F. E. Warren Air Force Base Cheyenne, Wyoming FAMILY HOUSING PRIVATIZATION PROJECT INDUSTRY FORUM

1. F. E. Warren Air Force Base Cheyenne, Wyoming FAMILY HOUSING PRIVATIZATION PROJECT INDUSTRY FORUM October 5, 2005

2. Topics • U.S. Air Force Housing Privatization Program • Project Overview • Business Arrangements, Financial Plan & Structure Requirements • Design and Construction Requirements • Property Management Requirements • Legal Documents • Solicitation Process

3. U.S. Air Force Housing Privatization Program

4. Housing PrivatizationProgram Overview Col William Macon Director, Housing Directorate HQ AFCEE/HD

5. Housing Privatization Goal Provide Military Families Access to Safe,Quality, Affordable and Well-Maintained Housing in a Military Community Where They will CHOOSE to Live.

6. Housing PrivatizationOverview • More than 38 percent of Air Force owned and operated family housing is inadequate • The U.S. Department of Defense (“DoD”) has tasked the Air Force to upgrade all required inadequate housing by or before Fiscal Year (FY) 2007 • To accomplish this mandate, the Air Force has launched into an aggressive program to revitalize all Military Housing units through a combination of traditional military construction and Privatization.

7. Housing Privatization Overview (cont.) • Privatization is a public-private partnership and it is vital that this program be predictable and understandable to our industry partners. • The Government offers: • Conveyance of existing housing units and associated improvements. • A 50 year ground lease of Government owned property. • Priority military rental referrals.

8. Housing Privatization Overview (cont.) • The Project Owner (“PO”) brings: • A complete feasible business and financing package. • Quality property management. • Well developed community plans and modern housing designs. • The forces to build the modern communities and housing designs to provide Airmen newly constructed or renovated housing units.

9. Housing Privatization Project Locations

10. Housing PrivatizationAFCEE’S ROLE • AFCEE is a Field Operating Agency under The Air Force Civil Engineer • Housing Privatization Center of Excellence • Execute project development & acquisition • Resident expertise • Privatization Toolbox • Variety of consultant support contracts/capability • Air Force Portfolio Manager

11. Housing PrivatizationAFCEE Contact Info • For more information connect to AFCEE’s home page: • http://www.afcee.brooks.af.mil • Click on the Housing Privatization link: • http://www.afcee.brooks.af.mil/dc/dcp/news

12. Project Overview

13. Project Overview KORMENDI \ GARDNER PARTNERS Privatization Support Contractor Cyrus Gardner, Principal Matt Karcher, Project Manager

14. Project OverviewDisclaimer The following information serves as a general summary describing the F. E. Warren AFB Military Housing Privatization Project. Be sure to closely read the Request for Proposal (“RFP”) for a complete description of requirements. The RFP is scheduled for release in November - December of 2005. This general summary is for information purposes only!

15. Project OverviewSummary • F. E. Warren AFB (Cheyenne, Wyoming) • Project Concept: • Credit authority available: Government Direct Loan • 50-year land lease

16. Project OverviewSummary (cont.) • Utilities • The following utilities are paid by the tenants when metering is complete: • Electricity (City Public Service) • Natural gas (Cheyenne Light, Fuel and Power Company) • The following utilities are paid by the PO: • Sanitary Sewer (Cheyenne Board of Public Utilities) and • Refuse collection (Western Plains Disposal) • Water (City of Cheyenne) • No AAFES, DeCA, MWRA facilities included in this project • Fire/police provided by base on reimbursable basis • One-Step solicitation process involves • Oral presentations from developers • Negotiations with Highest Ranked Offeror (“HRO”)

17. Project OverviewSummary (cont.) • The PO provides: • Renovation/construction to meet local codes & market standards • Feasible business and financial package • Quality property management for 50 years • Well-developed community plans and quality design • Military Families: • Pay rent equal to their housing allowance less a utility allowance • “110% utility allowance” is the estimated average monthly utility consumption for a unit type increased by 10% • Initially consumption is estimated until meters are installed and actual average consumption is known

18. Project OverviewLocation Map F. E. Warren AFB

19. Project OverviewEnd-State Project Demographics

20. Project Overview Current and Proposed Housing Areas

21. Project OverviewConveyed Inventory and Disposition 1Number of units on each parcel to be determined by Project Owner 2 The Officer Bricks and Sergeants Row units are collectively known as the “Historic Units”.

22. Project OverviewInventory Description

23. Project OverviewOther Conditions • Historic District • Conveyance of Officer Bricks and Sergeants Row units will be subject to the terms of the following: • Programmatic Agreement between base and the State Historic Preservation Office (“SHPO”) • Integrated Cultural Resources Management Plan • Historic Preservation Plan established by the Project Owner • Construction or renovation is subject to terms of the Historic Preservation Requirements • Any located in the Historic District • Any that is visible from the Historic District • Lead-based paint (“LBP”) abatement of the Historic units • Prior to conveyance LBP will be removed from friction surfaces • TCEplume under portion of Carlin Heights neighborhood

24. Project OverviewLead-Based Paint Abatement • Government has contracted for abatement of some of the lead-based paint in Historic units • 114 Officer Bricks units • 38 Sergeants Row units • Scheduled for completion before privatization transaction closes • Summary of Scope: • Doors and thresholds • Windows, transoms, frames • Built-in cabinet doors • Porches • Soil • Statement of Work for abatement project is included in Appendix F (Technical References)

25. Project OverviewOptional Parcels • Optional parcels are offered to the PO, but PO is not required to utilize them • Parcels D, E and H are unimproved • Parcel D: Adjacent to Carlin Heights to the south and west, 46 acres, available for housing • Parcel E: Adjacent to Carlin Heights to the north and east, 16 acres, available for housing • Parcel H: North side of base, north of Wapiti Road and west of South Lake Pearson, five acres, available for Dog Park (desired feature) • Optional Parcels I and J are improved • Parcel I: North of 10th Cavalry Avenue between Old Glory Road and South Fort Steele Way, one acre, contains Buildings 305 (vacant) and 306 (Housing Management Office) • Parcel J: South of 10th Cavalry Avenue between Old Glory Road and South Fort Steele Way, ½ acre, contains building 330 (housing maintenance)

26. Project OverviewMilestones

27. Business Arrangements, Financial Plan & Structure Requirements

28. Business/Financial/StructureTransaction Basics • Non-FAR Transaction • 50-year ground lease • Improvements Conveyed at Closing • Housing units • Potential Office and/or Maintenance Space • Office buildings 305 and 306; maintenance building 330 • Ancillary facilities in housing areas • Tot lots, playgrounds, recreational areas • Common areas/streets • Development/Construction Agreements • Property Management Agreement • Simultaneous real estate and financing transaction

29. Business/Financial/StructureBAH Revenue • Basic Allowance for Housing (“BAH”) • Amount allotted to each service member to cover the cost of housing, including utilities and personal property insurance • Varies between installations as it is based on • Geographic duty location • Pay grade • Dependency status • Rent = BAH – 110% estimated utility charges (gas/electricity) • For more information on BAH visit: https://secureapp2.hqda.pentagon.mil/perdiem/bah.html

30. Business/Financial/Structure2005 BAH Rates 1 BAH with Dependents used

31. Business/Financial/StructureHistoric Tax Credits • Historic tax credits may be available in connection with renovation of Historic units • If credits are sold, sale proceeds must be deposited into the Lockbox Account • If retained, face value must be deposited • Any request for historic tax credits must be coordinated with the Project’s Management Review Committee (“MRC”) and the SHPO

32. Business/Financial/StructureReal Estate Taxes • Project Owner is responsible for real estate taxes • Must include allowance for real estate taxes in the proposal’s pro forma • If payable, must escrow real estate taxes against future obligations • If exempt or abated, proposal must include a plan for utilizing the savings • Issue is directly linked to: • Federal Impact Aid • Municipal Services • Jurisdictional Law

33. Business/Financial/StructureFinancing • PO Cash Equity Contribution Minimum • 5% of total development costs • Private Debt Financing – Provided by PO • Construction loan and permanent first mortgage • Limited loan guarantee not available • Government Direct Loan (“GDL”) Available up to $59.2M • Requires justification (i.e., gap between development costs and available private funding sources) • Direct loan terms defined in the RFP • Subordinate to and cannot exceed private first mortgage • Debt Service Coverage Requirement: • 1.05 combined (private first mortgage and GDL)

34. Business/Financial/StructureFinancial Features • Required: • Financing competition: minimum 3 approved firms • Long-term developer commitment to the project • Minimum 50% net cash flow to reinvestment account (“RIA”) • Minimum 50% net proceeds of sale/refinance to Government • No cross-collateralization with other investments • Desired (including but not limited to): • Eliminate/minimize use of GDL • >50% net cash flow to RIA • >50% net proceeds of sale/refinance to Government • Fees/equity returns below industry benchmark • Incentive rather than base fees

35. Business/Financial/StructureFinancing Competition • Obtain most beneficial financing package • Facilitate transaction selection/closing process • Seek transparency in financing proposals • Foster developer - lender relationships

36. Business/Financial/StructureFinancing Competition (cont.) • Minimum of 3 financing firm proposals • List of approved firms in RFP Appendix O • Provide lender term sheet and letter of interest • Provide evaluation summary detailing qualitative criteria (i.e. financing structure, interest rate mitigation, etc.) • Complete Quantitative Financing Evaluation Chart (RFP Appendix P) showing the calculation of an “All-in Cost” of financing • In addition to the three firms from Appendix O offerors may bring in other lenders

37. Business/Financial/StructureCash Flow Requirements • Controlled by independent Lockbox Agent through Lockbox Agreement • Established at closing to accumulate and distribute project income derived from operation of property to: • Operate property in accordance with lease • Perform demolition, renovation, construction, etc. • Ensure timely repayment of loans, impositions, fees and expenses • Ensure funding of sub accounts

38. Business/Financial/StructureCash Flow Waterfall Government Note: At expiration of Lease, all remaining funds in all accounts are released to the PO, except for the Reinvestment Account, which will be transferred as directed by the Secretary. Member’s BAH Lockbox Agent Lockbox Revenue Account Operating Expenses Taxes & Insurance Impositions Reserve Account Interest/Principal on First Loan Project Owner Major Maintenance Replacement Reserve Account Interest/Principal on Government Loan Management and Fees Excess Operating Expenses Operating Reserve Account Construction, Renovation, Demolition Costs Construction Escrow Account % of Balance % of Balance Note: The PO must also deposit Other Eligible Tenants’ security deposits into the Other Eligible Tenants Security Deposit Account and refund those deposits pursuant to state law. Reinvestment Account (Quality of Life Improvement)

39. Design & Construction Requirements

40. Design & Construction Community Development Plan • Comply with federal/state/local codes, standards, regulations and industry practices • Enhance overall quality of life by incorporating green space, landscaping, underground utilities and recreation areas • Coordinate utility construction and services with local providers • Provide individual unit meters (gas and electric) • Achieve optimal housing density, i.e., no more than • 4 single family units per acre • 6 duplex or multiplex units per acre • Provide tot lots, playgrounds and multi-purpose recreational facilities

41. Design & Construction Construction Requirements • Meet minimum Air Force square footage requirements • Reduce energy/water consumption to current Energy Star criteria meet industry practices; comply with federal, state, county and local codes and standards • 5% of housing units handicap accessible or “readily adaptable” • Innovative design and construction techniques • Best professional judgment in style, design, configuration and functional solutions • Floor plans with orderly arrangement of functions, circulation and open spaces • Inviting entrances, indoor/outdoor integration, pleasing interiors • Modern kitchens and bathrooms • Durable, low maintenance, functional and aesthetically pleasing materials, equipment and finishes with rich texture and detailing • Metered for gas and electricity • Storage space

42. Design & Construction Renovation Requirements • 417 units require renovation • 152 Historic units (Parcels F & G) • 265 non-Historic units (Parcel C) • Individual gas and electric meters installed • On all housing units • Isolate all Government-retained facilities from PO’s common area utilities

43. Design & Construction Desired Features • RFP includes prioritized lists of desired features: • Community Desired Features • New Construction Desired Features • Renovation Desired Features

44. Design & Construction Construction Management • PO provides a plan that establishes procedures for coordinating, updating and implementing design and construction schedules including, but not limited to: • Design review conferences • Schedules • Environmental quality controls & procedures • Pre-construction conference • Quality control • Transition plan (more details in following slides) • Demolition plan (more details in following slides) • Payment and performance bonds and insurance

45. Design & Construction Transition Plan • Begins at project turnover date and ends at completion of demolition, renovation and construction • PO will provide a detailed Transition Plan for: • Project development • Unit availability • Phasing out of existing units • Methodology to provide utilities and services • Involuntary Relocations with all move-related expenses paid by PO (packing, unpacking, cable re-connect charges, etc.) • Items to be completed/continue before transition • Set up leases and allotments • Conduct an assessment of all required maintenance • Continue design work and permit processing

46. Design & Construction Demolition Plan • Off-base disposal of debris – no landfill on base • Hazardous waste handling in compliance with environmental regulations • All facilities and other above ground improvements (i.e., facilities, roads, etc.) to be removed unless otherwise indicated

47. Property Management Requirements

48. Property ManagementUnit Occupancy Plan • Coordination with installation’s Housing Management Office • Tenant application and assignment procedures • Move in/move out procedures • Tenant lease in accordance with state laws and RFP mandatory clauses • Tenant vacating procedures • Renting to non-referred tenants • Occupancy <95% for at least 3 consecutive months • Priority list (see next slide)

49. Property ManagementOther Eligible Tenants Priority • Other Uniformed Service Members/Families • Federal Civil Service Employees • Retired Military Members/Families • Guard and Reserve Military Members/Families • Retired Federal Civil Service • DoD Contractor/Permanent Employees (U.S. Citizens) • General Public

50. Property ManagementFacilities Maintenance Plan • Minimum requirements • Service Responses • Nationally certified/accredited management staff • Preventive maintenance and repair • Change of occupancy maintenance (COM) • GOQ maintenance • Vacant units maintenance and repair • Tree and shrub maintenance at units and common areas • Collection of curbside refuse and bulk trash, and recycling • Snow and ice removal • Summertime yard waste collection at each unit • Tumble weed and rubbish removal along fence line