MEMORANDUM DATE: March 9, 2017 TO: RE: City f Ann Arbr C/ Tm Crawfrd and Kevin McDnald 5 th and Library Purchase Cntract Deal Pints The Cre Spaces team remains extremely excited abut this develpment and is greatly appreciative fr the pprtunity t be in exclusive negtiatins n a Purchase Agreement with the City fr the acquisitin f the subject prperty. T further ur cmmitments stated within ur prpsal, we have wrked with the City n identifying additinal deal pints that will becme cmmitments and bligatins f bth parties upn adding them t a Purchase Agreement. The purpse f this memrandum is t utline the majr deal pints and prvide mre detail n hw we prpse t structure these int an Agreement. The specific details n several pints remain pen t further negtiatin and discussin. Belw is the utline f the prpsed deal pints: Wrkfrce Husing: T meet the gal established in the Amendment t the Reslutin t prvide 10% wrkfrce husing, we ffer the fllwing: Cre Spaces will cmmit t leasing up t 12% (43 units) f the currently anticipated 354 apartment units at rental rates based n 150% f Fair Market Rents (FMRs) at the time the units are leased. See attached mem delineating the current rents and related calculatins methd. (FMRs include the amunt f all tenant-paid water, sewer, electric and gas expenses.) Instead f 12% f the units at 150% FMR, Cre Spaces will cmmit t leasing up t 9% (32 units) f the currently anticipated 354 units at 120% f FMR at the time the units are leased. Additinally, Cre Spaces will cmmit t increasing the percentage f units ffered at 150% FMR frm 12% t 14.5% (an additinal nine units) with a cntributin frm the City t make up the lss in value as a result f a decrease in net perating incme. The cntributin frm the City wuld be $1,475,000. The wrkfrce units ffered will be limited t a mix f efficiencies, studis, and ne bedrm units. Page 1
Wrkfrce units will nly be leased t applicants that qualify with husehld incmes ranging frm 60% t 100% AMI fr the 150% f FMR rates and 50% t 80% AMI fr 120% f FMR rates. Cre Spaces will ffer the wrkfrce units n a first cme first serve basis t incmequalified tenants. Hwever, units will nt be held vacant if incme-qualified tenants are nt available. Shuld units nt be available fr wrkfrce husing the qualified applicant will reside at the tp f a waiting list fr the next available qualifying unit. Wrkfrce units will nt be materially different frm units rented at standard rates. (Units will be f the same size, feature the same finishes, etc.) Incme qualificatin f tenants will be cmpleted by Cre Spaces, and will be reviewed by the Washtenaw Cunty Office f Cmmunity and Ecnmic Develpment. Wrkfrce units will be prvided in the develpment in perpetuity. Parking: Cre Spaces anticipates the prpsed develpment include a lease f parking permits t adequately serve the needs f the mixed uses. The parking agreement shall be structured as fllws: 196-24-hur equivalent parking permits will be leased in the City-wned Library Lane Structure lcated beneath the prpsed develpment. The 196 permits are calculated as 196 permits fr 24 hurs per day fr each year. Therefre, if Cre Spaces elects t designate the use f ff-peak permits (currently 15 hurs), the remaining 9 hurs will be available fr additinal permits. 85 24-hur equivalent parking permits will be leased at the City-wned Furth and William Structure. All parking permits in the Furth and William Structure may be replaced by the City with permits in anther structure in the same parking district if the Furth and William Parking Structure is nt in use. The parking district includes the Library Lane Structure, the Furth and William Structure and the Furth and Washingtn Structure. 80 ff-peak parking permits will be leased at the City-wned Furth and William Structure. Cre Spaces will lease the required parking permits in accrdance with the Dwntwn Develpment Authrity s current standard mnthly permit rate, and in additin will pay any surcharge related t multi-permit cntracts. Annual increases in the mnthly rate shall be cnsistent with the Dwntwn Develpment Authrity established standard mnthly permit rates, and in n event shall rates increase mre in any given year than the average increase in all garages lcated in the same parking district. Cre Spaces shall ntify the City and the Dwntwn Develpment Authrity f its specific parking permit requirements n less than 60 days prir t the start date f the parking lease. Thereafter, Cre Spaces shall ntify the City and the Dwntwn Develpment Authrity f its parking requirements fr the fllwing calendar year n less than 60 days prir t the end f Page 2
each calendar year. The number f leased parking permits shall never exceed the ttals abve, but during the first three years the ttal number f leased permits can fluctuate upward and dwnward by a maximum number f 50 permits. After the first three years, Cre Spaces shall be allwed t permanently reduce the verall number f parking permits t the minimum amunt f parking required by Ann Arbr City Cde. Cre Spaces may elect, at its sle discretin, and with 90 days prir ntice t the Dwntwn Develpment Authrity, t release a prtin f the196 parking permits at the Library Lane Structure s that these permits may be used t accmmdate ther needs unrelated t the develpment. In that event, and subject t availability as determined by the Dwntwn Develpment Authrity, the number f parking permits released shall still be prvided in the Furth and William Structure. Cre Spaces shall be permitted t sublease parking permits t its residential tenants, htel peratr (including guest parking) and ther entities that perate within the prperty including, but nt limited t, ffice tenants and retail tenants, including emplyees f abve, as well as fr visitr and custmer use. Cre Spaces will have cmplete and sle discretin as t the rate it charges its sub-lessee (rental rate charged t sublessee can be mre than r less than the rate that Cre Spaces pays t the Dwntwn Develpment Authrity). Cre Spaces shall nt allw its lessees t sublease parking permits and shall include language prhibiting subleasing in all f its leases assciated with the prpsed develpment. Unauthrized subletting f parking permits shall make thse permits subject t cancellatin. Cre Spaces shall be allwed t permanently reduce at any time the verall number f parking permits t the minimum amunt f parking required by Ann Arbr City Cde. The agreement will be fr a 20-year term with tw 15-year renewal terms, which will be similar t the terms ffered in ther Dwntwn Develpment Authrity parking cntracts. Design: The design develped fr the Library Lane prject shall adhere t the City f Ann Arbr Dwntwn Design Guidelines with additinal cnsideratin fr the Design Element Pririties utlined within the Ann Arbr Dwntwn Street Design Manual. This high-quality develpment cmmits t enhancing the street-level pedestrian experience, and t cntributing t the vitality f dwntwn and identity f the Midtwn Character District. Cre Spaces shall be bligated t fllw the Dwntwn Design Guidelines. As part f that bligatin, the prject will be presented t the Ann Arbr Design Review Bard. The prject shall be reviewed by the City s Design Review Bard cnsistent with the requirements f Ann Arbr City Cde. In additin t this required review, CORE shall present the Prject t the Design Review Bard a secnd time in rder t prvide an additinal pprtunity fr review and cmment by the Bard. The apprach t design fr cntext and site planning shall include reinfrcing the psitive characteristics f adjacent sites and enriching the pedestrian experience thrugh the use f Page 3
urban pattern and frm. As a crner site, the design will be expressed with a public plaza framed by an architecturally significant building. Site planning will invlve rienting the building lcatin t accmmdate climate patterns as well as multi-mdal transprtatin. The apprach t massing design will feature building elements that are stepped away frm adjacent lwer height buildings alng Fifth Avenue and prvide a clear definitin between the building base and upper levels. This definitin includes a differentiated building tp. Clearly defined building entries will be punctuated with architectural canpies and accent lighting. Visually interesting building elements, such as architectural details and art features, will prvide a sense f scale that invites pedestrian activity at the street edge. This includes the use f windw design and placement and grund flr strefrnts. With a cmmitment t maximize activity and usability, pen space will be lcated where the highest level f pedestrian activity is anticipated. The pen space serves as a fcal pint n this site, riented tward Fifth Avenue, with dining pprtunities, seating areas, public art, lighting, water features, architectural details, and, decrative paving. By prviding bth cvered and uncvered areas, the plaza wuld be designed t accmmdate a wide range f activities and uses. Pedestrian cnnectins thrughut the develpment will integrate with the existing infrastructure and aim t enliven the pedestrian experience. The cnnectins will utilize spatial pprtunities t create efficient circulatin. The lcatin and size f driveways, access pints, alleys, and trash receptacles will be designed t minimize pedestrian impact and fcus n safety and circulatin. Sustainable technlgies will reinfrce a walkable cmmunity and aim t result in an energy efficient building. Natural systems emplyed will include site features that allw fr shade in the summer and sun in the winter supplemented by plant grups that prvide wind prtectin and are tlerant t urban cnditins. Further, by placing the building t the nrth f the public plaza, the pen space is ptimized t receive full slar expsure. All plans and public presentatins t shw building in its true clr as it will appear as ppsed t an enhanced image emphasizing sme particular aspect r clr f the building (r shwing the effect f light at different times f day, r sky clrs). Architectural elevatins will shw hw the building will lk n a cludy day withut reflectin r enhancement, and will indicate prpsed architectural materials t the greatest extent pssible. The design and appearance f the building shall be substantially similar t the attached drawings and shall incrprate the requirements listed belw under Building Design.' T allw flexibility and respnsiveness in ur apprach t design as we g thrugh the design review prcess, the City s Cuncil shall have the ability t waive any f the design requirements included in this memrandum t allw a building design that may be different frm the current prpsal. Page 4
Building Design: The lwer flrs shall be differentiated architecturally frm the remainder f the building. Cnstructin will be f high-quality materials including stne, brick, glass, metal panels, steel, and glass mullin system. N vinyl, EIFS, cmpsite materials such as fiber cement paneling r siding will be utilized. The height f the street level flr, frm finished flr level t ceiling shall be between 15-20 feet. Glazing n the upper level f the building n all facades shall utilize visin glazing t the maximum extent permitted by the current energy cde. The current energy cde limits the use f visin glass t a maximum f 40% within residential prtins f the building. T the extent pssible, CORE will attempt t maximize glazing n the suth, east and west facades. Use f any reflective r high tinted glass shall nt cunt tward this gal. A minimum Flr Area Rati f 500% shall be achieved n the site. Primary building entrances shall be highlighted with lighting, signage, materials, and detailing. Primary entrances shall be recessed ff the sidewalk t limit high-pedestrian entry cnflicts. Prvide pedestrian-riented uses n Fifth and Library Lane facades. N mre than 25% f these facades shall be ccupied by uses which have n need fr r discurage walk-in traffic. A minimum f 70% f the pedestrian level facing the Public Plaza shall be transparent windws and drs. These transparent windws shall remain free f curtains, decals, windw displays, r ther visual bstructins by tenants r ccupants, with the exceptin f retail business signs and retail business displays. Streetscape/Pedestrian: There will be a pedestrian pathway arund the building f at least 10 feet in width except n the east side f the building. On the east side f the building, the pedestrian path will be apprximately 6 feet in width due t the existing nrth-suth driveway access. A minimum f 60% f the street flr level shall be transparent windws and drs alng the 5th Ave and Library Lane facing facades. Overhead cver shall be prvided that ffers adequate pedestrian prtectin frm rain and snw, alng the Fifth and Library Lane facades. Page 5
A minimum f 1 ft-candle f warm light shall be prvided in all space between the building façade and curb alng streets. Driveways, access pints, alleys, and trash receptacles will be designed t minimize pedestrian impact. Zning and Develpment Standards: The prject shall cmply with all City s zning and develpment rdinances and standards. All rdinances and standards shall apply t the entire site (including existing site imprvements) cnsistent with all ther develpment in the City. Sustainability: Cre Spaces riginally prpsed t pursue LEED Silver and will nw cmmit t pursuing the equivalent f Gld certificatin under LEED Versin 2009. Cre Spaces will nt necessarily seek certificatin by the LEED rganizatin. The targeted LEED Gld checklist bjectives shall include, but are nt limited t: Alternative transprtatin, site develpment, and heat island effect credits under Sustainable Sites; Water use reductin and innvate wastewater technlgies credits under Water Efficiency; Energy perfrmance, cmmissining, and green pwer credits under Energy and Atmsphere; Cnstructin waste management, recycled cntent, and reginal materials credits under Materials and Resurces; Cnstructin IAQ management plan and lw-emitting materials credits under Indr Envirnmental Quality; and, Innvatin in design and reginal pririty credits under Innvatin and Design Prcess and Reginal Pririty Credits. Cnnectivity: The Cre Spaces design team is diligent in wrking with input frm the City and citizens t articulate a cnnectivity plan that transfrms the site s spatial pprtunities and engages pedestrians. The plan is defined by cntinuus pedestrian pathways that frame the site cnnecting adjacent prperties with the new public plaza. All site cnnectivity riginates frm the perimeter pedestrian pathway. This cnnectivity expands frm the public plaza frnting 5th Page 6
Avenue and Library Lane n the west and suth, respectively, acrss the prperty s nrth and east bundaries. This safe and efficient cnnectivity plan anticipates future cnnectins and imprves the street-level pedestrian experience with essential circulatin between Liberty Plaza and the Blake Transit Center. Current and future pedestrian linkages frm the perimeter path unite the develpment with East William t the suth and East Liberty t the nrth. The existing driveway alng the nrthern and eastern brders f the site is a ptential pprtunity t imprve cnnectivity fr the entire blck. The gal is t find a way t invigrate the pedestrian flw alng the driveway, and ur cnnectivity path, while dealing with the service aspects f the driveway. Aligned with the gals f the Allen Creek Greenway, the purpse and fcus f the pedestrian pathway and public plaza are t prvide cnnectivity and anchr pints. Frm all sides, the cnnectivity plan prvides pedestrians with a clearly defined means fr traversing this city blck. The pathway s suthern and western perimeters extend frm the public plaza and span the sidewalks alng Library Lane and 5 th Avenue. A safe and cmfrtable walkway alng the nrthern and eastern perimeters jins these sidewalks t cmplete the site s cntinuus pedestrian pathway. Driveway Access: The driveway n the nrthern and eastern brders f the site is currently used fr vehicle access fr neighbring prperties, and a best effrt will be made t maintain access during the cnstructin perid and prvide ntice fr any necessary temprary clsure. The design will include elements t make the driveway available t vehicular traffic and als make it pedestrian friendly. Permanent public use f the driveway will be included in the develpment. Public Plaza: See attached Plaza area plans. Develper shall cnstruct a Public Plaza that cvers an area f at least 12,000 square feet. The Plaza shall cntain at least five f the design amenities as shwn n the Plaza area plan. The final design f the Plaza shall be subject t the apprval f Ann Arbr City Cuncil after receiving a recmmendatin frm the Parks Advisry Cmmissin. The Plaza and all Plaza elements shall be designed and cnstructed in cmpliance with all applicable ADA requirements. The Develper shall cnstruct the Plaza and shall nt make any material changes t any plaza elements r remve any plaza elements withut prir written apprval f the Cmmunity Services Administratr r designee. Develper shall grant an easement t the City fr public use f the Plaza cnsistent with public use f a park. Page 7
The City and Develper shall establish rules fr the Plaza based n the City park rules in Chapter 39 f Ann Arbr City Cde. The develper may have Plaza hurs extend beynd thse prvided in park rules. Day-t-day peratin and management f the Plaza shall be the respnsibility f the Develper, including prviding security, cleaning, and maintenance. The Plaza shall be available fr use fr cmmunity events by rganizatin and individuals. Develper shall facilitate prgramming and activities in the Plaza by: Develping a prmtinal package that will be available t the public n use and rental f the Plaza Managing the prgramming f the Plaza thrugh an nsite prperty manager Prviding a small kisk r infrmatin statin with details n Plaza prgramming and availability Practively identifying cmmunity partners t prvide prgramming in the Plaza Hlding meetings at least annually with prgramming partners and interested cmmunity members and rganizatins Prviding $25,000 (including in-kind persnnel) in supprt per year fr Plaza prgramming Any rental fees shall be cnsistent with ther parks facilities rental fees in the City. Develper reserves the right t seasnally r temprarily crdn ff up t 2,000 square feet f the Plaza t be used as an utdr dining area in assciatin with and directly adjacent t retail and htel uses within the building. Designated areas shall be shwn n the final design f the plaza. Transactin: Cre Spaces shall pay $100,000 in earnest mney t the City upn signing the Purchase Agreement. The balance f the $10 millin purchase price shall be paid at clsing. The Purchase Agreement shall allw 360 days t clse cntingent n site plan apprval and cmpletin f the cndminium master deed and ther necessary clsing dcuments. The Purchase Agreement shall allw tw 90 day extensins at the discretin f the City Administratr. Cre Spaces shall grant the City a right t repurchase the prperty in seven years frm clsing if the prject has nt been develped r a final certificate f ccupancy has nt been issued at an agreed upn fair market value based n the appraised value at the time f the repurchase. Page 8
We lk frward t finalizing the Purchase Agreement and taking the next step twards a magnificent develpment which will further enhance the City f Ann Arbr. Sincerely, Tm Harringtn, Jr. Cre Spaces, LLC Cc: Eric Grimm Marc Lifshin Brian Neiswender Page 9
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SENT VIA EMAIL Frm: Mitch Daltn 2234 W Nrth Ave Chicag, IL 60647 RE: MI - Ann Arbr - Library Lane FY2016 Fair Market Rent (FMR) Gegraphy Summary fr Ann Arbr, MI MSA The Office f Management and Budget release new Cre Based Statistical Area definitins in February 2013. The Census American Cmmunity Survey incrprated these definitins in the ACS2013 release, which are the basis fr FY2016 Fair Market Rents. HUD has elected t cntinue use f the pre-2013 definitins except where the pst-2013 definitins result in a smaller FMR area. This is cnsistent with HUD's bjective t maximize tenant chice by allwing FMRs t vary lcally. HUD determines the Fair Market Rent by ding a rental market study and uses the 40th percentile f rental rates by unit size frm the previus 2 years (nt including new units and subsidized units). Final FY 2016 FMRs By Unit Bedrms Efficiency 1 Bedrm 2 Bedrms 3 Bedrms 4 Bedrms Per Unit $769.00 $851.00 $1,019.00 $1,396.00 $1,779.00 Per Bed $769.00 $851.00 $509.50 $465.33 $444.75 120% $922.80 $1,021.20 $611.40 $558.40 $533.70 150% $1,153.50 $1,276.50 $764.25 $698.00 $667.13 2015 FMR - 150% Prfrma - 150% FMR 2016 FMR - 150% Efficiency - $1,023 $1,153.50 Studi - $1,023 $1,153.50 1 Bedrm 1204.5 $1,095 $1,276.50 2 Bedrms 1426.5 $647 $764.25 Fair Market Rent Calculatin Methdlgy Fair Market Rents fr metrplitan areas and nn-metrplitan FMR areas are develped as fllws: 1. 2009-2013 5-year American Cmmunity Survey (ACS) estimates f 2-bedrm adjusted standard quality grss rents calculated fr each FMR area are used as the new basis fr Cre Spaces Friday, June 10, 2016 Chicag - IL
FY2016 prvided the estimate is statistically reliable. The test fr reliability is whether the margin f errr fr the estimate is less than 50% f the estimate itself. 2. If an area des nt have a reliable 2009-2013 5-year, HUD checks whether the area has had a reliable estimate in any f the past 5 years. If s, the mst recent reliable estimate is updated by the change in the area's crrespnding State metrplitan r nn-metrplitan area frm the year f the mst recent reliable estimate t 2009. This update value becmes the basis fr FY2016. 3. If an area has nt had a reliable estimate in the past 5 years, the estimate State fr the area's crrespnding metrplitan area (if applicable) r State nn-metrplitan area is used as the basis fr FY2016. 4. HUD calculates a recent mver adjustment factr by cmparing a 2013 1-year 40th percentile recent mver 2-bedrm rent t the 2009-2013 5-year 40th percentile adjusted standard quality grss rent. If either the recent mver and nn-recent mver rent estimates are nt reliable, HUD uses the recent mver adjustment fr a larger gegraphy. Fr metrplitan areas, the rder f gegraphies examined is: FMR Area, Entire Metrplitan Area (fr Metrplitan Sub-Areas), State Metrplitan Prtin, Entire State, and Entire US; fr nn-metrplitan areas, the rder f gegraphies examined is: FMR Area, State Nn- Metrplitan Prtin, Entire State, and Entire US. The recent mver adjustment factr is flred at ne. 5. HUD calculates the apprpriate recent mver adjustment factr between the 5-year data and the 1-year data and applies this t the 5-year base rent estimate. 6. Rents are calculated as f 2014 using the relevant (reginal r lcal) change in grss rent Cnsumer Price Index (CPI) frm annual 2013 t annual 2014. 7. All estimates are then inflated frm 2014 t FY2016 using a trend factr based n the frecast f grss rent changes thrugh FY2016. 8. FY2016 FMRs are then cmpared t a State minimum rent, and any area whse preliminary FMR falls belw this value is raised t the level f the State minimum. Surce: http://www.huduser.gv/prtal/datasets/fmr/fmrs/fy2016_cde/2016summary.dn? &year=2016&fmrtype=final&cbsasub=metro11460m11460 Ann Arbr Husing Cmmissin - Fiscal Year 2014 One Year Annual Plan http://www.a2gv.rg/departments/husing/dcuments/fy%2014%2015%20annual%20plan %20FINAL%20t%20HUD.pdf#search=FMR Cre Spaces Friday, June 10, 2016 Chicag - IL
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