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12-29-94 agendaCITY OF RICHFIELD, MINNESOTA THURSDAY, DECEMBER 29, 1994 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING HELD CONCURRENTLY WITH SPECIAL CITY COUNCIL MEETING 5:30 P.M. COUNCIL CHAMBERS AGENDA CALL TO ORDER 1. CONSIDEI REVENUE CENTURY LYNDALE LYNDALE NO ADJOURNMENT RATION OF PRELIMINARY RESOLUTION AUTHORIZING USE OF BONDS TO BE UTILIZED BY DOMINIUM INC. TO ACQUIRE COURT APARTMENTS LOCATED IN RICHFIELD AT 7431-7521 AVENUE, 7600-7720 PENN AVENUE AND 6301-6335 AVENUE COUNCIL LETTER NO. 351 Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the Administrative Services Director at 861-9702. 9 CITY OF RICHFIELD, MINNESOTA Council Letter No. 351 December? 29, 1994 Issue Statement: Consideration by the City Council of a resolution giving preliminary approval to the issuance of tax-exempt bonds and application for bonding authority to the State of Minnesota for Century Court Apartments of Richfield. Background Century Court Apartments are located in three areas of Richfield: 76th and Penn, 74th and Lyndale and 63rd and Lyndale. There are approximately 1,100 apartments at these three locations. The current owners desire to sell these properties. Dominium Inc., located in Plymouth, Minnesota, has a contingent purchase agreement to buy the properties. (A description of Dominium Inc. can be found behind Tab 1 in the attached booklet.) To purchase these units and renovate them, Dominium is requesting the City to authorize the application to the Department of Finance for tax exempt bond issuance authority in the not to exceed amount of $21,000,000. Behind Tab 2 in the attached booklet is a preliminary plan for • upgrading the apartments. This plan, however, should be viewed as a preliminary proposal only. Staff has not yet had an opportunity to evaluate it. If the Council approves the preliminary application, several items will be addressed by staff and Dominium. As indication of its good faith, Dominium has already deposited with the City $8,000 to cover out-of-pocket expenses incurred by the City in structuring this transaction. ? An experienced apartment building evaluator will be hired to evaluate the overall condition of the apartment buildings. The results of this evaluation will be used to finalize a plan for upgrading the apartments. ? A contract will be negotiated to help assure performance by Dominium on the upgrading program. ? The contract will also contain provisions to help assure strong management practices. ? A housing plan will need to be prepared and submitted for approval by the Council. The housing plan would establish the importance of these apartment units to the community. Recommended Motion: The City Council adopt the attached resolution providing for a preliminary approval for tax exempt bonding authority, not to exceed $21,000,000, and authorizing application for allocating bonding authority. Basis of Recommendation: 1. Tax exempt revenue bonds will minimize financing costs and operating costs will be less. 2. Century Court Apartments comprise approximately 20% of the rental apartment supply in Richfield. 3. The buildings need physical improvements to remain attractive in the market place. This transaction offers an opportunity to renovate them. 4. Dominium has indicated that rent increases would be in keeping with inflationary increases. They are not seeking to reposition these one bedroom apartments in the marketplace. 5. These properties will continue to pay real estate taxes. 6. Use of tax increment financing has not been proposed. 7. The bonds are secured by the apartment properties not City assets. Alternative Recommendation : • 1. Delay action. 2. Refuse to approve the resolution. Discussion/Decision Mode: . Dominium needs to submit the application for bonding authority to the state before year end. Respectfully submitted, James D. Prosser City Manager JDP:cak 0 THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. GIVING PRELIMINARY APPROVAL TO THE ISSUANCE OF TAX-EXEMPT BONDS AND AUTHORIZING APPLICATION FOR ALLOCATION OF BONDING AUTHORITY WHEREAS, the City of Richfield, Minnesota (the "City") is authorized to issue tax-exempt bonds subject to the annual statewide volume cap on such bonds; and WHEREAS, the City proposes to issue its general or special obligations in an aggregate principal amount not exceeding $21,000,000 (the "Bonds") to finance the acquisition and rehabilitation of a qualified residential rental project known as the Century Court Apartments (the "Project") located in the City of Richfield, Minnesota; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF RICHFIELD THAT: 1. The City Council hereby states its preliminary intention to issue its tax exempt bonds in the aggregate principal amount not exceeding $21,000,000 to finance the cost of the Project. • 2. The City Manger and authorized officers of the City, together with Holmes & Graven, Chartered, as bond counsel with respect to the Bonds, are hereby authorized to prepare and submit to the State of Minnesota Department of Finance, an Application for Allocation of Bonding Authority for Tax Exempt Financing under Federal Tax Law, in accordance with the provisions of Minnesota Statutes, Chapter 474A. 3. That the foregoing preliminary approval of the issuance of Bonds shall be subject to final determination by the City of terms and conditions and shall not constitute an irrevocable commitment on the part of the City to issue the Bonds. 4. This resolution constitutes a declaration of official intent to reimburse from bond proceeds for expenditures to be made with respect to the Project from and after the date hereof, and prior to the date of issuance of the Bonds. Any such reimbursement shall be made in accordance with the requirements of Section 1.150-2 of the Treasury Regulations. 1994. Adopted by the City Council on this 29th day of December, 0 ATTEST: Martin J. Kirsch, Mayor Thomas P. Ferber, City Clerk CENTURY COURT RICHFIELD, MINNESOTA Preliminary Tax Exempt Bond Inducement Request December 22, 1994 DOMINIUM. ? DOMINIUM. December 22, 1994 James D. Prosser City Manager City.of Richfield 6700 Portland Ave. Richfield, MN 55423-2599 Dear Mr. Prosser: The purpose of this letter is to serve as our request for a Preliminary Inducement Application for bonds for the Century Court Apartments located at 7431-7521 Lyndale Ave., 6301-6335 Lyndale Ave., and 7600-7720 Penn Ave. The amount of the Inducement request is $21,000,000. The purpose is for the acquisition and rehabilitation of these apartments. We understand that we as applicant will be responsible for certain related to out-of-pocket expenses and staff time at the City of Richfield. In addition, the City of Richfield will in no way be responsible for the repayment to bond holders. • This financing will permit the project to be rehabilitated in a way which will allow it to continue to provide the City of Richfield with quality rental housing for the residents of Richfield. As you are aware, while the project has generally been well maintained certain building components are original. These components are now over 25 years old and are in imminent need of replacement. Without this type of financing these improvement would have to be paid out of rental operations causing other maintenance areas to be neglected. We do not intend to reposition the product in the marketplace. Our proposal does not incorporate any significant rental increases. As you have indicated the City of Richfield is concerned about maintaining the high quality of its rental housing stock. We at Dominium share that concern and look forward to working together along with staff to finalize our plans for the improvement and rehabilitation of the Century Court Apartments in Richfield. The enclosed package provides greater detail on our company and our plans for the project. Very truly yours, 'Jack W. Safar • JWS/kp Minneapolis - Milwaukee - Miami 3140 Harbor Lane, Suite 102 Minneapolis, MN 55447-5120 Phone 612/559-1711 Fax 612/559-1783 Development - Construction - Management DOMINIUM BACKGROUND Overview Dominium is a real estate development company as well as an accredited property management company (AMO) that provides a wide variety of real estate related services to its customers, including but not limited to, turnkey development consulting, financial feasibility analysis, construction consulting, value engineering and project marketing and management. The fundamental focus of Dominium centers on identifying innovative and successful solutions to today's real estate challenges. Our team of professionals can successfully maximize a property's value and its net operating income to benefit all the partners while meeting any necessary compliance requirements. History Dominium was founded in 1972 by David Brierton and Jack Safar. During the past twenty J, four years they have parlayed their knowledge and entrepreneurial spirit into an - organization that has developed in excess of 6,000 rental housing units around the J country. The financing for these properties has come from multiple sources such as HUD, -, State Agencies, Tax Exempt Bonds, municipalities, Farmers Home Administration, and other conventional and unconventional loans. The organization's vast experience with creative financing solutions enables us to determine what source will provide the most cost efficient loan package for each situation. The property management organization currently operates approximately 5,000 units and has provided consulting services in the following state: Minnesota, Wisconsin, Florida, South Carolina, Arkansas, Missouri, California, and Texas. J Until the mid-80s the organization focused on developing and constructing federally subsidized multifamily housing, providing tenants with low rent, high quality housing alternatives. As federal funding programs were eliminated Dominium's strong product reputation and innovative financing strategies provided a natural transition into market rate multifamily housing developments. Upscale rental housing was Dominium's market J 1 J I7 1 J focus during the late 80s. During the past several years Dominium's efforts have focused on acquiring distress andlor under performing properties. The professionals at Dominium with their analytical skills, creative insight, and execution ability, are well equipped to address the challenges that these properties present. We have been very successful in repositioning these projects in their respective markets and significantly improving their investment value. Development Overview During the past twenty years Dominium has demonstrated. its ability to work with governmental bodies in obtaining regulatory and governmental approvals in the form of rezoning, platting, conditional use permits, variances, demolition of nonconforming facilities, tax increment financing, CDBG funding, HUD and state financing approvals. In order to streamline the approval process it has been our philosophy to keep neighbors well-informed with respect to our plans as well as seek their input. This approach in the past has greatly reduced concerns and objections that typically are raised by an uninformed public. Dominium has developed detailed computer models to assist us with financial analyses. These tools allow us to identify and establish the financial parameters that will result in a financially sound project. The market analysis with respect to unit -mix and rent structure are performed by independent market consultants. Dominium structures a project's ownership depending on the specific situation that exists. We have utilized general partnerships, limited partnerships, limited liability companies and joint ventures types of ownership structures in the past. We work with our partner to create the most desirable ownership. structure. We have financed projects using both conventional and government mortgages. Specifically, we have utilized tax exempt bond financing, tax credits, participating lender mortgages, conventional mortgage financing, FHA 22(d)4, FHA 231 mortgage insurance, Minnesota Housing Finance Agency financing, Wisconsin Housing Finance Agency financing, and FmHA 515 financing. All of Dominium's projects are financially sound and are in good standing with lenders. Dominium has demonstrated as evidenced by our track record that we have the ability to assemble a development team that can generate creative ideas and solutions followed by their implementation. Property Management - Overview The management organization markets and manages both subsidized and market rate residential properties. It strives to maintain a level of service and quality for the property owners and resident that surpasses industry standards. To accomplish this, the management organization focuses on meeting the profit and J financial goals of the property owners and providing residents with comfortable, attractive, well-maintained surroundings. Most properties managed by Dominium feature premiere locations, innovative exterior and interior.design, and quality construction. The company views its residents as "customers" rather than "tenants," striving to satisfy them in a way reminiscent of the • hospitality industry. Dominium conforms to a higher set of standards because it realizes J that the superior service and product will command higher rents and produce satisfied customers. Property Management - Staff J The quality of Dominium's properties is equaled by the quality of its staff. Dominium J' Management Services is an AMO (Accredited Management Organization which is the highest form of accreditation in the industry) and its regional property managers are either CPMs (Certified Property Managers) or candidates for CPM (the highest individual accreditation in the industry). The principals of Dominium allow key employees a great deal of autonomy to make decisions based on their personal expertise-a strategy which makes the most of the company's resources and clients' time. . Dominium's headquarters are in Minneapolis and has regional offices in Milwaukee and Miami that are linked by computer to ensure timely information transmission. -' To date, most of the efforts of the management organization have been in support of Dominium developed properties. The management organization's primary focus is on maximizing the revenue potential of each property that it manages and compliance with any federal or state requirements. This same focus is employed with all fee managed properties. The management organization is equipped to provide a battery of services to third-party -- clients, including market analysis for a customized management plan; accurate and timely computerized financial reports to owners; impeccable maintenance and cleaning of buildings and grounds; detailed projections and monitoring of expenses, results-oriented J marketing support to attract and retain customers; and resident and project compliance monitoring. Conclusion The Dominium organization takes a proactive philosophy in dealing with management and development issues. By anticipating potential problems early, we are generally able to minimize the expense that the project will incur at a later date, thus becoming a better J neighbor in the community. J j { J J t t• RECENT DOMINIUM DEVELOPMENTS Introduction Over. the past 22 years Dominium has had to face a wide variety of problems in the development and management of real estate. Utilizing its experienced staff, Dominium has always been able to quickly and effectively resolve difficult real estate situations. Real estate and property management is an entrepreneurial business where unique and complex problems occur frequently. The staff at Dominium feels that successful property management requires experienced and knowledgeable people close to the situation to make quick and intelligent decisions. The following projects are examples of a few recent problem properties Dominium has recently encountered in the property management business over the past 12 months. These projects represent a sample of under-performing apartment properties that Dominium has been either asked to step in and manage, or has recently acquired. Recent Acquisition/Development Projects Four Courts at Brookda/e Four Courts at Brookdale is a 25 year old apartment complex consisting of 252 units. The project is located just north of the Brookdale Mall in the city of Brooklyn Center. For many years the property operated successfully, but the project was not immune to the changing demographics that occurred in the area over the past several years. The property, like other apartment complexes in the area, saw the quality of their tenant base decrease dramatically. The frequency of delinquent rent payments and police calls to the project had increased considerably. In addition, the project was beginning to show its age. Four Courts needs substantial unit renovation in order to attract a more desirable tenant. Also, funds are needed to address several J major mechanical and structural problems: The heating system needs to be replaced and the balconies have become a safety issue. Dominium has received the full backing of the City of Brooklyn Center to turn the project around. Dominium has recently received an inducement resolution from the city to issue tax exempt bonds. The bond proceeds will finance the acquisition and rehabilitation of the project. In J addition, the project has been allocated tax credits which has enabled the partnership to raise additional funds for rehabilitation. Dominium anticipates the rehabilitation at Four Courts to be completed by the end of 1995. ?j J Dominium is confident the project turn around will be attained through tighter tenant screening procedures, experienced property managers, attractive and desirable units, and the full support of the city of Brooklyn Center. Driftwood Apartments Driftwood Apartments is located in southwestern Minneapolis near the 35W - Highway 62 interchange. The project was constructed in 1964 and consists of 198 one and two bedroom units. The project is located in a middle class neighborhood with many older, well-maintained single family homes. Recently, Driftwood has begun to see more problem tenants at the project. The current management has frequently found itself in the position of evicting the bad tenants. Many people in the community see Driftwood as the seed that could lead to the potential decline of this residential area. In addition to the increasing tenant problems, the Driftwood project has several physical deficiencies. The flat roofs at the project are leaking badly and require immediate replacement. New boilers and windows are needed, and the garages require major repairs. If the project is to attract a higher quality tenant, the apartment units must undergo major renovations. Items that need to be addressed include the repair of interior walls, replacement of all appliances, installation of new carpeting, and a renovation of the bathrooms. The former ownership simply lacked the resources necessary to undertake the a rehabilitation project of this magnitude. it -- Dominium has received an inducement resolution with tax credits from the City of Minneapolis for the acquisition and rehabilitation of Driftwood Apartments. Project rehabilitation will commence in January 1995 and will be completed by fall. All the mechanical and structural problems will be corrected and the unit interiors will be completely renovated. The units will contain new windows, carpeting, and appliances. The renovated units will assist management in drawing in a higher quality tenant. Oakdale Village J Oakdale Village Apartments is a 175-unit project located in Oakdale, Minnesota, a western suburb of St. Paul. The 25-years old project is located in a middle class neighborhood with a J ` mixture of apartments and single family homes. Over the past several years, the Oakdale area has been experiencing growth. Many new homes J j have recently been constructed. A new apartment complex has just opened and many of the existing apartment projects have been renovating their units. However, the former. Oakdale owner had not been putting any money back into the project. Many units became unrentable IJ because of a lack of functioning appliances. In addition, the project requires new windows and replacement of the heating system. Dominium has received an inducement resolution with tax credits from the City of Oakdale. I ? Proceeds are to be used to refinance and rehabilitate the project. Rehabilitation is to include new I,I appliances, new carpeting and vinyl flooring, new cabinets and counter tops, and major repairs to the bathrooms. In addition, 70 detached garages will be erected and new boilers are to be installed. J Williamsburg Estates Williamsburg Estates is a 25 year old, 122 unit market rate apartment complex located in southwestern Minneapolis, Minnesota, near Lake Calhoun. Since October 1993, the property has been operating in foreclosure and the debtor lacked the resources to quickly rectify the situation. The project has been underperforming for several years and the former owner neglected making repairs from normal every day wear. The previous management set rents way below market and in 1993. In 1993 the project was suffering from inadequate cash flows, the property was experiencing a 30% vacancy rate, and its rent levels were considered below market. In December 1993, Dominium acquired the property. As of December, 1994, Dominium had increased occupancy levels to 100% and the project is now generating an operating profit. The improvement in occupancy is attributed to improving the appearance of the grounds and the building interior making it more attractive to prospective tenants. In addition, Dominium brought in experienced leasing agents who understand the needs of the elderly tenant population. Operating expenses at Skylight Gardens were brought under control when Dominium put in place an efficient operating system which allowed the site staff to be reduced by seven people. Hillside Hillside Apartments is a 54-unit project located in Rochester, Minnesota. This troubled property has been experiencing cash flow problems for the past several months and was forced into foreclosure. In November 1994, Dominium purchased the project out of foreclosure from First Trust with the intent of managing and turning the property around. I Property Management Projects Forestwoods Apartments Forestwoods Apartments is 260-unit project located in St. Louis, Missouri. The project was financed under a FHA insured mortgage. As of last year, the property was underperforming and unable to meet its mortgage obligations. In April of 1994, Dominium was brought into the workout situation with FHA in order the to turn around the underperforming project. Domimum took over the property and immediately applied its management expertise. Today, the project is 1 meeting the conditions of the FHA agreement. Gwen Cherry Gwen Cherry Apartments is a 297-unit project located in Miami, Florida. The Project is owned by Dade County HUD, which is the public housing agency of Dade County. Dade County HUD has recently begun a pilot program whereby the management of its projects are to be contracted out to private management companies. In November, Dade County HUD awarded the first contracts to four management companies out of 60 applicants. Dominium was the smallest firm of the four companies to be awarded a contract. As of November, Dominium has installed its own management staff at Gwen Cherry. 16- - ? DOMINIUM" REFERENCES Mr. Robert VandenHoek Minnesota Housing Finance Agency 400 Sibley Street, Suite 300 St. Paul, MN 55401 (612) 296-9826 _ Mr. Howard Goldman Department of Housing and Urban Development Minneapolis-St. Paul Office, Region V 220 South Second Street Apfinneapolis, MN 55401-2195 612) 370-3051 Ms. Pat Gustafson/Ms. Nancy Bokelman City of Faribault HRA 208 N.W. First Street Faribault, MN 55021 (507) 33470100 Mr. Terry McNellis Piper, Jaffray Inc. 222 South 9th Street, 15th Floor Minneapolis, MN 55402 (612) 342-6665 Mr. Warren Nelson South Central MultiCounty HRA 18 Dill Avenue N.W. 04-adelia, MN 56062 (507) 642-3652 Mr. William Sands Western Bank and Insurance 663 University Avenue St. Paul, MN 55101 (612) 780-2810 Mr. Paul Bauer Real Estate Banking First Bank 90 South Sixth Street Minneapolis, MN 55402 (612) 973-8198 Mr. Bruce Brown. The Related Companies 625 Madison Avenue New York, NY 10022 (212),421-5333 Mr. Todd Urness Winthrop & Weinstine 3000 Dain Bosworth Plaza 60 South Sixth Street Minneapolis, MN 55402 (612) 347-0700 Mr. Edward J. Goldsmith City of Plymouth HRA 3400 Plymouth Boulevard Plymouth, MN 55447 (612) 550-5047 Minneapolis • Milwaukee • Miami 3140 Harbor Lane, Suite 102 Minneapolis, MN 55447-5120 Phone 612/559-1711 Fax 612/559-1783 Development • Construction • Management PROPERTY ASSIGNMENTS MINNESOTA PORTFOLIO - SAM ST. PIERRE PATE STARTED P?tOPERTY PROPERTY NUMBER OF AGENCY MANAGEMENT NUMBER NAME ETNITS NAME 1/93 308 Blackrock Terrace 51 Market Rate Aitkin, MN 1980 101 Highland Commons 41 MHFA Arlington, MN 1979 1.03 Northwood, Commons 32 MHFA Baudette, MN 1988 303 Bristol Village 290 Market Rate Bloomington, MN 1994 311 Four Courts at Brooklyn Center 252 Market Rate Brooklyn Center, MN 1979 107 Larson Commons 85 MHFA Cloquet, MN 1978 109 Pennel Park Commons 100 HUD. Duluth, MN 1987 300 Thomas Lake Pointe 216 Market Rate j Eagan, MN 9/93 123 Robinwood Manor 50 HUD 1 Faribault, MN 1987 171 Red Oak Manor 37 FmHA Farmington, MN 1980 119 Sibley Estates East & West 25 & 25 HUD Henderson & Winthrop, MN 1979 115 Valleyview. Commons 32 MHFA Mahnomen, MN 1994 312 Driftwood Apartments 175 Market Rate Minneapolis, MN 9/94 320 Williamsburg Estates 122 Market Rate Minneapolis, MN 1994 313 Oakdale Village 198 Market Rate Oakdale, MN 1978 117 Willow Wood Estates 40 HUD Plymouth, MN 1987 173 Oakwood Court 20 FmHA Princeton, MN 11/29/94 310 Hillside Apartments 54 Market Rate Rochester, MN 12/93 309 Skylight Gardens 59 Market Rate St. Cloud, MN 4/94 315 Forest Woods 260 MR/Sect. 8 St. Louis, MO 4/94 200 The Burlington Apartments 427 Market Rate St. Paul, MN 1982 121 Rivertown Commons 96 MHFA, Stillwater, MN 1983 175 Maplecrest Commons 20 FmHA Waconia, MN 23 Properties 2,707 Units PROPERTY ASSIGNMENTS WISCONSIN PORTFOLIO -LISA HEIN QATE STARTED PRQPERTY FROPERTY. NUMBER OF AGENCY ::.:MANAGEMENT N.UMBEFR NAME NAME 1988 306 Blatz House Offices 70,000 sq. ft. Office/Rata (Commercial) Uiiwaukee. WI 1988 302 The Blatz I 170 Market Rate Miiwaukee, WI I 2/95 322 Breezewood Village II I 65 WHEDA -artland. WI I 1981 133 Caiumet County 46 WHE-A 'ilton, WI New Holstein, WI 1984 141 Greenbriar Village I 45 I HUD Menc„onee Falls. WI 1978 149 Hickoryview Commons 40 HUD Oc-rcrnowoc, WI 1979 139 Jackson County 80 WHEDIA Blac:.< River Falls, WI Alma Center, WI Hixton, WI West Indies, WI Melrose, WI Merrillan, Wl Taylor, WI 1986 143 Monona Hills Apts. 70 WHEDA Madison, WI 1980 145 Neenah 1 60 WHEDA (Hear:.hside Commons) Neenah, WI 1980 147 Neenah II 76 WHEDA (Fireside Commons) (Fox Meadows I LAC 11) Neenah, WI 1979 153 Richland County 78 WHEDA Richland Center, WI 1979 155 Riverview Commons 50 HUD Watertown, WI 1983 151 Sunset Terrace 22 WHEDA Plover, WI 1981 157 Waukesha County 100 WHEDA (Breezewood Village) (Parkland Commons) Hartland, WI Oconomowoc, WI 1982 159 Westside Meadows 41 HUD West Allis, WI 1982 161 Winnebago County 105 WHEDA (Lakeside Commons, Menasha) (Maplewood Meadows I, Neenah) (Maplewood Meadows II, Neenah) (Fairway Meadows, Oshkosh) Woodland Meadows 15 Properties 1,048 Units PROPERTY ASSIGNMENTS FLORIDA PORTFOLIO - MAGGIE PEDRAZA NUMB. A PROPERTY NCY PROPERTY.. A :ST-ARTF=iJ MANAGEMENT NUMBER' NAME. UNETS NAME 1 /1 /95 332 oral Point 325 Market Rate Miami, FL 11/28/94 350 Gwen Cherry 297 Dade County HUD Miami, FL Public Housin 1982 165 Mossy Oaks Village 96 HUD Beaufort SC 1990 202 Shirley H. Gould House 100 HUD Boca Raton, FL 1984 305 Villa Hialeah 245 Market Rate Hialeah, FL i CENTURY COURT -RICHFIELD - PRELIMINARY REHABIT ITATION PLAN A preliminary plan for the Century Court Apartments in Richfield has been developed which will address the capital improvements needs of the project. The rehabilitation program will be separated into two parts. The first part of the program will use the bond proceeds to replace aging mechanical systems, decaying structural components, and to update approximately 50% of the apartment interiors. This initial rehabilitation program is expected to last 24-month. The second part the rehabilitation program will be funded through the energy costs savings generated from the new energy efficient boiler systems, thicker insulation on the new roofs, and the savings from being on interruptible service. This phase of the program will occur over the next two to five years. ' The following rehabilitation plan is based upon the recommendations of our architect and the construction supervisor. The partnership is in the process of refining the scope of work and solidifying the project costs. The partnership intends to closely work with city officials as the process of defining the scope of work proceeds. - Phase Landscaping The project's grounds have been kept in good condition and have mature trees lightly scattered through out. The partnership intends major relandscaping which will have new trees and shrubs throughout the grounds in order to improve the project's appearance. Parking Lots All parking areas will be repaired, seal-coated, and restriped. _i J 'T i i Roofs The roofs on the Century Court Penn Avenue buildings are flat with built-up asphalt and gravel surfacing. These roofs are original and have been patched and repaired as needed over the years. The roofs have reached their expected useful life and major roof replacement is expected over the next few years. The partnership will immediately replace all of the flat roofs upon acquiring the project. Century Court Lyndale Avenue and 63rd Avenue buildings have pitched roofs which are approximately 15 years old. These roofs have approximately another 10 years of useful life remaining. These roofs will be repaired as needed. Exterior Walls All exterior walls are brick and appear in good condition. Tuck pointing, caulking and replacement of damaged brick will be performed if needed. Interruptible Service The partnership intends to install a liquid-propane interruptible service at the project. Interruptible service will substantially reduce the projects utility costs. Heating/Hot Water Heat at all locations is provided through hot water baseboards. The heat and domestic hot water are provided by the same boiler system. Therefore, the boilers are running year round in order to provide the domestic hot water. All of the boilers are original. The partnership intends to install separate heating and hot watef systems. New energy efficient boilers and hot water heaters will by installed in the boiler rooms of each building. 2 s - Carpet/Vinyl New carpeting and floor coverings will be installed in approximately ! half of the units during the rehabilitation program. The replacement of carpeting and flooring remaining 570 units will be performed on an as needed basis from replacement reserves. Interior Painting Half of the apartment units will be completely repainted during the initial rehabilitation period. Windows Windows at the project willed replaced or repaired as needed. Appliances Many of the gas ranges, refrigerators, recirculating range hoods, and air conditioning units are original. The partnership intends to immediately replace appliances in approximately half of the units, with energy efficient models. New appliances will include refrigerators, gas ranges, range hoods, and air-conditioner • unit. J Cabinets/Counter Tops The existing kitchen cabinetry is constructed from plywood and finished with stained and varnished. The cabinetry is in good condition.. The cabinets will cleaned and revarnished,. or replaced if necessary. Most of the kitchen counter tops are original. The partnership intends to replace the kitchen counter tops in approximately half of the units during the initial rehabilitation period. J ; 3 Phase II Windows All unit windows at the project will be replaced with energy efficient vinyl windows. Appliances The remaining 570 units will have the appliances replaced. New appliances will include refrigerators, gas ranges, range hoods, and air-conditioner unit. Carpet/Vinyl The carpeting and floor coverings in remaining 570 units will be replaced. Interior Painting The remaining 570 apartment units will be completely repainted. Plumbing The kitchen sinks, bathroom sinks, and all faucets will be replaced in 1140 units. All water closets will be replaced as necessary. Cabinets/Counter Tops The counter tops of the remaining 570 units will be replaced. 4