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2022-08-16 CC Agenda Packet - PRESENTATION - ITEM E18 - Park VistaPark Vista: State of the Union Paul Lanyi for the PV Board August 9, 2022 Background Current State Future Challenges Dverview Board Discussions/Decisions City Council To Consider Park Vista Background • Senior living facility * Built in 1987 ■ 97 residential units (33 singles and 64 one bedrooms) Rent for new rentals at 60% of market rate per month 0 1 bedroom = now, $1142 vs $960/month last year o Studio = now $846 vs $705/month last year Park Vista Background (2) • On average 4 units turn each year • Approximately 65% of 97 units not paying 50% of market rates o Some residents have been at PV for 30 years • Others, average tenure 15 - 20 years • Annual rent increases of 1- 2% have been passed —75% of the time in the past 15 years by the Board Park Vista Background (3) • Large unanticipated expenses e.g. $50K mandatory earthquake insurance are challenging. Just learned about mandatory balcony inspections. Costs are TBD. ■ Held first joint Future discussion in 2019 with the City including Public Works, Finance, The Cadman Group and members of the Board o Reviewed Capital Replacement Reserves Report visa vis finances — Park Vista Background (4) According to a recently provided Plan of Operations, PV must be self-sufficient 5. RENTAL RATES In keeping with the intent of the City Council in the development of the Senior Housing Project, and to provide a quality living opportunity at the lowest possible cost, a range of rental fees has been established. These rates were designed to reflect a realistic approach in the operational needs of the property, ensure a proper operating budget and maintain an appropriate maintenance reserve. The rental schedules established for Park Vista reflect the cost necessary to meet (a) the annual operating budget for the current year of operation, (b) an appropriate operational reserve, and (c) a sinking fund to be known as the "Replacement Reserve" for the replacement of major components of the property, (appliances, roof, carpet, etc.) over an assumed 3 to 30 year life. In the past PV offered rental rates at 50% of market rate intending to o Cover operational costs o Keep an appropriate reserve o Maintain a sinking fund/replacement reserve Current Status • 1 vacant unit as of August 2022 due to the passing of a tenant ■ COVI D-19 healthy * PV holds N$1.5M in financial reserves (not including 504 funds) * Three new board members joined �,J Tim Whelan Denise Fessenbecker Julia Newman Future Challenges • $3.5M worth of projects identified in City Capital Replacement Reserves Report to be accomplished by 2031, $2.3M by 2027 • Park Vista, undercurrent practices and plans and using Senior Housing Fund 504 (controlled by the City) will stay within the City Finance recommended reserves until 2034 • This assumes that the N$900K of 504 funds will only be used for Park Vista • If they are not, Park Vista would fall below City recommended reserves o This also assumes no unidentified additional capital improvements will be pop up and be required In Place • O increased rents on current residents by 2% • �% Increased rents on new rentals to 60% • OIncreased internal transfer rental rates • © Increased parking rates Jan 1, 2022 for this year o $20/$25/$30@month after decades of no increase Fi nanciaLs park Ysb 20-rear Forecast 7022 2� 2024 2025 2026 2027 2D28 2029 2 2031 2 3j a � 3 35 20036 � 8 �39 � � 2M Revenue S810,062 S895,752 S950,356 $1,005,358 51,062,006 SL122,336 S1,185,097 51,249,113 S3,314,409 S1,381,012 S1,448,946 51,518,239 S3,588,918 S1,661,010 S1,734,541 S1,809,549 51,386,054 S1,964,089 S2,043,685 52,124,872 S2,207,684 Expenses (S5S20403 15710.4661 (S73S,).661 1576L1301 0788,0291 I5S16S122: IS!345.130i ISS75,451 [S506930I [$939,729i [5973AS71 (SL009.4181 [51.0464301 151,084,9565 !SLI75.0:81 6-166.665• [S1.210.394! i$ow7o 151,302.9441 iSL35z-i (57,403,47;1 Net SL28.022 $185.236 s2t5,G80 5244,228 S273S77 S3o6.315 S339.967 S3a698 5407,479 y I.M SAnj= SS01,R;_L 5542.40 5576,054 S609,4% VA2,664 5675.660 570B.34R 574p(656 S77i,6i0_ 580 x' Capital Expense (560.O0o) (S6A9,501) (5665,9R5) f526,290) 1i35.=':f (5604.171) I5s-3+,E63i (Sli".M 11 [5131-U99 03M.4361 fS26,2S0) IS9S4.5391 [S956,S39! iSS75,076i (S704,720; (S761,387) [S^0.I47! (SSY, 1371 15250,A0o1 i523+7,xa] ii150.0001 Transfer in From Fund SO4 5601000 so So 526,250 53S-72 $0 $234.M 50 5131,339 SO SM29D 512SPO S10O= 5i00,000 SIODAbo s0 So So so _ SO 50 Retumto Equity SL78.022 S244,228 5273,977 (5797.856". S339.957 3281t631 5407,299 S60:W7 S475,o78 432I�7111 (S3140511 S1W978 54,747 l5118.7031 i5Kn2l S32o232 54s% 5522650 $SS4�12 Beginning Equity S3,600,000 51,728,022 S1,263,808 5809,912 SLOSa,1401 S1,928118 $LO30,261 S1.370,229 S1,089,045 S4496,344 S1,557,191 52,032,270 S1,709SS2 SI,395,501 51,496,478 51.501,225 SI,382.522 S3,287,940 51,408,172 SI,M,869 S3 M519 Ending Equity SL728Al2 52A3,M 5809,912 S1.0541Ao SLUMO 50070.t61 SL370.229 SIAMiNS SLAK3A4 51r%7,191 Si,o3L270 54)09,552 SL39S601 SL4KA78 SLSOL225 SL382572 SL2l719Q SL41MM SId9Le69 SLAM514 5$976,731 City's SO4 Fund (ssoaaa�mn:, S900,000 S900,000 S900,000 S873,750 S838,478 S838,478 5603,610 S603,630 S472,471 5472,471 S446,221 S321,221 $221,221 5121,221 S21,221 S21,221 S21.221 S21,221 S21,221 S21,221 S21,221 TAtw Rands Availableto Park rib SL8,MAU SL163.90$ 53.709.912 51,927.990 54166,5'96 SIAW739 $1,973,339 SI6OL655 S3.961.815 S2,019,662 5217e.A91 S2.030.773 SL616.722 SL617.699 51.S22dd6 SIAIMM SL309.161 SLA29.393 SL920DW S2d42.740 SL996952 Recommended Reserve: 10%of operating e.pense * 2 years of capital S777,7% S'32%533 $768,762 $137.635 $718.246 S920,641 S974,262 S873,742 5602,448 $500659 $1.080.176 $2,014,020 SI636.258 S3.398.291 SIS79614 S7.649.315 S1479.398 S963.691 S630299 S635222 S390.347 Ov or(under) recommended reserves SLEW-317 $774�175 S941,150 S7,790,256 SL"R,350 5949,099 5999.577 SSI8,914 S3,366,367 S1,S29,003 S7.398.315 S16,753 (S195361 S229.408 j$56.1681 (5244.572) (S170,2371 S465,703 S1,289,791 S1.807,S38 52606.605 Revenue Assumptions: 3% increase in rents (2023-20261, and 2% increase thereafter 2% in parking fee every year, 4 units turning over per year & new tenants assessed a[ 60%of market rate through 2026 & 65%thereafter (2027 - 2042) Expense Assumptions: 2% annual increase for management contra, 3% for utilties, 5%for all other e.penses Capital Assumptions: Based on the CrWs independent facility assessment plan of park Vista; conducted by the City's Public Works Department 3% increase in rents (2023-2026), and 2% increase thereafter. 2% in parking fee every year, 4 units turning over per year & new tenants assessed at 60% of market rate through 2026 & 65% thereafter (2027 - 2042) Requests of City Council 1) Permit the Board to raise parking rates 2% per annum until canceled - recommended by City Director of Finance 2) Give the Board the authority to increase rents on current tenants from 2% up to 3% per year through 2026 - recommended by City Director of Finance (3% if CPI increase is 6% or higher through 2026) 3) Change market rate % to 65% for new tenants (2027-2042) 4) The Board requests that City Council formally dedicates 504 funds solely for Park Vista