developer 80% $28,094 City 20% $7,023 Prior Taxes on Movie Theatre Total $25,921 City Share 40% $10,368 High $6,270,875 2.00% $125,418 40% $50,167 $40,134 $10,033 $25,921 $10,368 Lighthouse at Columbia Heights ~ Deal Analysis Financial Information 20011-09 2009.10 201lJ.ll 2011.12 2012.13 Revenue construction 1,605,633 3,234,655 3,745,553 3,857,920 Expenses year (1,387,001) (2,193,142) (2,491,876) (2,566,633) Net Operating Income 218,632 1,041,513 1,253,677 1,291,287 Cash Flow (389,916) 406,965 482,918 519,355 Cost 10,605,299 10,605,299 10,605,299 10,605,299 Return on Cost NA 4% 5% 5% Contribution and Return Analvsis Year 5 ProiP.ct Ra-f1nance Cap Rate 10.0%. Debt 75% 7,953,974 Value 12,912,871 Equity 25% 2,651,325 New Debt (80%) 10,330,296 Total 100%, 10,605,299 Debt Repay 7,818,904 Org Equity Payout 2,651,325 Excess Proceeds i139933 Investment vears 1 2 3 4 5 Deal Economics 2008.09 2009.10 2010-11 2011.12 2012.13 NOt 218,632 1,041,513 1,253,677 1,291,287 Debt Service 6.50% ( 517,008) (517,008) (652,079) (652,079) Debt Service Coverage 0.42x 2.01x 1.92x 1.98x Debt Guarantees (79,540) (79,540) (79,540) (79,540) Capex (12,000) (38,000) (39,140) (40,314) Proceeds from re-finance . . . (139,933) TOTAL CASH AVAILABLE TO DISTRIBUTE . . 406,955 482,918 379,422 Cummualitive $ distribution 1,269,305 Annual equity return based 10% Required return $'s 1,590,795 Required return % 12% Shortfall (321,490) Action steps & Timing 1. Secure tax abatement commitment trom the city - ASAP on the commitment, expect 30 days to finalize 2. Finalize purchase & settlement agreements, assignment of all existing diligence items and agreements, obtain any additional city development approvals required - 20 to 30 days, this will occur in tandem with step # 1 3. Firm up debt and equity indications - this will occur in tandem with steps # 1 and 2, preliminary indication letters attached to written proposal 4. Finalize due diligence, private placement documents, raise debt/equity, close on transaction - 45 to 90 days after city deal is finalized Conclusion: To often developers stretch to make deals happen or overload upfront costs in the pursuit of profits today vs. investing for the future and that is clearly evident in what has transpired with this project. NPSL takes the opposite approach. We are in this business for the long haul and take our obligation to the seniors very seriously. We take great care and use caution with putting projects together to ensure that we can deliver on our cost estimates and operating budget. This ensures both short term and long term financial and operational success. We believe our plan and development will be successful and the end result will be vibrant community that allows seniors to preserve their independence and age with dignity New Perspective Senior Living project history NPSL has a proven track record ot sourcing, developing, financing, and managing senior housing, as demonstrated by the following accomplishments: . 1998 - Business inception. Consulting for development of senior housing was done backed by Todd Novaczyk's extensive development and management experience in the hospitality industry. . 2000 - Developed Windmill Ponds in Alexandria, MN. 65 units of independent living facilities. The facility was built for a non-profit group. 2003 - Developed Vriendshap Village in Pella, IA for a local group of businessmen. 92 units of independent and assisted living facilities. NPSL affiliates maintain an equity investment in the deal. 2004 - Developed 95 units of independent and assisted living facilities for non- profit group in Newton, IA. . 2005 - Developed the Lighthouse at Waconia, MN. 79 units of assisted living and Alzheimer's facilities. Initially was run by a 3rd party manager and NPSL had management oversight responsibilities. NPSL took over property management mid 2006. 2006 - Acquired New Perspective. 105 beds for Alzheimer's residents on 4 campuses located in Minnesota and Wisconsin. NPSL manages these properties. 2006 - Developed the Lighthouse at Silivs, IL. 136 units of independent and assisted living and Alzheimer's facilities. Property managed by a 3rd party. NPSL has management oversight responsibility. 2007 - Acquired Hoirzons Assisted Living properties near Duluth, MN. 59 units of assisted living and memory care. NPSL manages these properties. Construction on a 30 unit expansion will start later this month. Contact Information: Ryan Novaczyk Chief Financial Officer New Perspective Senior Living 4920 Lincoln Drive Edina, MN 55436 612-840-3924 rnovaczyk@npseniorlivina.com rnJ BANK M&I Marshall & IIsley Banlt 6625 Lyndale Avenue South Richfield, MN 55423-7.:373 612 798.3400 mibank.com May 21, 2008 Mr. Ryan Novaczyk New Perspectives Senior Living RE: Senior Living Project in Columbia Heights Dear Ryan, As recently discussed, M&I Bank has had the chance to perform preliminary reviews on your proposals and projections for acquiring land and constructing a 76 unit Assisted Living / Memory Care facility on the site in Columbia Heights. Based on our prior dealings with your organization we are happy to consider a financing request approaching high seven figure credit commitment amounts to provide construction and long term financing. Of course, any commitment the bank may extend would be subject to fOl1nal credit cOlllinittee approval following a period of due diligence and would require verification of reasonable levels of equity investment and adequate collateral value. As you pursue negotiations on the site please keep me infol1ned of progress. We have been very pleased with our previous experiences with you in projects of similar size and scope and greatly appreciate the opportunity to grow our relationship. ~inc, . CQj CIU'istopher FI)'1U1 Senior Vice President M&I Marshall & Illsley Bank -- -----------------------------~ -----' ----------------------- May 21, 2008 ,(!~\:~ ~f(!j\>' \-l~ Abens Financial Services, Inc. , 4920 Lincoln Drive p: 952933-9650 Minneapolis, MN 55436 t: 800347-2611 r: 952 933-9680 e: afs@abells.com w: www.abens.com To Whom it May Concern, Introduction: I founded Abens Financial Services in 1987. Abens Financial Services, Inc. is active in the private equity, reai estate and financial markets. As a financial advisor to wealthy families, Mr. Abens has been named one of the "best financial advisors" in the country by Worth Magazine. Although Mr. Abens has been quoted In various financial publications and been a guest expert on radio and teievision, he takes the most pride in client satisfaction and portfolio performance. I have been involved in the seniors housing sector raising private equity since 2006 and have worked on severai successful transactions with Todd Novaczyk and Ryan Novaczyk of New Perspective Senior Living. I have reviewed the Columbia Heights Seniors Housing project and believe deal generates the required returns and has an appropriate risk profile necessary for the successfully private placement of approximately $2.6M. This letter serves as an Indication of interest on my part to be involved with this transaction. It is not a firm commitment to place the above funds. Th~ Arnold D. Abens, Jr. President