A Model of Civic, Environmental, and Economic Leadershiptpar/work/Ann_Arbor_Civic_Center.pdf · The Ann Arbor Civic Center A Model of Civic, Environmental, and Economic Leadership

Toufic FakihMENG

Robert FlynnMBA

Tim ParhamMUP

Aaron RathMBA

The Ann Arbor Civic CenterA Model of Civic, Environmental, and Economic Leadership

Huron StreetFifth Ave.

Ann Arbor Civic Center

Table of Contents

Executive Summary ........................................................2 Introduction .....................................................................2

ROLE OF CIVIC CENTERS.....................................2 GUY C. LARCOM MUNICIPAL BUILDING ..............3 PIRATE DEVELOPERS, LLC. .................................4

Concept and Design........................................................5 24 HOUR MXD.........................................................5 DEVELOPMENT CONCEPT ...................................5 SITE ANALYSIS.....................................................10 HURON STREET...................................................12 ARCHITECTURAL ELEMENTS.............................12 SUSTAINABLE CONSTRUCTION.........................14 SOCIAL SUSTAINABILITY ....................................16 ENVIRONMENTAL EFFICIENCY..........................17 SPECIAL JUSTICE CENTER CONSTRUCTION....17

Market Analysis.............................................................19 WASHTENAW COUNTY, MICHIGAN ...................19 RETAIL DEMAND..................................................19 RESIDENTIAL DEMAND .......................................19

Political Analysis: Stakeholders.....................................20 CITY HALL .............................................................20 ANN ST. NEIGHBORHOOD ..................................20 DOWNTOWN DEVELOPMENT AUTHORITY .......20

Project Financials ..........................................................21 CONSTRUCTION FINANCING..............................21 TIF COMPONENT..................................................22 PROJECT EQUITY AND LIQUIDITY .....................22 LEASE RATE PROJECTIONS...............................23 FINANCIAL SUMMARY .........................................24 SENSITIVITY ANALYSIS.......................................25

Conclusions...................................................................26 Appendix .......................................................................27

A. MXD Pro Forma .................................................27 C. Downtown Map..................................................34 D. Resumes............................................................35 REFERNCES .........................................................39

1Pirate Developers, LLC, “Unlocking Civic Treasures”


Executive Summary The Ann Arbor Civic Center project involves a public-private partnership between the PDL Group and the City of Ann Arbor. Working in concert with one another the project combines the best in mixed use and green urban infill development. It begins with the construction of the new police and courts building called the Justice Center. The project then builds a new City Hall along Ann Street, while the old City Hall remains occupied. This avoids any displacement of city employees allowing for a smooth transfer of public employees into the new City Hall before the old City Hall is razed. Casa Verde will then be constructed complete with four floors of underground parking, retail uses on floors one and two and nine floors of two bedroom rental apartments. Finally, the Municipal Plaza, which will be functional twelve months a year, will be developed. The Ann Arbor Civic Center delivers vibrant civic center that engages the community. The PDL Group projects an overall IRR of 19.0% on the project.

The building footprints for each of the proposed buildings.

Introduction

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ROLE OF CIVIC CENTERS The Project for Public Spaces wepurpose of a civic development as, “Connecting peoptheir civic institutions.”1 As cities across the U.S. work to revitalize their communities by creating an attractive downtown, the civic institutions have to do more than just house civil servants. The City Hall, Police, and Courts arethe classic focal point for civic activity and citizen participation in government. But a well-designed Civic Center can also showcase the community’s history, visiand priorities. For example, the Seattle City Hall incorporates the environmental construction standards that are expected in community development2. In addition, sustainable construction practices and superior architecturadesign can create buildings that endure for generations. Civic developments often incorporate public open spaces such as parks, plazas, and picnic areas into the design. When designed correctly, the public spaces have good visibility, sunny approaches, and public seating. Public plazas in municipal centers often host art festivals and concerts. The Plaza Hidalgo, “the peasants’ plaza”, in Mexico City is a good example of a vibrant public spacethe steps of the civic institutions3. Plaza Hidalgo offers sunny exposure, open lines of sight integrated with landscaping, and public seating. Closer to home, the Citof Warren, Michigan completed a City Hall with a plaza featuring a water fountain in 2006. The water fountain converts to an ice rink that extends the public involvemewell into the winter4 On the other hand, a poorly designed



public space can discourage civic involvement, even in a great city such as Boston. The Boston City Hall Plaza features a large, open void with hidden recesses betweenarchitecturally bereft buildings

GUY C. LARCOM MUNICIPAL BUILDING the Guy

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Good Civic Space: Plaza Hidalgo, Mexico City

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The Ann Arbor Police and City Hall are located in C. Larcom, Jr. Municipal Building on the corner of Fifth Street and Huron Avenue. Guy Larcom was the City Administrator during the turbulent 1960’s. Ann Arbor sademonstrations, marches, and open riots during the Vietnam War. The Guy C. Larcom Municipal Building was constructed in 1960. Although the municipal building was designed by the renowned Midland, Michigan architect, Allen B. Dow, the modernist appearance is dated and it has not outlasted other contemporary or classical buildings in the city. The Ann Arbor Downtown enjoys a variety of classical architecture, notably buildings on the UniversityMichigan campus; Rackham Auditorium, Hill Auditorium andTower, Dennison Archway, and Samuel T. Dana Building. n addition to aesthetics, there are three design flaws in the IGuy C. Larcom building. First the building suffers from the flat roof surfaces of the “layer-cake” design. The harsh Michigan winters have created water problems in the structure. The city employees openly complained in a CCouncil Blog that offices suffer from leaks, mold, and asbestos6. In 2006, the City received quotes of $150.00/SFto repairing the roof leaks7.

econd, the “layer-cake”S

acking Civic Space: Boston City Hall Plaza (Undated)


buildings footprint for inhabitable space. The building casts an imposing shadow that betrays the usable space. The wider upper floors are supported on each end by concrete stair wells and an elevator tower, neither of which contributto office space. The City’s 250 municipal employees and 219 Police and Clerks are unable to fit in the building. The


top-heavy floor design does not have the building set-backs desired in the 2006 Calthorpe report8. Third, the Municipal Building is situated at the center of the 2.57 acre parcel. The FAR of the existing municipal building is estimated at 45%, given a potential lot size of 112,300 SF. It is surrounded by surface parking and a partially flooded mezzanine on the East approach. With the constant shuttling of police cruisers and flooded mezzanine, the building forms an island that discourages pedestrian traffic. Landscaping is not integrated into the building, although it did have roof plantings back in 19609. The building layout and approach does not encourage civic participation.

Recent photo of Guy C. Larcom Municipal Building, Ann Arbor, Michigan.

Original photo of Guy C. Larcom Building under construction in 196010. (The landscaping has been replaced with gravel.)

PIRATE DEVELOPERS, LLC.


Pirate Developers, LLC., (The PDL Group) are a private firm that specializes in design, development, construction, and operation of civic projects. In addition to sound financial and market-driven planning tools, the PDL Group brings special expertise in urban planning and construction engineering. For municipal and civic projects involving private and public stakeholders, the political exposure requires an experienced urban planner. The construction engineering expertise allows the responsible city planners to achieve the Green and Sustainable elements that are required for 21st Century leadership. The PDL Group provides basic design and architectural services in order to visualize the concepts. In-house preliminary design also allows a faster project deployment since the construction cost estimating can be assessed to the model. The architectural details and final design elements are typically shared with an approved local architecture firm that can capture the regionally desired appearance. The PDL

http://upload.wikimedia.org/wikipedia/commons/0/0f/AACityHall.JPG


Group’s preliminary design work can shave 20% from typical architectural costs. Pirate Developers, LLC., are committed to unlocking the community, economical and environmental value in civic developments around the country. These projects require a combination of mixed-use-development elements along with superior design, sustainable construction, and strong fiscal performance.

Concept and Design 24 HOUR MXD

Citizen involvement is a key tenet to improving the utilization of municipal buildings and creating a vibrant civic center. Therefore invoking the retail and residential components of mixed-use-development (MXD) draw public users to an otherwise municipal office use. The Ann Arbor Downtown Development Strategy workshop on November, 2005, expressed the need for integrated mixed use development to drive revitalization and quality of life while maintaining urban density. The Ann Arbor Civic Center concept involves retail and residential uses combined with the police, courts, and City Hall. Through careful integration, the 8-hour occupancy time of the city offices can be extended to include 16-hour retail and 24-hour residential housing.

Ann Arbor Civic Center MXD Allocation

City Hall Justice Building Retail 1 and 2 Rental CondoUnderground

Parking Structre GroundsAllocation 29.0% 22.0% 9.3% 18.0% 22.0% 36%

SF 144,412 109,554 46,312 89,635 109,554 40,000 total SF 499,468

Percent of Project Areas Allocated to Component Uses. Cost and Revenues Are Derived from Building Areas.

DEVELOPMENT CONCEPT The Ann Arbor Civic Center project consists of 1-year of site preparation, 3-years of phased construction, and approximately 5-years of stabilized operation before sale.

The development timeline and phases are carefully detailed in the Project Phases Timeline (Gantt Chart).


The Year-0 phase is called site preparation, but it includes the political approval process of the design and any public funding sources. Following Ann Arbor City Council


approval in Year-0, the PDL Group completes raising the debt and equity funding for the project. As described in the financial concept, the PDL Group will purchase the current City Hall and Police land from the City of Ann Arbor. Purchases of these parcels will be on a rolling basis in lockstep with the development phases. The Ann Arbor News lot is also being acquired and assembled with the Tios Restaurant property along Huron Street. The City of Ann Arbor has an option to buy the Tios building and adjacent property up to, but not including, Ahmos’ Restaurant11.

Current City Hall building from corner of Fifth and Huron.

Current site, view from along Huron looking at Tios building. Building models were available on Google, Inc. website.

Year-0 also includes commissioning the local architecture firm to complete the preliminary design. The PDL Group will seek the involvement of Quinn Evans; Architects at 219 1/2 N. Main Street because of their architectural proposal to the City of Ann Arbor in March of 200712. Quinn Evans; Architects has extensive local experience not only with the City Hall site plan, but also the City Administration and key Stakeholders. Phase-1 of the Ann Arbor Civic Center project signals the construction of the new police and courts building called the Justice Center. The Justice Center will occupy the west side of the parcel, parallel to Fifth Avenue. The existing Guy C. Larcom Municipal Building remains occupied during Phases 1 and 2. The first three floors of the 7 story Justice Center will house the police department and city jail. The upper floors are considered office and court space. The roof of the Justice Center features two reflection rooms and offices, each with green roofs.


The Justice Center, view from the back of the building on Fifth.


Justice Center next to Guy Larcom Building, view from Fifth. During the Phase-1 year, the Ann Arbor Police will park in the Ann Arbor News lot on the east side of the parcel. Access to the detention bay will continue from Ann Street. But when the Justice Center is completed, the police cruisers will enter and exit from the corner of Ann Street and Fifth Avenue. An entire floor of secure underground parking (17,000 SF) is being added for the Ann Arbor Police. The underground police deck helps relocate police traffic away from the residential neighborhood and to the street bordered by the Ann Arbor Fire Department. The Ann Arbor City Hall is constructed during Phase-2 of the Civic Project. The City Hall abuts Ann Street on the North face of the property. A sky-walk connects the City Hall and Justice Center at floors 3 and 4. Above the 6th floor, two private glass offices look out over the city. The open design of the first 6-floors features natural light shelves and enough office space for approximately 500 employees. A central clock tower gives presence to the building through the added height. The clock tower also

signals the classic civic purpose of the building. Phase-2 construction is scheduled for 1-year while the current Municipal building remains occupied.

The new City Hall behind the Guy Larcom Building, view from Huron Approximately 10,000 square feet of retail will occupy the 20,000 square foot first floor of the new City Hall. The retail can be accessed from inside the first floor lobby or from outside the building so that the retail can continue to operate even after the city building closes. The center of the first floor has lobby and meeting area features conducive to civic and civil discourse. The rest of the first floor space is used for small office and access to the upper floors (1-elevator, main stone staircase, and 2 fire escape stairways). After Phase-2 construction of the City Hall, Tios will be relocated to a 3,000 square foot section of the 1st floor retail. The cluster of commercial buildings along Huron Street, up to Ahmos’ Restaurant, will be razed for Phase-3.



Phase-3 involves the massive excavation of the 20,000 square feet below the Ann Arbor News lot and the Tios retail frontage. A 4-floor underground parking deck will be installed to handle the almost 360 cars for City Hall, Retail and Rental Condominiums. The first 2-floors above the parking deck have first and second floor retail space. The first floor is 21,500 square feet of prime commercial retail. The second floor features another 14,150 square feet of commercial space to serve the City Hall, condo residents, and local neighborhood. The rental condominium project has a footprint of 9,800 square feet per floor and raises 9-floors above the retail component. Each floor has approximately 9 units with a central hallway layout.

Sky view from South side of site after demolition of old City Hall The Guy C. Larcom building will be raised during Phase-3. The Municipal Plaza will feature landscaping designed by the Ann Arbor DDA. As part of the Ann Arbor DDA TIF to enhance community participation, a water-fountain will showcase the Municipal Plaza. The water fountain spans over 8,000 square feet and can be converted into an ice rink.

View from Huron at street level, finished product of Ann Arbor Civic Center




Ann Arbor Civic Center Development Timeline Ann Arbor Civic Center

Year 4 Year 5 Year 6 Year 7 Year 8Sp Su F W Sp Su F W Sp Su F W Sp Su F W 2011 2012 2013 2014 2015

Initial Site Concept/Architect.City ReviewArrange Private EquityRevised Site Concept/ArchitectCity ApprovalSecure Bank FinancingSiteAcquisitionAnn Arbor News Lot AcquisitionSite Prep and Geo-TechnicalPolice Park in A2 News LotConstruction of Justice CenterTransfer PoliceTransfer CourtsLease Justice CenterConstruction of City HallTransfer City EmployeesLease City Hall OfficeLease City Hall Retail (1) (Tios)Demolish Tios BuildingBuild Underground Parking (2)Demolish Guy Larcom BuildingConstruction of Rental CondosLease Rental CondosLease CondoComplex Retail (2)

Sell Justice Center to CitySell City Hall to City

Sell Retail Components 1 & 2Sell Rental Condos

Construction ActivityApprovals and RelocationsFinancial Transactions

Year 0 (2007)PHASE 1 PHASE 2 PHASE 3

Year 1 (2008) Year 1 (2009) Year 3 (2010)


FINANCIAL CONCEPT The PDL Group is purchasing the 2.57 acres of land from City Hall and the Ann Arbor News for $2.431M per acre. The $8.4M land sale is valued at 9.5% of the hard and soft construction costs and 7.2% of the total project costs. The entire project is valued at $116.0M dollars. Other development proposals for Ann Arbor, including Peter Allen & Associates redevelopment plan for the YMCA site, quote a 10% cost basis to value the land13. The PDL Group has experience setting the land basis at 8% of the project value, or 10% of construction costs. The closest comparable property is the McKinley Town Center, reportedly purchased for $15M in December of 200614. When weighing the proposed community and environmental benefits offered by the PDL Group proposal, the City of Ann Arbor agreed to value the land at 7.2% of the project costs. In addition, the 7.2% land valuation improves the project liquidity given the massive financing costs. After completion of the 3-project phases, the City of Ann Arbor will lease the municipal portions of the Justice Center and City Hall from The PDL Group during a 5-year stabilization period. After the leasing period, the City is contracted to buy-back the municipal portions of the Ann Arbor Civic Center. The commercial portions (retail and residential) are slated for sale to private management firms as part of an 8-year development and exit strategy. The sale of the rental condominiums requires additional consideration later. The “land-buy and property lease-back” transaction puts $6.25M of cash into the City of Ann Arbor coffers during a time of fiscal uncertainty. Although Google, Inc. is opening an operation in downtown Ann Arbor, the City is facing the

exodus of 2,100 jobs from Pfizer, Inc.’s global research facility. Pfizer was the fifth largest employer in Ann Arbor. The purchase of land is scheduled to precede the approaching construction phase. At the end of Year-0, 35% of the land, including the Ann Arbor News Parking lot, is purchased for the Justice Center. In the following two years, 40%, and 25% of the remaining parcels are purchased for the City Hall and Rental Condominium/Underground Parking. Pirate Developers, LLC., has agreed to lease the Justice Center and City Hall to the City of Ann Arbor at an IRR of at least, 15% but not to exceed 20%. The lease rates are set to cover the budgeted construction costs. The PDL Group has accepted the challenge of delivering the Ann Arbor Civic Center project within the budgeted cost of the agreed upon design. Cost overruns erode the PDL Group’s financial outcome. By contract, late-stage changes in design require a new financial forecast for lease rates. The minimum 15.0% IRR allows The PDL Group to meet the minimum return for the development risk while not exploiting the City’s captive use.

SITE ANALYSIS Current Use: The Guy C. Larcom Municipal Building is situated at the center of the 2.57 acre parcel selected for development. The FAR of the existing municipal building is estimated at 45% over the assembled lot size of 112,300 SF. The site is currently zoned for Public Land (PL), Parking (P), and Business Service/Residential District (C2B/R).


Site Selection: The City Council Resolution, R218-6-05, finds that the Guy C. Larcom site retains more synergies with current city services and has fewer disruptions to city


operations than the Library Lot15. The Library Lot parcel on 343 S. Fifth Avenue has been considered a potential alternative for a Municipal Complex. However, the City Planners estimate that the Library Lot will cost more. In addition, the Fifteenth District Court has not renewed their lease in the Ann Arbor County Courthouse past December of 2008 and will be counting on a new home by then. Natural Features: Currently there are about 4 coniferous and 5 deciduous trees on site. The proposed development will remove these trees. However, approximately 15 coniferous and deciduous trees will replace those taken down. None of the current trees are land mark trees. The unpaved portion of the site is covered by grass and some landscaping. The new Civic Center will significantly add to the natural features on site, not to mention the proposed structures will have green roofs that will reduce impervious surfaces. An advantage of the natural features on site is the elevation. The site is on average approximately 200 feet above the floodplain level. The site slopes down from East to West and changes in elevation about 60 feet.16 The elevation will allow the underground parking deck to go in without concern for impacting or being affected by the water table. The green roofs will actually improve the storm water impact on site. Impervious surfaces will be minimized in the Civic Center development and will benefit the distressed storm water sewer system in the City. Proposed Use: The Calthorpe Report findings will be implemented prior to our site preparation and the Huron Corridor Overlay District will include our site. The overlay district, which includes any property abutting Huron Street in downtown, allows for a maximum of 10 stories and an

FAR of 660%.17 With the tower design on City Hall it is likely we would be available for a 100% bonus in FAR. The Civic Center development will reach a total FAR of 346%, this includes the Justice Center, City Hall, and Casa Verde. Zoning Max

Height FAR Site

Calthorpe 10 stories 660% 100 N 5th

(whole site)

Proposed 11 stories 560% 333-341 E Huron (Casa Verde)

Proposed 11 stories plus tower

346% 100 N 5th

(whole site)

Zoning Barriers: PDL will be required to get a variance for building on the Tios lot at 333 E. Huron Street to the edge of the Ahmos lot at 341 E. Huron Street. The Western portion of the lot, where Tios currently resides, will reach a FAR of 560%. The privately owned and managed 135,947 square foot retail and residential building will sit on a 24,300 square foot lot. Casa Verde will exceed the maximum height restriction by one story. This will require a variance from the Huron Corridor District standards. It is likely that the City will allow the additional story because the City Hall clock tower will remain the tallest feature nearby and the mixed use Casa Verde will be offer the mixed-use vibrancy desired by the citizens.18


Site Layout: PDL felt that the site lent itself to become a vibrant mixed-use development with 24 hour vitality. Initially we felt that City Hall should be placed along Huron Street and include mostly retail at the street level, because we think this area is the most visible and trafficked area of the


site. Being forced to work around the current City Hall building gave us limited options for development of the site. After receiving input from Quinn Evans architects we decided against constructing a large City Hall along Huron Street because it would block sunlight from entering the plaza.

HURON STREET The Ann Arbor Civic Center will depend on pedestrian foot traffic to the site and through the site. The current AATA bus stop across Huron Street will provide access to the site for those that prefer non-motorized transit. By the time the Civic Center Development is complete in 2010 improvements to Huron Street will be complete. The improvements to be completed and funded by the DDA will include removal of the median lane and creation of a vegetative buffer in its place. Pedestrian orientation will also be given to intersections along Huron Street. These pedestrian friendly improvements will allow the Civic Center to function as a focal point in the community.

A model of the current conditions of Huron Street. Huron is currently a wide fast moving street with little orientation to pedestrians. Note the Guy Larcom building in yellow.

Proposed improvements to Huron Street to be implemented by the DDA through TIF funds. The improvements will slow traffic and provide safety to pedestrians. Note the Guy Larcom building highlighted in yellow.

ARCHITECTURAL ELEMENTS Justice Center: The Justice Center is 109,675 square feet with 7 floors. A 17,000 square foot underground parking deck has entrance an exit ramp facing Ann Street and an entrance on Fifth Avenue. The northern facing block of the Justice building will house the police, clerks, and jails. In the police block of the Justice Center, the first 3-floors have limited window access for security purposes. This section contains holding cells. The upper floors of the police section enjoy the same lighting and window features as the rest of the Justice Center. The South facing block of the Justice Center contains the City Courts and clerks offices.


Ann Arbor City Hall: The Ann Arbor City Hall is 153,100 square feet of office space. The main building is 6-stories high, but has two additional floors of penthouse offices


beneath the clock tower. On the 25,000 square foot first floor, 10,000 square feet is retail space. Casa Verde Retail: The retail component to the Civic Center will consist of the first two floors of the building along Huron Street. The first floor will take advantage of the street front along Huron. The second floor will be setback and a large 3,900 square foot patio area overlooking both the plaza and Huron Street. This is intended to serve as a visual stimulant to passers by and drivers along Huron Street to peak interest in the site. Casa Verde Rental Condominiums: Casa Verde will house 81 rental condominiums with 9 units on each of the 9 floors. The top two floors will provide great views to the tenants as an amenity. Proximity to the plaza and Civic Center gathering space will also increase interest in the condominiums. Municipal Plaza: The plaza will become a focal point for gatherings downtown. The space will be effective and useable year-round, as the fountain can convert to an ice skating rink. During the summer months the misting fountain and expansive pool area will provide an area for employees, patrons, and all to relax and stay cool. Parking: Two underground parking structures were designed to accommodate the Ann Arbor Civic Center. A single floor of underground parking is placed below the Justice Center. The underground police parking can park about 66 cruisers. The underground deck has a drive-in detention bay designed for secure prisoner transfers. The elevator for the secure section of the Justice Center is accessed inside the underground detention bay.

A 4-level, underground parking structure is being constructed in the 20,000 square foot floor area of the rental condo and retail building. A 2000 square foot extension on the northwest corner of the parking structure allows underground access to the City Hall Building via energy-efficient elevator and conventional staircase. A second, central-located elevator is required to access the retail and condo building. The 4-level parking deck is over 80,000 square feet and can hold approximately 360 cars. Of those available spaces, 260 are earmarked as flexible parking for city employees and visitors during the day and retail customers after hours. The remaining 100 spots are reserved for the tenants of the rental condominiums.


The underground parking will go under the Justice Center and the Retail; the DDA owned lot would have access to City Hall from below.


Floorspace and Useable Area Ann Arbor Civic Center

City Hall Justice Building Retail 1 and 2 Rental CondoUnderground Parking Structre Comments

Building Area (SF) 144,412 109,554 46,312 89,635 109,554 Floors 7 7 2 9 5Footprint 20,630 15,651 23,156 9,959 21,911 Usable Percentage 80% 70% 91% 85% 66%Usable Area 115,530 76,688 42,144 76,190 72,306

Area per Parking Space (less 33% Right-of-W ay Estimate in Usable Area Above) (SF) 170 See ReferenceParking Spaces for City Hall Underground (Public) 259Parking Spaces for Rental Condos (Public) 100Parking Spaces for Justice Center Underground Parking Spaces (Secure) 66Number of Short Term On-Street Parking Spaces 25Number of Short Term Lot Parking Spaces 20

Total Parking Spaces 470

1 floor under Police, 4 under Rental Condo

Required space for a parking space; Tecumseh Group19

SUSTAINABLE CONSTRUCTION Materials: The material selection is a balance of cost and sustainability. The frame of the building is going to be made from ready mix concrete and steel. Substituting 20% or more of Portland cement with fly ash will increase strength of the concrete and improve durability. The replacement of Portland cement with fly ash also reduces carbon emissions during the clinkering of the cement. Low VOC adhesives and sealants are going to be used in the interior finishes and paint. Industrial carpet made from recycled nylon and plastic fibers is readily available. For the courtrooms, city council chambers, and certain offices, wood flooring and paneling will be chosen from sustainable sources. Although the sustainable wood choices are not locally supplied, commercial available products boast regeneration times of 20-years of less. Courtroom paneling will likely be Lyptus®,

a hybrid provided through Weyerhauser. The paneling and other trim can use bamboo and cork products. Double glazed windows and foam insulated doors add to the sustainability of our project. Glass will be a main component of city hall to show the transparency of democracy in the USA, furthermore the façade will feature local-sourced red bricks.


Green Aspects: Several green aspects are integrated in our development: a green vegetation roof will be installed on top of the city hall roofs that flank the clock tower. These green roofs can be observed from the Mayor’s office, or by a roof access door for maintenance and tours. The green roof absorbs rainwater and diverts it from the city’s sewer system, improving water quality and enhancing the insulation of the building. The base layer consists of waterproofing membranes, upon which a layer of filter


media, porous earth, and lively plants filter the rainwater. The excess rainwater is collected in pipes for irrigation. A 38,000 cubic foot cistern will be installed in the basement to collect the rainwater and use it for irrigation and grey-water applications such as flushing toilets water. The 38,000 cubic foot cistern is the estimated size required for the roof footprint and anticipated grey-water needs.

33,000 SF Chicago City Hall; green roof pioneers (ca. 2001) Energy Efficiency: Double glazed windows with low e-coating and inner gas fill are designed into all project openings. In order to reduce the electricity costs by 4%, photovoltaic planks are going to be integrated on the roof. We estimate that solar cells will provide 1.0% of the electricity used by the building. Wood doors, foam insulated doors are going to be used on all the offices, thus saving 2% energy on cooling and heating systems. In the office areas, a floor raised 15” above the concrete slab creates space for the distribution of

supply air and electrical cables. Floor diffusers give the worker control over the ventilation and temperature to adjust to their comfort. This ventilation from the floor is upside down from regular ventilation systems where the air is blown down from above, against the flow of rising warm air. These systems have high energy efficiency due to lower distribution fan speeds and less extreme heating and cooling air temperatures High efficiency Elevators using innovative technologies , geared regenerative elevators that will save up to 50% energy over the regular hydraulic elevators and have a pay back of 21 years are used in the city hall and court house.20 Total energy savings of approximately 9.0% should lower our operating cost by approximately $0.25/SF. The General Accounting Office estimated that operational costs (including utilities and maintenance) for a Federal Building in New Jersey cost 3.00/SF21.

The all glass exterior on the South side of City Hall will utilize light shelves to reduce heating costs.



Seasonal function of low-e windows 22

The new Ann Arbor Civic Center is designed to express the spirit of the community, especially through environmentally responsible features. When asked about what comes to mind first when asked about Ann Arbor, greater than 50% of residents polled on the streets say, “the trees and the environment.”23 Therefore we have given a lot of importance to the environmental sustainability of the building. The City Hall portion of the Civic Center features open access and transparency; it has glass facades covering the southern face. The first 6 floors of the City Hall are made of large windows with internally-placed light shelves that bounce daylight across reflective ceiling panels so that it reaches interior rooms. The Justice Building also incorporates light shelves on the upper floors that house the

courts and legal offices. The first three floors of the Justice building have more restrictive window access and visibility for security reasons. The fluted glass panels bring diffused daylight into the interior offices and other spaces. Automated shades can provide 50% or 100% opacity when needed. As modeled after the Denver Federal Courthouse, we anticipate that natural light is available through 75% of the building.24

The rental condominium component of the project does not include light shelves due to the compartmental layout of the building. However, the rental condos have the low-e glass and environmentally responsible construction chemicals and carpeting.

Light shelves channel natural light inside building.

SOCIAL SUSTAINABILITY


Sustainability includes environmental, economic, and social issues. Social sustainability ensures vibrant and healthy communities and workplaces, quality of life, and social


equity. Here are a few of the building features meant to contribute to social sustainability for staff, visitors, and community. Public Spaces: The new Ann Arbor Civic Center will feature a development a central plaza for public events and informal gatherings. The City Plaza is built around a water fountain that converts to an ice rink in the winter. Based on a recent DDA project in the City of Marquette, a fountain that can be converted to an ice rink costs approximately $600,000. Sometime, the city plaza surface is covered and flooded to create skating surface. The fountain price includes conventional pumps and electrical chillers. Local Sourcing: Whenever possible, materials are going to be purchased from local manufacturers to enhance the economy of the region. For example, the Michigan Brick Company in Corunna, Michigan has been selected for façade bricks.

ENVIRONMENTAL EFFICIENCY LEED Components: The LEED green building system represents a standardized rating system for environmentally sustainable construction. Due to the many environmental problems in the world, like pollution and global warming, that affect our city; Pirate Developers has decided that the Civic Center should provide an example for future construction. The LEED Silver rating provides the best environmental efficiency rating within the City’s budget. To achieve a Silver rating, we have addressed several key sustainability issues and employed green technologies.

• Our site is sustainable; we have integrated bicycle parking and lockers rooms in order to encourage our employees to use several means of transportation.

• We are controlling rain water storm emission by integrating a green roof which will absorb rain water and relief water from the storm water systems; in addition a 30,000 cubic foot storage tank is installed in the basement to absorb rain water and recycle it while using it for flushing toilets.

• Wood products used are renewable; the carpet recyclable; and adhesives are low VOC.

• Water and energy efficiency; we have integrated double-glazed with low e-coating and inner gas filled windows.

• Wood doors (foam insulated doors) ($60/year); they save energy on electricity and on cooling and heating loads.

• Photovoltaic panels are integrated on the roof, which can provide us with up to 2 % of our energy.

• Light shelves are installed in the city hall to provide natural heat and light from the Southside of the bldg.

These options improved our checklist to 33 points and LEED rating of Silver.

SPECIAL JUSTICE CENTER CONSTRUCTION The police court and city hall require special security measures, therefore the following special items where added to these buildings.

• 10-heavy security doors to protect entrances and archives, 40 medium security doors for protected offices.

• 2-jail cells fitted to the standard jail specifications for the State of Michigan.



Dome security cameras employed in project25.

Proposed jail cell module for Justice Center26

Two Allen Bradley® control panels are integrated inside the police house to control the security systems inside the Justice Center. The Allen Bradley control panel is also the nerve center of the security for the city hall and police station. The electronic panel has full control of the cells and main entrances; it monitors the status of all doorways and remotely controls the door locking, intercom, closed-circuit TV and paging systems.

Example of an Allen Bradley® control panel in Justice Center. Due to the security measures taken on government buildings, we are going to integrate 50 Ceiling-mounted, dome security cameras. They are an eye in the sky because they can point in any direction up to 3600. No one really knows which way the camera is looking. They can be remotely adjusted at any time to monitor other directions. As described in the following summary table, the Justice Center modifications have added $1,570,000 to construction costs.


Security doors (heavy ) $100 100 each $10,000Security doors (medium ) $400 50 each $20,000jail cell fittings $250,000 2 LS $500,000security cameras $2,000 20 each $40,000Allen Bradley control panel $500,000 2 each $1,000,000


Market Analysis WASHTENAW COUNTY, MICHIGAN There are risks of growing unemployment in Washtenaw County, not only from the loss of Pfizer in Ann Arbor but the potential downside risk associated with further job losses in Michigan. However, Casa Verde’s target audiences—junior faculty at the University of Michigan as well as graduate students help insulate it from these risks. Furthermore, Casa Verde’s anticipated completion date is 2010. After three years of job losses in the county, job growth is expected resume in 200927. This creates a nice economic tailwind for the project.

RETAIL DEMAND Restaurants within 0.1 miles

• Vinology • Amadeus, Heidelberg, ethnic • Arbor Brewing Company and Grizzly Peak: local

restaurants, locally brewed beer There are three branded coffee shops all of which are .2 miles from the City Hall site as the crow flies. Sweetwaters Cafe is on East Washington and North Main and it is also on East Liberty and South Main. Starbucks is located on 300 South Main which is the corner of South Main and Liberty. County Coffee shop, on the corner of North Main and East Huron, is the closest coffee shop to the Ann Arbor City Hall site at .1 miles away. But we believe that given the captive commercial tenants from the City, our proximity to the Ann Arbor News, captive residents in Casa Verde

and foot traffic generated from civic activities that there will be more than enough demand for a coffee shop at the foot of Case Verde particularly if we are able to attract a branded local Sweetwaters Café or a branded international tenant such as Starbucks or Espresso Royal. Finally, Starbuck’s research suggests that customers will only travel six to eight minutes for a cup of coffee so we are confident in our ability to cannibalize County Coffee shops business while stimulating demand for coffee among a captive audience. Our market research also supports the development of a restaurant bar on the first floor of Casa Verde looking out onto the civic center with additional seating on the second floor including a patio area that is concentrated on Huron Street but continues along the side of the Civic Plaza. Restaurants are clustered on South 4th and East Washington Street. In addition there is a cluster of restaurants, including Vinology, on Main and Huron, one block east of the site. In addition to driving sales from the sites captive audience, this projects goal is to bring incremental foot traffic one block north and one block east. Conversations with local residents show the importance of on site laundry facilities. We have reserved the back of the first floor of Casa Verde for laundry facilities. In addition, the back right corner of the first floor of Casa Verde will house the onsite property manager and lease consultants.

RESIDENTIAL DEMAND


Casa Verde represents the only professionally managed green high-rise rental product on the market within steps to Main Street. While there are legacy single-family detached rentals on Ann and Catherine Streets our conversations


with tenants suggest these buildings are under-managed, in need of capital investment and not providing the amenities such as washer and dryer that tenant’s desire. A couple of tenants also were frustrated by the existing police deck, which influenced our decision to place the police parking lot beneath the justice building. An analysis of the North Campus rental market shows rents between $1.01-$1.22 per square foot. Professionally managed apartments charge rents at the higher end ($1.18-1.22) per square foot range. Our conversations with customers suggest that the two bedroom units within this submarket are too small. Furthermore, our research shows that one bedroom units are available on the market but two bedrooms are at capacity and unavailable for rent. Given that one bedroom units are actually getting lower amounts per square foot on the market our decision was to build exclusively two bedroom product to meet the supply deficiency. Conversations with University Towers on South University Street show two bedroom rents of $1,340-1,399 per month or an average $1.71 per square foot. While this is a different neighborhood, as a high-rise product we used it as a comparison.

Political Analysis: Stakeholders CITY HALL Employees at City Hall will be ecstatic to work in a new and sustainable building. The new building will accommodate more employees and give them more space then offered in the Guy Larcom building. The sustainable elements in the

design and function of the building will allow it to be a staple of downtown Ann Arbor for this century and beyond.

ANN ST. NEIGHBORHOOD The surrounding neighborhood is mostly comprised of graduate rental housing. In fact, all the houses directly North of the site are rentals and are predominantly graduate students. Because of the temporary nature of these residents it is unlikely that they will provide any resistance to the development. The property managers and owners would likely view the development as a windfall as it will increase the rents they are able to demand on tenants close to the amenities of the Civic Center.

DOWNTOWN DEVELOPMENT AUTHORITY The Ann Arbor Civic Center falls within the DDA boundary. The DDA is mainly concerned with parking concerns within the downtown. The PDL proposal will be consistent with the mission and recent projects of the DDA. We are providing over 250 public parking spaces. Because we are proposing such an improvement to the current parking situation there is little doubt that the DDA will fund the construction of the underground parking deck beneath the Casa Verde building. The DDA will likely use Tax Increment Financing and Bonds to pay for their portion of the parking deck. Because the development will also incorporate pedestrian and non-motorized transportation features (walkway, plaza, bike racks, showers and lockers for City employees that bike to work) the DDA will be supportive. As mentioned previously, the DDA will fund the pedestrian and traffic calming improvements on Huron Street.



Project Financials CONSTRUCTION FINANCING A conventional construction loan is drawn over 3-years to cover the $87.9M hard and soft construction costs. The construction loan has an 8.5% interest rate and a 1.05% origination fee. Funds drawn from the 36-month loan coincide with the start of each of the 3-Phases. The construction loan interest is rolled over into the principal during the construction period, thus the loan generates $12.7M in interest. At the end of each construction phase, the costs are rolled into a conventional loan. The conventional loans are modeled on a 7.50% interest rate that reflects the stable, secure nature of the office tenants (The City of Ann Arbor). However, 50.1% of the Ann Arbor Civic Center comprising the city Hall and Justice Center serve a municipal purpose. The City of Ann Arbor is floating general obligation municipal bonds to finance the civic portion of the project. The current market for these bonds would allow them to be financed at 4.25%.28 However, to be financially conservative we have modeled the bonds out over ten years at a blended interest rate of 6.25%. The tax-sheltered nature of municipal bonds reduces the buyer’s before tax required rate of return.


Construction Cost Table by Allocation

Total Property Footprint (SF) 112,320 Total FAR

Building Area (SF) 497,974 346%

Cost per SF* Cost ($2007)Land Acqusition 16.67$ 8,299,000$

Hard Construction Cost per SF* Cost ($2007)City Hall 136.74$ 19,746,960$

Justice Building 228.35$ 25,016,294$ Retail 1 and 2 151.21$ 7,002,790$ Rental Condo 100.00$ 8,963,532$

Underground Parking 90.57$ 9,921,819$ Tenant Improvement Allowance -$ -$

Core Hard Building Cost Subtotal 141.88 70,651,396$ Landscaping (3.85)$ (153,945)$

Total Hard Construction Costs 141.57$ 70,497,451$

Soft ConstructionCost as % of Hard Costs* Cost ($2007)

Construction Management Fees 7.00% 4,945,598$ Survey 7,000$

Soil Assessment 5,000$ Legal & Accounting 3.50% 2,472,799$

Permits & Fees 2.00% 1,413,028$ Architect Fees 3.50% 2,472,799$

Developer Fees 6.00% 4,229,847$ Insurance 2.50% 1,766,285$

Advertising 50,000$ Total Soft Construction Costs 34.87$ 17,362,355$ Total Construction Cost 87,859,806$

Financing & Contigencies % of Cost Origin Cost ($2007)Construction Interest 12,715,570$

Construction Loan Fee 1.00% 922,528$ Long Term Loan Fee Estimate 1% 1,000,000$

Misc. Closing Costs 1.00% 878,598$ Hard Cost Contingency 5.00% 3,524,873$ Soft Cost Contingency 5.00% 868,118$

Only Contigencies & Construction Fees 12.44$ 6,194,116$ Total Loans & Contigencies Cost 39.98$ 19,909,687$

Total Project Costs 233.08$ 116,068,492$


TIF COMPONENT The Ann Arbor Downtown Development Authority (DDA) has been granted the ability to capture the incremental tax revenue increase from downtown projects and use portions of the monies to draw improve the city or fund additional investment. The DDA can capture tax revenue from the non-school portion of the millage; currently estimated at 25.597 points. The Ann Arbor Civic Center is an important cornerstone for downtown development. The City of Ann Arbor and DDA are working diligently to bring effective parking and traffic management solution to Ann Arbor. The creation of more parking spaces was the first agenda item on the February 12, 2007 DDA Work-Session29. The TIF has been calculated on the base value of only the commercial components of the Ann Arbor Civic Center. The City of Ann Arbor cannot generate a TIF cash stream by taxing itself. Therefore the TIF calculation applies to the roughly 49.9% commercial portion of the project, minus the base cost of associated property. The TIF calculation shown in the Appendix sums the present value of 25 years of taxable value on the non-municipal portion of the project. The value of the underlying property only increases at conservative 4% rate, barely above the 2.85% inflation assumption used in the project Pro Forma. The PDL Group is applying 80% of the TIF capture to the construction of the underground parking garage. The TIF only subsidizes 33% of the cost of building the 4-floor city deck, and the 1-floor Justice Center deck. Only 1/3 of the created parking spaces are set aside for the private use of the condo residents. The remaining 20% of the TIF has been generously donated by the DDA and City of Ann Arbor for the

installation of Municipal Plaza and the water fountain. The landscaping and water fountain are investments that draw the community into the development and meet the stated objective of the DDA for greater downtown participation.

PROJECT EQUITY AND LIQUIDITY The PDL Group was fortunate to attract $3M of private equity from anonymous partners in the greater Ann Arbor area. The private equity is equally disbursed over the three construction phases. These private equity partners are interested not only in the financial outcome, but also the civic enhancement of the City. A debt and equity pie chart shows the breakdown of the project financing, including the common 75/25 debt to equity ratio. Note that 13.0% of the total project costs, $15.0M are required in cash equity from Pirate Developers, LLC. The PDL Group is charging a standard 6.0% developer fee of $4.2M for successful completion of Ann Arbor Civic Center.

74%

4%

1%

5%

3%13% Outstanding Debt

Developer Fee (6% HC's)

TIF to Developer for Landscape/Ice Rink

TIF for Municipal Parking

Private Equity Investors

Cash Equity Required

Ann Arbor Civic Center Project Equity Sources



Project Liquidity and Financing Ann Arbor Civic CenterYear 0 Year 1 Year 2 Year 32007 2008 2009 2010 SubTotal

Cash Equity Required 15,017,565$ -$ -$ -$ 15,017,565$ Cash Equity Balance -$ -$ -$ -$ -$

Debt Financing Required (5,587,132)$ 38,906,282$ 24,978,282$ 28,753,950$ 87,051,381$ Other Equity Sources -$ -$ 2,707,886$ 4,061,829$ 6,769,714$

Partner Equity Sources -$ 1,000,000$ 1,000,000$ 1,000,000$ 3,000,000$ Plus: Developer Equity Fee -$ -$ -$ 4,229,848$ 4,229,848$

Cumulative Debt & Equity 9,430,433$ 39,906,282$ 28,686,167$ 38,045,626$ 116,068,508$

LEASE RATE PROJECTIONS The ambitious inclusion of mixed uses in the Ann Arbor Civic Center requires the PDL Group to seek the appropriate lease rate for each component. A summary of the projects rents is shown in the following table. The City Hall and Justice Center buildings are considered captive-tenants since the lease rates are negotiated to cover the budgeted project costs and return at least 15% IRR, but not greater than 20% IRR. Project Lease Rates (Gross Modified)

$/SF IRR NPV Total NOIRetail: Gross Modified Lease 29.00$ 13.2% 161,782$ 4,637,547$ City Hall: Gross Modified Lease 23.00$ 18.5% 2,113,251$ 14,231,241$ Police & Courts: G.M. Lease 37.00$ 14.3% 1,387,378$ 15,804,629$ Rental Condos: G.M. Lease 21.21$ 15.0% 879,721$ 7,783,625$ Lease Rates For Ann Arbor Civic Center. Note that the municipal portions have been negotiated to deliver a 15% IRR minimum. After some after-budget construction cost adjustments for the additional security described above, the PDL Group has realized only a 14.3% IRR on the Justice Center. The Ann Arbor City Hall leases for 5-years at a 23.00 gross-modified rate and generates an 18.5% IRR. The City hall has approximately 143,000 gross square feet of office space. The hard costs for the City Hall were only 153.60/SF including the two elevators, clock tower, rainwater cistern, and light-shelf windows. The itemized hard construction costs are shown in the Appendix.

The Justice Center requires lease rates of $37.00/SF Gross Modified to cover the $292.32 cost per square foot and the 70% usable space. The PDL Group discovered that the usable space for a Court Building and Police Station is greatly reduced by the redundant hallways that separate secure egress for public access. A police station has separate passages and chambers for the public, police, staff and judges. The retail component of the Ann Arbor Civic Center is being leased for a $29.00/SF Gross Modified rate. The $29.00/SF rate is slightly less than the $30.00/SF mentioned by Albert Berriz for the McKinley Town Center retail. The Ann Arbor City Center offers the closest retail space to the graduate students and professors in the Ann Street neighborhood. Second the Civic Center retail has the benefit of captive clients through the MXD residential and office staff components. For example, the ULI Mixed Use Development Handbook calculates the average office worker spends $5.20 (1995 dollars) per lunch during the week30. Quoting the same source, resident spending for MXD with residential and retail can add up to $8.00/SF revenue. The PDL Group believes that $29.00/SF lease rates match the critical mass not available through stand-alone projects in the area. The chosen mix of high-quality recreation center, boutique stores, and a restaurant with pub meet the leasing profile.


The rental condos are designed for the junior faculty and professional graduate by featuring 2-bedroom floor plans and open balconies with elevated views. The $21.21/SF rate for the rental condos is derived from the lease schedule shown below. The PDL group prices the units according to desirable views. As described in the marketing section, the


average lease rate of $1.77 meets, if not exceeds, the comparable properties. The PDL Group understands that lease the one-time lease sign-up fee of $99 is a significant source of revenue for the Casa Verde component. Gauging the level of turnover at 50% (2.5-year cycles), the fee adds $0.053 to the leased square feet. A monthly pet fee also applies to the estimated 25% of the tenants. RENTAL CONDO LEASE SCHEDULE

Description Units SF/ Unit Lease/SF Monthly RateFloor 9 Penthouse 9 941 1.93$ 1,815$ Floor 8 Premium A 9 941 1.85$ 1,740$ Floor 7 Premium B 9 941 1.81$ 1,703$ Floor 6 Standard 9 941 1.60$ 1,505$ Floor 5 Standard 9 941 1.60$ 1,505$ Floor 4 Standard 9 941 1.60$ 1,505$ Floor 3 Standard 9 941 1.60$ 1,505$ Floor 2 Standard 9 941 1.60$ 1,505$ Floor 1 Easy Access 9 941 1.70$ 1,599$ Retail 2 76190 Average/SF Gross ModifiedRetail 1 1.77$ 21.21$

FeePet Fees 25% $60 $0.016

Admin Fee 50% $99 $0.053Assumptions based on Graduate Student behavior

% of Occupants Average Pet Charge per SF Rents

FINANCIAL SUMMARY The PDL Group set the exit cap rate for City Hall and Justice Center at 7.00% to reflect the stability of the tenant and income stream. In this case, the tenant is buying the building with a bond issue. The retail component is also sold at a 7.00% cap rate that reflects the 95% occupancy and strong stream of NOI after the 5-year stabilization period. The high construction costs contribute to the low IRR on the retail portion. The PDL group is operating the

retail portion long enough to qualify for the lower capital gains tax rate (shown in Pro Forma Appendix). However, we are not holding the retail component long enough to pay down enough principal to clear a higher portion of the costs, debt, and financing. Originally, The PDL Group projected an exit cap rate of 7.5% for the rental condos. A 7.0% cap rate greatly reduced the rental condo’s attractiveness and jeopardized their role in the project. But in a manner similar to the retail component, we realized that the rental condos should be heal and rented for perpetuity to benefit from the NOI and pay down the overhead construction costs. In keeping with the project guidelines and selling after the 5-year stabilization period, the PDL Group is handing over an undervalued asset. Therefore, we also chose a 7.0% exit cap rate to capture the upside value of the Casa Verde residential. The Ann Arbor Civic Center Project returns an IRR on the after tax cash flow of 19.0%. After the project is stabilized and sold, the equity investors realize a 35.5% IRR. The project generates total net operating income of $42.2M over the course of 8-years.



Key Project Financial InputsCap Rate for City Office and Retail 7.00%Cap Rate Rental Condos 7.00%COC for City Offices 10.0%COC for Retail 12.0%COC for Rental Condos 10.0%Interest Rate, Bank Conventional 7.50%Interest Rate, City GO Muni Bonds 6.25%Key Project Outcomes

IRR on After Tax Cash Flows 19.0%NPV on After Tax Cash Flows $632,720

IRR to Equity Investors 35.5%NPV to Equity Investors $15,145,454

The cost of capital (COC) for each component is also detailed in the Key Project Financial Inputs table above. The COC for the lower risk City Hall offices and Justice Center was assigned at 10%. Many major corporations, such as BASF Corp., assign a 10% COC target for new business expansions. The COC for the retail development is riskier, and a 12% rate was assigned by our investors.

SENSITIVITY ANALYSIS The sensitivity analysis was conducted on the conventional and municipal bond interest rates. The exit cap rates are included. Since the public and commercial uses are different, the cost of capital required for each component of the project was also modeled. The vacancy rate of the rental condos and retail components were also tested. The project outcome is most sensitive to the changes in the cap rate for the commercial portions of the project. If the rental condo portion of the development only garnered an 8% cap rate, then the residential component would lose

money. The cap rate effect causes over $1M shifts in the project profitability. CAP RATE Sensitivity

City_Office_Retail_Cap_R 8.0% 7.0% 6.0%Result Cells:

Rental_Condo_NPV ($128,059)9.2%

($410,661)8.7%

$879,721 $2,223,428Rental_Condo_IRR 15.0% 20.9%Retail_NPV $161,782 $925,039Retail_IRR 13.2% 17.8%City_Hall_NPV $407,124 $2,113,251 $4,388,087City_Hall_IRR 12.0% 18.5% 24.7%

Poor Conditions

Average Conditions

Optimistic Conditions

The conventional interest rate shows a considerable affect on the commercial pieces of the project, but the changes in the municipal bond issue rate have a more limited effect (not shown). Securing the low financing costs of the municipal bonds greatly reduces the interest rate exposure for the larger portion of the project. The PDL Group seeks advantageous interest rates from commercial lenders who recognize the stability of the commercial components when anchored to the Civic Center. Conventional InterestRate SensitivityChanging Cells:

Conventional_Interest_Ra 9.00% 7.50% 6.00%Result Cells:

Rental_Condo_NPV $669,101 $879,721 $1,088,854Rental_Condo_IRR 13.8% 15.0% 16.2%Retail_NPV $3,714 $122,522 $239,591Retail_IRR 12.0% 12.9% 13.7%

Poor Conditions

Average Conditions



The “poor conditions” scenario for the cost of capital is aggressively set at 14%. This rate may be sought by investors in risky commercial ventures. However, the PDL group has found that the


capital market is teeming with investors looking for projects with 10% COC targets or better. The restaurant portion of the project was assigned a 12% COC threshold for NPV analysis. Cost Of CapitalSensitivity

COC for Retail 14.0% 12.0% 10.0%Result Cells:

Retail_NPV ($109,645) $161,782 $484,513

COC for Rental Condos 12.0% 10.0% 9.0%Result Cells:

City_Hall_NPV $1,500,796 $2,113,251 $2,453,011Justice_Center_NPV $689,903 $1,387,378 $1,777,270Rental_Condo_NPV $488,049 $879,721 $1,099,239

Poor Conditions

Average Conditions


Even if the forecasted vacancy rates fluctuate by 20%, the retail and residential components of the project remain solvent. Although projects are always sensitive to vacancy and absorption rates, the PDL Group was pleased to see that the magnitude of a pour outcome in vacancy rates would not cripple the project. Under this worst-case scenario, the retail component still returns a 12.4% IRR. VACANCY SENSITIVITY

Retail_Vacancy_Factor 120% 100% 80%Result Cells:

Rental_Condo_NPV $512,971 $879,721 $1,246,471Rental_Condo_IRR 12.8% 15.0% 17.3%Retail_NPV $60,547 $161,782 $263,017Retail_IRR 12.4% 13.2% 13.9%

Poor Conditions

Average Conditions


Conclusions The Ann Arbor Civic Center is an ambitious project that transforms the property into a civic and commercial centerpiece for the city.

The LEED certification and sustainable building features make the Ann Arbor Civic Center a role model for future downtown development and other cities. But unlike other city hall projects with only “green” ambitions, the Ann Arbor Civic Center uses the elements of mixed-use-development to increase community participation. In the process, the City has created a socially and economically sustainable institution. Although the project carries the risk of a hefty price tag and coordination between public and private enterprises, the 19.0% combined base case projected IRR makes the project viable for launch. The PDL Group is proud to develop the Ann Arbor City Center.



Appendix A. MXD Pro Forma RETAIL PROFORMA Ann Arbor Civic Center

Year 2007 2008 2009 2010 2011 2012 2013 2014 PROFORMA MODEL PARAMETERSRevenue Inflation Rate 2.85% Retail Construction Cost 9,965,349$

Retail Rent -$ -$ 645,913$ 1,260,325$ 1,293,415$ 1,326,505$ 1,359,595$ 1,392,685$ Construction Period 24 months Allocated Property Acquisition Cost 771,807$ Vacancy $ -$ -$ 645,913$ 66,333$ 68,074$ 69,816$ 71,558$ 73,299$ Land Cost as % of Acquisition Cost 90%Reimbursed Leasee Costs 0 0 0 0 0 0 0 0 REVENUE Land Cost 694,626$ Gross Retail Rents -$ -$ -$ 1,193,992$ 1,225,340$ 1,256,689$ 1,288,037$ 1,319,386$ Source Effective Area ( Rent Total

(SF) ($2007) ($2007) Depreciation Base 10,042,530$ Operating Expenses Retail or Restaurants 42,144 29.00$ 1,222,163$ Years 39

Gas & Electric -$ -$ 11,379$ 1,159$ 1,180$ 1,201$ 1,222$ 1,222$ Deprciation/Year (straight line) 257,501$ Water & Sewer -$ -$ 4,636$ 485$ 506$ 527$ 548$ 548$ Year Vacancy Rate Rent Total Vacancy

Sub Total -$ -$ 16,015$ 1,644$ 1,686$ 1,728$ 1,770$ 1,770$ 2007 na na na FINANCINGInsurance -$ -$ 13,374$ 13,755$ 14,147$ 14,550$ 14,965$ 15,392$ 2008 na na na Loan to Value Ratio 75%Maintenance -$ -$ 22,290$ 22,925$ 23,579$ 24,251$ 24,942$ 25,653$ 2009 50% 645,913$ 645,913$ Total Debt 7,474,012$ Janitorial -$ -$ 33,435$ 34,388$ 35,368$ 36,376$ 37,413$ 38,479$ 2010 5% 1,260,325$ 66,333$ Interest Rate 7.50%Property Taxes -$ -$ 133,740$ 137,551$ 141,472$ 145,504$ 149,650$ 153,915$ 2011 5% 1,293,415$ 68,074$ Amortization Period (years) 30Management Fees -$ -$ -$ 59,700$ 61,267$ 62,834$ 64,402$ 65,969$ 2012 5% 1,326,505$ 69,816$ Annual Payment

Total Operating Expenses -$ -$ 218,853$ 269,963$ 277,518$ 285,243$ 293,142$ 301,178$ 2013 5% 1,359,595$ 71,558$ Total Equity $ 2014 5% 1,392,685$ 73,299$

Net Operating Income -$ -$ (218,853)$ 924,029$ 947,822$ 971,446$ 994,895$ 1,018,208$ TAX RATESEXPENSES Federal Long Term Capital Gain +5

($562,901)2,491,337

y 15.0%Less Debt Service -$ -$ Operating Expenses Cost / SF Total Area (SF) Expense Total Federal Ordinary Income 38.6%

Before Tax Cash Flow -$ -$ $ $ $ $ $ $ ($2007) Michigan Long Term Capital Gain 4.2%Plus Principal Reduction -$ -$ 84,662$ 90,588$ 96,929$ 103,714$ 110,974$ 118,742$ Insurance 0.30$ 42,144 12,643$ Michigan Ordinary Income 4.2%Less Depeciation -$ -$ 257,501$ 257,501$ 257,501$ 257,501$ 257,501$ 257,501$ Maintenance 0.50$ 42,144 21,072$

Taxable Income -$ -$ (954,593)$ 194,215$ 224,350$ 254,758$ 285,468$ 316,549$ Janitorial 0.75$ 42,144 31,608$ GAIN ON SALEProperty Taxes 3.00$ 42,144 126,431$ Selling Price 14,617,857$

Cash Flow Summary Less Sales Fee 584,714$ Before Tax Cash Flow -$ -$ (781,754)$ 361,128$ 384,921$ 408,545$ 431,995$ 455,307$ Less Cost 771,807$

Less Taxes -$ -$ (408,566)$ 83,124$ 96,022$ 109,037$ 122,180$ 135,483$ NNN Expenses Gas & Electric Water & Sewer Vacant SF Vacancy Cos

($562,901) ($562,901) ($562,901) ($562,901) ($562,901) ($562,901)(781,754) 361,128 384,921 408,545 431,995 455,307

t


Plus Depreciation 1,287,504$ Equity Investments (2,491,337)$ -$ -$ -$ -$ -$ -$ -$ (Cost / SF) (Cost / SF) ($2007) Taxable Gain 14,548,840$ Sales Proceeds -$ -$ -$ -$ -$ -$ -$ 4,679,955$ 2007 -$ -$ - -$ Capital Gain Tax (2,793,377)$

Total Cash Flow (2,491,337)$ -$ (373,188)$ 278,004$ 288,900$ 299,509$ 309,814$ 4,999,780$ 2008 0.53$ 0.21$ - -$ 2009 0.54$ 0.22$ 21,072 16,015$ Sales Proceeds 14,033,143$

Return on Equity 0.0% -31.4% 14.5% 15.5% 16.4% 17.3% 18.3% 2010 0.55$ 0.23$ 2,107 1,644$ Loan Payoff (6,559,810)$ Debt Sevice Coverage 0.0% 64% 179% 180% 181% 181% 1013% 2011 0.56$ 0.24$ 2,107 1,686$ Capital Gain Tax (2,793,377)$

2012 0.57$ 0.25$ 2,107 1,728$ Cash Flow 4,679,955$ Total NOI 4,637,547$ 2013 0.58$ 0.26$ 2,107 1,770$ NPV $161,782 2014 0.59$ 0.27$ 2,107 1,812$ IRR 13.2%

Management Fees 5.00% ~of Gross Effective RentsSales Fees 4.00%Exit Capitalization Rat 7.00%

Gross Modified Rent / SF


CITY HALL MUNICIPAL OFFICE PROFORMA Ann Arbor Civic Center

Year 2007 2008 2009 2010 2011 2012 2013 PROFORMA MODEL PARAMETERSRevenue Inflation Rate 2.85% Muni Office Construction Cost 28,985,047$

Muni Office Rents -$ -$ 2,668,217$ 2,740,160$ 2,960,109$ 3,035,839$ 3,111,569$ Construction Period Phase 2 Allocated Property Acquisition Cost 2,406,710$ Vacancy $ -$ -$ 140,432$ 144,219$ -$ -$ -$ Land Cost as % of Acquisition Cost 90%Reimbursed Leasee Costs 0 0 0 0 0 0 0 REVENUE Land Cost 2,166,039$ Gross Muni Office Rents -$ -$ 2,527,784$ 2,595,941$ 2,960,109$ 3,035,839$ 3,111,569$ Source Effective Area ( Rent Total

(SF) ($2007) ($2007) Depreciation Base 29,225,718$ Operating Expenses Municipal Office Space 115,530 23.00$ 2,657,189$ Years 39

Gas & Electric -$ 30,615$ 3,119$ 3,177$ -$ -$ -$ Deprciation/Year (straight line) 749,377$ Water & Sewer -$ 12,131$ 1,271$ 1,329$ -$ -$ -$ Year Vacancy Rate Rent Total Vacancy

Sub Total -$ 42,746$ 4,390$ 4,506$ -$ -$ -$ 2007 na na na FINANCINGInsurance -$ 35,647$ 36,663$ 37,708$ 38,782$ 39,888$ 41,024$ 2008 50% 1,366,460$ 1,366,460$ Loan to Value Ratio 75%Maintenance -$ 59,411$ 61,105$ 62,846$ 64,637$ 66,479$ 68,374$ 2009 5% 2,668,217$ 140,432$ Total Debt 21,738,786$ Janitorial -$ 89,117$ 91,657$ 94,269$ 96,956$ 99,719$ 102,561$ 2010 5% 2,740,160$ 144,219$ Interest Rate 6.25%Property Taxes -$ 356,468$ 366,627$ 377,076$ 387,823$ 398,876$ 410,243$ 2011 0% 2,960,109$ -$ Amortization Period (years) 30Management Fees -$ -$ 126,389$ 129,797$ 148,005$ 151,792$ 155,578$ 2012 0% 3,035,839$ -$ Annual Payment ($1,526,377)

7,246,262 Total Operating Expenses -$ 583,389$ 686,830$ 706,201$ 736,203$ 756,753$ 777,781$ 2013 0% 3,111,569$ -$ Total Equity $

Net Operating Income -$ (583,389)$ 1,840,954$ 1,889,740$ 2,223,906$ 2,279,086$ 2,333,788$ EXPENSES TAX RATESOperating Expenses Cost / SF Total Area (SF) Expense Total Federal Long Term Capital Gain +5 ye 15.0%

Less Debt Service -$ ($2007) Federal Ordinary Income 38.6%Before Tax Cash Flow -$ $ $ $ $ $ $ Insurance 0.30$ 115,530 34,659$ Michigan Long Term Capital Gain 4.2%

Plus Principal Reduction -$ 263,101$ 279,545$ 297,016$ 315,580$ 335,304$ 356,260$ Maintenance 0.50$ 115,530 57,765$ Michigan Ordinary Income 4.2%Less Depeciation -$ 749,377$ 749,377$ 749,377$ 749,377$ 749,377$ 749,377$ Janitorial 0.75$ 115,530 86,647$

Taxable Income -$ (2,596,042)$ (155,255)$ (88,998)$ 263,732$ 338,635$ 414,294$ Property Taxes 3.00$ 115,530 346,590$ GAIN ON SALESelling Price 34,290,008$

Cash Flow Summary Less Sales Fee 1,371,600$ Before Tax Cash Flow -$ (2,109,765)$ 314,577$ 363,363$ 697,529$ 752,709$ 807,411$ NNN Expenses Gas & Electric Water & Sewer Vacant SF Vacancy Cos

($1,526,377) ($1,526,377) ($1,526,377) ($1,526,377) ($1,526,377) ($1,526,377)(2,109,765) 314,577 363,363 697,529 752,709 807,411

t Less Cost 2,406,710$ Less Taxes -$ (1,111,106)$ (66,449)$ (38,091)$ 112,877$ 144,936$ 177,318$ (Cost / SF) (Cost / SF) ($2007) Plus Depreciation 4,496,264$

Equity Investments (7,246,262)$ -$ 2,707,886$ -$ -$ -$ -$ 2007 -$ -$ - -$ Taxable Gain 35,007,962$ Sales Proceeds -$ -$ -$ -$ -$ -$ 7,139,712$ 2008 0.53$ 0.21$ 57,765 42,746$ Capital Gain Tax (6,721,529)$

Total Cash Flow (7,246,262)$ 1,709,226$ 3,088,912$ 401,454$ 584,652$ 607,773$ 7,769,805$ 2009 0.54$ 0.22$ 5,776 4,390$ 2010 0.55$ 0.23$ 5,776 4,506$ Sales Proceeds 32,918,407$

Return on Equity -29.1% 4.3% 5.0% 9.6% 10.4% 11.1% 2011 0.56$ 0.24$ - -$ Loan Payoff (19,057,167)$ Debt Sevice Coverage 243.8% 333% 156% 167% 167% 635% 2012 0.57$ 0.25$ - -$ Capital Gain Tax (6,721,529)$

2013 0.58$ 0.26$ - -$ Cash Flow 7,139,712$ Gross Revenue 14,231,241$ NPV $2,113,251 Management Fees 5.00% ~of Gross Effective RentsIRR 18.5% Sales Fees 4.00%

Exit Capitalization Rate


7.00%



POLICE & COURTS (OFFICE) PROFORMA Ann Arbor Civic Center

Year 2007 2008 2009 2010 2011 2012 2013 PROFORMA MODEL PARAMETERSRevenue Inflation Rate 2.85% Justice Center Construction Cost 32,024,499$

Police and Courts Rents -$ -$ 2,999,191$ 3,080,058$ 3,160,926$ 3,241,793$ 3,322,661$ Construction Period Phase 1 Allocated Property Acquisition Cost 1,825,780$ Vacancy $ -$ -$ -$ -$ -$ -$ -$ Land Cost as % of Acquisition Cost 90%Reimbursed Leasee Costs 0 0 0 0 0 0 0 REVENUE Land Cost 1,643,202$ Gross Police Rents -$ -$ 2,999,191$ 3,080,058$ 3,160,926$ 3,241,793$ 3,322,661$ Source Effective Area ( Rent Total

(SF) ($2007) ($2007) Depreciation Base 32,207,077$ Operating Expenses Police & Courts Office 76,688 37.00$ 2,837,456$ Years 39

Gas & Electric -$ 10,161$ -$ -$ -$ -$ -$ Deprciation/Year (straight line) 825,822$ Water & Sewer -$ 4,026$ -$ -$ -$ -$ -$ Year Vacancy Rate Rent Total Vacancy

Sub Total -$ 14,187$ -$ -$ -$ -$ -$ 2007 na na na FINANCINGInsurance -$ 23,662$ 24,336$ 25,030$ 25,743$ 26,477$ 27,232$ 2008 25% 2,188,743$ 729,581$ Loan to Value Ratio 75%Maintenance -$ 39,437$ 40,561$ 41,717$ 42,906$ 44,128$ 45,386$ 2009 0% 2,999,191$ -$ Total Debt 24,018,374$ Janitorial -$ 59,155$ 60,841$ 62,575$ 64,358$ 66,193$ 68,079$ 2010 0% 3,080,058$ -$ Interest Rate 6.25%Property Taxes -$ 236,621$ 243,365$ 250,300$ 257,434$ 264,771$ 272,317$ 2011 0% 3,160,926$ -$ Amortization Period (years) 30Management Fees -$ -$ 149,960$ 154,003$ 158,046$ 162,090$ 166,133$ 2012 0% 3,241,793$ -$ Annual Payment

Total Operating Expenses -$ 373,062$ 519,062$ 533,625$ 548,488$ 563,659$ 579,147$ 2013 0% 3,322,661$ -$ Total Equity $

Net Operating Income -$ (373,062)$ 2,480,128$ 2,546,433$ 2,612,438$ 2,678,135$ 2,743,514$ EXPENSES TAX RATESOperating Expenses Cost / SF Total Area (SF) Expense Total Federal Long Term Capital Gain +5 15.0%

Less Debt Service -$ ($2007) Federal Ordinary Income 38.60%Before Tax Cash Flow -$ $ $ $ $ $ $ Insurance 0.30$ 76,688 23,006$ Michigan Long Term Capital Gain 4.20%

Plus Principal Reduction -$ 290,690$ 308,859$ 328,162$ 348,672$ 370,464$ 393,618$ Maintenance 0.50$ 76,688 38,344$ Michigan Ordinary Income 4.20%Less Depeciation -$ 825,822$ 825,822$ 825,822$ 825,822$ 825,822$ 825,822$ Janitorial 0.75$ 76,688 57,516$

Taxable Income -$ (2,594,631)$ 276,728$ 362,336$ 448,851$ 536,340$ 624,873$ Property Taxes 3.00$ 76,688 230,064$ GAIN ON SALESelling Price 40,310,059$

Cash Flow Summary Less Sales Fee 1,612,402$ Before Tax Cash Flow -$ (2,059,499)$ 793,692$ 859,997$ 926,001$ 991,698$ 1,057,077$ NNN Expenses Gas & Electric Water & Sewer Vacant SF Vacancy Cos

($1,686,437)8,006,125

($1,686,437) ($1,686,437) ($1,686,437) ($1,686,437) ($1,686,437) ($1,686,437)(2,059,499) 793,692 859,997 926,001 991,698 1,057,077

t Less Cost 1,825,780$ Less Taxes -$ (1,110,502)$ 118,440$ 155,080$ 192,108$ 229,554$ 267,446$ (Cost / SF) (Cost / SF) ($2007) Plus Depreciation 4,954,935$

Equity Investments (8,006,125)$ 2,707,886$ -$ -$ -$ -$ -$ 2007 -$ -$ - -$ Taxable Gain 41,826,811$ Sales Proceeds -$ -$ -$ -$ -$ -$ 9,611,355$ 2008 0.53$ 0.21$ 19,172 14,187$ Capital Gain Tax (8,030,748)$

Total Cash Flow (8,006,125)$ 1,758,889$ 675,252$ 704,917$ 733,893$ 762,145$ 10,400,987$ 2009 0.54$ 0.22$ - -$ 2010 0.55$ 0.23$ - -$ Sales Proceeds 38,697,656$

Return on Equity -25.7% 9.9% 10.7% 11.6% 12.4% 13.2% 2011 0.56$ 0.24$ - -$ Loan Payoff (21,055,554)$ Debt Sevice Coverage 236.0% 171% 171% 172% 172% 742% 2012 0.57$ 0.25$ - -$ Capital Gain Tax (8,030,748)$

2013 0.58$ 0.26$ - -$ Cash Flow 9,611,355$ Gross Revenue 15,804,629$ NPV $1,387,378 Management Fees 5.00% ~of Gross Effective RentsIRR 14.3% Sales Fees 4.00%

Exit Capitalization Rate


7.00%



RENTAL CONDO PROFORMA Ann Arbor Civic Center

Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 PROFORMA MODEL PARAMETERSRevenue Inflation Rate 2.85% Retail Construction Cost 14,697,517$

Rental Condo Rents -$ -$ -$ 484,786$ 1,603,027$ 2,036,103$ 1,911,674$ 1,985,200$ 2,058,726$ Construction Period Phase 3 Allocated Property Acquisition Cost 1,493,820$ Vacancy $ -$ -$ -$ 1,227,883$ 360,035$ 184,623$ 170,305$ 174,450$ 178,595$ Land Cost as % of Acquisition Cost 90%Reimbursed Leasee Costs 0 0 0 0 0 0 0 0 0 REVENUE Land Cost 1,344,438$ Gross Rental Condo Rents -$ -$ -$ (743,097)$ 1,242,992$ 1,851,480$ 1,741,369$ 1,810,750$ 1,880,131$ Source Effective Area ( Rent Total

(SF) ($2007) ($2007) Depreciation Base 14,846,899$ Operating Expenses Rental Condos 76,190 21.21$ 1,615,955$ Years 39

Gas & Electric -$ -$ -$ 29,333$ 8,533$ 4,343$ 3,977$ 4,114$ 4,114$ Deprciation/Year (straight line) 380,690$ Water & Sewer -$ -$ -$ 12,267$ 3,657$ 1,905$ 1,783$ 1,851$ 1,920$ Year Vacancy Rate Rent Total Vacancy

Sub Total -$ -$ -$ 41,600$ 12,190$ 6,248$ 5,760$ 5,966$ 6,034$ 2007 na na na FINANCINGInsurance -$ -$ -$ 24,868$ 25,576$ 26,305$ 27,055$ 27,826$ 28,619$ 2008 na na na Loan to Value Ratio 75%Maintenance -$ -$ -$ 41,446$ 42,627$ 43,842$ 45,091$ 46,377$ 47,698$ 2009 na na na Total Debt 11,023,138$ Janitorial -$ -$ -$ 62,169$ 63,941$ 65,763$ 67,637$ 69,565$ 71,547$ 2010 70% 484,786$ 1,227,883$ 0% Interest Rate 7.50%Property Taxes -$ -$ -$ 248,675$ 255,762$ 263,052$ 270,548$ 278,259$ 286,190$ 2011 20% 1,603,027$ 360,035$ 6% Amortization Period (years) 30Management Fees -$ -$ -$ (18,577)$ 31,075$ 46,287$ 43,534$ 45,269$ 47,003$ 2012 10% 2,036,103$ 184,623$ 8% Annual Payment ($868,226)

3,674,379Total Operating Expenses -$ -$ -$ 400,180$ 431,171$ 451,496$ 459,626$ 473,261$ 487,092$ 2013 9% 1,911,674$ 170,305$ 5% Total Equity $ 2014 9% 1,985,200$ 174,450$ 5%

Net Operating Income -$ -$ -$ (1,143,276)$ 811,821$ 1,399,984$ 1,281,743$ 1,337,489$ 1,393,039$ 2015 9% 2,058,726$ 178,595$ 5% TAX RATESFederal Long Term Capital Gain +5 y 15.0%

Less Debt Service -$ -$ -$ EXPENSES Federal Ordinary Income 38.6%Before Tax Cash Flow -$ -$ -$ ($ $ $ $ $ $ Operating Expenses Cost / SF Total Area (SF) Expense Total Michigan Long Term Capital Gain 4.2%

Plus Principal Reduction -$ -$ -$ 123,198$ 132,438$ 142,371$ 153,049$ 164,527$ 176,867$ ($2007) Michigan Ordinary Income 4.2%Less Depeciation -$ -$ -$ 380,690$ 380,690$ 380,690$ 380,690$ 380,690$ 380,690$ Insurance 0.30$ 76,190 22,857$

Taxable Income -$ -$ -$ (2,268,994)$ (304,657)$ 293,439$ 185,876$ 253,101$ 320,991$ Maintenance 0.50$ 76,190 38,095$ GAIN ON SALEJanitorial 0.75$ 76,190 57,143$ Selling Price 20,467,726$

Cash Flow Summary Property Taxes 3.00$ 76,190 228,570$ Less Sales Fee 1,023,386$ Before Tax Cash Flow -$ -$ -$ (2,011,502)$ (56,405)$ 531,758$ 413,517$ 469,263$ 524,813$ Less Cost 1,493,820$

Less Taxes -$ -$ -$ (971,129)$ (130,393)$ 125,592$ 79,555$ 108,327$ 137,384$ Plus Depreciation 2,284,138$ Equity Investments -$ -$ (3,674,379)$ 1,353,943$ -$ -$ -$ -$ -$ NNN Expenses Gas & Electric Water & Sewer Vacant SF Vacancy Cos

($868,226) ($868,226) ($868,226) ($868,226) ($868,226) ($868,226)2,011,502) (56,405) 531,758 413,517 469,263 524,813

t

Taxable Gain 20,234,658$ Sales Proceeds -$ -$ -$ -$ -$ -$ -$ -$ 5,881,220$ (Cost / SF) (Cost / SF) ($2007) Capital Gain Tax (3,885,054)$

Total Cash Flow -$ -$ (3,674,379)$ 313,570$ 73,988$ 406,166$ 333,962$ 360,936$ 6,268,649$ 2007 -$ -$ - -$ 2008 0.53$ 0.21$ - -$ Sales Proceeds 19,444,340$

Return on Equity 0.0% 0.0% -54.7% -1.5% 14.5% 11.3% 12.8% 14.3% 2009 0.54$ 0.22$ - -$ Loan Payoff (9,678,066)$ Debt Sevice Coverage 0.0% 0.0% 166% 137% 174% 165% 166% 845% 2010 0.55$ 0.23$ 53,333 41,600$ Capital Gain Tax (3,885,054)$

2011 0.56$ 0.24$ 15,238 12,190$ Cash Flow 5,881,220$ Gross Revenue 7,783,625$ 2012 0.57$ 0.25$ 7,619 6,248$ NPV $879,721 2013 0.58$ 0.26$ 6,857 5,760$ IRR 15.0% 2014 0.59$ 0.27$ 6,857 5,897$

2015 0.60$ 0.28$ 6,857 6,034$

Management Fees 2.50% ~of Gross Effective RentsSales Fees 5.00%Exit Capitalization Ra


7.00%


Rental Rate Inflation


B. Construction Cost Worksheets


Rough estimate of hard costs Ann Arbor Civic Centerresidential +retailSite construction Unit price quantity unit Cost Assume 15 ft excavcationMobilization 1 LS 50,000.00 longuer 164excavation 8.3 10933.33 CY 90,746.67 largeur 120Wood Shoring(16 feet deep) 10.5 8520 SF 89,460.00Backfill and hauling 6.8 13120 CY 89,216.00 depth of exc 15Concrete raft foundation Assume 4in per 10 ft floorraft foundation 120 70848 CY 8,501,760.00 height of bldg 135Basement walls 120 210.3704 CY 25,244.44 num of floors 8Slab on grade 120 2429.63 CY 291,555.56 walls 120 2103.704 CY 252,444.442 floor underground parking 120 39360 SF 4,723,200.00columns(1.3 feet D, 10 per floor) 120 39.30815 CY 4,716.98 Steel ratioSteel steel ratio per footing 80kg/m3 0.06 rebars all sizes 600 4419.878 T 2,651,926.73 Steel ratio per walls and col 120 kg /m3 0.093Doors and windowsregular windows 400 240 each 96,000.00Wood doors(foam insulated doo 460 70 each 32,200.00FacadesGlass 37.7 1500 SF 56,550.00Bricks 6.05 22720 SF 137,456.00 finishesInterior finishes 1 1 LS 5,000,000.00Mechanicalplumbing 2 19680 sf 39,360.00HVAC system 15 19680 sf 295,200.00Electricalelectrical systems 16 19680 sf 314,880.00Speciality equipmentsElevators 60000 2 each 120000sprinklers 6 157440 SF 944640

total 23,806,556.82 $ 151.21 $/SF

Residential 100.00 $/SF



Rough estimate of hard costs Ann Arbor Civic CenterCity HallSite construction Unit price quantity unit Cost Assume 15 ft excavcationMobilization 1 LS 50,000.00 longuer 70excavation 8.3 9,333.33 CY 77,466.67 largeur 240Wood Shoring(16 feet deep) 10.5 9,300.00 SF 97,650.00Backfill and hauling 6.8 11,200.00 CY 76,160.00 depth of ex 15Concrete raft foundation Assume 4in per 10 ft floorraft foundation 120 56,000.00 CY 6,720,000.00 height of bl 171Basement walls 120 229.63 CY 27,555.56 num of floo 7Slab on grade 120 1,814.81 CY 217,777.78 walls 120 2,322.96 CY 278,755.56columns(1.3 feet D, 10 per floor) 120 34.39 CY 4,127.36Steel steel ratio per footing 80kg/m3 0.06 rebars all sizes 600 3,709.48 T 2,225,687.22 Steel ratio per walls an120 kg /m3 0.093Doors and windowsDouble glazzed with low e-coating and inner gas fill 1260 70.00 each 88,200.00Wood doors(foam insulated doors)(60 $/year) 460 150.00 each 69,000.00 scale/cmFacades 432 14 30.85714Bricks 6.05 18,596.00 SF 112,505.80 262.2857Glass 37.7 31,310.80 SF 1,180,417.16Clock tower ( Big Ben Style ) 150000 1.00 LS 150,000.00 finishesInterior finishes 5,000,000.00Additional items (green stuff )30000 Storage tank 20000 1.00 LS 20,000.00green roof 15 16,800.00 SF 252,000.00Mechanicalplumbing 2 16,800.00 sf 33,600.00HVAC system 15 16,800.00 sf 252,000.00Electricalelectrical systems 16 16,800.00 sf 268,800.00Speciality equipmentsElevators 60000 2.00 each 120000sprinklers 6 117,600.00 SF 705600security cameras 2000 20.00 40000

Total 18,067,303.09 153.63 $/SF



Rough estimate of hard costs Ann Arbor Civic Centerpolice+court Assumptions Site construction Unit price quantity unit Cost Assume 15 ft excavcation 1Mobilization 1 LS 50,000.00 length 70excavation 8.3 9333.333 CY 77,466.67 width 240Wood Shoring(16 feet deep) 10.5 9300 SF 97,650.00Backfill and hauling 6.8 11200 CY 76,160.00 depth of exc 15clearing and grubbing 1 16800 SF 16,800.00Concrete raft foundation Assume 4in per 10 ft floorraft foundation 120 61600 CY 7,392,000.00 height of bldg 110Basement walls 120 229.6296 CY 27,555.56 num of floors 7Slab on grade 120 1814.815 CY 217,777.78 walls 120 3016.296 CY 361,955.562 floor underground parking 120 33600 SF 4,032,000.00columns(1.3 feet D, 10 per floor) 120 34.39463 CY 4,127.36 Steel ratiosSteel steel ratio per footing 80kg/m3 0.06 t/cy rebars all sizes 600 3829.443 T 2,297,665.89 Steel ratio per walls and col 120 kg /m3 0.093 t/cyDoors and windowsglazzed windows(160$/yr saving) 1260 140 each 176,400.00Wood doors(foam insulated doors)(60 $/year) 460 70 each 32,200.00FacadesBricks 6.05 24451 SF 147,928.55Glass 37.7 6160 SF 232,232.00 finishesInterior finishes 5,000,000.00Additional items (green stuff )30000 Storage tank 20000 1 LS 20,000.00green roof 15 16800 LS 252,000.00Landscaping 20 16800 SF 336,000.00Mechanicalplumbing 2 16800 sf 33,600.00HVAC system 15 16800 sf 252,000.00Electricalelectrical systems 16 16800 sf 268,800.00Speciality equipmentsElevators 135000 2 each 270000sprinklers 6 117600 SF 705600Security doors (heavy ) 10 1000 each 10000Security doors (medium ) 40 500 each 20000jail cell fittings 500000 1 LS 500000security cameras 2000 20 40000Allen Bradley control panel 500000 2 1000000

Total 26,853,503.22 228.35 $/SF


C. Downtown Map This map highlights the areas nearby the Civic Center (highlighted in yellow) within walking distance. As you can see the Civic Center is at the natural center of downtown Ann Arbor’s major attractions. Kerry Town, Main Street retail, and State Street retail surround the site. Original map was provided by the Ann Arbor DDA.



D. Resumes

Master of U

rban P

lanning Candidate – U

niversity of Michigan

, Expected 200

8 A

nn Arbor M

ichigan

Concentration in housing, com

munity, and econom

ic development planning

Relevant grad

uate coursework: P

lanning The

ory, Pu

blic Econom

ics, Quantitative M

ethods, L

egal A

spects of the Planning P

rocess, Real E

state Develop

ment, an

d Pro

fessional Planning P

ractice B

achelor of the A

rts in Public H

istory – Western M

ichigan University, A

pril 2005 K

alamazoo, M

ichigan

Minor in P

ublic Adm

inistration

R

elated Experiences

Assistant M

anager S

eptember 20

03-August 200

5 M

ichigan New

s Age

ncy, Kalam

azoo

R

ecorded, tracked, and m

aintained inventory of over 6,000 different magazine titles and 1

5,000 b

ooks. O

perated register w

hile dealing with custom

ers and answering m

ulti-line phones. Delegated

responsibility to other em

ployees and interacted w

ith vendors wh

en man

ager was not prese

nt. C

omputer S

kills

Intern Winter 2007

Detroit E

conom

ic Grow

th Corporation

Developed 3 dim

ensional model of the E

ast Riverfron

t District using G

oogle Earth and S

ketchUp

programs.

Internship Coordinator 2006-present

University of M

ichigan Urba

n Planning D

epartment

O

rganized week-long intern

ships for 15 urban planning students over spring break.

Intern Sum

mer 20

05 C

ity of Kalam

azoo Econ

omic D

evelopment D

epartm

ent

Updated inform

ation on Bro

wnfield sites in K

alamazoo. R

esearched M

ichigan tax abateme

nt programs.

Intern Fall 2003

City of K

alamazoo H

istoric Preservation D

epartm

ent

Interacted w

ith panel of diverse city and non-profit em

ployees to organize and cre

ate the D

owntow

n D

esign Review

standards for the City of K

alamazoo

. Observed an

d aided Historic D

istrict Coordinator

with daily functions. O

riginated and developed a N

ational Historic R

egister Survey R

eport for an area in

the Vine/E

dison Neighborh

ood. A

dditional Experience

Tim

othy N P

arham

423 High S

t. ? A

nn Arbor, M

I 48104

(517) 879-9

362 ?

tpar@um

ich.edu

Education

• M

icrosoft Office – E

xcel, Wo

rd, and Pow

erPoint

• S

PS

S experience

• G

oogle Earth and S

ketchU

p



ROBERT F. FLYN

N

2513 Packard St., Apt. E • Ann Arbor, MI 48104

[email protected] • 781.258.8739

EDUCATIO

N UN

IVERSITY OF M

ICHIG

AN

Ann Arbor, MI

Stephen M. Ross School of Business

M

aster of Business Administration, M

ay 2008

Emphases in Real Estate & General M

anagement

Elected Vice President of Alum

ni Relations for Real Estate Club

Appointed to admitted students w

eekend fundraising comm

ittee

Recipient of Michigan Distinguished Leaders Aw

ard Scholarship

GMAT score 720, 96th percentile

EXPERIENCE CITIG

ROUP G

LOBAL CO

RPORATE &

INVESTM

ENT BAN

K

Boston, MA

2003-2006 Associate-Equity Sales, Institutional Investor G

roup, 2005-2006

M

anaged operational integration of 16 institutional equity relationships working cross

functionall y with senior equity m

anagement, equity traders m

iddle & back officeoperations

Initiated & developed proprietary "deal sheet" product speeding dissem

ination &accurac y of m

anaged offering information across Citigroup offices, w

hile reducingredundancies

Generated & sold proprietary m

orning call summ

ary product to portfolio managers &

research analysts as competitive response to com

mission com

pression

Identified opportunities to automate accounts resulting in $50,000 of annual cost savings

Registered Associate to Institutional Investor Group, 2003-2005

Initiated contact w

ith & presented research investment ideas to, portfolio m

anagers &analysts im

pacting their investment m

anagement process

M

arketed research product related to proprietary conferences, webcasts, m

eetings with

Citigroup analysts & conference calls

Originated investment ideas & custom

ized product flow to clients--synthesizin

proprietary fundamental, technical, quantitative, econom

ic & futures research

CITIG

ROUP G

LOBAL M

ARKETS INC. SM

ITH BARN

EY 2001-2003

Registered Sales Assistant

Assembled firm

's retail s

g

yndicate book with m

anagement & com

pletedappropriate due diligence on indications of interest for m

anaged offerings

Built & strengthened relationships with high net w

orth individuals bidentifying client's financial goals, concerns and cross-sellinproducts

Summ

er 2000 Intern •

Trained over one hundred financial advisors on the benefits & functionality of Smith Barne

gy

appropriate

y


online"Access" platform

AD

DITIO

NAL

• Proficient w

ith ARGUS, Microsoft Office and M

icrosoft Explorer


Toufic Fakih

1929 Plymouth rd apt 4018

Ann A

rbor, MI 48105

Phone: 734 239-4925 E-m

ail: tfakih@um

ich.edu ================================================================================== O

BJE

CT

IVE

Seeking a challenging position in a progressive organization that offers opportunities for advancem

ent and where m

y skills can be used and developed. E

DU

CA

TIO

N U

niversity of Michigan – C

ollege of Engineering A

nn Arbor, M

I M

.Eng. Construction M

anagement Sep 06-Present

Fall G

PA: 4.0

Expected graduation date: June 2007 A

merican U

niversity of Beirut B

eirut, Lebanon B.Eng - C

ivil engineering Oct 00-June 04

E

XPE

RIE

NC

E C

onsolidated Contractors International C

ompany A

bu Dhabi, U

AE

Sept05-Aug 06

• W

orked within the M

aterials and Estimation D

epartment

• H

andled the cost estimating of m

aterials required for international projects in A

frica, the Middle East, and the C

aribbean •

Com

municated w

ith different vendors and subcontractors to inquire about pricing and other issues w

e had •

Applied engineering and econom

ics principles to compare different

service/material quotes and m

ake design decisions based on prices and technical com

pliance •

Performed quantity surveying and take offs and prepared bill of quantities

as a primary step in estim

ating heavy civil projects A

SHA

DA

GR

OU

P Beirut, Lebanon

Mar05-Sep05

- W

orked within the Project B

idding Departm

ent, responsible for projects in Q

atar, Sudan and Lebanon -

Prepared tender documents and bill of quantities

- Interacted w

ith suppliers and subcontractors to get price quotes -

Performed quantity take offs and surveying

- C

ompleted several A

utoCA

D draw

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38


38Pirate Developers, LLC, “Unlocking Civic Treasures” Civic Treasures” Pirate Developers, LLC, “Unlocking


REFERNCES 1 http://www.pps.org/civic_centers/info/civic_centers_approach

2 www.cityofseattle.net/sustainablebuilding

3 http://www.pps.org/great_public_spaces/one?public_place_id=756

4 http://www.cityofwarren.org/default.asp?norelay_hier_id_D1966B0=43&area_2=comm%2Fwarrendowntown&NC=2462X

5 http://www.pps.org/great_public_spaces/one?public_place_id=148

6 City Council: President's Day Edition19. February 2007, reference by online user; Juliew

7 City Planning Commission Public Hearing - January 18, 2007

8 City of Ann Arbor; Calthorpe Findings Rev., Jan 2006

9 Ann Arbor in the 20th Century: A Photographic History By Grace Shackman

10 Ann Arbor in the 20th Century: A Photographic History By Grace Shackman

11 Discussion with Jeff Kahan, Ann Arbor City Planner, March 19th, 2007.

12 Memo from Roger Fraser, City Administer; SUBJECT: Resolution to Approve a Professional Services Contract with Quinn Evans|Architects for the Planning and Design of the Ann

Arbor Municipal Center, March 5,2007

13 Peter Allen, A Response to the Request For Proposal Issued by the City of Ann Arbor Regarding 350 S. Fifth Avenue; March 3, 2005.

14 Ann Arbor Business Review; Behind the Google deal: A win-win for McKinley; Thursday, December 14, 2006

15 Resolution to Authorize City Administrator to Pursue the Guy C. Larcom Site for the Fifteenth District Court and Police; R218-05-6, City of Ann Arbor 16 City of Ann Arbor, Online Topographic Maps, http://www.ci.ann-arbor.mi.us/CommunityServices/Planning/Planning/mapdocs.html 17 City of Ann Arbor; Calthorpe Findings Rev., Jan 2006

18 City of Ann Arbor; Calthorpe Findings Rev., Jan 2006

19 Tecumseh Group, Inc; TipMaster (http://www.tipmaster.com) web site

20 E-Source companies, LLC.

21 http://www1.eere.energy.gov/femp/services/awards_presidential2004.html

22 Builders guide to energy efficient homes; U.S. Department of Energy: http://www.eere.energy.gov/buildings//building_america/ 23 Informal survey conducted by Aaron Rath from about March 1, 2007 to March 23, 2007 24 Alfred A. Arrajj U.S. Courthouse; Denver, Colorado: http://www.nrel.gov/docs/fy05osti/38655.pdf

25 http://www.camerasecuritynow.com/CCTV-Cameras/Dome.asp

26 http://www.ci.issaquah.wa.us/Page.asp?NavID=282

27 The Economic Outlook For Washtenaw County in 2007-2009 page 23 28 Citigroup, Smith Barney, Municipal Bond Inventory Offerings, April 13, 2007 29 Ann Arbor City Council and DDA WORK SESSION Meeting Minutes; February 12, 2007


30 ULI Mixed Use Development Handbook; Urban Land Institute, 2005

http://arborupdate.com/article/1469/city-council-presidents-day-edition

http://arborupdate.com/meta/7/about-this-site

https://web.mail.umich.edu/horde/services/go.php?url=http%3A%2F%2Fwww.camerasecuritynow.com%2FCCTV-Cameras%2FDome.asp

https://web.mail.umich.edu/horde/services/go.php?url=http%3A%2F%2Fwww.ci.issaquah.wa.us%2FPage.asp%3FNavID%3D282

Documents

A Model of Civic, Environmental, and Economic Leadershiptpar/work/Ann_Arbor_Civic_Center.pdf · The Ann Arbor Civic Center A Model of Civic, Environmental, and Economic Leadership