Project Name: Saint Francis Apartments at Cathedral Square. Project Address: 1400 Block North Washington Street, Denver, CO 80203

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1 Project Name: Saint Francis Apartments at Cathedral Square Project Address: 1400 Block North Washington Street, Denver, CO The St. Francis Center is proposing the new 50 unit Saint Francis Apartments at Cathedral Square for funding from Colorado Housing and Finance Authority. Saint Francis Apartments will utilize a tried and true Housing First model to combat homelessness within the City of Denver and will provide permanent supportive services necessary to overcome chronic homelessness. The proposed development is ideally located to provide convenient services and amenities to individuals and families who may not otherwise have resources available to take advantage of opportunities necessary to advance their lives. Saint Francis Apartments will be located at the 1400 Block of North Washington Street in the Capitol Hill Neighborhood of Denver. The project will be proximate to a number of services and amenities, a key factor in the fight against homelessness. Saint Francis Apartments will be built on land currently owned by Clarkson Corp, a wholly owned subsidiary of St. John s Cathedral. Upon successful award of funding Clarkson Corp will execute a 55 year ground lease to Saint Francis Apartments LLLP, of which St. Francis Center will be the managing member of the General Partner, Saint Francis Development LLC. The project will consist of one six story building with podium parking and a lobby/reception area on the ground floor. The building s second story will contain approximately 2,669 square feet of common and service space which will include a large common/dining room, a meeting room, a library/computer lab, a central laundry facility, and six apartments. Floors three through five will each have twelve apartments and floor six will have eight apartments and a large outdoor terrace. One of the apartments will be a manager s unit. Strengths Saint Francis Apartments will be owned by St. Francis Center, an experienced advocate for Denver s homeless and current manager of Cornerstone Apartments, a 50 unit permanent supportive housing project on Park Avenue West. Cornerstone Apartments follows the Housing First model that will be the foundation for Saint Francis Apartments. St. Francis Center will operate the services component of Saint Francis Apartments, while LIHTC compliance and day

2 to day property management will be performed by The Ross Management Group, an extremely knowledgeable property management company based in Denver with experience in LIHTC, HOME and Section 8 project based vouchers. The St. Francis Center and The Ross Management Group will work collaboratively at Saint Francis Apartments to create an environment conducive to permanently overcome homelessness. The proposed project is ideally located in Denver s Capitol Hill neighborhood, providing convenient amenities and services to a population that traditionally does not have independent transportation. The project achieved a 95 walk score, ranking as a walker s paradise and nearly 30 points higher than the average of surveyed comparables as well as close to 40 points higher than the Denver average for multi family projects. The project also achieved a transit score of 78, over 20 points higher than the average of surveyed comparables and more than 30 points higher than the Denver average for multi family projects. Additionally, Denver is experiencing a period of extreme demand for homeless housing. According to the market study provided by Melanie Rees, the proposed project would achieve a 1.1% capture rate within the market. Not only does this speak to the incredible demand for homeless housing, but also to the future stability of the project as evidenced by the low vacancy rate and long wait lists at comparable properties. One hundred percent of affordable units at Saint Francis Apartments will be supported by Housing Choice Vouchers, allowing for all units to serve Denver s homeless population. Twenty five vouchers have been committed by Denver Housing Authority and the project has applied to the Colorado Department of Local Affairs Division of Housing for the remaining 24 vouchers, which will be administered by the Mental Health Center of Denver. In addition to the 49 permanent supportive housing units, Saint Francis Apartments will include a manager s unit to ensure a staff person is on site 24 hours a day. This leads to increased project security, decreased maintenance costs and a lower turnover rate through individual intake processing and case management and coordination. For more detailed information regarding property management and tenant selection please see the Property Management Plan and Tenant Selection Criteria submitted with this application. The financing structure of Saint Francis Apartments will ensure long term project stability, even in the event that Housing Choice vouchers are removed from the project. By not having any traditional permanent debt, Saint Francis Apartments can cover project operating costs if excess cash flow from Housing Choice vouchers was to be removed. This ensures that no tenant will have to return to a life of homelessness throughout the life of the project. Weaknesses While increased development density is a practical sustainable development solution, it can also affect project marketability due to decreased landscaping and natural space for tenants.

3 The Saint Francis Apartments will contain 50 units on a site of approximately 9,900 square feet, which does not allow for street level landscaping. To offset the lack of landscaping due to increased development density, Saint Francis Apartments will have a large rooftop terrace that can be used by tenants for gardening or as an area to congregate. One of the primary concerns with the Housing First model is security and safety of the development s residents. The St. Francis Center has vast experience providing safe and secure Housing First environment through their experience at Cornerstone Residences and will work with The Ross Management Group to ensure proper security measures are implemented at Saint Francis Apartments. These measures include closed circuit surveillance systems, key fob controlled access points, on site management staff and intense case management. Detailed type of construction The Saint Francis team has engaged Humphries Poli Architects, an experienced Denver LIHTC architect to design Saint Francis Apartments. Additionally, we have received construction estimates from Alliance Construction, a local multi family contractor with experience in the LIHTC and PSH industry who worked closely Humphries Poli Architects when preparing their estimate and built The St. Francis Center s first permanent supportive housing project, Cornerstone Residences. The development will include 50 one bedroom units and will utilize a 15 month construction schedule with a projected start date of January Construction will consist of five levels of living and common space over podium parking with a case management and reception area. The building will have two access points on the ground floor controlled by key fobs and two elevators accessed through the main lobby. Total common space between the first and second floor for reception, administration, case management, library room, dining area and central laundry will equal 4,078 square feet. The rooftop terrace will equal 1,950 square feet. Ground level parking will include 17 spaces within the building footprint, compliant with the City of Denver s requirements for very affordable housing. Past history at Cornerstone Residences has shown that tenants of Housing First developments rarely have cars and the City s very affordable housing parking ratio requirements are more than adequate for homeless housing. Population being served The proposed project will provide 49 units serving homeless individuals at or below 30% of area median income and one manager s unit. Tenants will pay a maximum of 30% of their income for rent with support for all 49 units provided by project based vouchers through the Denver Housing Authority and Colorado Division of Housing.

4 Our market study indicates a significant need in the area and City of Denver for permanent supportive housing for homeless individuals. The Metro Denver Homeless Initiative (MDHI) point in time survey has identified an average of 11,550 homeless individuals within the City of Denver in recent years, of which Melanie Rees of Rees Consulting, Inc. has identified 4,635 to be good candidates for permanent supportive housing. Currently, there are only 805 existing units available to serve this population. Bedroom Mix Saint Francis Apartments will contain 50 high quality affordable units, 49 of which will provide permanent supportive services for homeless individuals at or below 30% of Area Median Income (AMI) with support from project based vouchers through the Denver Housing Authority and Colorado Division of Housing. The project will also include one unit for an on site manager. Number of Units Bedrooms Bathrooms AMI Level Project Location % Manager s Unit Saint Francis Apartments will be located at the 1400 Block of North Washington Street in the Capitol Hill Neighborhood of Denver, Colorado The neighborhood is bordered on the west by Broadway, on the North by East Colfax Avenue, on the east by Downing Street and on the South by East 7 th Avenue. According to the most recently available Census data, the Capitol Hill Neighborhood has an estimated population of 18,839 people made up by 13,654 households. Average household income is $41,999 and the poverty rate is 16.2%. Approximately 18.8% of renters have a housing cost burden, defined as paying more than 30% of income for housing. Amenities Saint Francis Apartments will feature spacious and fully furnished units for residents that traditionally do not have the ability to procure furniture with their own means. Furnishings will include a bed, dresser, nightstand, couch, table, chairs, television and other living essentials as necessary and will be provided through private donations to the St. Francis Center. For detailed information on budgeting for furnishings please see the Supportive Services Plan submitted with this application. In addition, the units will come equipped with many amenities not found in other projects. Some of these amenities include: air conditioning, high speed internet and cable TV wiring, refrigerator, electric range with an overhead hood, microwave oven, in sink garbage disposal and dishwasher, all in addition to an energy efficient and noise reducing building design. Saint Francis Apartments will be designed and constructed in accordance with Enterprise Green

5 Communities. The development team has engaged Humphries Poli Architects to oversee the design, construction and certification process. These amenities will not only provide a more comfortable living environment, but will also be beneficial from a management and maintenance standpoint. Using energy and water efficient appliances, building materials and a time tested building design reduces ongoing maintenance and operating expenses. Providing air conditioned units not only creates a more comfortable living space and reduces heat related community stress, but also reduces noise conflicts from open windows and reduces dust and insects in the units. The furnished units contribute to a more harmonious living environment for a tenant base that does not have the means to furnish a home on their own. Per Rees Consulting, Inc. s recommendations the rooftop terrace will be designed and constructed so that the tenants can use it for gardening. Additionally, The St. Francis Center will work with St. John s Cathedral to open the adjacent Dominick Park for resident use. Saint Francis Apartments will be located at the 1400 Block of North Washington Street in the Capitol Hill Neighborhood. The parcel is located in a vibrant area that includes the Colorado State Capitol, Civic Center Park, United Nations Park, five bus lines, nine bike share stations, over 50 restaurants, 20 coffee shops and eight grocery stores within a half mile. Services Since 1983, the St. Francis Center (SFC) has been successful in achieving its mission to provide a safe place for people who are homeless in Metro Denver to meet their basic needs for day today survival while offering them assistance to transition out of homelessness. Initially the St. Francis Center served 50 people per day in a church basement but programs have expanded with over 700 adults currently accessing resources on an average day. Historically recognized as a community leader for day shelter services, the St. Francis Center in recent years has expanded their healthcare, employment and housing programs to provide more opportunities for men and women to permanently exit homelessness. In 2014 SFC s health clinic served 1,111 patients, and employment programs assisted 1,858 people of whom 372 gained full time jobs. As the St. Francis Center looks to expand their permanent supportive housing portfolio currently anchored by Cornerstone Residences, which opened in 2009, they will continue to embrace a low barrier approach to supportive services that is in line with the housing first and harm reduction philosophy. With origins in the Episcopal Church the St. Francis Center is uniquely positioned to leverage support and services from all sectors of the community. Please note the St. Francis Center will be providing all services to their tenants, for which information has been provided in the permanent supportive services plan. In an effort to efficiently deliver comprehensive services on an as needed basis, the St. Francis Center has

6 established a collaborative referral process with numerous longstanding community partners. Through a combination of direct services and referrals, the St. Francis Center is able to ensure all guests are served through a client centered empowerment approach. As part of a Housing First approach the St. Francis Center will strive to make all relevant services available to residents. An individualized service plan will be created (and revised) through a client centered strengths based approach with those who engage with service staff. Case managers will support tenants in establishing goal plans and steps toward accomplishing those goals. If a tenant is working on unique goal plans with service staff progress will be noted as appropriate in confidential files. If a tenant is resistant to formal interactions with services staff, efforts will continually be made to increase rapport and potential motivation to participate. Tenants would only be rehoused if they do not meet the terms of their lease agreement and only after a housing retention plan was unsuccessful. For more detail on intakes, assessment, defining service plans and case management please see the comprehensive service plan provided with this application. Energy Efficiency Saint Francis Apartments has engaged Humphries Poli Architects as architect and Enterprise Green Communities Technical Assistant. Humphries Poli Architects will ensure proper compliance and documentation of Enterprise Green Communities requirements and will implement Xcel Energy s Energy Design Assistance program to track building efficiency and energy usage improvements. These efficiencies will be achieved through several building enhancements, including: Increased development density 220 units per acre Energy Star appliances Water conserving appliances and fixtures High performance windows and increased wall and roof insulation Smart HVAC systems For a complete list of Enterprise Green Communities strategies and implementations, please see the Enterprise Green Communities worksheet submitted with this application. Financing The primary funding source for Saint Francis Apartments will be Low Income Housing Tax Credits (LIHTC), allocated by the Colorado Housing and Finance Authority (CHFA). The development team will seek gap financing through the Colorado Division of Housing s Development Grant Funds and/or a long term mortgage through the Colorado Housing Investment Fund (CHIF), the City of Denver s Housing Loan Fund and request Project Based

7 Vouchers from the Colorado Division of Housing for those units not covered by vouchers awarded from the Denver Housing Authority. In order to maintain long term viability of the projects supportive services, CHFA will allow the development consortium to earn an additional five percent of project costs in developer s fees. One hundred percent of this increased amount will be contributed to an operating reserve restricted solely for the purpose of continued operations of the project s supportive services. This increase in developer s fee will result in a direct benefit of $414,175 to the residents of Saint Francis Apartments. Saint Francis Apartments will provide those in need of permanent supportive housing a platform to improve their lives, while also providing a place to call home for 49 of Denver s chronically homeless. Total sources and uses are as follows: Use Amount Source Amount Land/Demo/Impact Fees $88,330 LIHTC Equity $9,343,016 Construction $7,939,377 CDOH HDG Grant $490,000 Developer Fee $1,308,000 City of Denver Loan $490,000 Supportive Service Fee $437,000 Deferred Developer Fee $267,971 Third Party Fees $75,950 Financing Costs $515,260 Insurance & Reserves $227,070 Total $10,590,987 Total $10,590,987 In addition, the narrative should address the following: 1. Identify which guiding principles in Section 2 of the Qualified Allocation Plan (QAP) the project meets and why it meets them: To support rental housing projects serving the lowest income tenants for the longest period of time. All affordable units at Saint Francis Apartments will support extremely low income homeless individuals for a minimum of 40 years. All tenants will receive the benefit of permanent supportive services through the St. Francis Center. To provide opportunities to a variety of qualified sponsors of affordable housing, both for profit and nonprofit Saint Francis Apartments is the product of intense collaboration between for profit, non profit and governmental entities, all of which will materially contribute to the success of the project in unique ways. The sponsor of the development, The St. Francis Center is a non profit entity with

8 a history of service to extremely low income and homeless individuals. By combining The St. Francis Center s expertise in permanent supportive services and homeless housing with Ross Management s expertise in LIHTC, HOME and Section 8 management, Saint Francis Apartments will maximize housing benefits to all residents. Additionally, The St. Francis Center has engaged BlueLine Development, Inc. to ensure project completion. BlueLine Development is a for profit affordable housing developer with a strong history of affordable housing and permanent supportive housing success. Finally, the Denver Housing Authority will participate in the project through their Special Limited Partner program so the project will receive a waiver of real estate taxes to ensure long term viability through decreased operating expenses. By combining areas of expertise among these four entities, the Saint Francis team has done their best to ensure that all parties best interests, be it for profit, non profit or government entity, are represented. To distribute housing credits to assist a diversity of populations in need of affordable housing, including families, senior citizens, homeless persons, and persons in need of supportive housing Saint Francis Apartments will serve 100% extremely low income homeless individuals, traditionally the most difficult population to serve. By utilizing soft funding and project based housing choice vouchers, the project will serve 49 extremely low income homeless individuals who would not otherwise have housing. To provide opportunities for affordable housing within a half mile walk distance of public transportation such as bus, rail, and light rail One of the main assets of the proposed development site is its walkability within the Capitol Hill Neighborhood. The project site sits within a half mile of five bus lines providing tenants with over 350 rides per day. 2. Identify which housing priority in Section 2 of the QAP the project qualifies for: Projects serving Homeless Persons as defined in Section 5.B 5 Saint Francis Apartments is the result of an experienced homeless advocate s desire to expand their service for homeless individuals within the city of Denver. The St. Francis Center currently serves over 700 homeless individuals every day and operates 50 units of homeless housing at Cornerstone Residences. Saint Francis Apartments will be an expansion of that service with 100% of affordable units serving extremely low income homeless individuals in the Capitol Hill Neighborhood of Denver.

9 3. Describe how the project meets the criteria for approval in Section 2 of the QAP: a. Market conditions: Analysis of the primary market area indicates a shortage of housing available to homeless individuals as indicated by an estimated 4,635 good candidates identified by the market study who are served by 805 units in the Denver Metro area, of which only 350 are identified as comparable by the market study. These figures are further corroborated by high occupancy rates and wait lists at existing homeless housing communities within the primary market area. Capture rates for the project are extremely low at 1.1%. After consideration of projects under construction or in the planning process capture rates remain extremely low at 1.3%. Based on these calculations we anticipate a quick lease up and long term stabilization for Saint Francis Apartments. b. Readiness to proceed: The proposed project s site is currently zoned C MS 8, which allows for multi family development of up to eight stories. Therefore the project will not have to go through a rezoning process. The site is currently owned by Clarkson Corp, a wholly owned subsidiary of St. John s Cathedral who has agreed to lease the land to the project for 55 years at $1.00 per year. St. Francis Center has executed a lease option and will execute the land lease upon successful award of funding. Due to the increased density of the project the site will have to be re mapped by the city and obtain a parking waiver for very affordable housing. The development team has been working with the City of Denver s Planning and Zoning Department and all indications are that this will not cause any delays to the project. Members of the sponsor, developer and architect will attend a concept meeting with the city on April 30, 2015 with an anticipated timeline for remapping and waiver of four months. Based on an anticipated closing and construction start date of January 2016 this process falls well within the anticipated project timeline. The Saint Francis Apartments team has engaged Humphries Poli Architects, an experienced Denver LIHTC architect to design Saint Francis Apartments. Additionally, we have received a construction estimate from Alliance Construction, a Denver multi family contractor with years of experience in the LIHTC industry within the City of Denver and members of the Saint Francis Apartments team.

10 c. Overall financial feasibility and viability: Saint Francis Apartments is financially feasible if awarded 9% Low Income Housing Tax Credits as requested. The project is requesting to use CHFA s discretionary basis boost as a gap filler, which would equate to an increase of 29% in annual allocation. This boost is necessary to ensure project viability through what has become a proven financing structure for permanent supportive housing projects. Saint Francis Apartments will have secondary funding sources through the City of Denver s Housing Loan Fund and the Colorado Division of Housing Development Grant Funds. By utilizing the below market interest only loan from the City of Denver and Housing Development Grant funds as the only sources of secondary financing, Saint Francis Apartments is ensured of continued operations even in the event that the project s Housing Choice Voucher allocation is removed. d. Experience and track record of the development and management team: St. Francis Center Since 1983, St. Francis Center has provided a day shelter consisting of a safe place with services for basic needs along with resources to help persons experiencing homelessness seek and obtain stable housing. Initially, the St. Francis Center served 50 people per day in a church basement, but programs have expanded to over 700 adults currently accessing resources on an average day. Historically, the St. Francis Center has been recognized as a community leader for day shelter programming but in recent years, healthcare, employment and housing components have grown to provide more opportunities for men and women to permanently exit homelessness. As the St. Francis Center looks to expand a permanent supportive housing portfolio currently anchored by Cornerstone Residences, which opened in 2009, they will continue to embrace a low barrier approach to supportive services that is in line with the housing first and harm reduction philosophy. With roots in the Episcopal Church, the St. Francis center is uniquely positioned to leverage support and services from all sectors of the community. The Ross Management Group The Ross Management Group, formed in 1986, specializes in the management of conventional, tax credit, affordable and service enriched housing, as well as senior residential properties and retail/commercial real estate. They have successfully leased new developments resulting in maximum benefits for the investors and have expertise and experience in addressing the complex eligibility and reporting requirements often associated with diverse financing of tax credit properties. They have provided expert witness testimony regarding the entire spectrum

11 of the property management profession. Additionally, they consult with owners to review building design feasibility, determine tenant eligibility, process housing assistance payments, perform budgeting and oversee overall management practices. The Ross Management Group has received several awards including the Community of Quality Award for Exemplary Family Development from the National Affordable Housing Management Association and the Department of Housing and Urban Development has twice recognized them as the HUD Management Agent of the Year for the six state region. They have also received awards of excellence for specific properties from various state and local regulatory agencies. Ross Management currently operates 24 affordable housing developments totaling over 2,700 in Colorado, Oklahoma and North Dakota. These developments include financing through the Low Income Housing Tax Credit Program, HOME Investment Partnerships Program, Section 8, Section 202 and Section 236 programs. For more information please see the Ross Management Resume and List of Properties submitted with this application. BlueLine Development, Inc. BlueLine Development was founded in 2011, bringing years of development experience to the table as well as a great zeal for affordable housing. BlueLine s small team allows them to fully integrate the needs of their clients and act on items quickly. BlueLine was formed by Nate Richmond and Kelly Gill, two experienced and knowledgeable Low Income Tax Credit and Affordable multi family developers. Nate and Kelly use their proficiency to lead not only the BlueLine team, but also to guide and advise organizations who wish to fill a housing deficiency in their communities, but lack the know how to do so. Nate and Kelly have completed over 50 housing complexes that have used funding sources such as LIHTC, HOME funds, AHP funding, project based vouchers, NAHASDA and various grants. Nate works closely with each client in order to navigate each partnership appropriately. His vast knowledge in this field provides confidence to BlueLine s partners and ensures each transaction will be satisfactorily completed. Prior to BlueLine Nate Richmond led the development team for Summit Housing Group, Inc. and its parent company Summit Management Group, Inc. where he successfully developed affordable rental units across Montana and Wyoming. Before joining Summit, Nate was the president of Goose Lane Properties; a residential real estate development company where he developed single family projects.

12 Kelly s attention to detail and knowledge of finance, title work and the real estate profession make her an ideal individual to keep operations within the targeted timeframe and on budget. Prior to BlueLine, Kelly owned and operated Red Barn Consulting, a LIHTC consulting firm. She has also held positions as a Development Manager for Summit Housing Group, Inc. and Community Development, Inc., both successful affordable housing development companies. Since 2005 Kelly Gill has been involved in the development of affordable housing using LIHTC, HOME, RD, and other HUD programs. Since the inception of BlueLine Development, Inc. it has secured funding and completed construction on thirteen different LIHTC projects, in multiple states, with six different nonprofit companies. Please see the BlueLine Development Resume and List of Properties submitted with this application for more information. e. Cost reasonableness: The costs submitted with this application reflect the current construction market in The City of Denver. These costs have been verified verbally from numerous funders and construction reviewers and in writing by Alliance construction, a Denver LIHTC contractor familiar with the architect and active in the Denver market. The development team has looked for opportunities to streamline processes and minimize costs at every opportunity. By utilizing an architect, contractor and engineers who are all familiar with the LIHTC process, the development team has been able minimize turnaround time and duplication of efforts in the design phase, which will translate to an efficient construction process. f. Proximity to existing tax credit developments: Rees Consulting, Inc. identified three comparable tax credit development with permanent supportive services totaling 230 units within a 1.5 mile radius. The total vacancy rate of these projects is very low at 1.3%. Further analysis of these comparables can be found in the market study submitted with this application. g. Site suitability: The proposed development site is ideally located in many ways to serve the individuals at Saint Francis Apartments. The development is located in the heart of the Capitol Hill neighborhood within a half mile of 5 bus lines, providing over 350 possible rides per day. Additionally, the site is located within located within walking distance of Colorado State Capitol, Civic Center Park, United Nations Park, nine bike share stations, over 50 restaurants, 20 coffee shops and eight grocery stores.

13 The site is currently level and used as a parking lot, so excavation and site work requirements are minimal. The Phase I ESA submitted with this application found no existing or past environmental concerns. 4. Provide the following information as applicable: a. Justification for waiver of any underwriting criteria (minimum operating reserve, minimum PUPA or high PUPA, first year debt coverage ratio below 1.15 or above 1.30, minimum replacement reserve, vacancy rate below CHFA s minimum): Saint Francis Apartments is requesting a waiver of the maximum debt coverage ratio of By structuring the project without any traditional permanent debt the development is ensured of continued operations and financial stability in the event that project based voucher appropriations are cut or third party funding for services are decreased. In a time of increasing political uncertainty the development partners desire to ensure that the residents of Saint Francis Apartments do not have to return to a life of homelessness if the federal government decides to cut Section 8 appropriations. If HCV for St. Francis Center were removed the project could still cover the projected operating costs with rents maintained at 30% levels, instead of requesting a modification to CHFA s LURA for higher rents. Likewise, should third party funding for permanent supportive services be removed from the project, the cash flow generated from the project could be used to supplement the services budget so residents to not have to go without desperately needed services and support necessary to maintain a stable life. Should project based federal subsidy remain with the project throughout the compliance period, this increased cash flow could potentially be used for additional services not currently included within the scope of the services plan. This model has been used in The St. Francis Center s first development, Cornerstone Residences and has been extremely successful. b. Justification of the financial need for CHFA s DDA credit up to 130 percent of qualified basis: Saint Francis Apartments is requesting the CHFA DDA credit in the amount of 29% as a gap filler so the project does not have to assume permanent financing that could jeopardize the viability of the project in the future. By minimizing risk through this structure, the development team has generated significant investor interest as evidenced by the multiple letters of interest submitted with this application.

14 This project has been structured with approximately 20% of the developer fee not attributable to permanent supportive services deferred and equal amounts of City of Denver loan funds and Division of Housing, as requested by the Colorado Division of Housing, provider of 24 of the 49 project based vouchers. 5. Address any issues raised by the market analyst in the market study submitted with your application: Rees Consulting, Inc. noted four weaknesses in the market study submitted with this application as follows. 1) Site is small. Building fits tightly on site with little room for landscaping. The land for this project will be leased from Clarkson Corp/St. John s Cathedral for $1.00 per year for 55 years, effectively a land donation. By increasing project density on the site and garnering support through a land donation, the project is able to target 100% permanent supportive housing at 30% of AMI or below, a prospect that would most likely not have been feasible with the current cost of land had to be supported within the project budget, given the current cost of land in the Capitol Hill Neighborhood. Additionally, the increased development density is aligned with the goals of Enterprise Green Communities and the ever increasing need to utilize existing resources and infill locations to serve existing the homeless populations where they already exist. Finally, the development team has designed the building so that the rooftop terrace can be used for gardening by the residents. This strategy has been used at The St. Francis Center s existing development, Cornerstone Residences, with great success and provides a place of respite in an urban environment. 2) With a net reduction in parking spaces, neighborhood residents may resent their inability to use the lot. The proposed site is currently used as a parking lot for Argonaut Liquor and restricted to customers only. The proposed development would cause a decrease of 11 parking spaces for Argonaut and would contain 17 spaces for residents and staff. Argonaut Liquor and St. John s Cathedral have been in negotiations for approximately four months and have reached an agreement for the loss of the spaces, renegotiated the lease between the applicable parties and started the

15 process of re mapping the site with the City. Argonaut does not anticipate that the loss of the 11 spaces will materially affect their operations or discourage potential customers who would have otherwise entered the store. 3) Adjacent Dominick Park is closed. St. John s Cathedral owns and operates the adjacent Dominick Park and has expressed a desire to re open the park and make it available to residents of Saint Francis Apartments. The park was originally closed due to vagrancy after hours, but the Cathedral s vestry has begun the process of creating a plan for reopening the park specifically for the residents of Saint Francis Apartments to use. 4) Serving a broad spectrum of homeless population may lead to compatibility issues. In order to maintain fair housing compliance, Saint Francis Apartments will not limit occupancy to any group of individuals. Potential tenants will be screened by The St. Francis Center and most will have a previous relationship with The St. Francis Center via their existing operations. For specific information on tenants to be served please see the Tenant Selection Plan submitted with this application. 6. Address any issues raised in the environmental report(s) submitted with your application and describe how these issues will be or have been mitigated: No issues were raised in the Phase 1 ESA. 7. In your own words describe the outreach that you have conducted within the proposed community and demonstrate local support for the project (including financial support): A public hearing was held at St. John s Cathedral on February 22, 2015 and approximately 50 people were in attendance. For more information please see the recordings and sign in sheet submitted with this application. In addition to the public hearing, The St. Francis Center has actively engaged the appropriate City Council Members for public support and awareness. Please see the support letters provided with this application. 8. For acquisition/rehab or rehab projects, provide a detailed narrative that describes the proposed rehab plans and relocation plan (if applicable). Address the 10 year rule;

16 capital expenditures over the past two years; previous related party relationships; past local, state, or federal resources invested in the project; obvious design flaws; obsolescence issues; safety issues; and any significant events that have led to the current need for rehabilitation (i.e., fire, nature disaster). N/A You may also provide additional documentation that supports your narrative by attaching it to the narrative or submitting it on a CD. Each supporting document should briefly describe what is contained in the attachment. Example 1: Additional documentation to support the Market Conditions Criteria could be labeled to as follows: Attachment Market Conditions or Market Conditions.pdf, etc. Example 2: Soft funds documentation to support that amount of soft funds listed in the Application can be secured could be labeled as follows: Attachment Overall Financial Feasibility and Viability or Overall Financial Feasibility and Viability.pdf, etc.