REQUEST FOR BEST AND FINAL OFFER 965 Florida Avenue, N.W. (“District Parcel”)

Best and Final Offers (BAFOs) must be structured according to the guidelines provided herein. Tabular and bulleted responses are preferred where appropriate. BAFOs must be completed and submitted by Tuesday, June 11, 2013 at 1:00 pm to Corey Lee, Project Manager, by (1) e-mail ([email protected]) and (2) physical CD (1350 Pennsylvania Avenue, N.W., Suite 317). (Note: All proformas, budgets, economic impact models, etc. should be submitted in a Microsoft Excel-based format that is detailed, unlocked, and fully functional.) DISTRICT RESERVATION OF RIGHTS Offeror hereby acknowledges and agrees that the District reserves the right, in its sole discretion and as it may deem necessary, appropriate, or beneficial to the District with respect to the BAFO, to:            

Cancel, withdraw or modify the request for the BAFO prior to or after the BAFO deadline; Modify or issue clarifications to the BAFO prior to the BAFO deadline; After review of one or more responses to the District’s request for a BAFO, the District may request submission of additional information from some or all Offerors; Enter into negotiations with one or more Offerors based on BAFO responses; Reject any BAFO it deems incomplete or unresponsive to the requirements set forth in the District’s request for a BAFO; Consider one or more proposals that are noncompliant with the BAFO requirements; Reject all proposals that are submitted under the BAFO; Modify the deadline for proposals or other actions; Re-issue the original BAFO request, issue a new Solicitation or modify the BAFO request, whether or not any proposals have been received in response to the BAFO request; Subdivide the District Parcel into multiple, separately bid, negotiated and contracted components; All submissions under and subsequent to this BAFO shall become the property of the District; and The District may use any and all ideas in any BAFO submitted to the District, whether the BAFO is selected or rejected.

PROFORMA SUBMISSION REQUIREMENTS: Offeror must submit a proforma summary with the following details: Any BAFO submission must include an electronic version with a detailed, unlocked, and fully functional MS Excel financial model outlining methodology and including all proposed fee or ground lease payments. At a minimum, the proforma MUST show: 1. 2. 3. 4. 5.

Sources and uses of all capital, and a detailed development budget including all project hard and soft costs; All financing assumptions (including LTV, required rates of return, and interest rates); All absorption and occupancy rate assumptions; Projected timing of all cash flows (including any proposed ground lease payments) over a period of not less than twenty (20) years; and A detailed estimate of developer profit with waterfall showing returns to each equity partner in the transaction.    -3-

PROGRAM/DESIGN 1. Describe any revisions to your site plan and development program, including building massing, total development square footage or maximum building height. If the BAFO submission has changed your program and/or site plan, revised drawings must be submitted. 2. Retail – Identify retail tenant types (or example/prospective tenants), including local retailers, that your team has or intends to target and attract. 3. Residential – If a residential program is submitted, Offeror MUST submit development programs with corresponding proformas for both “Inclusionary Units” and any additional “Affordable Dwelling Units”, per the “Residential Units” section below. 4. Offeror MUST complete and include in its BAFO submission the Development Program table below.

DEVELOPMENT PROGRAM: Land District Parcel Gross Land Area Additional Parcel(s) Gross Land Area (if any) Total Project Buildable Area Building Area Condo (# of units:__________) Apartment (# of units:__________) Office Retail Hotel (# of rooms:__________) Grocer Micro-units (# of units:__________) Incubator Office Market Other Other Total (above grade) Parking Parking: above grade (# of spaces:__________) Parking: below grade (# of spaces:__________) Other Construction of east-west connection and public right of way Other

Gross Square Feet (GSF) 64,318

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Total Cost N/A N/A N/A

DEVELOPMENT BUDGET: Using the table below, please submit updated Sources and Uses for the Project. Under Sources, list each individual financing source on a separate line. If there are multiple financing sources, please add more rows to the table. Offerors shall also submit in support of the below table an updated, detailed and fully-functioning proforma in Microsoft Excel format. The proforma MUST include a detailed development budget showing all project hard and soft costs. Total Uses Line Item

Total Value

Total Value/GSF

DMPED Comments [Leave Blank]

Land Purchase Price Total Project Hard Costs Total Project Soft Costs (excluding financing) Total Financing Costs Developer Fee Total Project Cost Total Sources Line Item

Total Value

Total Value/GSF

[Insert Financing Source] [Insert Financing Source] [Insert Financing Source] District Subsidy Developer Equity Third-Party Equity Deferred Developer Fees Total Sources -5-

DMPED Comments [Leave Blank]

RESIDENTIAL UNITS: Offerors should use the most up-to-date Department of Housing and Urban Development (HUD) uncapped AMI data (reference Chart 1) to calculate rents and sale prices. Chart 1 presents the most current data, however new AMI data is published annually. The rent calculation formula is provided in Chart 2, the Occupancy Standard Factor used to price each affordable unit is provided in Chart 3, and the sale price formula is provided in Chart 4. All affordable rent payments collected by the future property owner from the tenants or third parties on behalf of tenants may not exceed the Maximum Allowable Rent for an Affordable Dwelling Unit (reference Chart 2). The initial sales price for an affordable unit may not exceed the Maximum Allowable Sales Price for affordable units (reference Chart 4). Chart 1: AMI for Washington DC MSA as of December 2012 Household Size 120% AMI 100% AMI 80% AMI 60% AMI 50% AMI 1 $90,132 $75,110 $60,088 $45,066 $37,555 2 $103,008 $85,840 $68,672 $51,504 $42,920 3 $115,884 $96,570 $77,256 $57,942 $48,285 4 $128,760 $107,300 $85,840 $64,380 $53,650 5 $141,636 $118,030 $94,424 $70,818 $59,015 6 $154,512 $128,760 $103,008 $77,256 $64,380

30% AMI $22,533 $25,752 $28,971 $32,190 $35,409 $38,628

Chart 2: Affordable Housing Rent Calculation to Include Monthly Utilities Affordable Housing Rent Calculation to Include Monthly Utilities MAR=(AMI*DAL*OSF*30%)/12-MU MAR Maximum Allowable Rent AMI Average Median Income at 100% DAL Designated Affordability Level OSF Occupancy Standard Factor MU Monthly Utilities (per HUD Utility Allowance) Chart 3: Occupancy Standard Factor for Affordable Housing Calculations Occupancy Standard Factor Occupancy Pricing Standard (Average Size of Affordable Unit Occupancy per Unit) Occupancy Standard Factor Efficiency/Studio 1 .7 1 Bedroom 2 .8 2 Bedroom 3 .9 3 Bedroom 5 1.1

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Chart 4: Affordable Housing Sale Price Calculation Affordable Housing Sale Price Calculation 1. Determine the Maximum Monthly Payment: Maximum Monthly Payment =((AMI*DAL*OSF*30%)/12) –FEES MSP AMI DAL OSF FEES

Maximum Sales Price Area Median Income at 100% for a 4 person household Designated Affordability Level Occupancy Standard Factor (reference Figure 5) Condominium Fees ($0.60 per Square Foot), Homeowners Association Fees ($0.10 per Square Foot), Real Property taxes at current real property tax rates assuming Homestead Deduction, and Monthly Hazard Insurance Fees for Single Family Homes = $125.00

2. Use Maximum Monthly Payment to Determine the Affordable Mortgage assuming a conventional thirty (30) year, fixed-rate, fully amortizing mortgage at the national average mortgage rate as published by the Federal Housing Finance Agency at www.fhfa.gov (3.54% as of April 11, 2013) plus a one and a half percent (1.5%) cushion to protect for future interest rate increases. 3. Determine the Sale Price assuming a 5% Down Payment Maximum Sales Price = Affordable Mortgage / 95%

Chart 5: Maximum Rent and Pricing Schedule for IZ Unit Type 

30% AMI  Rent*  Price  Studio  $        563    $  51,400   1 Bedroom  $        604    $  52,500   2 Bedroom  $        724    $  36,000   3 Bedroom  $        845    $  49,800    

50% AMI  Rent*  Price   $        939   $  117,900   $    1,006   $  116,600   $    1,207   $  122,800   $    1,408   $  141,900 

60% AMI  Rent*  Price   $    1,127   $  150,200    $    1,207   $  151,100    $    1,449   $  164,200    $    1,690   $  190,200  

80% AMI  Rent*  Price   $    1,502   $  214,600   $    1,610   $  220,100   $    1,931   $  247,000   $    2,253   $  286,800 

Additional information on District regulations pertaining to affordable housing can be found at District of Columbia Department of Housing and Community Development (DHCD) website: http://dhcd.dc.gov/ or by calling 202.442.9505. Using the tables below, Offeror shall submit an updated Unit Mix for the project. Please separate rental units from condominiums/townhomes, and proposed retail space. Separate tables have been provided for your convenience. For the residential unit mix, please specify the unit mix by AMI bands. If there are multiple AMI bands proposed in the project, please add more rows to the table(s).

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Unit Mix: IZ* Units – Rental** AMI Band < 50% AMI

< 80% AMI

Market

Unit Size

# of Units

% of Total Residential Units

% of Residential GSF

Average GSF

Studio 1-BR 2-BR 3-BR Studio 1-BR 2-BR 3-BR Studio 1-BR 2-BR 3-BR

Duration of Affordability Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity N/A

Total/Avg * Please indicate which units fulfill the Inclusionary Zoning requirement. ** Any “Affordable Dwelling Units” are in addition to units required by the IZ Program. Unit Mix: IZ* Units – For Sale** AMI Band < 50% AMI

< 80% AMI

Market

Unit Size

# of Units

% of Total Residential Units

% of Residential GSF

Studio 1-BR 2-BR 3-BR Studio 1-BR 2-BR 3-BR Studio 1-BR 2-BR 3-BR

Average GSF

Duration of Affordability Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity Perpetuity N/A

Total/Avg * Please indicate which units fulfill the Inclusionary Zoning requirement. ** Any “Affordable Dwelling Units” are in addition to units required by the IZ Program.

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Unit Mix: Affordable Dwelling Units – Rental* AMI Band < 30% AMI

< 50% AMI

< 60% AMI

< 80% AMI

Market

Unit Size

# of Units

% of Total Residentia l Units

% of Residentia l GSF

Studio 1 2 3 Studio 1 2 3 Studio 1 2 3 Studio 1 2 3 Studio 1 2 3

Average GSF

Duration of Affordability 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years N/A

Total/Avg * Any “Affordable Dwelling Units” are in addition to units required by the IZ Program.

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Unit Mix: Affordable Dwelling Units – For Sale* AMI Band < 30% AMI

< 50% AMI

< 60% AMI

< 80% AMI

Market

Unit Size

# of Units

% of Total Residentia l Units

% of Residentia l GSF

Average GSF

Duration of Affordability

Studio 1 2 3 Studio 1 2 3 Studio 1 2 3 Studio 1 2 3 Studio 1 2 3

40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years 40 years N/A N/A N/A N/A N/A

Total/Avg

* Any “Affordable Dwelling Units” are in addition to units required by the IZ Program. Unit Mix: Office, Retail, Hotel and/or Other Use

Gross Square Feet

Rent/ SF

Cost/ SF

Comments/ Notes

_____Total

N/A

_____Avg

N/A

Office Retail Hotel Other – specify (e.g., grocer, market, etc.) Total/Average

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FINANCIAL OFFER: District and selected Offeror, if any, will negotiate (as part of the Land Disposition and Development Agreement) (the “LDDA”) the final terms of a financial offer to District for District Parcel. Using the table below, indicate the total value of the best and final financial offer to District. Preference will be given to Offerors who maximize the overall economic benefit to District. Examples of economic benefits might be:  

Maximizing the land value proceeds (paid by Offeror to District) and incremental property and sales taxes; and/or Maximizing community benefits such as affordable housing, cultural and neighborhood-serving amenities, and job creation and/or apprenticeship programs for Ward 1 residents, particularly residents proximate to District Parcel. Line Item

Total Value

Total Stabilized Project Value* LESS: Total Development Cost (excluding land)**:  Hard Costs  Soft Costs  Financing Costs LESS: Required Profit Margin LESS: New Street and Public Right of Way Construction LESS: Demolition of Existing Improvements LESS: Remediation of Hazardous Materials LESS: Additional Affordable Housing LESS: [Specify Other Land Value Deductions] Total Value of Land Purchase to District * Project Value should be calculated based on an “IZ only” scenario (i.e., no ADUs); the cost of ADUs to the project should be indicated separately based on the difference between rent/sales of ADUs and market-rate units (see row for “Additional Affordable Housing” provided in the above table). ** Itemized costs (e.g., new street construction) should NOT be included in Total Development Cost; they should be counted/included only once – in the appropriate table row provided for the respective line item. FISCAL AND ECONOMIC IMPACT: Offeror shall estimate and describe the incremental fiscal and economic impact of the proposed Project according to the terms defined below. Offeror must provide an Excel-based worksheet detailing all relevant assumptions and calculations used to derive Tax Revenue estimates. Property Tax Revenue Line Item Property Tax Revenue During Construction Property Tax Revenue (aggregate of 10 years)

Post

Stabilization - 11 -

Total Value

FIRST SOURCE HIRING: Offeror shall execute a First Source Hiring Agreement with D.C. Department of Employment Services (DOES) prior to executing the LDDA with District. Using the table below, estimate and describe the anticipated jobs created.

Line Item Total Permanent Jobs (list types of jobs individually) ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ Total Temporary Jobs, Excl. Construction Jobs (list types of jobs individually) ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ Temporary Construction Jobs

Total Jobs Created Total Number of Jobs

Jobs Created for District of Columbia Residents

________________________ ________________________ ________________________ ________________________ ________________________ ________________________

________________________ ________________________ ________________________ ________________________ ________________________ ________________________

________________________ ________________________ ________________________ ________________________ ________________________ ________________________

________________________ ________________________ ________________________ ________________________ ________________________ ________________________

Total Jobs Created CERTIFIED BUSINESS ENTERPRISE (CBE) UTILIZATION: Offeror shall execute a CBE Utilization and Participation Agreement with the D.C. Department of Small and Local Business Development (DSLBD) prior to executing the LDDA with the District. Offeror should submit to the District a copy of any binding agreements with CBE partners in connection with the Project. Offeror must include a CBE partner or partners who will participate in the Project in the following ways: 1. Certified by DSLBD; 2. Invests or earns at-risk equity equal to at least 20% of equity invested by the sponsor - the value of the same equity may not be diluted under any circumstances; 3. Holds 20% of the development management responsibilities for the proposed Project; 4. Earns at least 20% of the development fees incurred by the Project, and 5. Earns at least 20% profits generated by the Project.

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Using the table below, estimate CBE Utilization: Line Item

Total Value

% of Total Value

Estimated (Est.)Value of Total Project Cost: Est. Value of Contracts Awarded to CBEs:

Using the table below, estimate CBE Participation: Line Item

Total Value

Total Value of Project Capital Structure: Total Value of Debt: Total Value of Equity Capital (Institutional and Sponsor): Total Value of Institutional Equity: Total Value of Sponsor Equity: Total Value of CBE Equity: Total Value of Development Fees: Total Value of CBE Development Fees:

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% of Total Value

SCHEDULE OF PERFORMANCE: Offeror shall submit an updated schedule of performance for the Project, using the table below, which identifies key activities and development milestones. The schedule should commence in June 2013, which is the date that the District anticipates a selection will be made. Milestone

Completion Date June 2013

Final Selection & Notice

October 2013

Substantial Completion of LDDA Submission of Surplus and Disposition Legislation to D.C. Council Execution of LDDA (“LDDA”) (Subject to Council approval of surplus and disposition legislation)

November 2013 Within 15 days of Council Disposition Approval Upon LDDA Execution

Submission of LDDA Deposit PUD/BZA Application (“Zoning Application”) Filed, if applicable

Within ____ days of LDDA execution Within 60 days after Zoning Order is received (or, if matter of right, within 180 days after LDDA Execution)

Permit Drawing Submission to DCRA Building Permit Issuance Construction Financing Commitment Received

Within ____ months after Zoning Order received

Closing and Submission of Closing Payment

Within 60 days after Closing

Construction Commencement

Within ____ months after construction commencement

Substantial Completion of Construction Certificate of Occupancy Issued

CHANGES PER COMMUNITY FEEDBACK: Please find attached for review and consideration by Offerors community comments regarding the original proposals to redevelop the District Parcel. In your BAFO, please indicate in bulleted/numbered format any changes made to your proposal that address the community’s concerns or incorporate proposed ideas regarding the development of the District Parcel. Preference will be given to Offerors who design development programs that comprehensively address stakeholder concerns and requirements. Responses must consider and incorporate stakeholder and community preferences to the extent feasible. - 14 -

APPENDIX A COMMUNITY COMMENTS GEORGIA AVENUE COMMUNITY DEVELOPMENT TASK FORCE: 1.

2. 3.

4. 5.

Would like to see more affordability, specifically 20% of the units at 30-60% AMI. Microunits should not be included in the calculations for affordable units unless they are truly being offered at below market rates. Would like to see affordable retail set aside for local small minority-owned businesses to include tenant improvements. Would like designs to acknowledge the many different populations in this neighborhood, and try to integrate these populations rather than add one more demographic. Surrounding this lot are Howard University students, HU faculty, condo and single family homeowners, low income housing residents, and new residents brought in by this development and the Howard Town Center. The designs should demonstrate ways to engage each of these groups with a common activity, much like the fountain in Columbia Heights does. We would like a community benefit fund of $500,000, to be distributed through a community process. We would like to see coordination with the Howard University School of Architecture and School of Business in the form of internships and a business incubator space.

ADVISORY NEIGHBORHOOD COMMISSION 1B06: On Monday April 23, 2013 the ANC1B Design Committee was presented with the two proposals. During the debriefing of the presentation three key areas were continuously raised: • The development shouldn’t bring traffic and congestion to the existing residential community • There is a huge need for affordable /workforce housing • This plan should complement the Howard Town Center Development JBG, Gragg & Associates, and Moddie Turay Co. –the proposal includes a hotel, grocery store, and housing. The Duke Small Area Plan for Greater Shaw / U Street indicates that the neighborhood is not ready to sustain a hotel. Additionally, the Bread Bond Development, located directly behind the site, and already approved by DMPED, is bringing a grocery store as a part of their development. JBG’s proposal offers an increase in job creation but substantially contradicts the terms of the RFP, since DMPED’s Request for Proposals (RFP) for the site recommends that the proposal promote the objectives and goals of the Small Area Plan. In addition, when the proposal was shared at the Design Committee Meeting, members of the committee stated that the plan appeared to create a “separate community within the current community” and not take into consideration the historical characteristics of the existing neighborhood. The Ellis Development- the proposal includes mixed-use development – with housing and retail. When the plan was originally shared it offered the highest number of affordable and workforce housing units. In addition to housing, they plan to bring an open market with a range of small business, similar to Union Market and Eastern Market. The proposal encompasses the characteristics of the community and complements the design for the Howard Town Center. In addition, The Ellis Group has secured letters of support from Howard University along with - 15 -

other civic associations. The proposal offers fewer jobs, but this model provides more opportunities for community and District residents to own businesses in the development. After weighing the responses to the RFP, the Ellis Group development better addresses the needs of the community. The small business and affordable housing components make it a better fit for the current neighborhood. The Ellis Group has demonstrated their commitment to the values put forth in the RFP through its recent development of Progression Place. The development met the requirements of the Duke Plan, increased the housing affordability beyond the required amount of the RFP and provides a vibrant space for the community. The Ellis Group has also committed to working through a PUD process which will ensure community involvement throughout every phase of the project.

ANC 1B TRANSPORTATION COMMITTEE RECOMMENDATIONS: Summary: The Transportation Committee's recommendations are restricted to the design of the proposed street(s) that would cut through the existing superblock currently surrounded by Sherman Ave, Florida Ave, Barry Place, 9th Street, and V Street. The proposed new streets can be a benefit to the ANC1B area, but only if they are done in a manner that balances different types of demand. We consider three options for achieving this balance. We recommend that the design of the street(s) cutting through the superblock provide full-time car access (perhaps with occasional exceptions such as scheduled market hours or street fairs), but with a street design that gives automotive traffic low priority. If it is possible for city government to stipulate such details in a contract with the developers who are sold the lot, the committee recommends explicitly requiring a woonerf design (described below) for the newlybuilt street.

Main types of demand I. Car access: The DUKE master plan is a plan for the U Street/Shaw area, including the area under consideration. It has been approved by the DC Council. It describes extensions to W Street and Bryant street between Georgia and Sherman/Florida, providing East-West connectivity for car traffic. The rationales for requiring this connectivity include providing access to emergency vehicles and minimizing the safety concerns associated with deserted spaces with no passers-by. Added car connectivity would be beneficial both to existing users of area roadways and to the new users that the development will attract. It is too early to produce estimates of the amount of traffic coming through the new streets, but the JBG/Gragg proposal includes a 400-car garage, giving some hint as to the expected additional traffic attracted by the development. The DUKE plan requires connectivity for car traffic, but does not place any minimum or maximum on the quantity of traffic coming through.

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II. Pedestrian access: 41% of Ward 1 residents do not own cars, and to that two-fifths of the population, a car thoroughfare provides limited benefit. The block is a short walk to the U Street metro, several bus lines, and a proposed streetcar line. The Howard master plan features a park immediately adjacent to this block. The space should be as comfortable to pedestrians as possible. The new streets give the developers more street-facing space to build into storefronts, and both proposals include a corridor of pedestrian-friendly storefronts. A street lined with stores and entirely cut off to drivers may begin to look and feel like an outdoor mall. However, the outdoor mall treatment by definition provides no car connectivity.

Balances: There are a few ways to achieve a balance between car and pedestrian traffic.

I. Time-split: One option might be to have a typical street, open to full car traffic during the week, converted to a closed-off pedestrian mall during the weekend. This is the arrangement of "Downtown Silver Spring", a block of Ellsworth Drive in Silver Spring. Such a time-varying setup cuts off traffic two out of seven days per week, and so may not be an acceptable fulfillment of the DUKE plan's requirement for connectivity. When car traffic is not cut off, Ellsworth Drive has only a few features that make it more pedestrian-friendly than other streets. II. Segregation: Another alternative is car-pedestrian segregation, with a dedicated street for cars and a parallel dedicated pedestrian mall. In this treatment, pedestrians are even less likely to use the caroriented street, which may leave it feeling deserted or inhospitable. This would especially be the case if retail and other pedestrian attractions gravitate to the pedestrian mall and away from the car-oriented street. III. Mix, giving cars low priority (the woonerf) This alternative, typically referred to by the Dutch name of "woonerf", is a space where cars are allowed at all times, but are given low priority. A typical street indicates high car priority by giving cars a wide reserved space, using pavement designed and marked to facilitate higher speeds, giving pedestrians a smaller margin on the sides, and using barriers (visual and physical, including parked cars) to keep pedestrians and cars separate. In a woonerf, the distinction between sidewalk and street is blurred: pavement is similar across the entire space and may be textured or painted to improve visual appeal and mark the space as special, there is no curb, and drivers are well aware that pedestrians are present and so keep their speeds low. Signs are posted to indicate that pedestrians may use the full street. The lanes for drivers are loosely demarcated with occasional barriers such as bollards or tree planters. During busy hours, cars may pass through at walking speeds; during off hours, cars may move at typical residential street speeds. - 17 -

Bicyclists are given no special treatment. The woonerf should be a comfortable street to ride on even with no explicit bike lane markings. During hours of high pedestrian use, bicyclists are expected to ride slowly, as cars are. Cobblestones might be a good option for paving a woonerf, but annoy bicyclists. In countries where woonerven are common, studies have found that traffic accident rates on woonerven are lower than on comparable traditional streets, because drivers are more cautious and drive more slowly than usual. The Howard University plan includes a park at the block to the East of the proposed projects, so extensions of the streets built by this project would be adjacent to the park. A woonerf by a park can be a natural fit, by blurring the boundaries between park and street. This may create interesting opportunities for park design that would not be possible with a hard park/street boundary. Some woonerven allow cars to park at roadside; some do not. Given that both proposals include large underground parking garages, the marginal benefit of allowing a few above-ground spaces may not be great. The DUKE plan does not require on-street parking.

ANC 1B DESIGN COMMITTEE NOTES: Both projects need a lot of work with their architecture (and they realize that) so I will concentrate mostly on the concepts. Right now that general area is a mix of vacant lots and underused semi industrial buildings. What I would like to see developed there is something that connects Howard University to the residential area west of the development. For JBG, the plus is that their plan will make W Street a thru street which is good for both vehicular and pedestrian traffic in the area. The minus to this is that it makes a very large parcel for the northern part of the development. To fill this parcel, JBG has proposed an ENORMOUS building that is way out of scale with the very small scale houses across the street. I am not sure they can come up with a building of this size that fits in. I am not concerned with a grocery store as part of their concept (I think the neighborhood can support another grocer). However, I don't think their concept meets the goal of connecting Howard to the residential area to the west. Their concept of an urban forest seems be only for the residents of the building, since most of it is interior. It does nothing for other residents in the area. The concept seems to be more of an island between the two communities, rather than a bridge. I am also a bit concerned over W Street being a private street under the control of JBG, or some other corporate entity. For Ellis, the plus is that their concept of a market seems to be a dynamic one that will draw both the Howard community and the western residents together--if executed correctly (if not done correctly it could morph into a fast food court desert). The minus is that their pedestrian connection to the two areas will leave an awkward transition to the west--pedestrians will empty out onto Florida/Sherman where the intersecting roads are already problematic.

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Additional ANC1B Design Committee Member Comments #1 Project Site/Design: JBG's proposal included developing an adjoining parcel of land. I like the idea of design cohesiveness that this affords but also recognize that neither JBG nor Ellis has presented other than a very rough project drawing for discussion purposes. Since Committee members gave both groups specific feedback regarding the desire for world class architectural design, this issue I believe is best addressed when the contractors have had a chance to react to the recommendations. Both proposals included "green" aspects such as solar. The winning contractor should be required to maximize those features to extent feasible. Of some concern are the implications of no "PUD" for the JBG proposal. While this would accelerate project completion, it also blocks the Zoning Commission from specifying standards. (NOTE: I may be off the mark in this comment, since I based it on my limited reading on DC PUDs on the ZC web page.) Affordable Housing: Ellis indicated that 15% of their proposed 360 residential units would be affordable housing. These 54 affordable units are less than the 20% or 70 affordable units proposed by JBG. (JBG will also be providing 40 more such units in their Atlantic Plumbing project site, but that is a given regardless of which contractor's proposal is selected.) I believe that in order to preserve the diverse and rich dynamics of our neighborhoods, affordable housing and scattered site subsidized housing should be a priority. JBG's proposal would provide more such housing. JBG also proposed the inclusion of micro- units. While these units might compete with Howard University's plans for student housing, they would provide a different form of "affordable" housing. Benefits/Community Grants Packages: Ellis proposed $100k to community-based organizations; JBG proposed $150k to specific community-based projects and scholarship funds plus the W St connection ($3M). The JBG proposal is significantly larger. Parking/Traffic: Both contractors' proposals address parking needs. Both proposals encourage more foot traffic versus automobile traffic. Mixed-Use Composition: Both proposals incorporate mixed business and residential usage. While Ellis proposes a marketplace with multiple small vendors, JBG proposes a Harris Teeter or similar grocery. Ellis proposes multiple convenience-type food establishments (e.g., fast food) while JBG proposes small cafes and restaurants similar to those found across from Whole Foods on P St. Both proposals provide space for incubating small start-up business, green spaces, etc. I believe the area has sufficient fast food restaurants nearby on Georgia Avenue but does not have enough of other dining options. Thus I prefer the JBG proposal. I also believe that with the significant increase in residents, a grocery is a better option than a marketplace, especially if we

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wish to encourage less auto traffic in and out of the area. I am concerned that new residents would be forced to drive to do routine grocery shopping.

Additional ANC1B Design Committee Member Comments #2 I support the JBG presentation due to the following six points: * Combined two parcels of land allow for the creation of a development that integrates better into the overall city * Developer is not requesting additional subsidized funding from the city to supplement development * Developer is not requesting variances from the existing zoning regulations * Suspect the project development life cycle will be smaller since variances and subsidized funding is not needed * Variations in the proposed types of housing * Development Team contains members with proven past experience with residential development within 1BANC.

VARIOUS NEIGHBORS A number of neighbors expressed through email an interest in investing in the Project. Please address in detail how your team might address this community desire.

SAMPLE EMAIL RE: INVESTING IN PROJECT – I believe that DC residents should be allowed an opportunity to invest in city-owned land development projects. I support the MRP / Ellis / Fundrise proposal for 965 Florida Ave NW. I think this is a great project and I would like MRP to be a part of it.

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APPENDIX B DEVELOPMENT TRANSACTION SUMMARY Offeror Name [

]

Total Residential Units Total Parking Spaces District Parcel Land Area District Parcel Land Area Deduct (e.g., new street)

Summary Detail

63,418

Residential GSF Retail GSF Hotel Other (Grocer) Other (Incubator Office) At-grade Parking GSF Total GSF Below-grade Parking GSF Avg Res Unit Size Acquisition Price Land Cost/SF Hard Cost Total Hard Cost/SF Soft Cost Total Soft Cost/SF Financing Costs Total Development Cost Remediation Developer Fee Equity Total Debt Total Deferred Developer Fee Total Sources Equity/Total Sources Debt/Total Sources Construction Loan Int Rt

% % %

Total Revenue Total Costs Total Profit Return on Equity Return on Cost Internal Rate of Return

% % %

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Comments

APPENDIX C BUSINESS TERM SHEET (Square 2873, Lot 1102) Seller

Government of District of Columbia, acting by and through the Deputy Mayor for Planning and Economic Development (the “District”)

Buyer Description of Real Property Disposition Structure

Closing Date

Purchase Price (If fee simple acquisition) Land Value (If ground lease) Ground Rent Factor Annual Ground Rent Lump Sum Ground Rent Option Annual Ground Rent Escalation Fair Market Value (FMV) Annual Ground Rent Recalculations

Offeror Financing

[__________________________________], (the “Offeror”) The parcel of land known for tax and assessment purposes as Square 2873, Lot 1102 (the “District Parcel”). District Parcel will be conveyed from District to Offeror under a fee simple or ground lease structure pursuant to D.C. Official Code § 10801(b)(8)(F). “Closing Date” means the date on which the fee disposition or ground lease of District Parcel is consummated per the executed land disposition and development agreement (the “LDDA”).

6.5% “Annual Ground Rent” means 6.5% of the Land Value (i.e., 6.5% x LV). In lieu of Annual Ground Rent, Offeror shall have the option to propose a lump-sum ground rent payment equal to the present value of the Annual Ground Rent over the term of the ground lease. Annual Ground Rent shall increase by ten percent (10%) on every 5th anniversary of the Closing Date. Annual Ground Rent shall be recalculated on the (i) 30th anniversary of the commencement date of the ground lease and (ii) every subsequent 25th anniversary of the initial recalculation date during the term of the ground lease. Each recalculation shall be based on the then-current fair market value of District Parcel, determined by appraisal, which shall be equal to the product of (a) 100% of the appraised value (determined as if District Parcel were (i) encumbered by the ground lease, (ii) unimproved by any improvements, and (iii) to be used for the actual uses in place), and (b) the Rent Factor; provided, however, the Annual Ground Rent resulting from each recalculation shall not be greater than 120% or less than 100% of the preceding year’s Annual Ground Rent. Offeror shall be responsible for obtaining financing and equity to fund 100% of the Development Program. District agrees to cooperate with Offeror in connection with Offeror’s proposed - 22 -

Affordable Housing

Post-Closing Requirements

funding of the Development Program pursuant to a project funding plan which must be approved by District. District shall not be obligated to extend any loan to Offeror or grant any funds to Offeror in connection with the financing of the Development Program by Offeror, and District shall incur no liability whatsoever should Offeror fail to obtain or close on financing for the Project. In the event that District Parcel is being redeveloped to consist of a residential component, District requires that the applicable Inclusionary Zoning affordable housing requirements for District Parcel be met. Offeror shall be bound by the requirements of a Construction & Use Covenant, Inclusionary Zoning Covenant, and, if applicable, an Affordable Housing Covenant, which shall be attached to the LDDA and which may be amended with the approval of District.

Offeror has caused this Term Sheet to be signed and acknowledged by a duly authorized representative. Offeror further agrees that it will be bound by the provisions of this Term Sheet in the event Offeror is selected to negotiate for the development and disposition of District Parcel. The terms of the LDDA shall be consistent with the terms of this Term Sheet unless District otherwise agrees in writing, in its sole and absolute discretion. OFFEROR:

BY:_______________________________ Name: Title:

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STATEMENT OF MINIMUM TERMS Square 2873, Lot 1102 Development of Parcel Approximately Located at Intersection of Florida Avenue, N.W. and Sherman Avenue, N.W., Washington, DC The Offeror, [__________________________________], (the “Offeror”), submits this Statement of Minimum Terms as part of the Offeror’s Best and Final Offer (“BAFO”), which sets forth the key business terms and conditions that Offeror is willing to incorporate into the Land Disposition and Development Agreement (“LDDA”) with the District of Columbia, acting by and through the Deputy Mayor for Planning and Economic Development (the “District”) for the development of the real property located in Square 2873, Lot 1102 located near the intersection of Florida Avenue, N.W. and Sherman Avenue, N.W. in the District of Columbia (the “District Parcel”). Such development of the District Parcel is referred to herein as the “Project”. LAND DISPOSITION AND DEVELOPMENT AGREEMENT: District will either convey its fee simple interest in the District Parcel to Offeror, or retain its fee simple ownership interest in the District Parcel and allow Offeror to ground lease the District Parcel over a 99year term for the purpose of development. A ground lease (the “Ground Lease”) will not be subordinated to any other interests in connection with the development of the District Parcel and shall be attached as an exhibit to the LDDA to be entered into and recorded upon fulfillment of the conditions precedent set forth in the LDDA. Upon conveyance or ground lease of the District Parcel to Offeror, Offeror shall be responsible for payment of all real property taxes in accordance with D.C. Official Code § 47-1005 (2009). District and Offeror shall agree on the final terms of the LDDA for the District Parcel. Offeror shall have the right to exclusively negotiate with District for one hundred twenty (120) days (“the Exclusive Rights Period”) from District’s notification of its election to negotiate with Offeror to negotiate a final LDDA. If District agrees, in its sole and absolute discretion, to the terms negotiated for the disposition of the District Parcel, District and Offeror will execute the LDDA within 30 days following District’s receipt of all required approvals, including D.C. Council approval in accordance with D.C. Official Code § 10-801 (2012 Supp.). AS-IS: The LDDA shall provide that District will either convey or ground lease the District Parcel to Offeror in “as is” condition and District makes and shall make no representations or warranties as to the condition of the District Parcel or any improvements thereon, as to the suitability or fitness of the District Parcel or any improvements thereon for any purpose, as to any environmental law, other law or any other matter affecting the use, value, occupancy or enjoyment of the District Parcel, or as to any other matter whatsoever. District shall have no responsibility to prepare the District Parcel in any way for development at any time. Neither District, nor any employee, representative, or agent of District has made any representation or warranty, express or implied, with respect to the District Parcel or any

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improvements thereon. Any and all costs associated with the remediation of any environmental condition(s) existing on the District Parcel whether before or after conveyance of the District Parcel to Offeror shall be born solely by Offeror. Offeror acknowledges and agrees that District shall not be required to contribute in any manner toward such remediation costs. DEPOSITS: All deposits required to be delivered to District hereunder will be held by District through Offeror’s successful completion of the Project, as determined by District or as otherwise provided herein. Solicitation Response Deposit: Offeror, with submission of its original proposal, should have submitted a $50,000 deposit (“Solicitation Response Deposit”) in the form of an irrevocable letter of credit or certified funds. At the time of selection, this deposit is at risk to Offeror. The Solicitation Response Deposit will be returned to Offeror if Offeror is not extended the right to exclusively negotiate with District. Land Disposition and Development Deposit: At execution of the LDDA, Offeror shall submit to District an additional $100,000 deposit (“LDDA Deposit”) in the form of an irrevocable letter of credit substantially similar to that provided in Appendix M of the original solicitation. This deposit shall be in addition to the Solicitation Response Deposit and all earlier deposits. Closing Deposit: Prior to Closing, District and the selected Offeror will negotiate additional deposits due at Closing to ensure Offeror’s completion of the Project, as well as compliance with all executed terms and agreements in the LDDA. This deposit will be in the form of an irrevocable letter of credit substantially similar to that provided in Appendix M of the original solicitation and for an amount no less than $500,000 (the “Closing Deposit”). DEVELOPMENT PROGRAM: Offeror has set forth in its BAFO its proposed development plan and program for the Project, including but not limited to unit mix, income targeting, proposed amenities, human capital programming and design features. District has relied on the representations set forth in Offeror’s proposal and the BAFO with respect to all elements. Offeror agrees to act in good faith to implement the objectives, programs and plans set forth in Offeror’s proposal and BAFO. Any modifications or attempted modifications to the proposal or BAFO by Offeror during the Exclusive Rights Period may result in termination of all negotiations, whereupon District shall have the right to retain the Solicitation Response Deposit. FINANCIAL OFFER: As part of the LDDA, District and Offeror will negotiate the final terms of the conveyance documents, or the Ground Lease, and restrictive covenants. The final terms of the financial offer for the District Parcel will be based upon either the purchase price for the District Parcel, or the present value of a 99-year unsubordinated ground lease. Offeror has set forth in its BAFO its financial structure and funding plan, including all subsidy needs. District has relied on the representations set forth in Offeror’s proposal and the BAFO with respect to funding ability, financing capability, ability to advance funds for predevelopment, ability to contribute developer equity in the amounts shown in Offeror’s proposal and the ability to move forward with the proposed Project based on the revenue and expense assumptions provided by Offeror.

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The financial offer being made by Offeror is essentially the commitment to finance and develop the program for the Project set forth in its proposal in a manner consistent with the requirements set forth in the Solicitation for Offers, Offeror’s proposal and any supplemental materials submitted with Offeror’s proposal, and this BAFO. DUE DILIGENCE AND SOFT COSTS: Offeror shall be responsible for all costs and expenses related to its proposal, any due diligence, and any pre-development and soft costs for the Project. Offeror shall begin due diligence immediately upon being selected to exclusively negotiate with District. INCLUSIONARY ZONING: Offeror shall comply with the Inclusionary Zoning provisions of the District of Columbia Zoning Ordinance by providing for Inclusionary Units (11 DCMR §§ 2600 et seq. (2012)). FIRST SOURCE HIRING: Offeror shall enter into a First Source Hiring Agreement with the D. C. Department of Employment Services (DOES) prior to executing the LDDA with District. In connection with the First Source Hiring Agreement, Offeror agrees that no less than 51% of new jobs created by the Project will go to District of Columbia residents in accordance with D.C. Official Code §§ 2-219.01 et seq and, if applicable, the local apprenticeship program under D.C. Official Code §§ 32-1401 et seq. CERTIFIED BUSINESS ENTERPRISE (CBE) UTILIZATION: Offeror shall enter into a CBE Utilization and Participation Agreement (“CBE Agreement”) with the D.C. Department of Small and Local Business Development (DSLBD) in accordance D.C. Official Code §§ 2218.01 et seq. prior to executing the LDDA with District. In connection with the CBE Agreement,

Offeror shall expend funds contracting and procuring goods and services from CBEs in an amount equivalent to no less than thirty-five percent (35%) of the Adjusted Development Budget. Offeror shall also submit to District a copy of its binding agreement(s) with its CBE partner(s). Offeror must include a CBE partner or partners who, at a minimum, participate in the Project in the following ways:

1) Certified by DSLBD; 2) Invests or earns at-risk equity equal to at least 20% of equity invested by the sponsor - the value of the same equity may not be diluted under any circumstances; 3) Holds 20% of the development management responsibilities for the proposed Project; 4) Earns at least 20% of the development fees incurred by the Project, and 5) Earns at least 20% profits generated by the Project.

GREEN BUILDING ACT: Developer shall construct the project improvements in accordance with the Green Building Act of 2006, D.C. Official Code § 6-1401.01, et seq. (2008 Repl.) and DC’s Stormwater Management Program stated

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in 21 DCMR, Chapter 5. In addition, Developer must submit with its building permit application a LEED checklist indicating that the Improvements are designed to include sustainable design features such that the Improvements meet the standards for certification as a "LEED-Certified" building. Developer must use commercially reasonable efforts to obtain LEED certification at the "Certified" level for the Improvements once construction has been completed. APPLICABLE LAWS: Offeror shall comply with all applicable federal and District laws and regulations, including, without limitation, Living Wage Act (DC Code § 2-220.01 et seq.), the Davis Bacon Act (40 USCS § 3142 et seq.), Historic Landmark and Historic District Protection Act of 1978 (D.C. Code § 6-1101 et seq.) and National Historic Preservation Act of 1966 (16 U.S.C. 470). DESIGN REVIEW AND APPROVAL: Subject to the terms and conditions to be negotiated and set forth in the LDDA, District shall have the right to review and approve or disapprove all or any part of the project plans and drawings related to the design, development, and construction of the Project, and all modifications and changes thereto. DEVELOPMENT AND COMPLETION GUARANTY AND BONDS: As further assurance of certain terms and conditions set forth in a construction and use covenant to be recorded against the District Parcel at Closing, Offeror shall cause a development and completion guaranty to be executed by guarantors acceptable to District and shall deliver to District certain performance bonds as required by District pursuant to terms of the LDDA. SCHEDULE OF PERFORMANCE: The schedule of performance submitted by Offeror with the BAFO shall serve as the basis for performance in the LDDA. Offeror shall commence pre-development activities for the Project immediately following District’s notification of its election to negotiate an LDDA with Offeror. Offeror shall demonstrate its commencement of pre-development work through the execution of service contracts with consultants, designers, etc. The same service contracts must be submitted to District for review and must identify specific deliverables that will be initiated immediately following District’s notification of its election to negotiate with Offeror to negotiate a final LDDA. If Offeror does not meet the schedule of performance submitted to District, then District, in its sole and absolute discretion, may terminate the negotiations and keep all deposits submitted by Offeror. LDDA EXECUTION: Offeror must fully negotiate an LDDA with District within the Exclusive Rights Period. District and Offeror will execute the LDDA within 30 days following the approval of the disposition resolution by D.C. Council pursuant to D.C. Code § 10-801. District in its sole discretion may extend the execution period. CONDITIONS TO GROUND LEASE EFFECTIVE DATE: Prior to the Closing under the LDDA and either the conveyance of the District Parcel to Offeror, or the Effective Date of the Ground Lease, as the case may be, Offeror shall have satisfied the following conditions:

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a) Offeror shall have submitted to District a Project budget and funding plan, and all design and construction drawings for the Project and the same must have been approved by District; b) Offeror shall have obtained all permits required for excavation, sheeting and shoring for the Project; c) Offeror shall have obtained all funding necessary to complete the Project, as evidenced by documentation satisfactory to District; d) Offeror shall have caused a development and completion guaranty (or guaranties) acceptable to District to be executed by guarantors acceptable to District and shall have delivered to District certain performance bonds as required by District pursuant to the terms of the LDDA; and e) Offeror shall have satisfied all other standard District conditions of Closing and other customary conditions to be negotiated by and between District and Offeror. CONSTRUCTION COMMENCEMENT: Offeror shall commence construction within 60 days following Closing under the LDDA. INDEMNIFICATION: Offeror shall indemnify, defend, and hold harmless District and its past, present and future respective directors, officers, agents and employees, from and against any and all losses, costs, claims, damages, liabilities and causes of action (including reasonable attorney’s fees and court costs) arising out of anything contained in this Term Sheet. TERMINATION OF NEGOTIATIONS: In the event that District and Offeror do not reach mutually acceptable final terms to the LDDA, District shall have the right, in its sole and absolute discretion, to terminate negotiations with Offeror at the conclusion of the Exclusive Rights Period and retain the Solicitation Response Deposit, and all plans, studies, reports, drawings, specifications and similar work product produced or funded by Offeror (or its agents, consultants or contractors) in connection with the Project prior to termination at no cost to District. Offeror’s submission of this BAFO in no way obligates or commits District to enter into any agreement (including any LDDA) with Offeror or any other person or entity. Any final agreement (if any) will be only pursuant to (i) the negotiation of an LDDA that is acceptable to the Mayor, in his sole discretion; (ii) District receipt of authorization of D.C. Council pursuant to D.C. Code § 10-801; and (iii) District’s execution of a final LDDA. TERMS FINAL: By submission of this document, Offeror is agreeing that such terms contained in the Statement of Minimum Terms and the Best and Final Offer (“BAFO”) are final and Offer acknowledges that they are non-negotiable in its future negotiations. Notwithstanding the foregoing, Offeror also acknowledges that in the event that District elects to negotiate with Offeror, District will not be bound to any or all of the terms contained in Offeror’s BAFO. OFFEROR’S ACKNOWLEDGEMENT: By submission of this document, Offeror expressly acknowledges that the Deputy Mayor for Planning and Economic Development (“Deputy Mayor”) has no authority to bind District to ground lease or

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convey the District Parcel to Offeror absent D.C. Council approval pursuant to D.C. Code § 10-801 and that its negotiations with District are at its sole risk and expense. Offeror further acknowledges that the District may not make any final decisions concerning the scope or nature of the Project for the District Parcel prior to compliance with all other District and federal laws and regulations. In addition, Offeror acknowledges that District cannot enter into any financial obligations under this BAFO without the lawful availability of funds and absent compliance with all other applicable District laws. Offeror acknowledges and agrees that the obligation of District to fulfill financial obligations of any kind pursuant to any and all provisions of this BAFO relating to any public funds, or any subsequent agreement entered into pursuant to this BAFO or referenced herein relating to any public funds are and will remain subject to the provisions of: (i) the Federal Anti-Deficiency Act, 31 U.S.C. §§1341,1342, 1349, 1351; (ii) D.C. Official Code § 47-105; (iii) the District of Columbia Anti-Deficiency Act, D.C. Official Code §§ 47-355.01 – 355.08, as the foregoing statutes may be amended from time to time; and (iv) §446 of the District of Columbia Home Rule Act. Any provision herein contained that violates the Anti-Deficiency Act shall render this BAFO void ab initio. Offeror acknowledges and agrees that it will hold District, its officers, employees, agents, representatives, and consultants harmless from all claims, liabilities, and costs related to all aspects of this BAFO. CONFIDENTIALITY: Offeror agrees not to disclose any information provided by District or obtained in the course of negotiations with District to any third party without District’s prior written consent; provided that Offeror may disclose such information (i) to any confidential advisors; (ii) to prospective partners, investors, nominees, designees or lenders, or any confidential advisors thereof; or (iii) to such others as may be otherwise required by law. NON-BINDING: If the Deputy Mayor elects to exclusively negotiate with Offeror, the Deputy Mayor makes no commitment (nor is he authorized to make any commitment) to enter into any contract and does not intend to proceed with any proposed project unless and until (i) District has satisfied all requirements of applicable environmental laws; (ii) District has received all required approvals of the Council of the District of Columbia; and (iii) the Deputy Mayor and the selected Offeror have reached mutually acceptable agreements governing the development, conveyance or ground lease of the District Parcel. COMMUNICATIONS: District will lead any discussions with the media and the community regarding the development of the District Parcel. Offeror shall not initiate, pursue or engage in any discussions or communications with the media or community without first coordinating with and receiving the approval of District.

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{Signature Page}

ACCEPTANCE: Following District’s notification of its election to exclusively negotiate with Offeror, District will negotiate exclusively with Offeror to reach final terms of an LDDA prior to the expiration of the Exclusive Rights Period. District shall have the right to terminate negotiations with the selected Offeror if the parties are unable to agree upon the final terms of the LDDA within the Exclusive Rights Period. The terms outlined herein shall be set forth formally and more completely in the LDDA.

[INSERT TEAM NAME]

Signature: Name: Company: Title: Date:

___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________

NOTIFICATION OF ELECTION TO EXCLUSIVELY NEGOTATE: District, acting by and through the Deputy Mayor for Planning and Economic Development, hereby elects to exclusively negotiate with Offeror for one hundred twenty (120) days from the date set forth below.

Signature: Name:

Victor L. Hoskins

Company:

Office of the Deputy Mayor for Planning and Economic Development

Title:

Deputy Mayor for Planning and Economic Development

Date:    

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