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• • 8 2. The only known reason for not renting to seniors would be project failure upon the lender foreclosing, I believe. To directly address this risk it is important to understand the following: a. Willow Ponds with all its covenants has performed at a consistently high economic level since construction: • vacancy levels are low and have averaged each year at an overall rate of 5 %. ■ debt service coverage has averaged consistently at 1 to 1.2 ratio. • annual average turnover is very low with only two tenants per year; 13 tenants are original and over one half of the seniors have rented for more than 5 years. The primary tenant "move -out" is due to involuntary onset of aging. b. After a through third party capital needs assessment report, the current physical property quality is rated as good. However, due to the age of the property, over the next 15 years some $400,000 of replacement investments will be needed to keep the property in good shape. See Attachment F, Willow Ponds CNA. c. While the market for affordable senior rental housing in Lino Lakes has proven to be strong, this trend will prevail in the future wherein demographic projections identify older aged residents as the fastest growing segment for Anoka County. Therefore, the City of Lino Lakes senior use restrictive covenant has never been nor expected to b e in the future a market burden. d. Willow Ponds was originally designed and developed for a senior population: one level cottage style architecture. The proposed purchase and refinancing will not alter the past and current operations. All restrictions will stay in place while the same property manager will be retained. e. The proposed refinancing will significantly improve the market position of the project to operate the project long term. The buyer has arranged the market's most desirable form of rent real estate financing possible: a low rate 35 year fixed 15` mortgage loan