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Exhibit A
COMPOSITE EXHIBIT A HCLC Terms and Conditions for Block 55 Project Reimbursement Basis Funding from Collective HCLC Memoranda And Tranche 2 Affordable Housing Bonds Projects Strategies CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM TO: Members of the Housing and DATE: October 23, 2020 FILE: Commercial Loan Committee SUBJECT: Block 55 Owner, LLC Sawyer's Landing George Mensah, Director FROM: Department of Housing & Community Developmeffi!IFERENCES : ENCLOSURES: I i��� �Z��i1�� ►�1 Block 55 Owner, LLC ("Block 55"), a Florida Limited Liability company. The single -asset entity created for the development of the project. The principal and manager of Block 55 is Mr. Michael Swerdlow. Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that is a partner in the development of the project. The Holdings consists of. • Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) • Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) • Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) • MC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14.85% interest ownership) • Downtown Duffie Family, LLC (FL). Manager: Alben Duffie (24.92% interest ownership) • Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) • The Alan L. Meltzer Revocable Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) Block 55 Owner, LLC 2 October 23, 2020 Sawyer's Landing The principals, Michael Swerdlow and Alben Duffie are partners of The Swerdlow Group, a real estate firm that offers more than 40 years of experience in the development of mix -use real estate projects; Stephen Garchik and Stephen McBride offer are partners of SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in this type of real estate development. Mr. Atzmon is a team member of the Swerdlow Group and has 33 years of experience in managing large and complex projects like the Sawyer Landing project. PROJECT Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed - use commercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (110) studio/one-bathroom units; two hundred eighty (280) one-bedroom/one- bathroom units; and one hundred eighty-eight (188) two-bedroom/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. BACKGROUND On February 25, 2019, the Department of Housing and Community Development ("Department") issued a Request for Proposals ("REP") in HOME Investment Partnerships Program ("HOME") funds; Community Development Block Grant ("CDBG") funds; State Housing Initiatives Partnership Program ("SHIP") funds; Affordable Housing Trust Funds ("AHTF") funds; and General Obligation Bonds ("GOB") for the construction and rehabilitation financing of multifamily rental housing projects and homeownership projects. On September 18, 2020, the Department presented the Borrower's request of $7,500,000 in Miami Forever GOB funds for the project, but the HCLC members requested that the Borrower provide the HCLC in the next meeting with a feasibility study related to the signed lease agreement's validity and provide a Plan B if the tenants should require less space than what they anticipated or should they withdraw from the signed leases. BORROWER'S RESPONSE In response to the concerns from the HCLC, the Borrower provided the following documents: 1. Memorandum from Borrower addressing each of the concerns of HCLC members 2. Updated term sheet from R4 Financial 3. R4 Financial tax credit LOI 4. Aldi abstract lease details 5. Target abstract lease details 6. Economic benefits analysis 7. Cushman & Wakefield demand for retail overview Block 55 Owner, LLC Sawyer's Landing October 23, 2020 HOUSING AND COMMERCIAL LOAN COMMITTEE DECISION: Approved as Recommended by Staff Yes 0 No ❑N/A [] To Include Additional Conditions or Restrictions Yes ❑ No [V N/A ❑ Disapproved Yes ❑ No [ NIA ❑ To Include Further Action Yes Cl No [ NIA ❑ ,Specify any further action, conditions or restrictions: Chairperson or Representative Stamp Date Loan Committee Memo Issue #1- What if retail tenants do not occupy the space? First, the signed leases to date are with Target and Aldi, both of whom have recorded memorandum of leases against title notifying the world of their rights to occupy the premises when completed. These tenants are required to pay rent no matter what. If they default, all of their rent, cam and taxes are accelerated and due the date of the default. They are both obligated to open their stores. Secondly, they both have investment grade credit ratings even during the pandemic, so their guaranty of rent is absolute. Further, Ross, Burlington and Five Below are close to investment grade (double to triple B) as well. Their occupancy too, is most certain. Moreover, the local Overtown CRA has been desperate for retail users in this area of the city. These tenants are demanded by the local occupants and will serve as the catalyst for the redevelopment of Overtown. Finally, we are in discussions with medical uses for the remaining vacant space, if any. These uses are likely to land at the project given the number of senior citizens living in the residential tower. They too have substantial credit ratings. A letter can be obtained from our attorneys notifying you of the recording information on the leases. Issue #2- Status of Peebles litigation. We won summary judgment on the major point of the case that claimed we have violated a non -compete provision. We still have to prevail on the confidentiality provision, for which damages are limited to Peebles' out of pocket expenses. This is similar to the non - compete claim, which we are confident that we will win. Lastly, there is a collusion claim which is absolutely ridiculous. These actions will get resolved in due time, but the real threat in the suit has been dismissed by summary judgement. Most importantly, the suit poses no threat to the property, as it is not against the real estate. We have already acquired the property and title insurance has been issued with no mention of the lawsuit. Issue #3-Biscayne Landing. Michael Swerdlow is no longer a partner in the project. Several years ago, the project defaulted on its debt. At that time, Mr. Swerdlow was not a part of the project, having sold his interest two year prior to Boca Developers and therefore had no part in the default. Subsequent to the default by Boca Developers, Mr. Swerdlow saved the project by coming back in with Richard Lefrak, a major New York based developer. Mr. Lefrak's desire to build a completely horizontal project caused him to purchase Mr. Swerdlow's interest. Therefore, any development being undertaken at that project is being directed solely by the current owners of the project. Issue #4- Limited equity in the project. Currently the partners have contributed over 11 million to the project. Another 5 million is being added in October. Since that 5 million is all that is being required by the construction lender, we plan to write off the 11 million that has already been invested. Further the CDD ownership of the garage is being 100% financed with a bond offering. The first reading of the CDD has already occurred and was unanimously adopted by the county. The second reading will occur on October 20t" as part of the consent agenda. We have retained a bond underwriter, MBS Capital, who has assured us that the bonds are fully sellable once certified. Therefore, this amount of equity capital that we show will be sufficient to finance the remainder of the project based on the projections we have shared with the Committee and the debt proposal from R4. Most importantly, please note that no funding from the City will be required until the closing of the construction loan at which point everything mentioned above will be in place. August 18, 2020 Block 55 Residential, LP Attn: Sydne Garchik 5230 Pacific Concourse Drive, Suite 350 Los Angeles, CA 90045 RE: SAWYERS LANDING, MIAMI, FLORIDA (the "Project") Dear Ms. Gard - k: Thus letter (this "Letter") expresses the intent of and summarizes the terms and conditions pursuant to which R4 Capital LLC or one of its affiliates (the "Limited Partner") will acquire a limited partnership interest in Block 55 Residential, LP, a Florida limited partnership (the "Partnership"). The General Partner and Class B Limited Partner (as defined below) agrees and acknowledges that all information provided herein shall be true, correct and complete in all material respects. 1. Project Structure. The Partnership has been formed to acquire, own, develop, and operate the Project, which is anticipated to be eligible to claim Low -Income Housing Tax Credits ("Credits") under Section 42 of the U.S. Internal Revenue Code (the "Code"). The Partnership anticipates receiving a determination (the "Determination") of Credits for the year 2020 from the Florida Housing Finance Corporation (the "Credit Agenev" ). It is anticipated that the Partnership will be entitled to receive credits by reason of the Project being financed by tax-exempt volume cap bonds (the "Bonds"), which bonds will be issued by the Housing Finance Authority of Mianni-Dade County (the "Issuer'). Tlne key parties involved in the Partnership shall be: Party Name Ownership Interest in the Partnership 1 The Partnersl-dp Block 55 Residential, LP N/A 2 Limited Partner An affiliate of R4 Capital LLC 99.99% 3 General Partner Affordable Housing Institute, Inc. .001% 3 Class B Limited Partner To be determined .009% Neither the General Partner (or Class B Limited Partner) nor any person related to the General Partner (or Class B Limited Partner) may hold any debt owed by the Partnership or allow any permanent debt to be recourse, if such debt was used to finance any items included in the Partnership's Eligible Basis, excluding the Deferred Developer Fee, subject to tax counsel review as necessary to preserve any allocations of the Credits. 2. Other Project Parties. A. Developer. Swerdlow Group and SJM Partners Inc. Guarantor(s). Michael Swerdlow, Stephen Garchik, Stephen McBride, or other parties acceptable to the Limited Partner. The obligations of the General Partner set forth in the Partnership Agreement, including but not limited to those described herein, shall be guaranteed by the Guarantor(s). It is assumed that the Guarantor(s) will have a minimum liquidity and net worth of $12,000,000 and $60,000,000, respectively. C. Property Manager. Bozzuto Management. D. General Contractor. John Moriarty and Associates. The General Partner shall obtain a fixed -price contract for the construction of the Project on terms and conditions and with a general contractor acceptable to the Limited Partner, which contract shall provide for a 100% payment and performance bond or letter of credit for not less than 15% of the fixed -price construction contract amount from a banking institution acceptable to the Limited Partner. A minimum of a 5% total construction cost contingency is required (unless a higher amount is required by the Limited Partner after underwriting the Project). It is expected that the construction contingency amount will be outside of the construction contract. The above is subject to and will conform to Credit Agency requirements. The qualifications and financial condition of each of the foregoing parties must be acceptable to the Limited Partner. 3. Unit Matrix and Project Schedule. A. Unit Matrix. The Project will consist of 578 units in one (1) building. Of the 578 units, 289 of the units will be subject to a 20-year Housing Assistance Payment Contract ("HAP"). It is expected that all of the units will qualify for Credits under Section 42 of the Code, all applicable state and federal regulations and the Allocation. The following will be the unit mix and 'income restrictions of the units: Unit Type Number of Units Income Restrictions Studio / 1 Bath — HAP 110 40% AMI 1 Bedroom / 1 Bath — HAP 156 40% AMI 1 Bedroom / 1 Bath 124 70% AMI 2 Bedroom / 2 Bath — HAP 23 40% AMI 2 Bedroom / 2 Bath 37 70% AMI 2 Bedroom / 2 Bath 128 80% AMI The Project will utilize income averaging and, as a result, all units will qualify for Credits. B. Project Schedule. The construction/lease-up schedule expected for the Project and upon which the credit pricing and deal terms contained herein are calculated is as follows: .-Closing Date Anticipated on or before January 1, 2021 Completion Date 29 months after Closing Date, anticipated May 31, 2023 First Unit Leased 29 months after Closing Date, anticipated June 1, 2023 Last Unit Leased 34 months after Closing Date, anticipated November 30, 2023 Page 12 R4 Capital 4. Project Financing. It is anticipated that, in addition to the equity to be provided by the Limited Partner, the Project will be financed with the following loans (the "Loans"): A. Permanent Loan. The following permanent loans (the "Permanent Loans") are expected to be made to the Partnership: L First Permanent Loan. A loan in the approximate amount of $150,000,000 will be provided by a R4 Capital Funding LLC. This loan is estimated to bear interest at a fixed rate of approximately 3.85% per annum with a 204-month term and a 480-month amortization. A commitment for this loan will be in place prior to admission of the Limited Partner to the Partnership. The Limited Partner acknowledges that the amount of the loan may increase if the interest rate is reduced, so long as a debt service coverage ratio of 1.15 to 1.00 is maintained, and the Limited Partner, with advice of tax counsel, has determined that the increased debt amount will not have an adverse impact on the allocation of Credits. ii. Class B Limited Partner Loan. A loan in the approximate amount of $18,000,000 will be provided by the Class B Limited Partner. This loan is estimated to bear interest at a fixed rate of approximately 1.00% per annum with a 360-month term and be payable solely from Cash Flow and 360 months of amortization. A commitment for this loan will be in place prior to admission of the Limited Partner to the Partnership. B. Equity Bridge Loan. The Partnership will obtain an interest -only construction loan in the form of tax- exempt bonds (the "Construction Loan") from R4 Capital Funding LLC in the approximate amount of $35,000,000 with a term of not less than 48 months and an estimated interest rate of 3.85%. The Guarantor(s) shall guarantee repayment of the Construction Loan. A commitment for this loan -will be in place prior to admission of the Limited Partner to the Partnership. C. Other Sources. The terms and conditions of each of the Loans and any other loan to the Partnership will be subject to the Limited Part ner's approval in its reasonable discretion. All Permanent Loans must be non -recourse, subject to standard carveouts. 5. Tax Credits. It is anticipated that the Partnership will be eligible to receive Credits by reason of the Project being financed by the Bonds and accordingly will be entitled to receive annual Credits in the amount of $5,626,771, of which $5,626,208 will be allocated to the Limited Partner ("Limited Partner Credit Share"). The amount of Credits for which the Project will qualify is based on an Eligible Basis of $182,687,367 ("Eligible Basis'), a Qualified Basis of $182,687,367 ("Oualified Basis"), and an applicable percentage of 3.08% ("Applicable Percentage'). The following sets forth the delivery of Credits that the Project and the Limited Partner will claim: Year Pro'eces Credits Limited Partner Credit Share 2023 $2,106,794 $2,106,583 2024 — 2032 $5,626,771 $5,626,208 2033 $3,519,977 $3,519,625 The amount of capital to be contributed pursuant to this Letter is, in part, based on the Credit delivery set forth above. Any delay in such Credit delivery will cause a decrease in the amount to be contributed by the Page 1 3 R4 Capital Limited Partner. The Project is located in a qualified census tract and therefore qualifies for a 30% Eligible Basis boost. 6. Capital Contributions. Based on the information set forth herein and the materials you previously submitted, and subject to the Limited Partner's satisfactory completion of due diligence (in its sole discretion), the Limited Partner will make aggregate capital contributions (the "Capital Contributions") to the Partnership (subject to adjustment as provided below) of $48,527,000 based on a contribution amount of $0.8625 per dollar of Limited Partner Credit Share in four (4) installments according to the following schedule: Amount of Capital % of Total Capital Contribution ($) Contribution 1 Admission of the Limited Partner to the $4,852,700 10.00% Partnership 2 Later of 100% Construction Completion $12,131,750 25.00% or July 1, 2023 3 Later of Rental Achievement or July 1, $29,044,180 59.85% 2024 4 To fund the Operating Reserve, upon the $2,498,370 5.15% expiration of the Operating Deficit Guaranty The following are definitions for the terms set forth above in the Capital Contribution schedule. All construction completion thresholds prior to 100% Construction Completion will be based on submissions of AIA forms G702/703 and an inspection by the Limited Partner's engineering consultant ("Limited Partner Consultant") and/or the Limited Partner's asset management group as to the progress of the Project, approving the construction and certifying that the work performed to meet such threshold has been permanently made a part of the Project. A. 100% Construction Completion. 100% Construction Completion will be deemed to have occurred when (i) the Limited Partner has received a certificate from the Project architect and Limited Partner Consultant that the Project has been completed substantially in accordance with the final plans and specifications (the "Plans") approved by the Limited Partner, (ii) the Project has received a final certificate of occupancy (or its equivalent) permitting occupancy of the entire Project for its intended use, if applicable, and (iii) the Limited Partner has received a draft certificate from the Project's independent accountant(s) setting forth the initial estimate of the Project's Eligible Basis for Credit purposes and the amount of annual Credits to which the Partnership is entitled, and that the amount of Bonds financing the Project as of the date the Project was placed-un-service was greater than 50% of the Project's basis in the land and building(s). B. Rental Achievement. Rental Achievement will be deemed to have occurred when (i) all of the Project's permanent financing has closed (or will close simultaneously with payment of the Rental Achievement Capital Contribution), (ii) the Limited Partner has received IRS Form 8609 for each building in the Project, (iii) all of the set -aside apartments in the Project have qualified for Credits, (iv) the Project has maintained a physical occupancy rate of at least 95.0% and a debt service coverage ratio of at least 1.15 to 1.00 (assuming a 5.0% vacancy factor (subject to final underwriting) based on the greater of actual or underwritten assumptions, but using actual taxes, insurance, utilities, and management fee) for three (3) consecutive months, and (v) the Limited Partner has received a certificate from the Project's Page 1 4 R4 Capital independent accountant(s) stating the amount of the first year Credits, Eligible Basis, Qualified Basis, Applicable Percentage, the amount of annual Credits to which the Project is entitled, and the Limited Partner Credit Share. Notwithstanding the foregoing, if all conditions for Rental Achievement have been satisfied except receipt of IRS Forms 8609 provided that all information for such forms has been submitted to the Credit Agency, then $2,426,350 of the Rental Achievement Capital Contribution will be withheld until receipt of IRS Forms 8609. Adjuster Provisions. The Capital Contributions set forth in Section 6 of this Letter will be subject to the following Credit adjusters: A. Credit Adjuster. If the actual amount of annual Credits certified by the Project accountant(s) to be allocable to the Limited Partner is less than the amount set forth above, then the amount of the Capital Contributions to be provided by the Limited Partner will be decreased by $0.8525 for each $1.00 that the Limited Partner Credit Share is reduced. If the Project receives an additional allocation of Credits or is otherwise entitled to receive additional Credits more than initially anticipated or underwritten, subject to the availability of Limited Partner funds, the amount of the Limited Partner's Capital Contributions will be increased by $0.8525 for each $1.00 that the Limited Partner Credit Share is increased (up to a maximum increase of $2,426,350). If the Limited Partner does not make Capital Contributions above the cap set forth above, then the Limited Partner will either (i) use its best efforts to procure a Class B Limited Partner to make such Capital Contributions and be allocated such additional Credits, or (ii) elect to alter the ownership percentages in order to cause the additional Credits to be allocated to the General Partner or its designee. Any adjustment(s) will be reflected in the Rental Achievement Capital Contribution, as set forth in the applicable documents. B. Timing Adjuster. If any portion of the Limited Partner Credit Share is not received in 2023 or 2024, then the 100% Construction Completion Capital Contribution or the Rental Achievement Capital Contribution, will be reduced by $0.65 for each $1.00 that the Limited Partner Credit Share is deferred. If the actual amount of Credits allocated to the Limited Partner in 2023 is greater than the Limited Partner Credit Share for such years, then, subject to the availability of Limited Partner funds, the Rental Achievement Capital Contribution will be increased by $0.45 for each $1.00 that the Limited Partner Credit Share is accelerated, up to a maximum increase of $2,426,350. Should any downward adjuster be greater than the remaining balance of the Limited Partner's capital contributions, the amount shall be paid by the General Partner to the Limited Partner on a grossed -up after- tax basis and guaranteed by the Guarantor(s). The aggregate amount of any increases in the amount of the Limited Partner's Capital Contributions shall not exceed 10% of the Aggregate Contribution Amount as defined in the Partnership Agreement. The amount of the Capital Contributions set forth above was also based upon the assumption that the Partnership will elect to be treated as an Electing Real Property Trade or Business ("ERPTOB"), as enacted by the 2017 amendments to the Code, and will have an initial basis of not less than $250,685 per unit with respect to residential rental property with a recovery period of 30 years. Additionally, it is assumed that the Partnership will be entitled to claim depreciation deductions with respect to site improvements of not less than $23,140 per tunit with a 15-year recovery period and personal property of not less than $31,397 per unit with a five-year recovery period. The General Partner may not elect out of bonus depreciation with respect to the 15- and 5-year life assets in accordance with Section 168(k)(2) of the Code without the consent of the Limited Partner. As a result of tlne 100% accelerated depreciation, the Partnership will claim accelerated Page 15 R4 Capital depreciation deductions of $10,700,166 with respect to site improvements and $14,518,000 with respect to personal property in 2023. If the amounts of the accelerated depreciation deductions are less than the amounts set forth in the preceding sentence, the amount of the 100% Construction Completion and/or Rental Achievement Capital Contribution(s) will be reduced by $0.21 per dollar of such shortfall. In the event that the realization of such accelerated depreciation deductions by the Partnership is delayed to a subsequent year due to a delay in the Project's Completion Date, the portion of the 100% Construction Completion and/or Rental Achievement Capital Contribution(s) will be reduced by $0.021 for each dollar and each year of accelerated depreciation deductions that are so deferred. At the Partnership's expense, the General Partner shall obtain a Cost Segregation Study on behalf of the Partnership, from a provider acceptable to the Limited Partner, to segregate personal property and land improvement assets from real property costs. The General Partner shall adopt the findings of the Cost Segregation Study for all Partnership reporting purposes. 8. Developer Fee. The Developer shall be entitled to a total development fee (the "Developer Fee") in the amount permitted by the Credit Agency. It is anticipated that a portion of the Developer Fee (the "Cash Developer Fee") will be paid from the Limited Partner's Capital Contributions (and any other mutually agreed upon sources) in installments mutually agreeable to the Partnership's partners, provided that the payment of the Developer Fee is subordinate to the payment of all of the Partnership's obligations to third parties and deposits into the Replacement Reserve and the Operating Reserve. Subject to the foregoing and provided that the Limited Partner's projections do not show the need for additional sources of funds to complete the Project, 20% of the Cash Developer Fee will be paid to the Developer upon admission of the Limited Partner to the Partnership, 20% of the Cash Developer Fee will be paid to the Developer upon 100% Construction Completion, and at least 60% of the Cash Development Fee will be held back until Rental Achievement. To the extent the Developer Fee has not been paid in full upon the funding of the final Capital Contribution, the remainder of the Developer Fee (the "Deferred Developer Fee"), together with interest at 6.00%, will be paid out of Cash Flow as provided below. To the extent the Deferred Developer Fee is not paid by the end of the 15-year compliance period, the General Partner shall be obligated to contribute to the Partnership an amount equal to the unpaid Deferred Developer Fee, which obligation shall be guaranteed by the Guarantor(s). 9. Reserves. The Partnership will fund the following reserves: A. Replacement Reserve. The Partnership will fund out of Cash Flow a replacement reserve (the "Replacement Reserve") in the amount equal to the greater of (i) $300 per unit per year, to be increased by 3% annually, or (ii) such amount as determined necessary by the Limited Partner upon regular reviews of the physical needs and financial circumstances of the Project. B. berating Reserve. An operating reserve (the "Operating Reserve") in the amount of $2,498,370 (the "Minimum Balance") will be funded upon expiration of the Operating Deficit Guaranty. The Operating Reserve will be replenished up to the Minimum Balance from Cash Flow to the extent withdrawals are made. No withdrawals may be made from the Operating Reserve (i) until Rental Achievement, (ii) while the Project is maintaining at least break-even operations or (iii) until the maximum amount of the General Partner's obligation under the Operating Deficit Guaranty (the "Maximum ODG Amount") is expended from other sources. Page 1 6 R4 Capital 10. Obligations of the General Partner and the Guarantor(s). The General Partner shall have the following obligations, among others, and the Guarantor(s) shall guarantee these obligations: A. Completion and Development Deficit Guaranty. The General Partner shall guarantee lien -free completion of the Project in a good and workmanlike condition, substantially in accordance with the Plans, by not later than June 1, 2023 (the "Completion Date"). The Completion Date is based on an assumed closing date of January 1, 2021 and a construction period of 29 months (such date may be extended by a maximum of six (6) months in the case of unavoidable events if each Lender permits such extension).. The General Partner shall be responsible to pay the amount (the "Development Deficit") by which all costs and expenses incurred with respect to the construction and completion of the Project and its operation until Rental Achievement has occurred (together, the "Development Expenditures") exceed the funds available to the General Partner from (i) the Capital Contributions, (ii) Cash Flow prior to Rental Achievement, and (iii) financing proceeds which have been approved by the Limited Partner (collectively, (i)-(iii), the "Development Sources"). The Development Deficit will be considered a cost overrun and will not be included in Eligible Basis without the consent of the Limited Partner. Payments made under this Completion and Development Deficit Guaranty shall be treated as a non -interest - bearing loan from the General Partner to the Partnership, repayable solely from available cash flow or residual proceeds in accordance with Sections 13(A)(ix) and 13(B)(vii) below. B. Operating Deficit Guaranty ("ODG"). The General Partner shall be required to loan the Partnership without interest all funds necessary to cover operating deficits ("Operating; Loans") for a period commencing on the expiration of the Completion and Development Deficit Guaranty and ending upon (i) the later of (a) 60 months after the expiration of the Completion and Development Deficit Guaranty or (b) the Project's achievement of 1.15 to 1 debt service coverage on the Permanent Loans calculated over a period of 6 consecutive months based on audited financials (with such 6-month period ending no earlier than the last date of the 60-month period described in clause (a)), and (ii) confirmation that the Operating Reserve has been fully funded to its originally required balance. Tlne maximum ODG amount shall be $7,371,584. Operating Loans will be repayable out of 100% of future available Cash Flow or out of available proceeds of a Capital Transaction. C. Loss of Section 8 Guaranty. The General Partner shall be required to loan the Partnersl-dp without interest all funds necessary to cover operating deficits ("Operating Loans") that result from the loss or delay in excess of six (6) months in funding of the Section 8 subsidy to the Project. Operating deficits could occur from lower collected rents, the cost to re -tenant the building with income eligible tenants and any other costs incurred due to a delay in contract funding and/or loss of the Section 8 contract. This Guaranty will run through the tax credit compliance period and be unlimited in its amount through the expiration of the ODG, thereafter, the Loss of Section 8 Guaranty may be capped based upon the Limited Partner's overhang analysis. D. Recapture Guaranty_. If the Limited Partner is allocated Credits less than the Limited Partner -Credit Share or Credits allocated to the Limited Partner are recaptured, the General Partner shall reimburse the Limited Partner on a grossed -up, after-tax basis for any such deficit or recapture of Credits plus any associated penalties, interest or additional taxes due by reason of such payment (a "Recapture Event"), unless the same is caused by a change nn the Code, or Market Change Foreclosure (as defined below), or the action of the Limited Partner in violation of the Partnership Agreement. Any liability of the General Partner hereunder arising by reason of events, other than from any action of the General Partner in violation of the Partnership Agreement, occurring after the fifth anniversary of the Project achieving Rental Achievement, shall be satisfied by reducing the share of Cash Flow and sale or refinancing proceeds otherwise distributable or payable to the General Partner, the Developer, or their affiliates, Page 1 7 R4 Capital including amounts otherwise payable against the Deferred Developer Fee. Any amount due under this Recapture Guaranty shall bear interest at the rate of 10% per annum from the date of the Recapture Event until paid. For purposes of this Section IOC, a "Market Change Foreclosure shall mean a foreclosure of the Project due to the failure of the Project to pay mandatory debt service payments when due, which failure arose from the Project not generating sufficient revenues to meet its mandatory debt service and other operating expenses, and such foreclosure or failure to have sufficient revenues to pay debt service arose from adverse market conditions and is not otherwise due to the negligence of, or breach of the Partnership Agreement by, the General Partner, the Class B Limited Partner or their Affiliates or other breach by the Partnership, General Partner, the Class B Limited Partner or their Affiliates of any project document or the failure of the General Partner, Class B Limited Partner or their Affiliates to operate and maintain the Project in a manner comparable to other affordable housing projects in the locality in which the Project is located. E. Repurchase. At the election of the Limited Partner, the General Partner shall be required to permit the Limited Partner or an affiliate to become the General Partner of the Partnership or to repurchase the equity interests of the Limited Partner for an amount equal to (i) 100% of the Capital Contributions paid to date, plus (ii) an amount equal to 10% of the total scheduled Capital Contributions of the Project, plus (iii) interest on (i) and (ii) at the Prime Rate from the date of payment of the initial Capital Contribution, less tax benefits received by the Limited Partner and not subject to recapture, if (a) construction of the Project is not completed within six (6) months of the Completion Date, (b) prior to Rental Achievement there is an uncured default under or termination of any financing document or commitment or any other material document, (c) a foreclosure action is commenced against the Project prior to Rental Achievement, (d) a Form 8609 for each building is not delivered within eighteen months following 100% Construction Completion, or (e) prior to Rental Achievement certain other events occur which could impair the ability of the Partnership to claim the Credits and allocate to the Limited Partner the Limited Partner Credit Share. F. Environmental Indemnification. The General Partner and the Guarantor(s), jointly and severally, shall indemnify the Partnerslp and the Limited Partner with respect to the presence of hazardous materials in, on or about the Project including all compliance, clean-up and remediation costs (if applicable). This obligation will be more specifically set forth in the Partnership Agreement and other related documents and will be in a form acceptable to all partners. 11. Management Fee. Bozzuto Management will be the Project's initial property manager. Tlne Property Manager must have, to the Limited Partner's satisfaction, adequate experience in managing properties eligible for Credits, and the Property Manager will enter into a property management agreement (the "Management Agreement") with the Partnership subject to commercially reasonable terms and conditions including a management fee not to exceed 2.75% of gross rentals (the "Management Fee"). However, if the Property Manager is an affiliate of the General Partner, the Management Agreement will provide that up to 40% of the Management Fee will be deferred (the "Deferred Management Fee") to the extent that the Partnership does not have sufficient Cash Flow to pay such Management Fee. The Management Agreement must have a term of one year or less and provide for termination at the request of the Limited Partner upon 30 days' prior notice. 12. Allocation of Tax Credits, Depreciation, Profits and Losses. The Credits, depreciation, operating profits and losses will be allocated in accordance with the percentage interests of the Partnership's partners. 13, Distributions. Page 1 8 R4 Capital A. Cash Flow Distributions. For the period prior to Rental Achievement but not longer than six months following 100% Construction Completion, cash flow of the Partnership ("Cash Flow") after paying all expenses in connection with the development of the Project will be paid to the General Partner as an incentive fee ("Lease -Up Fee"). Thereafter, Cash Flow after operating expenses, mandatory debt service and any reserves that may be required by the Limited Partner or by any lender under the Loans will be distributed in the following order of priority: i. to pay the Limited Partner a $50,000 cumulative annual local administrative fee (the "Local Administrative Fee"), which fee shall increase by 3% per annum; ii. to pay the non-profit General Partner a $10 per tout annual fee (the "Non -Profit General Partner Fee"); iii. to replenish the Operating Reserve account to the Minimum Balance; iv. to repay any loans made by any partner of the Partnership other than the General Partner or Class B Limited Partner; V. to repay any other loans made by the Partnership's partners other than those made to pay for obligations of the General Partner or Class B Limited Partner; vi. to pay any Deferred Management Fee; vii. to pay any outstanding portion of the Deferred Developer Fee and accrued interest; viii. to repay any Operating Loans to the extent of 100% of remaining Cash Flow, and to any other loans by the General Partner, Class B Limited Partner, or Guarantor(s); ix. to pay the Class B Limited Partner an annual supervisory management fee (the "Supervisory Management Fee") equivalent to 2.5% of annual effective gross income; and X. the balance 89.999% to the Class B Limited Partner, 0.001% to the General Partner and 10% to the Limited Partner. B. Proceeds of Sale or Refinancing. Net proceeds of a sale or refinancing (each, a "Capital Transaction") will be distributed in the following order of priority: i. to pay expenses of such Capital Transaction, debts and obligations of the Partnership, and establish necessary reserves; I to pay the Limited Partner any accrued but unpaid portion of the annual Local Administrative Fee; iii. to repay any loans made by any partner of the Partnership other than the General Partner or Class B Limited Partner; iv. to repay any other loans made by the Partnership's partners other than those made to pay for obligations of the General Partner or Class B Limited Partner; V. to pay any Deferred Management Fee; vi. to pay any outstanding portion of the Deferred Developer Fee and accrued interest; vii. to repay any other loans made by the General Partner, Class B Limited Partner or the Guarantor(s) pursuant to their obligations hereunder; and viii. the balance 89.999% to the Class B Limited Partner, 0.001% to the General Partner and 10% to the Limited Partner. Proceeds on liquidation of the Partnership shall be made in accordance with (i) through (vii) above, and then to the partners to the extent necessary to eliminate any positive balance in their capital accounts, and then in accordance with (viii) above. 14. Rights of Limited Partner. The consent of the Limited Partner will be required for, among other things: (i) a Capital Transaction involving the Project, (ii) the withdrawal, admission or substitution of the General Page 1 9 R4 Capital Partner and/or Class B Limited Partner, and (iii) the sale, assignment, encumbering or pledging of the General Partner's and/or Class B Limited Partner's interests in the Partnership. Furthermore, the Limited Partner will have the right to remove the General Partner and Class B Limited Partner and eliminate the General Partner's and/or Class B Limited Partner's interest in the Partnershp if certain events set forth in the Partnership Agreement occur, including if: (i) the General Partner violates its fiduciary responsibilities, (ii) the General Partner or the Partnership materially breaches its respective obligations and commitments, (iii) the General Partner or the Guarantor(s) becomes bankrupt, (iv) the Project has sustained a loss of more than 5% of the Credits, or (v) the Project is subject to foreclosure or has materially breached documents encumbering the Project. 15. Limited Partner Review. As set forth in the Partnership Agreement, the Limited Partner will have the right to inspect the Project during and after construction and to review construction loan disbursement requests and other financial and operations matters of the Project and the Partnership. 16. Reporting Requirements. The Partnership will prepare and deliver to the Limited Partner (a) quarterly unaudited financial statements to be delivered within 30 days after the end of each quarter of the fiscal year; (b) annual audited financial statements to be delivered within 60 days after the end of each fiscal year; (c) an annual budget for each fiscal year to be delivered not later than November 1 of the preceding year; and (d) the Partnership's draft tax returns and K-1 forms to be delivered within 45 days after the end of each fiscal year. The independent accountant(s) for the Partnership may be chosen by the General Partner, subject to the Limited Partner's prior approval. 17. Purchase Option. The General Partner, so long as it is the general partner, shall have an option to purchase the Limited Partner's interest in the Partnership (the "Purchase Option") commencing at the beginning of the year following the final year in which Credits are delivered and ending upon the eighteenth anniversary of the placed u1 service date of the Project, for a purchase price equal to the greater of (i) fair market value of the Limited Partner's interest (" FMV") or (ii) the sum of (x) the amount of the federal, state and local tax liability that the partners of the Partnership would incur as a result of such sale (determined on an after-tax basis) ("Exit Taxes'), (y) the amount of any unreimbursed deficiency in Credits recognized by the Limited Partner with respect to the Project as compared to the level forecast by the Limited Partner together with a return on such unrecognized Credits of 13% per arnlum (the "Credit Shortfall"), and (z) if the Purchase Option is exercised prior to the end of the Compliance Period, the amount of any accrued and unpaid Local Administrative Fees owed to the Limited Partner as of the date the Purchase Option is exercised plus the amount of Local Administrative Fees that would be owed to the Limited Partner if the Purchase Option were exercised at the end of the Compliance Period. In addition, if the General Partner exercises its rights pursuant to this Section 17 prior to the expiration of the Compliance Period, the General Partner and the Guarantors agree to execute a post -transfer compliance and guaranty agreement (the "Recapture Guaranty") relating to any tax credit recapture event arising during the Compliance Period (the form and substance of such agreement being reasonably acceptable to the General Partner, the Guarantors and the Limited Partner). Any exercise of the option will be contingent on receipt by the Limited Partner of a fully - executed Recapture Guaranty that has been approved by the Limited Partner, certification from the Project accountant(s) that exercising the option will not cause a tax credit recapture, and current financial statements for the Guarantors reasonably acceptable to the Limited Partner, indicating minimum unrestricted liquidity and net worth of $12,000,000 and $60,000,000, respectively. If the Limited Partner's interest is sold for less than FMV pursuant to the Purchase Option, then the Limited Partner shall receive a priority distribution from sales proceeds prior to the waterfall set forth in Section 13(B) above, in an amount equal to its Exit Taxes and Credit Shortfall, if any. Page 1 10 R4 Capital 18. Conditions Precedent. The Limited Partner's investment in the Partnership in accordance with the terms of this Letter is subject to satisfaction (in the Limited Partner's sole and absolute discretion) of the following conditions precedent (the "Conditions Precedent"): A. the Limited Partner's receipt and approval of all due diligence requested pursuant to the Limited Partner's due diligence list; B. the negotiation of a final partnership agreement governing the Partnership (the "Partnership Agreement') and related documents; C. evidence of the required approval of the Project by any necessary governmental entity; D. the Limited Partner's receipt and approval of current financial statements (prepared in accordance with generally accepted account principles) and a real estate owned schedule for the General Partner, the Guarantor(s) and their principals; E. the Limited Partner's receipt of corporate opinions rendered by counsel to the General Partner satisfactory to the Limited Partner, in form and substance acceptable to the Limited Partner; F. evidence of insurance in accordance with the requirements set forth by the Limited Partner; G. evidence (in the form of an appraisal) that the allocation of basis between building and land is accurate and supportable; H. such other materials as are reasonably required by the Limited Partner as part of its customary financial and legal due diligence review, including such information reasonably required for inclusion un a registration statement, supplement, other offering materials prepared for the Limited Partner, or any report required to be filed with any governmental authority; and I. approval of the Limited Partner's internal investment committee and satisfaction of such other conditions as may be required as a condition to such approval. 19. Transfer of Limited Partner Interest. The Limited Partner will have the right to transfer its interest in the Partnership, and to have the transferee admitted as a substitute limited partner: (i) to any affiliate of the Limited Partner, (ii) to any other person or entity provided that (A) the Limited Partner will remain liable to make all capital contributions outstanding at the time of the transfer or (B) the net worth of the proposed transferee will be acceptable to the General Partner and the Class B Limited Partner in its reasonable discretion, or (iii) to a partnership or limited liability company in which the Limited Partner is the general partner or managing member. It is understood that the Limited Partner will bear all third -party costs related to any such transfer(s). Further, notwithstandvig anything to the contrary herein, any transfer shall be subject to all requisite lender and regulatory approvals. 20. Transfer of General Partner Interest and Class B Limited Partner Interest. The General Partner and Class B Limited Partner shall not sell, transfer, assign, pledge or encumber any portion of its interest in the Partnership without the prior written consent of the Limited Partner. No change in control of the General Partner or Class B Limited Partner will be allowed without the consent of the Limited Partner. 21. Bank Accounts. All bank accounts of the Partnership will be maintained with an accredited banking institution acceptable to the Limited Partner, 22. Changes. Any change to the information provided to us, or any change to our assumptions after our due diligence review, could affect our financial projections and thus the amount and terms of the Capital Contributions. The Limited Partner has predicated the proposed terms contained in this Letter on the financial projections it has prepared, which are based upon the financial and other information furnished by the General Partner or its agents, as well as certain assumptions of the federal income tax consequences of this transaction. Many regulations remain to be issued under various tax acts and many tax provisions contain ambiguities. The issuance of regulations or other resolution of such ambiguities, or any other Page 1 11 R4 Capital changes in these tax assumptions, could affect the financial projections and thus, the amount and terms of the Capital Contributions. 23. Tax Disclosure. Notwithstanding anything to the contrary contained in the Partnership Agreement or any other agreement between the parties hereto, or in any offering materials pertaining to the Project, the Limited Partner and each officer, employee, representative or agent of the Limited Partner may disclose to any and all persons, without limitation of any kind, (i) the tax treatment and tax structure of the Partnership and any of the Partnership's transactions or activities, and (ii) all materials of any kind (including opinions and tax analysis) that are provided to the Limited Partner regarding its investment in the Partnership and/or such transactions or activities of the Partnership. This authorization as to tax disclosure is effective retroactively to the commencement of any discussions between the parties hereto or any of their agents or representatives. 24. Exclusivity. The General Partner acknowledges that the Limited Partner will expend significant effort and expense in connection with its Project review, and due diligence and may forego other investment opportunities as a result thereof. The General Partner agrees that it will not solicit or entertain any offers by other parties to acquire an equity interest in the Partnership tunless and until the Limited Partner has notified the General Partner in writing that the Limited Partner is not prepared to proceed with this transaction. The Limited Partner shall make such determination withal 60 days after the submission by the General Partner of all items required by the Limited Partner to complete its due diligence. Exclusivity will be voided if the Limited Partner's internal investment committee rejects an investment in the Project or if the General Partner or Class B Limited Partner does not receive a draft Partnership Agreement within thirty (30) days of signing this letter, so long as all necessary documents for completion of a draft Partnerslp Agreement are provided in a timely manner. 25. Transaction Expenses. In addition to any expenses that are the responsibility of the General Partner, if the transaction does not dose due to the actions of the General Partner, or the inability of the General Partner to satisfy the Conditions Precedent contained herein, the General Partner shall be responsible for the legal costs incurred by the Limited Partner. Additionally, at the time of closing, the General Partner shall reimburse the Limited Partner for a portion of its legal and due diligence fees in an amount equal to $50,000. [Signature Page to Follow] Page 1 12 R4 Capital Tlus Letter is not binding to the Limited Partner, as the Lunnited Partner's potential equity investment in the Project summarized herein remains subject to approval from the relevant internal committees of the Limited Partner with respect to any such investment and capital commitments from investors sufficient to fund the Capital Contributions contemplated hereunder. The negotiated Partnership Agreement for Casa Devon will be the template for the Partnership Agreement for this Project. Please indicate your agreement and acceptance of the foregoing by signing the enclosed copy of this Letter and returning it to the undersigned by August 31, 2020. If you have not done so by such date, the proposal contained in this Letter shall expire and be of no further effect. It is also understood that the economic terms outlined herein shall remain valid for 180 days from the date hereof. Should closing of the transaction occur after such date, such terms are subject to renegotiation by the Limited Partner. We look forward to working with you on this transaction. Very truly yours, R4 CAPITAL LLC By: Name: Paul Connolly Title: Executive Vice President AGREED AND ACCEPTED THIS _ day of 12020 SWERDLOW GROUP By: Naive: Title: SJM PARTNERS, INC. By: Name: Title: GUARANTOR(S) By: Michael Swerdlow, individually Page 1 13 R4 Capital 0 By: Stephen Garchik, individually Stephen McBride, individually Page 1 14 R4 Capital R4 CAPITAL F U N 0 l N C via e-mail August 19, 2020 Block 55 Residential, LP Attn: Sydne Garchik 5230 Pacific Concourse Drive, Suite 350 Los Angeles, CA 90045 Re: Bond Financing Proposal for: Sawyers Landing (578 Units) Miami, Florida Dear Ms. Garchik, On behalf of R4 Capital Funding ("114CF"), we appreciate this opportunity to provide a financing proposal regarding Sawyers Landing, a proposed mixed -use rental community in Miami, FL and herein after referred to as the "Property". As follows, this letter (the "Letter") expresses the intent of and summarizes the terms and conditions pursuant to which R4CF proposes to finance the Property by providing construction period and permanent mortgage capital to Swerdlow Group and SJM Partners Inc or their affiliates (collectively, the "Sponsor"). Under our Direct Bond Purchase Program, R4CF or a designated capital partner would purchase an estimated $185,000,000 of tax-exempt bonds (the "Tax -Exempt Bonds"). The aggregate bonds to be purchased by R4CF shall herein after be referred to as the "Bonds". The basic business terms and conditions of the Bonds are set forth herein. Please note that R4CF structured this proposal using key assumptions provided by the Sponsor which are subject to revision following R4CF's underwriting and due diligence. FINANCING ARID SECURITY Property Description The Property is a proposed rental apartment community, located in Miami, FL and comprised of 578 units. Following the proposed construction, the Property will consist of 110 studio units, 290 one -bedroom units, and 188 two -bedroom units. The Property will be subject to certain LURAs based upon its receipt of LIHTC and/or other public subsidies. It is further anticipated that 289 of the Property's units will subject to contract -based Section 8 subsidies. Structure It is anticipated that the Bonds will be issued by TBD. Upon issuance, R4CF, or its designee, will purchase the Bonds. Proceeds of the Bonds will be lent to the borrowing entity (the "Borrower") under the terms of a Loan Agreement to pay for a portion of the Property's development costs. In order to reduce construction period interest, the Bonds will be funded on a Draw Basis pursuant to a schedule mutually agreed upon prior to Closing by the Sponsor and R4CF. R4CF anticipates that such draws will be in a minimum amount of $500,000 and occur not more frequently than once per month, Bond Principal $185,000,000 during the development period, paid down to approximately $150,000,000 at Stabilization. Bond Interest Rate The fixed rate of interest on the Bonds will be established approximately five business days prior to Closing based upon the 10-year Treasury Index, published by Thomson Reuters, plus a spread of 3.10% subject to a Bond Interest Floor Rate of 3.85%. As of August 19, 2020 the 10-year Treasury Index is 0.65%, and the Bond Interest Rate would be 3.85%. Upon Closing, interest will be paid monthly. Special Redemption Concurrently with the achievement of Stabilization of the Property, there shall be a one-time Special Redemption of Bonds in the amount of $35,000,000. This Special Redemption will be concurrent with and in addition to the final sizing of the Bonds as described in Stabilization Requirement. Debt Sizing Method The Bonds shall be sized to a minimum 1.15x Debt Service Coverage Ratio ("DSCR"). The Bond Amount assumes an underwritten net operating income of $8,464,839. This N01 initially incorporates a 5.0% vacancy rate, a 5.0% hard pay management fee, and $300/unit per annum replacement reserve. These assumptions are subject to review through R4CF's underwriting process. Stabilization The Property is anticipated to achieve Stabilization 41 months from Closing Requirement (the "Stabilization Date"). Upon Stabilization, the final sizing of the Bonds shall be determined. Development Period Recourse Guarantees, as described below, shall be released upon R4CF's determination that the minimum DSCR has been reached (which may involve a partial redemption of the Bonds). Stabilization requires that: (i) the ratio of net operating income of the Property for the prior three months to the maximum debt service In any three month period equals or exceeds 1.15x to 1.Ox, (ii) the average economic occupancy in each of the three months equals at least 90%, and (iii) the Property has achieved Final Completion (as defined in the Bond documents), For the purposes of Stabilization, net operating income shall be defined as actual Property income adjusted to reflect actual economic vacancy (subject to a 5.0% minimum) over the greater of aggregate Property expenses or projected aggregate property expenses established through R4CF's Page 12 R4 Capital Funding underwriting process (excluding property tares, insurance and utilities which will be verified from actual expenses). Interest Only Period The period prior to the Stabilization Date. Amortization Following the Interest Only Period, mandatory redemption of the Bonds shall occur, in part, on a monthly basis sufficient to fully amortize such Bonds over 40 years. Financing Term Upon the 161h anniversary of Stabilization, the Bondholder shall have the option to require a mandatory tender of the Bonds. The Bondholder shall be required to provide 6 months' notice for such mandatory tender. Optional Prepayment Optional prepayment of the Bonds shall not be permitted prior to the 151h anniversary of Stabilization. Thereafter, the Bonds may be prepaid at par upon 30 days' notice to the Bondholder. CONSTRUCTION Construction Period Substantial Completion is anticipated to occur 29 months from Closing. Construction Budget R4CF's proposal assumes that the Borrower will spend approximately $90,526,449 ($156,620 per unit) In residential hard costs and approximately $71,476,880 ($123,662 per unit) in commercial space costs. Construction Deposits Funds necessary to construct the Property will be deposited into an escrow and Disbursements account (the "Development Fund") to fund capital expenditures on a schedule and with terms approved by R4CF prior to the Closing Date. During the Construction Period, amounts in the Development Fund shall be disbursed to the Borrower as construction progresses but not more often than on a monthly basis. Disbursements shall be based upon approval of the Borrower's Requisition Submission by R4CF. Any monies remaining in the Development Fund at the end of the Construction Period which are not needed for R4CF-approved capital items shall be used to redeem the Bonds. FINANCING COSTS Application Fee $60,000 to cover the cost of the third -party appraisal, engineering, and environmental reports, as well as any R4CF out-of-pocket underwriting costs. The Application Fee is payable upon the execution of this proposal by the Borrower. R4CF shall use reasonable efforts to coordinate third party reports with the LIHTC Equity provider. Legal Deposit A $25,000 legal deposit is required to commence legal documentation. R4CF Origination Fee 0.50% of the Bonds payable to R4CF at Closing R4CF Construction Fee 0.50% of the Bonds payable to R4CF at Closing Other Costs The Sponsor and/or Borrower shall be responsible for transaction costs and expenses incurred by R4CF, legal fees of the issuer, trustee and R4CF. Should the Bonds not close for any reason other than the failure of R4CF to comply Page 13 R4 Capital Funding with its obligations hereunder, Sponsor and/or Borrower shall remain obligated for all third -party costs and out-of-pocket costs Incurred by R4CF not covered by the Application Deposit, Ongoing Fees All ongoing trustee and issuer fees associated with the transaction are to be paid separately by the Borrower. RESERVES & ESCROWS Escrow Accounts The Borrower shall make monthly payments to escrow accounts held In the Partnership's name by the Bond Trustee for taxes, insurance premiums, and replacement reserves. All disbursements from the escrow accounts shall require R4CF's consent. Replacement Reserves Replacement reserves will initially be set at $300 per unit per year (to be confirmed by R4CF's underwriter and engineer). Operating Reserve Atthe end of the 60-month Operating Deficit Guaranty period, the Borrower will fund an Operating Reserve of approximately $2,498,370 (to be calculated as 3 months of expenses, replacement reserves, and debt service) which the Borrower shall deposit into an escrow account held by the Partnership (the "Operating Reserve") to be used for debt service payments and/or operating deficits during the term of the Bonds. The Operating Reserve shall be held in an interest -bearing account and the interest shall be paid to the Borrower annually. The Operating Reserve shall be released to the Borrower upon maturity of the Bonds. The final sizing of the Operating Reserve is subject to review through R4CF's underwriting Page 14 R4 Capital Funding KEY PARTIES Borrower Structure The Borrower and its General Partner shall each be a single -purpose, bankruptcy -remote limited partnership or limited liability company. Property Management As part of its diligence, R4CF will review and approve the Property Manager and the management contract. R4CF currently expects that Bozzuto Management will serve as Property Manager. The property management fee shall be 2.75% of Effective Gross Income and any amount in excess of 2.75% shall be subordinate to payment of interest and principal on the Bonds and ongoing third -party fees. SECURITY 91 GUARANTEES Financing Security The Bonds shall be secured by a first priority mortgage lien on the land and improvements; UCC filings for fixtures; assignment of all rents and leases; and a first priority collateral assignment of all contracts, management agreements, and other agreements and all permits relating to the Property. Guarantors Michael Swerdlow, Stephen Garchik, and Stephen McBride, subject to R4CF due diligence and approval, will provide joint and several guarantees as described below. Development Period Prior to Stabilization, the Bonds will be full recourse to the Borrower and Recourse Guarantees Guarantors, and Completion and Debt Service Guarantees are required from the Borrower and Guarantors. R4CF will require the Guarantors to maintain Liquidity of at least $12 million and Net Worth of at least $60 million. Permanent Period None after Stabilization, except for industry -standard carve -outs, which Guarantees shall include guarantees against fraud, misrepresentation, bankruptcy, and environmental issues. LIHTC Equity In addition to the Bonds, the acquisition and construction of the Property will be funded through a Partnership investment in the Federal Low Income Housing Tax Credits (the "Tax Credits"). R4CF estimates that the Tax Credit Partnership will generate approximately $48,527,000 of proceeds for investment in the Property and is to be provided by R4 Capital LLC. The terms and pay -in commitments of the LIHTC proceeds are subject to review by R4CF. Other Partnership In addition to the Bonds, the acquisition and construction of the Property Equity/Public shall be funded with an Equity Contribution or Grant of not less than Contribution $18,000,000 from the Partnership or a Public Financing Source (the "Subordinate Funds"). Any payments due under the Subordinate Funds shall be subordinated to the Bonds and subject to an Intercreditor Agreement acceptable to R4CF. Deed Restrictions and All income and rent restrictions shall be subordinate to the Bonds. Ground Ground Leases leases, if any, shall be subordinate to the first priority mortgage lien unless the fee interest is owned by a government agency to ensure long-term affordability. Page 15 R4 Capital Funding Commercial Master In addition to the residential units, the Property will include approximately Lease and Guarantee 250,000 square feet of commercial space. Currently, there are signed leases with Target for 50,000 square ft and Aldi grocery for 25,000 square which are subject to R4CF's satisfactory review and approval prior to Closing. Additionally, there is a signed letter of intent with Ross Stores for 26,000 square ft and EOS Sports gym for 40,000 square ft. The balance of the commercial space has been designed to incorporate either retail or office/healthcare/school occupancy. The Guarantors will provide a master lease (the "Master Lease") for all of the commercial space in the Project. The Master Lease will, among other items, provide for (i) a term of not less than the Financing Term, (ii) the Lessee to pay all of the direct and allocable operating expenses of the commercial space, (iii) monthly rent payments to the Partnership net of all operating expenses of no less than a to -be -determined amount by R4CF, and (iv) ongoing financial reporting requirements and covenants. The Master Lease is not subject to termination without R4CF consent. The master lessor and each sub tenant will provide an SNDA on terms acceptable to R4CF. OTHER PROVISIONS On -going Reporting The Borrower shall provide R4CF or its designee with an annual budget for Requirements operations and capital expenditures to be approved by R4CF within 30 days of submission. Periodic reporting requirements shall include delivery of operating statements, occupancy reports, rent rolls, and other reports reasonably requested by R4CF. Borrower shall provide to R4CF an annual audit report of each Property's financial statements from a firm approved by R4CF not more than 120 days after the end of each fiscal year. Due Diligence / R4CF shall have 60 days to complete due diligence beginning from the date Conditions to Closing on which R4CF has received: (i) an executed copy of this proposal along with the Application Fee and Legal Deposit and (ii) necessary preliminary due diligence information as requested by 114CF. R4CF's due diligence efforts Include, but are not be limited to, market and valuation analysis, engineering and environmental investigations, bond document review, title and survey review, and review of borrower/sponsor financial statements and history. Based upon our findings during the due diligence period, R4CF has the right to decline to proceed with this proposal and shall not be under any obligation to the Borrower. in the event that R4CF rejects the transaction, all unspent proceeds from the Application Fee and Legal Deposit will be returned to the Borrower. Closing Method R4CF may purchase the Bonds directly or indirectly through a designee, a placement agent, or underwriter at no cost to the Borrower. The designee Page 16 R4 Capital Funding will abide by all the terms included in this term sheet. To the extent permitted by the issuer, the Bonds will be issued in book -entry -only form and purchased through a DTC participant selected by 114CF. Sale or Securitization R4CF may elect to sell, assign, or participate all or part of its interests in the Bonds, provided that such transaction does not negatively impact the Borrower. The Borrower agrees to cooperate with R4CF In this matter and take all actions reasonably requested by R4CF and the new participant, so long as the Borrower does not incur any out-of-pocket costs or additional liability from anv such transfer or securitization. Exclusivity Upon execution of this proposal, the Sponsor agrees to cease all initiatives to obtain bond financing from other parties and to terminate any other financing proposals in process. This exclusivity requirement shall terminate should R4CF advise the Sponsor in writing that it does not intend to proceed with this transaction. Any violation of this exclusivity requirement from the Sponsor or affiliates shall also cause the Origination Fee, any out-of-pocket costs, and/or legal fees incurred by R4CF, to be immediately due and payable to R4CF. The economic terms provided In this letter shall remain valid through January 31, 2021, subject to current bond market conditions. However, this letter does not constitute a commitment by R4CF to complete the transaction outlined herein, as any commitment by R4CF to lend or purchase the Bonds is contingent upon final approval of R4CF's Investment Committee. Page 17 R4 Capital Funding R4CF is pleased to provide this financing proposal. If the terms set forth in this proposal are satisfactory, please indicate your acceptance by executing and returning to R4CF a copy of this letter and the Application Deposit before August 31, 2020. If you have not done so by such date, this proposal shall expire and be of no further effect. Very truly yours, R4 Capital Funding LLC 404 James D. Spound President Agreed and Accepted. - Swerdlow Group By: Name: Title: Date: SJM PARTNERS, INC. By: Name: Title: Date: Page 18 R4 Capital Funding By: By: Stephen Garchik, individually Stephen McBride, individually Page 114 R4 Capital Block 55 - Aldi Lease Aldi Lease Agreement dated March 13, 2020 First Amendment dated March 17, 2020 Landlord Downtown Retail Associates LLC, a Florida limited liability company Tenant Aldi (Florida) L.L.C., a Florida limited liability company Guarantor Aldi Inc., an Illinois corporation pursuant to Guaranty dated March , 2020 Premises 23,723 square feet on Level R-1 (sixth level) Term 10 years Renewal Options 6 5-year renewal options Base Rent Options Lease Years Annual Base Rent/Square Foot Annual Base Rent Monthly Base Rent (based on 23,723 square feet) (based on 23,723 square feet) 1-5 $29.25 $693,897.75 $57,824.81 6-10 $32.62 $773,897.75 $64,491.48 Option Periods 11-15 $34.25 $812,592.64 $67,716.05 16-20 $35.97 $853,222.27 $71,101.86 21-25 $37.76 $895,883.38 $74,656.95 26-30 $39.65 $940,675.55 $78,389.63 31-35 $41.64 $987,716.43 $82,309.70 36-40 $43.72 $1,037,097.00 $86,424.75 Percentage Rent None TI Allowance (Sec. 3.5): $55.00 per sq. ft. CAM (Sec. 7.6(a)): Cap of $6.00 for the first full calendar year of the Term. Ongoing cap of 5% per year for Tenant's Pro Rata Share of CAM, exclusive of cost of Common Area utility charges and Tenant's Facilities Charges. 1 Tenant's Facilities Charges (Sec. 7.6(b)): Tenant shall pay at the same manner as CAM 100% of Landlord's costs of maintaining, repairing and cleaning and supplying utilities to Tenant's Facilities (defined as Tenant's loading dock, freight elevator and trash compactor), including maintenance contract for Tenant's freight elevator. Tenant's Facilities Charges have a cap of 5% per year on annual increases. Overall Cap (Sec. 7.6(c)): Tenant's Pro Rata Share of CAM, Insurance Costs, Taxes, Facilities Charges and CDD Assessments for the first full calendar year of the Term shall not in the aggregate exceed $16.10 per sq. ft. and shall not increase annually by more than 5% over prior calendar year. CAM Admin Fee (Sec. 7.4): 7% of CAM exclusive of utilities, Insurance Costs and the portion of any single expenditure that exceeds $10,000. Insurance (Sec. 12.2 and 12.3): Landlord to maintain $2,000,000 combined single limit general liability policy and special form policy covering all improvements in the Development for full replacement cost, which may include windstorm and loss of rents ("Insurance Costs"). Tenant shall pay Tenant's Pro Rata Share of Landlord's Insurance Costs (in the same manner as Tenant's Pro Rata Share of CAM), estimated to be $2.18 for first full calendar year of the Term. Taxes (Sec. 13): Taxes against the Residential Component shall be separately assessed and not included in Taxes. Tenant shall pay to Landlord Tenant's Pro Rata Share of Taxes within 30 days after Tenant's receipt of an invoice. Sales Tax on Rent (Sec. 13.4): Tenant shall pay Florida sales tax on base rent and other amounts. CDD Assessments (Sec. 13.5): Tenant's Pro Rata Share of CDD Assessments for the first full calendar year of the Term shall be approximately $4.00 per sq. ft. Tenant shall pay to Landlord the Tenant's Pro Rata Share of CDD Assessments until the bonds are paid in full. Opening Co -Tenancy (Sec. 3.6(a)): The "Opening Co -Tenancy Requirement" is that at least 3 of the following have signed leases and opened for business to the public: Target, Ross Burlington and YouFit (or other equivalent gym). Tenant may elect to not commence Tenant's Work and/or may elect not to open for business and will have no obligation to pay rent until the Opening Co -Tenancy requirement is satisfied. If Tenant opens for business while the Opening Co -Tenancy Requirement is not satisfied, Base Rent will be reduced by 50%. If the Opening Co -Tenancy Requirement is not satisfied within 365 days after the Delivery Date, Tenant shall have the ongoing right to terminate the Lease until the Opening Co -Tenancy Requirement is satisfied. Within 30 days after such termination, Landlord shall pay Tenant the "Lease Cost Reimbursement". Ongoing Co -Tenancy (Sec. 3.6(b)): If at anytime after Tenant opens for business, 2 or more of the following users: Target, Ross, Burlington and/or YouFit (or other equivalent gym) (each, 2 an "Anchor") are not open (other than temporary closures due to casualty, condemnation, remodeling or Force Majeure) (the "Ongoing Co -Tenancy Requirement"), Rent will be reduced by 50% until users open/reopen or are replaced with national (more than 100 locations in more than 10 states) retailers occupying at least 90% of the former Anchor Premises. Target may be replaced by up to two (2) national retailers if each occupies at least 20,000 sq. ft. If such conditions are not satisfied within 270 days after Tenant delivers Notice that the Ongoing Co -Tenancy Requirement is not satisfied, Tenant shall have the ongoing right to terminate the Lease until the Ongoing Co -Tenancy Requirement is satisfied. Within 30 days after such termination, Landlord will pay Tenant the Improvements Reimbursement. Right of First Refusal to Lease (Sec. 3.7(a)): During the Term, Tenant has a right of first refusal to lease all or any portion of the Target Premises. Right of First Offer to Lease (Sec. 3.7(b)): Tenant has a right of first offer to lease all or any portion of the Target Premises that contains at least 20,000 sq. ft. if such space becomes available during the Term. Exclusive and Restricted Uses (Sec. 6): Subject to the use rights of Target (which is the Excluded Tenant set forth on Exhibit H), no portion of the Development will be leased, used or occupied for the operation of: (i) a Retail Grocery Store; or (ii) any noxious use set forth in Exhibit G. The term "Retail Grocery Store" means a supermarket, a meat market, a grocery store, a fruit and vegetable store or stand, a frozen or otherwise processed food store, and any other store where more than 2,500 square feet (including adjacent aisle space) is used for the sale or display of grocery items. "Retail Grocery Store" shall also include the operation of a grocery pick-up service (e.g. Clicklist, Curbside Pickup or similar service) anywhere within the Development, whether or not the premises from which the service is offered is also used for the sale and display of grocery items. The term "Retail Grocery Store" does not include a delicatessen or any restaurant wherein preferred food is sold for on - premises or "take-out" consumption, or a convenience store also selling gasoline for automobiles. Further, no advertisements (including, but not limited to, any advertisements on electric charging stations) in the Development shall advertise, promote or identify a Retail Grocery Store other than Tenant. If a violation is not cured within 30 days after notice, Tenant shall have the right as its sole and exclusive remedy to pay 50% of Base Rent and pursue injunctive relief. Subject to rogue tenant, after 180 days Tenant has ongoing right to terminate the Lease. If a rogue tenant violation, Tenant's right to terminate the Lease is tolled provided Landlord pursues legal proceedings to terminate the violation and the violation is terminated within 365 days after Landlord's receipt of the violation notice. Permitted Use (Sec. 4.4(a)): Tenant may use the Premises for: (i) the operation of a select 3 assortment retail grocery store, including the sale of alcoholic beverages for off -Premises consumption to the extent permitted by law, but not including the sale of prescription drugs by a licensed pharmacist for so long as Target's exclusive for the same is in effect ("Intended Use"); and (ii) subject to an exclusive and prohibitive use restrictions benefitting the existing tenants in the Development, all of which are set forth on Exhibit F attached to the Lease ("Existing Restrictions"), for so long as such Existing Restrictions are in effect, any other lawful retail purpose (collectively, the "Permitted Use"). In connection with Tenant's use of the Premises for the Intended Use, Tenant shall have the exclusive right to use the curbside area on NW 3rd Street designated on the Site Plan as the "Tenant's Pick -Up Area" for curbside and "order -ahead" pick-up of grocery items from the Premises. Commencement Date (Sec. 4.1): The Term of the Lease shall commence on the date that is the earlier of: (i) the date Tenant opens for business in the Premises, or (ii) the date that is 180 days after the Delivery Date. Rent commences on the Commencement Date. Covenant to Open (Sec. 4.5): Subject to Force Majeure, casualty, condemnation and delays caused by Landlord, Tenant agrees to open a fully fixtured, staffed and stocked Aldi grocery store for business to the public for at least 1 day on or before 240 days after the Delivery Date. Go Dark Recapture (Sec. 4.6): No continuous operation. Landlords has a go dark recapture right. Assignment and Sublease (Sec. 22.1): Except as otherwise provided in Section 22.2, Landlord's reasonable consent is required. Release on Certain Assignments (Sec. 22.2): Notwithstanding anything to the contrary contained in the Lease, Tenant has the right, without Landlord's consent, to assign the Lease or sublet all or any portion of the Premises: (i) to a parent, subsidiary or other affiliate of Tenant; (ii) to a corporation or other entity with which may emerge or consolidate; or (iii) in connection with the sale of all or a substantial portion of Tenant's assets. Tenant shall also have the right to sublet to a subtenant operating in not more than 25% of the Premises or a national tenant (operating at least 50 stores in the United States) or a regional tenant (operating at least 15 stores in the Southeast United States). From and after Tenant's assignment of the Lease pursuant to Section 22.2, the original Tenant under the Lease shall no longer be liable for Tenant's obligations under the Lease arising after the date of the assignment if the assignment is to an entity with a net worth of at least $150,000,000. Tenant Repairs (Sec. 8.1): Tenant shall maintain the interior non-structural elements of the Premises, plate glass, doors, signage, utilities exclusively serving the Premises from point of connection to the Premises, cart storage system, refrigeration and freezer units within the Premises. 4 Landlord Repairs (Sec. 8.2): Landlord shall maintain the roof and structural portions of the Premises, the exterior of the building, and all portions of the HVAC not located within the Premises. SNDA (Sec. 26): Tenant will subordinate the Lease to any first mortgage provided the lender executes an SNDA in the form of Exhibit C. Landlord to reimburse Tenant up to $2,000 for attorney's fees. Estoppel (Sec. 26): Tenant will deliver estoppel within 30 days after receipt of request. Requesting party to reimburse other party up to $2,000 for attorney's fees, not applicable to first estoppel requested of Tenant. Assignment (Sec. 22): Landlord's reasonable consent required except for no consent corporate transfers — parent, subsidiary, affiliate, merger -consolidation, sale of all or substantial portion of assets. Original Tenant released upon assignment to entity with net worth of least $150,000,000. Performance Dates: Entitlement Period (Sec.1.2(a)): earlier of 360 days after the Effective Date or date Landlord obtains the Entitlements (site plan approval, elevations and signage approval, landscape plan, permits for utility connections, civil engineering plan approval). Entitlements do not include Landlord's building permits. Free Rent (Sec. 1.2(b)): If Landlord fails to obtain the Entitlements within the Entitlement Period, Tenant shall receive day for day Base Rent credit until received. Termination Right (Sec. 1.2(b)): If Landlord fails to obtain the Entitlements within 60 days after the end of the Entitlement Period, Tenant has right to terminate within 30 days thereafter, but prior to Landlord receiving the Entitlements. Permit Period (Sec. 2.1(b)): Starts first day after end of Entitlement Period and ends 240 days thereafter. During the Permit Period Tenant shall use good faith efforts to obtain Landlord approval of Tenant's Plans, and all permits for Tenant's Work, Tenant's signs and storefront elevation facing front customer entrance ("Tenant's Permits and Approvals"). Tenant can extend its Permit Period for two (2) additional 30-day periods. Landlord's Plans (Sec. 2.2(a)): No later than 60 days after the Effective Date, Landlord shall submit to Tenant for Tenant's review and approval a full set of proposed plans and specifications for Landlord's Work ("Landlord's Initial Plans"). Tenant to respond within 10 days following its receipt. 5 If Landlord fails to submit Landlord's Initial Plans to Tenant within such 60-day period, then the Permit Period shall be tolled. Termination Right (Sec. 2.2(a)): If Landlord fails to deliver Landlord's Initial Plans to Tenant within 90 days after the Effective Date, Tenant shall have the ongoing right to terminate the Lease. Closing Deadline (Sec. 2.5(a)): Landlord shall use commercially reasonable efforts to close on purchase of the Land on or before 30 days after the expiration or earlier waiver of the Tenant's Permit Period (the "Closing Deadline"). Landlord to deliver to Tenant the "Closing Documents" within 10 business days after closing. Termination Ri&ht (Sec. 2.5(b)): If Landlord fails to close on the Land by the Closing Deadline or Landlord fails to deliver to Tenant the Closing Documents within 10 business days after the Closing Date, Tenant has an ongoing right to terminate the Lease on 30 days notice to Landlord at any time prior to date Landlord completes the Closing and delivers the Closing Documents to Tenant. Delivery Date (Sec. 3.2(a)): the date Landlord tenders and Tenant accepts exclusive possession of the Premises in the Required Condition. Free Rent - Anticipated Delivery Date (Sec. 3.2(b)): If the Delivery Date has not occurred on or before the date that is 900 days after the Effective Date and Tenant has obtained Tenant's Permits and Approvals, then Tenant gets day for day free Base Rent until Delivery Date occurs and Tenant may perform Landlord's Work. The Anticipated Delivery Date is extended day for day for delay caused by Force Majeure or by Tenant Delay (Tenant Delay requires notice thereof from Landlord to Tenant). Termination Right - Anticipated Delivery Date (Sec. 3.2(c)): If the Delivery Date has not occurred within 1080 days after the Effective Date, Tenant has right to terminate the Lease. irst Amendment 2 Additional Curbside Pick-up Spaces (Sec. 2 (e)): During the Entitlement Period Landlord shall use best efforts to obtain an amendment to the site plan approval to permit 5 diagonal parking spaces instead of 3 parking spaces in Tenant's pickup area on NW 6th street. Inspection Period (Sec. 4): Tenant waives the Inspection Period Contingency set forth in Section 2. 1(a) of the Lease. 0 Block 55 - Target Lease Lease dated December 12, 2019, Amendment to Lease dated February 20, 2020, Second Amendment to Lease dated April 9, 2020 and Third Amendment to Lease dated June 25, 2020 (note, the three amendments extended the Required Closing Date. The third amendment extends the Required Closing Date to October 1, 2020). Landlord Downtown Retail Associates LLC, a Florida limited liability company Tenant Target Corporation, a Minnesota corporation Premises 49,306 square feet on the ground floor (Schedule I and Exhibit B) Term (Sec. 2.2) 15 years Renewal Options (Sec. 2.2) 6 5-year renewal options Fixed Rent (Sec. 3.1 and Exhibit E) Annual Monthly (i) Lease Years 1-5 $1,232,650.00 $102,720.83 (ii) Lease Years 6-10 $1,355,915.00 $112,992.92 (iii) Lease Years 11-15 $1,491,506.50 $124,292.21 6 Extensions (iv) Lease Years 16-20 $1,640,903.68 $136,741.97 (v) Lease Years 21-25 $1,805,092.66 $150,424.39 (vi) Lease Years 26-30 $1,985,552.62 $165,462.72 (vii) Lease Years 31-35 $2,184,255.80 $182,021.32 (viii) Lease Years 36-40 $2,402,681.38 $200,223.45 (ix) Lease Years 41-45 $2,642,801.60 $220,233.47 Percentage Rent (Sec. 3.2): For each Lease Year, 5% over the Natural Breakpoint, Natural Breakpoint is the Fixed Rent for each Lease Year divided by 5%. TI Allowance (Sec. 6.1(B)): $2,606,450 CAM (Sec. 4.1): Fixed sum of $443,754 per year, payable in 12 equal monthly installments. As of February 1st of the second Lease Year, and each February I" thereafter, the fixed CAM shall increase 2% per year. This includes insurance. Taxes and CDD (Sec. 4.2): As Tenant's sole contribution for Tenant's share of real property, ad valorem, development or improvement district taxes (for example a CDD), assessments (general and special) or other taxes for the Property (other than Rental Taxes), Tenant will contribute the fixed sum of $345,142 per year in 12 equal monthly installments. On February 1st of the second Lease Year and each February 1" thereafter, the tax payment will increase by 2% per year 1 Insurance (Sec. 13): No separate payment from Tenant, included in fixed CAM. Sales Tax on Rent (Sec. 13.4): Tenant to pay sales tax on Rent. Co -Tenancy (Sec. 3.3): Landlord required to have executed leases for retail occupants of at least 125,000 square feet, not including Target, with the Commercial Component (which excludes the residential) on the date that is 10 days before the Rent Commencement Date. If not, Rent will abate by 50% until the co -tenancy is satisfied. Rent Commencement Date (Sec.3.1(B)): Rent Commencement Date is the earlierto occur of: (i) the first Opening Date that is at least 200 days after the Delivery Date or (ii) Tenant's opening for business. Opening Date means days in March, July and October on which Target customarily opens stores and its national store opening program. Use (Sec. 5.2(A)): The Commercial Component (including the Premises) may only be used for Commercial Use, Entertainment Use and Fitness Use. The Parking Component may only be used for parking purposes. The Residential Component may only be used for residential uses. "Commercial Use" means (i) retail sale of goods, (ii) office uses that provide services directly to consumers, including financial institutions, real estate, stock brokerage, title companies, travel and insurance agencies and medical, dental and legal clinics or services, (iii) office uses that do not provide services directly to consumers, and (iv) restaurants. "Entertainment Use" means Chuck E. Cheese, Dave and Busters, Lucky Strike, Pinstack, Urban Air and the like, which may include food, beverage and alcoholic beverage service. "Fitness Use" means gym, fitness facility, health club, yoga, karate and other martial arts, indoor cycling, spinning, aerobics and the like. Exclusive Use (Sec. 5.2(B)): The following uses (the "Exclusive Uses") are prohibited upon all portions of the Property except for the Premises: 1. Any sale of pharmaceutical drugs requiring the services of a licensed pharmacist. The prohibition in this Section 5.2(B)(1) will automatically expire if, after the Rent Commencement Date, any store, department, or operation selling any pharmaceutical drugs requiring the services of a licensed pharmacist is not operated from the Premises for a period in excess of twelve (12) continuous months, but such period will not start until after any period of construction, repair, or remodeling ends. 2. Any convenience store. 3. Any General Merchandise Use by or on behalf of a retailer whose reasonably projected annual gross revenues are at least Five Billion Dollars ($5,000,000,000) in Constant Dollars. "General Merchandise Use" means any store, department, service, or operation that collectively or individually offers for sale, delivery, or return (whether through in-store sales, Online Fulfillment, or any combination thereof) a variety of merchandise in multiple categories, including all of the following categories: (i) apparel and accessories, (ii) baby products (including diapers), (iii) consumer electronics, (iv) toys (including bicycles), (v) health and beauty products, (vi) household cleaning products, and (vii) food. For purposes of this Section 5.2 (13)(3), a "category" means (x) an area, department, or shelf within a store or (y) section, department, or grouping on a website, in each case selling a selection of at least several items within a particular listed category. For example, and area of a store, or a department on a website, that sells toys is a category, but two or three toys being sold at a checkout counter is not a category. "Online Fulfillment" means any method of fulfilling online merchandise orders or returns including pick-up (via 2 lockers, kiosks, pick-up counters, drive up facilities, or other pick-up services or facilities), ship/delivery from store, or other types of fulfillment operations or facilities for online orders. For clarity, the operation of ROSS, TJ Maxx, Marshalls, HomeGoods, Burlington, Century 21, H&M, Primark, Nordstrom Rack, or Bed Bath & Beyond stores, as each are operated in a majority of their stores in the United States as of the Effective Date, are not a General Merchandise Use. In contrast, the operation of Sears, Wal Mart, and Kmart stores, and of Amazon lockers in Whole Foods stores or Amazon return service at Kohl's, are examples of a General Merchandise Use. 4. Any store, department, service, or operation within the Property that identifies, in any manner that is visible from the exterior of a Building, any retailerthat operates a General Merchandise Use in the United States (via its name or symbol or any derivative thereof). 5. Any pet shop on the ground floor of the Property. 6. Except for a Five Below store, any store operating primarily as a "dollar" store or other similar variety discount type store, such as those operated on the Effective Date under the trade name Dollar Tree, Family Dollar, or 99 cents Only. The prohibitions in Sections 5.2(B)(3) and (4) will automatically expire if, after the Rent Commencement Date, a general merchandise or discount department store (such as "Target" is not operated from at least twenty thousand (20,000) square feet of the Premises for a period in excess of twelve (12) continuous months, but such period will not start until after any period of construction, repair, or remodeling ends (one-half of the aisle space adjacent to any shelving or display case used for the retail display of such products will be included in calculating Floor Area for such purposes). Covenant to Open (Sec. 5.6): If the Delivery Date has occurred by the Required Delivery Date and Landlord has performed all of its obligations under the Lease, if Tenant does not open for 1 day as a Target Store on or before 1 year after the Rent Commencement Date (the "Opening Deadline"), then no later than 90 days thereafter Landlord may terminate the Lease and recover $862,978 as liquidated damages. Go Dark Recapture (Sec. 5.7): No continuous operation. Landlords has a recapture right. Release on Certain Assignments (Sec. 9.1(B)): If the assignee or a guarantor of the assignee's obligations has a tangible net worth of at least $350,000,000, then Tenant is released. Assignment and Sublease (Sec. 9.1): Tenant may assign or sublet the Premises or any portion thereof without Landlord's consent. Except for a Corporate Transaction or for a Concessionaire, profits shared equally with Landlord after deducting Tenant's reasonable out of pocket costs or reletting. Except for Corporate Transactions, if Tenant intends to discontinue operations and assign or sublet the entire Premises, Tenant shall give Landlord notice and Landlord has recapture right and must pay Tenant's unamortized leasehold improvements costs. Landlord Repairs (Sec. 7.2): Roof and structural, exterior walls and Common Elements. Tenant Repairs (Sec. 7): Except for Landlord's repairs, Tenant shall maintain the Premises, 3 including Tenant's Improvements, the storefront glass, windows and doors, Tenant's Property within the Exclusive Area and Tenant's Systems (which includes the HVAC system) exclusively serving the Premises. SNDA (Sec. 16.18): Tenant will subordinate the Lease to any first mortgage with the Exhibit J form of the SNDA. Estoppel (Sec. 16.2): Tenant will deliver estoppel within 30 days of request stating the matters listed in this Section 16.2. Performance Dates: Section 2.5(A): Tenant may terminate the Lease if Landlord has not acquired fee simple title to the Property on or before October 1, 2020 (the "Required Closing Date"). Section 2.5(B): Tenant may terminate the Lease upon 30 days notice if the Delivery Date has not occurred on or before August 1, 2023, subject to extension for Force Majeure (not to exceed 120 days extension for Force Majeure). Section 2.6: If any of the Delivery Conditions have not been met and the Delivery Date has not occurred by August 1, 2022 (the "Required Delivery Date") subject to Force Majeure (not to exceed a total of 30 days for Force Majeure), then starting on the Rent Commencement Date the Rent will abate day for day for the first 30 days then 2 days for each day after the first 30 days. 4 July 27, 2019 Mr. Michael Swerdlow Downtown Retail Associates, LLC 2901 Florida Avenue Coconut Grove, FL 33133 Re: Economic and Fiscal Benefits Analysis Proposed Sawyer's Landing Mixed -use Project Dear Mr. Swerdlow: Miami Economic Associates, Inc. (MEAI) has performed an analysis to estimate the economic and fiscal benefits that will be realized by the City of Miami and/or its Southeast Overtown Park West (SEOPW) CRA as well as three other governmental jurisdictions as the result of the development by Downtown Retail Associates, LLC of the proposed Sawyer's Landing mixed - use project. The project will be located on NW 6t' Street between NW 2nd and NW 3rd Avenues on a 3.5-acre site known as Block 55. It will consist of approximately 355,000 square feet of leasable retail space and 506 rental apartment units including 404 market rate units and 102 units affordable by very low-income households. It will also contain approximately 1,050 parking spaces. The other three jurisdictions considered in our analysis included Miami -Dade County, the Miami -Dade County Public School District and the Children's Trust of Miami -Dade County. The estimates of economic and fiscal benefits presented in this report were calculated based on rates for taxes and fees that are subject to change as are the construction costs that we assumed in our analysis. Accordingly, the actual fiscal and economic benefits generated by the proposed mixed -use project for the governmental jurisdictions enumerated above may vary from those estimated below. All monetary amounts in this letter are expressed in 2019 Dollars. Key Findings The key findings of the analysis MEAT performed are as follows: Tablo i Economic Benefits Sawyers Landing Mlxod-usa Project (2019 Constant Dollars) Benefits Non -recurring Recurring - annual basis recurring - 1 D year period Ecomonle Benofrtrs over 10 years of operation Jobs Created Direct 1,935Jobs 815Jobs 815 Jobs Annually Indirect 532 Jobs 123 Jobs 123 Jobs Annually Induced 719 Jobs 169 Jobs 169 Jobs Annually Total 3,166Jobs 1,107Jobs 1, 107 Jobs Annually Labor Income (All workers) $167,623,0DD $27,401,800 $274,018,000 5441,641,000 Gross Domestic Product (Value-added) $238,756,600 S37,730,300 S377,303,000 $616,059,600 Total Economic Output $406,379,60D $65,132,100 5651,321,000 $1,057,700,600 Source: Downtown Retall Associates, LLC; YouFit, Miami Parking Autliority; IMPLAN; GAI Consultants Inc,; Miami Ecoaomlc Associates, Inc, Summary- Sawyer's Landing is a 1 billion dollar economic engine for the City of Miami in less than 10 years of operation Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 2 Economic Benefits During the period in which the proposed Sawyer's Landing mixed -use project is being developed, 3,186 jobs will be generated, including 1,935 construction jobs on -site (direct jobs). The remainder of the jobs will either be in businesses that support the construction industry such as building supply and trucking companies (indirect jobs) or in establishments in which the construction workers and the indirect workers spend their earnings (induced jobs). The workers occupying these direct, indirect and induced jobs are projected to earn more than $167.6 million in wages and salaries throughout the period in which the project is being constructed. After the development of the proposed Sawyer's Landing mixed -use project has been completed, it is expected that 815 workers will be employed on -site annually on a full-time equivalent (FTE) basis in the proposed commercial space and in jobs relating to property operations and maintenance, parking and the rental of the residential units2. An additional 292 indirect and induced workers will also be employed. The earnings of all these workers on an annual basis are expected to exceed $27.4 million annually. It should, however, be noted that the number of people actually employed on -site may be greater than 815 because the workforces in the retail, food and beverage and fitness sectors includes many part-time workers. MEAT estimates that the households living in the 506 rental apartment units will spend approximately $8.0 million annually on retail goods and in eating and drinking establishments. Since only a portion of these expenditures are likely to occur on -site, they will provide support for jobs in retail and food and beverage establishments off -site, including elsewhere in the SEOPW CRA area and/or the City of Miami, that are not reflected in employment numbers enumerated in the preceding paragraph. Fiscal Benefits Prior to the development of the proposed Sawyer's Landing mixed -use project, Downtown Retail Associates, LLC will acquire the project's site from the SEOPW CRA for consideration totaling $18.0 million inclusive of: 1) $15.0 million in cash; and 2) the value of the 8,500 square feet of ground floor and mezzanine space that will be deeded to the SEOPW CRA at no cost, which is estimated to be at least $3.0 million. • During the construction period, it will pay the City of Miami more than $8.4 million in impact fees, supplemental impact fees and building permit fees. Included in this figure will be more than $437,000 in park impact fees. School impact approximating $626,000 will also will be paid to the Miami -Dade County Public School District. After the development of the proposed Sawyer's Landing mixed -use project is fully completed, the Trust Fund of the SEOPW CRA will receive nearly $2.5 million annually in incremental revenues. 2 The retail, restaurant and hotel sectors as well as the property and parking operations and maintenance sector employ substantial portions of their workforces on a part-time basis. Accordingly, considerably more than 390 workers may be employed on -site than the number of full-time equivalents stated above. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 3 • Upon project completion, the Miami Parking Authority, a department of the City of Miami, will become the purchaser and owner/operator of the 1,000-car parking garage within the project. SP Plus Corporation estimates that the Authority will realize more than $1,273,500 annually in net operating income and that the City of Miami will collect more than $191,000 annually in parking surcharges. Other Benefits • While not fully quantifiable as economic or fiscal benefits, the proposed Sawyer's Landing mixed -use project will provide other significant benefits: o It will provide the residents of Overtown and Park West with major new shopping opportunities within their own neighborhood, which have not historically existed. o It will showcase the history of Overtown in its design. o It will create 102 new affordable housing units within the SEOPW area of the City of Miami. o It will provide new job opportunities for residents of the SEOPW area. In this regard, Downtown Retail Associates, LLC is committed to complying with the hiring and wage requirements established by the SEOPW CRA both during the period in which Sawyer's Landing is being developed and once it begins operating. Priority in awarding construction contracts will be given to Overtown and CRA area businesses and then to Miami -Dade County businesses. Similarly, priority in hiring will be given to Overtown and CRA area residents and then to Miami -Dade County residents. Finally, it will organize at least 2 job fairs to facilitate the hiring of Overtown and CRA area residents by the subcontractors performing the construction work and by the retailers who will occupy the finished retail space. o It will provide new housing units within walking and/or biking distance of the various office buildings and courthouse buildings that comprise the Government Center district of Downtown Miami and many non -governmental buildings within Downtown Miami. o By virtue of its location one block west of a Metrorail station and one block northwest of a Metromover station, it will serve to increase transit ridership. The remainder of this letter report, which as shown below, provides a complete discussion of the findings of our analysis and their bases. Section Page Project Description 3 Economic Benefits 4 Fiscal Benefits 6 Bases of Fiscal Estimates 9 Closing 12 Project Description Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 4 As discussed in the introductory paragraph of this letter, the proposed Sawyer's Landing mixed - use project will be developed on NW 61h Street between NW 2"d and NW 3rd Avenues on a 3.5- acre site that was made available for development by the SEOPW CRA in 2016 through a formal RFP process in which Downtown Retail Associates, LLC was the winning bidder. The proposed Sawyer's Landing mixed -use project was designed by Arquitectonica, a world- renowned, Miami -based firm. It will consist of approximately 355,000 square feet of retail, restaurant and entertainment space, 506 rental apartment units and approximately 1,050 parking spaces. With respect to the proposed retail space, the ground floor tenant will be a Target store that will contain a full Starbucks and a CVS Pharmacy within its space. The first floor will also feature restaurants with outdoor seating along Sawyer's Walk. Ross for Less, Aldi Supermarkets, Burlington, Ulta Beauty and other national retailers will also occupy portions of the retail space as will a YouFit fitness facility. The 506 proposed one -bedroom and two -bedroom residential units will range in size between 626 and 940 square feet. In terms of unit mix, the 506 units will include 242 one -bedroom units and 264 two -bedroom units. As previously stated, 404 of the total units will be market rate units which will be offered at rents averaging $2,370 per month. The remaining 102 units will be offered as housing affordable to very low-income households at rents averaging $876 per month. These very low-income households will have incomes less than 50 percent of the Area Median Income of Miami -Dade County, which is currently $54,900 according to the Florida Housing Finance Corporation. All of the residents of the project will have access to a private pool and clubhouse on top of the retail podium and will also have free use of the fitness facility located on the top floor of the retail space. The proposed Sawyer's Landing mixed -use project will contain approximately 1,050 parking spaces. Downtown Retail Associates, Inc. intends to sell the parking garage when construction is completed to the Miami Parking Authority, a department of the City of Miami, which will operate it on a fully automated basis. According to a study prepared by SP Plus Corporation, the facility will generate in excess of $1.27 million annually in revenues net of taxes and the City's parking surcharge from residents, employees and shoppers at Sawyer's Landing as well as monthly customers, transient users and people visiting Downtown Miami. The Miami Parking Authority will net an amount equal to the above -stated revenues because the garage's operating expenses will be covered by the CAM payments of the proposed project's tenants. According to information provided to MEAT by Downtown Retail Associates, LLC, the proposed project is expected to cost approximately $219.5 million to build in terms of hard construction costs. It is further estimated that approximately $44.4 million will be spent on soft costs including, but not limited to, architectural and engineering fees, other consultant fees, building permit and impact fees, project overhead, insurance, marketing and leasing commissions. Therefore, a total of $263.9 million will be spent to develop the proposed Sawyer's Landing mixed -use project exclusive the cost associated with land acquisition and project financing. Economic Benefits The term "economic benefits" relates to the positive impact that the proposed Sawyer's Landing mixed -use project will have on the economy of the City of Miami and/or Miami -Dade County. The economic benefits that the project will provide will be both non -recurring and recurring in nature, with the former occurring during the construction period, the latter on an annual basis Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Emall: eneaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 5 each year after the project has been fully completed. Table 1, at the top of the next page, summarizes the economic benefits that the Sawyer's Landing mixed -use project will generate. The monetary amounts shown are expressed in 2019 in Constant Dollars. Table 2 Economic Benefits Sawyer's Landing Mixed -use Project 2019 Constant Dollars Benefits Non -recurring Recurring Jobs Created Direct 1,935 815 Indirect 532 123 Induced 719 169 Total 3,186 1,107 Labor Income All workers $ 167,623,000 $ 27,401,800 Gross Domestic Product Value-added $ 238,756,600 $ 37,730,300 Total Economic Output $ 406,379,600 $ 65,132,100 Source; Downtown Retail Associates, LLC; YouFit, Miami Parking Authority; IMPLAN; GAI Consultants Inc.; Miami Economic Associates, Inc. With respect to Table 2, the following points are noted: • The estimates of job creation, labor income and gross domestic product (or value-added) were formulated using the IMPLAN Input -Output Model developed at the University of Minnesota approximately 40 years ago and which has been updated on a continuing basis in the ensuing years. A description of the model may be found in the appendix on page 13 of this report. The term "direct jobs" refers to jobs on -site. "Indirect jobs" are jobs in industries related to the on -site economic activity while "induced jobs" are jobs in economic sectors across the entirety of the economy in which the direct and indirect workers spend their earnings. Illustratively, during the construction period, the direct jobs would be filled by the on -site construction workers. The indirect workers would include people employed by building supply and trucking firms, among others, that provide goods and services that support the on -site construction activity. The induced workers would include people working in supermarkets and doctors' offices, among other venues, that the direct and indirect workers patronize. • The estimates of non -recurring benefits are based on the project's estimated cost of hard construction, which is expected to total $219.5 million. Soft costs were not included since the IMPLAN model estimates those expenses and their inclusion in the input would result in double -counting. The benefits shown would be generated throughout the entirety of the development period and are stated 2019 Constant Dollars. • The estimates of recurring benefits are annual amounts expressed in 2019 Constant Dollars for each year after development of the project has been completed. The indirect and Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel. (305) 669-0229 Fax: (305) 669-8534 Email: meaiink@kellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 6 induced jobs as well as labor income and gross domestic product were estimated based on the 815 direct employees on a full-time equivalent (FTE) basis that will constitute the proposed project's on -site workforce. The estimated number of direct employees assumes the following: o The approximately 300,000 square feet of the retail space that will be occupied by stores will be occupied by an average 2.0 employees on a FTE basis per 1,000 square feet while the 30,000 square feet occupied by food and beverage establishments (exclusive of the Starbucks within the Target Store) will employ an average of 5.0 workers on a FTE basis per 1,000 square feet. o Based on information provided by YouFit, MEAT estimates that the fitness facility will employ approximately 25 people on a FTE basis. o Based on information provided by Downtown Retail Associates, LLC and the Miami Parking Department, MEAT estimates that approximately 40 people will be employed on -site on FTE basis who will be involved in leasing and property operations and maintenance with respect to retail space, the rental apartment units and the parking facility. It should, however, be noted that the number of people actually employed on -site will be greater than 815 since the workforces in retail, food and beverage and fitness sectors are comprised of many part-time workers. MEAT estimates that the 506 households living on -site will have an aggregate income approximating $40.0 million and will spend approximately $8.0 million, or approximately 20 percent of that amount, annually on retail goods and in eating and drinking establishments. Since only a portion of these expenditures are likely to occur on -site, they will provide support for jobs in retail and food and beverage establishments off -site, including elsewhere in the SEOPW CRA area and/or the City of Miami, that are not reflected in Table 1. Fiscal Benefits The term "fiscal benefits" refers to the positive impact that the proposed Sawyer's Landing mixed -use project will have on the finances of the various jurisdictions in which it will be located. Table 2, on the page following, summarizes the fiscal benefits that the project will generate on both a non -recurring and annual recurring basis for the City of Miami, the SEOPW CRA and the Miami Downtown Development Authority. Table 3, on the page following Table 2, summarizes the fiscal benefits it will generate for Miami -Dade County, the Miami -Dade County Public School District and the Children's Trust of Miami -Dade County. With respect to Table 2, the following points are noted: • Downtown Retail Associates, Inc. will provide the SEOPW CRA with total consideration in the amount of at least $18.0 million to acquire the Sawyer's Landing property. This figure includes: $15 million in cash; and 2) the value of the 8,500 square feet of ground floor and mezzanine space that will be deeded to the SEOPW CRA at no cost, which is estimated to be at least $3.0 million. • Since the site of the proposed Sawyer's Landing mixed -use project is owned by the SEOPW CRA, no ad valorem taxes are currently levied. Accordingly, 100 percent of the ad valorem Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 7 taxes that the City of Miami as well as the jurisdictions enumerated on Table 3 collect after the proposed project is completed will represent new recurring revenue. Further, the preponderance of the amounts collected by the City of Miami and Miami -Dade County collect will then be contributed to the SEOPW CRA. • Also representing new recurring revenue to the City of Miami will be $1,273,650 it will realize annually from the operations of the on -site parking garage and the $191,048 that it will collect annually in parking surcharges collected from the utilization of that facility. It will also realize new recurring revenues annually in the form of increased utility taxes and franchise fees, occupational license fees and state sales tax rebates. The latter amounts cannot be estimated at this time based on the information that is currently available. • The estimate of ad valorem taxes and the contribution to the SEOPW CRA Trust Fund shown on Table, as well as Table 3, are understated since they are based solely on the estimated value of the real property that will exist at the proposed project when it is developed. Ad valorem taxes will also need to be paid on the personal property in the proposed retail space. (Intentionally blank) Table 3 Summary of Fiscal Benefits City of Miami and SEOPW CRA Sawyer's Landing Mixed -use Project 2019 Constant Dollars Jurisdiction Non -recurring Recurring City of Miami Impact Fees Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 8 Police Impact Fees $ 210,790 Fire Impact Fees $ 272,114 General Services Impact Fees $ 148,294 Park Impact Fees $ 1,998,700 SEOPW DRI Supplemental Impact Fees $ 613,478 Building Permit Fees General $ 2,158,567 Trade -related ** Ad Valorem Taxes General Fund $ 88,554 Debt Service Fund $ 99,131 Downtown Development Authority $ 100,407 Net Income from Parking Operations $ 1,273.650 Parking Surcharge $ 191,048 State Sales Tax Rebate ** Occupational License Fees ** Utility Taxes and Franchise Fees ** Southeast Overtown Park West CRA Saw er's Landing Sale Consideration *** $ 18,000,000 Contribution to CRA Trust Fund $ 2,485,295 " Amount cannot be estimated based on the information currently available. *** Incudes: 1) $15 million in cash; and 2) the value of the 8,500 square feet of ground floor and mezzanine space that will be deeded to the SEOPW CRA, which is estimated to be at least $3.0 million. Source: Downtown Retail Associates, LLC; SP Plus Corporation; Relevant sections of the City of Miami Code; Miami - Dade County; Miami -Dade County Property Appraiser; Miami Economic Associates, Inc. Table 4 Summary of Fiscal Benefits Miami -Dade County, Miami -Dade County Public School District and Children's Trust Sawyer's Landing Mixed -use Project 2019 Constant Dollars Jurisdiction Non -recurring Recurring Miami -Dade Count Road Impact Fees $ 0 Water & Sewer Connections Fees ** Ad Valorem Taxes Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 9 General Fund $ 54,505 Debt Service Fund $ 99,614 Library Fund $ 60,918 State Sales Tax Rebate ** Local Option Sales Tax ** Occupational License Fees ** Water & Sewer Use Charges ** Reduced Transit Subsidy** Miami -Dade County Public School District School Impact Fees $ 625,953 Ad Valorem Taxes Operating $ 1,395,108 Debt Service $ 49,121 Children's Trust Ad Valorem Taxes $ 94,702 .* Amount cannot be estimated based on the information currently available. Source: Downtown Retail Associates, LLC; Relevant sections of the City of Miami Code; Miami -Dade County; Miami - Dade County Property Appraiser; Miami Economic Associates, Inc. Bases of Estimates of Fiscal Benefits The materials that follow explain how the estimates of fiscal benefits presented in Tables 3 and 4 were calculated. All monetary amounts are in 2019 Constant Dollars. Non -recurring Fiscal Benefits • Downtown Retail Associates, LLC proposes to provide total consideration in the amount of at least $18.0 million to acquire Sawyer's Landing from the SEOPW CRA. This figure includes: 1) $15 million in cash; and 2) the value of the 8,500 square feet of ground floor and mezzanine space that will be deeded to the SEOPW CRA, which is estimated to be at least $3.0 million. The City of Miami charges impact fees on all new projects within the City for police, fire and general services. It also charges all new projects within the City that include residential units impact fees for parks. Finally, if a project is within the area where development is controlled by the SEOPW DRI, the City charges supplemental impact fees. Based on the quantities of development proposed for the Sawyer's Landing mixed -use project and the current fee schedules, a total of $2,629,898 will be paid in regular impact fees including $210,790 for police, $272,114 for fire, $148,294 for general services and $1,998,700 for parks. DRI supplemental impact fees in the amount of $613,478 will also be paid. • Given that the proposed Sawyer's Landing area is located in the area where development is controlled by the SEOPW DRI, it will not be required to pay the road impact fees that Miami - Dade County charges in all new projects within its jurisdiction. The proposed Sawyer's Landing mixed -use project will, however, need to pay school impact fees that Miami -Dade County collects on behalf of the Miami -Dade County Public School Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 10 District. Based on the quantity of residential development proposed and the current school impact fee rate schedule, school impact fees in the amount of $625,953 will need to be paid. The amount the City of Miami collects for general building permits for all new projects constructed within the City based on the cost of the hard construction proposed. The various trades involved in constructing a new project including the roofing, electrical, plumbing, structural, mechanical, elevator and fire safety system contractors will also be required to pay permit fees on their portions of the work. Downtown Retail Associates, LLC estimates that it will need to pay $2,158,567 in building permit fees. The Miami -Dade Water & Sewer Department requires that connection fees be paid to activate water and sewer service for a new project. Downtown Retail Associates, LLC estimates that it will be required to pay approximately $200,000 in water and sewer connection fees. Recurring Fiscal Benefits The millage rates currently being levied for ad valorem tax purposes by the governmental entities referenced on Tables 2 and 3 are shown at the top of the next page. The ad valorem tax revenues projected were calculated by applying the millage rates shown to the proposed project's estimated taxable value, which was assumed to be $214.5 million. That figure equates to the cost of hard construction less the costs associated with the parking garage plus the cash portion of the consideration that Downtown Retail Associates, LLC. By virtue of the fact that the parking garage will be owned by a public entity, it will be exempt from ad valorem taxes. Entity Rate/$1000 Taxable Value Taxes City of Miami General Fund 7.5865 $ 1,627,304 Debt Service Fund 0.4435 $ 95,131 Downtown Development Authority 0.4681 $ 100,407 Miami -Dade Count General Fund 4.6669 $ 1,001,050 Debt Service Fund 0.4644 $ 99,614 Library Fund 0.2840 $ 60,918 Miami -Dade County Public Schools Operating Fund 6.5040 $ 1,395,108 Debt Service Fund 0.2290 $ 49,121 Children's Trust 0.4415 $ 94,702 Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 11 Source: Downtown Retail Associates, LLC; Miami -Dade County Property Appraiser; Miami Economic Associates, Inc. Because the proposed Sawyer's Landing mixed -use project will be located in the jurisdiction of the SEOPW CRA, both the City of Miami and Miami -Dade County will be required to annually fund the CRA's Trust Fund with an amount equivalent to 95 percent of the funds they collect for their General Funds on the difference between the taxable value of Sawyer's Landing when the CRA was established and the taxable value of the proposed mixed -use project when completed. For the purpose of this analysis, it is assumed that the 'frozen value' of Sawyer's Landing when the CRA was established was approximately $1,000,000 or approximately 25 percent of the current market value estimated by the Miami -Dade County Property Appraiser. The General Funds of the two jurisdictions will retain 100 percent of the taxes generated on the value of the property at the time the CRA was established and 5 percent of those generated on the incremental value. Accordingly, the District Trust Fund will receive $2,485,295 annually while the general funds of the City and the County will retain $88,554 and $54,505 annually, respectively. Based on a study prepared by SP Plus Corporation, a consulting firm that specializes in the preparation of financial analyses for parking facilities, it is estimated that that the Miami Parking Authority will net $1,273,650 annually from operations of the 1,050 parking spaces at Sawyer' • The City of Miami collects a 15 percent surcharge on parking revenues. SP Plus Corporation estimates that the on -site parking garage at the proposed Sawyer's Landing mixed -use project will generate in $191,048 in surcharge receipts for the City of Miami The State of Florida and Miami -Dade County will collect sales taxes on the all the rents paid by both businesses and residents of Sawyer's Landing and the parking revenues collected in the project's garage as well as the revenues generated on the sale of sales tax -eligible retail goods and the sales recorded in food and beverage establishments. The State sales tax rate is 6 percent while the County's is 1 percent. Approximately, 9 percent of the sales tax amount collected by the State is rebated back to the County in which the taxes were collected and then divided between the County and the cities within the County. Since the percentage of retail revenues that will be based on sales tax -eligible goods is not currently known, the amount of sales tax revenues that will be collected be either the state and/or Miami -Dade County cannot be estimated at this time. The City of Miami and Miami -Dade County will collect occupational license fees from the occupants of the proposed retail space. The amounts collected cannot be estimated at this time since they will depend on the exact nature of the businesses housed in the retail space, which is not currently known. • The City of Miami collects utility taxes and franchise fees from the providers of telephone, electric and other such services based on their revenues. The amount collected as a result of the development of the Sawyer's Landing mixed -use project will be dependent on the amount of these services used by the project's retail tenants and residents; therefore, it cannot be quantified at this time. The Miami -Dade Water & Sewer Department will provide water and sewer services to the proposed Sawyer's Landing mixed -use project. The service fees that will be generated will Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 12 be a determined by usage and the number and the size of the meters through which service is provided. Since the engineering parameters of the proposed project are not yet known, an estimate of the service fees earned cannot be formulated at this time. Miami -Dade County currently subsidizes the operations of its Metrorail, Metromover and Metrobus services because their fare box revenues are insufficient to defray all operating expenses. It is anticipated that the development of the proposed Sawyer's Landing mixed - use project will serve to increase ridership on those services, thereby reducing the amount of subsidy required. It is not, however, within MEAI's competence to estimate the extent to which ridership will increase. Closing The analysis performed by MEAI demonstrates that development of proposed Sawyer's Landing mixed -use project would be highly beneficial fiscally the City of Miami and its SEOPW CRA as well as the three other jurisdictions in which it will be located. It will also provide employment opportunities for residents of the City of Miami and/or Miami -Dade County both while it is being built and after construction has been completed. Sincerely, Miami Economic Associates, Inc. Andrew Dolkart President Appendix Minnesota IMPLAN Input -Output Model The Minnesota IMPLAN Input -Output Model relies on multiplier analysis which quantifies the cumulative effect of dollars inserted into the regional economy. As a dollar moves through the region, it creates additional revenue for linked businesses and/or their employees who also spend that money. More simply, expenditures dispersed by one entity become revenue to another, continuing an economic cycle which ultimately dissipates, bleeding into other regions or areas. Although a number of economic models are available, they work in fundamentally similar ways and center on the same indicators. The Minnesota IMPLAN model was initially created approximately 40 years ago at the University of Minnesota and has been upgraded on a continuing basis in the ensuing years. The multiplier impacts calculated by the Minnesota IMPLAN model are based on input-output methodology, which explicitly considers the inter -industry linkages that exist within an economy. Each industry needs labor and inputs from other industries in order to produce economic output. Whenever an industry experiences an increase in the demand for its output, many other industries within that economy indirectly experience an increase in demand as well because of these inter -industry linkages. This increase in demand that results from the need for material inputs is called the indirect effects. In addition, an increase in production within a region also leads to an increase in household income through the hiring of workers, which in turn generates Miami {Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: meaink@bellsouth.net Mr. Michael Swerdlow Downtown Retail Associates, LLC July 27, 2019 Page 13 further demands for goods and services within the region. Firms also need to expand their base of physical capital to meet higher levels of demand, and this too stimulates regional economic growth. The latter effects are referred to as induced effects. The inter -industry linkages and the induced effects on consumer and capital spending lead to successive rounds of production, and this process results in an increase in output that exceeds the initial change in demand, or a multiplier effect. Similarly, the increase in household income will exceed the initial payroll increase encountered in the industry that experienced the original increase in demand. The total change in employment in the regional economy is a multiple of the direct change in employment. In addition to estimating employment, MEAT also used the Minnesota IMPLAN model to quantify the total earnings or labor income of the direct, indirect and induced workers as well as the total gross domestic product, or value added, that would result from the efforts of the direct, indirect and induced employees. Labor income consists of all forms of employment income including wages and salaries and proprietor income. Gross domestic product (GDP), also known as value-added, is the increased value of a product or service as the result of the economic inputs (labor and capital) expended at a given stage, GDP is the sum of wages and salaries, proprietor income, interest and indirect business taxes. Miami Economic Associates, Inc. 6861 S.W. 89th Terrace Miami, Florida 33156 Tel: (305) 669-0229 Fax: (305) 669-8534 Email: mealnk@bellsouth.not r, 4 , a.r .r rpp l w�,� tr ,w rf a a �.�. R.S. r s �• `^.. t nee ^V7Fa`4`.e :. � .� 1: :, J + � . � .,/ z. I �'`''� r � 'i+ { `ir• I/ls �, ��' s,.I�A. �. I , r :, ' : �, 'i, 'hYi � •y�,,.s-az S. III '�' ' - +�zcwWsgyy w,. � y�.' l i x�� 1 4.. � �'�,.•`],^.,�, � � ,�,� 4*�S � �.l- r � '......(y`jrn i. JTl;t• ter- _ 5 ERDLO11V mo GROUP IIIIIIII WAKEFIIELD 5 K,r 'hcl:+drernnrnames ardlogofore fureere;entahonalpurpose; anq!All signageacdgraphicss� Greg Masin Senior Director Retail Brokerage September 21, 2020 Michael Swerdlow Manager Swerdlow Real Estate Group 2901 Florida Ave Coconut Grove, FL 33133 Michael: 11111CUSHMAN & 16 WAKEFIELD Cushman & Wakefield of Florida, LLC. Licensed Real Estate Brokers 333 SE 2n1 Ave Suite 3900 Miami, FL 33131 (305)371-4411 T Greg.Masln@cushwake.com I write this correspondence to you in response to your request for an overview of the demand for retail goods and services at the Block 55 site. The project is uniquely situated at the hub of the residential growth of the Downtown Miami area and further benefits from immediate access to all of the public transportation systems in Miami, including Metrorail, Metromover, Metrobus, and the Brightline station. Per the Downtown Development Authority market report for the first quarter of 2020, there are 3,332 residential units in the trade area, with 1,331 units under construction and 2,001 units planned. This demography, combined with the daytime population of the downtown and Brickell trade areas of 347,702, creates a unique operating environment almost umnatched in Miami- Dade county, one of the most successful retail environments in the nation. The relevance of the retail component of the project is further established by the lease commitments that have been achieved prior to the project breaking ground. Target, one of the most successful operators in the nation, has been engaged in a search for a downtown site for many years, and has executed a lease at Block 55 for a substantial unit, to be further complemented by an in house CVS drugstore and a Starbucks coffee cafe. Target is a coveted tenant by commercial landlords, given their astute underwriting of trade areas, flexibility in their delivery to the customer and most importantly, their credit standing and long history of successful operation. The site is further enhanced by a lease that has been executed with Aldi Grocers. Aldi is an extremely well capitalized and well thought of by the industry, discount grocer. Aldi has made an aggressive push into Florid in the pas ten years. Their choice of Block 55 for one of their first urban, vertical units, speaks loudly about the opportunity that they see at the subject site. Ross Stores is in the final stages of executing a lease. Ross is one of the most successful and healthy retailers in the country, and continues to expand their footprint, even in these times. South Florida is one of Ross' most successful trade areas. Ross units in South Florida tend to outperform the average unit nationally, and thus Ross continues to increase their distribution points in Miami Dade County, on top of a very strong existing presence. It is our understanding that Ross has been engaged in discussion on this site for well over five years, as the plan has evolved and the project has come into focus. Again, this level of commitment to a site by a retailer is indicative of the projects underlying strength. Burlington Stores is also in final lease negotiation to occupy a large format store at the project. Burlington remains one of the few "big box"'retailers that are performing at a high level and are well capitalized enough to continue to expand. Their soft goods model is an added benefit to the project. Five Below is a successful discount concept, especially in "tween" demographic, and has been rapidly expanding in the U.S. again, their choice of Block 55 for their first downtown unit speaks volumes about the project. Final discussions are also underway with EOS a large format fitness operator that has remained on track for national expansion throughout the pandemic. This service tenant will complement the existing retailers, and provide the first large scale fitness facility for the downtown market. It is essential to note that another significant demand driver for the project is the soon to be opened Publix Supermarket across the street from the Block 55 site. Publix is the most successful grocer in Florida and has long been an "early adopter" with outstanding market information on neighborhoods and their future growth. To date there is not a Publix in the downtown corridor and the fact that their first unit is at the same intersection as the Block 55 project should not be lost on the reader. As we have discussed we remain bullish on the prospects of Block 55. We have encouraged your team not to lease additional space at this time, as we strongly believe the premise will be more valuable to the partnership as the project nears completion. Block 55 fills avoid in the market both from a physical and a locational standpoint. The large scale envelope allows large format users to obtain a first generation premises in the heart of an existing dynamic market that is undergoing a rapid increase in population base. 'A . G� GREGORY MASIN MANAGING DIRECTOR CUSHMAN & WAKEFIELD OF FLORIDA, LLC. GM\ir CITY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM Members of the Housing and September 18, 2020 TO: Commercial Loan CommitteeDATE: Block 55 Owner, LLC ,qw SUBJECT: Sawyer's Landing George Mensah, Director '+/ Department of Housing & Community Development FROM: REFERENCES: ENCLOSURES: Block 55 Owner, LLC (")Block 55"), a Florida Limited Liability company. The single -asset entity created for the development of the project. The principal and manager of Block 55 is Mr. Michael Swerdlow. Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that is a partner in the development of the project. The Holdings consists of: ® Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) ® Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) ® MC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14,85% interest ownership) m Downtown Duffle Family, LLC (FL). Manager; Alben Duffle (24.92% interest ownership) © Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) ® The Alan L. Meltzer Revocable 'Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) Block 55 Owner, LLC 2 September 18, 2020 Sawyer's Landing The principals, Michael Swerdlow and Alben Duffle are partners of The Swerdlow Group, a real estate firm that offers more than 40 years of experience in the development of mix -use real estate projects; Stephen Garchik and Stephen McBride are partners of SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in this type of real estate development. Mr. Atzmon is a team member of the Swerdlow Group and has 33 years of experience in managing large and complex projects like the Sawyer Landing project. PROJECT Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed - use commercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (110) studio/one-bathroom units; two hundred eighty (280) one-bedroom/one- bathroom units; and one hundred eighty-eight (188) two-bedrooin/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. BACKGROUND On February 25, 2019, the Department of Housing and Community Development ("Department") issued a Request for Proposals ("UP") in HOME Investment Partnerships Program ("HOME") funds; Community Development Block Grant ("CDBG") funds; State Housing Initiatives Partnership Program ("SHIP") funds; Affordable Housing Trust Funds ("AHTF") funds; and General Obligation Bonds ("GOB") for the construction and rehabilitation financing of multifamily rental housing projects and homeownership projects. It is the City's intention to fund as many applicants as possible, upon the availability of funding, to projects demonstrating the ability to proceed with the commencement of the project, Special consideration was given to Certified Community Housing Development Organizations ("CHDO"); or a partnership with a CHDO. BORROWER'S REQUEST The Developer submitted a proposal requesting $7,500,000 in Miami Forever GOB funds for the new construction of a mixed -use 19-story project to be known as Sawyer's Landing. The project will provide a total of 578 affordable housing units and retail space that to date it includes the following retailers: Target, Aldi Supermarket, Becker Boards, Ross, Burlington, Five Below, and EOS Fitness. The units will be targeting elderly and families that are very low to low income ranging from 40% to 80% of area median income. This project is located at 249 NW 6 Street in the Overtown neighborhood. Block 55 Owner, LLC 3 September 18, 2020 Sawyer's Landing DEPARTMENTAL RECOMMENDATION Based on the proposal provided by Borrower, the Department recommends the allocation up to $7,500,000 in GOB funds to Block 55 Owner, LLC for the development of Sawyer's Landing project subject to the following loan terms and conditions: 1. City Commission Approval: The allocation of GOB finds are subject to City of Miami Commission Approval at its meeting to be held on September 241h, 2020, the Administrations recommendation amending the Miami Forever Bond, Affordable New Construction Rental Strategy. 2. Firm Commitments: The allocation of GOB funds are subject to obtaining all of the necessary outstanding firm construction and permanent commitments as detailed herein, for the development of the project. Closing on all financing to be simultaneous. 3. GOB Funding approval. The requested allocation of the GOB funding requested is subject to City of Miami Commission approval. 4. Use of Funds: City funds will be used for development hard costs. 5. City Assisted Units: All 578 project units shall be assisted with GOB funds from very low and low-income households. 6. Maximum Rent and Income Levels: Rents charged on City -assisted units are subject to Florida Housing Finance Corporation State Housing Initiatives Partnership ("SHIP") program according to the income target proposed by the Borrower. The rent and income limits are published annually by the US Department of Housing and Urban Development and Florida Housing Finance Corporation ("FHFC"). 7. Affordability Period.: an affordability period of 30 years will apply commencing from the date the City approves the closeout of the project. 8. Loan Repayment & Interest Rate Terms: This is a deferred loan provided to the Borrower with no debt service payments required. The property must maintain the required affordability structure for a period of 30 years. Failure to comply with these requirements will result in the full repayment of principal and an agreed upon interest rate. Full repayment of principal is due at the 30-year maturity. 9. Draw Disbursements: The City shall not fund any draw request in an amount that exceeds the City's initial contribution percentage of the entire development cost of the project. 10. City Incurred Costs: Borrower understands and agrees that $10,000 of the GOB funds may be used by the City to cover costs incurred by the City on behalf of the project. 11. Increase in Project Costs: If the project costs increase ten percent (10%) or more of the original budget, and the Borrower is not able to secure additional funding within 60 days before the project commencement, the project will be subject to recommendation to the Housing and Commercial Loan Committee for de -obligation of the project funding. 12. Retainage(s): Five percent (5%) of each draw request will be retained until the City has received as part of the close-out, at the Borrower's sole cost, a Final Cost Certification prepared by an independent certified public accountant, both in form and substance acceptable to the City. 13, Commitment Fee: There will be a $5,000 commitment fee. 14. Eligible Project Costs: Eligible project costs will be effective from the date of environmental clearance. Block 55 Owner, LLC 4 September 18, 2020 Sawyer's Landing 15. Reporting Compliance: Borrower is subject to compliance reporting requirements in the process of construction and during the affordability period. 16. Development Benchmarks/Scope of Work: The project shall: (a) commence construction within six (6) months from the Effective Datelll of the contract; (b) obtain all certificates of occupancy required for the project within 18 months from the Effective Date; and (c) have all project units rented within 12 months after the issuance of project's certificate(s) of occupancy, but in no event later than 30 months from the Effective Date. 17.Insurance Requirements: Borrower shall obtain and furnish evidence of insurance coverage as the City may require in connection with the Project. 18. Affirmative Marketing Plan: Borrower shall provide an Affirmative Marketing Plan using IND's approved form and report to the City annually on all actions taken to comply with said plan. Borrower shall comply with the requirements of the affordable housing notice to City Officials Ordinance #13491. 19. Lottery: Selection of eligible tenants shall be from the results of a tenant lottery, which shall be conducted with a representative of the City of Miami present. In addition, the project shall comply with the requirements of the City of Miami Ordinance 13645, Resident Preference. 20. Project Signage: Borrower shall furnish signage identifying the Project and shall acknowledge the contribution of the City by incorporating the seal of the City and the names of the City commissioners and officials in all documents, literature, pamphlets, advertisements, and signage, permanent or otherwise, All such acknowledgments shall be in a form acceptable to the City and its costs should be covered under the City Incurred Cost line item. 21. De -obligation of Funds: The City may at its sole discretion de -obligate the fielding approved herein, if by no later than six (6) months from the date of approval of the City funds, the Borrower has failed to close on all funding commitments represented herein. 22. Compliance with the provisions of Davis Bacon Act, and regulations, as amended. 23. Discretionary Action by Administration: Staff shall have the discretion to approve and, by way of Memorandum, authorize the City Manager to execute any and all documents needed to further the Project Completion, provided, however, that the lien position nor the project terms are not materially affected. 24. Project Default: If the City determines that the project is in default, the following conditions will apply: o The highest interest rate available under the law will be applicable for the funds disbursed from date of disbursement. o The Restrictive Covenant will remain as a restriction on the Project property throughout the Affordability Period; and o The borrower, project developer, managing partner(s) of the borrower and/or other individuals, principals and/or other entities as determined by the City will be debarred from receiving any City funding for a period of five (5) years. O] The "Effective Date" is the date on which the contract has been signed by the City Manager and attested to by the City Clerk. DIock 55 Owner, LLC Sawyer's Landing September 18, 2020 HOUSING AND COMMERCIAL LOAN COMMITTEE DECISION: Approved as Recommended by Staff Yes ]�2t�o /A To Include Additional Conditions or Restrictions Yes j�' No A EI Disapproved Yes O o N/A'❑ To Include Further Action Yes 7No ❑ N/A ❑ Specify any further action, conditions or restrictions: The Committee requested to hearth is item at the next meeting and include a feasibility study relating to the signed lease agreements' validity and provide a Plan B if the tenants should require less space than what they anticipated or should withdraw from the signed leases. Block 55 Owner, LLC Project Analysis: Sawyer's Landing Market Risk Sawyer's Landing project will be new construction of a 19-stoiy high-rise mixed -use building located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project will offer residential units, as well as office space and retail space. The project's residential space will be a total of five hundred seventy-eight (578) units occupying 409,525 square feet consisting of three hundred ninety (390) one-bedrooin/one- bathroom units and one hundred eighty-eight (188) two-bedroorn/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet that will include retailers such as Target, Aldi Supermarket, etc. The list of retailers to date is under the project risk section. The project's first four (4) floors will be dedicated for parking for both retail and residential clients with approximately 945 spaces. According to the City of Miami's 2014-2018 Consolidated Plan, city residents have not been able to keep up with the increasing high cost of living in the Miami area, as such 67% of city residents fit the low -to -moderate income category and nearly half of city households (46%) are cost -burdened. There is a trend in demographic changes that signal an increased need for housing, especially in certain subsets of the population. The growth of the non -family households in the City will likely impact the demand for smaller housing units overtime. Another trend is the housing cost/income mismatch has led to a significant number of cost -burdened households and the need for more affordable housing options. The Miami area has the most cost -burdened middle -income households in the nation due to a combination of very low income and combined costs of housing and transportation. In addition, the job market in the area was impacted by a hiring slump in 2013 that further aggravated the mismatch between income and cost of living. The proposed project targets the mix income households that includes public housing and affordable housing for low and very low income to meet the local demographic housing demands. The commercial aspect of the project will generate 775 construction jobs and 315 permanent jobs. All five hundred seventy-eight (578) units will be City -assisted and marketed to households that are very low income and low income ranging from 40% to 80% of the area median income. The residential units will be targeting elderly and family households. The project is well suited for affordable housing and the needs and demands of the market area. Borrower Risk The Borrower entity is Block 55 Owner, LLC ("Block 55"), a Florida limited liability company. The manager and principal of Block 55 is Mr. Michael Swerdlow. The member of Block 55 is Block 55 Member, LLC, a Florida limited liability company that is represented by Mr. Swerdlow as well. Behind Block 55 Member, LLC is Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that consists of different entities and ownership interests as per the attached organizational chart. The principals behind the Holdings are Michael Swerdlow and Alben Duffle who are partners in The Swerdlow Group, a real estate fum; Stephen Garchik and Stephen McBride who are partners under SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in real estate development has developed approximately 4,000,000 square feet of office space; 2,000,000 square feet in residential properties; 5,000,000 square feet in self -storage projects; 1,200,000 square feet of retail space; and 500,000 square feet in industrial space. Mr. Stephen McBride has experience ranging from acquisition to construction of retail/office/mixed-used residential and infrastructure real estate in his 23 years of working in the industry. Other principals of the Holdings are Sidney Atzmon (COO of Swerdlow Group), and Alan Meltzer. According to the project proposal, Mr. Swerdlow has approximately 40 years of experience in developing cornrnercial and residential real estate. Mr. Swerdlow is the managing member of The Swerdlow Group, a real estate finn that has experience in the development of retail, office and industrial space. The Swerdlow Group has developed approximately 5,000 a combination of single-family homes and apartment units in the Southeastern United States. Mr. Alben Duffle is also a managing member of the Swerdlow Group. Mr. Duffle has experience in consumer lending and has worked at Miami -Dade County's Office of GSA in connection with minority contractors and subcontractors for the County's Mass transit projects. The Swerdlow Group has developed private and public projects. The project will be developed via partnering of the Swerdlow Group and SJM Partners, Inc., a real estate developer that with its 27 years of experience in acquisition and development of real estate shares similar experience in the development of mixed -used real estate projects. This serves as evidence of the developer's capacity and experience in the development of real estate. ect Risk Sawyer's Landing project will be new construction of a mixed -use 19-story building located at 249 NW 6 Street in the Overtown neighborhood. The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of three hundred ninety (390) one-bedroorn/one-bathroom units and one hundred eighty-eight (188) two-bedrooin/two-bathroom units. All units will be City - assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. It will generate 775 construction jobs and 315 permanent jobs. The retailers signed up for the project are Target, Aldi Supermarket, Becker Boards (billboards), Ross, Burlington, Five Below, and EOS Fitness. This space includes office space for the CRA, Net Office and a Police Substation. The project will offer the first four (4) floors of the project for retail, office, and residential parking. The construction financing will consist of $155,706,203 in tax-exempt bonds from Florida Housing Finance Corporation; $80,107,529 in Community Development District from Miami Dade County; $7,500,000 in GOB funds from the City of Miami, $7,500,000 in CRA grant funds; $6,000,000 in Miami Dade County Infrastructure grant funds; $51,827,619 in Equity Investment Tax Credits from the Housing Finance Authority of Miarni Dade County and $5,000,000 from the Borrower's own money investment. The Borrower anticipates receiving a detennination of credits for the year 2020 from the Florida Housing Finance Corporation ("FHFC"). The anticipated credits will be financed by a tax-exempt volume cap bonds. These bonds will be issued by the Housing Finance Authority of Miami -Dade County. The managing development arm will consist of a partnership between the Swerdlow Group with SJM Partners, Inc. The principals of SJM Partners, Inc. is Mr. Stephen J. Garchik who has 37 years of experience in real estate development and Mr. Stephen McBride who has 23 years of experience in the same type of real estate development. The property will be managed by Bozzuto Management. Bozzuto Management manages around 78,000 units in 12 states with experience in retail and 2 residential management. They have experience in managing mixed -income rental units. Based on the infonnation provided by the borrower, the prof ect is financially viable. Risk On October 10, 2018, The Associates entered into a development agreement with the Southeast Overtown Park West Community Development Agency ("CRA") for the development of a property that is owned by the CRA. According to the budget, the property was conveyed to the Borrower for the purchase price of $19 million. On September 2, 2020, the property was conveyed to Block 55 Owner, LLC via a special warranty deed as specified in the development agreement between the Borrower and the CRA. In addition, a Restrictive Covenant agreement was executed on the same date between the Borrower and the CRA. The covenant sets a series of restrictions to the land that includes Currently, the property is a vacant lot consisting of 3.44 acres (149,856 sq. ft.). According to an appraisal dated July 21, 2020 by Cushman & Wakefield, the vacant land was valued at $45,000,000. Since the property is currently vacant, the Uniform Relocation Act will not Portfolio Risk The Borrower was awarded the opportunity to develop a vacant property owned by the CRA via a request for proposal ("RFP") identified as RFP No. 17-02 for the development of the property. Mr. Michael Swerdlow is the principal and manager that represents the Borrower entity. Through his company, The Swerdlow Group, Mr. Swerdlow has extensive experience in the development of commercial and residential real estate. The other principals under the Holdings share extensive experience in the development of mixed -use real estate projects. Their portfolio of developments includes from single- family home communities, condominiums, retail, office/business parks to industrial developments. The Sawyer's Landing project will be financed with a combination of tax- exempt bonds the county and grants from the CRA and Miami -Dade County as it is detailed in the attached cost allocation form of sources and uses. The project is located in a redevelopment area in the City of Miami. In conclusion, the project addresses the objectives within the City of Miami's Consolidated Plan. The project is consistent with the borrower's real estate portfolio. The City of Miami General Obligation Bond ("GOB") funds will be used for construction hard costs. Five hundred seventy-eight (578) units will be City -assisted units for very low and low-income households. The project will have a 30-year Affordability Period. The City's total average investment per unit in GOB funds is $12,976. Development Budget: Acquisition $19,03 0,000 Soft Cost $89,632,576 Hard Cost $204,978,775 Total Development Cost: $313,641,351 See attached the Budget - Cost Allocation and Operating Pro-fonna 3 Project Information: Residential Space: 409,525 sq. ft. Property size: 3.44 acres Retail Space: 250,000 sq. ft. Building Size Number of Building Structure: Stories: 19-story Amenities Project amenities will include access to roof -top pool with a deck; conununity room with a clubhouse, a 25,000 square feet public park to be known as Sawyer's Walk that will include a dog park and a children's play area. Other amenities include the NET Office, CRA Office, Police Substation, 40,000 square feet gym, 24-hour security cameras and each unit will include a washer and dryer. The first 4 floors will be dedicated to parking with an approximate total of 945 spaces. Collateral Subordination (Permanent Financing): First Lien — Permanent Bonds by Housing Finance Authority of Miami -Dade County in the amount of $155,706,204 Second Lien — City of Miami GOB funds in the amount of $7,500,000 Total Developer Fee: $11,903,315 (4%) Maximum Developer Fee permitted under the RFP shall be up to 18% for Bond / 4% Low Income Housing Tax Credit funded projects. If the project is not a tax credit deal, the maximum developer fee permitted shall be up to 16%. The City will not pay any developer fee. Cost Income Maximum # Units #Bed # Bath Square Feet per Square Target Rent Rent GOB Subsidy (AMI) Limit Feet 110 0 1 470 $310.00 40% 585 $1,291 $12,975 280 1 1 637 $229.00 70% 1,052 $1,202 $12,975 188 2 2 955 $153.00 80% 1,274 $1,274 $12,975 578 * The tenants will be offered Low Income Housing Tax Credit Vouchers as rental subsidy. 0 CITY OF MIAMI APPLICANT: Block 55 Holdines. LLC PROJECT NAME: Block 55 Financing Sources: Specify Name Total Project GOB Funds Construction loan spent-R4 Development District rastrty ucture frasMIDcture inf grant CRA Grant Equity Investment tax credit -R4 Equity Investment Land Acquisition S 19,030,000.00 S 6,530,000.00 $ 5,000,000.00 $7,500,000.00 S 0.00 $ - Hard Costs Construction (incl. Site work) 178,541,443 $ 6,216,537.61 $ 83,558,493.30 48,31%329 $6,000,000.00 $ 34,447,083.00 $ - Construction contingency 16,054,909 $ 398.658.64 $ 8,204,601.20 4,564,183 $ 2,887,466.74 $ - Construction: Concrete/Soil Test 1,230,460 $ 63,751.60 $ 672,296.80 246,092 $ 248,319.60 $ Appliances 3,221,392 $ 364,428.64 $ 2,038,984.30 - $ 817,979.06 $ - Construction Supervision 5,930,571 $ 446,623.51 $ 2,813,751.67 1,574 554 $ 1,095 641.55 $ - Total Hard Costs $ 204,978,774.88 S 7,490,000.00 $ 97,288,127.28 S 54,704,157.65 $6,000,000.00 S - $ 39,496,489.95 S - Soft Costs Arch Design, Civil Engineering 11,095,860 $ - $ 6,979,289.73 1,756,852 $ 1,051,943.32 $ 1,307,775.44 Impact & School Fees 519,998 $ $ 670,391.87 - $ 120,421.07 $ 11,617.46 Permits/Fees 3.591,479 $ $ 1,729,980.54 902,180 $ 117,329.95 $ 559,556.08 Legal 2,825,000 $ - $ 2,107,673.19 S 254,212.53 $ 463,114.28 Licenses/Environmental/Utility Fees 1,274,139 $ - $ 138,592.84 1,098,139 $ 12,267.38 $ 25,139.78 Appraisal /Surve s 78,000 $ - $ 51,834.92 8,600 $ 16,019.61 $ 1,545.47 Insurance: Construction Period 1,912,845 $ - $ 1,156,128.02 366,498 $ 355,885.84 $ 34,333.61 Marketing/ Advertisin 2,252,600 $ - $ 702,772.94 1,322,400 $ 135,446.60 $ 91,980.46 Loan Closing/ Financin Fees 16,827,536 $ - $ 12,519,171.78 196,000 $ 3,369,395.42 $ 742,968.48 Interest/ Carrying Costs 29.725,877 $ - S 14,560,046.23 10,302,032 $ 3,435,854.91 $ 1,427,943.15 TiitleInsurance & Recording 1,979,162 $ - $ 1,150,817.57 440.591 $ 353,636.81 $ 34,116.64 Temporary/Permanent Relocation Fees Taxes 636,765 $ - $ 475,076.66 $ 147,461.71 $ 14 226.17 For Use by City: City incurred costs 10,000 $ 10,000.00 $ - $ - Developer's Fees & Overhead 11,903,315 $ $ 6,470,158.52 3,260,078 $ 1,981,879.07 $ 191,199.12 Soft Cost Contingency $ 5,000,000.00 $ - $ 3,176,141.43 750,000 $ 979,374.71 $ 94,483.86 Total Soft Costs S 89,632,576.25 S 10,000.00 $ 51,888,076.24 $ 20,403,371.09 $ - $ - $ 12,331,128.93 S 5,000,000.00 Total Project Cost $ 313,641,351.13 $ 7,500,000.00 $ 155,706,203.51 $ 80,107,528.74 $6,000,000.00 $7,500,000.00 $ 51,827,618.88 $ 5,000,000.00 •: • Construction Financing Lender Amount 1st Lien R4 155,000,000 2nd Lien City 7,500,000 Non Recourse CD Bonds 80,000,000 Non Recourse County 6,000,000 Equity R4 51,700,000 Non Recourse CRA 7,500,000 Equity Owner 5,000,000 312,700,000 Permanent Financing Lender Amount 1st Lien R4 155,000,000 2nd Lien City 7,500,000 Non Recourse CD Bonds 80,000,000 Non Recourse County 6,000,000 Equity R4 51,700,000 Non Recourse CRA 7,500,000 Equity Owner 5,000,000 312,700,000 * CD - Community Developmnet District Bonds WORK SCOPE / DEVELOPMENT SCHEDULE Sawyer's Landing Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed -use cornrnercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (110) studio/one-bathroom units; two hundred eighty (280) one-bedroorn/one-bathroom units; and one hundred eighty-eight (188) two-bedroorn/two- bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. Activity Environmental Remediation Completion Building Permitting (Permit Ready) Start of Construction Construction Completion Commence Affirmative Marketing Initial Lease -Up (Leasing Activities Commence) Stabilized Occupancy Estimated Date December 2020 December 2020 April 2021 October 2023 November 2023 December2023 February 2024 ORGANIZATIONAL CHART Block 55 Owner, LLC (FL) — Manager: SG Manager, LLC 100% Block 55 Member, LLC (FL) — Manager: SG Manager, LLC 100% Block 55 Holdings, LLC (FL) consists of: • Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) • Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) • Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) • MC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14.85% interest ownership) • Downtown Duffie Family, LLC (FL). Manager: Alben Duffie (24.92% interest ownership) • Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) • The Alan L. Meltzer Revocable Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) 4r CAPITAL F U N 0 1 N G via e-mail August 19, 2020 Block 55 Residential, LP Attn: Sydne Garchik 5230 Pacific Concourse Drive, Suite 350 Los Angeles, CA 90045 Re: Bond Financing Proposal for: Sawyers Landing (578 Units) Miami, Florida Dear Ms. Garchik, On behalf of R4 Capital Funding ("R4CF"), we appreciate this opportunity to provide a financing proposal regarding Sawyers Landing, a proposed mixed -use rental community in Miami, FL and herein after referred to as the "Property". As follows, this letter (the "Letter") expresses the intent of and summarizes the terms and conditions pursuant to which R4CF proposes to finance the Property by providing construction period and permanent mortgage capital to Swerdlow Group and SIM Partners Inc or their affiliates (collectively, the "Sponsor"). Under our Direct Bond Purchase Program, R4CF or a designated capital partner would purchase an estimated $185,000,000 of tax-exempt bonds (the "Tax -Exempt Bonds"). The aggregate bonds to be purchased by R4CF shall herein after be referred to as the "Bonds". The basic business terms and conditions of the Bonds are set forth herein. Please note that R4CF structured this proposal using key assumptions provided by the Sponsor which are subject to revision following R4CF's underwriting and due diligence. FINANCING AND SECURITY Property Description The Property is a proposed rental apartment community, located in Miami, FL and comprised of 578 units, Following the proposed construction, the Property will consist of 110 studio units, 280 one -bedroom units, and 188 two -bedroom units. The Property will be subject to certain LURAs based upon its receipt of LIHTC and/or other public subsidies. It is further anticipated that 289 of the Property's units will subject to contract -based Section 8 subsidies. Structure It is anticipated that the Bonds will be issued by TBD. Upon issuance, R4CF, or its designee, will purchase the Bonds. Proceeds of the Bonds will be lent to the borrowing entity (the "Borrower") under the terms of a Loan Agreement to pay for a portion of the Property's development costs. In order to reduce construction period interest, the Bonds will be funded on a Draw Basis pursuant to a schedule mutually agreed upon prior to Closing by the Sponsor and R4CF. R4CF anticipates that such draws will be in a minimum amount of $500,000 and occur not more frequently than once per month. Bond Principal $185,000,000 during the development period, paid down to approximately $150,000,000 at Stabilization. Bond Interest Rate The fixed rate of interest on the Bonds will be established approximately five business days prior to Closing based upon the 10-year Treasury Index, published by Thomson Reuters, plus a spread of 3.10% subject to a Bond Interest Floor Rate of 3.85%. As of August 19, 2020 the 10-year Treasury Index is 0.65%, and the Bond Interest Rate would be 3.85%. Upon Closing, interest will be paid monthly. Special Redemption Concurrently with the achievement of Stabilization of the Property, there shall be a one-time Special Redemption of Bonds in the amount of $35,000,000. This Special Redemption will be concurrent with and in addition to the final sizing of the Bonds as described in Stabilization Requirement. Debt Sizing Method The Bonds shall be sized to a minimum 1.15x Debt Service Coverage Ratio ("DSCR"). The Bond Amount assumes an underwritten net operating income of $8,464,839. This NOI initially incorporates a 5.0% vacancy rate, a 5.0% hard pay management fee, and $300/unit per annum replacement reserve. These assumptions are subject to review through R4CF's underwriting process. Stabilization The Property is anticipated to achieve Stabilization 41 months from Closing Requirement (the "Stabilization Date"). Upon Stabilization, the final sizing of the Bonds shall be determined. Development Period Recourse Guarantees, as described below, shall be released upon R4CF's determination that the minimum DSCR has been reached (which may involve a partial redemption of the Bonds). Stabilization requires that: (i) the ratio of net operating income of the Property for the prior three months to the maximum debt service in any three month period equals or exceeds 1.15x to Lox, (ii) the average economic occupancy in each of the three months equals at least 90%, and (iii) the Property has achieved Final Completion (as defined in the Bond documents). For the purposes of Stabilization, net operating income shall be defined as actual Property income adjusted to reflect actual economic vacancy (subject to a 5.0% minimum) over the greater of aggregate Property expenses or projected aggregate property expenses established through R4CF's page 12 R4 Capital Funding underwriting process (excluding property taxes, insurance and utilities which will be verified from actual expenses). Interest Only Period The period prior to the Stabilization Date. Amortization Following the Interest Only Period, mandatory redemption of the Bonds shall occur, in part, on a monthly basis sufficient to fully amortize such Bonds over 40 years. Financing Term Upon the 161h anniversary of Stabilization, the Bondholder shall have the option to require a mandatory tender of the Bonds. The Bondholder shall be required to provide 6 months' notice for such mandatory tender. Optional Prepayment Optional prepayment of the Bonds shall not be permitted prior to the 15th anniversary of Stabilization. Thereafter, the Bonds may be prepaid at par upon 30 days' notice to the Bondholder. DIOi!a i l'1rw`i[�T l Construction Period Substantial Completion is anticipated to occur 29 months from Closing. Construction Budget R4CF's proposal assumes that the Borrower will spend approximately $90,526,449 ($156,620 per unit) in residential hard costs and approximately $71,476,330 ($123,662 per unit) in commercial space costs. Construction Deposits Funds necessary to construct the Property will be deposited into an escrow and Disbursements account (the "Development Fund") to fund capital expenditures on a schedule and with terms approved by R4CF prior to the Closing Date. During the Construction Period, amounts in the Development Fund shall be disbursed to the Borrower as construction progresses but not more often than on a monthly basis. Disbursements shall be based upon approval of the Borrower's Requisition Submission by R4CF. Any monies remaining in the Development Fund at the end of the Construction Period which are not needed for R4CF-approved capital items shall be used to redeem the Bonds. FINANCING COSTS Application Fee $60,000 to cover the cost of the third -party appraisal, engineering, and environmental reports, as well as any R4CF out-of-pocket underwriting costs. The Application Fee is payable upon the execution of this proposal by the Borrower. R4CF shall use reasonable efforts to coordinate third party reports with the LIHTC Equity provider. Legal Deposit A $25,000 legal deposit is required to commence legal documentation. R4CF Origination Fee 0.50% of the Bonds payable to R4CF at Closing R4CF Construction Fee 0.50% of the Bonds payable to R4CF at Closing Other Costs The Sponsor and/or Borrower shall be responsible for transaction costs and expenses incurred by R4CF, legal fees of the issuer, trustee and R4CF. Should the Bonds not close for any reason other than the failure of R4CF to comply Page 13 R4 Capital Funding with its obligations hereunder, Sponsor and/or Borrower shall remain obligated for all third -party costs and out-of-pocket costs incurred by R4CF not covered by the Application Deposit. Ongoing Fees All ongoing trustee and issuer fees associated with the transaction are to be paid separately by the Borrower. RESERVES & ESCROWS Escrow Accounts The Borrower shall make monthly payments to escrow accounts held In the Partnership's name by the Bond Trustee for taxes, insurance premiums, and replacement reserves. All disbursements from the escrow accounts shall require R4CF's consent. Replacement Reserves Replacement reserves will initially be set at $300 per unit per year (to be confirmed by R4CF's underwriter and engineer). Operating Reserve At the end of the 60-month Operating Deficit Guaranty period, the Borrower will fund an Operating Reserve of approximately $2,498,370 (to be calculated as 3 months of expenses, replacement reserves, and debt service) which the Borrower shall deposit into an escrow account held by the Partnership (the "Operating Reserve") to be used for debt service payments and/or operating deficits during the term of the Bonds. The Operating Reserve shall be held in an interest -bearing account and the interest shall be paid to the Borrower annually. The Operating Reserve shall be released to the Borrower upon maturity of the Bonds. The final sizing of the Operating Reserve is subject to review through R4CF's underwriting process. Page 14 R4 Capital Funding KEY PARTIES Borrower Structure The Borrower and its General Partner shall each be a single -purpose, bankruptcy -remote limited partnership or limited liability company. Property Management As part of its diligence, R4CF will review and approve the Property Manager and the management contract. R4CF currently expects that Bozzuto Management will serve as Property Manager. The property management fee shall be 2.75% of Effective Gross Income and any amount in excess of 2.75% shall be subordinate to payment of interest and principal on the Bonds and ongoing third -party fees. SECURITY & GUARANTEES Financing Security The Bonds shall be secured by a first priority mortgage lien on the land and improvements; UCC filings for fixtures; assignment of all rents and leases; and a first priority collateral assignment of all contracts, management agreements, and other agreements and all permits relating to the Property. Guarantors Michael Swerdlow, Stephen Garchik, and Stephen McBride, subject to R4CF due diligence and approval, will provide joint and several guarantees as described below. Development Period Prior to Stabilization, the Bonds will be full recourse to the Borrower and Recourse Guarantees Guarantors, and Completion and Debt Service Guarantees are required from the Borrower and Guarantors. R4CF will require the Guarantors to maintain Liquidity of at least $12 million and Net Worth of at least $60 million. Permanent Period None after Stabilization, except for industry -standard carve -outs, which Guarantees shall include guarantees against fraud, misrepresentation, bankruptcy, and environmental issues. LIHTC Equity In addition to the Bonds, the acquisition and construction of the Property will be funded through a Partnership investment in the Federal Low Income Housing Tax Credits (the "Tax Credits"). R4CF estimates that the Tax Credit Partnership will generate approximately $48,527,000 of proceeds for investment in the Property and is to be provided by R4 Capital LLC. The terms and pay -in commitments of the LIHTC proceeds are subject to review by R4CF. Other Partnership In addition to the Bonds, the acquisition and construction of the Property Equity/Public shall be funded with an Equity Contribution or Grant of not less than Contribution $18,000,000 from the Partnership or a Public Financing Source (the "Subordinate Funds"). Any payments due under the Subordinate Funds shall be subordinated to the Bonds and subject to an Intercreditor Agreement acceptable to 134CF. Deed Restrictions and All income and rent restrictions shall be subordinate to the Bonds. Ground Ground Leases leases, if any, shall be subordinate to the first priority mortgage lien unless the fee interest is owned by a government agency to ensure long-term affordability. Page 15 R4 Capital Fending Commercial Master In addition to the residential units, the Property will include approximately Lease and Guarantee 250,000 square feet of commercial space. Currently, there are signed leases with Target for 50,000 square ft and Aldi grocery for 25,000 square which are subject to R4CF's satisfactory review and approval prior to Closing. Additionally, there is a signed letter of intent with Ross Stores for 26,000 square ft and EOS Sports gym for 40,000 square ft. The balance of the commercial space has been designed to incorporate either retail or office/healthcare/school occupancy. The Guarantors will provide a master lease (the "Master Lease") for all of the commercial space in the Project. The Master Lease will, among other items, provide for (i) a term of not less than the Financing Term, (ii) the Lessee to pay all of the direct and allocable operating expenses of the commercial space, (iii) monthly rent payments to the Partnership net of all operating expenses of no less than a to -be -determined amount by R4CF, and (iv) ongoing financial reporting requirements and covenants. The Master Lease is not subject to termination without R4CF consent. The master lessor and each sub tenant will provide an SNDA on terms ble to R4CF. OTHER PROVISIONS On -going Reporting The Borrower shall provide R4CF or its designee with an annual budget for Requirements operations and capital expenditures to be approved by R4CF within 30 days of submission. Periodic reporting requirements shall include delivery of operating statements, occupancy reports, rent rolls, and other reports reasonably requested by 114CF. Borrower shall provide to R4CF an annual audit report of each Property's financial statements from a firm approved by R4CF not more than 120 days after the end of each fiscal year. Due Diligence / R4CF shall have 60 days to complete due diligence beginning from the date Conditions to Closing on which R4CF has received: (i) an executed copy of this proposal along with the Application Fee and Legal Deposit and (ii) necessary preliminary due diligence information as requested by R4CF. R4CF's due diligence efforts include, but are not be limited to, market and valuation analysis, engineering and environmental investigations, bond document review, title and survey review, and review of borrower/sponsor financial statements and history. Based upon our findings during the due diligence period, R4CF has the right to decline to proceed with this proposal and shall not be under any obligation to the Borrower. In the event that R4CF rejects the transaction, all unspent proceeds from the Application Fee and Legal Deposit will be returned to the Borrower. Closing (Method R4CF may purchase the Bonds directly or indirectly through a designee, a placement agent, or underwriter at no cost to the Borrower. The designee Page 16 R4 Capital Funding will abide by all the terms included in this term sheet. To the extent permitted by the Issuer, the Bonds will be issued in book -entry -only form and purchased through a DTC participant selected by R4CF. Sale or Securitization R4CF may elect to sell, assign, or participate all or part of its interests in the Bonds, provided that such transaction does not negatively impact the Borrower. The Borrower agrees to cooperate with R4CF In this matter and take all actions reasonably requested by R4CF and the new participant, so long as the Borrower does not incur any out-of-pocket costs or additional liability from any such transfer or securitization. Exclusivity Upon execution of this proposal, the Sponsor agrees to cease all initiatives to obtain bond financing from other parties and to terminate any other financing proposals in process. This exclusivity requirement shall terminate should R4CF advise the Sponsor in writing that it does not intend to proceed with this transaction. Any violation of this exclusivity requirement from the Sponsor or affiliates shall also cause the Origination Fee, any out-of-pocket costs, and/or legal fees incurred by R4CF, to be immediately due and payable to R4CF. The economic terms provided in this letter shall remain valid through January 31, 2021, subject to current bond market conditions. However, this letter does not constitute a commitment by R4CF to complete the transaction outlined herein, as any commitment by R4CF to lend or purchase the Bonds is contingent upon final approval of R4CF's Investment Committee. Page 17 R4 Capital Funding R4CF is pleased to provide this financing proposal. If the terms set forth in this proposal are satisfactory, please Indicate your acceptance by executing and returning to R4CF a copy of this letter and the Application Deposit before August 31, 2020. If you have not done so by such date, this proposal shall expire and be of no further effect. Very truly yours, R4 Capital Funding LLC qP4 James D. Spound President Agreed and Accepted. - Swerdlow Group By: Name: Title: Date: SJM PARTNERS, INC. By: Name: Title: Date: Page 18 R4 Capital Funding By: By: Stephen Garchik, individually Stephen McBride, individually Page 114 R4 Capital CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM Members of the Housing and September 18, 2020 TO: Commercial Loan Committee DATE: FILE: SUBJECT: Block 55 Owner, LLC Sawyer's Landing George Mensah, Director Department of Housing & Community Development FROM: REFERENCES: ENCLOSURES: Block 55 Owner, LLC ("Block 55"), a Florida Limited Liability company. The single -asset entity created for the development of the project. The principal and manager of Block 55 is Mr. Michael Swerdlow. Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that is a partner in the development of the project. The Holdings consists of: • Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) • Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) • Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) • MC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14.85% interest ownership) • Downtown Duffle Family, LLC (FL). Manager: Alben Duffie (24.92% interest ownership) • Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) • The Alan L. Meltzer Revocable Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) Block 55 Owner, LLC 2 September 18, 2020 Sawyer's Landing The principals, Michael Swerdlow and Alben Duffle are partners of The Swerdlow Group, a real estate firm that offers more than 40 years of experience in the development of mix -use real estate projects; Stephen Garchik and Stephen McBride are partners of SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in this type of real estate development. Mr. Atzmon is a team member of the Swerdlow Group and has 33 years of experience in managing large and complex projects like the Sawyer Landing project. PROJECT Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed - use commercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (110) studio/one-bathroom units; two hundred eighty (280) one-bedroom/one- bathroom units; and one hundred eighty-eight (188) two-bedroom/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. �«'iZ$IIl1 1 On February 25, 2019, the Department of Housing and Community Development ("Department") issued a Request for Proposals ("RFP") in HOME Investment Partnerships Program ("HOME") funds; Community Development Block Grant ("CDBG") funds; State Housing Initiatives Partnership Program ("SHIP") funds; Affordable Housing Trust Funds ("AHTF") funds; and General Obligation Bonds ("GOB") for the construction and rehabilitation financing of multifamily rental housing projects and homeownership projects. It is the City's intention to fund as many applicants as possible, upon the availability of funding, to projects demonstrating the ability to proceed with the commencement of the project. Special consideration was given to Certified Community Housing Development Organizations ("CHDO"); or a partnership with a CHDO. BORROWER'S REQUEST The Developer submitted a proposal requesting $7,500,000 in Miami Forever GOB funds for the new construction of a mixed -use 19-story project to be known as Sawyer's Landing. The project will provide a total of 578 affordable housing units and retail space that to date it includes the following retailers: Target, Aldi Supermarket, Becker Boards, Ross, Burlington, Five Below, and EOS Fitness. The units will be targeting elderly and families that are very low to low income ranging from 40% to 80% of area median income. This project is located at 249 NW 6 Street in the Overtown neighborhood. Block 55 Owner, LLC 3 September 18, 2020 Sawyer's Landing DEPARTMENTAL RECOMMENDATION Based on the proposal provided by Borrower, the Department recommends the allocation up to $7,500,000 in GOB funds to Block 55 Owner, LLC for the development of Sawyer's Landing project subject to the following loan terms and conditions: 1. City Commission Approval: The allocation of GOB funds are subject to City of Miami Commission Approval at its meeting to be held on September 241h, 2020, the Administrations recommendation amending the Miami Forever Bond, Affordable New Construction Rental Strategy. 2. Firm Commitments: The allocation of GOB funds are subject to obtaining all of the necessary outstanding firm construction and permanent commitments as detailed herein, for the development of the project. Closing on all financing to be simultaneous. 3. GOB Funding approval. The requested allocation of the GOB funding requested is subject to City of Miami Commission approval. 4. Use of Funds: City funds will be used for development hard costs. 5. City Assisted Units: All 578 project units shall be assisted with GOB funds from very low and low-income households. 6. Maximum Rent and Income Levels: Rents charged on City -assisted units are subject to Florida Housing Finance Corporation State Housing Initiatives Partnership ("SHIP") program according to the income target proposed by the Borrower. The rent and income limits are published annually by the US Department of Housing and Urban Development ("HUD") and Florida Housing Finance Corporation ("FHFC"). 7. Affordability Period: an affordability period of 30 years will apply commencing from the date the City approves the closeout of the project. 8. Loan Repayment & Interest Rate Terms: This is a deferred loan provided to the Borrower with no debt service payments required. The property must maintain the required affordability structure for a period of 30 years. Failure to comply with these requirements will result in the full repayment of principal and an agreed upon interest rate. Full repayment of principal is due at the 30-year maturity. 9. Draw Disbursements: The City shall not fund any draw request in an amount that exceeds the City's initial contribution percentage of the entire development cost of the project. 10. City Incurred Costs: Borrower understands and agrees that $10,000 of the GOB funds may be used by the City to cover costs incurred by the City on behalf of the project. 11. Increase in Project Costs: If the project costs increase ten percent (10%) or more of the original budget, and the Borrower is not able to secure additional funding within 60 days before the project commencement, the project will be subject to recommendation to the Housing and Commercial Loan Committee for de -obligation of the project funding. 12. Retainage(s): Five percent (5%) of each draw request will be retained until the City has received as part of the close-out, at the Borrower's sole cost, a Final Cost Certification prepared by an independent certified public accountant, both in form and substance acceptable to the City. 13. Commitment Fee: There will be a $5,000 commitment fee. 14. Eligible Project Costs: Eligible project costs will be effective from the date of environmental clearance. Block 55 Owner, LLC 4 September 18, 2020 Sawyer's Landing 15. Reporting Compliance: Borrower is subject to compliance reporting requirements in the process of construction and during the affordability period. 16. Development Benchmarks/Scope of Work: The project shall: (a) commence construction within six (6) months from the Effective Datell] of the contract; (b) obtain all certificates of occupancy required for the project within 18 months from the Effective Date; and (c) have all project units rented within 12 months after the issuance of project's certificate(s) of occupancy, but in no event later than 30 months from the Effective Date. 17. Insurance Requirements: Borrower shall obtain and furnish evidence of insurance coverage as the City may require in connection with the Project. 18. Affirmative Marketing Plan: Borrower shall provide an Affirmative Marketing Plan using HUD's approved form and report to the City annually on all actions taken to comply with said plan. Borrower shall comply with the requirements of the affordable housing notice to City Officials Ordinance #13491. 19. Lottery: Selection of eligible tenants shall be from the results of a tenant lottery, which shall be conducted with a representative of the City of Miami present. In addition, the project shall comply with the requirements of the City of Miami Ordinance 13645, Resident Preference. 20. Project Signage: Borrower shall furnish signage identifying the Project and shall acknowledge the contribution of the City by incorporating the seal of the City and the names of the City commissioners and officials in all documents, literature, pamphlets, advertisements, and signage, permanent or otherwise. All such acknowledgments shall be in a form acceptable to the City and its costs should be covered under the City Incurred Cost line item. 21. De -obligation of Funds: The City may at its sole discretion de -obligate the funding approved herein, if by no later than six (6) months from the date of approval of the City funds, the Borrower has failed to close on all funding commitments represented herein. 22. Compliance with the provisions of Davis Bacon Act, and regulations, as amended. 23. Discretionary Action by Administration: Staff shall have the discretion to approve and, by way of Memorandum, authorize the City Manager to execute any and all documents needed to further the Project Completion, provided, however, that the lien position nor the project terms are not materially affected. 24. Project Default: If the City determines that the project is in default, the following conditions will apply: • The highest interest rate available under the law will be applicable for the funds disbursed from date of disbursement. • The Restrictive Covenant will remain as a restriction on the Project property throughout the Affordability Period; and • The borrower, project developer, managing partner(s) of the borrower and/or other individuals, principals and/or other entities as determined by the City will be debarred from receiving any City funding for a period of five (5) years. P] The "Effective Date" is the date on which the contract has been signed by the City Manager and attested to by the City Clerk. Block 55 Owner, LLC Sawyer's Landing September 18, 2020 HOUSING AND COMMERCIAL LOAN COMMITTEE DECISION: Approved as Recommended by Staff Yes ❑ No ❑N/A ❑ To Include Additional Conditions or Restrictions Yes ❑ No ❑ N/A ❑ Disapproved Yes ❑ No ❑ N/A ❑ To Include Further Action Yes ❑ No ❑ N/A ❑ Specify any further action, conditions or restrictions: Chairperson or Representative Stamp Date Block 55 Owner, LLC Project Analysis: Sawyer's Landing Market Risk Sawyer's Landing project will be new construction of a 19-story high-rise mixed -use building located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project will offer residential units, as well as office space and retail space. The project's residential space will be a total of five hundred seventy-eight (578) units occupying 409,525 square feet consisting of three hundred ninety (390) one-bedrooin/one- bathroom units and one hundred eighty-eight (188) two-bedroom/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet that will include retailers such as Target, Aldi Supermarket, etc. The list of retailers to date is under the project risk section. The project's first four (4) floors will be dedicated for parking for both retail and residential clients with approximately 945 spaces. According to the City of Miami's 2014-2018 Consolidated Plan, city residents have not been able to keep up with the increasing high cost of living in the Miami area, as such 67% of city residents fit the low -to -moderate income category and nearly half of city households (46%) are cost -burdened. There is a trend in demographic changes that signal an increased need for housing, especially in certain subsets of the population. The growth of the non -family households in the City will likely impact the demand for smaller housing units overtime. Another trend is the housing cost/income mismatch has led to a significant number of cost -burdened households and the need for more affordable housing options. The Miami area has the most cost -burdened middle -income households in the nation due to a combination of very low income and combined costs of housing and transportation. In addition, the job market in the area was impacted by a hiring slump in 2013 that further aggravated the mismatch between income and cost of living. The proposed project targets the mix income households that includes public housing and affordable housing for low and very low income to meet the local demographic housing demands. The commercial aspect of the project will generate 775 construction jobs and 315 permanent jobs. All five hundred seventy-eight (578) units will be City -assisted and marketed to households that are very low income and low income ranging from 40% to 80% of the area median income. The residential units will be targeting elderly and family households. The project is well suited for affordable housing and the needs and demands of the market area. Borrower Risk The Borrower entity is Block 55 Owner, LLC ("Block 55"), a Florida limited liability company. The manager and principal of Block 55 is Mr. Michael Swerdlow. The member of Block 55 is Block 55 Member, LLC, a Florida limited liability company that is represented by Mr. Swerdlow as well. Behind Block 55 Member, LLC is Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that consists of different entities and ownership interests as per the attached organizational chart. The principals behind the Holdings are Michael Swerdlow and Alben Duffie who are partners in The Swerdlow Group, a real estate firm; Stephen Garchik and Stephen McBride who are partners under SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in real estate development has developed approximately 4,000,000 1 square feet of office space; 2,000,000 square feet in residential properties; 5,000,000 square feet in self -storage projects; 1,200,000 square feet of retail space; and 500,000 square feet in industrial space. Mr. Stephen McBride has experience ranging from acquisition to construction of retail/office/mixed-used residential and infrastructure real estate in his 23 years of working in the industry. Other principals of the Holdings are Sidney Atzrnon (COO of Swerdlow Group), and Alan Meltzer. According to the project proposal, Mr. Swerdlow has approximately 40 years of experience in developing commercial and residential real estate. Mr. Swerdlow is the managing member of The Swerdlow Group, a real estate firm that has experience in the development of retail, office and industrial space. The Swerdlow Group has developed approximately 5,000 a combination of single-family homes and apartment units in the Southeastern United States. Mr. Alben Duffie is also a managing member of the Swerdlow Group. Mr. Duffie has experience in consumer lending and has worked at Miami -Dade County's Office of GSA in connection with minority contractors and subcontractors for the County's Mass transit projects. The Swerdlow Group has developed private and public projects. The project will be developed via partnering of the Swerdlow Group and SJM Partners, Inc., a real estate developer that with its 27 years of experience in acquisition and development of real estate shares similar experience in the development of mixed -used real estate projects. This serves as evidence of the developer's capacity and experience in the development of real estate. Project Risk Sawyer's Landing project will be new construction of a mixed -use 19-story building located at 249 NW 6 Street in the Overtown neighborhood. The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of three hundred ninety (390) one-bedroorn/one-bathroom units and one hundred eighty-eight (188) two-bedroom/two-bathroom units. All units will be City - assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. It will generate 775 construction jobs and 315 permanent jobs. The retailers signed up for the project are Target, Aldi Supermarket, Becker Boards (billboards), Ross, Burlington, Five Below, and EOS Fitness. This space includes office space for the CRA, Net Office and a Police Substation. The project will offer the first four (4) floors of the project for retail, office, and residential parking. The construction financing will consist of $155,706,203 in tax-exempt bonds from Florida Housing Finance Corporation; $80,107,529 in Community Development District from Miami Dade County; $7,500,000 in GOB funds from the City of Miami, $7,500,000 in CRA grant funds; $6,000,000 in Miami Dade County Infrastructure grant funds; $51,827,619 in Equity Investment Tax Credits from the Housing Finance Authority of Miami Dade County and $5,000,000 from the Borrower's own money investment. The Borrower anticipates receiving a determination of credits for the year 2020 from the Florida Housing Finance Corporation ("FHFC"). The anticipated credits will be financed by a tax-exempt volume cap bonds. These bonds will be issued by the Housing Finance Authority of Miami -Dade County. The managing development arm will consist of a partnership between the Swerdlow Group with SJM Partners, Inc. The principals of SJM Partners, Inc. is Mr. Stephen J. Garchik who has 37 years of experience in real estate development and Mr. Stephen McBride who has 23 years of experience in the same type of real estate development. The property will be managed by Bozzuto Management. Bozzuto Management manages around 78,000 units in 12 states with experience in retail and 2 residential management. They have experience in managing mixed -income rental units. Based on the information provided by the borrower. the proi ect is financialiv viable. Acquisirion/Kelocanon K1sx On October 10, 2018, The Associates entered into a development agreement with the Southeast Overtown Park West Community Development Agency ("CRA") for the development of a property that is owned by the CRA. According to the budget, the property was conveyed to the Borrower for the purchase price of $19 million. On September 2, 2020, the property was conveyed to Block 55 Owner, LLC via a special warranty deed as specified in the development agreement between the Borrower and the CRA. In addition, a Restrictive Covenant agreement was executed on the same date between the Borrower and the CRA. The covenant sets a series of restrictions to the land that includes Currently, the property is a vacant lot consisting of 3.44 acres (149,856 sq. ft.). According to an appraisal dated July 21, 2020 by Cushman & Wakefield, the vacant land was valued at $45,000,000. Since the properly is currently vacant, the Uniform Relocation Act will not apply. Portfolio Risk The Borrower was awarded the opportunity to develop a vacant property owned by the CRA via a request for proposal ("RFP") identified as RFP No. 17-02 for the development of the property. Mr. Michael Swerdlow is the principal and manager that represents the Borrower entity. Through his company, The Swerdlow Group, Mr. Swerdlow has extensive experience in the development of commercial and residential real estate. The other principals under the Holdings share extensive experience in the development of mixed -use real estate projects. Their portfolio of developments includes from single- family home cominunities, condominiums, retail, office/business parks to industrial developments. The Sawyer's Landing project will be financed with a combination of tax- exempt bonds the county and grants from the CRA and Miami -Dade County as it is detailed in the attached cost allocation forin of sources and uses. The project is located in a redevelopment area in the City of Miami. In conclusion, the project addresses the objectives within the City of Miami's Consolidated Plan. The project is consistent with the borrower's real estate portfolio. The City of Miami General Obligation Bond ("GOB") funds will be used for construction hard costs. Five hundred seventy-eight (578) units will be City -assisted units for very low and low-income households. The project will have a 30-year Affordability Period. The City's total average investment per unit in GOB funds is $12,976. Development Budget: Acquisition $19,030,000 Soft Cost $89,632,576 Hard Cost $204,978,775 Total Development Cost: $313,641,351 See attached the Budget - Cost Allocation and Operating Pro-fonna 3 Project Information: Residential Space: 409,525 sq. ft. Property size: 3.44 acres Retail Space: 250,000 sq. ft. Building Size Number of Building Structure: Stories: 19-stoiy Amenities Project amenities will include access to roof -top pool with a deck; corninuruty room with a clubhouse, a 25,000 square feet public park to be known as Sawyer's Walk that will include a dog park and a children's play area. Other amenities include the NET Office, CRA Office, Police Substation, 40,000 square feet gym, 24-hour security cameras and each unit will include a washer and dryer. The first 4 floors will be dedicated to parking with an approximate total of 945 spaces. Collateral Subordination (Permanent Financing): First Lien — Permanent Bonds by Housing Finance Authority of Miami -Dade County in the amount of $155,706,204 Second Lien — City of Miami GOB funds in the amount of $7,500,000 Total Developer Fee: $11,903,315 (4%) Maximum Developer Fee permitted under the RFP shall be up to 18% for Bond / 4% Low Income Housing Tax Credit funded projects. If the project is not a tax credit deal, the maximum developer fee permitted shall be up to 16%. The City will not pay any developer fee. Cost Income Maximum # Units # Bed # Square per Target Rent Rent GAB Bath Feet Square Subsidy (AMI) Limit Feet 110 0 1 470 $310.00 40% 585 $1,291 $12,975 280 1 1 637 $229.00 70% 1,052 $1,202 $12,975 188 2 2 955 $153.00 80% 1,274 $1,274 $12,975 578 * The tenants will be offered Low Income Housing Tax Credit Vouchers as rental subsidy. El CITY OF MIAMI APPLICANT: Block 55 Holdings. LLC PROJECT NAME: Block 55 Financing Sources: Specify Name Total Project GOB Funds Construction loan spent - R4 Community Development District MD infrastructure grant CRA Grant Equity Investment tax credit - R4 Equity Investment Land Acquisition $ 19,030,000.00 $ 6,530,000.00 $ 5,000,000.00 $7,500,000.00 $ 0.00 $ - Hard Costs Construction (incl. Site work) 178,541,443 $ 6,216,537.61 $ 83,558,493.30 48,319,329 $6,000,000.00 $ 34,447,083.00 $ - Construction contingency 16.054,909 $ 398,658.64 $ 8,204,601.20 47564,183 $ 2,887,466.74 $ - Construction: Concrete/Soil Test 1,230,460 $ 63,751.60 $ 672,296.80 246,092 $ 248,319.60 $ Appliances 3,221,392 $ 364,428.64 $ 2,038,984.30 - $ 817,979.06 $ Construction Supervision 5,930,571 $ 446,623.51 $ 2,813,751.67 1,574,554 $ 1,095 641.55 $ - Total Hard Costs $ 204,978,774.88 $ 7,490,000.00 $ 97,288,127.28 $ 54,704,157.65 $6,000,000.00 $ - $ 39,496,489.95 $ - Soft Costs Arch Design, Civil Engineering 11,095,860 S - $ 6,979,289.73 1,756,852 $ 1,051,943.32 $ 1,307,775.44 Impact & School Fees 519,998 $ - $ 670,391.87 - $ 120,421.07 $ 11,617.46 Permits/Fees 3.591,479 $ - $ 1,729,980.54 902,180 $ 117,329.95 $ 559,556.08 Legal 2,825,000 $ - $ 2,107,673.19 $ 254,212.53 $ 463 114.28 Licenses/Environmental/Utility Fees 1,274,139 $ - $ 138,592.84 1,098,139 $ 12,267.38 $ 25,139.78 Appraisal /Surve s 78,000 $ $ 51 834.92 8.600 $ 16,019.61 $ 1,545.47 Insurance: Construction Period 1,912.845 $ - $ 1,156,128.02 366,498 $ 355,885.84 $ 34,333.61 Marketing/Advertising 2.252,600 $ - $ 702,772.94 1.322,400 $ 135,446.60 $ 91,980.46 Loan Closing/ Financin Fees 16,827,536 $ - $ 12,519,171.78 196,000 $ 3,369,395.42 $ 742,968.48 Interest / Carrying Costs 29,725,877 $ - $ 14,560,046.23 10,302,032 $ 3,435,854.91 $ 1,427,943.15 Title Insurance& Recording 1,979,162 $ - $ 1,150,817.57 440,591 $ 353,636.81 $ 34,116.64 Temporary/Permanent Relocation Fees Taxes 636,765 $ - $ 475,076.66 $ 147,461.71 $ 14 226.17 For Use by City: City incurred costs 10,000 $ 10,000.00 $ - $ - Developer's Fees & Overhead 11,903,315 $ - $ 6,470,158.52 3,260,078 $ 1,981 879.07 $ 191,199.12 Soft Cost Contingency $ 5,000,000.00 $ - $ 3,176,141.43 750,0001 $ 979,374.71 $ 94.483.86 Total Soft Costs $ 89,632,576.25 $ 109000.00 $ 51,888,076.24 $ 20,403,371.09 $ - $ - $ 12,331,128.93 $ 5,000,000.00 Total Project Cost $ 313,6419351.13 $ 7,500,000.00 $ 155,706,203.51 $ 80,107,528.74 $6,000,000.00 $7,500,000.00 $ 51,827,618.88 $ 5,000,000.00 A B C D E F G H I J K L M N O P 55- Miami 249 NW6thStreet Florida ercial VPPY 1 VPAr 9 VAAY 7 VAAY d VPAf r, -A V 7 VPAf R VPAr Q VPAr 1n VPAr 11 VPAr 19 UPAf 1:1 VAAf 1d VPAr IF 111123 111124 111125 111126 111127 111128 111129 111130 1 /1131 111 J32 111133 111134 111135 111136 111137 12131 /23 12131 /24 12/31/25 12131 J26 12M V27 12131128 12131/29 12/31130 12/31131 12131132 12131 /33 12131134 12131135 12131136 12/31 /37 :rcialIncome 3,065,408 5,321,761 5,380,166 5,430,676 5,862,358 5,877,504 5,894,166 5,912,494 5,976,232 6,477,765 6,502,1513 6,528,992 6,558,509 6,636,325 7,170,855 ortfall 747,703 1,202,502 1,120,849 1,036,747 900,538 775,897 683,996 589,338 491,840 336,875 194,481 87,943 ircialCash FlowBaforeDebt Service 2,317,705 4,119,259 4,259,317 4,393,929 4,961,820 5,101,608 5,210,170 5,323,156 5,484,392 6,140,890 6,307,678 6,441,050 6,558,509 6,636,325 7,170,855 btservice 3,515,975 3,506,376 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 3,241,986 ih Flow 1,198,270) 612,883 1,017,330 1,151,943 1,719,833 1,859,621 1,968,184 2,081,170 2,242,406 2,898,903 3,065,691 3,199,063 3,316,523 3,394,338 3,928,869 CDD VAAri VPAr9 VPArl vAnrd VPAr .ri VPAr% VPAr7 VAArA VP_ArQ VAAf in VAAr 11 VPAr 19 VPAr is vPAr 14 VPAr i.r, 111123 111124 11112 5 1 J1126 111127 111128 111 /29 1 /1130 111 I31 111132 11113 3 111134 111135 111136 1/1137 12131 /23 12/31124 12131/25 12M 1126 12131127 12131 /28 12131/29 12/31130 12131131 12131 /32 12131133 12/31134 12/31135 12131136 12131137 Income 2,0135,7113 3,674,941 3,759,689 3,846,980 3,986,473 4„114,496 4,209,881 4,308,128 4,409,321 4,568,093 4,714,407 4,824,985 4,938,879 5,056,191 5,237,017 ig Expenses 58,433 103,175 106,271 109,459 112,743 116,125 119,609 123,197 126,893 130,700 134,620 138,659 142,819 147,103 151,517 Cash Flow before CDD assessment 2,037 86 3,571,766 3,653,419 3,737,521 3,873 730 3,998,371 4,090,273 4,184,931 4,282,429 4,437,393 4,579,787 4,686,326 4 796,060 4,909 087 5,085,501 DD Assessment 2,784,990 4,774,268 4,774,268 4,774,268 4,774,268 4,774,268 4,774,268 4,774,268 4,774,268 4,774,268 4,774268 4,774,268 4,774,268 4,774,268 4,774,268 ;h Flow After COD Assessment (747,703) (1,202,502 (1,120,849) (1,036,747) (900,538) (775,897 (683,996) (589,338} 491,840 336,875 (194,481) (87,943 21,792 134,819 311,232 imsai vAAr 1 VPAr 9 VP.ar .S VPAr d v,,ar S Von 6 VP.Ar7 VPArR VAAr Q VPAr 1n vPAr 11 VAAr 19 vAAf 1.1 V Ar 1d VAAr 1 r 111123 111124 111125 111126 111127 111128 111 J29 111130 111131 111132 111133 111 M4 111135 111136 111137 12131123 12131/24 12/31125 12131126 12M 1 l27 12/31128 12131129 12131/30 12131 M l 12131 J32 12M 113 3 12131/34 12131/35 12131 /36 12/31/37 ntia l Income 5,336,022 11,266,811 11,454,108 11,695,013 11,989,601 12,188,479 12,391,375 12,598,369 12,86 3,436 13,186,659 13,406,454 13,630,691 13,859,458 14,150,869 14,505,017 )eraflng Expenses 1,337,562 2,507,146 2,579,846 2,654,678 2,731,702 2,810,984 2,892,590 2,976,592 3,063,067 3,152,059 3,243,673 3,337,976 3,435,048 3,534,970 3,637,828 7,067,160 i Reserves 102,418 180,841 186,266 191,854 197,610 203,538 209,644 215,934 222,412 229,084 235,957 243,035 250,326 257,836 1 265,571 rdial Cash Flow Before Debt Service 3,896,041 1 8,578,823 8,687,996 8,848,481 9,060 289 9,173,957 9,289,140 9 5,843 9,577,967 9,805,516 9,926,825 110,049,679 10,174 084 110,358,062 110,601,618 :rvice :h Flow tc d Commerc ia, Garage & Residential ash Flow before debt service VAAr1 VAAr9 VPArI VPArd VAAr r, VPArA v4,Ar7 vaarR VPArQ VPAr in vP_Af 11 VPAr 19 VAAr 1.1 vAAr id vPAr 1F 111123 1J1124 111125 111126 111127 111128 111129 111130 111131 VIJ32 111J33 111M4 VV35 111136 111137 1213l /23 I 12131124 12131125 1213106 12/31127 12J31128 1 1213l /29 1 12131/30 12131131 1 12131/32 1 12J31133 12131 /34 1 12131135 1 12131136 12131137 8,998,736 117,472,350 117,721,581 118,016,678 18 796,377 119,049,833 119,273,579 119,503,268 119,836,627 120,720,674 121,008,771 121,264,997 121,528,653 21,903,474 22,857-974 irvice & CDD assessment 110,156,120 15,133,144 114,886,520 14,886,520 14,886,520 114,886,520 14,886,520 14,886,520 114,886,520 14,8$6,520 14,886,520 14,886,520 14,886,520 14,886,520 14,886,520 ih Flow 1 (1,905,087)1 1,136,704 1 1,714,211 1 2,093,4111 3,009,319 1 3,387,415 1 3,703,062 1 4,027,410 1 4,458,267 1 5,497,279 1 5,927,769 1 6290,534 1 6,642,133 , 7,016,954 1 7,971.454 WORK SCOPE / DEVELOPMENT SCHEDULE Sawyer's Landing Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed -use commercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (110) studio/one-bathroom units; two hundred eighty (280) one-bedroom/one-bathroom units; and one hundred eighty-eight (188) two-bedroom/two- bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. Activity Environmental Remediation Completion Building Permitting (Permit Ready) Start of Construction Construction Completion Commence Affirmative Marketing Initial Lease -Up (Leasing Activities Comnnence) Stabilized Occupancy Estimated Date December 2020 December 2020 April 2021 October 2023 November 2023 December2023 February 2024 ORGANIZATIONAL CHART Block 55 Owner, LLC (FL) — Manager: SG Manager, LLC 100% Block 55 Member, LLC (FL) — Manager: SG Manager, LLC 100% Block 55 Holdings, LLC (FL) consists of: • Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) • Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) • Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) • MC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14.85% interest ownership) • Downtown Duffie Family, LLC (FL). Manager: Alben Duffie (24.92% interest ownership) • Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) 0 The Alan L. Meltzer Revocable Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) CITY OF MIAMI, FLORIDA To Members of the Housing and DATE. December 18, 2020 FILE: Conunercial Loan Committee SUBJECT : Block 55 Owner, LLC Sawyer's Landing George Mel i, Director pp FROM: Department of Housing & Community DevelopMdf1tERENCES : ENCLOSURES: i . D 9 • Block 55 Owner, LLC ("Block 55"), a Florida Limited Liability company. The single -asset entity created for the development of the project. The principal and manager of Block 55 is Mr. Michael Swerdlow. Block 55 Holdings, LLC ("Holdings"), a Florida limited liability company that is a partner in the development of the project. The Holdings consists of: • Downtown Swerdlow Family Guaranty, LLC (FL). Manager: Michael Swerdlow (15% interest ownership) • Downtown Swerdlow Associates, LLC (FL). Manager: Michael Swerdlow (26.42% interest ownership) • Lawyers Landing Investors, LLC (FL). Manager: Stephen Garchik and Stephen McBride (15.56% interest ownership) • 1lIC Lawyers Landing Associates, LLC (FL). Manager: Stephen Garchik and Stephen McBride (14.85% interest ownership) 9 Downtown Duffle Fancily, LLC (FL). Manager: Alben Duffie (24.92% interest ownership) Biscayne Investment Holdings, LLC (FL). Manager Sidney Atzmon (3.15% interest ownership) • The Alan L. Meltzer Revocable Trust (FL). TTE: Alan Meltzer (0.10% interest ownership) Block 55 Owner, LLC 2 December 18, 2020 Sawyer's Landing The principals, Michael Swerdlow and Alben Duffle are partners of The Swerdlow Group, a real estate firm that offers more than 40 years of experience in the development of mix -use real estate projects; Stephen Garchik and Stephen McBride offer are partners of SJM Partners, Inc. Mr. Garchik is President of SJM Partners, Inc. with 37 years of experience in this type of real estate development. Mr. Atzmon is a team member of the Swerdlow Group and has 33 years of experience in managing large and complex projects like the Sawyer Landing project. PROJECT Sawyer's Landing project will be new construction consisting of a 19-story high-rise mixed - use commercial and residential complex located at 249 NW 6 Street, Miami in the Overtown neighborhood (Census Tract 34.00). The project's residential space will be a total of 409,525 square feet consisting of a total of five hundred seventy-eight (578) units consisting of one hundred ten (1 10) studio/one-bathroom units; two hundred eighty (280) one-bedrooni/one- bathroom units; and one hundred eighty-eight (188) two-bedroorn/two-bathroom units. All units will be City -assisted for very low and low-income households. The project's retail space will consist of a total of 250,000 square feet. The project will offer the first four (4) floors of the project for retail and residential parking with approximately 945 spaces. BACKGROUND On October 23, 2020, the Housing & Commercial Loan Committee approved the allocation of $7.5 million in Miami Forever Tax Valorem ("GOB") funds to Block 55 Owner, LLC for the development of the Sawyer's Landing project. BORROWER REQUEST On December 4, 2020, the Borrower requested revisions to the terms of the City's $7.5 million GOB Loan as follows: Collateral Subordination — the first lien, Permanent Bonds by Housing Finance Authority of Miami Dade County shall be up to $170,000,000; • Construction Benchmarks — due to the size of the project the construction benchmarks need to be extended as follows: A. Commence construction 9 months fiom the effective date; B. Obtain the certificate of occupancy 36 months from the effective date; and C. Lease -up all units 12 months fiom the date of the certificate of occupancy; and Miami Forever Bond Units - The project consists of a total of 578 residential units, of which 289 units will be subject to Miami Dade County Project Based Vouchers, that shall be provided to current City of Miami Residents. The remaining 289 units shall be Miami Forever Bond units, whose tenants shall be selected via a lottery attended by a representative of the City of Miami. In addition, the project shall comply with the requirements of the City of Miami Ordinance 13645, Resident Preference. Block 55 Owner, LLC 3 Sawyer's Landing December 18, 2020 DEPARTMENTAL RECOMMENDATION The Department has reviewed the Borrower's request and recommends modifications to the loan terms and conditions of the project as follows: • Collateral Subordination — The first lien position, Pennanent Bonds by Housing Finance Authority of Miami Dade County, shall be allowed to go up to $170,000,000; • Construction Benchmarks —due to the size of the project the const action benclunarks will be extended as follows: A. Commence construction 9 months from the effective date; B. Obtain the certificate of occupancy 36 months from the effective date; and C. Lease -up all units 12 months from the date of the certificate of occupancy; • Reduction of City -assisted units from 578 units to 289 units. The remaining 289 units will be Miami Dade County Public Housing Project Based Voucher assisted. The project units will be subject to City of Miami Ordinance 13645; and • All other loan terns remain the same. HOUSING AND COMMERCIAL LOAN COMMITTEE DECISION Approved as Recommended by Staff Yes VNo ❑ A ❑ To Include Additional Conditions or Restrictions Yes ❑ No ❑✓ N/A ❑ Disapproved Yes ❑ No [� /A ElTo Include Further Action Yes El No [V N/A ❑ Specify any further action, conditions or restrictions: Chairperson or Representative _JStamp Date DEC 18 2020 APPROVED December 4, 2020 Mr. George Mensah, Director Department of Housing and Community Development One Flagler Building 14 North East 1st Street Miami, Florida 33132 Re: Sawyer Landing Project Dear Mr. Mensah, As per our discussion with the staff of the Department of Housing and Community Development, the purpose of this correspondence is to set forth our requested revisions to the terms of the $7,500,000 Loan Agreement between the City of Miami and Block 55, Owner LLC in connection with the above referenced Project. Our recommended revisions are as follows: 1. Housing Finance Authority of Miami Dade County in the amount funded Collateral Subordination - Please modify section to note that the first lien — Permanent Bonds by by the initial permanent lender and any replacement amount provided by the subsequent first trust lender and therefore during the Affordability Period, as the same may be extended by the Borrower in each case, which amount will not exceed $170,000,000. 2. Development Benchmarks /Scope of Work. a) Commencement date 9 months from effective date. b) Certificate of Occupancy required 36 months from commencement date. c) Project lease -up within 12 months of project's certificate of occupancy 3. Miami Forever Bond Units. The project will contain a total of 578 residential units, of whi89 ch 2d to units will be subject to Miami Dade County Project Based Vouchers, that shall be provide current City of Miami Residents. The remaining 289 senior units shall be Miami Forever Bond units, whose tenants shall be selected by way of a publicly announce lottery attended by a representative of the City of Miami. In addition, the project shall comply with the requirement Ordinance 13645, Resident Preference. s of the City of Miami We look forward to having the opportunity to commence the development of Sawyer Landing in the coming months. Sincerelya Michael SWerd(OW, Ma ager Block 55 Owner, LLC M Alfredo Duran CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM Honorable Mayor and Members Date: January 15T", 2021 of the City Commission Arthur Noriega V. City Manager SUBJECT: Declaration of Intent -Miami Forever Bond Program — Second Tranche of Affordable Housing Strategies Projects ENCLOSURES: Attachments Pursuant to Resolution No. 17-0350, adopted on July 27, 2017 the Miami City Commission called for a bond referendum special election for the purpose of submitting to the electorate the Miami Forever Bond Program. On November 7, 2017, the voters of the City of Miami approved this bond referendum in the amount of $400 million. On December 131", 2018, pursuant to Resolution No. 18-0546 the Miami City Commission approved to issue taxable and tax-exempt limited ad valorem bonds payable from ad valorem taxes provided that the capital projects debt millage does not exceed the rate of 0.5935 mills, in accordance with the above referenced bond referendum. That resolution further authorized the first tranche of the City of Miami Forever Bond Program in the total amount $58,653,339 for Series A (Roadways- $7,590,182, Parks and Cultural Facilities-$25,348,229, Public Safety-$420,000, Sea Level Rise and Flood Prevention-$10,294,928) and Series B (Affordable Housing and Economic Development-$15,000,000). The Administration is requesting second tranche approval to begin the process of issuing taxable and tax-exempt limited ad valorem bonds payable from ad valorem taxes provided that the capital projects debt millage not exceed the rate of 0.5935 mills, in accordance with November 71", 2017 referendum. These bonds will be used to reimburse the City for funds advanced by the City for certain expenses incurred with respect to capital projects to be undertaken: • To improve affordable housing The Guiding Themes of this Bond Program are: Safety, Wellness and Quality of Life, Equity Economic Return and Modernization. The established vision of this Bond Program is to orchestrate a deliberate and objective project selection process, by expertly assessing citywide requirements and citizen input, and optimize all available resources to create a stronger, more innovated and resilient future for Miami. The Second Tranche is intended to have an immediate impact on the City's affordable housing. The Second Tranche of the Miami Forever Bond Program is proposed in the following amounts: • Affordable Housing $40,000,000 Projects under the Second Tranche will be selected through a Request for Proposals issued by the Department of Housing and Community Development, inviting qualified developers to propose developments for the construction, rehabilitation and permanent financing needs for affordable housing rental developments and homeownership development located withing the City of Miami and in accordance with the Miami Forever Affordable Housing Bond Projects Strategies attached and incorporated: Should you have any questions, please contact George Mensah, Director of the Department of Housing and Community Development, at 305-416-2080. Attachments EXHIBIT "A" Affordable Homeownership Strategy Program Summary Program Description: Provides construction and permanent financing to assist in part with the development of affordable single family units, townhomes, twin homes, and condominium units to be sold to, eligible individuals or families with incomes not to exceed 140% of Area Median Income (AM[) Maximum Award: The maximum total amount of City of Miami financing shall not exceed $75,000 per unit City Funding Sources: City of Miami General Obligation Bond, Home Investment Partnership Program (HOME), State Housing Partnership Program (SHIP), Community Development Block Grant (CDBG), Affordable Housing Trust Funds (AHTF) and other sources of funding that may become available to the City. City funding Uses: Funds may be used for land acquisition, development soft cost, financing costs, hard construction costs and may upon the completion of the construction of the unit, partially or entirely serve as a pass -through permanent loan to the eligible buyer of the completed unit. City Funding Loans/Terms: The following loan types and terms may be used: 1. Deferred Payment Loan: No debt service payments required. Homeowner must maintain occupancy as primary residence for a period of 30 years (affordability period). Failure to comply will result in the full repayment of principal and default interest rate. Sale or transfer of the units within the affordability period shall result in the full payment of the loan. Other restrictions or provision may be imposed. Loan will be forgiven upon the completion of the affordability period. 2. Principal and Interest Amortizable Loans: Principal and Interest payments based on an amortization of 30 years, payable monthly until maturity at an interest rate not to exceed 3%, determined on the ability of the buyers payment capacity. Sale or transfer prior to the affordability period will result in the full repayment of principal plus interest. Other restrictions may be imposed. City Funding Availability Process: City funds shall be made available through a Request for Proposals (RFP) to include pre- determined requirements pertaining to the capacity of the development team, ability of the development to proceed in a timely manner, availability of all project funding, location of project, leveraging requirements, number of units, total city assistance per unit, types of units, energy efficiency, target income market addressed, etc. Projects will be selected on the basis of a point scoring system. City construction funding shall be secured and enforced by a Mortgage, Restrictive Covenant, Note, Disbursement Agreement, Regulatory Agreement, City Permanent/Pass through loan to the buyer shall be secured by a Mortgage, Note, and Restrictive Covenant. Development Funding Leveraging: Project funding leveraging shall be the responsibility of the Owner and may include funding from private banking institutions, State of Florida, Miami -Dade County Surtax, etc. Development Type: Single family homes attached townhomes, twin homes and condominium buildings. Development Ownership: Private fee simple or leasehold ownership through For -Profit or Not -For -Profit corporations solely or through Partnerships. Compliance: The City of Miami's Department of Housing and Community Development shall be responsible for the contractual/regulatory compliance of all developments assisted. Homeowners shall be monitored on a semi-annual basis to assure continued compliance with the terms of the Loan Documents. Loan Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, Le. monthly billing and collection, maintaining current property insurances, tracking delinquencies, providing all required reporting, etc. Affordable New Construction Rental Strategy Program Summary Program Description: Provides construction and permanent financing to assist in part with the development of affordable multifamily rental projects containing units affordable to Extremely Low Income (ELI), Very Low Income (VLI), Low Income (LI) and Workforce development (WF) income levels individuals and families. Maximum Award: The maximum total amount of City of Miami financing shall not exceed the lesser of $1M or 20% Loan to Cost (LTC) on projects containing 20 to 40 units and the lesser of $1M or 40% LTC on projects containing less than 20 total units. And, for developments providing more than 40 units, the determination of the total amount of City of Miami financing may be made on a per unit basis, not to exceed 20% of the Loan to Cost (LTC) per unit. City Funding Sources: City of Miami General Obligation Bond, Home Investment Partnership Program (HOME), State Housing Partnership Program (SHIP), Community Development Block Grant (CDBG), Affordable Housing Trust Funds (AHTF) and other sources of funding that may become available to the City. City funding Uses: Funds may be used for land acquisition, development soft cost, financing costs, hard construction costs, and permanent financing upon construction completion. City Funding Loans/Terms: The following loan type and terms may be used: 1. Deferred Payment Loan: No debt service payments required. Property must maintain the required affordability structure for a period of 30 years. Failure to comply will result in the full repayment of principal and an agreed upon default interest rate. Full repayment of principal at the 30 year maturity. 2. Interest Only Loan: Interest only payments at up to 3% interest rate, payable monthly until maturity. All principal and interest due at maturity. Loan maturity can be set for a period up to 30 years. 3. Principal and Interest Amortizable Loans: Principal and Interest payments based on an amortization of 15 to 30 years, payable monthly at a rate of up to 3%, until maturity. Loan maturity can be set for a period of up to 30 years. City Funding Availability Process: City funds shall be made available through a Request for Proposals (RFP) to include pre- determined requirements pertaining to the capacity of the development team, ability of the development to proceed in a timely manner, availability of all project funding, location of project, leveraging requirements, number of units, total city assistance per unit, types of units, energy efficiency, etc. Projects will be selected on the basis of a point scoring system. City funding shall be secured and enforced by a Mortgage, Restrictive Covenant, Note, Disbursement Agreement, Regulatory Agreement, Rental Agreement, etc. Development Funding Leveraging: Project funding leveraging shall be the responsibility of the Owner and may include funding from private banking institutions, State of Florida, Miami -Dade County, Private investment, etc. Development Type: Multifamily rental apartment building(s) of 5 or more units, containing, units of various sizes, with or without common amenities. Project designs and specifications in compliance with City of Miami planning and zoning requirements. Building construction in compliance with City of Miami and Florida Building Codes. Development Ownership: Private fee simple or leasehold ownership through For -Profit or Not -For -Profit corporations solely or through Partnerships. Compliance: The City of Miami's Department of Housing and Community Development shall be responsible for the contractual/regulatory compliance of all developments assisted. Annual compliance monitoring shall be conducted by City staff that will review project rent rolls, leases, tenant income files, financial statements, current operational licenses and certificates, annual inspection of units, etc. Loan Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, I.e. monthly billing and collection, maintaining current property insurances, tracking delinquencies, providing all required reporting, etc. Affordable Workforce New Rental Strategy Program Summary Program Description: Provides construction and permanent financing to assist in part with the development of affordable multifamily rental projects containing units affordable to Workforce development (WF) income levels individuals and families (up to 140% AMI). Maximum Award: The maximum total amount of City of Miami financing shall not exceed the lesser of $1M or 20% Loan to Cost (LTC) on projects containing 20 to 40 units and the lesser of $1M or 40% LTC on projects containing less than 20 total units, and, for developments providing more than 40 units, the determination of the total amount of City of Miami financing may be made on a per unit basis, not to exceed 20% of the Loan to Cost (LTC) per unit. City Funding Sources: City of Miami General Obligation Bond, Affordable Housing Trust Funds (AHTF) and other eligible sources of funding that may become available to the City. City funding Uses: Funds may be used for land acquisition, development soft cost, financing costs, hard construction costs, and permanent financing upon construction completion. City Funding Loans/Terms: The following loan types and terms may be used: Interest Only Loan: Interest only payments at an agreed upon interest rate, payable monthly until maturity or a pre -determined period. All principal and interest due at maturity. Loan maturity can be set for a period up to 30 years. Principal and Interest Amortizable Loans: Principal and Interest payments based on an amortization of 15 to 30 years, payable monthly until maturity. Loan maturity can be set for a period of up to 30 years. City Funding Availability Process: City funds shall be made available through a Request for Proposals (RFP) to include pre- determined requirements pertaining to the capacity of the development team, ability of the development to proceed in a timely manner, availability of all project funding, location of project, leveraging requirements, number of units, total city assistance per unit, types of units, energy efficiency, etc. Projects will be selected on the basis of a point scoring system. City funding shall be secured and enforced by a Mortgage, Restrictive Covenant, Note, Disbursement Agreement, Regulatory Agreement, Rental Agreement, etc. Development Funding Leveraging: Project funding leveraging shall be the responsibility of the Owner and may include funding from private banking institutions, State of Florida, Miami -Dade County, Private investment, etc. Development Type: Multifamily rental apartment building(s) of 5 or more units, containing, units of various sizes, with or without common amenities. Project designs and specifications in compliance with City of Miami planning and zoning requirements. Building construction in compliance with City of Miami and Florida Building Codes. Development Ownership: Private fee simple or leasehold ownership through For -Profit or Not -For -Profit corporations solely or through Partnerships. Compliance: The City of Miami's Department of Housing and Community Development shall be responsible for the contractual/regulatory compliance of all developments assisted. Annual compliance monitoring shall be conducted by City staff that will review project rent rolls, leases, tenant income files, financial statements, current operational licenses and certificates, annual inspection of units, etc. Loan Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, I.e. monthly billing and collection, maintaining current property insurances, tracking delinquencies, providing all required reporting, etc. Homeownership Preservation Strategy Program Summary Program Description: Provides rehabilitation assistance to City of Miami homeowners, with repairs necessary in bringing the home to decent, safe and sanitary conditions, as well as to include materials and methods that harden the property to better withstand natural weather occurrences as well as to maximize the energy efficiencies of the home. The program will assist Extremely Low Income (ELI), Very Low Income (VLI), Low Income (LI) level individuals and families and Workforce (WF) income levels. Maximum Award: The maximum total amount of City of Miami financing shall not exceed $70,000 per home. City Funding Sources: City of Miami General Obligation Bond, State Housing Partnership Program (SHIP), Community Development Block Grant (CDBG), Affordable Housing Trust Funds (AHTF) and other sources of funding that may become available to the City. City funding Uses: Funds may be used for soft and hard construction costs. Upon completion the assistance shall be converted into a permanent loan for a period of 10 years (affordability period). City Funding Loans/Terms: The following loan types and terms may be used: Deferred Payment Loan: No debt service payments required. Property must maintain the required affordability structure for a period of 10 years. Failure to comply will result in the full repayment of principal and an agreed upon default interest rate. Full repayment of principal at the 10 year maturity. The homeowner must maintain occupancy in the home as their primary residence for the period of affordability, or otherwise full payment of the principal will be due. Principal and Interest Amortizable Loans: Principal and Interest payments based on an amortization of 10 years, payable monthly until maturity, at a rate of interest up to 3%, based on the income and payment capacity of the homeowner. City Funding Availability Process: City funds shall be made available through a lottery of, eligible homeowners in the City of Miami. City funding shall be secured and enforced by a Mortgage, Restrictive Covenant and Note. Unit Funding Leveraging: Project funding leveraging may be accepted from other City of Miami, Miami Dade, State of Florida rehabilitation programs, as well as any other sources available for this purpose. Units assisted: Single family homes, townhomes, twin homes and condominiums. Ownership: Private fee simple of primary residence of eligible property owners, Compliance: The City of Miami's Department of Housing and Community Development shall be responsible for the contractual/regulatory compliance of all homeowners assisted. Homeowners shall be monitored from on a semi-annual basis to assure continued compliance with the terms of the Loan Documents. Loan Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, Le. monthly billing and collection, maintaining current property insurances, tracking delinquencies, providing all required reporting, etc. Program Description: Funding under this strategy will be used by the City of Miami to acquire buildable vacant parcels of land suitable for the development of mixed use/mixed income affordable rental o/ homeownership developments/ units to be built by the City ofMiami orbyorganizations that have been procured through a competitive request for proposa|u(RFP) process. Development financing for projects that have been selected through an RFP process, nhoU be the responsibility of the Deve|opmont/OwnerOrganization. If partial funding is provided by the City of Miami, it shall be in accordance with the specifications detailed inthe RFP. Maximum Award: Funding for projects developed by the City of Miami shall come from any Federal, State, and/or local sources available to the City, and shall be determined based upon the needs and structure of the proposed development. City Funding Sources: City of Miami General Obligation Bond, Home Investment Partnership Program (HOME), State Housing Partnership Program (SHIP), Community Development Block Grant (CDBG), Affordable Housing Trust Funds (AHTT) and other sources of funding that may become available to the City. Any additional funding provided to the development will be in accordance with the terms of the particular stro1eOy, that is, New Rental Construction or Homeownership Development Strategies. Development Tviae: Mixed income and mixed -use multifamily rental apartment bUilding(s) of 5 or more un6ts, containing, units of various sizes, with or without common amenities and, single family development of 5 or more homeownership units. Project designs and specifications in compliance with City of Miami planning and zoning requirements. Building construction in compliance with City of Miami and Florida Building Codes. Income levels served: Proposed developments shall serve Extremely Low, Very Low, Low and Workforce level incomes. {nproportions aswill beenumerated inthe Request for Proposals. Development Ownership: Private fee simple or leasehold ownership through For -Profit or Not -For -Profit corporations solely or through Partnerships, OR City of Miami owned. Preference will be given to non-profit Land -trust so as to make the units permanently affordable. e City of Miami's Department of Housing and Community Development shall be responsible for the contractual/regulatory compliance of all developments assisted. Annual compliance monitoring shall be conducted by City staff that will review project rent rolls, leases, tenant income files, financial statements, current operational licenses and certificates, annual Inspection ufunits, etc. Loan Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, iw.monthly billing and collection, maintaining current property insurances, tracking delinquencies, providing all required reporting, etc. Affordable Rental Housing Preservation Strategy Program Summary Program Description: Provides construction and permanent financing to assist in part with the rehabilitation/preservation ofexisting affordable multifamily enta|pnojectz.[ityaobtadunhswiUbeequiredtoprovida 2O%ofthe assisted units for Extremely Low Income (30%AK4|), and D0%ofthe assisted units for Low Income (80Y6AK4|) All unassisted units shall not berestricted, Maximum Award: The maximum total amount ofCity ofMiami financing shall not exceed the lesser of$1k4or25%Loan to Cost (LTC) of rehabilitation, onprojects containing 2Uormore total units and the lesser of$lor5O%LTC onprojects containing less than 2Ototal units. City. Funding Sources: City ofMiami General DbU8odon Bond, Home Investment Partnership Program (HOME), State Housing Partnership Program (SHIP), Community Development Block Grant (CDBG), Affordable Housing Trust Fonda (AHTF)and other sources uffunding that may become available tothe City. City funding Uses: Funds may be used for soft cost and hand rehabilitation costs, and permanent financing upon construction completion. City Funding Loans/Terms: The following loan type and terms may be used: 1. Deferred Payment Loan: No debt service payments required. Property must maintain the required affordability structure for a period nf3O years. Failure to comply will result in the full repayment of principal and an agreed upon default interest rate. Full repayment of principal at the 30 year maturity, 2. Interest Only Loon: Interest only payments at up to 3% interest rate, payable monthly until maturity ore pre- determined period. All principal and interest due at maturity. Loan maturity for a period up to 30 years. City Funding Availability Process: City funds shall bemade available onafirst come first served basis, for eligible multifamily building in the City of Miami. City funding shall be secured and enforced by a Mortgage,Restrictive Covenant, Note, Disbursement Agreement, Regulatory Agreement, Rental Agreement, etc. Development Funding Leveraling. Project funding leveraging h lLd|ofth shall be the �y eOwner and may include funding from private banking institutions, State cfFlorida, Miami -Dade County, Private investment, other City ofMiami funding, etc. Development TVpe: Multifamily rental apartment building(s) of 5 or more units, containing, units of various sizes, with or without common amenities. Project designs and specifications in compliance with City of Miami planning and zoning requirements. Building construction in compliance with City of Miami and Florida Building Codes. Development Ownership: Private fee simple or leasehold ownership through For -Profit or0ot-For-Profitcorporations solely or through Partnerships. e City ofMiami's Department ofHousing and Community Development shall be responsible for the contractual/regUlatory compliance of all developments assisted, Annual compliance monitoring shall be conducted by City staff that will review project rent rolls, leases, tenant income files, financial statements, current operational licenses and certificates, annual inspection ofunits, etc, Logn Servicing: The City of Miami's Department of Housing and Community Development shall provide all loan servicing, Le. monthly billing and collection, maintaining current property insurances,tracking delinquencies, providing all required reporting, etc. City of Miami Affordable Housing Long Term Lease/Build Manage Strategy Program Summary Program Description: Funding under this strategy will be used by the City of Miami to acquire buildable vacant parcels of land or existing real estate properties suitable for the development or redevelopment of mixed use/mixed income affordable rental or homeownership developments to be owned and built by the City of Miami or by a third -party developer on behalf of the City of Miami for the purposes of maintaining, operating and management of affordable housing units. Maximum Award: Funding for properties under this strategy shall come from the Miami Forever Bond funds or another fund legally available to the city. Development Type: Mixed income and mixed -use multifamily rental apartment building(s) of 5 or more units, containing units of various sizes, with or without common amenities and, single family developments. Project designs and specifications in compliance with City of Miami planning and zoning requirements. Building construction in compliance with City of Miami and Florida Building Codes. Income levels served: Proposed developments shall serve Extremely Low, Very Low, Low level incomes. Development Ownership: Properties purchased under this strategy may be maintain under city ownership, or leased to a third party developers secured through a competitive RFP process or pursuant to Section 29-B of the Charter of the City of Miami Florida, who may construct with taxable and/or tax- exempt bonds in one or more separate future Miami Forever Bonds tranches, affordable multifamily rental or homeownership project containing units for individuals and families who earn up to eighty percent (80%) of area median income with developers managing such properties for the City.