Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
V.C - Housing Update
HEDRA Memorandum To: HEDRA Commissioners From: Rusty Fifield, Economic Development Coordinator Date: February 5, 2020 Subject: Housing Update Action Requested No action requested. Item presented for information. Background At the January HEDRA meeting, I presented the working draft of the report on housing in Hastings. This began a conversation about housing issues and the role of the City in addressing these issues. I presented a revised draft of the report to the City Council on January 21. Among the changes in the revised draft are additional information on rental housing and modified next steps. A copy of this report is in your packet. I am working on a framework for continuing our exploration of housing issues. I hope to continue our discussion at the March meeting. In the meantime, I welcome your questions and feedback about the information in the report. Attachments Housing and Economic Development in Hastings, Working Draft presented to City Council, January 21, 2020 +RXVLQJDQG (FRQRPLF 'HYHORSPHQWLQ +DVWLQJV $Q([DPLQDWLRQRI+RXVLQJ,VVXHV DQG1HHGV :RUNLQJ'UDIW 3UHVHQWHGWR&LW\&RXQFLO -DQXDU\ &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH &RQWHQWV ,QWURGXFWLRQ ................................................................................... +RXVLQJDQG(FRQRPLF'HYHORSPHQW ............................................... &LW\+RXVLQJ3ODQ ........................................................................... 6WUDWHJLF$VVHVVPHQW ..................................................................... $IIRUGDELOLW\ .................................................................................. &RVWRI1HZ&RQVWUXFWLRQ ............................................................... /LIH&\FOH+RXVLQJ ....................................................................... 7RZQKRPHDQG+RPHRZQHU¶V$VVRFLDWLRQV .................................... ([LVWLQJ6LQJOH-)DPLO\+RXVLQJ6WRFN ............................................. /DFNRI1HZ+RXVLQJ'HYHORSPHQW ............................................... 5HGHYHORSPHQW ........................................................................... 5HQWDO+RXVLQJ ............................................................................ 1H[W6WHSV ................................................................................... 7RROV ........................................................................................... $SSHQGL[$—([FHUSWVIURP&RPSUHKHQVLYH3ODQ ................... &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH ,QWURGXFWLRQ 7KLVUHSRUWLVSDUWRIDQRQJRLQJGLVFXVVLRQRIKRXVLQJLQ+DVWLQJV7KH&LW\¶V6WUDWHJLF3ODQIRU(FR QRPLF'HYHORSPHQWFDOOVIRUWKHSUHSDUDWLRQRIDSURILOHRIWKHORFDOKRXVLQJVWRFNDVSDUWRIFUHDWLQJ VWUDWHJLHVIRUDGGUHVVLQJKRXVLQJQHHGVUHODWHGWRHFRQRPLFGHYHORSPHQW7KH&RPSUHKHQVLYH 3ODQFRQWDLQVDQH[WHQVLYHKRXVLQJDQDO\VLVDQGDKRXVLQJSODQ7KH+RXVLQJ&KDSWHURIWKH&RPSUH KHQVLYH3ODQLVGHVLJQHGWRDGGUHVVFRPPXQLW\KRXVLQJQHHGVORRNLQJWRDQGVSHFLILFDOO\WKHDI IRUGDEOHKRXVLQJREMHFWLYHVRIWKH0HWURSROLWDQ&RXQFLO7KHQH[WVHFWLRQRIWKLVUHSRUWVXPPDUL]HVWKH +RXVLQJ&KDSWHU:KLOHWKH&RPSUHKHQVLYH3ODQLVWHFKQLFDOO\WKH&LW\¶V³KRXVLQJSODQ´LWZDVQRWGH VLJQHGWREHDQDFWLRQSODQ7KH+RXVLQJ&KDSWHULVDORQJ-WHUPJXLGHORRNLQJRXWWR ,QWKH'DNRWD&RXQW\&RPPXQLW\'HYHORSPHQW$JHQF\&'$FRPPLVVLRQHGDFRXQW\-ZLGHKRXV LQJQHHGVDVVHVVPHQW7KHVWXG\UHSRUWZLOOFRQWDLQVSHFLILFILQGLQJVIRU+DVWLQJV7KH&RXQW\QHHGV DVVHVVPHQWZLOOGHHSHQRXUXQGHUVWDQGLQJRIKRXVLQJLQ+DVWLQJVDQGSURYLGHFRPSDULVRQZLWKRWKHU FLWLHVLQWKH&RXQW\,WLVXQOLNHO\KRZHYHUWKDWWKHQHHGVDVVHVVPHQWZLOOXQFRYHUQHZKRXVLQJLVVXHV )RUWKLVUHDVRQWKH&LW\¶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· 2YHUDOOSRSXODWLRQJURZWKLVVORZLQJ7KH6WDU7ULEXQHUHFHQWO\ 'HFHPEHUUHSRUWHG³6WDWHGHPRJUDSKHUVIRUHFDVW JURZWKLQWKHVDSDFHWKDWZLOOOLIWWKHSRSXODWLRQIURPDERXW PLOOLRQWRPLOOLRQSHRSOH7KDW¶VGRZQIURPJURZWKLQ WKHVDQGHYHQZHOOEHORZWKHSDFHRIWKHVWKHSUH YLRXVORZHVW-JURZWKGHFDGH´/HVVSRSXODWLRQJURZWKSODFHVPRUH LPSRUWDQFHRQWKHDELOLW\RI+DVWLQJVWRDWWUDFWDQGUHWDLQUHVL GHQWV · $WWKHVDPHWLPHWKHFRPSRVLWLRQRIWKHSRSXODWLRQLVFKDQJLQJ $PRQJWKHNH\ILQGLQJVRIWKH0HWURSROLWDQ&RXQFLO¶V5HJLRQ DO)RUHFDVWXSGDWHZDV³0DMRUGHPRJUDSKLFVKLIWVQRZXQGHUZD\ ZLOOFKDQJHRXUUHJLRQGUDPDWLFDOO\%\WKHUHJLRQ VSRSXOD WLRQZLOOEHPRUHUDFLDOO\DQGHWKQLFDOO\GLYHUVHROGHUDQGPRUH OLNHO\WROLYHDORQHRULQODUJHUKRXVHKROGV´$OORIWKHVHIDFWRUVDI IHFWKRXVLQJQHHGVLQ+DVWLQJV · 0LOOHQQLDOVSHUVRQVERUQEHWZHHQDQGZLOOEHLP SRUWDQWIRUFHVLQWKHKRXVLQJPDUNHW8QGHUVWDQGLQJWKHKRXVLQJ GHPDQGVRIWKLVJHQHUDWLRQLVHVVHQWLDOWRKRXVLQJSROLF\LQ+DV WLQJV0LOOHQQLDOKRPHEX\HUVDOVRIDFHXQLTXHFKDOOHQJHV,Q WKHDYHUDJHVWXGHQWORDQGHEWZDVSHUSHUVRQZLWKD PRQWKO\SD\PHQWRI&UHGLWFRP7KLVILQDQFLDOEXUGHQDI IHFWVWKHDELOLW\WRVDYHIRUDGRZQSD\PHQWWRDIIRUGPRUWJDJH SD\PHQWVDQGWRSD\IRUXSGDWLQJDQGLPSURYHPHQWVWRROGHU KRPHV · 7KHDIIRUGDELOLW\RIQHZFRQVWUXFWLRQGHFUHDVHVDVLQFUHDVHVLQ KRXVLQJFRVWVRXWSDFHLQFRPHJURZWK$6HSWHPEHUUHSRUW IURPWKH)HGHUDO5HVHUYHLQ6W/RXLVH[SODLQV³$VRIWKHILUVWTXDU WHURIWKUHHEURDGKRXVHSULFHLQGH[HV—)+)$¶VH[SDQGHG- &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH GDWD+RXVH3ULFH,QGH[WKH6 3&RUH/RJLF&DVH-6KLOOHU+RPH 3ULFH,QGH[DQGWKH&RUH/RJLF1DWLRQDO+RXVH3ULFH,QGH[—DOO VWRRGPRUHWKDQDERYHOHYHOVIURPVHYHQ\HDUVHDUOLHUFRUUH VSRQGLQJWRDQDYHUDJHDQQXDOUDWHRILQFUHDVHRIDERXW0HDQ ZKLOHSHUFDSLWDSHUVRQDOLQFRPHLQFUHDVHGDERXWLQWKRVH VHYHQ\HDUVDQQXDOO\ZKLOHFRQVXPHUSULFHVZHUHXSRQO\ DERXWDQQXDOO\´ ·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³KROGLQJ´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· RIVLQJOHIDPLO\KRPHVDUHDIIRUGDEOHIRUKRXVHKROGVDWRI $0, )LJXUH +RPH9DOXH(09%\<HDU%XLOW 7KHDJHDQGVW\OHRIKRXVLQJLQ+DVWLQJVSURYLGHVDVXSSO\RIDIIRUGDEOHKRXVLQJ :HGRQRWNQRZLIDIIRUGDEOHKRPHVKDYHWKHVW\OHDQGFRQGLWLRQWRDWWUDFWKRPHEX\HUV $IIRUGDELOLW\PXVWEHFRQVLGHUHGLQFRQMXQFWLRQZLWKHPSOR\PHQWDQGZDJHV$KRXVHLVDIIRUGDEOHRQO\LIZDJHVDUHVXIILFLHQW $YDLODEOHGDWDVXJJHVWVWKDWQHZFRQVWUXFWLRQLVQRWDIIRUGDEOHIRUWKHDYHUDJHKRXVHKROG &LW\IHHVDQGFKDUJHVDUHRQHIDFWRULQWKHFRVWVDQGDIIRUGDELOLW\RIQHZFRQVWUXFWLRQ7KHVHIHHVDQGVHUYLFHVVKRXOGEHFRQVLVWHQWZLWKWKHYDOXHRIWKHVHUYLFHVSURYLGHG $IIRUGDELOLW\ &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH · 2QO\RIWKHKRXVHVEXLOWDIWHUDUHDIIRUGDEOH ·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· GRZQSD\PHQW · \HDUIL[HG-UDWHPRUWJDJHDW · SHU\HDUKRPHRZQHU¶VLQVXUDQFH · 3URSHUW\WD[HVDWUDWHV 7KHVHDVVXPSWLRQVVKDSHEDVLFLOOXVWUDWLRQVRIDIIRUGDELOLW\ · 7KH0HWURSROLWDQ&RXQFLOUHSRUWVWKDWWKH0HGLXP+RPH9DOXHLQ +DVWLQJVLV7KH0HGLDQ+RXVHKROG,QFRPHLV SHU\HDU7KLVPDNHVKRXVLQJFRVWVRILQFRPH7KH0HGLDQ 9DOXHKRPHLVDIIRUGDEOHDWLQFRPHVRIDQGDERYH · 7KH6DLQW3DXO$UHD$VVRFLDWLRQRI5HDOWRUVVKRZVWKH$XJXVW PHGLDQVDOHVSULFHRIKRPHVLQ+DVWLQJVWREH7KLVSULFH PRYHVWKHDIIRUGDELOLW\WKUHVKROGWRLQFRPHVRISHU\HDURU KLJKHU ·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dŚĞĨŽůůŽǁŝŶŐĂƌĞƚŚĞ<ĞLJ&ŝŶĚŝŶŐƐ ŽĨƚŚĞDŝŶŶĞƐŽƚĂ,ŽƵƐŝŶŐ WĂƌƚŶĞƌƐŚŝƉ͛ƐďŝĞŶŶŝĂůƌĞƉŽƌƚ͗ DŽƌĞƚŚĂŶϭŝŶϰ—ŽƌϱϳϮ͕ϭϯϯ— ŚŽƵƐĞŚŽůĚƐŝŶDŝŶŶĞƐŽƚĂƉĂLJŵŽƌĞ ƚŚĂŶƚŚĞLJĐĂŶĂīŽƌĚĨŽƌŚŽƵƐŝŶŐ͕ ŵĂŬŝŶŐŝƚůŝŬĞůLJƚŚĂƚƚŚĞLJĐƵƚďĂĐŬ ŽŶŶĞĐĞƐƐŝƟĞƐůŝŬĞĨŽŽĚ͕ĞĚƵĐĂƟŽŶ ĂŶĚŵĞĚŝĐŝŶĞƐŝŵƉůLJƚŽƉĂLJƚŚĞŝƌ ƌĞŶƚŽƌŵŽƌƚŐĂŐĞ͘dŚĂƚŶƵŵďĞƌ ŐƌĞǁďLJŶĞĂƌůLJϮϲ͕ϬϬϬŚŽƵƐĞŚŽůĚƐ ĨƌŽŵϮϬϭϱƚŽϮϬϭϳ͘ ZĂĐŝĂůĚŝƐƉĂƌŝƟĞƐƉĞƌƐŝƐƚ͘&ŽƌƚLJ ƉĞƌĐĞŶƚŽĨŚŽƵƐĞŚŽůĚƐŽĨĐŽůŽƌ ĞdžƉĞƌŝĞŶĐĞĐŽƐƚďƵƌĚĞŶĐŽŵƉĂƌĞĚ ƚŽϮϯƉĞƌĐĞŶƚŽĨǁŚŝƚĞŚŽƵƐĞŚŽůĚƐ͘ dŚĞŐĂƉďĞƚǁĞĞŶŚŽƵƐŝŶŐĐŽƐƚƐĂŶĚ ŝŶĐŽŵĞƐŝƐŐƌŽǁŝŶŐ͘&ƌŽŵϮϬϬϬƚŽ ϮϬϭϳ͕ŵĞĚŝĂŶƌĞŶƚŚĂƐƌŝƐĞŶϭϯ ƉĞƌĐĞŶƚ͕ǁŚŝůĞŵĞĚŝĂŶƌĞŶƚĞƌ ŝŶĐŽŵĞŚĂƐĨĂůůĞŶϱƉĞƌĐĞŶƚ͘ DŝŶŶĞƐŽƚĂ͛ƐƚŽƉŝŶ-ĚĞŵĂŶĚũŽďƐ ĚŽŶ͛ƚƉĂLJĞŶŽƵŐŚƚŽĂīŽƌĚŚŽƵƐŝŶŐ͘ KŶůLJŽŶĞŽĨƚŚĞƐĞǀĞŶƚŽƉŝŶ- ĚĞŵĂŶĚũŽďƐŝŶDŝŶŶĞƐŽƚĂƉĂLJƐ ĞŶŽƵŐŚƚŽĂīŽƌĚĂŵĞĚŝĂŶ-ǀĂůƵĞ ŚŽŵĞ͘KŶůLJƚǁŽŽĨƚŚĞƐĞũŽďƐƉĂLJ ĞŶŽƵŐŚƚŽĂīŽƌĚĂƚǁŽ-ďĞĚƌŽŽŵ ĂƉĂƌƚŵĞŶƚ͘ ,ŝŐŚŚŽƵƐŝŶŐĐŽƐƚƐĐŽŶƟŶƵĞƚŽ ƚŚƌĞĂƚĞŶƚŚĞŚĞĂůƚŚŽĨDŝŶŶĞƐŽƚĂ ƐĞŶŝŽƌƐ͘&ŝŌLJ-ƐĞǀĞŶƉĞƌĐĞŶƚŽĨĂůů ƐĞŶŝŽƌƌĞŶƚĞƌƐĂŶĚŵŽƌĞƚŚĂŶĂ ƋƵĂƌƚĞƌŽĨĂůůƐĞŶŝŽƌŚŽŵĞŽǁŶĞƌƐ ƉĂLJŵŽƌĞƚŚĂŶƚŚĞLJĐĂŶĂīŽƌĚĨŽƌ ŚŽƵƐŝŶŐ͘ 6WDWHRIWKH6WDWH¶V+RXVLQJ &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH +DVWLQJV¶H[LVWLQJKRXVLQJVWRFNSURYLGHVRSWLRQVWKDWDUHDIIRUGDEOH IRUPDQ\RFFXSDWLRQV7KLVFKDUWLOOXVWUDWHVWKHSUREOHPLQH[SDQGLQJ WKHVXSSO\RIZRUNHUKRXVLQJ0DQ\RFFXSDWLRQVFDQQRWDIIRUGWKHSULFH RIQHZFRQVWUXFWLRQ 5HQWVDUHGHHPHGWREHDIIRUGDEOHZKHQUHQWLQFOXGLQJXWLOLWLHV³JURVV UHQW´UHSUHVHQWVRUOHVVRIJURVVLQFRPH7KH0HWURSROLWDQ&RXQ FLOUHSRUWVWKDWWKH0HGLXP+RXVHKROG,QFRPHLQ+DVWLQJVLV SHU\HDU*URVVUHQWPXVWEHSHUPRQWKRUOHVVWREHDIIRUGDEOH 7KHGLVFXVVLRQRIDIIRUGDELOLW\IRURZQHGKRXVLQJXVHVWKH$VVHVVRU¶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· +RZGRHVWKHDGGLWLRQRIXWLOLW\H[SHQVHFKDQJHWKHDIIRUGDELOLW\ FDOFXODWLRQ" · :KDWLVWKHXQPHWGHPDQG" ·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͛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· 7KH'HYHORSHUPXVWSD\IRULQIUDVWUXFWXUHSULRUWRJHQHUDWLQJDQ\ UHYHQXHIURPODQGVDOHVRUFRQVWUXFWLRQ7KHILQDQFHDQGFDUU\FRVWV HLWKHUDGGWRWKHKRPHSULFHRUHURGHSURILW · &LW\GHVLJQVWDQGDUGVDUHLQWHQGHGWRHQVXUHWKDWWKHLQIUDVWUXFWXUH LVDSSURSULDWHIRU+DVWLQJV7KH&LW\ZLOODVVXPHRZQHUVKLSDQG PDLQWHQDQFHUHVSRQVLELOLW\IRUWKHLQIUDVWUXFWXUH · ,QIUDVWUXFWXUHULJKW-RI-ZD\VWRUPZDWHUPDQDJHPHQWDUHDDQGSDUN ODQGGHGLFDWLRQUHGXFHWKHDPRXQWRIODQGWKDWFDQEHVROG · 7KH&LW\FKDUJHVWKH'HYHORSHUIRUFRVWRIPDQDJLQJDQGLQVSHFWLQJ WKHLPSURYHPHQWSURMHFWSOXVDQDGPLQLVWUDWLYHIHHHTXDOWRRI WKHLQVSHFWLRQFRVWV 'HYHORSHU2YHUKHDG $WILUVWJODQFHRYHUKHDGFRVWVDSSHDUWREHXQGHUWKHFRQWURORIWKHGH YHORSHU7KH&LW\GRHVKRZHYHULPSDFWWKHVHFRVWVWKURXJKWKHWLPH DQGPDWHULDOVUHTXLUHGWRREWDLQ&LW\DSSURYDOV ĨŽĐĂůƉŽŝŶƚŽĨƚŚŝƐĚŝƐĐƵƐƐŝŽŶŚĂƐďĞĞŶƚŚĞ ϮϬϭϵƌĞƉŽƌƚĨƌŽŵƚŚĞ,ŽƵƐŝŶŐīŽƌĚĂďŝůŝƚLJ /ŶƐƟƚƵƚĞ͞WƌŝĐĞĚKƵƚ͗dŚĞdƌƵĞŽƐƚŽĨ DŝŶŶĞƐŽƚĂ͛ƐƌŽŬĞŶ,ŽƵƐŝŶŐDĂƌŬĞƚ͟;ƚŚĞ ͞,/^ƚƵĚLJ͟Ϳ͘/ŶĂŶĂůLJnjŝŶŐŚŽƵƐŝŶŐĐŽƐƚƐ͕ƚŚĞ ƐƚƵĚLJĚŝǀŝĚĞƐĐŽƐƚƐŝŶƚŽĨŽƵƌĐĂƚĞŐŽƌŝĞƐ͗ ůĂŶĚ͕ĐŽŶƐƚƌƵĐƟŽŶ͕ĂĚŵŝŶŝƐƚƌĂƟŽŶĂŶĚ ƉƌŽĮƚ͘>ŽĐĂůĨĞĞƐĂƌĞďƵŝůƚŝŶƚŽƚŚĞůĂŶĚĂŶĚ ĐŽŶƐƚƌƵĐƟŽŶĐŽƐƚƐ͘dŚŝƐďƌĞĂŬĚŽǁŶŽĨĐŽƐƚƐ ĚŽĞƐŶŽƚƉƌŽǀŝĚĞĂƵƐĞĨƵůĨƌĂŵĞǁŽƌŬĨŽƌ ƉůĂŶŶŝŶŐŝŶ,ĂƐƟŶŐƐ͘dŚĞĨŽůůŽǁŝŶŐ ĐĂƚĞŐŽƌŝĞƐĂƌĞŵŽƌĞĐůŽƐĞůLJĂůŝŐŶĞĚǁŝƚŚ ŚŽƵƐŝŶŐĐŽƐƚƐŝŶ,ĂƐƟŶŐƐ͗ >ĂŶĚ͗dŚĞĂĐƚƵĂůĐŽƐƚŽĨůĂŶĚƉƌŽ-ƌĂƚĞĚƚŽ ĞĂĐŚƉĂƌĐĞů͘ ŽŶƐƚƌƵĐƟŽŶ͗dŚĞĐŽƐƚŽĨůĂďŽƌ͕ŵĂƚĞƌŝĂůƐ͕ ƐĞƌǀŝĐĞƐĂŶĚŽƚŚĞƌŝƚĞŵƐĚŝƌĞĐƚůLJƌĞůĂƚĞĚƚŽ ďƵŝůĚŝŶŐƚŚĞŚŽƵƐĞ͘ /ŶĨƌĂƐƚƌƵĐƚƵƌĞ͗dŚĞĐŽƐƚŽĨŝŶĨƌĂƐƚƌƵĐƚƵƌĞ ďƵŝůƚƚŽƐĞƌǀĞƚŚĞƐƵďĚŝǀŝƐŝŽŶƉƌŽ-ƌĂƚĞĚƚŽ ƚŚĞƉĂƌĐĞů͘ ĞǀĞůŽƉĞƌKǀĞƌŚĞĂĚ͗ĞǀĞůŽƉĞƌĐŽƐƚƐ͕ƐƵĐŚ ĂƐĂĚŵŝŶŝƐƚƌĂƟŽŶ͕ŵĂƌŬĞƟŶŐ͕ůĞŐĂůĂŶĚ ĮŶĂŶĐĞ͕ƉĂƐƐĞĚŽŶƚŽƚŚĞŚŽŵĞďƵLJĞƌ͘ ĞǀĞůŽƉĞƌWƌŽĮƚ͗,ŽŵĞĐŽŶƐƚƌƵĐƟŽŶǁŝůů ŶŽƚŽĐĐƵƌƵŶůĞƐƐƚŚĞĞǀĞůŽƉĞƌŝƐĂďůĞƚŽ ŐĞŶĞƌĂƚĞŝŶĐŽŵĞŝŶĞdžĐĞƐƐŽĨĂůůƉƌŽũĞĐƚ ĐŽƐƚƐ͘ ŝƚLJ&ĞĞƐĂŶĚŚĂƌŐĞƐ͗dŚŝƐĐĂƚĞŐŽƌLJ ŝŶĐůƵĚĞƐƚŚĞĚŝƌĞĐƚĐŽƐƚƐŝŵƉŽƐĞĚďLJƚŚĞ ŝƚLJƚŽĚĞǀĞůŽƉĂƐƵďĚŝǀŝƐŝŽŶĂŶĚďƵŝůĚĂ ŚŽƵƐĞ͘ (OHPHQWVRI+RXVLQJ&RVWV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH dŚĞĚĞǀĞůŽƉŵĞŶƚĐŽŵŵƵŶŝƚLJ͕ďŽƚŚ ůŽĐĂůůLJĂŶĚƌĞŐŝŽŶĂůůLJ͕ĐŽŶƚĞŶĚƐƚŚĂƚ ĨĞĞƐĐŚĂƌŐĞĚďLJĐŝƟĞƐĂƌĞĞdžĐĞƐƐŝǀĞĂŶĚ ƵŶŶĞĐĞƐƐĂƌŝůLJĂĚĚƚŽƚŚĞĐŽƐƚŽĨ ŚŽƵƐŝŶŐ͘dŚĞĨŽĐƵƐŝŶ,ĂƐƟŶŐƐŚĂƐďĞĞŶ ŽŶĐŚĂƌŐĞƐƚŽĐŽŶŶĞĐƚƚŽƚŚĞŵƵŶŝĐŝƉĂů ƵƟůŝƚLJƐLJƐƚĞŵ;^ĂŶĚtͿ͘dŚĞƐĞ ĐŚĂƌŐĞƐĂƌĞŽŶĞƉĂƌƚŽĨƚŚĞƐĞƚŽĨĨĞĞƐ ĂƉƉůŝĞĚƚŽŶĞǁĚĞǀĞůŽƉŵĞŶƚƚŚĂƚ ŝŶĐůƵĚĞ͗ĚĞǀĞůŽƉŵĞŶƚĂƉƉůŝĐĂƟŽŶƐ ƌĞǀŝĞǁĂŶĚƉƌŽĐĞƐƐŝŶŐ͕ƉĂƌŬĚĞĚŝĐĂƟŽŶ͕ ďƵŝůĚŝŶŐƉĞƌŵŝƚƐ͕ĂŶĚŝŶĨƌĂƐƚƌƵĐƚƵƌĞ ĐŽŶƐƚƌƵĐƟŽŶŝŶƐƉĞĐƟŽŶĂŶĚ ĂĚŵŝŶŝƐƚƌĂƟŽŶ͘dŚĞƐĞĐŽƐƚƐĂĚĚƚŽƚŚĞ ƉƌŝĐĞŽĨŶĞǁŚŽƵƐŝŶŐŝŶ,ĂƐƟŶŐƐ͕ďƵƚ ƚŚĞLJĂůƐŽƌĞƉƌĞƐĞŶƚƐĞƌǀŝĐĞƐƚŚĂƚŽĐĐƵƌ ĂƐĂĚŝƌĞĐƚƌĞƐƵůƚŽĨĚĞǀĞůŽƉŵĞŶƚ͘ ^ĞǀĞƌĂůƋƵĞƐƟŽŶƐŚĞůƉĨƌĂŵĞƚŚĞŝƐƐƵĞƐ ĨŽƌƚŚĞŝƚLJ͗ · ŽŝƚLJĨĞĞƐĂŶĚĐŚĂƌŐĞƐĂĐĐƵƌĂƚĞůLJ ƌĞŇĞĐƚƚŚĞĐŽƐƚƐŽĨŶĞǁ ĚĞǀĞůŽƉŵĞŶƚƉƌŽũĞĐƚƐ͍ · tŽƵůĚĂƌĞĚƵĐƟŽŶŝŶĨĞĞƐĂŶĚ ĐŚĂƌŐĞƐďĞƉĂƐƐĞĚŽŶƚŽƚŚĞ ŚŽŵĞďƵLJĞƌĂŶĚŵĂŬĞŚŽƵƐŝŶŐ ŵŽƌĞĂīŽƌĚĂďůĞ͍ · ŽĞƐŽƚŚĞƌǀĂůƵĞƌĞĐĞŝǀĞĚĨƌŽŵ ŶĞǁĚĞǀĞůŽƉŵĞŶƚŽīƐĞƚƌĞĚƵĐĞĚ ƌĞǀĞŶƵĞ͍ · /ĨĨĞĞƐĐŽůůĞĐƚĞĚĨƌŽŵĚĞǀĞůŽƉŵĞŶƚ ĚŽŶŽƚƉĂLJĨŽƌƚŚĞƐĞƌǀŝĐĞƐ͕ŚŽǁ ĂƌĞƚŚĞLJƉĂŝĚĨŽƌ͍ dŚĞƐĞƋƵĞƐƟŽŶƐŵƵƐƚďĞĂŶƐǁĞƌĞĚĂƐ ƉĂƌƚŽīĂďƌŽĂĚĞƌĚŝƐĐƵƐƐŝŽŶĂďŽƵƚŝƚLJ ŽďũĞĐƟǀĞƐĨŽƌŐƌŽǁƚŚĂŶĚŚŽƵƐŝŶŐ͘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¶VZLWK FKRLFHV/DFNLQJFRPSHWLWLRQWKHEXLOGHUKDVPRUHODWLWXGHLQVHWWLQJ WKHSULFH &LW\)HHVDQG&KDUJHV 7KH&LW\FROOHFWVDYDULHW\RIIHHVUHODWHGWRODQGGHYHORSPHQWDQGKRXV LQJFRQVWUXFWLRQ7KHVHIHHVDUHLQWHQGHGWRRIIVHWWKHFRVWVRIQHZGH YHORSPHQW · /DQGXVHDSSURYDOIHHVDUHFKDUJHGEDVHGRQWKHQDWXUHRIWKHSUR MHFWDQGWKHQHFHVVDU\&LW\DSSURYDOV3RWHQWLDOIHHVDUHIRUDQQH[D WLRQFRPSUHKHQVLYHSODQDPHQGPHQW($:SUHOLPLQDU\DQGILQDO SODWUH]RQLQJVLWHSODQUHYLHZYDFDWLRQRIULJKW-RI-ZD\DQGYDUL DQFHV · 7KH&LW\PD\UHFHLYHODQGIRUSDUNGHGLFDWLRQRUUHFHLYHSD\PHQWLQ OLHXRIODQG3DUNGHGLFDWLRQDOORZVWKHSDUNV\VWHPWRH[SDQGDQG VHUYHQHZUHVLGHQWV3DUNGHGLFDWLRQGRHVQRWIXQGERWKDFTXLVLWLRQ DQGGHYHORSPHQW · 1HZGHYHORSPHQWSD\VIRUDFFHVVWRPXQLFLSDOZDWHUDQGVDQLWDU\ VHZHUV\VWHPV&XUUHQWFKDUJHVLQFOXGHVHZHULQWHUFHSWRUIHHVHZHU DFFHVVFKDUJH6$&DQGZDWHUDFFHVVFKDUJH:$&7KH&LW\DOVR FROOHFWV6$&IRUWKHUHJLRQDOZDVWHZDWHUV\VWHPRQEHKDOIRIWKH 0HWURSROLWDQ&RXQFLO7KHUDWLRQDOHLVWKDWH[LVWLQJXVHUVSDLGIRU WKHV\VWHPFDSDFLW\WKDWDOORZVQHZGHYHORSPHQWWRRFFXU7KH FKDUJHVKHOSWRIXQGIXWXUHLPSURYHPHQWVWKDWZLOOUHSODFHWKLVFD SDFLW\ ·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³PLOOHQQLDOV´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³WXUQNH\´KRPHVRXJKWE\VRPHEX\HUV'H IHUUHGPDLQWHQDQFHDOVRUHSUHVHQWVDKRXVLQJFRVWQRWGHSLFWHGLQWKH SULFH $VXVWDLQDEOHKRXVLQJVXSSO\UHTXLUHV³0RYHXS´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ƵĐŚŽĨƚŚĞĚĂƚĂŝŶƚŚŝƐƌĞƉŽƌƚ ůŽŽŬƐďĂĐŬĂƚŚŝƐƚŽƌŝĐĂůƚƌĞŶĚƐ͘/ƚŝƐ ĂůƐŽŝŵƉŽƌƚĂŶƚƚŽůŽŽŬŝŶƚŽƚŚĞ ĨƵƚƵƌĞ͘WůĂŶŶŝŶŐŵƵƐƚĐŽŶƐŝĚĞƌƚŚĞ ĐŚĂŶŐŝŶŐŚŽƵƐŝŶŐĚĞŵĂŶĚŽĨƚŚĞ DŝůůĞŶŶŝĂů'ĞŶĞƌĂƟŽŶ͘DŝůůĞŶŶŝĂůƐ ǁĞƌĞďŽƌŶďĞƚǁĞĞŶϭϵϴϭĂŶĚϭϵϵϳ ĂŶĚƌĞƉƌĞƐĞŶƚƚŚĞůĂƌŐĞƐƚ ŐĞŶĞƌĂƟŽŶŝŶŽƵƌŚŝƐƚŽƌLJ͘ZĞƐĞĂƌĐŚ ƐŚŽǁƐƚŚĂƚƚŚĞŚŽŵĞŽǁŶĞƌƐŚŝƉ ĐŚĂƌĂĐƚĞƌŝƐƟĐƐŽĨDŝůůĞŶŶŝĂů͛ƐĂƌĞ ĚŝīĞƌĞŶƚƚŚĂŶĂŶLJƉƌĞǀŝŽƵƐ ŐĞŶĞƌĂƟŽŶ͘^ŽŵĞŽĨƚŚĞĚŝīĞƌĞŶĐĞƐ ŝŶĐůƵĚĞ͗ · DŝůůĞŶŶŝĂůƐĂƌĞůĞƐƐůŝŬĞůLJƚŽďĞ ŚŽŵĞŽǁŶĞƌƐ͘ · DŝůůĞŶŶŝĂůƐƚĞŶĚĞĚƚŽŐĞƚ ŵĂƌƌŝĞĚĂŶĚŚĂǀĞĐŚŝůĚƌĞŶ ;ĞǀĞŶƚƐƚŚĂƚƚƌŝŐŐĞƌ ŚŽŵĞŽǁŶĞƌƐŚŝƉͿůĂƚĞƌŝŶůŝĨĞ͘ · DŝůůĞŶŶŝĂůƐƉƌĞĨĞƌƌĞĚůŝǀŝŶŐŝŶĂ ŵŽƌĞƵƌďĂŶĞŶǀŝƌŽŶŵĞŶƚ͘ · 'ƌĞĂƚĞƌĂŵŽƵŶƚƐŽĨƐƚƵĚĞŶƚ ůŽĂŶĚĞďƚĐƌĞĂƚĞďĂƌƌŝĞƌƐƚŽ ŚŽŵĞŽǁŶĞƌƐŚŝƉ͘ 0LOOHQQLDOVDQG+RPHEX\LQJ &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH 7RZQKRPHVDQG+RPHRZQHU¶V$VVRFLDWLRQV 7KHWUDGLWLRQDOVLQJOH-IDPLO\KRXVHLV³GHWDFKHG´-QRWFRQQHFWHGWR DQRWKHUGZHOOLQJ$WRZQKRXVHLVDVLQJOH-IDPLO\GZHOOLQJDWWDFKHGWR RQHRUPRUHRWKHUGZHOOLQJV7KHKRPHRZQHURZQVWKHXQLWDQGDSUR- UDWDVKDUHRIWKHFRPPRQSURSHUW\LQDVSHFLILHGDUHDRIWRZQKRXVHV 7KHWRZQKRXVHRIIHUVDPRUHDIIRUGDEOHRZQHUVKLSRSWLRQZLWKQRUH VSRQVLELOLW\IRUPDLQWHQDQFHRIJURXQGVRUEXLOGLQJV$IHHLVSDLGWRD KRPHRZQHU¶VDVVRFLDWLRQIRUPDLQWHQDQFH 7KH0HWUR*,6GDWDEDVHVKRZVWRZQKRXVHXQLWVLQ+DVWLQJV,P SRUWDQWFKDUDFWHULVWLFVRIWKLVFRPSRQHQWRIWKHKRXVLQJVWRFNLQFOXGH · 7RZQKRXVHVUHSUHVHQWDQHZHUSDUWRIWKHKRXVLQJVWRFNVH)LJXUH RIWKHXQLWVZHUHEXLOWVLQFH2QO\RIWKHXQLWV ZHUHEXLOWEHIRUH · 1HZFRQVWUXFWLRQKDVHIIHFWLYHO\GLVDSSHDUHG2QO\RIDOOXQLWV ZHUHEXLOWEHWZHHQDQG,QWHUHVWLQQHZWRZQKRPHGH YHORSPHQWLVOLNHO\WRJURZWRPHHWWKHQHHGIRUDIIRUGDEOHQHZ FRQVWUXFWLRQDQGDGGLWLRQDORSWLRQVIRUVHQLRUKRXVLQJ · 7KHDIIRUGDELOLW\RIWRZQKRPHVLVLOOXVWUDWHGLQ)LJXUH7KLVFKDUW VKRZVWKHDYHUDJH(VWLPDWHG0DUNHW9DOXHRIWRZQKRXVHXQLWVLQ +DVWLQJVE\\HDUEXLOW7KHYDVWPDMRULW\RIWKHXQLWVIDEHORZWKH DIIRUGDEOHWKUHVKROGIRUWKH0HGLDQ,QFRPHLQ+DVWLQJV ,QUHFHQW\HDUVWKHDYHUDJHYDOXHURVHDERYHWKHDIIRUGDELOLW\ WKUHVKROG XQLWVKDGQR\HDUEXLOWOLVWHG )LJXUH 7LPLQJRI7RZQKRXVH&RQVWUXFWLRQ &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH $KRPHRZQHU¶VDVVRFLDWLRQ+2$LVFUHDWHGWRSURYLGHIRUPDLQWHQDQFH RIWKHFRPPRQSURSHUW\VHHVLGHEDU7KH+2$SOD\VDFULWLFDOUROHLQ WKHFRQGLWLRQRIWKLVSRUWLRQRIWKHKRXVLQJVWRFN1RWH—7KHVHLVVXHV DOVRDSSO\WRFRQGRPLQLXPV7KHRSHUDWLRQDQGILQDQFLDOFRQGLWLRQRI WKHDVVRFLDWLRQGHWHUPLQHVWKHRQJRLQJPDLQWHQDQFHRIWKHVHKRXVLQJ XQLWV+RPHRZQHU¶VDVVRFLDWLRQVKDYHSROLF\LPSOLFDWLRQVIRUFLWLHVWKDW DUHRIWHQRYHUORRNHG7KH&LW\GRHVQRWWUDFNWKHHVWDEOLVKRURSHUDWLRQ RI+2$VLQ+DVWLQJV7KHQXPEHURILQGLYLGXDOWRZQKRXVHVXEGLYLVLRQV SURYLGHVDSUR[\IRUSRWHQWLDO+2$$VVXPLQJHDFKVXEGLYLVLRQKDVLWV RZQ+2$WKHUHFRXOGEH+2$LQ+DVWLQJV ([LVWLQJ6LQJOH-)DPLO\+RXVLQJ6WRFN 2QHRIWKHPRVWLPSRUWDQWFKDUDFWHULVWLFRI+DVWLQJV¶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dŚĞŝŵƉŽƌƚĂŶĐĞŽĨŚŽŵĞŽǁŶĞƌ͛Ɛ ĂƐƐŽĐŝĂƟŽŶƐŝƐŽŌĞŶŽǀĞƌůŽŽŬĞĚ͘hŶůŝŬĞĂ ƐŝŶŐůĞ-ĨĂŵŝůLJŚŽŵĞ͕ĂƉĞƌƐŽŶĚŽĞƐŶŽƚ ŚĂǀĞŝŶĚŝǀŝĚƵĂůŽǁŶĞƌƐŚŝƉŽĨƚŚĞďƵŝůĚŝŶŐ ĞdžƚĞƌŝŽƌ͕ǁŝŶĚŽǁƐĂŶĚƌŽŽĨƐ͘dŚĞ,KŝƐ ƌĞƐƉŽŶƐŝďůĞĨŽƌŵĂŝŶƚĞŶĂŶĐĞ͘dŚĞ,KŝƐ ĂůƐŽƌĞƐƉŽŶƐŝďůĞĨŽƌƐƚƌĞĞƚƐĂŶĚĐŽŵŵŽŶ ƉƌŽƉĞƌƚLJ͘dŚĞƵŶŝƚƉĂLJƐŵŽŶƚŚůLJĚƵĞƐ͘ ƉŽƌƟŽŶŽĨƚŚĞĚƵĞƐƐŚŽƵůĚďĞƐĞƚĂƐŝĚĞŝŶ ƌĞƐĞƌǀĞĨŽƌĨƵƚƵƌĞŵĂŝŶƚĞŶĂŶĐĞĂŶĚ ƌĞƉůĂĐĞŵĞŶƚ͘WƌŽďůĞŵƐŵĂLJĂƌŝƐĞǁŚĞŶ ƚŚĞƌĞŝƐŶŽĐĂƉŝƚĂůƉůĂŶŽƌŝƚŝƐ ŝŶĂĚĞƋƵĂƚĞůLJĨƵŶĚĞĚ͘dŚĞ,KĐĂŶŶŽƚ ŐŝǀĞĂŵŽƌƚŐĂŐĞŝŶƚĞƌĞƐƚŝŶƚŚĞďƵŝůĚŝŶŐƐ ŵĂŬŝŶŐďĂŶŬůŽĂŶƐǀĞƌLJĚŝĸĐƵůƚ͘džƚƌĂ ŝŶĐƌĞĂƐĞƐŝŶĚƵĞƐŽƌƐƉĞĐŝĂůĂƐƐĞƐƐŵĞŶƚƐ ƌĞƋƵŝƌĞŚŽŵĞŽǁŶĞƌĂƉƉƌŽǀĂůĂŶĚ ƐŽŵĞƟŵĞƐƐƵƉĞƌ-ŵĂũŽƌŝƚLJǀŽƚĞƐ͘ hŶĚĞƌĨƵŶĚĞĚĂƐƐŽĐŝĂƟŽŶƐĂƌĞƚƌĂƉƉĞĚŝŶ ĚŽǁŶǁĂƌĚƐƉŝƌĂůŽĨĚĞƚĞƌŝŽƌĂƟŶŐ ƉƌŽƉĞƌƚLJ͘dŚĞŶĞĞĚĨŽƌĂĮdžŽŌĞŶĐŽŵĞƐ ƚŽƚŚĞŝƚLJ͘ +RPHRZQHU¶V$VVRFLDWLRQV )LJXUH $YHUDJH(VWLPDWHG0DUNHW9DOXH%\<HDU%XLOW &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH +RXVLQJLQ+DVWLQJVZDVEXLOWRYHUDORQJVSDQRIWLPH$OPRVWRI VLQJOH-IDPLO\KRPHVZHUHEXLOWEHIRUH+DVWLQJVKRXVLQJERRP EHJDQLQDQGUDQWKURXJK7KUHH-TXDUWHUVRIWKHVLQJOH- IDPLO\KRPHVLQ+DVWLQJVZHUHEXLOWWKDWSHULRG5RXJKO\RQH-KDOIRI KRPHVZHUHEXLOWSULRUWRPDNLQJWKHPDMRULW\RI+DVWLQJVKRPHV PRUHWKDQ\HDUVROG 7KHDJHRIWKHKRXVLQJVWRFNLVDOVRUHIOHFWHGLQWKHVW\OHRIKRXVH7KH FKDUWLQ)LJXUHFRPELQHVWKHVW\OHRIKRPHZLWKWKH\HDUEXLOW7KLV FKDUWQRWRQO\VKRZVWKHJURZWKRIWKHKRXVLQJVWRFNEXWDOVRWKH FKDQJHVLQKRXVLQJSUHIHUHQFH(DUO\KRXVLQJLQ+DVWLQJVZHUHEXLOWDV DPL[RIGZHOOLQJVEHWZHHQRQHDQGWZRVWRULHV7KHVHYDULHWLHVRI KRXVHSUDFWLFDOO\GLVDSSHDUHGDIWHU7KHVDQGVZHUH GRPLQDWHGE\WKHVLQJOH-VWRU\VXEXUEDQ³UDPEOHU´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¶VPDUNHW ([LVWLQJ+RPHV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH /DFNRI1HZ+RXVLQJ'HYHORSPHQW %XLOGLQJSHUPLWGDWDFROOHFWHGE\WKH&LW\VKRZVHYHUDODVSHFWVRIUHFHQWKRXVLQJGHYHORSPHQWLQ+DV WLQJV *URZWKLQWKHORFDOKRXVLQJVWRFNFDPHWRDKDOWDWWKHSHDNRIWKH*UHDW5HFHVVLRQDQGKDVEHHQVORZWR UHFRYHU%XLOGLQJSHUPLWGDWDLOOXVWUDWHVWKLVVLWXDWLRQVHH)LJXUH · 1HZKRXVLQJVWDUWVSHHNHGDWLQ7KLVUHSUHVHQWVPRUHXQLWVWKDWZHUHEXLOWRYHUWKHWHQ- \HDUVSDQIURP-QHZXQLWV · 2QO\IRXUQHZKRPHVVWDUWHGLQ · 2QO\VLQJOH-IDPLO\KRPHVKDYHEHHQEXLOWLQWKHSDVW\HDUV · 1HZPXOWL-IDPLO\KRXVLQJKDVRQO\RFFXUUHGLQWKHSDVWWKUHH\HDUV ·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dŚĞƵŶƉƌĞĐĞĚĞŶƚĞĚůĂĐŬŽĨŶĞǁŚŽƵƐŝŶŐ ĐŽŶƐƚƌƵĐƟŽŶŚĂƐŚĂĚŝŵƉŽƌƚĂŶƚŶĞŐĂƟǀĞ ĞīĞĐƚƐŽŶƚŚĞĐŽŵŵƵŶŝƚLJ͘ · dŚĞŵŽƐƚŽďǀŝŽƵƐĞīĞĐƚŝƐƚŚĞůĂĐŬŽĨ ƉŽƉƵůĂƟŽŶŐƌŽǁƚŚ͘ŌĞƌĂĚĚŝŶŐĂůŵŽƐƚ ϰ͕ϬϬϬƉĞŽƉůĞĨƌŽŵϮϬϭϬƚŽϮϬϭϬ͕ ,ĂƐƟŶŐƐŐƌĞǁďLJŽŶůLJϰϲϴƉĞŽƉůĞĨƌŽŵ ϮϬϭϬƚŽϮϬϭϳ͘ · ,ŽƵƐĞŚŽůĚŝŶĐŽŵĞŐƌĞǁĂƚĂƐůŽǁĞƌƌĂƚĞ ƚŚĂŶƚŚĞƌĞƐƚŽĨƚŚĞdǁŝŶŝƟĞƐ͘DĞĚŝĂŶ ,ŽƵƐĞŚŽůĚŝŶĐŽŵĞŝŶ,ĂƐƟŶŐƐŝŶĐƌĞĂƐĞĚ ďLJϵ͘ϳй;Ψϲϭ͕ϮϯϮƚŽΨϲϲ͕ϰϬϯͿĨƌŽŵϮϬϭϬ ƚŽϮϬϭϳ͘ƵƌŝŶŐƚŚĞƐĂŵĞƉĞƌŝŽĚ͕ŵĞĚŝĂŶ ŝŶĐŽŵĞŐƌĞǁϭϴ͘ϰйŝŶĂŬŽƚĂŽƵŶƚLJ ĂŶĚϮϭ͘ϵйŽǀĞƌƚŚĞϳ-ŽƵŶƚLJZĞŐŝŽŶ͘ · dŚĞƉŽƉƵůĂƟŽŶŐŽƚŽůĚĞƌ͘&ƌŽŵϮϬϭϬƚŽ ϮϬϭϳ͕ƚŚĞϲϬ-ϳϰĂŶĚϳϱнĂŐĞŐƌŽƵƉƐ ĂĚĚĞĚϲϬϰĂŶĚϮϳϰƉĞŽƉůĞ͕ƌĞƐƉĞĐƟǀĞůLJ͘ dŚĞϮϬ-ϮϵĂŐĞŐƌŽƵƉůŽƐƚϲϰƉĞŽƉůĞ͘dŚĞ ƵŶĚĞƌϮϬĂŐĞŐƌŽƵƉƐŚƌĂŶŬďLJϱϳϲ͘ · dŚĞƐĞĐŚĂŶŐĞƐĐĂŶĂůƐŽďĞƐĞĞŶŝŶ ŚŽƵƐĞŚŽůĚĐŽŵƉŽƐŝƟŽŶ͘/ŶϮϬϬϳ͕ϮϴйŽĨ ,ĂƐƟŶŐƐŚŽƵƐĞŚŽůĚƐǁĞƌĞŵĂƌƌŝĞĚ ĨĂŵŝůŝĞƐǁŝƚŚĐŚŝůĚƌĞŶĂŶĚϮϯйŽĨ ŚŽƵƐĞŚŽůĚƐǁĞƌĞƉĞƌƐŽŶƐůŝǀŝŶŐĂůŽŶĞ͘LJ ϮϬϭϳ͕ƚŚĞƐŝƚƵĂƟŽŶŚĂĚŇŝƉƉĞĚƚŽϭϵй ŵĂƌƌŝĞĚǁŝƚŚĐŚŝůĚƌĞŶĂŶĚϯϬйůŝǀŝŶŐ ĂůŽŶĞ͘ dŚŝƐůĂĐŬŽĨŐƌŽǁƚŚŵĞĂŶƐĨĞǁĞƌĐƵƐƚŽŵĞƌƐĨŽƌ ůŽĐĂůďƵƐŝŶĞƐƐĞƐ͕ĨĞǁĞƌǁŽƌŬĞƌƐĨŽƌůŽĐĂů ĞŵƉůŽLJĞƌƐĂŶĚĨĞǁĞƌƐƚƵĚĞŶƚƐŝŶƚŚĞ,ĂƐƟŶŐƐ ^ĐŚŽŽůŝƐƚƌŝĐƚ͘ŚĂŶŐŝŶŐĚĞŵŽŐƌĂƉŚŝĐƐĂīĞĐƚ ƚŚĞĚĞŵĂŶĚĨŽƌĂŶĚĂďŝůŝƚLJƚŽƉĂLJĨŽƌŐŽŽĚƐ ĂŶĚƐĞƌǀŝĐĞƐ͕ďŽƚŚƉƌŝǀĂƚĞĂŶĚƉƵďůŝĐ͘dŚĞƐĞ ƚƌĞŶĚƐĐƌĞĂƚĞďĂƌƌŝĞƌƐƚŽĂƩƌĂĐƟŶŐŶĞǁ ĚĞǀĞůŽƉŵĞŶƚ͘dŚĞLJƐƵŐŐĞƐƚƚŽƚŚĞŽƵƚƐŝĚĞ ǁŽƌůĚƚŚĂƚ,ĂƐƟŶŐƐǁŽƵůĚŶŽƚďĞĂŐŽŽĚƉůĂĐĞ ƚŽďƵŝůĚŚŽŵĞƐŽƌŽƉĞŶĂďƵƐŝŶĞƐƐ͘ ,PSOLFDWLRQVRI/LPLWHG+RXVLQJ 'HYHORSPHQW 5HFHQWKRXVLQJGHYHORSPHQWKDVEHHQOLPLWHGWRH[LVWLQJVXEGLYLVLRQV DQGVPDOOSODWV2YHURIDOOKRXVLQJEXLOWIURPWKURXJK RFFXUUHGRQH[LVWLQJSODWVRUDUHQHZILQDOSODWVZLWKLQODUJHUSUHOLPL QDU\SODWVDSSURYHGSULRUWR7KHODUJHVWILQDOSODWDSSURYHGGXU LQJWKLVSHULRGFUHDWHGMXVWORWV $FRQWLQXDWLRQRIWKHVHWUHQGVVHHPVXQOLNHO\WRPHHWWKHFRPPXQLW\¶V IXWXUHKRXVLQJQHHGV )XWXUHKRXVLQJJURZWKUHTXLUHVODQGDYDLODEOHIRUGHYHORSPHQW+DV WLQJVKDVUHDFKHGDSRLQWZLWKDYHU\OLPLWHGVXSSO\RIYDFDQWUHVLGHQWLDO SURSHUW\)LJXUHRQWKHQH[WSDJHLOOXVWUDWHVWKLVVLWXDWLRQ([LVWLQJ SODWWHGORWVVKRZQDVXQGHYHORSHGFRPHIURPWKH0HWUR*,6GDWDEDVH 7KHSXUSRVHRIWKLVPDSLVQRWWRLQYHQWRU\YDFDQWSDUFHOVEXWWRVKRZ WKHH[WHQWRIWKHSUREOHP · 7KHUHDUHSODWWHGORWVWKDWFDQEHGHYHORSHGEXWKDYHQRW · 7KHUHLVYHU\OLPLWHGYDFDQWODQGIRUIXWXUHGHYHORSPHQWZLWKLQWKH FLW\OLPLWV · $SHUVRQORRNLQJWREXLOGDQHZKRPHLQ+DVWLQJVZRXOGILQGD VPDOOVXSSO\RIFKRLFHV 7KHVHIDFWRUVKLJKOLJKWWKHQHHGWRSODQIRUQHZGHYHORSPHQWORFDWLRQV RXWVLGHRIWKH&LW\¶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³5HQWDO+RXVLQJ´LVQRWD VLQJOHKRXVLQJW\SH,WWDNHVDYDULHW\RIIRUPV,Q+DVWLQJVWKHSULPDU\IRUPVRIUHQWDOKRXVLQJDUH · +RXVLQJVSHFLILFDOO\GHVLJQHGWREHUHQWHU-RFFXSLHG$SDUWPHQWEXLOGLQJVUHSUHVHQWWKHODUJHVWSRU WLRQWKLVW\SHRIUHQWDOKRXVLQJ+DVWLQJVDOVRKDVGXSOH[DQG-SOH[EXLOGLQJVIRUUHQWHU-RFFXSDQF\ · 1RWDOODSDUWPHQWVDUHFOXVWHUHGLQDFRPPRQEXLOGLQJ$SDUWPHQWVPD\VKDUHDEXLOGLQJZLWKFRP PHUFLDOXVHV7KHVHPL[HGXVHVDUHFXUUHQWO\IRXQGSULPDULO\LQWKH'RZQWRZQDUHD · +RXVLQJEXLOWDVRZQHU-RFFXSLHGKRXVLQJWKDWLVFXUUHQWO\UHQWDOSURSHUW\7KHVHUHQWDOXQLWVLQ FOXGHVLQJOH-IDPLO\WRZQKRXVHFRQGRPLQLXPDQGWZLQKRPH ·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· )LJXUHRQWKHQH[WSDJHVKRZVWKHYDULHW\RIKRXVLQJW\SHVWKDWSURYLGHUHQWDOKRXVLQJ · 7KHVLQJOH-IDPLO\GZHOOLQJVWKDWDUHFXUUHQWO\UHQWDOSURSHUW\UHSUHVHQWRIWKHWRWDOQXPEHU RIVLQJOH-IDPLO\KRPHV · 7KHSHUFHQWDJHRIUHQWDOKRXVLQJLVKLJKHUIRUVLQJOH-IDPLO\DWWDFKHGSURSHUWLHVWRZQKRXVHFRQ GRWZLQKRPH0RUHWKDQRIWKHVHSURSHUWLHVDUHUHQWDO · $OPRVWRQH-KDOIRIDOOUHQWDOKRXVLQJXQLWVFRPHIURPKRXVLQJW\SHVRWKHUWKDQDSDUWPHQWVVHH)LJ XUH )XUWKHULQYHVWLJDWLRQRI&LW\UHQWDOOLFHQVHGDWDLVQHHGHGWRGHWHUPLQHLIWKLVLQIRUPDWLRQFDQSURYLGH DGGLWLRQDOLQVLJKWVRQUHQWDOKRXVLQJLQ+DVWLQJV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH )LJXUH 1XPEHURI5HQWDO3URSHUWLHV%\+RXVLQJ7\SH )LJXUH 1XPEHURI+RXVLQJ8QLWV%\3URSHUW\7\SH &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH $SDUWPHQWV $SDUWPHQWVDUHWKHODUJHVWVRXUFHRIUHQWDOKRXVLQJ7KHWDEOHLQ)LJXUHOLVWVWKHH[LVWLQJVXSSO\RI DSDUWPHQWVLQ+DVWLQJVWKDWKDYHHLJKWRUPRUHXQLWV7KHFXUUHQWVXSSO\LQFOXGLQJWKHXQLWVWREH DGGHGE\7KH&RQIOXHQFHWRWDOVXQLWV 7KLVLQIRUPDWLRQLOOXVWUDWHVVHYHUDOLPSRUWDQWSRLQWVDERXWWKLVVHJPHQWRIWKHORFDOKRXVLQJVWRFN · $SDUWPHQWVDUHROGHU)LIW\-IRXUSHUFHQWRIWKHDSDUWPHQWEXLOGLQJVZHUHEXLOWEHIRUH · 7KH*UHDW5HFHVVLRQVWRSSHGFRQVWUXFWLRQRIQHZXQLWV1RQHZDSDUWPHQWVZHUHEXLOWIURP WKURXJK · 7KHUHLVUHQHZHGLQWHUHVWLQDSDUWPHQWFRQVWUXFWLRQ2YHUWKHSDVWWKUHH\HDUVIRXUSURMHFWVDGGLQJ XQLWVZHUHFRPSOHWHGRUDUHXQGHUFRQVWUXFWLRQ7KHVHXQLWVUHSUHVHQWMXVWRIWKHLGHQWLILHG WRWDO 7KH&LW\KDVQRWFRQGXFWHGPDUNHWUHVHDUFKWRGHWHUPLQHLIWKLVVXSSO\PHHWVORFDOGHPDQG,WLVKRSHG WKDWWKH&RXQW\1HHGV$VVHVVPHQWZLOODGGUHVVWKLVLVVXH Name Type Use Units Year Built The Confluence Market Family 22 2020 Voyager Estates Market Family 88 2019 Artspace Lofts Affordable Family 39 2017 Vermillion Shores I Market Family 36 2008 Eagle Pointe Apartments Market Family 66 2007 Park Ridge Assisted Living Senior 78 2002 Oak Ridge Manor Assisted Living Senior 67 2001 Mississippi Terrace Affordable Senior 40 1992 Riverbend Apartments Market Family 48 1979 545 35th Street W Market Family 8 1969 565 35th Street W Market Family 8 1968 1590 Spring Street Market Family 8 1968 Riverbend Apartments Market Family 18 1966 River Junction Apartments Market Family 12 1965 2301 Oak Street Market Family 9 1964 2300 Pine Street Market Family 8 1964 Guardian Angels Affordable Family 30 1934 Valley Manor Market Family 169 1971 Hidden Valley Apartments Market Family 138 1978 Westview Village Market Family 108 1972 Sibley Apartments Market Family 8 NA Total 1,008 )LJXUH 6XSSO\RI([LVWLQJ$SDUWPHQWVRU0RUH8QLWV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH 5HGHYHORSPHQW 7KHWZRUHFHQWPDUNHWUDWHSURMHFWVVXJJHVWWKDWWKHFRQVWUXFWLRQRIDSDUWPHQWVLVILQDQFLDOO\IHDVLEOHRQ YDFDQWODQG7KHUHDUHLQGLFDWLRQVKRZHYHUWKDWWKHUHQWSRWHQWLDOLQ+DVWLQJVPD\QRWJHQHUDWH HQRXJKLQFRPHWRVXSSRUWUHGHYHORSPHQW5HGHYHORSPHQWSURMHFWVKDYHWKHVDPHEDVLFFRQVWUXFWLRQ FRVWVDQGUHQWFRQVWUDLQWVDV³JUHHQILHOG´GHYHORSPHQWEXWIDFHFRVWVQRWIRXQGRQYDFDQWODQG · 5HGHYHORSPHQWVLWHVRIWHQUHTXLUHWKHDVVHPEO\RIVPDOOHUSDUFHOVDWDKLJKHUFRVWSHUXQLW · ([LVWLQJVWUXFWXUHVPXVWEHFOHDUHGDQGUHPRYHG ·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¶V+RXVLQJ1HHGV$VVHVVPHQWZLOOFRQWDLQYDOXDEOHLQIRUPDWLRQ(OHPHQWVRIWKH&RXQW\ 6WXG\WKDWDGGWRRXUILQGLQJVDQGUHFRPPHQGDWLRQVZLOOEHLQFRUSRUDWHGLQWRWKLVUHSRUW8OWLPDWHO\ WKHUHQHHGVWREHDSURFHVVIRUSURYLGLQJWKH&LW\&RXQFLOZLWKWKHXQGHUVWDQGLQJQHHGHGWRJXLGHIXWXUH DFWLRQV (VWDEOLVKSULRULWLHV 2QHFRQFOXVLRQRIWKLVUHSRUWLVFOHDU—DOORIWKHKRXVLQJLVVXHVIDFLQJ+DVWLQJVFDQQRWEHDGGUHVVHGDW WKHVDPHWLPH7KH&LW\&RXQFLOPXVWHVWDEOLVKSULRULWLHVWRIXUWKHUH[SORUDWLRQDQGDFWLRQ3RWHQWLDODF WLRQVWRFRQVLGHULQWKHSULRULWL]DWLRQSURFHVVLQFOXGH · (YDOXDWHWKHFRQGLWLRQDQGPDUNHWGHVLUDELOLW\RIH[LVWLQJVLQJH-IDPLO\KRPHV · (YDOXDWHWKHFRQGLWLRQDQGPDUNHWGHVLUDELOLW\RIH[LVWLQJDSDUWPHQWV · ,GHQWLI\JDSVLQWKHOLIHF\FOHKRXVLQJVXSSO\ZKDWDUHWKHJUHDWHVWXQPHWQHHGV · ,GHQWLI\DQGGHWHUPLQHWKHFDSLWDOQHHGVDQGILQDQFLDOFRQGLWLRQRIKRPHRZQHU¶VDVVRFLDWLRQV · )LQGRSSRUWXQLWLHVWRPDNHQHZFRQVWUXFWLRQPRUHDIIRUGDEOH · 8QGHUVWDQGWKHQHHGIRUZRUNIRUFHKRXVLQJDQGWKHSRWHQWLDOIRUPRUHZRUNHUVWROLYHLQ+DVWLQJV · 'HWHUPLQHWKHDSSURSULDWHDSSURDFKWRHQFRXUDJLQJQHZKRXVLQJFRQVWUXFWLRQ · (YDOXDWHWKHIHDVLELOLW\RIQHZKRXVLQJFRQVWUXFWLRQRQUHGHYHORSPHQWVLWHV ·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· &RQVWUXFWLRQRIZRUNIRUFHKRXVLQJ · )LUVW-WLPHKRPHEX\HUSURJUDP · +RPHEX\HUHGXFDWLRQSURJUDPV · 0RUWJDJHIRUHFORVXUHSURJUDP · +RPHLPSURYHPHQWORDQSURJUDPV · :HDWKHUL]DWLRQDQGHQHUJ\HIILFLHQF\SURJUDPV · 5HGHYHORSPHQWJUDQWV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH $SSHQGL[$—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–7KH%DVLVRIWKH3ODQ ,QRUGHUWRUHDOL]HWKHKRXVLQJJRDODQGSROLFLHVLGHQWLILHGLQWKLVSODQWKH&LW\¶VKRXVLQJHIIRUWVZLOO QHHGWRIRFXVRQWKHIROORZLQJ · 3URYLGLQJOLIH-F\FOHKRXVLQJWKDWDGGUHVVHVDOORIWKHKRXVLQJQHHGVDVLQGLYLGXDOVPRYHWKURXJK YDU\LQJVWDJHVRIWKHLUOLYHV · $WWHPSWWRSURYLGHVRPHEDODQFHWRWKHVXSSO\DQGGHPDQGIRUKRXVLQJWRDFFRPPRGDWHUHD VRQDEOHYDFDQF\UDWHV · (PSKDVL]HFRQWLQXDOPDLQWHQDQFHRIWKHH[LVWLQJKRXVLQJVWRFN · 3URYLGHLQIUDVWUXFWXUHQHFHVVDU\WRVXSSRUWKRXVLQJ · $FFRPPRGDWHDQDSSURSULDWHPL[RIODQGXVHVWKURXJKRXWWKHFRPPXQLW\WKDWVXSSRUWVVXV WDLQDELOLW\ $SSO\2ULJLQDO+DVWLQJV'HVLJQ6WDQGDUGV2+'6 3URPRWHKRXVLQJLQLQILOODQGUHGHYHORSPHQWDUHDV )RFXVIXWXUHKRXVLQJLQDUHDVWKDWDOORZIRUHIILFLHQWDQGFRVW-HIIHFWLYHFLW\VHUYLFHV 3URPRWHOLIHF\FOHKRXVLQJ · $JJUHVVLYHO\SXUVXHUHGHYHORSPHQWSURMHFWVQHDUWKHGRZQWRZQDUHDWRSURYLGHIXWXUHRSSRUWX QLWLHVIRUKLJKHUGHQVLW\KRXVLQJZLWKLQFORVHSUR[LPLW\WRWKHFRUHGRZQWRZQ · 5HYLHZDQGHYDOXDWH]RQLQJFRGHUHYLVLRQVWKDWSHUPLWDFFHVVRU\DSDUWPHQWVPRWKHU-LQ-ODZ DSDUWPHQWVJUDQQ\IODWVRURWKHUDOWHUQDWLYHKRXVLQJIRUPV · &RQVLGHUGHYHORSLQJD³SODQERRN´WKDWZRXOGSURYLGHWHFKQLFDODVVLVWDQFHRUUHPRGHOLQJLGHDV LQWHQGHGIRURXWGDWHGKRPHV · (YDOXDWHODQGXVHJXLGDQFHDQG]RQLQJGHVLJQDWLRQRIH[LVWLQJYDFDQWODQGDUHDVZLWKLQWKH&LW\ WRGHWHUPLQHLIRSSRUWXQLW\H[LVWVIRUSUHVHUYLQJODQGVIRUKLJKDQGPHGLXPGHQVLW\UHVLGHQWLDO GHYHORSPHQW · :RUNZLWKSULYDWHODQGRZQHUVDQGGHYHORSHUVZKRSURSRVHUHGHYHORSPHQWSURMHFWVQHDUWKHGRZQWRZQDUHDWKDWPL[XVHVDQGSURYLGHDOWHUQDWLYHKRXVLQJRSWLRQVVXFKDVKRXVLQJRYHUFRPPHUFLDO · &RQWLQXHZRUNLQJZLWKWKH&'$WRGHYHORSDIIRUGDEOHKRXVLQJSDUWLFXODUO\IRUIDPLOLHVDQGVHQLRUV · )RUPSDUWQHUVKLSVZLWKRWKHUQRQ-SURILWDJHQFLHVVXFKDV+DELWDWIRU+XPDQLW\WRGHYHORSRZQ HURFFXSLHGDIIRUGDEOHKRXVLQJXQLWV · 0RQLWRUIHGHUDODQGVWDWHOHJLVODWLRQSDUWLFXODUO\DVLWUHODWHVWRFKDQJHVLQ6HFWLRQ+RXVLQJ 3URJUDPVDQGRWKHU+8'SURJUDPVWKDWSURYLGHORZLQFRPHKRXVLQJIRUSHUVRQVRQIL[HGLQ FRPHVVXFKDVHOGHUO\RUGLVDEOHGSHUVRQV · 3HULRGLFDOO\UHYLHZ86&HQVXVWRGHWHUPLQHLIFKDQJHVLQGHPRJUDSKLFFRPSRVLWLRQUHYHDORWKHU XQPHWKRXVLQJQHHGV &LW\&RXQFLO-DQXDU\:RUNLQJ'UDIW 3DJH %DODQFHKRXVLQJVXSSO\DQGGHPDQG · (YDOXDWHLQHIILFLHQWRUFRQIOLFWLQJODQGXVHVZLWKLQWKHGHYHORSHGDUHDVRI+DVWLQJVIRUUHGHYHO RSPHQWRSSRUWXQLWLHVDQGLQILOOGHYHORSPHQWRSSRUWXQLWLHV · 3XUVXHDQQH[DWLRQRIYDFDQWODQGDUHDVWRDFFRPPRGDWHDGGLWLRQDOKRXVLQJXQLWGHPDQG · 'HVLJQDWHH[LVWLQJYDFDQWODQGDUHDVLQWKHFRPPXQLW\ZKHUHDSSURSULDWHIRUPHGLXPDQGKLJK-GHQVLW\KRXVLQJ +RXVLQJ0DLQWHQDQFH · &RQWLQXHXWLOL]LQJH[LVWLQJKRXVLQJLPSURYHPHQWSURJUDPVWKURXJKWKH&'$ · ([SORUHQHZLQQRYDWLYHDSSURDFKHVWRSURYLGLQJLQFHQWLYHVWRKRPHRZQHUVDQGUHQWDOSURSHUW\RZQHUVWRUHKDEDQGUHQRYDWHROGHUKRXVLQJVWUXFWXUHVZKLOHPDLQWDLQLQJKLVWRULFFKDUDFWHU · &RQWLQXHHQIRUFLQJ&LW\&RGH&KDSWHUVDQG · :RUNZLWKDSDUWPHQWRZQHUVDQGPDQDJHUVWKURXJKDFRDOLWLRQRUJURXSPHHWLQJIRUPDWZLWK DIILOLDWLRQWRWKH0LQQHVRWD0XOWL-IDPLO\+RXVLQJ$VVRFLDWLRQ · &RQVLGHUFRQGXFWLQJDQDQQXDOKRXVLQJIDLUWKDWSURYLGHVRSSRUWXQLWLHVIRUKRPHRZQHUVWROHDUQ DERXWWKHYDULRXVKRXVLQJSURJUDPVWKH&LW\KDVDQGWRSURYLGHRSSRUWXQLWLHVIRUUHVLGHQWVWROHDUQDERXWKRXVLQJEXVLQHVVHVWKDWPD\VHUYHWKHLUUHKDERUPDLQWHQDQFHQHHGV · 3HULRGLFDOO\SHUIRUPDZLQGVKLHOGVXUYH\RIUHVLGHQWLDODUHDVWRGRFXPHQWKRXVLQJFRQGLWLRQVDQGUHFRUGWKHPLQWKH&LW\*HRJUDSKLF,QIRUPDWLRQ6\VWHP*,6 3URYLGHDGHTXDWHLQIUDVWUXFWXUH · ,PSOHPHQWDQDQQXDOVWUHHWVLGHZDONDQGXWLOLW\PDLQWHQDQFHSURJUDPWRHQVXUHSURSHUO\IXQFWLRQLQJLQIUDVWUXFWXUHLQH[LVWLQJGHYHORSHGDUHDV · :RUNZLWKORFDOWHFKQRORJ\FRPSDQLHVLQSURYLGLQJQHZWHFKQRORJ\VXFKDVILEHURSWLFFDEOHDQG KLJKYROXPH 6XVWDLQDELOLW\ · ([SORUHPL[HG-XVHGHYHORSPHQWSURMHFWVIRULQILOOUHGHYHORSPHQWQHDUWKHGRZQWRZQDUHD · (QVXUHSHGHVWULDQFRQQHFWLRQVWRKLJKSHGHVWULDQYROXPHDUHDVVXFKDVVFKRROVRUVKRSSLQJFHQWHUVIURPIXWXUHUHVLGHQWLDOGHYHORSPHQWV · ([SORUHIHDVLELOLW\RIHVWDEOLVKLQJQHLJKERUKRRGFRPPHUFLDOQRGHVZKHQUHGHYHORSPHQWRFFXUV