Taking Summit Plaza from Acquisition to Recapitalization:

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Cuthbert Norris
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1 Taking Summit Plaza from Acquisition to Recapitalization: Leveraging Operations, Utility, and Environmental Costs Redeveloped by: Belveron RE Partners & Low Income Housing Corp (LIHC) Summit Plaza Jersey City, NJ 483 Units Project Based Section 8 Site

2 etc. Original Site and Current Site,

3 Location, Location, Location 5 minute walk to Journal Square PATH 11 minute train to World Trade Center 22 minute train to Penn Station (34 th Street) Summit Plaza Transit Station

4 HUD Operation Breakthrough: Innovative Construction and Systems

5 Innovative Systems: 1970s Off Grid Living for 1,150 Residents

6 Innovative Systems: Labor Saving Pneumatic Trash Collector

7 Modular Construction 1.0 and Transit Oriented Development vs. Today 18 story construction with concrete box prefabricated slide-in-place modules

8 Deep Dive on Mechanical Due Diligence: Legacy Issues

9 Finding Root Cause: The First Day of the Next 40 years HVAC: Operating and Maintenance Cost Creative Thinking: Challenge Replace in Kind Mentality Holistic: Multiple Benefits from each Expenditure With Underwriting of Savings The Sum is Greater Than the Addition of the Parts Due Diligence Leads To Two Key Contractors and No GC

10 Environmental Clean Up Reduces Cost and Allows HUD Approval ISSUES Active NJ DEP case Annual Permitting and Testing Title V Air Permit Tanks, Tanks, Tanks RESULTS: Clean Site $65,000/yr Savings

11 The Legacy Amenity: Pool $666/day This: OR:

12 2018 Summit Plaza Resident Experience All This AND Net Savings $20,000/year Security Office with Window onto Site New Lobby Infill New Community Room Resident Services Coordinator

13 Rockport Mortgage Translated Vision to HUD Rockport guidance during due diligence helped team quantify savings Rockport Mortgage translated our vision to HUD Quantifiable data provided to HUD resulted in no pushback from National Loan Committee Two independent sources of documentation with such large amounts of energy and operational savings underwritten was very critical (Sparhawk Group and PSE&G) Leveraged the energy and operation savings at 75% of expected savings Emphasized prior track record of reducing operational expense

14 RESULTS Annual Operating Expense Savings, $ Millions Base Year $0 $1.100 $ ,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Annual Operating Cost: Dollars Per Unit $14,000 $11,700 $10, Actuals 2018 Estimated New Loan Base Underwriting Loan

15 Rough Waters: New Approaches, New Tools & New Crew

16 Think Outside Replace In Kind Step 1: Starting Point Cost Original PSE&G $1.5 million Incentive $774,000 Savings/yr $129,000 Payback After Incentive 5.6 years Original Utility Incentive Project Step 2: Owner Advocate + Due Diligence Cost Incentive Expanded PSE&G $3.6 million $2.3 million Savings/yr $382,000 Payback After Incentive 3.5 years Expanded Utility Incentive Project Owner Infrastructure

17 Think Whole Site AND Total Cost of Operation Cost Cost Step 1: Starting Point Incentive Savings/yr PSE&G + Owner Payback after Incentive Original PSE&G $1.5 million Incentive $774,000 Savings/yr $129,000 Payback after Incentive 5.6 years Step 3: Total Cost of Operation $11.2 million $2.9 million $1.6 million 5.0 years Original PSE&G Project Expanded Utility Incentive Project $3.6 + $1.6 + $6 - $2.9 Incentive - $0.2 ITC = $8.1 Million NET Cost Entire Owner Project: Utility Infrastructure, Windows, Water Conservation, Combined Heat and Power, Solar PV, Controls

18 Identifying Root Needs and Causes

19 Identifying Root Needs and Causes

20 Root Causes: Right Sizing For Savings

21 Creative Solutions Reduce Capital Cost and Operation Cost

22 Documented Operations Savings: $481,000 per year, $1,000 per unit 2015 Purchase Order for Operations and Maintenance MECHANICAL Contractor Building Service Description 2015 Sum of Purchase Orders Eliminated Heating Repairs *1 Remaining Plmb & Heat Repairs Estimated Materials Estimated invoice labor *2 Labor Savings $110 vs $225/hr *3 483 Units New Budget Budget per unit Prestige 625 plmb/heat repairs $42,014 $21,175 $20,838 $4,168 $16,671 $8,669 $12,170 Prestige 627 plmb/heat repairs $53,810 $16,762 $37,049 $7,410 $29,639 $15,412 $21,636 Prestige 700 plmb/heat repairs $159,286 $90,624 $68,662 $13,732 $54,930 $28,563 $40,099 Prestige 730 Bldg 730, all 2015 $318,815 Prestige 730 Sprinkler Engineering $55,000 Prestige 730 Sprinkler Permits $44,000 Prestige 730 New DHW $123,519 Prestige 730 only plmb/heat repairs $96,296 $26,894 $69,402 $55,521 $28,871 $26,650 Prestige other $5,404 $1,980 $3,424 $1,712 $890 $822 Prestige central plant mixed capital & operating $73,436 $23,406 $50,030 $25,015 $13,008 $12,007 Mechanical Total without capital projects $356,809 $180,840 $249,404 $183,487 $95,413 $80,555 $167 ELECTRICAL Contractor Building Service Description 2015 Sum of Purchase Orders Eliminated Heating Repairs *1 Lighting Fixture/Lamp Savings *4 One Time Install GFI Cost *5 New Budget Statsi All work $234,785 Statsi 700 new sprinkler panel 700 $111,344 Statsi 730 new sprinkler panel 730 $13,696 Statsi All work Non-capital projects $109,745 $4,593 $31,986 $31,986 $41,180 $85 Universal All buildings Non-capital projects $97,858 $23,258 $74,601 $154 Electrical Total without capital projects $207,603 $27,850 $31,986 $31,986 $115,781 $240 SUPPLIES Contractor Building All supplies for consumables, repairs and unit turns 2015 Sum of Purchase Orders Eliminated Toilets As All Will Be Replaced *6 New Budget HD Supply All $121,053 $8,878 $112,176 $232 Total of 2015 Purchase Orders/Invoices, no capital projects $905,334 $424,292 $878 Projected Annual Savings $481,041

23 Cost ($/month) Monthly Power Cost: 291 Units, 2 Buildings, plus Central Plant 2015/2016/ ,000 60,000 50,000 40,000 30,000 20,000 10,000 - February March April May June July August September October November December January

24 Electric Power Demand: 291 Units, 2 Buildings, plus Central Plant 2015/2017 May June July August September October November December Demand (kw) Demand 2017 Demand 2015 Demand Trendline 2017 Demand Trendline

25 Cost ($/unit-month) Site Wide Water and Sewer Savings 2015/2017 $80 April 1 to December 31, 34% Savings, $325/unit annualized savings $70 $60 $50 $40 $30 $20 $10 $- Percent Savings January February March April May June July August September October November December 4% 24% 41% 42% 46% 30% 42% 45% 40% 50% 39% 39%

26 Cost ($/unit-month) Cooling Tower Water Savings: 6.4 gpm/24/7 for four summer months! 2015/2017 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $- Percent Savings June July August September Month 49% 53% 64% 79%

27 Cost ($/unit-month) Gas and Electric Savings: Not Weather Normalized, 2015/2017/2018 $300 $250 $200 $150 $100 $50 $- Percent Savings May June July August September October November December January 40% 33% 29% 36% 36% 52% 48% 40% 40% 2017/2015 HDD % 49% 145% 197% 93%

More Savings to Come: February 2018 Usage (kw) 350 300 250 200 150 100 50 Daily Electric

28 More Savings to Come: February 2018 Usage (kw) Daily Electric Power Usage (Feb 5, 2018) Building Cogen Power 0 0:00 4:00 8:00 12:00 16:00 20:00 0:00 Time

29 Holistic Approach is Greater Than The Sum of Parts $3.6 + $1.6 + $6 - $2.9 MM Incentive - $0.2 ITC = $8.1 million NET Cost PSE&G + Owner Cost $11.2million Incentive $2.9 million Savings/yr $1.6 million Payback 5.0 years Expanded Utility Project Entire Owner Project: Utility Infrastructure, Windows, Combined Heat and Power, Solar PV, Controls Year Portfolio Manger Energy Benchmark HUD Water Benchmark * * - Projected Use Based on 2017 Savings

30 Thank You! Amy Johnson Portfolio Management Belveron RE Partners Matthew Holden, P.E. President Sparhawk Group

Distributed PV and Third-Party Financing 101 for Utilities August 8, 2013

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