THE HISTORIC GLENN DALE HOSPITAL

FEASIBILITY STUDYforaContinuingCareRetirementCommunity

AGENDA

• History, Activities and Tasks Completed

• Feasibility Study and Outcomes

• Discussion

15 Minutes

30 minutes

20 minutes

GLENN DALE HOSPITAL

Total Acreage: 207 acres; zoned as Open Space

Existing: 23 existing structures in a campus-like setting on 60 acres 450,000 square feet of space All buildings suffering from

long term deterioration

33

February 18, 2016

History

• Institution opened on Sept. 15, 1934 as Tuberculosis Sanitarium

• Majority of buildings completed by 1940

19341960

• Doctors no longer found it necessary to isolate tuberculosis patients

• Glenn Dale Hospital opened to persons with long term illnesses

1982

• Buildings sighted as deficient and failed to pass fire and safety inspections

• An estimated$20 Million was

needed to update the complex, instead it was closed in January 1982

1995

• Sold to M-NCPPC

• House Bill 113 (deed restrictions)

• 60 acres mustbe developedas a CCRC

• 150 acres must remain as parkland

• 20-year Excess Profit Covenant (expired)

2003

• M-NCPPC determined that the 60-acre parcel is not needed for parks or recreational purposes and could be disposed of in accordance with applicable state law

2011

• Added to National Register of Historic Places

2014

• Added to Local Register of Historic Sites and Districts

DEVELOPMENT TEAM

The Alexander CompanyDeveloper, Preservation Architect & Preservationist

Community First Development, LLCCo-developer

DewberrySite / Civil Engineering

Southway Builders, Inc.General Contractor

G.S. Proctor & Associates, Inc.Consultant

Meyers, Rodbell & Rosenbaum, PALegal

Collington Life Care CommunityCCRC Provider

EXECUTIVE SUMMARY

• Maryland-National Capital Park and Planning Commission owns Glenn Dale Hospital Site

– 5201 Glenn Dale Road, Glenn Dale, Maryland– 60 developed acres– CCRC use restriction in place

• Redevelopment Authority of Prince George’s County issued RFQ for the Feasibility Study on March 18, 2016

– Amendment 1 3/22/16– Amendment 2 4/13/16

• The Alexander Company team was selected on August 3, 2017

FEASIBILITY STUDY TIMELINE & SCOPEPhaseI

STAKEHOLDER OUTREACH

• Who:– The Maryland-National Capital Park and Planning Commission– Neighboring civic groups– The Prince George’s County Historic Preservation Commission– The National Park Services– Maryland Historical Trust– Preservation Maryland– Prince George’s County Executive– The Prince George’s County permitting and regulatory agencies– The Prince George’s County Council– The Redevelopment Authority of Prince George’s County

• What:– Scheduled meetings– Presentations on progress of Feasibility Study– Solicit input on deliverables

PhaseII

PROGRAM ANALYSIS

Independent Living 247 – 413 unitsAssisted Living 198 – 396 unitsMemory Care 64 – 129 bedsNursing Facility 1,700 beds

TOTAL 445 – 809 units1,764 – 1,829 beds

MarketDepth

PROGRAM ANALYSIS

Independent Living 250 – 300 unitsAssisted Living 30 bedsMemory Care 26 bedsNursing Facility 19 beds

TOTAL 250 – 300 units75 beds

BrechtAssociatesRecommendation

PROGRAM ANALYSIS

Independent Living (Apts) 184 unitsIndependent Living (Cottage) 40 unitsAssisted Living / Nursing 30 bedsMemory Care 20 beds

TOTAL 224 units50 beds

Collington/KendalRecommendation

COLLINGTON / KENDAL ANALYSIS

• In evaluating potential CCRC sites, Kendal utilizes a 55% multipier of the average entry fee for determining allowable construction hard costs.

• Entry fees are those only attributable to the independent living components that receive deposits. The other components, such as memory care and assisted living are not included as they are “age in place” components that are included with the original enry fee.

• The assumptions that drive the $42,350,000 Kendal allowable hard cost number include 220 independent unts @ $350,000 entry fee x 55%.

ENTRY & MONTHLY FEES

COMMUNITY ENTRY FEES MONTHLY FEESCollington $240,000 $2,359

Riderwood $220,000 $2,050

Miller’s Grant $380,000 $2,665

Average $246,667 $2,335

Glenn Dale $350,000 $2,500

ZONING & ENTITLEMENTS

• Currently zoned O-S

• Special exception required

• Necessary steps to obtain entitlements– A preliminary plan of subdivision– Traffic study– Natural resource inventory– Storm water study– Detailed site plan and a concept plan

HISTORIC TAX CREDITS

• Must meet the Secretary of Interior’s Standards for Rehabilitation

• Claim a federal tax credit equal to 20% of QREs – 2017 Tax Reform Bill added five-year recovery period– No limit on credits awarded or claimed

• Claim a state tax credit equal to 20% of QREs– $3 million credit cap per owner / developer, project and year– Only $9 million allocated annually by Maryland Historical Trust– Project must commence within 18 months of award– Project must be completed within 30 months

• Assumed investor pricing for federal: $0.83 / dollar

• Assumed investor pricing for state: $0.71 / dollar

ENVIRONMENTAL

• Abatement costs if buildings are renovated: $5,368,971

• Abatement costs if buildings are demolished: $4,434,072

• Voluntary Cleanup or Brownfields Program as potential offset

AbatementcostsobtainedApril2013

CCRC USE / LICENSING

• Process to apply to the MDOA for a feasibility study includes 18 submissions

– Business plans, deposit policies, verifications of certifications, market studies

• Preliminary certificate of registration requires 12 exhibits

• Application for initial certificate requires that the CCRC obtains deposits equal to 65% of the proposed units ($35,000 on average)

PRE-DEVELOPMENT COSTS

ITEM CATEGORY COSTSite Plan Civil $380,000

Landscape Plan Landscape Architect $150,000

Historic Consultant Historic $200,000

Surveys Survey $60,000

Final Geo-technical Analysis Geo-technical $75,000

Environmental Studies Wetlands Consultant $50,000

Electric & Com. Utility Design Utility Consultant $100,000

Traffic Signal Study, Design, etc Traffic Engineer $75,000

Retaining Wall & Bridge Design Structural Engineer $50,000

Organizational Costs Legal $120,000

Land Use / Real Estate Atty. Legal $80,000

Acquisition Cost / Title / Dev. Acquisition $200,000

Investor Commitment Fees / Legal Syndication Costs $75,000

Design & Engineering Costs / Fees Architectural/Engineer $2,350,000

Projections and Financial Modeling Accounting $20,000

Environmental Studies Environmental $80,000Continued onfollowing slide

PRE-DEVELOPMENT COSTS

ITEM CATEGORY COSTMarketing (CCRC Presales) Marketing $2,240,000

Review Fees County Fees $60,000

Building Permit Fees (Land Dev.) County Fees $5,000

MDOT Permits Traffic Permits $3,000

CCRC Licensing State Licensing Fees $65,000

State Tax Credit Application Fees State Tax Credit Fee $50,000

Lender Application / Commitment Financing $350,000

Rezoning Application Fee County Fees $140,000

Appraisals / Market Studies Appraiser/Market Anly. $40,000

Reimbursable Expenses All $75,000

SUBTOTAL $7,093,000

CONTINGENCY (10%) $709,300

TOTAL $7,802,300

DEVELOPMENT SCENARIOSOption1:FullAdaptiveReuse

Existing Buildings

New Construction High Density

New Construction

Mothballed

DEVELOPMENT SCENARIOS

• Adaptive reuse of nearly all the historic facilities with minimal new construction to fulfill the desired program

– 210 units / beds– All administration, recreation and support services are in the historic structures– New construction provides 40 apartments and 24 cottages near Utility and Cherry Dr.

• Total Cost: $130,865,782

• Feasible Cost per Kendal Analysis: $91,217,479

• Gap: $39,648,303

Option1:FullAdaptiveReuse

DEVELOPMENT SCENARIOSOption2:PartialAdaptiveReuse

Existing Buildings

New Construction High Density

New Construction

Mothballed

DEVELOPMENT SCENARIOS

• Adaptive reuse of the children’s hospital and nurse’s dormitory– 84 units

• Mothball duplexes, adult hospital and employee’s dormitory

• Demolish apartment buildings, power plant, and warehouse to make way for new construction

– 190 units / beds– All administration, recreation and support services are in the new construction

• Total Cost: $140,609,557

• Feasible Cost per Kendal Analysis: $87,230,849

• Gap: $53,378,708

Option2:PartialAdaptiveReuse

DEVELOPMENT SCENARIOSOption3:AllNewConstruction

New Construction High Density

New Construction

DEVELOPMENT SCENARIOS

• Demolition and removal of all historic structures

• Replace with new construction– 274 units / beds– Administration, recreation and support services cover roughly 2/3 of the site

• Total Cost: $114,294,677

• Feasible Cost per Kendal Analysis: $68,927,565

• Gap: $43,367,112

Option3:AllNewConstruction

GAP CLOSING SCENARIOS

• Property tax abatement (historic and/or VCP)

• Tax incremental financing or PILOT

• Local infrastructure reimbursement / contributions

• New Markets Tax Credits

CCRCUse

GAP CLOSING SCENARIOS

• Low Income Housing Tax Credits (rental housing)

• HOME funds

• CDBG

• Additional SHTCs under multiple owner / operator scenarios

• 150 units of additional new, for-sale construction housing– Additional increment for TIF– $7.5 - $9 million from lot sales

Non‐CCRCUse,RelatedUse

CONCLUSION

• CCRC licensing process typically takes 7-10 years

• Gathering construction documents, permits, etc. will take years

• Potential CCRC residents would be expected to part with their deposits for 5+ years

• Timing and limitations of funding sources in light of above

• Tax credit investment pool limitations

• Financial gap

INDUSTRY TRENDSProviders are moving away from the CCRC model and into hybrid models that provide many of the same care services but avoid the burden of up-front time, costs and risks associated with the pre-sales.

• A Changing Consumer: Baby Boomers will demand more services, more amenities and expect to be a part of decision making in all aspects of community

• Aging in Place: Consumers will not want to be "forced" to transition to different levels of care. Support services will be expected in IL residences.

• Age Segregation: Consumers will not want to be "locked away" with a bunch of old people. Diversity of age, ethnicity, background, etc. will be necessary. Communities need to plan for intergenerational living.

• Dementia Care: There is no cure on the near horizo. A bricks and mortar approach is still the primary solution BUT caregivers will demand more support in home and delay the move as long as possible.

• Affordable Housing: Huge need currently that will only grow. No additional federal monies expected so creative solutions needed.

• Continuing Care at Home: Most consumers no matter what will want to stay in their home unless a medical event forces them to move. Bringing a package of services to consumers where they currently live is increasing in demand.

FAQ

Will The Alexander Company develop a turn-key CCRC for Collington Life Care Community to own and operate?

The Alexander Company will perform the adaptive reuse of the historic structures.

Upon completion / permanent loan conversion, Collington Life Care Community will assume the managing member role of the partnership, thereby removing The Alexander Company.

Community First Development would perform the new construction with Collington Life Care Community as their client.

FAQ

Is the CCRC licensing process our barrier or is it the funding gap?

It’s both.

The licensing process requires nearly $8 million of predevelopment funds.

Many of the funding sources (or their terms) can alter or even be eliminated throughout predevelopment and licensing phases.

This places an intolerable amount of risk on the developer, regardless of the funding gap.

FAQ

If the County, through a number of measures, is able to fill the Option 1 funding gap, is a CCRC feasible?

It could be feasible; however, the issue with the CCRC licensing process and funding gap still applies.

What happens if the state terminates its historic tax credit program, or an amendment to federal tax reform happens next year? Would the County increase its gap contribution? A developer will take this risk if the project can close in a year or two, by assuming transition rules would grandfather the credits for a limited time. With the CCRC licensing process, the project wouldn’t commence for at least three years and nearly $8 million of predevelopment expenses would have been expended. Also, if units don’t pre-sell and a license isn’t granted by DPOA, the deed restriction would prohibit a change of course (conversion to rental, or for-sale products), and the at-risk predevelopment expenses could never be recouped.

FAQ

If the expectation is that the development density would be limited to eight dwelling units per acre, and the CCRC unit target is 274, is there potentially an Option 1A that would reduce the gap by allowing infill affordable senior or market-rate housing along with a CCRC?

Yes, this option is included in the gap closing scenarios for non-CCRC related uses.

QUESTIONS?(608) 258-5580 │ alexandercompany.com

For more information and to sign up for updates, visit:

www.glenndalehospital.com

WHERE COULD WE GO FROM HERE?

GOAL: Continue towards the redevelopment of the site with financially viable

Senior Living Community

AND ADAPTIVE REUSE of as many existing buildings as possible NEW BUILDINGS and USES to complement the historic

structures Maintaining a CAMPUS LIKE SETTING Compatible with the SURROUNDING NEIGHBORHOODS

Accommodating as many SENIOR HOUSING types as viable

• Independent Living• Assisted Living• Memory Care• Nursing Assistance

WHERE COULD WE GO FROM HERE?SCOPE OF SERVICE Considerations:

Define the Mix of Components/Uses for Project

Determine Market Feasibility for Viability

Provide a Cost Estimate, including the financing gap

Site Development Plan

Propose Development Options to meet the desired mix of use

Prepare for the Entitlement Process to ready the site for

development

Create a Project Phasing Plan

Community Engagement

Continued information sharing and gathering of ideas/opinions

WHERE COULD WE GO FROM HERE?

The TO DO LIST includes:

New SCOPE OF SERVICES with a Consultant Team

Evaluate the CCRC LEGISLATION for potential changes to help this project

Continue to MAINTAIN THE SITE

Partner with appropriate entities to STABILIZE STRUCTURES suitable for reuse

Develop FUNDING STRATEGIES for site abatements, environmental remediation, etc.

Continue to DEVELOP PARTNERSHIPS at the county and state levels