Item C: Capstone Student Housing Development Proposal

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Attachment E Questions from Councilor Brown (email dated 3/19/2012) 1.Council should know the name of the "really big Wall St. investor" mentioned by Conrad Sick at the City Club/DNA event @ Cosmic Pizza on 3-11-12 and the amount of his investment in this project. Kayne Anderson, Real Estate Advisors 2.Capstone to check-off which of the following projects listed on their website as "sold to others" that they still manage (18 projects listed): None of the projects listed in the email are managed by Capstone. These projects were developed under a different business model, investor sources/sponsors and economic cycle. The projects were developed for a strategic sale timed with an optimum market condition which was achieved with in the 2005 -2007 robust economic cycle. The size of the project portfolio made the projects attractive for other national level owners-developers/operators of student housing. The current owners of these assets have continued the project operations within the framework of Capstone’s original management template which is standard within the purpose-built student housing market. Today Capstone operates under a different business model considering the national economic conditions have significantly changed since 2007. Capstone develops with Kayne Anderson (KA) who is prime owner and equity sponsor for the projects. KA underwrites these projects having the flexibility to hold for the long term or sell them pending market conditions. The operating agreement between KA and Capstone enables Capstone the long term management option, pending performance. The working relationship between KA and Capstone is strong. In the case KA decides to sell the asset in the future then Capstone has the opportunity with the new owner who more than likely will be an investment source and not another developer/operator source as was targeted for the previous business model and cycle and will continue managing the asset for the new owner. Consistent with the new business model Capstone has retained management after the asset is sold for the Cottages at Baton Rouge, Columbia, Missouri and The Lodge at East Lansing, Michigan. 3.A cost-estimate total for building demolition and a sub-total estimate for asbestos remediation Building Demolition $377,046; Asbestos Remediation $931,000 4.A chart showing how $16 mil tax mitigation breaks down for all the affected jurisdictions: i.e., Eugene General Fund, Lane Co., Lane ESD, etc. Below is the estimated division of tax impact. Since staff has not yet completed the analysis to determine a more accurate tax estimate, the chart shows the impact based on $1 million increments. The staff analysis will be provided with the April 23 MUPTE public hearing AIS.