Exhibit G: Housing Strategy

City of St. Louis

ExG_HousingStrategy.docx Exhibit G. Housing Strategy. The Near North Side (NNS) of St. Louis is in a prominent location of regional commerce just north of Downtown St. Louis and just west of the Mississippi

River. The area, that has been known for ill-fated historical events like the failure and eventual demolition of the Pruitt-Igoe public housing project, decades of disinvestment, and serious public safety concerns, has recently seen positive change in several “wins.” These include the development of the Flance Early Learning Center, a new KIPP middle school, and the proposed

Jonas Hubbard Jr. Community Center; the decision of NGA to locate in NNS; and a shift toward positive momentum in the NorthSide Regeneration project with plans for a GreenLeaf food market just two blocks away. Continued resident input through the CN Planning Grant process informed the detailed vision for this Housing Strategy, building consensus among residents, stakeholders, and experts. The revitalization of Preservation Square (PS), formerly known as

O’Fallon Place, is the primary focus of the Housing Plan. PS is supported by Section 8 Housing

Assistance Program (HAP) contracts that cover 342 units. The second component of the plan is the rehabilitation of the historic St. Louis Brewery Apartments.

G.1 Overall Strategy. The Housing Plan consists of six phases: four phases of on-site mixed-income, multi-family housing, an on-site 54-unit universal design building, and a family phase in an existing building in the NNS neighborhood that will be renovated, known as “The

Brewery.” Each phase of housing draws upon a blend of resources, including CNI funds, other public dollars, private LIHTC equity, private debt, and other sources (Att. 20). Together, these various components comprise a holistic approach to providing a continuum of high quality housing that is appropriate for the current and emerging NNS market. PS was built in the late

1970s/early 1980s and renovated in 1999. Units have not been renovated in over 15 years and lack important modern features and the design of the site does not promote safety, community,

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 2 and sense of place. Yet affordable housing remains vital to NNS, and, therefore, an extensive planning process was undertaken with residents to identify strategies to improve the quality of affordable housing options. The priorities for revitalizing PS articulated by residents and stakeholders were integrated into the housing plan and are discussed in G.4. They include: integration of Crime Prevention Through Environmental Design (CPTED) features; a reduction in density; a restored street grid; modernized interiors; diversified architecture; green/sustainable materials/design; and a new “front porch” along the main artery to downtown, 14th Street.

The $142 Million (including Part B costs) Housing Plan will be implemented by McCormack

Baron Salazar (MBS), the Housing Implementation Entity, who will be responsible for planning, designing, and constructing the new and rehabilitated housing, and will provide the developer and operating guarantees and receive the developer fees for all phases described below.

McCormack Baron Management (MBM), an affiliate of MBS, will act as Property Manager and

McCormack Baron Asset Management (MBAM) will serve as Asset Manager for the residential development. The City of St. Louis will partner as a public investor. US Bank has committed

$12 Million in first mortgage financing, and US Bancorp CDC will provide tax credit equity, and donations to the projects in exchange for tax credits under MHDC’s Affordable Housing

Assistance Program (AHAP). MBS has site control for all of the replacement housing sites.

Highly experienced senior executive MBS staff assigned to the CN Plan include Richard Baron

(Chairman), Kevin McCormack (Chief Executive Officer), Vince Bennett (President) and

Michael Duffy (Chief Operating Officer), who each bring decades of housing finance and development history to the project. Michael Duffy and Mandy Kozminske, Finance Manager, will be responsible for all financial structuring and negotiation with financing partners, including the equity investor(s) and lenders, and meeting all HUD mixed-finance requirements. Senior

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 3 Vice President, Julie DeGraaf Velazquez, brings over fifteen years of experience in urban development, including the last twelve years with MBS working on complex Choice and other mixed-finance developments. Julie will lead the internal team, which also includes VP of Design and Construction, Randy Rhoads, Project Managers Emily Bernstein and Laura Kinsell-Baer, and external partners and community residents and stakeholders, to ensure the project meets its goals within budget and on schedule. The Housing Strategy objectives align with those of CNI and are expected to achieve measurable outcomes. The $20.65M CNI housing investment will be leveraged to a total housing investment of $142M. Housing Phases 1-4 (On-Site Family). Of the 675 total units on the PS site, 393 (58%) will be demolished to de-densify and redesign the site. This will allow all units to be oriented along the street, increase the amount of green space within the community, allow for off-street parking that is safer and better connected to units, and accommodate interior space for tot lots, trash enclosures and mail kiosks. 14th Street will be re- energized as a vibrant mixed-use central corridor with neighborhood scale retail including 7 live- work apartment units and 2,400 sf of commercial space for existing neighborhood entrepreneurs and/or businesses interested in entering or expanding into the community. The first four phases include the renovation of 282 PS units inside and out with modern finishes and amenities, and the construction of 219 new units in mixed-use, garden and townhome buildings, for a total of

501 units. Newly created through-streets restore the traditional street grid and allow all units to front public streets. Improved residential units are complemented with new open space for recreation and healthy living, and expanded management and communities facilities. The plan includes a range of bedroom sizes to accommodate current residents and target market demand, as reflected in the market study (Att. 37): 147 1-BR, 266 2-BR, and 88 3-BR units. Of these 501 units, 249 of these will be replacement units covered by the HAP contract (49.7%), 128 will be

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 4 <60% affordable LIHTC (25.5%), and 124 will be market-rate (24.8%). Market rents will range from $780 for a 1-BR to $1,090 for a 3-BR and are supported by the market study. The market study also supports the income mix between affordable and market rate units and bedroom mix, which is more heavily weighted toward 1-BR’s and 2-BR’s given target market preferences.

Funding sources are identified in Attachment 20. Exterior designs for new and renovated buildings transform the tired, monolithic buildings and integrate both contemporary and traditional finishes. The designs reflect the community’s stated preferences, and bridge the neighborhood’s architectural history across some of St. Louis’ oldest and newest buildings.

Interiors will feature contemporary finishes, open floor plans, in-unit washers and dryers, ample storage space, at least one-and-a-half baths in two- and three-story garden and townhouse units, and bedroom sizes that accommodate standard bedroom furniture. Phase 5 Universal Design

(UD) Building (On-Site). A single, universally-designed building will be centrally located onsite in the heart of Near North and convenient to public transit, the planned green grocer, and the Affinia health care clinic. The UD building will have 54 units including 50 1-BR and 4 2-BR units. Modeled after MBS’ 6 North Apartments (designed in partnership with a local disability rights organization), the building will be served by an elevator to allow 100% accessibility.

Common areas and apartments will include many easy-to-use, adaptable features that are instrumental for residents with disabilities to live independently, and are convenient to residents without disabilities. This building responds to several market demands: 1) 1-BR occupancy levels at PS remain consistently high compared to other unit types; 2) the St. Louis Housing

Authority’s Section 8 1-BR wait list has 14,000 individuals; and 3) the community expressed strong interest in housing options for a range of household types, including for single adults and couples. The 54 units including 26 Section 8 replacement units (48%), 15 affordable LIHTC

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 5 units (28%), and 13 market rate units (24%). Nearby 1-BR market rate units are priced considerably higher, driving many younger renters in particular to suburban and other apartment markets. The UD building’s contemporary design, welcoming common areas, fitness center, and accessible laundry facilities on each floor will make this an attractive option in the NNS.

Funding sources can be found in Attachment 20. Phase 6 (On-Site Family). The Plan calls for the final phase to be developed in NNS at the existing historic St. Louis Brewery (1700 N 20 th

St.). The design of “The Brewery” allows for more diversity in housing by providing a denser, hip alternative in a historic structure that is particularly attractive to the millennial generation. It provides a housing option for employees of NGA within a block of their new headquarters. The renovation plan updates all 140 mixed-income units over one phase, replacing carpet with plank flooring, updated cabinets, sustainable features and new energy-efficient appliances, water and light fixtures. Common areas will be completely upgraded, including the fitness center, community spaces and pool. The Brewery currently has no subsidized units. Under the Housing

Plan, 67 Section 8 subsidies (48%) will be ported from a PS HAP contract to The Brewery (33 1-

BR’s, 25 2-BRs, and 9 3-BRs). The remaining 73 units include 34 affordable LIHTC (24%) units and 39 market rate units (28%). Market rents will range from $780 for a 1-BR, $950 for a 2-BR, and $1,090 for a 3-BR and demand for this housing is demonstrated by the market study

(Attachment 37). MBS intends to obtain a Rent Comparability Study to increase rents and raise additional funds to invest back in PS and NNS. Funding sources are in Attachment 20.

One-for-One Replacement Plan 1-BR 2-BR 3-BR Total Section 8 Total BRs Units

Existing Preservation Square 60 182 100 342 724* Phases 1-4: On-Site Family 44 139 66 249 520 Phase 5: On-Site UD 24 2 0 26 28 Phase 6: On-Site Family 33 25 9 67 110 Total Physical Replacement 101 166 75 342 658*

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 6 *The NOFA and related FAQs state replacement housing must comply with Choice and Section

8 requirements. Section 8 allows the bedroom mix to be adjusted to better meet the target market demand (subject to HUD approval), so long as budget neutrality is maintained. The Housing Plan therefore adjusts the bedroom distribution of the Section 8 units across each phase, but replaces each of the 342 Section 8 HAP units one-for-one. As part of the relocation plan, we are requesting 331 Tenant Protection Vouchers (Att. 59) to provide both housing choice options for existing residents and to provide tenant protection for residents that have to be relocated off-site during construction. The development team has a goal of “patchwork” on-site, one-move relocation, to keep as many Section 8 families in the community as possible during the construction period. Housing Objectives and Metrics to Measure Long Term Success. The housing objectives include those listed in the NOFA and an additional one adopted by the community during the planning process. Strategy #1: Energy Efficient, Sustainable,

Accessible, Healthy, and Free from Discrimination. Reducing energy consumption from fossil fuels, promoting good health, and affecting a positive impact on the environment are of great importance to the CNI design and development team. As detailed in Exhibit G.5 below and

Attachments 38 and 43, all housing will be built to achieve Enterprise Green Communities certification, which includes ENERGY STAR v3, and the neighborhood will achieve LEED-ND certification. This will result in a dramatic reduction in mold and indoor air-related health issues, lowered utility costs, and mitigated negative impacts to the environment such as greenhouse gas emissions. Buildings will also incorporate resilience standards to better withstand severe weather events (heat, wind, rain). Site strategies to conserve water, manage surface runoff, and encourage native species will allow adherence to the local consent decree that requires private developments to detain stormwater runoff on site as they are revitalized. Native trees and

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 7 vegetation are used throughout to prevent erosion and create a beautiful environment that requires little to no irrigation. An accessible and healthy lifestyle in the neighborhood is achieved through the restoration and connection to the traditional street grid, meaning improved walkability, bikeability, and connectedness of the community to downtown and other amenities in St. Louis’ urban core. HUD accessibility standards will be exceeded: 14% of the units across unit sizes will be accessible to people with disabilities (5% family units and 100% UD building),

100% of ground floor garden apartments will be visitable and adaptable, and all townhomes will be visitable (zero-step entrance, 32 inches of door passage space, and a wheelchair-accessible ground floor bathroom). 5% of units will be wired for visual and/or hearing impairments.

Sidewalks and paths of travel will be designed to ADA and UFAS standards. As described further in Exhibit J, the development team is also committed to affirmatively furthering Fair

Housing and increasing racial, ethnic, and economic diversity to create a community free from discrimination. Outcomes: Improved Housing Quality and Energy Efficiency; Improved

Allergen-Related Health Outcomes; Improved Accessibility and Visitability; Increased

Connectivity; and Reduced Concentration of Poverty. Metrics: Number sustainably-certified units added to St. Louis’ overall housing stock; percent reduction in utility costs and use over conventional construction; percent units developed for persons with disabilities; percent of childhood asthma and allergen cases; change in racial diversity; and change in neighborhood walkscore. Strategy #2: Mixed-Income. The Transformation Plan provides for a mix of market rate (25%), affordable (26%), and deeply affordable (49%) housing for households from a broad range of income levels, including very-low-income, low- and moderate-income and households with unrestricted income. It is anticipated that the increase in housing options for various income levels and the aesthetic design and sustainability of the housing will serve as an incentive for

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 8 families already living in Preservation Square to stay and for new families to move in.

Outcomes: Preserved Housing Affordability and Improved Income Diversity in PS and NNS.

Metrics: Sustained multi-year occupancy rates of replacement rental units for extremely and very-low-income households, low- and moderate-income households, and unrestricted households (balanced, sustained mix); percent homeownership by low / median income in PS and broader NNS. Strategy #3: Well-Managed and Financially Viable. The new development will be privately owned by entities for which an affiliate of MBS will be the General Partner; and privately managed by McCormack Baron Management (MBM). MBM has over 30 years of mixed-income property management experience and currently manages over 30,000 apartments at over 350 properties across the country. MBM is highly experienced in managing to market- rate standards and in accordance with HUD/LIHTC compliance requirements. Management will regularly inspect units and respond to maintenance requests within 24 hours. Operating budgets for all phases account for the rental income that can be generated from the project and the costs of maintenance and operations to market rate standards, including sufficient reserves to maintain, repair, and replace systems as needed over time. Most importantly, staff will treat all residents professionally with dignity and respect, and respond with prompt and courteous service. As the plan transitions to implementation and completion, resident and stakeholder input will remain regular and critical (discussed in Exh. I). Outcomes: Improved Housing Quality for the Long

Term; All Residents Feel Connected, Heard, and Valued. Metrics: Regular financial/property management ratings; occupancy turnover rates; health of maintenance reserves. Strategy #4:

Integrate Housing with Neighborhood Initiatives to Create a Safe, Engaged, Age-Friendly

Community by Design. HUD standards and best practices grounded in New Urbanism confirm that good physical and social community design help ensure that spaces for community

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 9 interaction are safe for people of all ages in which to walk, play, sit, spend time outdoors, and socialize. By reconnecting the street network, orienting buildings toward streets (with fencing between buildings to create private interior yards, green space, and well-lit sidewalks and parking areas), and integrating accessible and age-friendly building entrance and sidewalk design, the plan creates new, safe public space. Balconies and front porches create “eyes on the street” and better transition from the public realm of the street and sidewalk to the private realm of individual homes. Small pocket parks offer open green spaces to stop and catch one’s breath or stop and play. Resident engagement with opportunities for social interactions through recreational space, health programming, high quality management, and resident management/onsite employment also leads to safer communities in which all people feel welcome. This concept is thriving in NNS for other neighborhood groups, and MBM employs it at properties with overwhelming success in resident satisfaction and lower crime rates than in neighborhoods with less opportunity for social engagement. Outcomes: All Residents, Including

Vulnerable Populations, Feel Safe; Strong, Stable Neighborhood. Metrics: Percent of residents reporting a strong sense of community and safety; change in Part 1 and Part 2 crimes; percent of residents reporting feeling socially engaged with neighbors; rate of age diversity. Possible

Alternatives in the Local Housing Market. The team evaluated possible alternatives to the current Housing Plan and determined that, based on feedback gathered during the planning phase and the market study, developing a more balanced array of mixed-income housing options in the neighborhood was the most appropriate response in this neighborhood. Alternative 1 – Rebuild in Another Community: The site is 23.8 acres located at the center of the NNS, near the critical downtown employment hub as well as the planned improvements to the NNS neighborhood, like the NGA investment. The site has strong access to highways and additional manufacturing and

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 10 warehousing job opportunities in both Missouri and Illinois. Rebuilding off-site would add substantial costs, absorb scarce resources, would leave this critical core of the community vacant, and not take advantage of this central location served by existing services. Alternative 2 –

Rebuild 100% Section 8 Housing: There is a strong correlation between the concentration of poverty that existed at PS and the decline in the quality of life and housing. While some community residents advocated preserving PS, this option is not financially viable from an operating standpoint nor as a long-term community development strategy for the neighborhood.

Alternative 3 – Rebuild with Minimal Public Housing and Maximum Market Rate Housing –

This part of the neighborhood is not ready for 100% market rate rental, as confirmed by the market analysis. Although demand for affordable housing is high and market rate demand is expected to grow, during three years of community meetings, residents spoke up time and again on the continued need for public and affordable housing units. The size of the PS site, with the nearby Brewery site, permits not only the preservation of over 100% of the existing subsidized units, but introduces a more economically-stable mix of income levels without sacrificing the urban neighborhood character and reduces the density to a more appropriate level. The proposed income mix has proven successful in stabilizing similar markets similar around the country.

G.2 Mixed-Income Development. Of the total 695 units to be developed, 342 (49.2%) of the units are Section 8 replacement units. Of the remaining 353 units, 177 (25.5%) (177) are affordable LIHTC (up to 60% AMI), and 176 (25.3%) are market rate (60% of AMI and above).

G.3 Long-Term Affordability. All replacement units and all LIHTC units will have, at a minimum, a 40-year affordability restriction recorded as deed restrictions/land-use restriction agreements on each phase, placed at closing.

G.4 Design. The Near North Side planning process resulted in a community-based vision that

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 11 integrates the mixed-income, mixed-use redevelopment of PS with a host of complementary investments in the broader neighborhood, connected by improved infrastructure and streetscapes.

The site plan (Attachment 40) works to restore and reinforce the qualities of adjacent streets and blocks, knitting the neighborhood together with surrounding blocks by eliminating inward-facing cul-de-sacs and creating new pedestrian-friendly thoroughfares by deconcentrating the neighborhood in key locations. 1) Design Elements. The proposed design replaces outmoded

Section 8 units with a selection of rehabilitated and new mixed-income garden and townhouse apartments designed to contemporary architectural standards and market preferences, and target demographics. Rather than side walls facing the street, all residential front doors and front porches will face public streets. The design is modern, yet well-integrated with the architectural character of the century-old neighborhood surrounding it in terms of materials and colors, appealing to families and individuals who seek an affordable option and have the means to move to the suburbs, but prefer to stay in the City. 2) Unit and Room Sizes. All new 1-, 2-, and 3- bedroom units will be designed to a market rate standard. Room are large enough to accommodate modern furniture and room sizes and bedroom configurations have been designed to accommodate the needs of contemporary families, including ground-floor powder rooms in townhouses, in-unit washers/dryers, and large closets. 3) Compact, Pedestrian-Friendly,

Mixed-Use Neighborhood. The plan works to reconnect to the traditional block pattern to create a framework that supports compact yet comfortable development, connections for pedestrians, and a more diverse mix of land uses. It has a diversified architectural density of two- and three- story garden, townhome and mixed-use buildings with higher densities on the larger collector streets. Different building types create variety and diversity from the street that is attractive to pedestrians, and both contextual and contemporary, elevating traditional designs to tangibly

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 12 demonstrate new investment in North St. Louis. The plan features new, continuous, and accessible sidewalks and crosswalks; improved street lighting and drainage; buildings that face the public realm; and opened up local streets that provide better connection to parks and bike routes, such as N 20th St. and the proposed 14th Street Greenway. The improvements promote walking, biking, and accessibility to healthy foods and other community amenities that aid in a healthy lifestyle. The Housing Plan complements the Neighborhood Plan by providing 7 live- work units and 2,400sf of commercial space along 14th Street as well as a 6,700sf community/management building. 4) Community Space/Recreation. The design compliments the existing field and courts in nearby Murphy and Desoto parks with new open space, play structures, and garden plots. The centerpiece of the housing site is the state-of-the-art community space requested by residents. This 1.4-acre hub includes a community center a with fitness center and classrooms, and outdoors a splash pad, picnic pavilion, play area, revamped sports courts and pool, and large trellis with seating. Each residential block incorporates a playground and community garden. 5) Defensible Space. The plan is designed to create defensible space by incorporating Crime Prevention Through Environmental Design (CPTED) principles to deter criminal activity through natural surveillance, natural access control, and clearly defining public versus private spaces. Some proposed elements include: security lighting; security cameras; windows overlooking sidewalks, parking lots, and parks; limited entrances to buildings and parking spaces; and see-through fences between buildings. 6) Micro-climate Appropriate

Landscaping. The plan follows Enterprise Green Communities (EGC) criteria, which include native species and xeriscaping to reduce the need for irrigation and provide for landscaping that is resilient to dramatic weather events. Native shade trees will help restore the native microclimate and reduce the heat island effect, conserving energy and promoting livability by

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 13 creating more comfortably enjoyable outdoor spaces. 7) Stormwater Management Practices.

Aggressive strategies will be employed to address stormwater run-off, consistent with EGC and to meet local standards for zero impact. The design incorporates native raingardens and underground storage trenches to clean and detain precipitation, mitigate flash flooding, decrease the impact to the combined stormwater-sewer system, and increase resilience to extreme weather events. The Sewer District has committed to funding the stormwater collection features.

G.5 Green Building. All new and rehabilitated replacement housing will be built and certified to

Enterprise Green Communities Criteria (EGC) 2015 Standards, either under the new construction

(all new construction), substantial rehab (on-site rehab) or moderate rehabilitation (Brewery) standards. EGC increases the efficiency of the buildings and systems by including ENERGY

STAR for Homes certification and/or, in the case of rehabilitation, a HERS score of 85 or less, making use of renewable energy for water heating, installing energy efficient appliances and lighting, and using ENERGY STAR-certified roofing product. EGC prevents wasted natural resources by using environmentally preferable materials and minimizes construction wastes and promotes healthy living environments through the use of healthy interior materials (low- and no-

VOC paints and adhesives, Green Label carpeting and other environmentally preferable flooring, formaldehyde-free wood products, and asthmagen-free materials), integrated pest control, adequate ventilation planning, and mold prevention. Attachment 43 outlines what techniques and strategies will be used to achieve EGC (based on 2015 standards). In addition to EGC, the team is committed to achieving LEED-ND Certification (Att. 38). MBS has 10 projects certified under

EGC, 9 projects in construction, and multiple ones in the design phase. MBS was the first developer in the world to receive two Stage 3 (completed) LEED-ND certifications. It has also completed two Stage 1 LEED-ND projects, and 4 additional LEED-ND ones are in development.

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 14 G.6. Land Use Approvals. As demonstrated in Attachment 44, all discretionary land-use approvals, other than design / permit reviews, have been secured for the first phase and all phases of housing.

G.7. Financial Feasibility. As demonstrated in Attachments 20 and 48, the housing plan is sound and financially feasible with only a small percentage of the budget unidentified. Further,

Attachment 13 demonstrates the commitment of the lead applicant to identify and commit any additional resources for Part A and Part B development costs.

G.8. Housing Development Leverage: The $20.65 Million in Housing CNI funds will leverage

$111 Million in other funds for a total housing investment of $132 Million. Of this, $16.291

Million has been firmly committed (Attachment 53).

Near North Side Choice Neighborhood Exhibit G: Housing Strategy Page 15