About Village Lake Apartments
This 208 unit apartment building is located in an A+ area situated on 9.8 acres just minutes from Google and downtown Mountain View – the center of the Silicon Valley.
The business plan is to re-entitle the land within 2-3 years, with the strong possibility of an 18 month exit.
The city council is pro-development, supporting higher density projects and has already shown support for the proposed use of this property.
Investors will receive a 15% preferred return and 10% of the back end profits. The returns are expected to be as good, if not better than his past RWN syndications.
Below is your project update for PEI Fortbay MV LLC, our Mountain View Project.
Environment Impact Report
The EIR comment period ended in mid-January and only a few comments were received. The City and consultants are drafting the responses and sending soon.
We are formalizing and finalizing a development management agreement and ground lease with the Mt. View Whisman School District to develop the designated 144 affordable units of the property as teacher housing to satisfy the affordable housing and community benefit for the project.
Google Continues Expansion in the Area
Our neighbor Google continues its massive expansion and development plans in North Bayshore with ongoing construction of its 600,000 sf HQ scheduled to be completed in 2020. They have also purchased 50 acres for $1BB, and they have recently submitted development plans for several other larger office development projects also in North Bayshore. This increases the continuing large demand for housing in Mountain View.
City Approval Process
The City planning department has tentatively scheduled the project for Planning Commission hearing in April and City Council hearing in May with a recommendation for approval of the project. Fortbay has extended the Acore loan for the project until September. We have also retained CBRE to market the property for sale or recapitalization in May, pending immediate project approval.
Regarding K1 Timing
Please note the PEI Fortbay MV LLC tax return is complicated given the entity structure. The project CPAs are working on them as quickly as possible, but their current estimation is that they will not be ready for distribution until late March or early April.
If you have any questions, please email them to Syndications@RealWealthNetwork.com.
Below is the latest update from the developer of the Mountain View Project:
Since the Tenant Relocation package was approved by City Council last November, more than 50% of the tenants have applied for relocation benefits and we have paid out over $1M in relocation benefits. At least 50% of residents in November 2016 have relocated and replaced with new tenants who do not qualify for any benefits.
This was perhaps the most significant part of the re-entitlement process as the Council’s main concern over re-development was displacement of the residents. Since the approval and institution of the relocation plan and the generally positive reception and acceptance of the package by the residents, this main concern has diminished. Also, the project has certain equitable good will and vesting with this process.
The Project Design has undergone 2 sets of formal Design Review meetings and 3 informal staff level meetings. It has now progressed to a point of finalizing finishes and design details. The overall bulk, mass and scale and unit counts and square footage has been finalized as reflected in the latest Design Package. We expect one final DRC meeting with a complete Design Package submittal in January 2018.
In August the City commissioned EIR’s for both our project and the sister 555 W. Middlefield projects. We have paid over $300,000 for the costs of the EIR to be performed by and independent 3rd party consultant. The focus of the EIR will be traffic impacts and greenhouse gas emissions. We expect preliminary study results in Q1’2018. The completion of the EIR is the major entitlement milestone for the Project. The Project approval will consist of concurrent approvals of the EIR, the PD Zoning and Project Design Application by the City Council expected in Q3’18.
In November we completed a re-financing of the Project with our current mezzanine lender and equity capital provider, Colony Capital, and our senior lender, ACORE. This will permit the servicing of the loans and funding of the remaining entitlements until June of 2018.
Fortbay has retained Nova Partners to perform Construction Management and Estimating and General Contractor selection for the project. Nova Partners is one of the most reputable institutional quality Construction Management firms in Silicon Valley with a track record of construction managing large institutional size construction projects. Nova will also perform value-engineering design services to achieve more cost effective and efficient construction designs.
Fortbay has retained Devine and Gong, an affordable housing consultant to advise on the financing and income levels for the affordable housing building. Fortbay is also working with the City of Mountain View staff to designate the income levels for the affordable housing building. The items for discussion are increasing the income level to include more moderate income units and/or possibly moderate income for-sale condos. The City has a crisis with lack of moderate income housing available for residents with 80-120% of median income and thus has been very receptive to these discussions.
Project Business Plan Update
The original capitalization provided funding for re-entitlement for higher density of approximately 565 units. We had hoped for entitlements in 3rd quarter 2017 and assumed a Mitigated Negative Declaration for the environmental review. Our back-up strategy was an exit via a “value add” remodel of the existing 200 units and adding 40 new units. The Design Review process became more challenging with the City of Mountain View, resulting in 2 re-designs and an approximate 6 month delay. In addition, based on current “activity” and the scope of the projects we have decided to do a full EIR. Although an additional delay of approximately 6 months, we feel this decision is sound.
As discussed above we are in the process, now that plans and product are finalized, of updating our project proforma and we should have it in Q1 2018.
Here is the latest update from Tom DeRegt on our Mt. View syndication:
This is your Q3 quarterly update for the Mt. View / Fortbay Project.
The project is progressing according to plan and we have accomplished quite a bit since the last update:
- Approximately 80 residents have applied for and received almost $1MM in relocation benefits per the approved City relocation plan for 777. This is important because we are vesting certain implied rights and removing a major objection to the project – tenant displacement. The City and residents are very pleased because we have honored our commitments.
- The City Design Review Committee approved the general design concepts, massing, layout, and landscape plan for the project on July 19th.
- The Site Plan received an award of distinction at the Western US residential developer conference in San Diego in June.
- The City of Mt. View officially retained an EIR consultant (Environmental Impact Report) for the project, agreed to the scope and had the kick-off meeting on July 20. Fortbay paid the City $350,000 for the EIR. The public scoping will be conducted in August at the Zoning Admin meeting.
- Fortbay is in the final stages of negotiating a 15-month extension with ACORE, the senior mortgage lender for the Property.
- The property continues to have strong 97% occupancy and steady rent increases.
- Notice of Development Proposals will be posted on-site in the next few weeks.
- Fortbay has retained a third-party affordable housing consultant to evaluate maximizing the accretive value of the affordable component to the overall project.
- Fortbay has finalized negotiations with Miramar Property Group to assist with re-capitalizing the project for the development phase and exposing the project to prospective large domestic and international institutional investors.
You can view designs recently approved by the City Design Review Committee and a video fly-through:
We hope you are as happy with the project’s progress as we are. Your next update will be in November 2017.
deRegt Development, Inc.
Here is the latest update from Tom DeRegt on our Mountain View syndication:
Q2 2017 QUARTERLY UPDATE – MOUNTAIN VIEW
Overall, the project is proceeding according to plan and we have achieved some major milestones since the last update.
Tenant Relocation Plan
On November 22nd we received City Council approval to submit a formal and complete application package with the height, mass, scale and density on which we had been working on all of 2016. It also was a preliminary approval of our tenant relocation plan and our onsite affordable housing building.
The tenant relocation plan permits the orderly relocation of current tenants, and this is perhaps the biggest challenge of the project. Notice and outreach to the existing tenants will be provided 18 months prior to start of construction, and all new tenants have been receiving notice since October. Per recent Resident Meetings, the current tenants have been pleased with relocation benefits and accommodations compared to previous proposals. Outreach will continue over the next 18 months.
Since this project is currently zoned for only 250 units, this was an important milestone to proceed with an application for re-zoning to a 700+ unit project (approximately 144 unit affordable housing and 560 unit market rate) at 5 stories.
The formal application was completed and filed in March 2017.
The City issued a letter with comments from various departments, which are now being addressed.
Design Review Committee (DRC) Hearing
The Design Review Committee hearing was held on April 19th. DRC asked for less contemporary and more transitional elevation designs on Middlefield road. Re-designed plans and answers to the City comment letters will be submitted in June at the next DRC meeting.
A formal Environmental Impact Report (EIR) study will commence in late May.
Click below to access:
- Updated site plans, architecture and current construction schedule for the project
- Financials as of March 2017
Attached is your Quarterly Investor Update for the PEI / Fortbay Apartment project in Mountain View. For your convenience, here are the highlights:
The Project Has Gotten Even Better
- Our developer partners went through a lengthy review process with the City, resulting in their re-doing the entire plan three times. The end-result is that now the project will have 711 units, up from the originally-planned 560! The 711 break out as follows: 144 Lower Income and 567 Market Rate.
- Meanwhile, employment continues to grow and supply of rental units has not kept pace with employment growth in Mountain View.
New Project Timeline
- As a result of the review process, the timeline has been pushed back a little. We expect City Approval approximately around Q2 2018, which is only 3-6 months behind the original plan.
- We feel that the tradeoff is well worth it, as the enhanced plan offers both a superior design and more units, thereby increasing the value of the property.
- We have approval to start the tenant relocation program and the Environmental Impact Report (EIR), both of which will begin in March 2017.
We’ve posted the following detailed documents to our website, for those that wish to review: