Final Deck - Email - KC MFH 8.21.14 · • Monarch Manor (former ballpark site) at 22nd & Brooklyn—20-plus single family sites. John Wood Assistant City Manager/Director Neighborhoods

© 2014 Husch Blackwell LLP. All Rights Reserved.

Seminar MaterialsKeeping Pace with Market Rate HousingAugust 21, 2014

Kansas City Market Rate Housing Seminar

Demographic Data Points

Presented by Kenneth Jaggers

Senior Managing Director

Integra Realty Resources

August 21, 2014


Kansas City Neighborhoods Ready Set Go

• Demographics identify problems and opportunities

• Several neighborhoods are compared to one another and the entire east side

• Is there a renaissance coming?

• What do the demographics support?

Represented Neighborhoods


Lykins

Lykins


Independence Plaza

Independence Plaza


Monarch Manor

Monarch Manor


Beacon Hill

Beacon Hill


Hyde Park

Hyde Park


Santa Fe

Santa Fe


Manheim Park

Manheim Park


East Side Neighborhoods



Demographic Data Points

Urban Neighborhoods

2014 Estimate LykinsIndependence

PlazaMonarch Manor Beacon Hill Hyde Park Santa Fe Manheim Park


% of Pop. With at least Associate Degree 13.79% 16.58% 17.94% 29.86% 42.12% 11.93% 37.62% 15.14%

Total HH 2019 Projection 6,347 5,935 4,058 4,557 9,683 5,373 6,846 27,024

Total Households 2014 Estimate 6,426 5,986 4,052 4,431 9,745 5,411 6,980 27,200

Projected HH Growth 2014‐2019 ‐1.23% ‐0.85% 0.16% 2.85% ‐0.64% ‐0.70% ‐1.92% ‐0.65%

Nonfamily Households % 37.18% 41.81% 50.54% 62.31% 70.12% 45.33% 62.11% 43.45%

Average Household Income $33,201 $31,928 $29,295 $39,840 $45,421 $27,295 $45,439 $31,847

Median Household Income $24,958 $22,748 $21,538 $23,775 $27,950 $20,646 $27,683 $23,317

Average Household Size 2.93 2.65 2.2 1.88 1.81 2.38 2.01 2.52

Travel Time to Work 24 mins 25 mins 22 mins 21 mins 20 mins 24 mins 21 mins 24.42

Walk Score 60 66 62 46 54 43 45 26

Renter Occupied % 54.45% 73.02% 68.21% 67.52% 72.90% 54.24% 63.93% 57.22%

Avg. Length of Residence 6.7 8.1 9.3 7.6 6.1 7.4 6.1 7.4

Median Owner‐Occupied Housing Value $59,540 $68,261 $63,643 $98,244 $147,023 $54,330 $100,651 $56,593

Single Family Detached % 61.66% 37.13% 49.30% 35.72% 28.74% 71.48% 46.50% 64.56%

% of Houses pre 1980 92.69% 89.18% 74.65% 70.21% 87.89% 81.88% 87.66% 86.73%

Median Year Structure Built 1939 1939 1952 1950 1939 1939 1941 1943

Market Rate Housing Opportunities in Kansas City’s Urban Core

“Keeping Pace with Market Rate Housing”By John Wood

Director of the City of KC MO Neighborhood and Housing Service DepartmentAugust 21, 2014


Overview

• Quality housing, whether through homeownership or “good” rental properties, is one of KCMO’s principal goals!

• Homeownership is key; it indicates stability and permanency. Residents have more buy-in to the City’s future because they have a vested interest!

• Strategically promote and target housing geographically, but as a component of holistic, comprehensive approach.

• The end result is not simply housing, however, is more about creating an environment for increased roof-tops and population growth.

• Yet, homeownership is a concern not just in Kansas City but across the country.

• USA Today article in May “Priced Out of A Dream” a reported that among the 100 largest metro areas homeownership for the middle-income population has become more challenging.

• Increasing homes prices outpace wages & incomes, which are comparatively stagnant;

• Buying is preferable to renting, a majority of homes are not affordable for middle-income buyers in 20 of the 100 metro areas;

• In 2013, this was true in only 10 of the 100 largest metro areas;

• Overall, the share of affordable homes have actually declined in 98 of the 100 markets.


• Kansas City Star article, “Home is a Dream Come True”

– Trend of younger families purchasing in areas east of Troost Ave. such as the Ivanhoe neighborhood;

– Down payment, finding willing mortgage lenders, and low-value properties are obstacles;

– Modest incomes, but a willingness to live east of Troost Ave in a mixed-income environment and participate in non-profit community development organizations and neighborhood associations—i.e., Ivanhoe, Westside Housing, Blue Hills Community Services; and

– Tendency to be less dependent on autos, more tech-oriented, and racially diverse attitudes and interactions.

– Opportunity is to leverage these relationships and create social capital network—this human interaction is invaluable to creating “a safe, livable community”.

In Kansas City, MO…• Challenge—how do we attract more residents?

• Geographically large area ~320 Sq. miles, but low density;

– Has 6,600 lane miles of streets & 5,000 miles of water/sewer lines;

– As much infrastructure as Los Angeles, a city of eight million people.

– Kansas City has 1,460 people per sq. mile; Los Angeles -8,000 people per sq. mile;

• Over 7,000 vacant properties, including 4,000 in the Land Bank of Kansas City (Jackson County tax delinquencies);

– About 1,000 (25%) of Land Bank inventory is vacant structures

• These are generally located south of the river, east of Troost Ave. and north of 95th St.


Strategically…

• My goal is to create a quality environment where residents feel safe and can enjoy a quality home within KCMO’s urban core.

• Use City services to stimulate and catalyze: – Employing code inspections and dangerous building demolition;– Creating a robust Land Bank operation;– Selling real estate at deep discounts; – Offering financial incentives using HUD community

development block grant and HOME funds as gap or subordinated financing;

– Developing consensus at City Hall on prioritizing support for LIHTC and other major projects;

– Coordinating with other City departments to provide public infrastructure and streamlined permitting and zoning;

– Incorporating economic development incentives such as Land Clearance for Redevelopment Authority or TIF as needed.


Targeting

• Focus resources over several years to initiate development and substantially complete the area before moving to another– List of 12 target areas;

• Plan for 5 years or less and plan holistically—neighborhood development is more than housing;– Public infrastructure, systematic code inspections, rehabilitation and

home repair, tree trimming, re-purpose vacant properties into parks, community gardens, neighborhood organizing, etc;

• Leverage resources where the City has already invested funding;

• Partner with private sector developers and non-profit community organizations to facilitate support;

• Support larger projects as part of a comprehensive plan.

Beacon Hill• Approx. 100 acres bounded by 22nd St to 27th St., Vine St. to

Troost Ave. Located directly across from City Health Dept. and in close proximity to Hospital Hill and Crown Center.

• Plans changed from a 300 single-family development in 1999 to the current mixed-income and mixed-use development;

• Used a $10MM HUD Section 108 Loan Guarantee to purchase much of the land, relocate residents and demolish older homes and structures;

• Master Developer is Beacon Hill Developers, LC;• Progress was interrupted by significant differences between

previous City administration and the non-profit intermediary resulting in a Federal Receivership—which involved 8 years of litigation.


Beacon Hill• Receivership was resolved March 2013 and fully terminated in

October;

• Since 2011, the City has acted as co-developer and committed resources to stimulate the market;

• As a result, we have $90 million of private, institutional and public funding (mostly private money);– 80 single family homes ranging from $180,000 to $500,000-plus;

– Top sale of $495,000; evidence of increased property values

– Grocery store at 27th & Troost;

– Extended stay hotel;

– UMKC graduate/medical student housing (126 apts.)

– 30 units of mixed-income LIHTC project (Colonnade Apts 27th & Tracy);


Other

• Manheim Park-39th St to Brush Creek, Troost Ave. to Paseo Blvd:

– 50 homes (infill new construction) phased over three years with Make It Right Foundation, Dalmark Dev., BNIM and neighborhood association;

• Historic Santa Fe neighborhood to complement the East Patrol/Community Crime Lab facility at 27th & Prospect Ave (rehab large three-stories);

• 39th & Euclid Gateway Project with Ivanhoe Neighborhood, seven duplex units for sale;

• Monarch Manor (former ballpark site) at 22nd & Brooklyn—20-plus single family sites.

John Wood

Assistant City Manager/Director

Neighborhoods and Housing Services Dept.

[email protected]

816-513-6594


TAX ABATEMENT FOR HOUSING INCENTIVES

By: Charles Renner – August 21, 2014

TAX ABATEMENT/EXEMPTION


Chapter 99

Statutory Cite: 99.300–99.660 & 99.700-99.715 Benefit: 100% Abatement for 10 years Requirements: Must be a constitutional charter city with an LCRA Must be a blighted area Requires LCRA approval and designation of Developer by

LCRA Special Considerations: Generally, no PILOTs are paid. Instead, taxes are

calculated based on the pre-redevelopment assessed value of the property

Assessor not prohibited from increasing the assessed value other than the new construction/rehabilitation

Chapter 353

Statutory Cite: 353.010-353.190 Benefit: 100% Abatement for up to 25 years (typically 10

years 100% and 15 years 50%) Requirements:

Property must be transferred to an Urban Redevelopment Corporation for a “moment in time”

Must be a blighted area Special Considerations: 8% earnings limitation per annum Continue to pay taxes on base value of land (exclusive of

improvements) Most municipalities require PILOTs = base value of

improvements Phased/delayed projects risk increase in base


Chapter 100

Statutory Cite: 100.010 – 100.200

Benefit: 100% exemption (typically between 10-25 years) on real and personal

property taxes

100% sales tax exemption on building materials

Requirements: Must transfer property to a municipality for the term of the exemption

Special Considerations: Belt and Suspenders

Challenges with Assessor if imposing a CID/TDD special assessment in order to monetize the benefit of the exemption

Educating Lenders

Can use other political subdivisions (LCRA, PIEA, CID, and TDD) for property tax exemption (psuedo Chapter 100)

IMPACT OF SPECIAL DISTRICTSvs.

TAX ABATEMENT


Neighborhood Improvement Districts

Statutory Cite: 67.453 – 67.475

Benefits: Special Assessment

Requirements: Within a city or county

Public Improvements

Special Considerations Not a separate legal entity (controlled by the city or county)

Obligations are quasi-general obligations of the city or county

No provision for adding or removing property at a later date

Special assessment can be based on any reasonable method of assessment and different classes of property can be assessed different

Total amount of obligations cannot exceed 10% of the assessed valuation of all taxable tangible property within the city or county

Community Improvement Districts

Statutory Cite: 67.1401 – 67.1571

Benefits: Special Assessment

Property Tax

Sales and Use Tax

Business License Tax

Requirements: Public Improvements

Private Improvements if within a blighted area

Special Considerations Special assessment can be based on any reasonable method of

assessment and different classes of property can be assessed different

Political Subdivision v. Non-profit


Transportation Development Districts

Statutory Cite: 238.200 - 238.275 Benefits: Special Assessment Property Tax Sales and Use Tax

Requirements: Transportation Improvements

Special Considerations Ownership of improvements Municipality appoints an advisor to the board Different classes of property can be assessed

different

BLIGHT


Blight Definitions

Chapter 99 An area which, by reason of predominance of defective or inadequate street layout, insanitary or unsafe conditions,deterioration of site improvements,improper subdivision or obsolete platting, or the existence of

conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic OR social liability or a menace to the public health, safety, morals, or welfare in its present condition and use

Chapter 353 That portion of the city within which the legislative authority of such city determines that by reason of age, obsolescence, inadequate or outmoded design or physical deterioration have become economic AND social liabilities, and that such conditions are conducive to ill health, transmission of disease, crime or instability to pay reasonable taxes

Blight Definitions

TIF/MODESA(almost identical to Ch. 99)

An which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic OR social liability or a menace to the public health, safety, morals, or welfare in its present condition and use

CID (1) Same definition as TIF/MODESA; OR

(2) Has been declared blighted or found to be a blighted area pursuant to Missouri law including, but not limited to, Chapter 353, the TIF Act, or the LCRA law


THANK YOU

HUD/FHA Multifamily Financing for Market Rate Projects

By: Ron Weis


Background:

FHA mortgage insurance has been available for financing multifamily and healthcare properties for many years.

Two developments have made an FHA insured mortgage for these properties more attractive:

• In the early 2000s, HUD transformed the programs into Multifamily Accelerated Processing, and moved primary underwriting responsibility from HUD staff to approved lenders. Healthcare programs then mover into the LEAN program for processing.

• Federal Reserve action coupled with a market desire for security in response to economic difficulties starting in 2008 resulted in historically very low interest rates for FHA insured multifamily and healthcare mortgages. Interest rates that historically averaged between 6% and 7% have remained low.

The two factors, coupled with the longer full amortization, higher leverage ratios, and more favorable prepayment terms for FHA insured mortgages have resulted in an almost 5 fold increase in the annual volume of FHA insured mortgages.

Principal FHA Multifamily/Healthcare Programs:

Note that these programs are not income restricted.

Section 221(d) – for new construction or substantial rehabilitation of existing properties

Section 220 – for new construction or substantial rehabilitation of existing properties located designated urban renewal areas and areas with concentrated program of code enforcement or neighborhood development.

Section 231 – new construction or substantial rehabilitation of existing properties for elderly or disabled persons.

Section 223(f) – refinancing or acquisition of existing properties.

Section 232 – new construction or substantial rehabilitation of healthcare residential properties (board & care, assisted living, nursing homes).

Section 232/223(f) – refinancing or acquisitions of healthcare residential properties.


Section 221(d) – New Construction/Sub Rehab

• 40 year term & amortization; non‐recourse; fixed rate; loan amount the least of 83.3% of replacement cost or a loan supported by a 1.20 debt service coverage ratio; decreasing % prepayment (not yield maintenance); interest only during construction; fully assumable.

• Initial concept meeting to review the basic elements of the project and eligibility

• Two step application process with the pre‐application requiring a Phase I ESA, market study, limited appraisal for income and expense comps, and limited architectural drawings for site plan, 1st floor layouts, typical wall section, and apartment unit floor plans.

• May have up to 10% of net rentable square footage in commercial space and 15% of project EGI in commercial income.

• Requires payment of Davis Bacon prevailing wage rates for construction.

Section 220– New Construction/Sub Rehab for Urban Renewal and Concentrated Development Areas

• Terms and application process same as for 221(d) program

• May have up to 20% of net rentable square footage in commercial space and 30% of project EGI in commercial income.

• Located in an eligible area:

1. An urban renewal area or area of code enforcement carried under one of three Federal programs.

2. A concentrated development area, approved by the Hub/PC, in which concentrated housing, physical development and public service activities are being carried out in a coordinated manner, pursuant to a locally developed strategy for neighborhood improvement, conservation or preservation.



Section 231– New Construction/Sub Rehab for Rental Housing for the Elderly

• Terms and application process similar to the 221(d) program

• Occupancy limited to persons age 62 years and older

• Meals and service cannot be required and included as part of the rent.

• Attention is given to apartment layout and design to ensure consistency with the need of elderly persons or persons with handicapping conditions.


Section 223(f) – Acquisition/Refinancing for Existing Apartments

• 35 year term & amortization; non‐recourse; fixed rate; loan amount the least of 83.3% loan to value ratio, 100% of refinancing cost (83.3% of acquisition cost) or a loan supported by a 1.20 debt service coverage ratio; decreasing % prepayment (not yield maintenance); fully assumable. Cash out is allowed if the loan amount does not exceed 80% LTV.

• The property must have been completed or substantially rehabilitated at least three years prior to the date of firm application for mortgage insurance.

• Initial concept meeting, in person or via teleconference, to review the basic elements of the project and eligibility

• One step process requiring the usual 3rd party reports.

• May have up to 20% of net rentable square footage in commercial space and 20% of project EGI in commercial income..

• Repairs do not require payment of Davis Bacon prevailing wage rates


The risk analysis and perspective has a longer window so the review process requires more detail

The underwriting needs to demonstrate that there is a reasonable expectation that the property will be successful:

Construction will be completed for the amount of money loaned

The property will rent up and achieve underwritten stabilization for the amount of money loaned.

Using FHA Mortgage Insurance Programs for New Construction/Substantial Rehabilitation

+ ‐

Longer, fully amortizing terms Davis Bacon wage requirement

Fixed rate – no interest rate risk for 40 years

Time for application and to closing is longer (full plans & specs., processing)

Lower interest rate due to the mortgage insurance

Greater leverage

Land/property equity recognized in Loan to Replacement cost calculation

Non‐recourse from the beginning of construction through the entire term of the loan

Fully assumable

Builder/developer equity recognition

Favorable prepayment terms


Using FHA Mortgage Insurance Programs for Acquisition/Refinancing

+ ‐

Longer, fully amortizing terms Project must be at least 3 years old

Fixed rate – no interest rate risk for 35 years

Does not work well for acquisition financing due to the amount of time required to process & close

Lower interest rate due to the mortgage insurance

Greater leverage for refinancing

Can cover 100% of refinancing costs if LTV & DSCR allows

Fully assumable

Repairs do not require Davis Bacon wage rates

Favorable prepayment terms

Ron WeisVice President

Gershman Mortgage1557 E. Primrose, Suite B100

Springfield, MO 65804Direct: 417‐881‐4739Cell: 417‐343‐[email protected]

1

ARNOLD DEVELOPMENT GROUP

SOCIAL EQUITY

ECOLOGICAL STEWARDSHIPCreating lasting value through sustainable development.

2

Table of Contents

• Answering the Call - Company Overview

• Changes Demographics and Housing Preferences

• A New Model for Sustainable Urban Development

• About ADG

ARNOLD DEVELOPMENT GROUPPage 2

3

Introduction

Answering the Call

housing, transportation, and other infrastruc-ture investments, the Partnership is promot-ing reinvestment in existing communities,

areas where disinvestment and industrial pollu-tion have left a legacy of abandoned and con-taminated sites. Other grants require recipients

Former Treasury Secretary Henry Paulson recently wrote that Climate Change is “the challenge of our time.” It is very likely that our great grandchildren will unequivocally agree. How we respond to this challenge will largely determine the kind of world we bestow on future generations.

While world leaders carry on a never ending policy debate, Congress has reached a similar paralysis – with no viable solution in sight for reducing the greenhouse gases in our atmosphere.

While the public sector may be slow to act, we believe that the private sector is perfectly positioned to play a leading role in creating a sustainable tomorrow.

We have all the solutions we need to create a low carbon society – but need to develop economical systems-based solutions that can bring sustainability into the mainstream.

Arnold Development Group is a benefit corporation focused on addressing global warming and income inequality by changing the way we develop real estate in the United States and throughout the world.

Our mission is to develop and refine scalable solutions for creating real estate that offers a high quality of life, consumes dramatically less energy, and lasts hundreds of years. The assets will be more profitable over time, especially when measured across a triple bottom line of profit, planet and people.

The long term economic savings created by sustainable development presents an opportunity to address a second pressing challenge of our time, income inequality. Creating a strong middle class and sustainability are intricately linked. High transportation and housing costs redirect resources away from higher priority areas such as education, nutrition and healthcare.

The scalable systems based solutions that we develop enable families to spend less money on housing, transit and food, which in turn fosters the creation of a stronger middle class.

We invite you to join us as we answer the call to build a more resilient and just future.

— Jonathan Arnold

CEO, Arnold Development Group

4

Primary Challenges

Climate Change

Buildings account for 39% of carbon emissions. We need to change the way we build.


5

Primary Challenges

Income Inequality

Stagnant wages are eroding the middle class.(Limiting who can afford market rate housing.)


6

In 2030, only 27% of U.S. Households will have Children

75% of U.S. Households prefer to live where they could walk to more destinations.

44.5 million new attached and small lot detached units will need to be built between now and 2020 to meet the demand.

Changes in Demographics and Housing Preferences

Sustainable Development Opportunity

DISTRIBUTION OF HOUSEHOLDS WITH AND WITHOUT CHILDREN, AND SINGLE-PERSON HOUSEHOLDS, 1960, 2000, AND 2030

Household Type 1960 2000 2030

Households with Children 48% 33% 27%Households without Children 52% 67% 73%Single-Person Households 13% 26% 28%

SUMMARY OF HOUSING PREFERENCE SURVEYS

Housing Type Detailed Share Total Type Share

Attached 38% Apartment 14% Townhouse 15% Condominium/Cooperative 9%Detached 62% Small Lot 37% Large Lot 25%Total “new urbanity” preference (attached + small lot detached) 75%

PROJECTED HOUSING DEMAND COMPARED TO CURRENT SUPPLY

Supplyy Demand Difference, Demand Difference, Difference, Residential 2007 (in Demand 2020 (in 2007-2020 (in 2030 (in 2020-2030 (in 2007-2030 (in Type thousands) Share thousands) thousands) thousands) thousands) thousands)

Attached, 39,093 38% 55,242 16,149 60,521 5,279 21,428 all types

Small lot 25,337 37% 53,789 28,452 58,929 5,140 33,592Large lot 63,773 25% 36,344 (27,430) 39,817 3,473 (23,957)Detached 89,110 62% 90,132 1,022 98,745 8,613 9,635

totalTotal 128,203 145,374 17,171 159,267 13,892 31,064

75%

16,149

28,542

27%

ARNOLD DEVELOPMENT GROUPPage 6 Arthur C. Nelson, Director of Metropolitan Research

College of Architecture + Planning of the University of Utah

7

Kansas City MSA Demographic Trends

Growth in Households from 2010-2040• 87% of Growth will be Households without Children

• 54% of Growth will be Single Person Households.

• 50% of all Growth will be Rental Housing.

Housing Preferences from 2010-2040• 50% of people would prefer to be able to walk to work or shops.

• Only 10% live in neighborhoods where that is possible.

To meet the demand for walkable places, all new housing will need to be built in walkable neighborhoods.

Source: KANSAS CITY METROPOLITAN AREA MARKET TRENDS, PREFERENCES AND OPPORTUNITIES TO 2025 AND 2040 Report by the Metropolitan Research Center University of Utah for Mid-American Regional Council


8

Walkable neighborhoods require a critical mass of residents to fi nancially support service retail.

40-70 dwelling units per acre will achieve this critical mass.

Critical Mass =Enough Residents + Visitors

To Support Retail and Services

Key to Creating Walkable and Transit Oriented Neighborhoods

Critical Mass


9

LODO, DENVER

SANTANA ROW, SAN JOSE

PEARL DISTRICT, PORTLAND

RIVER MARKET, KANSAS CITY

Examples of Successful Urbanism


10

Page 10 ARNOLD DEVELOPMENT

Housing and transportation costs outpaced incomes from 2000 to 2010. Developing housing in centrally located, transit oriented neighborhoods will be more competitive than auto-dependent locations.

0%

1%

20%

30%

40%

50%

60%

Household Income

Combined Housing

+ Transportation Costs

Transportation Costs

Housing Costs

+52%

+33%

+44%

+25%

Pe

rce

nta

ge

Ch

ang

e (

20

00

– 2

010

)

Rising Housing and Transportation Costs vs. Incomes for the Median-Income Household in the Largest 25 Metro Areas(costs and income are not adjusted for inflation)

NOTE: Households in this figure include renters and homeowners carrying a mortgage. On subsequent pages, our analysis focuses on all renters and owners, including homeowners who own their home outright.

Source: Housing + Transportation (H+T®) Affordability Index applied to 2000 Census data and 2006-2010 American Community Survey data (Center for Neighborhood Technology and Center for Housing Policy).

LOCATION EFFICIENT AREAS (H+T Less Than 45% of HH Income)

NON LOCATION EFFICIENT AREAS (H+T 45% and Greater of HH Income)

Kansas City Metro Location Effi cient Areas


The New Development Model

Transit Oriented Development

11

The Future We Want Jonathan Arnold and Bill Becker co-founded the project

then partnered with the United Nations.

A 5-year initiative to fill the “vision vacuum” in the sustainability space.

A replicable model for envisioning sustainable communities around the world.

” We need everyone —

Government Ministers and

policymakers, business and

civil society leaders, and young

people — to work together to

create a future worth choosing,

a future we want.”

- Secretary General Ban Ki-Moon


Previous Work with the United Nations


12


Conclusions after working with the United Nations

• We have all the technologies we need to address climate change.

• The problem is too large for NGO’s and Non-Profits

• We need profitable models for sustainable development that can be easily replicated.


13

Siloed Thinking addresses issues as distinct “Problems” to be solved individually.

Systems Thinking considers the interdependence of objects and their attributes


Siloed vs Systems Thinking

Energy Housing Food Transportation

Energy

Housing

Food

Transportation


14

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Dolla

rs

Goal: Reduce HH Expenditures through Sustainable DesignThe New Development Model


Utilities

..Transportation

....Shelter

..Food

Social Security

..Healthcare

..Entertainment

..Apparel and services

..Alcoholic beverages

Other

Household Operations, Supplies, Furnishings

Taxes

Utilities

..Transportation

....Shelter

..Food

Replicable model to reduce these household expenditures.

Source: U.S. Bureau of Labor Statistics, Consumer Expenditures in 2009, News Release, USDL-10-1390, October 2010.

Transportation

Utilities

Shelter

Food

15

Second & Delaware

The New Development Model• 312 Unit Prototype• Transit Oriented• Passive House Certifi ed


16

Outdoor Pool

Raised Planting Beds

Pocket Park

Landscaped Roof Gardens Roof Gardens Toddler Play Room Urban Agriculture

Human Scale Design

Shared Conference Room

Sun Drenched UnitsWorkout RoomLiving Walls

ARNOLD DEVELOPMENT GROUPPage 16 Second and Delaware Apartments

17

ARNOLD DEVELOPMENT GROUPPage 17 Schematic View from Delaware Street

18

ARNOLD DEVELOPMENT GROUPPage 18 Schematic View of Courtyard

19

ARNOLD DEVELOPMENT GROUPPage 19 Schematic View of Courtyard

20

Second and Delaware


Raised Planting Beds

Soccer Field

Common Roof Terrace

Completed 2nd Street

Schematic View of Roof Terraces and Park

21

Last Generation Development Model

While stick-built construction offers a low cost alternative to concrete construction, over time the structure becomes susceptible to mold.

Problems with Stick Construction:

• Not Flexible - Cannot change use.

• Thin walls allow sound to transfer easily.

• Poorly insulated and energy ineffi cient.

• OSB absorbs moisture for long periods of time which mold and cause hidden health hazards.

• Require large capital expenditures to maintain buildings over time.

The business model of most merchant builders is to create structures as cheaply as possible and sell them to a REIT, Life Insurance Company or Pension Fund.

The long term consequences are left for the institutional investors and the municipality to contend with.


22

Passive House Construction

Current Development Model uses poorly insulated walls and oversized mechanical systems to compensate for the thermal losses.

Passive House Model calls for super insulated building envelopes and require 70-90% less energy to heat and cool the building.

5” Walls

$119.00 per month $26.47 per month

16” Walls



Passive House Buildings have 70-90% lower utility bills.

23

Additional Environmental Benefi ts

Natural Gas Combined Heat and Power - 100% Coal Free


24

Additional Environmental Benefi ts

Reduction in Source Energy Consumption

One Light Tower Second and Delaware

Conditioned Space (sf) 277,512 290,754 Total Energy Consumption kBtu/yr 40,703,695 4,522,830 Source Energy (kBtu/yr) 145,370,339 5,798,500

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

Total Energy Consumption kBtu/yr Source Energy (kBtu/yr)

One Light Tower

Second and Delaware

96% Reduction in Source Energy Consumption

Typical Multifamily High-Rise

Second and Delaware Apartments

Typical High-Rise

Second & Delaware


25

• This project will be a game changer for the multifamily housing and green building movement in the United States.

• 20,000 buildings in Europe have been built to Passive House standards, many of them large scale housing developments.

• Second and Delaware will be the fi rst institutional investor scale Passive House (superior to LEED Platinum) in the United States.

• More importantly – the project is a replicable model for Pension Funds, Health Insurance Companies, and REITs, to base their acquisition criteria on.

• The model will prove that higher quality buildings have lower risk profi les and have higher returns than the current model.

Impacts

Bringing Passive House into the Mainstream


26

If not for the Streetcar, this project would be half the size.

• The Streetcar project that will connect the River Market to downtown prompted us to double the size of our development and increase our investment in Kansas City by $20 million.

• Second and Delaware will contribute $30,000 per year to the Streetcar Transportation Development District and $20,000 to the River Market Community Improvement District.

The Impact of the Streetcar


27


Transit Oriented Development


$0

$100

$200

$300

$400

$500

$600

ConventionalDevelopment

Transit OrientedDevelopment

Zip Car CostsMonthly TransitCar PaymentsFuel Costs

$0

$100

$200

$300

$400

$500

$600

Living in transit oriented neighborhoods can reduce transportation costs by 70%


28


Urban Agriculture

Typical Rooftop Food Producing Rooftop


Cost of Fresh & Canned Produce


Rooftop agriculture builds community and improves access to healthy food

29

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Baseline Costs New Market RateCosts

UtilitiesTransportation CostsHousingFood

19%Reduction

Financial Impacts

Reduction in Key Monthly HH Expenditures

$544 per month or equivilent to a 19% reduction in household expenditures.


30

Environmental Impacts

Annual Reduction in CO2 Emissions:

2,416 Tons of CO2

Equivalent Yearly Benefi ts:This project will dramatically reduce CO2 emissions for the lifespan of the building.

CO2 Emissions from:245,682 gallons of gasoline consumed

56,192 tree seedlings grown for 10 years

5,096 barrels of oil consumed

457 passenger vehicles

28.9 tanker trucks’ worth of gasoline

91,312 propane home barbecue cylinders

9.4 rail cars’ worth of coal

Every year this project will reduce CO2 emissions equivalent to the carbon sequestered by 1,796 acres of pine forests.

ARNOLD DEVELOPMENT GROUPPage 30 Compared to the energy consumed by conventional buildings in non TOD neighborhoods.

31

Replicable Incentives

PACE Financing

Energy Savings

Pace Loan (20 year at 2.75%)Mortgage ConstantDSCRAdjusted Savings

Pace Loan Amount

248,214$

0.0661.0

248,214$

3,779,623$


32


The Arnold Development GroupThe Arnold Development Group (AGD) designs and develops high quality mixed-use retail, offi ce and residential projects. We strive to create vibrant urban neighborhoods where residents and visitors can live, work, learn, and play. Once completed, our projects are a catalyst for economic growth and future development.

Commitment to SustainabilityWe are committed to creating high quality, long lasting buildings that not only yield a fi nancial return, but also signifi cant social and environmental benefi ts.

Our commitment to building high quality, energy effi cient developments in walkable, urban core locations will provide a competitive advantage for years to come.

ADG has been certifi ed by B Labs to meet their rigorous standards of social and environmental performance, accountability and transparency.


About the Arnold Development Group

Company Overview

33


Investment Philosophy

Concrete StructuresMaking long lasting and adaptable buildings.

Livable DensityMaking density attractive, secure and desirable.

Super Insulated EnvelopesReducing energy costs by 70%

Urban GardensProducing food and strengthening communities.

Long Term Investment Approach

At the Arnold Development Group, we bring a long term investment to all of our projects, and evaluate the fi nancial return of a project using a total life-cycle cost analysis.

All of our investments are analyzed using a minimum of a 20 year investment period. This aligns our interests with stakeholders in the community and results in high quality developments that hold their value over time. Our investment philosophy enables our developments to deliver benefi ts across a triple bottom line.

Stick Built Construction

CORE COMPONENTS TO ADG DEVELOPMENTS

• Build high performance real assets that outperform the current model fi nancially, socially and environmentally.

• Combine best practices in building science, transportation, and urban food production to increase competitive advantage and yield.


34

Page 34 ARNOLD DEVELOPMENTPage 34 ARNOLD DEVELOPMENT

Jonathan ArnoldChief Executive Offi cer, Principal

Jonathan is responsible for strategy, corporate vision and capital structure. He is an

expert at placemaking and specializes in mixed-use urban infi ll developments. Over

the last 17 years, he has helped design, market and develop more than $6 billion in

commercial real estate and large scale energy projects, including buildings in Battery

Park City, Brooklyn, New York, and Kansas City.

Jonathan holds a degree in architecture from Cornell University and a Masters in

Real Estate Development from Columbia University.

Jonathan is also the founder of Arnold Imaging, a visual communications company

that specializes in communicating the benefi ts of mixed-use developments before

they are built.

Christian ArnoldChairman, Board of Directors, Principal

Christian is responsible for the entitlement, design and execution for all

developments undertaken by the company. Christian’s entrepreneurial spirit and

leadership skills allows him to effectively lead our team of consultants. Before

joining the Arnold Development Group, Christian was a design director in the Boston

offi ce for the largest architectural fi rm in the country. He has managed the design

and construction of more than $2.8 billion in commercial real estate.

Christian is a graduate of Kansas State University and is also a founding partner

of Clockwork Architecture and Design. Christian is involved in a number of local

and national charities and not-for-profi ts, including National MS Society, DIFFA,

Muscular Dystrophy Association, The Leukemia and Lymphoma Society.


Principals

35


Featured Project: First and Main Lofts


36


Featured Project: Second and Delaware Offi ce


37

Design Team


Clockwork ArchitectureKansas City, Missouri

Clockwork is a multi-disciplinary design studio

founded by Neil Sommers and Christian Arnold with a

proprietary business model that results in a return on

investment for our clients.

Their expertise lies in commercial and residential

architecture, interior design, graphic design and

construction management. The current team consists

of design professionals trained in architecture, interior,

graphic, web, and industrial design.

Their talented team of designers has won numerous

design awards including the prestigious Edward

Tanner Award. The design work has been published

in Dwell, Architectural Record, I.D., Interior Design,

Interiors and Sources, World Architecture, Inc. and

many local and regional periodicals.

DRAW ArchitectureKansas City, Missouri

DRAW Architecture + Urban Design is an

interdisciplinary architecture fi rm integrating

design, research and new technologies in ways

that are changing the way people live.

Their work refl ects their commitment to achieving

exceptional design through resourceful,

responsible, innovative solutions for clients and the

community. Located in the Crossroads Art District

near downtown Kansas City, their design and

research-focused collaborative employs a high-

level team of visionary architects, designers and

thinkers with a vision to create thoughtful, beautiful

spaces.

DBE/WBE/SLBE Certifi ed

LEED + Energy Consultant

Direct Design EnterprisePawling, New York

Established in 1995, Direct Design Enterprises is

located in Pawling, New York within the New York

Metropolitan area. Direct Design Enterprises offers

a full spectrum of architectural and design services

including the following areas of expertise:

Direct Design Enterprises staff experience

includes multi-family residential rail and airport

transportation facilities, commercial and

institutional facilities, agricultural, single and power

stations and historic restoration.

Projects currently completed or in progress are

located in Manhattan, New York, Connecticut,

New Jersey, North Carolina, Virginia, Maryland,

Idaho, North Dakota, Florida, Rhode Island,

Massachusetts, Missouri, Kansas, Venezuela,

India, China and The Philippines.

We have assembled a team of best in class designers, energy consultants, and engineers from local and national fi rms.

The result of their collaboration is a design solution that offers amazing aesthetics, energy effi cient units, and a long lasting structure.


38

FinancingOppenheimer Multifamily Housing & Healthcare Finance, Inc.

Oppenheimer Multifamily Housing & Healthcare Finance, Inc. is a wholly-owned subsidiary of the same Oppenheimer and Co. that provides investors with the necessary expertise and insight to meet their fi nancial challenges. Oppenheimer Multifamily Housing & Healthcare Finance will be the lender for the construction and permanent fi nancing for Second and Delaware Apartments.

Second and Delaware will be fi nanced with a mortgage that is backed with a HUD 221(d)4 loan guarantee. On November 28, 2012, we presented the project to the Kansas City Housing and Urban Development offi ce in Kansas City Kansas. The project was very well received. The HUD representatives commented on the urban design, the transit oriented location, and the energy effi ciency the project will offer. On December 10, 2012 ADG was invited by HUD to submit a per-application, the next stage in the process. We are scheduled to submit the application on March 15, 2013.

The HUD 221(d) loan program offers non-recourse debt that is amortized over 40 years and lent at a rate of 3% per year. The 221(d)4 program lowers the risk profi le of the project by locking in an interest rate for the full 40 year term. The rate lock, coupled with the 40 year amortization period, enables us to invest in higher quality materials and building systems and to still be cash fl ow positive.


Jack HollandManaging Director4717 Grand Ave., #700Kansas City, MO [email protected] Michael HammondDirector85 Broad Street, #2600New York, NY 10004212.667.5539

[email protected]


39

Contact InfoFor more information, please contact:

Jonathan ArnoldPrincipal

210 West 5th Street

Kansas City, MO 64105

T. 816 595 5000

F. 888 598 2703

[email protected]


Neighborhoods and Housing Services Dept.

Target Areas

Heart of the City Area Plan:

- Monarch Manor @ 22nd and Garfield

- East Patrol Area – Brooklyn from 25nd to 26th – TA# 1

- 27th Street Brooklyn to Prospect – TA# 2

- Park, 27th to 28th – TA# 3

- Seven Oaks along 39th Street:

- 39th Street, Jackson to Emanuel Cleaver II Blvd.

- Elmwood, 39th to 38th Street

- Spruce, 39th to 43, two Phases

- Santa Fe – Benton Blvd, 27th to 31st

- Manheim around Bancroft School Redevelopment

- 39th Street, Euclid to Prospect

Briarcliff-Winnwood Area Plan:

- North Jackson, NE 38th to NE Russell Rd.

Swope Area Plan:

- East 53rd Street, Mersington to Spruce

- East 55th Street Corridor, Paseo to Prospect

Hickman Mills/Ruskin Area Plan:

- Blue Ridge Blvd. To Bristol, E. 114th Street to E. 113th Street

Downtown Area Plan:

- Westside along Summit

- Completed Lots/Property- BHD Townhomes- Beacon Hill Colonnades- Mt Prospect - Single Family- BHSHD - Student Housing- Commercial TBD- Northwest Quadrant- Grocery/Retail- Southwest Quadrant - Residen al TBD- Historic MXD By Owner- Tracy Infill by BDC/CDC- Mul -Family by MHDC- Green Reserve Area- Church

PROJECT LEGEND:

Mt. Pisgah Church

Paseo Bap st Church

Revised:November 7, 2013

HOUSING LEGEND:

STREETS LEGEND:

Walking Trail

Beacon Park

Google FiberHut Loca on

LAND CLEARANCE FOR REDEVELOPMENT AUTHORITY

jwood31

Sticky Note

Final Deck - Email - KC MFH 8.21.14 · • Monarch Manor (former ballpark site) at 22nd & Brooklyn—20-plus single family sites. John Wood Assistant City Manager/Director Neighborhoods

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