June 2015 Capitol Hill Housing Board Meeting Keys and Addenda Reminder: Dinner begins at 5:45. The meeting starts promptly at 6 PM.

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1 June 2015 Capitol Hill Housing Board Meeting Keys and Addenda Reminder: Dinner begins at 5:45. The meeting starts promptly at 6 PM. Disclosures and recusals: Board members will review items on the agenda and make any necessary disclosures and recusals. Community Programs & External Relations Update: Michael and others will debrief on Top of the Town, luncheon and the Community Forum. In general, the events went well both in terms of the fund raising component and the community relationship building component. We had some challenges and will continue to have challenges earning trust and the process is providing us insight into our own short comings as an organization. Chris will discuss our next steps in building that trust and in partnering with CD-based organizations. Presentation and Discussion: This will be a prelude to the discussion we anticipate having at the retreat. The topics also respond to our desire to work in other communities. Executive Session: The board will enter executive session (b) To consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price; and (c) To consider the minimum price at which real estate will be offered for sale or lease when public knowledge regarding such consideration would cause a likelihood of decreased price. However, final action selling or leasing public property shall be taken in a meeting open to the public. Real Estate Development Discussion: 24 th and Union has been acquired and will move toward abatement and demolition as discussed at the May Board meeting. Greg will provide a brief verbal update on the project. Executive Committee: Jill and Chris will give an update on the strategic planning process including and discuss the agenda for the retreat. Finance: The finance committee presents its regular report and dashboard through April The audit is complete and is available for Board members. Asset Management and Acquisitions: Brad will go over the final terms of the mitigation at the Brewster.

2 Board Packet Attachments 1. Meeting Keys & Agenda 2. Consent Agenda and Attachments a. Contracts and Expenditures (None) b. Board Minutes c. Tenant Complaint Resolution Log (None) d. Property Management Report and Minutes e. Property Management dashboard f. Memo from the CHH Foundation g. Real Estate Development Report and minutes h. Sustainability Report i. Executive Committee Minutes (To be Distributed at Board Meeting) 3. April 2015 Finance Report and Statements and Asset Management Report Audit Apartments Disposition plan Upcoming Meetings and Events Please let Chris or Michael Know if you d like additional information on any event or meeting. Monday, June 8 CHH Board Meeting Thursday, June 18 Board Retreat Monday, June 22 CHH Executive Committee Meeting

3 CAPITOL HILL HOUSING BOARD June 8, :00 PM 7:30 PM Regular Meeting 12 th Ave Arts Pike-Pine Room th Avenue, Seattle AGENDA 6:00 Call to Order (Quaintance) 1. Approve consent agenda Attachment 2 2. Disclosures and recusals 6:05 Public Comment (Not to exceed 5 minutes per individual or 15 for combined speakers) 6:10 Community Programs and External Relations 1. Top of the Town and Community Forum (Seiwerath) Hand Out 2. Community Next Steps (Persons) Verbal 6:15 Presentation and Discussion 1. Structure concept Discussion 2. Beyond Cultural Competence 6:45 Items in Executive Session 1. CADA Properties Introduction 3. CH TOD Update 4. Real estate opportunity 7:05 Real Estate Development Discussion (Persons, Elkerton) th and Union Power Point 7:10 Executive Committee and Board (Persons/Quaintance) 1. Strategic Planning 2015 (Fleming) Hand Out a. Board Retreat 7:15 Finance Report (O Donnell, Wallis) 1. Financial summary, cash management report: April 2015 Attachment Audit 7:20 Asset Management and Acquisitions (Persons and Fleming) 1. Brewster Final Terms Power Point 7:30 Adjourn (Quaintance)

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5 Regular Board Meeting Pike-Pine Meeting Room th Avenue, Seattle May 11, 2015 Members Present: Bob Fikso, Heyward Watson, Rachel Ben-Shmuel, Cathy Hillenbrand, Jaebadiah Gardner, Sharron O Donnell, Drew Porter, Liz Dunn, Paige Chapel, Dana Behar, Matt Roewe,, Robert Schwartz Staff Present: Chris Persons, Jill Fleming, Deena Wallis, Greg Elkerton, Simone Hamilton, Greg Elkerton, Kirk McClain (taking Minutes), Melissa Blankenship Absent: Alice Quaintance, Farin Houk, Michael Malone, Paul Breckenridge Guest Present: Maureen Kostyack Call to Order (Cathy Hillenbrand): The May 11 th regular meeting of the Capitol Hill Housing board of Directors was called to order by Chair, Alice Quaintance at 6:05 pm when a quorum was reached. Approve consent agenda. Disclosures and recusals: No disclosures or recusals were made. Public Comment No members of the public were present. Community Programs and External Relations: Top of the Town and Community Forum (Seiwerath) Chris Persons spoke in Michael Seiwerath s absence regarding Top of the Town event. Top of the Town event is fully sold-out. CHH decided to join the three events together: Top of the Town, Community Forum, and Community Round-table to take advantage of the upcoming Denise Scott visit. Chris gave brief bio of Denise and her organization, Local Initiatives Support Corporation (LISC.org). This year CHH will hold its Community Forum in the Central District as a way to address issues related to gentrification in that area. Chris mentioned there was significant negative feedback regarding the Top of the Town Invitation. CHH had conversations with our community partners and addressed that and other related issues around CCH s commitment to preserving the diversity of the Central District. Chris added that these recent events provided a great learning opportunity for CHH to practice better cultural awareness. Chris mentioned the CHH Foundation BBQ. Board members were asked via online poll to pick a date when they preferred to attend the first annual CHH Foundation Board BBQ. The event is scheduled to be held at Sherry Brown s house on Capitol Hill. Presentation and Discussion: Maureen Kostyack, Housing Program and Development Manager with the City of Seattle Office of Housing presented: The State of Housing Seattle and Washington. Chris introduced Maureen to the Board. Maureen has several years of experience working in affordable housing in Seattle. Maureen discussed three main topics: Present housing affordability and livability, Seattle Housing Levy, Affordable housing Policy in Olympia (Olympia is currently in Special Session). Real Estate Development Discussion: 24 th and Union project. CHH is purchasing the site on May 20 th. CHH has applied for demolition permit and will start asbestos abatement process at the end of July Chris mentioned CHH is cognizant of the community feelings about the site. CHH is discussing a communications plan that will balance need to have an event commemorating the memory of the building, with the need to develop the property. Jaebadiah Gardner suggested CHH make an effort to include minority-owned

6 businesses of color working on the project or work with companies to hire people of color to do some of the labor. CHH is currently having a conversation with one General Contractor regarding hiring minority laborers. Strategic Planning 2015: Staff performed a visioning exercise at the last All Staff meeting with the goal of coming up with a big accomplishment for CHH ten years into the future. CHH will take the results of the exercise to the management team/leadership team retreat to work on crafting it more into a vision statement to take to Board Retreat. Another strategic planning activity was at the annual meeting. Our strategic planning consultant who led the last part of the meeting asked for stakeholder input regarding future directions for CHH. Summary of that input will be available at next board retreat. Housing Partnership Network: Jill distributed a handout for Housing Partnership Network (HPN). CHH will host a tour of 12AA building for HPN in June. Finance Report: Financial summary, cash management report: May Sharon O Donnell reported regarding the new policy for Capital Budget projects to give the board insight to any major projects CHH does next year and for Budget was finalized and was included in the Board Packet. Overall financial position is very good. Jill also reported that the CHH Charter requires that the Board should adopt a capital budget. Thus far, board has never been presented with a capital budget. CHH executive staff is working hard on coming into compliance with all elements of the Charter. CHH is in a much better position to track CHH capital needs. Chris asked if CHH will be doing capital budget with the regular budget in the future. Jill reported it will most likely be done with the regular budget in December, or in January or February, shortly after Board adopts the operating budget next month. Board member requested the Minutes reflect that Board accepted with the understanding that we will actually do the projects that we have the financing to do. A Motion to approve Finance Report was made, seconded and passed unanimously. Asset Management and Acquisitions: Brewster Update and deal points. CHH has a meeting with Seattle City Light next week. Chris will update the board on additional developments after that meeting. Fire Station 7 update and deal points. We expect to close on July 15 th. Chris reported that the City has moved beyond their ability to take over the property. CADA Properties will be discussed at next Board meeting. Meeting was adjourned at 7:55PM Attested, Robert P. Schwartz, Secretary May 11, 2015

7 Property Management Committee Members: Rob Schwartz (Chair), Farin Houk, Heyward Watson, Mitchell Belcher, and Kristin Ryan Staff: Billie Abers, Katrina McMillian June 2015 Property Management Committee members, Rob Schwartz (Chair),by phone, met with Billie Abers, Director of Property Management, Brad Lange, Director of Asset Management and Acquisitions, Lisa Hagen, Asset Management Analyst and Katrina McMillian, Senior Portfolio Manager, on June 2, The committee reviewed the report and discussed current property management activities. Capital Projects current The exterior painting of the Pantages is scheduled to start on June 8 th and be completed by the end of July. The Devonshire interior painting began May 11 th, and will be complete early June. Carpet installation will follow. Brewster Brad, Jill and Chris met with City Light Management last week, we continue to discuss options and mitigation regarding the Denny Substation and its impact on the Brewster residents, operations and finances. The Fredonia roof is complete and the Park Hill roof started June 1 st, and be complete by the end of June. Work has started at the Larned with Legacy Telecommunications, Inc. to install Verizon Wireless system on the roof and basement. We are in negotiations with Verizon at the Broadway Crossing. We are in the process of getting proposals for interior painting and replacement of interior flooring at the Seneca. We held a day of caring at Gale Place on June 2 nd, with WNBA. They held a basketball clinic, assisted with grounds keeping, donated a basketball hoop and opening game day tickets. We are in the process of requesting proposals to upgrade the Helen V fire alarm system. Resident Services In May Resident Services provided 48 Households with direct one-on-one services. Distributed $1129 in rental assistance. Held 10 community events, including the first Resident Services HUD zoo trip. Began development of a resident voter registration pilot. Third Party Management The remaining CADA buildings, Union/James and Harvey, are third party managed. We will be responding to an RFP for SHA in June. The committee reviewed the Disposition plan for the 410 Apartments.

8 The committee reviewed the Turnover memo from Asset Management. Building Operations From the Finance report: Year to date April 30, 2015 Blended Operating Statement Vacancy loss for the portfolio was 3.6% for the first four months of Vacancy loss for 2014 and 2013 was 3.8% and 2.7%. For budget purposes we assumed vacancy rates ranging from 3-5% depending on the building.

9 Capitol Hill Housing Operating Statement For the period ending: 4/30/2015 Benchmarks 98% Excellent 95% Good 90% Poor 98% Excellent 95% Good 90% Poor <30 days Excellent 45 days Good 60+ days Poor 1.15 excellent 1.05 good <1.0 concern 1.15 excellent 1.05 good <1.0 concern 1.15 excellent 1.05 good <1.0 concern Frequency YTD YTD YTD YTD YTD YTD Monthly YTD M M YTD 2015 A A A Type HUD Buildings Units Actual Inc Budget Var % Exp (before debt s Budget Var % Op exp/unit - YTD (Before Res) 2015 YTD Vac Loss Vac 2/2014-2/2015 YTD Vac Vac Cash Flow after reserves and debt service Occupancy Rate Occupancy Rate 12 mth trend Repl Res Y or N Op Res Average Unit Y or N Turnaround Time DCR 2013 Actual DCR 2012 Actual DCR 2010 Actual Reserve Balance - 4/30/2015 Operating Reserve Balance 4/30/2015 Cash budgeted into CHH budget Comments Blended HUD 18th Ave 9 39,135 38,206 2% 19,028 21,130 10% 2, % 0.1% 0.1% 0.0% 6, % 100% Y $89,286 $865 Blended 410 Apts 6 17,907 17,334 3% 11,159 12,356 10% 1, % 0.0% 0.0% 0.0% 3, % 100% Y $69,960 $30,662 Blended HUD 412 Apts 12 52,619 58,594-10% 43,626 48,849 11% 3, % 13.0% 12.8% 8.8% 5,381 92% 87% Y $87,080 $0 Blended Berneva 12 35,197 34,247 3% 23,429 29,458 20% 1, % 1.6% 0.3% 2.7% 7, % 99% Y Y $8,757 $5,427 Blended Boylston Howell 30 96,459 97,746-1% 74,175 75,169 1% 2, % 2.9% 3.3% 1.0% (40,119) 100% 97% Y Y $54,117 $14,595 One time debt service payment Blended Bremer , ,359 2% 83,993 86,877 3% 1, % 1.6% 2.1% 1.6% 16,124 99% 99% Y Y $103,491 $31,990 $15,000 Blended Brewster 35 94,290 93,292 1% 57,933 57,023-2% 1, % 3.7% 4.2% 3.4% 27, % 96% Y Y $492,089 $30,411 $15,000 Blended Broadway 5 19,454 19,572-1% 12,562 12,702 1% 2, % 12.0% 0.0% 9.1% 2, % 88% Y $17,120 $3,552 Blended Burke Gilman Gardens 15 54,042 58,126-7% 49,110 45,818-7% 3, % 5.1% 9.8% 3.2% (20,815) 96% 95% Y Y $102,353 $26,551 One time debt service payment Blended Byron Wetmore 12 39,892 41,733-4% 34,884 38,147 9% 2, % 4.6% 8.5% 4.4% (2,892) 92% 97% Y $38,787 $5,649 Blended Casa di Cinque 5 21,703 21,166 3% 10,847 16,519 34% 2, % 0.0% 0.0% 0.0% 8, % 100% Y *** $21,823 $11,842 $5,000 Blended Centennial ,522 98,103 6% 48,626 56,531 14% 1, % 1.4% 0.9% 3.1% 10, % 99% Y Y $26,644 $16,637 Blended Devonshire , ,243 2% 139, ,471-9% 2, % 2.5% 1.3% 2.9% (831) 98% 98% Y Y $334,445 $9,934 $35,000 Blended HUD Elizabeth James , ,027 3% 124, ,519 7% 2, % 4.2% 1.4% 6.1% 9, % 95% Y $90,109 $0 Blended Fleming 36 98,551 97,992 1% 65,795 65,667 0% 1, % 8.6% 5.2% 7.7% (1,305) 92% 98% Y Y $32,462 $7,801 Blended Fredonia 12 92,636 87,900 5% 64,948 53,723-21% 5, % NA 3.9% 0.8% 2,202 92% 98% Y Y $60,353 $70,608 $30,000 Blended Gale Place 24 92,650 90,188 3% 80,547 75,302-7% 3, % 3.3% 5.1% 2.4% (1,552) 96% 97% Y $23,293 $41,934 Blended Gilman Court 25 96,434 93,176 3% 92,191 70,659-30% 3, % 1.1% 1.6% 0.9% (9,959) 100% 99% Y Y $55,475 $4,418 $4000 reserves in transit Blended HUD Hazel Plaza 16 67,988 71,256-5% 45,776 37,360-23% 2, % 7.5% 6.7% 7.7% 4,339 95% 94% Y 174 ** 1.04 $63,698 $0 Blended HUD Holden Vista 16 50,373 55,572-9% 54,419 47,220-15% 3, % 6.6% 13.2% 5.7% (22,361) Y $65,426 $0 3rd party management Blended John Carney 27 68,929 68,860 0% 58,961 49,815-18% 2, % 5.3% 3.9% 4.9% (4,220) 100% 96% Y Y $41,997 $36,008 $5,000 Blended Larned 33 80,063 82,678-3% 77,727 75,687-3% 2, % 4.2% 4.3% 3.7% (147) 100% 94% Y Y 67 ** $32,204 $17,444 Blended Lincoln Court 29 87,732 88,719-1% 63,418 51,865-22% 2, % 3.6% 2.1% 3.4% (12,462) 100% 96% Y Y $1,208 $242 Roof expenses not reserved Blended HUD Mary Ruth Manor 20 81,655 79,547 3% 57,465 58,481 2% 2, % 5.9% 5.5% 4.9% 4, % 95% Y $140,213 $0 Blended Maxwell 4 14,118 13,716 3% 10,291 11,026 7% 2, % 0.0% 0.0% 0.0% 1, % 100% Y $14,371 $13,001 Blended Melrose 30 73,957 77,040-4% 64,461 63,621-1% 2, % 6.1% 9.9% 4.8% (3,316) 92% 94% Y Y $69,013 $27,744 Blended Miller Park 12 45,156 46,115-2% 39,841 34,341-16% 3, % 9.1% 5.0% 8.5% (5,635) 100% 92% Y Y $173,990 $29,685 Blended Park Hill , ,627 0% 87,470 86,331-1% 2, % 2.0% 3.1% 2.1% 11,861 98% 99% Y $62,949 $65,624 $25,000 Blended HUD Ponderosa 23 67,278 65,387 3% 68,808 60,345-14% 2, % 4.2% 2.2% 5.7% 11,627 96% 96% Y 61 *** $253,687 $0 Blended Seneca , ,618 2% 74,904 79,603 6% 2, % 2.5% 0.0% 2.6% 11, % 97% Y Y $244,587 $5,609 Blended Villa , ,475 6% 150, ,160-10% 2, % 4.3% 4.5% 3.4% 14, % 95% Y Y $122,922 $11,553 2,577,438 2,553,614 1,891,643 1,821,773 34,161 Discrete 12AA , ,005 0% 156, ,808 7% 1, % 4.7% 0.5% 3.6% 145, % 32 $69,664 $435,366 Discrete Broadway Crossing , ,881 2% 117, ,472-8% 2, % 3.8% 1.1% 4.8% (1,179) 98% 94% Y Y $151,799 $102,839 Discrete HUD El Nor , ,450 1% 131, ,064 5% 2, % 2.3% 0.7% 2.6% 13, % 98% Y $509,295 $182,390 Discrete Fremont Solstice 18 63,795 67,283-5% 58,617 47,789-23% 3, % 7.0% 3.9% 7.4% (15,235) 100% 94% Y Y $55,215 $78,608 Audit fees and consulting Discrete Haines (new) 30 97,056 96,585 0% 64,955 69,948 7% 2, % 1.3% 2.2% 0.0% 30, % 99% 82 $30,011 Discrete Harrison , ,950 2% 90,646 67,804-34% 4, % 2.6% 0.2% 2.9% (22,645) 100% 98% Y Y $49,011 $72,688 Real estate taxes not budgeted for Discrete HUD Helen V , ,987 1% 78,723 80,014 2% 2, % 1.4% 0.0% 1.9% 15, % 99% Y Y $256,937 $107,357 Discrete Holiday , ,102-3% 68,290 64,366-6% 2, % 6.1% 5.1% 6.2% (9,453) 87% 94% Y Rehab yr $37,283 $128,080 $10,000 reserves in transit Discrete Oleta ,591 98,559 3% 60,627 62,221 3% 1, % 7.4% 1.4% 8.2% 4,921 97% 92% Y Y $137,079 $0 Discrete Pantages , ,789-2% 181, ,723-54% 3, % 3.4% 3.5% 3.8% (57,867) 98% 99% Y Y $490,125 $167,818 Repair and maintenance to reserve Discrete HUD Silvian , ,002-1% 106,847 81,172-32% 3, % 4.6% 3.7% 3.6% (28,903) 91% 89% Y $286,604 $157,456 Partnership management fee Discrete Squire Park Plaza , ,491-10% 131, ,981-2% 2, % NA 11.3% 2.5% 106,940 91% 89% 79 $4,905 Discrete The Jefferson , ,760 1% 111,620 90,327-24% 2, % 1.7% 2.7% 1.0% (16,926) 95% 98% Y part yr $53,486 $211,000 $12,000 reserves in transit Discrete Unity Village 30 90,644 92,732-2% 65,049 71,579 9% 2, % 1.8% 2.9% 2.2% 21,224 Y ** N/A N/A 3rd party management ,130,938 2,169,576 1,423,609 1,302, ,082 M:\Admin\Board\PACKETS\2015 Packets\06 15\2e Property Management Dashboard 2015.xlsx

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11 MEMORANDUM To: Capitol Hill Housing Board of Directors From: Michael Seiwerath, Executive Director, Capitol Hill Housing Foundation CC: Christopher Persons Re: June 2015 Fundraising and Communications Update GRANTS AND DONATIONS CHHF received a $5,000 grant from Wells Fargo to support affordable housing. Recent grant submissions include a $10,000 request to Union Bank, and requests for support from Chase Bank (Real estate and community development), Room and Board (Resident services) Seattle Foundation (Arts District) the Seattle Department of Neighborhoods (EcoDistrict), and Transit Center (Shared Parking). A recent proposal to Enterprise Community Partners was declined. AWARDS 12th Avenue Arts came in second place for the NDC Academy Awards, losing by a single vote. Board Chair Alice Quaintance and Senior Developer Katie Porter presented the project to a panel in Washington, DC. 12th Avenue Arts is a finalist for the ULI Global Awards for Excellence. This is a great honor the project is one of 22 finalists from seven nations. ULI judges will be visiting the building this summer, and winners will be announced in San Francisco in October. 12th Avenue Arts is an Urban finalist for the Affordable Housing Finance Magazine s Reader s Choice Awards. The Pantages Apartments won this award in th Avenue unfortunately was not a finalist for the 2015 Charles L. Edson Tax Credit Excellence Award.

12 EVENTS Top of the Town May 20 Top of the Town proved to be another sold out dinner, and there was strong feedback in support of the event. The sunny weather meant the outdoor patio could be used, Denise Scott s talk was relevant to the challenges of Seattle, and Doris Koo made a persuasive appeal. Continuing to grow, the event grossed more than $128,000 versus a budget of $99,000, and surpassed the 2014 total of $102,000. Sponsorship played a key role, bringing in nearly $90,000. Net proceeds are up approximately 20% from Central District: A Conversation on a Changing Community May 21 For this year's forum, we partnered with Centerstone and the Central District Forum for Arts & Ideas, to host a community conversation on issues facing the rapidly changing neighborhood. Following the recommendations of our partner organizations and other community leaders, we revised our approach to the event. Rather than a large public event, we facilitated a smaller, interactive conversation with more time for attendees to discuss issues. Attendees were community stakeholders were invited by the partnering organizations. The conversation at the Langston Hughes Performing Arts Institute was a dynamic, engaging discussion about the challenges in the Central District. In the opening remarks, Andrea Caupain of Centerstone spoke about how the changes were disproportionately affecting people of color, Christopher Persons spoke about why CHH is partnering in the Central District, and Denise Scott of LISC spoke about successful relevant communities throughout the nation. The second part of the program was small group conversations about four subjects: (1) Cultural & Community Preservation, (2) Engaging Young People of Color, (3) Affordable Housing Development, (4) Small Business and Neighborhood Economic Development. This format offered ample time for participants to discuss these themes, and voice opinions. The program ended with a call from Denise Scott for more partnerships to keep the Central District affordable and culturally vibrant. Video from the event is here:

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14 COMMUNICATIONS & EXTERNAL RELATIONS Capitol Hill TOD Our protest to Sound Transit regarding the affordable housing site at the future Capitol Hill light rail station continued to receive media mentions on the Capitol Hill Seattle blog and Capitol Hill Times. We have appealed Sound Transit s initial denial of our protest and members of the media have been informed. Sustainability The Holiday community solar program was covered by Next City and featured in a report by A Renewable America. Joel Sisolak s latest guest post on the CHS blog talks about community resilience. Additional media coverage has included a Seattle Weekly story on homelessness that features CHH staff member Kirk McClain and a DJC announcement of 12th Avenue Arts AGC Build Washington award for construction excellence. CAPITAL CAMPAIGN 12th Avenue Arts Capital Campaign Overall GOAL : $4.6 M Goal Pledged TOTAL $4,600,000 $4,737,205

15 Capitol Hill Housing Foundation 2015 Budget As of June 2, 2015 Unrestricted Budget Income Source 2015 Goal 2015 Actual % to Goal Government $ 20,000 $ - NA Foundation $ 219,917 $ 189, % Corporate $ 89,250 $ 17, % Individual $ 118,000 $ 69, % Events & Sponsorships $ 143,500 $ 87, % TOTAL $ 590,667 $ 364, % Restricted Budget Income Source 2015 Goal 2015 Actual % to Goal Government $ - $ - Foundation $ 100,000 $ 100, % Corporate $ 0 $ - 0.0% Individual $ 25,000 $ - 0.0% Events & Sponsorships $ 0 $ - 0.0% TOTAL $ 125,000 $ 100, % Combined Budgets (Restricted & Unrestricted) Income Source 2015 Goal 2015 Actual % to Goal Government $ 20,000 $ - 0.0% Foundation $ 319,917 $ 284, % Corporate $ 89,250 $ 12, % Individual $ 143,000 $ 69, % Events & Sponsorships $ 143,500 $ 87, % TOTAL $ 715,667 $ 454, %

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17 REAL ESTATE DEVELOPMENT BOARD REPORT Property Development Committee (PDC) Members: Paul Breckenridge, Alice Quaintance, Liz Dunn, Matt Roewe, Dana Behar, Rachel Ben-Shmuel, Bob Fikso, Andrew Brand; Staff: Greg Elkerton, Katie Porter The Property Development Committee met on Tuesday, June 2 nd at 5:30pm. PDC members in attendance were Paul, Alice, Bob, and Andrew; CHH staff members in attendance were Greg and Katie. June 2015 CURRENT PROJECTS 1. 12th Avenue Arts (88 units/arts/commercial/office): Staff is tracking the TI build out for the retail tenants and the close-out of public financing. 2. Haines Construction is complete. The building is in the three month stabilization period and will then convert to permanent financing. 3. Union & 24 th (Liberty Bank Building): The site has been acquired. Our environmental consultant is working to start the environmental remediation process, which will include the demolition of the existing building and additional site characterization. Staff is working on initial programming and financing plans in anticipation of a public funding application in September. The PDC reviewed the project s predevelopment spending. POTENTIAL PROJECTS 4. Sound Transit - Transit Oriented Development (TOD): CHH is in discussions with Gerding Edlen, who must have a non-profit partner for the B-North site acceptable to Sound Transit by late June. CHH also filed an appeal to Sound Transit s denial of our formal protest to not award the B-North site to a non-profit developer, as stipulated in the Development Agreement with the City of Seattle.

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19 SUSTAINABILITY and PLANNING MONTHLY REPORT TO CAPITOL HILL HOUSING PDA BOARD June 8, 2015 Staff: Joel Sisolak, Sustainability Director, Alex Brennan, Senior Planner, Arielle Lawson, Outreach Coordinator EcoDistrict Steering Committee: Neelima Shah (co-chair)*, Mike Mariano (co-chair)*, Matthew Combe*, Julie West, Cathy Hillenbrand*, Alicia Uhlig, Charles Bowers, Clayton Smith, Erik Rundell, Erika Melroy, Heather Burpee, Ian Siadak, Janet Shull, Joe David, Julie West, Lauren Rochholz, Leon Garnett, Liz Dunn, Michelle Caulfield, Michelle Hippler, Chasten Fulbright, Whitney Fraser. *Executive Committee member PROGRAM DEVELOPMENT Grants We have pending requests with the Department of Ecology (Public Participation Grant), the Bullitt Foundation, Department of Neighborhoods NMF, King County Metro and TransitCenter. Sponsorship We continue to reach out to businesses to request sponsorship. Staffing We are in the midst of a hiring process to bring on a new FTE Sustainability Manager. The Sustainability Manager will join Joel Sisolak and Alex Brennan on the Sustainability and Planning team. Arielle Lawson will be completing her 1-year commitment via the Lutheran Volunteer Corps on July 22. We currently have 2 interns working on EcoDistrict projects. ECODISTRICT PROJECTS Community Solar The project is FULLY SUBSCRIBED! There will be a celebration at Cal Anderson Park July 12 being organized by City Light. We are in the process of awarding a contract to a consultant for analyzing the feasibility of expanding the community solar program onto other buildings. District Shared Parking The report from our district shared parking research is complete and posted to the EcoDistrict website projects page. We are working on fundraising and internal conversations to prepare for implementing the report s recommendations. Dumpster Removal We have partnered with the Capitol Hill Chamber to explore waste management alternatives to the current illegal placement of waste and recycling dumpsters on streets and sidewalks within the EcoDistrict. We have begun to document the problem and work with the Chamber, SPU, Recology Cleanscapes and local retailers on developing a recommendation.

20 Pedestrian Streets About 50 community members attended the Community Council meeting on this topic on May 28 th. The project received press in the Capitol Hill Seattle Blog, the Stranger, and Seattle Transit Blog. The community engagement phase of the project is coming to a close and the planning phase for the pilots is starting. Urban Design Framework We have been in ongoing conversation with the Department of Planning and Development about a neighborhood planning process that would ramp up in 2015 and more publicly launch in early DPD is enthusiastic about the effort and the opportunity to build on work that EcoDistrict stakeholders have been doing for the past couple of years. It is unclear that DPD will have funding to appropriately staff this planning effort. Land Use Review Committee The Land Use and Development Working Group is interested in launching a LURC to serve parts of the EcoDistrict likely to see an uptick in development pressures in the coming few years. In April, this concept (as well as the UDF) were presented to the Capitol Hill Housing PDA Board and met with enthusiasm. ECODISTRICT LEADERSHIP Capitol Hill EcoDistrict Steering Committee The Steering Committee will meet July 10th. The Equity and Engagement Working Group will lead a discussion about bringing greater diversity to our work and applying an equity lens to our project prioritization processes. Waste and Behavior Working Group The Waste and Behavior WG is focused on developing a resident engagement program, which will operate as a partnership between Capitol Hill Housing and Recology Cleanscapes. This pilot project is contingent on funding. We have a request pending with the WA State Dept of Ecology and expect to learn if that funding will be included in the Governor s budget. Equity and Engagement Working Group This working group also is tasked with developing an equity lens for prioritizing all future EcoDistrict initiatives. The WG will be hosting the EcoDistrict Steering Committee meeting in July Land Use and Development Working Group This WG reviewed zoning topics that could be part of a future planning process. Future meetings will discuss building performance, right of way, and fee/incentive opportunities. EcoDistrict and DPD staff will work on 2016 project scoping. COMMUNICATIONS & ENGAGEMENT Website As requested, Resource Media has provided constructive criticism of the EcoDistrict website. Joel is working with the CHH Foundation team to make updates. Capitol Hill Community Council The Community Council hosted the EcoDistrict to discuss our Pike Pine Pedestrian Street project on May 28 th. OTHER COMMUNITY DEVELOPMENT WORK South 12th Research and community engagement for this project are ongoing. GREENING CHH

21 Resource Conservation We are reviewing multiple systems for monitoring the energy and water use across the CHH portfolio, and included a request for funding WegoWise ( in our most recent funding proposal to Enterprise Community Partners. That proposal was declined. Green Building The City of Seattle received an in-kind grant from the US Department of Energy to do a deep audit of one of CHH s properties to determine the potential for energy retrofits well beyond the usual low-hanging fruit, towards the bigger picture of what we can do now to ensure that the building can be operated efficiently and economically 20 or 30 years down the road. The audit of the Boyleston Howell was completed on

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31 CAPITOL HILL HOUSING IMPROVEMENT PROGRAM Financial Statements and Single Audit Reports For the Years Ended December 31, 2014 and 2013

32 Table of Contents Independent Auditor s Report 1 2 Management Discussion and Analysis 3 8 Financial Statements: Balance Sheets 9 10 Statements of Revenues, Expenses and Changes in Net Position 11 Statements of Cash Flows Notes to Financial Statements Supplementary Information: Schedule of Departmental Operations 35 Schedule of Property Operations Schedule of Expenditures of Federal Awards and Related Notes Single Audit Reports: Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Schedule of Findings and Questioned Costs Schedule of Prior Audit Findings 47 Page

33 Independent Auditor s Report Board of Directors Capitol Hill Housing Improvement Program Seattle, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the business type activities and the aggregate discretely presented component units of Capitol Hill Housing Improvement Program (CHHIP), as of and for the years ended December 31, 2014 and 2013, and the related notes to the financial statements, which collectively comprise CHHIP s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. T: T: F: NE 4th St Suite 1700 Bellevue WA clarknuber.com We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business type activities and the aggregate discretely presented component units of CHHIP, as of December 31, 2014 and 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

34 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 3 through 8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise CHHIP s basic financial statements. The schedules of departmental operations and property operations are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A 133 and is not a required part of the financial statements. The schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedules of department operations and property operations are fairly stated, in all material respects, in relation to the basic financial statements as a whole. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated May 19, 2015 on our consideration of CHHIP s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering CHHIP s internal control over financial reporting and compliance. Certified Public Accountants May 19,

35 CAPITOL HILL HOUSING IMPROVEMENT PROGRAM Management Discussion and Analysis For the Year Ended December 31, 2014 As management of Capitol Hill Housing Improvement Program ( CHHIP ), we offer readers of the CHHIP financial statements this narrative overview and analysis of the financial activities of CHHIP for the year ended December 31, Financial Highlights - Assets exceeded liabilities (net position) at the close of 2014 by over $19 million. - Unrestricted cash and cash equivalents at December 31 totaled $2,447, CHHIP properties continue to operate with extremely low vacancy rates with the portfolio averaging 3.7 percent in During 2014 CHHIP, as the developer, completed the 12th Avenue Arts project, a $47 million development combining affordable housing, performing arts space, community space, retail, and parking. Construction of 12th Avenue Arts was completed during the fall of The residential condo unit consisting of 88 units of affordable housing was placed in service in September and all units were leased by October 31. The commercial and garage condo units were placed in service in October. CHHIP moved its main office to the second floor of the building in October. All of the commercial spaces were under lease at December 31, The garage condo unit which provides secure below grade parking for the Seattle Police Department was occupied in November. - The Tiltsonian was sold December 2014 for $961,000 which resulted in a gain on sale of $619,798. CHHIP provided relocation assistance to affected tenants and successfully relocated 4 of the 5 households in CHHIP units at other locations. - During 2014 the investor limited partner transferred its limited partnership interest in Fleming Apartments Limited Partnership to CH Development Association a blended component unit of CHHIP. - Haines Acquisition LLC, which was wholly owned by CHHIP, sold the Haines Apartments to Affordable Apartments Associates LLC on September 30, CHHIP is the managing member of Affordable Apartments Associates LLC and Raymond James Tax Credit Funds, Inc. is the investor member. Affordable Apartments Associates LLC was formed to facilitate the rehabilitation of the 30 unit apartment building using the low income housing tax credit. Rehabilitation work began immediately upon closing and was completed in April, Overview of the Financial Statements CHHIP s financial statements consist of three parts management s discussion and analysis (this section), financial statements prepared in accordance with Governmental Accounting Standards Board (GASB), and supplemental schedules. CHHIP financial statements provide information about CHHIP s overall financial position and results of operations. The financial statements report information about CHHIP as a whole using accounting methods similar to those used by private sector companies. These statements, which are presented on the accrual basis, consist of the Balance Sheet, Statement of Revenues, Expenses and Changes in Net Position, and the Statement of Cash Flows. The Balance Sheet includes all of CHHIP s assets and liabilities. All of the current year s revenues and expenses are accounted for in the Statement of Revenues, Expenses and Changes in Net Position regardless of when cash is received or paid. 3

36 CAPITOL HILL HOUSING IMPROVEMENT PROGRAM Management Discussion and Analysis For the Year Ended December 31, 2014 Overview of the Financial Statements (Continued) The financial statements include the activities of CHHIP and 15 related entities that are required to be combined with CHHIP. These entities are three nonprofits, Elizabeth James Senior Housing, Central City Affordable Housing and CH Development Association and twelve limited partnerships and limited liability companies, Larned Apartments Limited Partnership, Byron/Wetmore Limited Partnership, Ponderosa at Madison LLC, SOPI Village Manager LLC, Villa Apartments Limited Partnership, Gilman Court Limited Partnership, 1214 Boylston Avenue Limited Partnership, Fleming Apartments Limited Partnership, Holiday Affordable LLC, Haines Acquisition LLC, Twelfth Avenue Arts Master Tenant LLC, Twelfth Avenue Arts Development LLC, and CH Real Estate Management Services LLC. Although legally separate, the nonprofits were formed to meet the mission of CHHIP. Since CHHIP board members comprise all or a majority of the nonprofit boards' members, they are considered instrumentalities of CHHIP and are included in CHHIP's financial statements. CHHIP is the general partner and CH Development Association has replaced the investor limited partners in the six limited partnerships. CHHIP is the sole member of Ponderosa at Madison LLC, Haines Acquisition LLC, and Holiday Affordable LLC and has a majority interest in SOPI Village Manager LLC. CH Development Association is the sole member of Twelfth Avenue Arts Development LLC which is, in turn, the sole member of Twelfth Avenue Arts Master Tenant LLC. During 2014, CHHIP formed CH Real Estate Management Services LLC to provide property management services to third parties in select situations. CHHP is the sole member of the LLC. The financial statements also include as "Discrete Component Units" 13 legally separate tax credit partnerships and limited liability companies for which CHHIP is financially accountable as the sole general partner or managing member. Additionally, the Capitol Hill Housing Foundation is included as a discrete component unit as is 12th Avenue Arts Associates LLC and Twelfth Avenue Arts Association. Financial information for these affiliates is aggregated and reported in a separate column from the CHHIP financial information. Audited financial statements are available for all of the discrete component units and may be requested from CHHIP. The financial statements also include a Notes to Financial Statements section that provides additional information that is essential to a full understanding of the data provided in the financial statements. The supplemental schedules provide a breakdown of CHHIP property operations at the building level. The following changes should be considered in reviewing these financial statements. Fleming Apartments Limited Partnership, a Washington limited partnership, was not included in the CHHIP financial statements for 2013, but it is included in the 2014 due to the exit of the investor limited partner. 4

37 CAPITOL HILL HOUSING IMPROVEMENT PROGRAM Management Discussion and Analysis For the Year Ended December 31, 2014 Overview of the CHHIP Blended Entity Financial Position and Operations December 31, Assets: Current assets $ 6,289,881 $ 4,487,700 $ 3,538,576 Noncurrent assets Capital assets, net 41,990,400 43,495,197 43,866,202 Other 20,817,657 21,936,505 21,906,827 Total Assets $ 69,097,938 $ 69,919,402 $ 69,311,605 Liabilities: Current liabilities $ 5,203,120 $ 2,011,560 $ 2,596,346 Noncurrent liabilities 44,890,854 50,498,341 51,373,708 Total Liabilities $ 50,093,974 $ 52,509,901 $ 53,970,054 Net Position: Invested in capital assets, net of related debt $ 1,200,111 $ 374,752 $ 450,879 Restricted 4,075,715 3,761,651 3,715,724 Unrestricted 13,728,138 13,273,098 11,174,948 Total Net Position $ 19,003,964 $ 17,409,501 $ 15,341,551 The financial assets of CHHIP consist primarily of capital assets, its land, buildings and building improvements. This is consistent with CHHIP s mission to build vibrant and engaged communities through affordable housing and community development efforts in Seattle. Capital assets are shown net of depreciation. Other assets include cash reserves for repairs and replacements and debt service as required by our lenders. The liabilities are predominantly long term debt that has been used to purchase, develop and rehabilitate our apartment buildings. Many of these loans, provided by governmental entities, have below market interest rates and do not require annual debt service. See Note 5 for a more complete discussion. The difference between total assets and total liabilities, net position is one indicator of financial health. Net position increased by $1,594,463 in 2014 and $2,067,950 in For 2014 $2,002,867 was due to positive operating results and $(408,404) was due to the change in component units which occurred when CH Development Association acquired the limited partner interest in Fleming Apartment Limited Partnership and is net of a related reduction in allowance for affiliates due to general partner. For 2013 $1,184,352 was due to the change in component units which occurred when CH Development Association acquired the limited partners interests in 1214 Boylston Avenue LP. The balance resulted from positive operating results and capital grants passed through for the 12th Avenue Arts project. 5

38 CAPITOL HILL HOUSING IMPROVEMENT PROGRAM Management Discussion and Analysis For the Year Ended December 31, 2014 Overview of the CHHIP Blended Entity Financial Position and Operations (Continued) The results of operations for CHHIP are presented below: For the Year Ended December 31, Operating revenues Tenant revenues $ 7,915,513 $ 7,374,941 $ 6,678,970 Fees for services 782, , ,526 Project development fees 2,279,306 1,099,245 2,337,260 Other 36,224 78, ,560 Nonoperating revenues Contributions and grants 1,047,051 1,759, ,125 Interest income 241, , ,174 Net gain on 12th Avenue Arts transactions 6,504,036 (Loss) gain on sale of assets 856,903 (61,628) 575,277 Total Revenues 13,159,064 11,293,039 17,928,928 Operating expenses Salaries, benefits, and payroll taxes 3,902,638 3,688,293 3,281,278 Operating and maintenance 1,294,781 1,357,785 1,054,445 Other operating expenses 2,606,333 2,367,014 1,865,915 Depreciation and amortization 1,907,280 1,815,409 1,630,407 Nonoperating expenses Grant to the component unit 300,000 Interest expense 1,145,165 1,180, ,222 Total Expenses 11,156,197 10,409,441 8,802,267 Change in Net Position $ 2,002,867 $ 883,598 $ 9,126,661 Results of Operations Operating revenues are generated principally from rental income as well as property management and other fees paid by the discrete component units. Tenant revenues increased 7 percent in 2014, 9 percent in 2013 and 6 percent in We are limited in how much we can increase tenant revenues as our rents are regulated. Vacancy loss for 2014 was 3.7 percent, which is the fourth year our annual vacancy loss has been below 4 percent. Vacancy loss for 2013 was 3.2 percent and for 2012 was 3.3 percent. We continue to work to turn and lease units faster. CHHIP earns development fees for its management role in the development of new properties. During 2014 CHHIP earned development fees for both commercial and housing components of the 12th Avenue Arts project and the redevelopment of Haines representing 18 percent of total operating revenues. During 2013 CHHIP earned development fees for both the commercial and housing components of the 12th Avenue Arts project representing 12 percent of total operating revenues. During 2012 CHHIP earned development fees for two projects, The Jefferson and 12th Avenue Arts representing 24 percent of total operating revenues. The 2012 fees earned on the 12th Avenue Arts commercial component were reinvested in the project. 6