Lighthouse Inn July 10, 2015 RFP Proposal Summaries revision

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1 1. Development team & principal contact information Developer is the principal of Water s Edge Resort & Spa, Westbrook, CT; The Copper Beech Inn, Ivoryton, CT, and many commercial real estate holdings in CT, NY, NJ, and Florida. Contact for the Developer is: Claudio Marasco The developer has a fortyplus year track record of acquisition, renovation, construction and operation of world class hotel, resort and Inn properties. Eric Hamburg, developer and principal contact. Buyer and owner will be a new, tentatively Lighthouse Inn Residences,. The development entity will be Industrial Renaissance Eric Hamburg is sole shareholder of Industrial Renaissance (IR). Hamburg will be project manager and have overall responsibility and describes IR as long-term owneroperators. Industrial Renaissance has been in business since 1996 with equity investments from $1 million up to $18 million and debt financing up to $55 million. Contact & Managing Member: Roger Bennett, CPA Lighthouse Inn Investors, is not yet registered with the CT Secretary of State. The co-owners are identified as Roger Bennett, President of Bennett & Company, PC an accounting firm in Bloomfield, CT, Boston Asia Capital, Mario Laguardia, and Richard Centolella. rev Development team: MLG Architects, New York City; EDSA, resort and landscape architects, six offices worldwide; HVS Consulting and Valuation, international company with office in Mineola, NY; Also, LII has signed on the premier operator of inns and wedding venues in Newport Rhode Island to operate the facility. Rev Managing Members: Norman A. Nadeau and principal contact; Anthony Morascini is registered with CT Secretary of State with business address as 48 Guthrie Place, New London. Managers: Julieanne Johnson & Norman Nadeau. Norman Nadeau financial advisor with 25 years experience; renewable energy expertise; boat operator. Anthony Morascini tavern operator (40 years); sea captain (50 years); artist, Buyer/Developer Mr. Londregan is sole owner of Longshore Partners (registered with the Secretary of State) a real estate investment firm (20 years). A partner with Londregan Commercial Real Estate Group. Six years working for Hilton Hotels Corporation as a director of sales.

2 2. Proposed development & concept Based on the location of the property and to harmonize and maintain continuity with the surrounding community the developer believes the best use of the property is predominately residential with limited to no food and beverage operation. The developer proposes to renovate the Mansion to a standard of high quality accepted in the lodging industry. It is likely that portions of the main dining area will be replaced with additional lodging rooms. The Carriage House and Beauty Salon will be demolished. The developer is proposing to construct up to 30 high quality town house style residential units, similar to Victorian row houses. Units will have architectural detailing to complement and enhance the surrounding residential community. Phase I Renovation of Mansion into 20+/- luxury apartments. Design plans will help to determine exact number of units. Building aesthetics and historical details will be maintained. Design and build attractive and flowing landscape. No inn services are proposed. Phase II Demolish carriage house and outbuildings and construct high end apartments or condominiums in a cluster of townhome or pocket neighborhood style with a village feel with walkways and attractive landscaping. Restore Inn to former grandeur and similar traditional inn operation. Two Phases Phase I: Complete rehabilitation of the Mansion (6 months). Phase II: Infrastructure, grounds, and roadway improvements. Total rebuild of Carriage House, a larger spa, and possibly a larger pool and deck, gardens and landscaping making it more attractive for the outdoor wedding experience. (6 months). Developer states that they have had discussions with several hotels who have flag operators. Also discussions with branding the Inn with sister properties, hotels located in Newport, RI and throughout the Northeast. Restore all buildings to National Historical Society Code of Compliance and operate as the traditional inn and resort use. They intend to bring all buildings and pool into ADA Compliance. They intend utilize current green technology and aim at being a leader in envirohotels. They intend to install solar tracking systems. Three Phases Phase I: Clean & renovate restaurant, tavern, and some rooms (three months). Phase II: Finish renovations to Mansion including all rooms (within 10 months of opening tavern and restaurant) Phase III: Complete renovations to Carriage House and pool and install solar units (1 year). Second year they say they will receive a federal grant to replace windows and heating/cooling systems. Phase I Demolition of all structures on the property. Build a seasonal, semienclosed special events facility where mansion is located. Designed to replicate many of the architectural components of the original Guthrie Mansion. A year-round food and beverage facility designed within the confines of the special events facility. Parking to be in Carriage House area and in wooded area bordering Parkway South. Phase II build a multistory guest room facility in the central portion of property, serving as guest quarters for attendees of wedding receptions and other social and corporate functions.

3 3. Estimated investment and development costs $10,000,000 (ten million dollars), total cost of project including new residential units. $2,500,000 - $3,000,000 for the Mansion renovations. $7,000,000-10,000,000 (seven to ten million dollars) for total project build out. $3,000,000 (three million dollars) to bring property back into fully operational status. $5,000,000 (five million dollars) within a four year plan of rehabilitation. $6,000,000 (six million dollars) over a 6-year period. Not identified 4. Purchase and acquisition proposal 5. Project financing details General note: a preliminary analysis has determined that a residential project as proposed will produce greater tax revenue than a hotel/inn $1.00 Because of extensive capital outlay and projected lengthy return on investment the offer is to purchase for $1 (one dollar), waive all outstanding water & sewer charges (approx. $39,738), and provide unspecified property tax abatements that will need to be negotiated. Developer does not require any financing. Developer has the liquid financial capital to perform the Developer is prepared to begin immediately after receiving all necessary approvals and permits. General note: a preliminary analysis has determined that a residential project as proposed will produce greater tax revenue than a hotel/inn $165,000 as follows $25,000 at closing $40,000 water/sewer lien $100,000 at $25,000/yr over 4 years. Plus Earnout 3.5% of appraised value of each new building. Initial tax value based upon $165,000 value until CO. Then 7-year or more tax abatement. Developer will self-finance Phase I. Once completed, developer will refinance with traditional lender and use some funds to get Phase II started and traditional lender to finance remaining project as needed. $350,000 No other conditions proposed in RFP response. Letter from Al Falco, Senior VP, Webster Private Bank a division of Webster Bank, N.A. stating Roger Bennett is a preferred client in good standing and they are interested in further pursuing the project as primary funder. $100,000. Developer will pay the water/sewer liens separately from purchase price offer. These offers are contingent upon receiving a 100% real property tax abatement in year 1. And an 80% real property tax abatement in year 2. NOTE: See RFP UPDATE_EDC mtg All offers are negotiable to some degree Polaris Capital Group of San Diego is in the process of funding $1,000,000 for rehabilitation of Inn plus $1,527,500 (revised) line of credit. Refinance after two years. All loans and mortgages paid within ten years. $250,000 Free and clear of all liens and encumbrances including water/sewer liens ($40,000+/-). 100% real & personal property tax abatement for 10 years. Years real and personal property assessed at 50% of then mill rate. No financing required for the acquisition, design and initial site preparation for A confidential balance sheet can be provided to City Council representative.

4 6. Beach rights and other conditions Re-establishment of beach rights is of absolute importance for success of the Planning & Zoning Commission approval of project is required. Water & Water Pollution Control Authority approval to waive outstanding water & sewer fees is required. This proposal is subject to the completion of a financial, environmental, hazardous materials, and legal due diligence investigation by Industrial Renaissance, its consultants, attorneys and other professional advisors. Planning & Zoning Commission approval of project is required. Beach rights are not addressed but there are references to the beach. Beach rights are not specifically addressed other than to note Guthrie Beach services under the topic The Product (page 9), and identifies Guthrie Beach Association/Ryan Goodspeed as a consultant or partner for the rehab process (page 22). Attorney for Guthrie Beach Inc. states in a letter at no time has Guthrie Beach, Inc. been a consultant or partner for Grand Slam Holdings,. -rev NOTE: See Peck & Tuneski law firm letter dated Developer has plans to install ground base solar panels and other energy efficient systems. No mention of beach use or rights. Other Conditions: Subject to approval by all applicable authorities of demolition of all structures. Waiver of all demolition and building fees for Seller provides a recent environmental assessment of property. Buyer agrees to complete remediation needed. If remediation cost estimate exceeds $300,000 buyer s proposal and any agreements may be rendered null and void. Seller agrees to contribute $100,000 toward environmental remediation and up to $100,000 for demolition debris removal as cash or in-kind by eliminating tipping fees at transfer station.

5 7. Additional Notes Developer s own management and maintenance team along with newly trained hires will be responsible for project operations. This project will require approval from the Planning & Zoning Commission (PZC). Depending upon details contained in a site plan, the project may require amendments to the R-1 zoning regulations. 8. Observations The developer, his staff and professional service people have been to the site on many occasions. They have noted that the hospitality industry has changed with a greater focus on providing venues for weddings and other special occasions. Given the proximity to neighboring residential properties, the limited number of guest rooms, the remote location of the inn, and distance to the beach they believe that these factors would make it very challenging to have a long term successful traditional inn operation. During due diligence investigation developer requires and exclusive agreement that the City not solicit, initiate, or encourage other proposals or offers. This project will require approval from the Planning & Zoning Commission. Depending upon details contained in a site plan, the project may require amendments to the R-1 zoning regulations. The developer has been to the site on two occasions once with his architect. The developer has considerable experience with renovating and restoring older buildings, particularly with elaborate architectural woodwork. The developer purchased the unfinished seven condominium units at 1 Hamilton Street, New London in January He has been renovating the property with an expected opening date in August. Improvements to the grounds will help drive considerable market share to the property from weddings and special events. Reopening the Inn as it was traditionally operated may not require (PZC) approval. However, because the Inn is a nonconforming use any intensification of uses may have to go to the PZC for approval. The developer has visited the site on one occasion that I am aware of. The architect, Mr. Laguardia, has stated that he is familiar with the site and has toured it several years ago. The developer has not identified by name an operator/manager for the Inn only as a well known hotel operator. That information has been requested. The developer does not himself appear to have hands on inn/hotel management experience. Initial correspondence had been coordinated by John Voloshin who is not a partner or member of LII. rev Five principal staff managers are identified in the proposal submitted. Reopening the Inn as it was traditionally operated may not require (PZC) approval. However, because the Inn is a nonconforming use any intensification of uses may have to go to the PZC for approval. The developers have been to the site on numerous occasions, sometimes with team members and sometimes with contractors and servicemen. They have a great deal of enthusiasm. The developers themselves do not have much comparable hotel/inn experience, and limited experience rehabilitating older buildings. They plan to hire team members who have some experience with inn services and inn management. Their renovation timeline and financing plan appears ambitious. Mr. Londregan is submitting proposal as a single entity but reserves the right to include other persons and/or entities for building, development, and other components of the Due to demolition of the structures and rebuilding new the developer s proposal will need reviews by many departments and City agencies and commissions. The developer has been to the site on many occasions. His proposal does indicate the harsh conditions with no economically feasible means to salvage the Mansion and Carriage House. However, the Office of Development & Planning does not recommend the demolition of the historic Mansion.