HARTSONOMA 2150 WEST COLLEGE AVE

„ _ _.
REAL ESTATE CONSULTANTS SANTA ROSA, CA
EXECUTIVE SUMMARY

Michael Allen
Collaborative Housing Solutions
P.O. Box 4870
Santa Rosa, CA 95402

Dear Michael,
Collaborative Housing Solutions and the Sonoma County Water Agency has given us a clear directive
for the redevelopment of 2150 West College Ave. In response, we are pleased to present you with the
College Creek Conceptual Master Plan and Business Plan Outline. College Creek is a 100% affordable
workforce housing community that brings together the highest level of Green Development Practices
and community benefit.

The Master Plan features:

• In fill development of 140 units on 7.5 acres close to public transit, jobs and all conveniences
• A flexible Master Plan that allows the Agency to mix-and-match:
o A variety of unit types ranging from 1-bedroom to 3-bedroom
o A variety of settings ranging from buildings that appear as estate homes to a pedestrian
village
o Opportunities for both rental and for-sale forms of ownership
• This flexibility allows the Agency to react to market conditions as the project is being completed
• A one-acre opportunity site for special needs, affordable housing or special purpose housing
• Half-buried parking below the units that allows for:
o A car-free environment in and around the pedestrian village
o Large continuous expanses of open space, some almost the size of a football field.
o A mid-project green belt with a performing arts amphitheater and a resident-directed
community center
• Re-use of the entire existing on-site storm drainage system with no new outfalls into College
Creek and no increase in impervious surface
• Preservation of almost every tree on site and establishment of a protected riparian zone
• Preservation of the landscaped frontage along West College Ave
• Re-use of the existing entry and exit points and sidewalks
• Efficient green modular construction with solar orientation
• Recycled water for irrigation

PHONF: 415 -897 6088 PAGE 1 FAX: 415 897 5400

 • Creek side trail system with 50 to 70+ foot creek setbacks
• ADA and universal design, adaptability and accessibility

The Business Plan features

• Affordability levels of rental and sales prices ranging from 100% of median income to 68% of
median
• All homes affordable to households making median income or less with only a 30% total
housing expense ratio
• An operations plan that includes on site personnel for day care, management and maintenance
• A Development Program Financial Model that integrates:
o A complete breakdown of direct construction and infrastructure requirements and costs
o An analysis of indirect design and development costs
o An adjustable unit mix matrix for each building
o A chart of affordability options for each unit type
• Four alternative development scenarios
• A recommended preferred alternative leading to the highest and best use of the property.

This is a working document presented to Collaborative Housing Solutions and the Water Agency as a
first draft. It was prepared with a limited budget and so many exhibits, tables and drawings are not yet
in presentation format. We expect there to be modifications, additions and subtractions as we
progress through the review, entitlement, financing and construction phase of the project. Affordable
housing calculations will need to be updated to meet just-released 2008 figures.

In a separate document we will recommend the next steps for the Collaborative Housing Solutions and
Water Agency to take to move this project forward in the most efficient manner.

Thank you,

Rob Hart, President

HartSonoma

PHONF: 415-897-6088 PAGE 2 FAX: 415 8973400

 College Creek

Business Plan Outline

Background
The Neighborhood
• 2150 West College Ave, Santa Rosa, CA
• Site of former Sonoma County Water Agency headquarters
• Fully improved with office buildings, maintenance facilitates, landscaping and
infrastructure
• Road width of 4 lane drops to 2 lane in front of property, will eventually be 4 lane
• Small strip commercial across street provides conveniences
• A few vacant parcels that could go commercial with proper residential development of
subject property
• California Department of Forestry Fire Dept adjacent to the west.
• Single family beyond to the west
• Single family across street to the north
• Fire Department and Transit Station to the East
• Finley Community Park and Aquatic Center beyond to the east

The Site
• Generally level site bounded by College Creek to the south and east, and West College
Ave to the North.
• Fully landscaped
• Fully improved with roads, water, sewer & drainage

The Market
• The for-sale real estate market in Santa Rosa has collapsed.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.coni Page 1 July 9,2008
 • Historically there has been a wide split between market rate housing and affordable
housing.
• We have gotten to the point where affordable housing calculations lead to prices that in
some cases are higher than the market will bear.
• There is a strong demand for rental product.
• There is a weak demand for "for-sale" product.
• Santa Rosa maintains a quality of life that will continue to attract a strong base demand
for housing.
• Median Condo/Townhouse price in Santa Rosa: $209,000
• Median single family home price in Santa Rosa: $375,000

The Assignment
• Provide about 140 units of housing in a creative setting
• Approx 10 units for SWCA employees affordable to those employees at their current pay
scale
• Use green building practices and the latest sustainable techniques in land planning, site
work, construction and operations.
• Use the site as a laboratory for the North America Climate Initiative.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

\yww.HartSnnoma.cpm Page 2 July 9, 2008
The Master Plan
Goals Identified

Master Plan, Development Program & Business Plan as a Framework to Guide Development
• Master Plan identifies zones and land uses.
• Site Plan applies those land uses to the specifics of existing conditions
• Development Program identifies product sizes and ownership types.
• Business Plan provides alternatives development programs that give positive financial
results.

100% housing that is affordable

• Provide a variety of affordable housing types, settings and ownership methods.
• All homes should be affordable to households making median income or less.
• Provide greater than the 15% at 80% of median rule.
• We set the above criteria as a starting point to present a conservative analysis in a down
market. No allowance has been made for appreciation in rental or home prices.

The site has tremendous curb appeal - preserve that

• Create a 50 foot setback greenbelt along West College Ave.
• Preserve the mature trees fronting West College Ave.

• Re-use the existing entrance and exit.

• Keep frontage buildings low- Ito 2 story-and make them look like large single-family
homes.

A lot of infrastructure has been built in to the site - reuse what is possible
• Map the storm drainage system and preserve and re-use all major lines, inlets and
outfalls.
• Align roads and buildings to make use of existing improvements
• Re-use of existing drainage means no new outfalls into College Creek. This avoids Fish &
Game as well as Army Corps of Engineers permits.
• Attempt to re-use sewer and water points of connection.

A lot of work has gone into landscaping the site - preserve as many trees as possible

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 3 July 9,2008
 • Survey all existing trees

• Design Master Plan around major existing trees

• Save important groupings of trees such as amphitheater

Improve the quality of life for those who live here above normal workforce housing
conditions
• Cluster buildings into settings

• Provide large useable open spaces, not landscape slivers

• All parking half-buried underground
• Provide a multitude of on-site amenities that foster activity without using precious
natural resources.
• Provide flexibility in amenity end-use to meet as yet unknown community needs
• Resort-quality at a workforce level

Protect the watershed of College Creek

• Even though it is only a storm channel, the creek is a valuable habitat and amenity

• Observe 50-setback even though it is not required.

• Remove existing fence but control access at either end of property.

• Remove improvements within 50 feet of the creek.

• Landscape creek setback and encourage use of maintenance road as walking path.

Use efficient construction techniques to preserve resources, cut costs

• Building module fits underground parking module
• Height module fits code and maximizes wood-structure efficiency

• Floor plan modules are interchangeable and lead to componentization.

Take advantage of the latest in energy and resource-saving ideas

• Use recycled water for irrigation
• Consider recycled water for heating and cooling
• Consider solar power
• The entire Master Plan and Business Plan concept is green

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 4 July 9, 2008
Recognize the needs of the full spectrum of our society
• ADA accessibility and adaptability
• Universal design
• Parcel B provides opportunity for special needs housing
• 100% "housing that's affordable" provides opportunities for those usually unable to
enter the housing market.

Additional goals and refinements of the above goals will be described in future assignments.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 5 July 9,2008
600

500 -

400 -

300

200

Home Sales and Values in

100 — Santa Rosa, CA
HartSonoma 7-08
•Number of sales •Median Price

in LD LO in IA ID ID ID

Q. > a. >
QJ O OJ O
l/l Z
wy$$wi<
College Creek Regional Map
** *»

HARTSONOMA
REAL ESTATE CONSULTANTS
•— --

> s *

.S*-- *%"^
College Creek Context Map
HARTSONOMA
REAL ESTATE CONSULTANTS
Existing Conditions
HARTSONOMA
REAL ESTATE CONSULTANTS
The Master Plan
Goals Identified

Master Plan, Development Program & Business Plan as a Framework to Guide Development
• Master Plan identifies zones and land uses.

• Site Plan applies those land uses to the specifics of existing conditions

• Development Program identifies product sizes and ownership types.

• Business Plan provides alternatives development programs that give positive financial
results.

100% housing that is affordable

• Provide a variety of affordable housing types, settings and ownership methods.

• All homes should be affordable to households making median income or less.

• Provide greater than the 15% at 80% of median rule.
• We set the above criteria as a starting point to present a conservative analysis in a down
market. No allowance has been made for appreciation in rental or home prices.

The site has tremendous curb appeal - preserve that

• Create a 50 foot setback greenbelt along West College Ave.
• Preserve the mature trees fronting West College Ave.
• Re-use the existing entrance and exit.
• Keep frontage buildings low - 1 to 2 story - and make them look like large single-family
homes.

A lot of infrastructure has been built in to the site - reuse what is possible

• Map the storm drainage system and preserve and re-use all major lines, inlets and
outfalls.
• Align roads and buildings to make use of existing improvements
• Re-use of existing drainage means no new outfalls into College Creek. This avoids Fish &
Game as well as Army Corps of Engineers permits.
• Attempt to re-use sewer and water points of connection.

A lot of work has gone into landscaping the site - preserve as many trees as possible

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSpnonia.com Page 3 July 9,2008
 • Survey all existing trees
• Design Master Plan around major existing trees
• Save important groupings of trees such as amphitheater

Improve the quality of life for those who live here above normal workforce housing
conditions
• Cluster buildings into settings
• Provide large useable open spaces, not landscape slivers
• All parking half-buried underground
• Provide a multitude of on-site amenities that foster activity without using precious
natural resources.
• Provide flexibility in amenity end-use to meet as yet unknown community needs
• Resort-quality at a workforce level

Protect the watershed of College Creek

• Even though it is only a storm channel, the creek is a valuable habitat and amenity
• Observe 50-setback even though it is not required.
• Remove existing fence but control access at either end of property.
• Remove improvements within 50 feet of the creek.
• Landscape creek setback and encourage use of maintenance road as walking path.

Use efficient construction techniques to preserve resources, cut costs

• Building module fits underground parking module
• Height module fits code and maximizes wood-structure efficiency
• Floor plan modules are interchangeable and lead to componentization.

Take advantage of the latest in energy and resource-saving ideas

• Use recycled water for irrigation
• Consider recycled water for heating and cooling
• Consider solar power
• The entire Master Plan and Business Plan concept is green

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 4 July 9,2008
Recognize the needs of the full spectrum of our society
• ADA accessibility and adaptability
• Universal design
• Parcel B provides opportunity for special needs housing
• 100% "housing that's affordable" provides opportunities for those usually unable to
enter the housing market.

Additional goals and refinements of the above goals will be described in future assignments.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

vvvvw.Hart5onoma.com Page 5 July 9,2008
 COLLEGE
CREEK

Estate Multi-family Units

Ample 50 to GO foot setback Re-use existing 2150W.ColkgeAve
One & two story multi family buildings
look like single family domes: /Entrance Santa Rosa, CA 95401
half-buried parking beneatil APN 010-320-025

"ARCEL B_
Appro*. 1 gross acre
22 multi family units
over 48 parking spaces Architect
Opportunity site
Cinl Engineer

So Js Engineer

Landscape Archm

Village Multi-family units

Townhouses over flats;
Half-buried parking beneath;
Car-free pedestrian terrace

CONCEPTUAL
MASTER
PLAN

MP1
HARTSONOMA
The Product
Due to the density established as a goal by the client, all products are multifamily units. To
avoid the typical multifamily scene of large expanse of parking surrounding apartment blocks,
almost all parking in half-buried below the units. There is at least one of each unit type at
raised grade for adaptable universal design.

One Bedroom unit - Type A

• 720 square feet, one bedroom one bath, kitchen, storage, laundry, deck or patio and
large great room.

• Median income two-person household: $60,100

• Rental Product:

o Housing expense ratio: 30% including utilities

o Affordability index: 68% of median.

o Rental rate: $975 per month

• For-Sale Product:

o Housing expense ratio: 30% including utilities, taxes, insurance & HOA dues

o Affordability index: 76% of median.

o Sale price: $149,500

One bedroom units have the distinction that the price the market will bear results in for-sale
pricing at below "low income" levels. There is not a lot of demand for one bedroom units, and
not very many of the proposed.

Two Bedroom units - Type B & D

• 924 square foot flat & 1,107 square foot townhouse, two bedrooms one or one-and-
one-half bath, kitchen, storage, laundry, deck or patio and large great room.
• Median income three-person household: $67,600

• Rental Product 1:
o Housing expense ratio: 30% including utilities
o Affordability index: 78% of median.
o Rental rate: $1,250 per month
• Rental Product 2:
o Housing expense ratio: 30% including utilities
o Affordability index: 100% of median.
o Rental rate: $1,350 per month

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 6 July 9,2008
 • For-Sale Product:
o Housing expense ratio: 30% including utilities, taxes, insurance & HOA dues
o Affordability index: 100% of median.
o Sale price: $230,000
The proposed two bedroom for-sale product is what we like to calf "housing that's affordable"
as opposed to affordable housing. It is easily affordable to a household making median income
and gets ABAG credit as moderate income housing. There is a high demand for two-bedroom
rental product as entry level housing, and this is the primary unit type proposed.

Three Bedroom units - Type E & F

• 1,248 & 1,299 square foot flats, three bedrooms two baths, kitchen, storage,
laundry, deck or patio and large great room.
• Median income four-person household: $81,100
• Rental Product 1:
o Housing expense ratio: 30% including utilities
o Affordability index: 78% of median.
o Rental rate: $1,500 per month
• Rental Product 2:
o Housing expense ratio: 30% including utilities
o Affordability index: 100% of median.
o Rental rate: $1,650 per month
• For-Sale Product:
o Housing expense ratio: 30% including utilities, taxes, insurance & HOA dues
o Affordability index: 100% of median.
o Sale price: $282,000
The proposed three bedroom for-sale product is also "housing that's affordable" as opposed to
affordable housing. It is easily affordable to a household making median income and gets ABAG
credit as moderate income housing. There is a demand for three-bedroom rental product by
families as replacement for foreclosed homes or as an alternative to buying in a down market.

Parking
There are 256 covered parking spaces and 14 uncovered parking spaces proposed in the
Conceptual Master Plan. This is a ratio of 1 space for every one-bedroom unit and 2 spaces for
every two & three bedroom unit.

Refinements of these products will be described in future assignments.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 7 July 9, 2008
 COLLEGE CREEK Affordable Affordable Affordable Affordable
2 Bedroom Rental Low Lower Moderate Median
Median Income 67,600 67,600 67,600 67,600 67,600
Ratio to median 78% 80% 95% 120% 100%
Max qualifying income 52,600 54,080 64,220 81,120 67,600
Sample interest rate 6.5% 6.5% 6.5% 6.5%
Down payment 10% 10% 10% 10%
HOA dues 1,200 1,200 1,200 1,200
Insurance 650 650 650 650
Taxes 2,500 2,500 2,500 2,500
Club - - - -

Care
Utilities & Maintenance 780 - - - -

Total Housing payment 15,780 16,224 19,266 24,336 20,280

Affordability Ratio 30% 30% 30% 30% 30%
Mortgage/Rent 1,250 11,874 14,916 19,986 15,930
Test Value $11,854 $14,818 $19,642 $15,852
Sales Price 172,000 215,000 285,000 230,000
Meets crieria? OK OK OK OK
 College Creek
Unit Module Samples

Type A Sleep

1 Bedroom
720 sq ft
Type B
2 Bedroom
924 sq ft
Sleep Sleep

e-e-
* i'
k •^^^•v ** "^v I
S
Cook Sleep
JL

Si
Stain
Stairs
1/2 Ba below

"^ Bath

Sleep
Live Sleep

t j 1
»'•*•

f >
15-0
Type c Type D
2 Be droom 2 Bedroom
1,09 5 s q f t 1,107 sq ft

16'-°' to.

I
r •> J

Cook Sleep Sleep

"1 «rf

Stairs
r ^ t Type G
k- J
4 Bedroom
Bath
1,436 sq ft

I Sleep Sleep

r V )
St.*
L 1
The Settings

Estate Units
A small cluster of multifamily units configured to look
like a large single family home.

Well-spaced and setback along West College Ave

One and two story over half-buried parking

Large covered front porch faces West College for curb

appeal
6-unit building with 12 covered parking spaces
The photos to the right are a representation of possible
architectural style and appearance, not actual
multifamily units. Note half buried parking on lower
left.

Village Units
• 5 to 9 unit buildings on a pedestrian terrace over half-
buried parking
• Three stories
• Townhouse over flat
• No entrance higher than second floor
• Garage, first and second floors served by elevator

• The photo to the right is a representation of possible architectural style and appearance.
The parking is not quite half-buried in this photo.

Parcel B
• Opportunity site
• Available to sell to a specialty user for special needs housing, affordable for-sale, rental
or market rate housing. Some alternatives are analyzed below.
• Land product would be one gross acre with entitlements and infrastructure in place for
22 units and 48 half-buried parking spaces.

Amenities & Operations

• Open space - perhaps the biggest amenity at College Creek is the large amount of open
space. Putting almost all of the parking in a half-buried setting under the buildings frees
up much of the site to be used for recreation, privacy, separation oxygen production
and site cooling [as opposed to "hot spots" created by exposed parking lots].

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page8 July 9, 2008
 • The Community Center - this 3.600 sg. ft. Barn provides extra space available to all
residents. The building is set up as a collection of activity centers that can be configured
at the discretion of the residents. A particular configuration has been selected for
pricing the alternatives; however the opportunity is only limited by the imagination.
Some ideas include:
o Senior Library - a quiet room for seniors only. Stocked by private collection.
Bookshelves line all walls, comfortable furniture, gas fireplace.
o Teen Ramp - a hard to get to place for teens and teen counselor only. The ramp
can be accessed by in-line skates, skateboards, bicycle and scooter. Old
furniture, crash pad atmosphere, private outlook, supervised.
o Day Care Room - Supervised day care for project and neighborhood infants.
Adjacent tot lot allows outdoor activities. Away from Teen and Senior zones.
o Great Room with community kitchen - a large room residents can use for
parties, meetings, and events
o Technology/Media Center-common computer, internet connection, wireless.
o Adult Loft and Terrace - overlooks other uses.
o Accessory uses - office, bathrooms, storage and stairs.
o Optional Uses - site for swimming pool at residents discretion
• Community Center and Site Operation - this is another area that sets College Creek
apart from other workforce housing communities. We propose funding three full
time/part time staff dedicated to the site, and headquartered in the Community Center.
o 3 staff, $120,000 per year payroll. If rental, one of these needs to live on site.
Live/work opportunity.
• Day Care staff person; day care may have capacity to serve surrounding
neighborhood. Estimate 10% of College Creek residents will use.
• Manager & program supervisor may not be full time; shows property to
potential tenants; handles resident issues.
• Building & landscape maintenance person; supervises hired landscape
staff; performs minor repairs
• Maintenance - In addition to the items described above, we have also budgeted:
o Over $200 per day in repairs. Unused repair funds go to a reserve fund for major
replacement items.
o 7% of gross rental receipts per year for a management company to handle
billing, taxes, insurance
• Commission -We have budgeted 3% for sales commissions on for-sale product.

Refinements to the Settings will be described in future assignments.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSnnoma.com Page 9 July 9,2008
The Business Plan
The College Creek Master Plan has been set up as a framework for flexibility. The components
of the plan are:
• Floor plan modules - bed-bath and great-room components that can be flopped or
interchanged.
• Unit types -1,2 and 3 bedroom units
• Forms of ownership - rental or for-sale
There is an almost infinite variety of combinations of the components within the framework of
the settings of the College Creek Master Plan. We examine four alternatives below ranging
from an all-rental project to an all-for-sale project. The Master Plan framework allows the
client to gain entitlements, build infrastructure and parking, and then still be able to revise the
product mix to meet current demand. Detailed strategies to maximize this opportunity will be
described in future assignments.

Development Cost
Under all alternatives presented below there are a series of development costs that remain
constant. It is difficult to estimate construction costs far in the future. Right now, lumber is
down and steel is up. Tomorrow that may change. The costs presented below are in today's
dollars and confirmed by contractors and local experience as a reasonable starting point. There
are many variables to be analyzed, some of which have not yet been determined.

To compare all development alternatives, we use a total development cost of $27,500,000 for
140 units [196,429 per unit]. A complete breakdown of how we arrive at this figure is shown at
the end of this report. The infrastructure budget details roads, water, sewer, drainage, utilities
and landscaping unit costs. The project budget provides detailed indirect costs and professional
fees and a summary of direct costs. The development program details unit mix and individual
unit construction, sale and rental costs. The affordability sheets show the affordable housing
formulas for each unit type. The unit mix matrix shows the number and type of units in each
building.

The total development cost assumes that HartSonoma acts as contract developer and carries
out the project as an agent for the client. We have no way to predict costs if this is not the
case, other than to suggest that they will probably be much higher.

By altering the development program and unit mix, any variety of scenarios can be modeled.
The development cost assumes approximately 50% "prevailing wage" employment. In the
housing construction sector of the current economy, the term "prevailing wage" has become
somewhat blurred. Typically "prevailing wage" has meant union rates. In the North Bay
housing market however, union rates are not the prevailing wage in the dictionary sense of the
word. Nevertheless, it is important that this project be built with skilled workman being paid a
fair wage. No un-documented/foreign/unlicensed/unskilled workers would be permitted on
site. Union hiring and employment would be encouraged. If the client were to require strict

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

wvvw.HaitSonoma.com Page II July 9,2008
union employment, the development cost would increase by about $2 million to $4 million,
making all alternatives described below less feasible.

We are in the very early stages of the financial analysis of this project. The total development
cost presented above includes about $1,580,000 in unassigned expenses to cover unanticipated
items. Client revisions to the above described Master Plan will impact project expenses. The
way in which the project is presented and received, the amount of affordable housing and the
standing of the land owner will all affect development costs. Many projects do not even
consider detailed development costs and alternative development scenarios as we have at this
early stage. HartSonoma feels that economic sustainability is as important as environmental
sustainability or even more so. If a project is not financially viable, it will not get built, and not
provide the environmental benefits proposed. Thus we give great focus to the economic
viability of the Master Plan. Many of our assumptions may be low or high, but our goal is to
give the client a starting point to compare development alternatives and understand the
financial implications of developing this important site. In this current analysis, the elements
that are not included in the total development cost are:
• Land - land is assumed to be contributed by the land owner in return for the profits
generated by the project.
• Entitlements - since there could be such a wide swing in costs depending on how the
SCWA proceeds - not included
• School fees, water meter fees, sewer hookup fees - not included
• Insurance - a $250,000 project specific developer policy is included. General liability for
the Builder is included. Wrap insurance for an all condo project is not included.
• Property Taxes - not included
• Appraisal Fees - not included
• Construction Financing - not included but the opportunity exists
• Alternative Energy Systems - not included but the opportunity exists
The $1,580,000 of unassigned cost could be assigned to some of the items above as directed by
the client. Detailed analysis of the above items will be described in future assignments. Four
alternative development scenarios are described below. No warranty is expressed or implied as
to the accuracy of the figures in this report.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 12 July 9,2008
I HARTMARIN
TOOLS 1 COLLEGE CREEK
Mf SANTA ROSA, CA
INFRASTRUCTURE
1 *
ROADS Lin. Ft. Width $/Sq. Ft. Amount
Sidewalk Demo 10.00 5.00 10.00 500.00
Roads 1,000.00 24.00 5.50 132,000.00
New Driveways - 24.00 5.00 -
Sidewalk, curb & gutter 1,000.00 5.00 12.50 62,500.00
Parking Spaces 160.00 10.00 5.50 8,800.00
Total 203,800.00

WATER Lin. Ft. Quan. $/Ln. Ft. Amount

Service 20.00 8.00 100.00 16,000.00
Mains 1,000.00 1.00 100.00 100,000.00
Hydrants 1.00 4.00 5,000.00 20,000.00
Other water work 1.00 8.00 5,000.00 40,000.00
Total 176,000.00

SEWER Lin. Ft. Quan. $/Ln. Ft. Amount

Laterals 20.00 8.00 100.00 16,000.00
Main 1,000.00 1.00 100.00 100,000.00
Pump station - 1.00 50,000.00 -
Other sewer work 1.00 8.00 5,000.00 40,000.00
Total 156,000.00

DRAINAGE Lin. Ft. Quan. $/Ln. Ft. Amount

Units 100.00 8.00 100.00 80,000.00
Site 1,000.00 1.00 100.00 100,000.00
Other drainage work 1.00 5,000.00
Total 180,000.00

UTILITIES Lin. Ft. Quan. $/Ln. Ft. Amount

Combined utilities 1,000.00 1.00 100.00 100,000.00
PG&E Engineering - 1.00 50,000 -
Other utility work 1.00 8.00 2,500.00 20,000.00
Total 120,000.00

LANDSCAPE Units $/Unit Amount

Front & rear yards 1.00 7.00 25,000.00 175,000.00
Common landscape 1.00 1.00 50,000.00 50,000.00
Terraces 2.00 13,800.00 15.00 414,000.00
Specialty trees 10.00 1.00 1,000.00 10,000.00
Retaining Walls 150.00 5-00 100.00 75,000.00
Fencing 1,000.00 1.00 35.00 35,000.00
Other landscaping work 1.00 9.00 5,000.00 45,000.00
Total 804,000.00
Alternative A - All Rental

Product Mix
# Type Affordability
15 1 Bedroom 68% of median
6 2 Bedroom 78% of median
73 2 Bedroom 100% of median
12 3 bedroom 78% of median
34 3 Bedroom 100% of median

• 140 total units

• 33 below 80% of median = 24%

• 107 at 100% of median = 76%

Type # %
1 Bedroom 15 11
2 Bedroom 79 56
3 Bedroom 46 33

Item Amount
Project Cost: $27,500,000
Annual income: 2,505,300
Less Debt Service: (1,650,000)
Cash Flow after debt service: 855,300
Less Operations: (358,611)
Net Annual Income: 496,689
Return on land @ $5,000,000: 10%

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.BartSonoma.com Page 13 July 9, 2008
Alternative B - Rental and For-sale mix

Product Mix
# Type Ownership Afford ability
4 1 Bedroom For sale 76% of median
16 2 Bedroom For sale 100% of median
4 3 Bedroom For sale 100% of median
11 1 bedroom Rental 68% of median
6 2 bedroom Rental 78% of median
57 2 Bedroom Rental 100% of median
12 3 bedroom Rental 78% of median
30 3 Bedroom Rental 100% of median

140 total units

33 below 80% of median = 24%

107 at 100% of median = 76%

Type #
1 Bedroom 15 11
2 Bedroom 79 56

3 Bedroom 46 33

Item Amount
Project Cost: $27,500,000

Less Sales Revenue: (5,243,820)

Net Project Cost: 22,256,180

Annual income: 2,120,100

Annual Debt Service @ 6%: (1,335,371)

Cash flow after debt service: 784,729

Operations: (331,647)

Net Income: 453,082

Return on land @ $5,000,000: 9%

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 14 July 9, 2008
HARTSONOMA ) Links PARAMETERS
f -i^-. ALTERNATIVE B
TOOLS _ J BUDGETS CASH FLOW
SANTA ROSA, CA
*' V [ J
[ DEVELOPMENT PROGRAM \E CREEK

Product Floor Total Land Const Const Total Unit Total Monthly Annual
# Unit Type Ownership Style Pricing Area Fl Area Area S/sf Cost Const Cost Sale Revenue Income Income Percent Code
1 A j 4 1 Bedroom Unit Fee simple Condominium HMHT Affordable 720 2,880 0.07 115 82,800 331,200 149,500 598,000 - - 1% 2
1 B 16 2 Bedroom Unit Fee simple Condominium HM HT Affordable 924 14,784 0.34 115 106,260 1,700,160 230,000 3,680,000 - ! 8% 3
1 F 4 3 Bedroom Unit Fee simple Condominium HM HT Affordable 1,248 4,992 0.11 115 143,520 574,080 282,000 1,128,000 - - 3% 4
2 A 4 1 Bedroom Unit Rental Condominium 70% of Median 720 2,880 0.07 115 82,800 331 ,200 - - 975 46,800 1% 2
2 B 6 2 Bedroom Unit Rental Condominium 80% of Median 924 5,544 0.13 115 106,260 637,560 - - 1,250 90,000 3% 3
2 E 12 3 Bedroom Unit Rental Condominium 80% of Median 1,299 15,588 0.36 115 149,385 1,792,620 - - 1,500 216,000 8% 4
3 A 7 1 Bedroom Unit Rental Condominium 70% of Median 720 5,040 0.12 115 82,800 579,600 - - 975 81,900 3% 2
3 D 57 2 Bedroom Unit Rental Condominium Market 1,107 63,099 1.45 115 127,305 7,256,385 - - 1,350 923,400 32% 3
3 E 30 3 Bedroom Unit Rental Condominium Market 1,299 38,970 0.89 115 149,385 4,481 ,550 - - 1,650 594,000 P 20% 4
1 14 Circulation - - - 80 1,120 0.03 50 4,000 56,000 0% -

3 62 Circulation - - - 80 4,960 0.11 50 4,000 248,000

256 Parking spaces - - 300 76,800 1.76 50 15.000 3,840,000 17% -
- Swimming Pool & Hot Tub - . 1,200 - - - - - 25 0%
1 Community Building - - 3,600 3,600 0.08 150 540,000 540,000 20 33,600 2% -

14 Day Care - - - - - - - - 800 134,400 0% -

- - . - - - - 0% -
- - - - - - - - - 0% -
Units 140 Covered parking 256 Totals 240,257 5.52 22,368,355 5,406,000 176,675 2,120,100
29 Open parking 14 sq ft acres dollars 162,130
21% Total parking 270 5,243,820
Alternative C - Rental and Parcel B Sale mix
Note: Parcel B would be sold with a restriction that all units be low income. The land price is
based on land with planning entitlements and infrastructure. This proposal provides mid-
project cash flow to refund up-front development costs.

Product Mix
# Type Ownership Affordability
4 1 Bedroom Rental 76% of median
16 2 Bedroom Rental 100% of median
4 3 Bedroom Rental 100% of median
22 Parcel B Land $57,000 per unit
7 1 bedroom Rental 68% of median
57 2 Bedroom Rental 100% of median
30 3 Bedroom Rental 100% of median

• 140 total units

• 33 below 80% of median = 24%

• 107 at 100% of median = 76%

Type
1 Bedroom 15 11

2 Bedroom 79 56

3 Bedroom 46 33

Item Amount
Project Cost: $24,500,000
Revenue: $1,254,000
Net Project cost: 23,246,000

Annual income: $2,152,500

Annual Debt Service @ 6%: ($1,394,760)

Cash flow after debt service: 757,740

Operations: (333,915)

Net Income: 423,825

Return on land @ $5,000,000: 8.5%

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonoma.com Page 15 July 9, 2008
Alternative D-AII For-Sale
We have prepared an analysis showing all units sold as condominiums. Using the product mix
outlined above, this alternative results in the following pro-forma:

Item Amount
Project Cost: $27,500,000
Net Sales Revenue: $32,038,130

Net Profit: ~ 4,538,130

Return on land @ $5,000,000: -9%

Due to the condition of the market described above, and the fact that it returns less than
$5,000,000, this is not a preferred alternative.

The Process
One strategy would be to proceed as if College Creek were an all rental project. This form of
ownership affords the highest value, least entitlement risk and least liability for the client/land
owner. Once entitlements have been granted, then during or after construction, the client may
opt to file a condominium map on the project. This is a less controversial and more focused
process that gives the client flexibility should they decided to sell some of the units in the
future. We will provide a detailed analysis of community outreach, the government approval
process and pre-construction logistics in future assignments.

Thank you,

Rob Hart

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www.HartSonnma.com Page 16 July 9,2008
 College Creek

Business Plan Outline

Background
The Neighborhood
• 2150 West College Ave, Santa Rosa, CA

• Site of former Sonoma County Water Agency headquarters

• Fully improved with office buildings, maintenance facilitates, landscaping and
infrastructure
• Road width of 4 lane drops to 2 lane in front of property, will eventually be 4 lane
• Small strip commercial across street provides conveniences
• A few vacant parcels that could go commercial with proper residential development of
subject property
• California Department of Forestry Fire Dept adjacent to the west.
• Single family beyond to the west
• Single family across street to the north
• Fire Department and Transit Station to the East
• Finley Community Park and Aquatic Center beyond to the east

The Site
• Generally level site bounded by College Creek to the south and east, and West College
Ave to the North.
• Fully landscaped
• Fully improved with roads, water, sewer & drainage

The Market
• The for-sale real estate market in Santa Rosa has collapsed.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

www. H artSonoma.com Page 1 July 9, 2008
 • Historically there has been a wide split between market rate housing and affordable
housing.
• We have gotten to the point where affordable housing calculations lead to prices that in
some cases are higher than the market will bear.
• There is a strong demand for rental product.
• There is a weak demand for "for-sale" product.
• Santa Rosa maintains a quality of life that will continue to attract a strong base demand
for housing.
• Median Condo/Townhouse price in Santa Rosa: $209,000
• Median single family home price in Santa Rosa:^$S75,000 "

The Assignment
• Provide about 140 units of housing in a creative setting
• Approx 10 units for SWCA employees affordable to those employees at their current pay
scale
• Use green building practices and the latest sustainable techniques in land planning, site
work, construction and operations.
• Use the site as a laboratory for the North America Climate Initiative.

HARTSONOMA COLLEGE CREEK BUSINESS PLAN 9:53 AM

w\vwJja rtSonoina.com Page 2 July 9,2008