A-MILL Artist Lofts 2017 Colvin Case Study Challenge

A-MILL Artist Lofts 2017 Colvin Case Study Challenge

Sponsored by November 2017 Team 9 Table of Contents

Introduction...... 1 Historical Context...... 2 Developer...... 3 Vision...... 4 Project Description...... 5 Market Analysis...... 6 Planning & Entitlement...... 9 Project Financing...... 11 Design & Construction...... 13 Marketing...... 16 Operations...... 17 Impact of Development...... 18 Appendix...... 19 • Draw Schedule & Market Analysis Capture Rate...... 19 • Sources and Uses...... 20 • LEED Score Card ...... 21 • Comparable Map ...... 22 ∗ Comparable Quality & Rent ...... 23 ∗ References...... 24

November 2017 A-Mill Artists Lofts | Colvin Case Study Challenge Introduction

Awards

• Business Journal - Best in Real Estate- Adaptive Reuse Multifamily

• NAHB - Multifamily Community of the Year

• Affordable Housing Finance - AHF Readers' Choice Awards

The A-Mill Artist lofts are Dominion, a Plymouth, MN • Novogradac - Historic located in the historic Pillsbury based developer, spent $150 Rehabilitation Awards flour mill building; in the heart million dollars restoring the of downtown Minneapolis, original construction of the mill • NAHMA - 201 6 Minnesota. Originally into a gathering place for both Affordable Housing local artists and the community. constructed by Charles Alfred Vanguard Award Historic Pillsbury in 1 880, the Pillsbury The buildings 250 artist lofts, flour mill was one of the largest artist workshops, and social • MFE Awards – Project of flour mills located in the U.S for spaces, are sustainably designed the Year: Green over 40 years. Powered by water utilizing hydrothermal heating from the St. Anthony Falls, the and cooling, roof water • NH&RA- Timmy Award Pillsbury flour mill produced irrigation, and LED lighting. -Best Historic over 1 7,500 barrels of flour per The building also includes a Rehabilitation day with the use of two large conversion of the old neon hydro-powered turbines located “Pillsbury’s -Best Flour” sign. in raceways under the mill. This flour was shipped from the heart of the mid-west, along the mighty Mississippi, to consumers throughout the U.S.

Recently this historic building experienced a rebirth as a LEED certified affordable artist lofts building anchoring the cities Mills District.

Page 1 1 Historical Context

In the 19th century, as the from Northern Minnesota and Western Frontier began Platteville limestone from a local settlement, Charles Pillsbury was quarry. Pillsbury insisted that the attracted to an area in building have a style, which was Minnesota alongside the uncommon for a factory Mississippi river. Pillsbury was building in that era, and drawn to a piece of land in commissioned well-respected Minneapolis directly alongside Minneapolis architect Leroy the only waterfall on the entire Buffington to design the river; Saint Anthony Falls. What complex. Historians now refer to as “The waterfall that built Charles Pillsbury started his Minneapolis”, Saint Anthony career by making technological stems and seeds and further Falls was the foundation of the improvements to the middlings refined the flour. This Twin Cities. The site became purifier, which allowed a more improvement resulted in an home to the Pillsbury A-Mill in efficient process of producing increase in capacity and energy 1881, which would serve as the flour for production. After the savings. The A-Mill’s flour world’s largest flour mill for completion of the A-Mill, production would steadily grow many decades. The 6-story Pillsbury made another building was constructed with from 4,000 barrels per day in technological advancement with local materials: timber which 1882 to 17,500 barrels a day in floated down the Mississippi the plansifter, which filtered out 1905. James J Hill, another Twin Cities mogul, provided rail service and tracks directly into the mill where rail-cars were loaded before being shipped across the United States. In 1950, the plant was modernized to use the old water raceways to create power and generate electricity. The mill was eventually phased out of operation in 1975.

In 1966, the Pillsbury Milling Complex was added to the National Register of Historic places. The Pillsbury A-Mill became a National Historic Landmark, and is a contributing property to the Saint Anthony Falls Historic district. 2 Page 2 Developer

their new development & acquisitions LLC for the sole focus of acquiring and developing apartment communities.

Dominium expanded this vision, under the leadership of Mr. Mark Moorhouse, Mr. Owen Metz, and Mr. Neal Route, by investing in the A-Mill project in downtown Minneapolis. Aligning with local stakeholders, Dominium painted the vision of what is The availability of affordable confronted the affordable today the historic A-Mill Artist rental housing has become rental problem head-on as one lofts community. As an anchor a problem for our country. of our country’s largest cornerstone to the Historic Mills Within the past 8-10 years, affordable housing operators. district, the A-Mill artist lofts the availability of natural Dominium owns and operates provide not only affordable occurring affordable rentals, has over 26,000 apartment units housing for our community, but been diminished due to the throughout the continental encourage the development of reinvestment and refurbishment U.S. Originally founded in entrepreneurial artists; by of older apartment buildings. 1972, by Mr. David Brierton providing them with an inviting Largely a function of investors and Mr. Jack Safar, Dominium housing community where they seeking better returns in a low has expanded rapidly under the may work and live. interest rate economy, this trend initial vision of these early has forced many lower-income founds. In 1999, this initial As a community, the city households further away from vision was extended with the of Minneapolis, alongside urban cores. As a result, families formation of Dominium Hennepin County and are often strained with Development & Acquisition Dominium partners, have been additional commute times to LLC; under the additional at the forefront when investing their jobs, children are often leadership of Mr. Armand in the arts, and preserving forced to change school districts, Brachman and Mr. Paul Sween. the historical past of our and families are relocated further With the formation of the Mills district. This common away from the urban cores that Dominium Development & investment, not only provides often provide critical support. Acquisition LLC, Dominium the necessary foundation for the spun-off their initial property upward mobility of our citizens, As a company, Dominium has management group, and utilized but preserves our historical past.

3 Page 3 Vision

Vision needs, Dominium is During the peak of operations, addressing the national shortage the Pillsbury Flour mill used of affordable housing, creating innovative technologies and was a local jobs, and acting vital component to American environmentally responsible by growth. Over time technologies restoring and improving evolved, and the one-time sustainable features within the nationally significant A-mill lost building. Dominium has created importance. What had once been a unique space which will be a an impressive structure had breeding ground for innovative become a vacant and thinking and artistic expression deteriorating limestone building. for the city of Minneapolis. Disregarded and passed over by Dominium has put their stamp many, Dominium had a vision, on the A-Mill apartment lofts, and identified an opportunity but have done so with respect for with the A-mill. Dominium, a tradition and without leader in low-income housing, compromising historical and eras. Dominium’s energy and environmental integrity. sustainable and socially design, and historical responsible actions have The A-Mill bridges the past with redevelopments, identified the produced positive economic the future, and is a passing of the A-Mill project as aligning effects, and has kept the torch between two great perfectly with its core tradition alive. The A-Mill will Minnesota companies and competencies. By re-purposing once again have a positive and leaders of their respected fields the use of the building to adapt meaningful impact on society. to the current

4 Page 4 Project Description

Site Plan Amenities The site is located East of The A-Mill project is a low-income housing tax credit Southeast 3rd Ave and North development with rents fixed to 60% of the area median of Southeast Main and consists household income (AMHI), and includes the following of the following buildings: A- amenities: in unit Washer/Dryer, Central Air Conditioning, Mill North, A-Mill South, Red Rooftop Deck, Galleries, Concierge, Fitness Center, Yoga/ Tile building, the Warehouse Pilates Room, Music, Dance, Painting, Pottery, and building are the building on Photography Studio. Hydrothermal electric heat and trash the site map in dark yellow removal are also included in the tenant’s rent. There are also The grain storage building and 209 underground parking garage spaces. the Machine shop are the building in light yellow. All buildings have residential units with the exception of the White Elevator grain storage building on Lot 3 and the Machine shop, which are both behind the A-Mill North, A- Mill South and Red Tile Building.

Page 5 5 Market Analysis

Two market studies were commissioned by Dominium to measure demand for the proposed 251 unit low income housing project. A market feasibility study was prepared by Vogt Santer Insights (VSI), which revealed strong demand for the proposed project, and indicated that the proposed site would compete very well in the market. A survey report was prepared to measure market interest among regional artists by a non-profit organization called PLACE (Projects Linking Art, Community & Environment). The results of the survey report indicated a high level of interest among Twin Cities artists; and also their support for the project.

The data for the Market study projections were based on the West, Sheridan, Downtown prepared by VSI was collected analysis of the following factors: Minneapolis and Downtown from the Area Chamber of West. The boundaries of the site Commerce, The 1990 and The Primary Market Area PMA included I-94 on the south 2000 Census on Housing, Typically defined as the and west, I-35 West on the east US Department of Labor smallest geographic area which and Northeast 18th Ave on the & Commerce, ESRI, and is expected to generate the north. interviews with local planning majority of support for the and building officials. VSI used project. The area is defined Demographic Trends/ the data collected in the report by evaluating demographic Economic Trends/ Site Evaluation to define the primary market and socioeconomic factors, area, evaluate economic and and also involves a drive-time At the time of the report in demographic characteristics, analysis to the site, rather than 2012, Population in the site analyze the rental market, being defined by a radius. eTh PMA was projected to grow, identify competing properties, Primary Market Area defined and 72.5% of occupied housing make rent recommendations, by the VSI study included a units were renters, which was predict the length of lease-up total of 5.3 square miles and very high, and represented great periods, as well as estimate included the neighborhoods of potential. In terms of economic occupancy levels. Absorption Marcy-Holmes, St. Anthony trends, the Hennepin County

6 Page 6 Market Analysis economy is better positioned and market rate units were rates of existing LIHTC within than other MN counties, and 97.6% occupied. Interviews the market, VSI predicted the the nation as a whole, given its with city officials and local subject development would be lower unemployment rate. The realtors revealed 97 tax credit very competitive with existing city of Minneapolis is home units were under construction, tax credit properties and would to large employers such as: The and 437 market rate units were have distinct advantages over University of Minnesota, Target under construction. Tax credit almost all the existing tax credit Corporation, Fairview Health vacancies were lowest among properties. Proposed rents Services, and Wells Fargo Bank. high quality projects and with an would be set at maximum The site evaluation was also anticipated quality rating of A, allowable levels. strong, with nearby walking the site was expected to compete trails, a park, and luxury condos well in the market. Market Rate Comparable and apartments. The site is less Properties Competitive Property than 2 miles from shopping, Analysis There were five market rate recreation, employment, and comparable buildings with entertainment opportunities. There were ten comparable a total of 650 units, and an Strong economic and LIHTC buildings with an average overall occupancy rate of demographic factors are overall combined occupancy rate 95.8%. These buildings were all supportive of affordable housing of 97.8%, and all were inferior inferior or equal to the subject and the site’s location and or equal in location, overall property in location and quality, proximity to community services quality, and amenities. The however, two buildings had also has a positive effect on its amenities of the proposed site superior amenities. Based on the marketability. are considerable: in unit washer/ dryer, walk-in closet, central AC, rent levels of these comparable Overall Rental Housing a rooftop deck, and studio spaces market rate buildings, the Market Conditions for music, dance, painting, proposed collected rents pottery, and photography. Based (maximum allowed) are 49.8%- There were 8,219 total units on the analysis of proposed 74.2% of achievable market within the site PMA, tax credit rents, unit sizes, amenities, rents. units were 98.3 % occupied, location, quality, and occupancy

7 Page 7 Market Analysis

Depth of Market rate would be required, which This information was collected Under the LIHTC program, is moderate. This capture rate through a survey, which was eligibility is based on household indicates that for a project with aggressively advertised to income not exceeding the so many units, an extended lease private and public regional arts targeted percentage of area up period of more than 1 year organizations and also advertised median household income would be likely. through social media, email (AMHI), depending on blasts, flyers, and neighborhood household size. The subject Vogt Santer Insights had newspapers. The number of property would be restricted concluded that all factors were artists that responded to the to households with incomes indicating strong demand, and survey was 572, which was lower of up to 60% of AMHI that the proposed site would than expected. PLACE believed of Minneapolis-St. Paul- compete very well in the market. that the number of respondents Bloomington metropolitan Based on the location, overall represented a very small statistical area (MSA). This quality, and amenities, the percentage of the total number maximum income calculation site was determined to have of artists in the Twin Cities and was based on a three person a distinct advantage over all surrounding areas. However, household. Minimum income existing tax credit properties the results of the survey were requirements were determined in the PMA. Assuming the encouraging nevertheless: using a 35% rent-to-income recommended rent gaps would • 65% would relocate to the A-Mill Artist Lofts model, making the income- be used for the studios, one- bedroom, and two-bedroom • 66% would be willing to be on appropriate range required to the waiting list live at the proposed site between apartments, VSI projected the • 56% would secure space via a $29,657- $44,460. Based on this proposed site to reach stabilized letter of interest and/or deposit range there were an estimated occupancy of 96% within 12-13 • ~60% would qualify based on 2,257 income eligible renter months of opening. Assuming the income profile required households in the site PMA the recommended rent gaps in 2014. With the proposed were not used, the anticipated A breakdown of artist type 251 units, an 11.1% capture occupancy rate was 94%, with a revealed performing artists lease-up period of 15-17 months were the most prevalent group after opening. of artists and the survey also revealed that natural light was The purpose of the PLACE the most important amenity for survey was to study the the artists. This information market interest, space needs, provided valuable insight into and amenity preferences for the the type of space and design the A-Mill artist lofts, as well artists were looking for. as collect demographic and household income data among Both market studies indicated the target audience, which is the strong demand, and fully Twin Cities Artist community. supported the proposed project.

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Page 4 Planning & Entitlement

Land Contract Part II required that the districts, required engaging The existing A-Mill / Pillsbury architect’s plans encompass stakeholders to minimize the preservation of the negative development property was originally proposed facility. Part III involved impacts. The stakeholders to have luxury condos as far back an inspection, to confirm involved were the Shoreland, as the early 2000’s. This initial that the preservation was Mississippi River Critical proposition by another developer in fact completed following Area, and University Area however got side-tracked in construction. overlay districts. These overlay 2003 when the initial condo • Geotechnical - A planned districts identified challenges underground garage required in preventing damage to project failed and the project excavation. The Geotechnical the river/shoreline, and was foreclosed on by BNC soil conditions were a “Type conforming to the University Bank. Following foreclosure, C” soil containing gravel master planning goals. These the property sat vacant for an and sand that does not challenges were discussed extended period of time; causing stick together. To prevent a with the stakeholders during the National Trust for Historic cave-in during excavation. A an appeal of Dominium’s Preservation to eventually more expensive temporary application. However, the soil retaining shoring was application was approved intervene. The National Trust required to hold back the soils on the condition the for Historic Preservation to build the parking garage development comply with; designated the Pillsbury A-Mill then the soils are back-filled historic preservation, structure one of the top 11 most against the parking structure. conservation of environment, endangered sites in America. • Environment - Dominium and refurbish the “Pillsbury’s This designation drew the hired Braun Intertec for a Best Flour” red neon sign. attention of both the local Phase I Environmental Site Variances were granted for Assessment. The assessment a Floor Area Ratio from community and area developers. provide by Braun Intertec 2.7 to 3.6, and a historic In 2012, Dominium stepped-in determined that there was a variance on parking allowed and purchased the property after high probability of hazardous an underground garage for completing its entitlements. materials onsite. After Phase the development to proceed. • Appraisal - Dominium had II testing confirmed positive, • Construction Documents - Integra Realty Resources this assessment resulted in The BKV Group was retained conduct an appraisal for the the creation of a Hazmat under contract by Dominium fee simple interest Pillsbury Response Action and to design and engineer A-Mill property on December Construction Contingency the A-Mill project. This 7th. Plan. This plan included the included providing plans and • Historical Preservation application for approximately specifications as part of the - Dominium planned to $1 million dollars in asbestos proposed project scope. Weis use Historic Tax Credits and lead abatement; as well as Builder’s was also retained as a means to support the $700 thousand dollars in soil as the projects General A-Mill project. The Tax remediation. contractor. As part of the credit program is a three-part • Zoning - The A-Mill property initial planning process, Weis process. Part I required that was originally zoned I2 Builder’s originally estimated the building be designated industrial and changed to that the project would cost as historical, which had C3A (Community Activity approximately $90 million occurred in 1966 once it Center District) back in dollars and have a scheduled was put on the National 2004. This zoning and the timeline of approximately Register of Historic Places. several adjacent overlay two years.

9 Page 9 Planning & Entitlement

• Permits - Utility permits for gas, phone, internet, sewer, water, and electric were confirmed in April 2013; and made available prior to the September 2013 construction start date, in accordance with the acquisition contract. • General Partnership - An entity was required to be formed to handle credit to equity on the A-Mill. When seeking out an investor, Dominium required an investment partner with adequate monetary backing, as well as a diverse portfolio that would handle the risk of waiting for sustainable occupancy. Berkshire the state Historic Tax Credits Bank. Two of the structures Hathaway encompasses these (HTC) equity. MLHA4 from the acquisition were not requirements and was in-fact LLC .005% is divided included in the renovation. the private capital provider for between two entities. An These structures included the the equity financing through asset protection of Minneapolis Leasing Machine shop and the Grain Affordable Housing Partners, elevators. The Machine shop Inc. (AHP) on the Pillsbury Housing Associations IV, Limited Inc. (MLHA4 Inc.) was purchased by the Artist Lofts. The general with 88.85% ownership for Minneapolis Leasing Housing partnership agreement the Dominium executives, Associations V, LLC (MLHA5 organization chart for the and the Enhanced Historic equity financing displayed LLC) for $290K; and was Credit Partner MN Fund, subsequently sold to Shafer shows AHP with 99.99% LLC (EHCP) with 11.15% Richardson for $700K. The ownership partnering with the ownership. executives of Dominium Grain Elevators were purchased under the asset protection of by the Minneapolis Leasing Acquisition Polaris Holdings 1, LLC (PH) Housing Associations VI, LLC with .005% in Minneapolis Dominium purchased the (MLHA6 LLC) through a loan Leasing Housing Associates appraised $6M property with from U.S. Bank. The Grain IV, Limited Partnership the equity from the Non- elevators were considered (MLHA4 Partnership). These Competitive (4%) Housing historically significant by the entities of the organization Tax Credits. These tax credits National Preservation Society. chart manage the Non- financed at least 50% of the The MLHA4 Partnership Competitive (4%) Housing $3.9M land and building facilitated equity and backed Tax Credits (NHTC); and development costs. The the bridged loans to finance the contribute to the projects property was purchased from A-Mill project. equity financing. BNC • MLHA4 LLC channels 10 Page 10 Project Finance

Project Financing project entailed approximately Dominium partners with The financing of the $150M $98M of both Federal and approximately $74M in A-Mill Artist lofts entailed a State funding realized at various capital equity financing. The combination of debt and equity different project milestones. The equity was provided to the through the Minneapolis Lease Federal funding of approximately Dominium partners over six Housing Associates IV, LLC $80M was provided in the payment installments based on (MLHA4) Partnership that form of Non-competitive (4%) predetermined milestones set included Federal and State Housing Tax Credits (NHTC), forth in the general partnership government agencies; as well as and federal Historic Tax Credits agreement. These initial equity both public and private banking (HTC); with the goal of payments allowed the MLHA4 and investment firms. As an providing both affordable rental Partnership to procure both industry leader in affordable housing, and preserving the short-term construction rental housing, Dominium historic nature of the existing financing, letters of credit, and partnered with the Berkshire A-Mill structure. For the Federal mortgage related financing. Hathaway Company, the tax credits, Dominium worked The state of Minnesota provided Federal National Parks Service, together with both the Federal similar state HTC; that mirrored US Bank, Hennepin County, historic registry and Berkshire the Federal HTC. Similar to the city of Minneapolis, and Hathaway when utilizing the the Federal tax credits, the Cornerstone Real Estate Advisors associated federal HTC. As part state provided reimbursement (Mass Mutual) for the financial of this partnership, the Federal for 20% of the qualified structuring of this project. As a National Parks Service provided construction costs utilized to team, the project entailed more tax credits for 20% of the preserve the structure. For these than three Limited Liability projects qualified rehabilitation credits, Dominium worked with Corporations (LLC) including expenditures. The $80M in the Federal National Park Service an entity of the Dominium tax credits were split with and State Historic Preservation partners, Federal historic tax Berkshire Hathaway receiving Offices, when procuring $27M credit / affordable housing 99.99% of the tax credits in state HTC. These credits partners, and Minnesota state and the primary Dominium were distributed in the form of historic tax credit partners. partners receiving 0.005% of a one-time tax certificate that the tax credits. As compensation was issued to a Historic tax Equity Financing for this exchange, Berkshire credit partners LLC formed by The equity financing for the Hathaway compensated the Dominium. In this case, the

11 Page 11 Project Finance the developer and U.S. Bank. The majority of these short-term notes were paid-off following construction. Following substantial completion, Cornerstone Real Estate Advisors (Mass Mutual Life Insurance) issued the development team their first $25.6M mortgage (5.20% APR) based on the $26M letter of credit provided by U.S. Bank. The conditions of this first mortgage and subsequent letter of credit Historic tax credit partners LLC of Minneapolis, and Hennepin included meeting specific lease- sold the $27M tax certificate County, are issued and resold up vacancy rates of 5% debt to U.S. Bank, with the $24M on the open market by a service coverage sustainable sale proceeds dispersed to the representative of Dominium, occupancy. Additional funding MLHA4 Partnership. Initially, with any profit margins going sources for the project included 12% of this amount was funded back to the borrower, and the $940K in environment clean-up at project closing, with the bond proceeds being paid back and remediation grants, $200K remaining balance funded to to both the city and county. for storm-water and interior MLHA4 Partnership once the demo, and $555K for site project received approval of the The construction phase was redevelopment and public realm Part 3 from the National Park financed with $86M in short- improvements. Service. This equity funding term credit provided and over time is distributed to guaranteed by U.S. Bank. This The financial Pro Forma entails the NLHA4 Partnership and credit was provided in the form a 15-year project payback period utilized to offset project related of $50M in short-term bonds with a cap rate of 5.5%. Also, as construction costs. with variable interest rates, $4M the developer, Dominium plans in short term bank notes, and a to hold the A-Mill as a long-term Debt Financing $26M letter of credit between investment. The debt financing for the project consisted of approximately $80M in Tax- Exempt Bond financing; with Hennepin County issuing $60M in bonds, and the city of Minneapolis issuing $26M in bonds to the borrower. As a perquisite for receiving Federal low-income housing tax credits (LIHTC), the tax-exempt bonds issued by both the city

12 Page 12 Design & Construction

Design & Construction This was largely attributed to The space planning for the erosion of the limestone block The design and renovation of interior spaces was another structure over time; with the the 1880 flour A-mill required a challenge the BKV Group was strong design and construction effects potentially caused by presented with. The interior team, that not only understood freezing and thawing in the cold the facets of new facility design, Minnesota climate. BKV Group spaces needed to be inviting for but understood how took on the challenge of not only the art focused tenants; to deal with the preservation repairing the structure by but the public that would of existing historic structures. reinforcing the exterior building frequent the building following BKV Group, an Architectural envelope, replacing grouting completion. Following an and Design consulting leader in extensive programming process, the apartment housing market, between the limestone blocks, the various stakeholders arrived rose to this significant challenge. and replacing the insulation Working in conjunction with around all main entries. This at spaces that included artist neighborhood residents, and was followed by the focused living spaces, dramatic state and county officials, BKV replacement of the original performance-focused gallery Group restored the charm of the blue-grey windows spaces, various art studio spaces original structure, well creating a prominently located (paint, clay, sound, and dance), as contemporary and inviting living throughout the structure. The well as state of the art amenities environment for the A-Mill’s replacement of the existing including a fitness center, a future tenants. windows required working with clubroom with kitchen, and a 7th various vendors when procuring As part of the design process, floor rooftop deck with the unique window BKV group followed a very fluid panoramic views of the design process, due to the measurements, paint colors, and downtown Minneapolis skyline. existing unknown conditions of glass types. The design of the exterior the existing facility. As the envelope and preliminary space architect and interior designer, planning was followed by the BKV Group was initially design of the interior spaces. The presented with the challenge of restoring the existing building interior design focused on a structure, and developing a space sustainable contemporary design. planning program that was When designing the interior, the acceptable for all impacted BKV Group implemented stakeholders. sustainable strategies including Hydro-electric power generation, The existing building structure high efficiency water-source heat- required an extensive design pumps, LED lighting, low-flow effort due to the limited available as-built documents plumbing fixtures, and daylight available, and the deterioration harvesting skylights. These of the existing structure. After sustainable strategies were initially taking ownership, it recognized by the U.S Green was determined that the seven- Building Council with the story limestone structure was project receiving LEED Gold leaning over two feet. certification.

13 Page 13 Design & Construction

The A-Mill received high marks between the limestone blocks the tunnels and power a water in the LEED certifications (tuckpointing) and repairing turbine attached to a shaft that category of “energy and extensive limestone spalling. In spun and turned the gears that atmosphere” achieving 28 points regards to spalling, the west drove the pulleys, conveyer out of 35 points. The hydro- façade experienced heavy erosion belts, and elevators that operated electric generator is expected to over the years; above the sixth- this historic milling structure. provide over 70% of the entire floor window heads, and at the complex’s electrical power; and water table bearing ledge. This The existing turbine shaft and erosion caused cracks, concave contributed to the projects turbine was retrofitted with a voids, and the expansion of the modern mechanical turbine after optimize energy performance limestone lintels. an extensive federal approval and onsite renewable energy process. The new mechanical goals. Additionally, the project Hydroelectricity, was the largest turbine powers a new electrical site received high marks on the sustainable endeavor envisioned power system and is controlled LEED certification scorecard on the project; and was by an updated Building due to providing a dense and subsequently a project within Automation System (BAS). This large volume site that itself. The implementation of new system allows the facility incorporated several diverse the hydroelectric system staff to not only monitor energy means of public transportation. required renovating the old usage in real-time, but allows for water diverting raceways that predictive monitoring of The project team experienced rerouted the river under the A- potential power system faults. As a list of challenges when Mill. The original underground a result, the system is highly repairing the exterior building structure built in the 1880’s efficient, and provides long-term envelope. These challenges allowed energy savings for both the included replacing grouting the water to travel through tenants and Dominium.

14 Page 14 Design & Construction

The soil on the A-Mill property railroad tracks were a processing center to the next was tested and found to have significant aspect of this floor down are still visually sediments that needed to be project as they remind us of present. The pulley wheels are remidiated. This remediation the historic past of the milling still in place and convey that the project required trucking the structure. The A-Mill is not hydro power machinery must contaminated soils offsite; and just an apartment building; but have traveled up through all the subsequently allowed for the a museum of artifacts. The floors to loop back down into the excavation of the current interior is similarly significant, processing equipment. All of parking garage. This new built around historic machinery this conveys the important underground parking garage was that describes a story of history of this Mill district covered with the current discovery. Inside, the design & structure and the importance of walkable park area; as well as the construction teams left the our flour milling past. The Owl replacement of the existing existing conveyor belt elevators, Eyes that watch over the A-Mill railroad tracks that weaved pulleys, and silos as-is preserving was incorporated into the between the silos and the main some of the existing milling construction of the building by A-Mill structure. The historic process. The grain chutes were outreach to local artists. flour dropped from one

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Page 10 Marketing

Dominium decided to set rents at the Maximum Allowable amounts at 60% of AMHI, and no rent gaps were put into place.

When PLACE conducted their Twin Cities Survey Report for the A-mill they created initial awareness within the artist community through the survey, social media, email blasts, flyers, and outreach was actually needed. also attended multiple artist to press. Relationships were also Dominium was already tapped events such as the Stone Arch established with leaders into the community because of bridge festival and Northern of private and public regional the Schmidt Artist lofts created Spark. art organizations such as in the neighboring city of St. Springboard for the Arts, The Paul. Word spread very quickly The website also proved to be a valuable marketing tool which Guthrie Theatre, The State Arts organically throughout the artist provided prospective tenants Board, MCAD, Juxtaposition, community. The Artist lofts with pictures and information The Walker/MNartist.org, and offered many desirable features regarding the building and the Cultural Affairs leaders for and amenities which made the amenities, rent and income space highly coveted. Through the cities of Minneapolis and St. guidelines, and an opportunity to experience and the insights Paul. This leadership group met request more information. with Dominium for a focus gained from the market Survey group meeting to discuss details report, Dominium knew what By opening day Dominium had of the project and to ask the artists wanted. Due to the the entire A-Mill Apartment Loft questions. These leaders served location, price, amenities, and fully leased. These leasing results as ambassadors to the artist uniqueness of the building, buzz exceeded expectations. The community. quickly circulated throughout market clearly liked what they However, not much marketing the artist community. Dominium saw.

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Page 10 Operations

On opening day, Dominium had managed to pre-lease the entire building and achieve 100% occupancy. With rents set at a maximum allowable amount of 60% AMHI, Dominium had exceeded leasing expectations without having to implement any rent gaps. Lease terms are a standard 12 months and rents will continue to be raised to meet the maximum allowable amount. Below is a history of A-Mill rent levels and qualifying total household gross income levels.

In addition, to meeting income Dominium has not experienced guidelines, prospective tenants any operational issues with the must also meet the artist A-Mill with the exception of the qualifications, which involves high heating expenses. However, an application requesting a this was expected due to the resume and portfolio, a history age of the building and the of creative and career goals, and high amount of common areas. the desire to engage in a creative Dominium’s current plan is to community. hold the property and continue to manage it. With 100% Dominium has internal occupancy rates and a current property managers that put interest list of roughly 1,600 high priority in the quality of people, the market clearly liked artists that enter the A-Mill. what it saw.

Page 17 17 Impact of Development

Dominium’s redevelopment a factory building created an artists. Artists that contribute to project of the A-Mill in industrial elegance which was the pulse of the city, but often Minneapolis was an incredible unheard of for that era. Charles struggle financially success, with seemingly flawless Pillsbury was a great American are now provided the space, execution. The project did not pioneer, and was truly ahead of resources, and inspiration to help experience any major unexpected his time. them continue to enrich the setbacks, was completed ahead Minneapolis art scene. of schedule, was financially Over 130 years later, Dominium sound, and produced better has continued the tradition, and Dominium’s socially responsible, than expected leasing results. added another chapter and environmentally friendly, Utilization of the federal and to this historically important, masterful restoration of the state tax credits was a creative and beautiful, monument. A-Mill is a great contribution to way to help finance the project. Dominium had taken a the city of Minneapolis, and is an There were many constituents crumbling building which extension of the vision Pillsbury involved with the project such had been vacant for years, and created in 1881. The redeveloped as: government officials and agencies, business partners, artfully restored this historic A-Mill will serve as a reminder of neighborhood groups, the artist masterpiece. Dominium has also Minnesota’s rich history for many community; and Dominium was lead in a socio-economically years, and is one of the finest and able to effectively align them all responsible manner by building most unique historical to a common vision. Dominium’s artist lofts and helping the city of renovations in the United States experience with LIH, energy Minneapolis retain talented local of America. efficiency, and historic redevelopments re-enforces their position as one of the top development companies in the nation.

In 1881 Charles Pillsbury created more than just a flour mill; he created a true contribution to society. The A-Mill not only supplied our growing nation with flour, but also stimulated the local economy by providing employment opportunities. Environmentally friendly and energy efficient methods utilized in operations were progressive, and the beautiful façade on

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Page 15 Appendix

Draw Schedule

Market Analysis Capture Rate

19 Page 19 Appendix

Sources and Uses

20 Page 20 Appendix

LEED Scorecard

21 Page 21 Appendix Comparable Map

Page 22 Appendix Comparable Quality & Rent

Page 23 Reference Page

• Historic American Building Survey: Addendum to Pillsbury Milling Complex, Pillsbury “A” Mill (HABS No. MN-29-5-A), National Park Service – Midwest Region • Vogt Santer Insights (vsi): Market Feasibility Study of Pillsbury Mills 116 3rd Avenue South dated January 25th, 2013 • BKV Group: A-Mill Artist Lofts Basis of Design document and site renderings received October 13th, 2017 • Dominium: A-Mill Artist Lofts Case Study, A-Mill Artist Housing Brochure, & A-Mill Bond Model dated August 28th, 2013 • Dominium: Acquisition of the Pillsbury A-Mill to be renovated into Affordable Artist Lofts memo dated October 10th, 2013 • Dominium: A-Mill Artist Lofts Grand Opening, Agenda & Talking points dated June 8th, 2016 • Dominium: University of St. Thomas A-Mill / Affordable housing PowerPoint presentation. • Dominium: A-Mill Artist Lofts letters of support: Friends of the Mississippi River, Preservation Alliance of Minnesota, Marcy Holmes Historic Neighborhood, National Historic Trust For Historic Preservation, & Soap Factory. • Twin Cities Artist Survey Report For The A-Mill Artist Lofts."Prepared by Projects Linking Arts Community & Entertainment (PLACE). June 15,2012.

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