Presentation for the Borough of Middletown

Woodland Hills | Electric Substation Relocation & Smart Grid

United Realty & Infrastructure Group, LLCAugust 2015 CONFIDENTIAL

The information contained in this document and any other enclosed documents is privileged and confidential and intended to be conveyed only to the designated recipient(s). If you are not the intended recipient, you arehereby notified that any unauthorized disclosure, copying, distribution or taking of any action in reliance on the contents of the documentation is strictly prohibited and review by any individual other than the intendedrecipient. If you have received this document in error, please immediately notify David Stubbs at 301-658-6540 ext. 105 (or via email: dstubbs@URIGRP.com), including enclosed documents without reading or copying themin any manner. Thank you.

Project Overview The Borough has a strong need to relocate the Mills Street Substation from its current site. The

current electric substation is in a flood plain which suffered quite a few outages as a result;

The Borough and Urigroup entered into a Letter of Intent on April 28, 2014 to begin exploring therelocation of the Substation and Meter Replacement;

The Woodland Hills area was discussed as the desired location which is composed ofapproximately 170 acres and has been zoned and approved for 440 dwelling units. The Boroughexpressed a strong interest in having Woodland Hills developed, which is the largest remainingdevelopable parcel in Middletown. On May 13, 2014, Urigroup secured site control of WoodlandHills for the purposes of relocating the Substation and developing the residential community;

On November 17, 2014, the Borough Council authorized the Boroughs Electrical Engineer to moveforward on a preliminary design and proposal for the relocation in combination of the substation tothe Woodland Hills area;

On February 17, 2015, the Borough and Urigroup executed a Development Agreement to developthe Substation at Woodland Hills (see Proposed Borough Facility Plan enclosed). Under theDevelopment Agreement, the parties agreed that Urigroup would develop Substation and ElectricMeter replacement then lease them to the Borough under terms to be negotiated further;

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Project Overview (continued) Urigroup has been working with the Boroughs Electrical Engineer on relocation and consolidation of

the Substation to Woodland Hills, and has obtained funding for the development of the Project. Inaddition, the Borough and Urigroup have submitted applications for two Community DevelopmentBlock Grants and have begun the process of submitting an application for RedevelopmentAssistance Capital Program funding. These funds would go towards reducing the Boroughs out-of-pocket financial obligation for the Project;

By relocating the substation to Woodland Hills, it will kick start a project that has been in planning forover 13 years, the site work improvements at Vine Street and Woodland Avenue will open the siteup for future development, and more importantly the Substation will be relocated to a site 30 feetabove the flood plain (Woodland Hills Site Plan is enclosed);

The Economic and Fiscal Impact of the development creates significant benefits for the Borough(Fiscal & Economic Impact Analysis is enclosed);

Consolidating the Mills and Spruce Street Substations into a new substation and revamping theexisting metered system to a smart grid system will provide much greater efficiencies for theBorough and its customers. In addition once the construction has been completed, if the Boroughwere to later lease or sell their elect distribution system then the newly installed system would havemuch greater value when looking for possible investors/operators.

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P3 Financing Options for Electric Substation Relocation & Smart Grid System Revamp Urigroup has provided two options to finance and develop the Project at Woodland

Hills on the following pages;

The following options have their advantages and disadvantages when compared toone another;

The priority has been to safe guard and upgrade electric distribution system asquickly as possible given its current dire condition, while at this time spurringeconomic development through the Woodland Hills Development.

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Substation Financing Options

Pros: Keeps control of electric distribution system; Tax exempt financing, which allows for lowest cost of financing; Borough will apply grants/subsidies to reduce construction costs of the Project; Property and infrastructure reverts to Borough upon expiration of Ground Lease.

Cons: Borough must handle upfront legal and predevelopment costs; Delays construction completion and occupancy by up to 6 months or more; Borough assumes construction risk; There may be uncertainty for municipal bond financing in light of current events and market volatility; Tax exempt financing would trigger prevailing wage; Tax-exempt debt must be retired/defeased before Electric Distribution System can be sold or leased to a Private Entity.

*-The projections above are approximate and subject to the current market conditions. Not a final quote. Page 4

Substation Financing Options (continued)

Pros: Keeps control of electric distribution system; Private equity and debt utilized to fund improvements; Funding is in place. Urigroup provides Borough the ability to Rate Lock now and protect the financing from market volatility; Urigroup guarantees project to be on time and on budget; assumes construction risk; Project completion and occupancy by September 2016, if we begin by August 15th, 2015; All approved Expenses to be reimbursed at closing and no additional capital provided from Borough until first lease payment on

October 1st, 2016; The Master Lease will provide greater flexibility for the Borough. One benefit is that it is assignable, there is no need to

terminate lease in order to sell or lease distribution system; Urigroup will work with the Borough to maximize the use of subsidies/grants for Project; Similar call provisions and/or yield protection as tax-exempt financing and/or prepayment options; Property and infrastructure reverts to Borough upon expiration of Master Lease.

Cons: Financing costs may be higher than Tax-Exempt Financing; Lease payments will be higher than Tax-exempt financing throughout its term due to annual escalator of lease; If Urigroup utilizes public subsidies the project would then be subject to prevailing wage.

*-The projections above are approximate and subject to the current market conditions. Not a final quote. Page 5

MiddletownBoroughElectricSubstationRelocation&SmartGridSystemDEVELOPMENTBUDGET $Amount %CostCLOSINGCOSTS

LandAcquisition 545,000 4.4%LandRecordationTax 50% 0.00% 0 0.0%LandTransferTax 50% 4.00% 10,900 0.1%

TOTALLANDCOSTS 555,900 4.5%

FINANCINGCOSTSDebtPlacementFee 122,600 1.0%ConstAdmin/Monitoring/Trustee 77,000 0.6%LenderLegal/Expenses 100,000 0.8%Bond/LoanFee 122,600 1.0%BondInsurancePremium&Expenses 267,474 2.2%

TOTALFINANCINGCOSTS 689,674 5.6%

TOTALCLOSINGCOSTS 1,245,574 10.2%

HARDCOSTS ElectricSubstation 4,425,000 36.1%Sitework 1,176,120 9.6%Infrastructure Improvements (REX2 Meter Replacement & Smart Grid System) 509,000 4.2%Bond 62,323 0.5%CMFee 122,202 1.0%HardCostContingency 13% 792,244 6.5%

TOTALHARDCOSTS 7,086,890 57.8%

SOFTCOSTSA&E 475,105 3.9%Overhead/Admin 69,097 0.6%ProjectManagement 125,000 1.0%Legal 113,390 0.9%Accounting 51,380 0.4%InspectingEngineer 150,000 1.2%Entitlements 50,000 0.4%Studies 88,000 0.7%Permits/Fees 16,600 0.1%Utilites/Security 48,696 0.4%BRandGLInsurance 16,500 0.1%TaxesDuringConstruction 5,417 0.0%Testing&Commissioning 75,000 0.6%SoftCostContigency 10% 182,918 1.5%DevelopmentFee 6% 500,253 4.1%

SoftCosts,Subtotal 1,967,357 16.1%TOTALCOSTSBEFOREINTEREST&METEDCOST 10,299,821 84.0%

MetEd'sInfrastructureDesign/Upgrade(69kVTAPOption) 1,200,000 9.8%TOTALSOFTCOSTSW/OPEX 3,167,357 25.8%TOTALCOSTSBEFOREINTEREST 11,499,821 93.8%

ConstructionLoanInterest 757,600 6.2%TOTALPROJECTCOST $12,257,421 100.0%

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Woodland Hills Development Fiscal & Economic Impact Analysis

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Multipliers

Total Household Size Population Multipliers

Burchell AverageListokin of

Type Bedrooms 1980 1980 1990 2000 Multipliers

Apartment 1 1.390 1.520 1.480 1.530 1.480 2 2.163 2.450 2.130 2.110 2.213 3 3.341 3.500 3.100 3.100 3.260

Townhome 2 2.037 2.090 2.060 2.000 2.047 3 2.833 3.060 2.760 2.660 2.828

Twin 2 2.322 2.090 2.060 2.000 2.118 3 3.429 3.060 2.760 2.660 2.977

Single Family 3 3.287 3.280 3.160 2.980 3.177 4 4.061 4.120 3.840 3.770 3.948

School-Age Children Population Multipliers

Burchell AverageListokin of

Type Bedrooms 1980 1980 1990 2000 Multipliers

Apartment 1 0.017 0.030 0.060 0.080 0.047 2 0.231 0.360 0.240 0.250 0.270 3 0.857 1.080 0.740 0.770 0.862

Townhome 2 0.164 0.220 0.140 0.160 0.171 3 0.550 0.760 0.440 0.440 0.548

Twin 2 0.269 0.220 0.140 0.160 0.197 3 0.846 0.760 0.440 0.440 0.622

Single Family 3 0.734 0.770 0.610 0.580 0.674 4 1.366 1.430 1.080 1.080 1.239

Listokin New Home Study

Listokin New Home Study

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Population Impacts

Total Household Size - Woodland Hills PopulationImpact

atType Bedrooms # Homes Multiplier Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Buildout

Apartment 1 70 1.480 13 26 39 52 65 78 91 104 104 2 150 2.213 41 82 123 164 205 246 287 332 332 3 20 3.260 8 16 24 32 40 48 56 65 65

Subtotal 240 62 124 186 248 310 372 434 501 501

Townhome 2 59 2.047 15 30 45 60 75 90 105 121 121 3 66 2.828 23 46 69 92 115 138 161 187 187

Subtotal 125 38 76 114 152 190 228 266 308 308

Twin 2 23 2.118 6 12 18 24 30 36 42 49 49 3 23 2.977 8 16 24 32 40 48 56 68 68

Subtotal 46 14 28 42 56 70 84 98 117 117

Single Family 3 50 3.177 19 38 57 76 95 114 133 159 159 4 50 3.948 24 48 72 96 120 144 168 197 197

Subtotal 100 43 86 129 172 215 258 301 356 356

TOTALS 511 157 314 471 628 785 942 1,099 1,282 1,282

School-Age Children - Woodland Hills PopulationImpact

atType Bedrooms # Homes Multiplier Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Buildout

Apartment 1 70 0.047 - 1 2 3 3 3 3 3 3 2 150 0.270 5 10 15 20 25 30 35 41 41 3 20 0.862 2 4 6 8 10 12 14 17 17

Subtotal 240 7 15 23 31 38 45 52 61 61

Townhome 2 59 0.171 1 2 3 4 5 6 7 10 10 3 66 0.548 4 8 12 16 20 24 28 36 36

Subtotal 125 5 10 15 20 25 30 35 46 46

Twin 2 23 0.197 1 2 3 4 5 5 5 5 5 3 23 0.622 2 4 6 8 10 12 14 14 14

Subtotal 46 3 6 9 12 15 17 19 19 19

Single Family 3 50 0.674 4 8 12 16 20 24 28 34 34 4 50 1.239 7 14 21 28 35 42 49 62 62

Subtotal 100 11 22 33 44 55 66 77 96 96

TOTALS 511 26 53 80 107 133 158 183 222 222

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Comparison of Existing Data and Forecast - Woodland Hills

Middletown Borough Woodland Hills2010 Census Data Forecast

4,411 Housing Units 511

8,901 Population 1,282 2.018 Population Multiplier 2.509

1,610 School-Age Children 222 0.365 School-Age Children Multiplier 0.434

Fiscal Impacts

Millage Rates EffectiveAssessment RE Tax

County Library Municipal School Total Ratio Rate

Middletown Borough 6.876 0 5.631 22.15 34.657 100% 3.47%

Municipal Revenues Increase In RE Taxes From Woodland HillsAverage

SalesType # Homes Price per Home Total per Home Total

Apartment 210 160,626 904.49 189,942 1,606 337,315

Townhome 125 196,277 1,105 138,154 1,963 245,346

Twin 46 228,800 1,288 59,265 2,288 105,248

Single Family 100 262,500 1,478 147,814 2,625 262,500

TOTAL 511 535,175 950,409

Real Estate Tax Leviedat Full Build-Out

1% Transfer Tax Leviedat Home Closing

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Municipal Revenue Increase During Build-Out - Woodland Hills

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Real Estate Taxes 66,897 181,279 271,919 362,559 405,713 448,867 474,759 535,175 535,175 535,175 Transfer Tax* 118,801 124,741 131,275 138,492 146,500 155,426 165,429 184,973 47,520 47,520 Earned Income Tax** 16,948 33,895 50,843 67,790 84,738 101,685 118,633 135,580 135,580 135,580 Building Permits & Fees 95,813 95,813 95,813 95,813 95,813 95,813 95,813 95,813 - - Utility Revenues *** 43,420 86,839 130,259 173,678 217,098 260,517 303,937 347,356 347,356 347,356 Other Revenues*** 6,454 12,909 19,363 25,817 32,271 38,726 45,180 51,634 51,634 51,634 Annual Municipal Revenue Increase 348,332 535,476 699,471 864,149 982,132 1,101,034 1,203,750 1,350,531 1,117,267 1,117,267

Cumulative Municipal Revenue Increase 348,332 883,808 1,583,278 2,447,427 3,429,559 4,530,592 5,734,342 7,084,874 8,202,140 9,319,407

* Transfer Tax of 1% upon initial Home Closing plus 5% of homes resold per year.

** Earned Income Tax of .5% on the average expected household income. Income expected to utilize 20% on 30 year amortized mortgage payment at 4% interest.

Avg Sale 195,000 5% Down Principal 185,250 Payments/Yr 10,613 Income/Yr 53,065

*** Ulitity Revenues are determined to be $47.70 per month per unit for Apartments and an avergae of $69.85 per month per unit for all other housing types

****All other taxes based on per capita revenues for existing revenue items. 40.28 per capita

Municipal Expenditures Increase from Woodland HillsIncrease

Item Expenditure in ExpendituresTotal PerCapita from Woodland Hills

General Government 324,305 36.43 46,709 Public Safety 2,686,981 301.87 387,003 Public Works 1,329,694 149.39 191,514 Electric Utility 274,457 Other Expenditures 1,433,799 161.08 206,508

Total Expenditures 5,774,779 648.78 1,106,191

Municipal Expenditure Increase During Build-out - Woodland Hills

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

General Government 5,720 11,440 17,161 22,881 28,601 34,321 40,042 46,709 46,709 46,709 Public Safety 47,394 94,788 142,183 189,577 236,971 284,365 331,760 387,003 387,003 387,003 Public Works 23,454 46,908 70,361 93,815 117,269 140,723 164,176 191,514 191,514 191,514 Utility Costs* 34,307 68,614 102,921 137,228 171,535 205,843 240,150 274,457 274,457 274,457 Other Expenditures 25,290 50,580 75,870 101,160 126,450 151,740 177,030 206,508 206,508 206,508 Annual Municipal Expenditure Increase 136,165 272,331 408,496 544,661 680,827 816,992 953,157 1,106,191 1,106,191 1,106,191

Cumulative Municipal Expenditure Increase 136,165 408,496 816,992 1,361,653 2,042,480 2,859,472 3,812,629 4,918,820 6,025,011 7,131,202

* Utility Costs are determined to be $37.69 per month per unit for Apartments and an average of $55.19 per month per unit for all other housing types.

not available

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NET MUNICIPAL FISCAL IMPACT FROM WOODLAND HILLS DEVELOPMENTFull

Build-OutYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Total Revenues 348,332 535,476 699,471 864,149 982,132 1,101,034 1,203,750 1,350,531 1,117,267 1,117,267 Total Expenditures 136,165 272,331 408,496 544,661 680,827 816,992 953,157 1,106,191 1,106,191 1,106,191

Net Annual Fiscal Impact 212,167 263,145 290,975 319,488 301,305 284,041 250,593 244,340 11,076 11,076

Cumulative Net Fiscal Impact 212,167 475,311 766,286 1,085,774 1,387,079 1,671,120 1,921,713 2,166,053 2,177,129 2,188,204

ECONOMIC IMPACT FROM WOODLAND HILLS DEVELOPMENT

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Direct Spending - Development

Construction 8,875,000 13,995,000 11,656,000 10,013,000 7,683,000 4,445,000 1,250,000 500,000 - - Salaries 1,008,000 1,078,000 1,078,000 1,078,000 1,078,000 750,000 750,000 400,000 - - Services 385,000 1,113,000 1,460,000 1,548,000 1,444,000 972,000 720,000 462,000 - - Total Direct Spending 10,268,000 16,186,000 14,194,000 12,639,000 10,205,000 6,167,000 2,720,000 1,362,000 - -

Indirect Spending - Resident Housing Services 76,650 306,600 459,900 613,200 766,500 919,800 1,073,100 1,226,400 1,250,928 1,275,947 Transportation 333,843 1,335,371 2,003,056 2,670,742 3,338,427 4,006,112 4,673,798 5,341,483 5,448,313 5,557,279 Food & Beverages 258,566 1,034,264 1,551,396 2,068,528 2,585,660 3,102,792 3,619,924 4,137,056 4,219,797 4,304,193 Health Care 142,282 569,126 853,689 1,138,253 1,422,816 1,707,379 1,991,942 2,276,505 2,322,035 2,368,476 Utilities 68,985 275,940 413,910 551,880 689,850 827,820 965,790 1,103,760 1,125,835 1,148,352 Total Indirect Spending 880,325 3,521,301 5,281,952 7,042,602 8,803,253 10,563,903 12,324,554 14,085,204 14,366,908 14,654,246

Total Annual Spending - Woodland Hills 11,148,325 19,707,301 19,475,952 19,681,602 19,008,253 16,730,903 15,044,554 15,447,204 14,366,908 14,654,246

Cumulative Spending - Woodland Hills 11,148,325 30,855,626 50,331,578 70,013,180 89,021,432 105,752,335 120,796,889 136,244,093 150,611,001 165,265,247

Annual Spending:Housing Services Estimate 2,400 Transportation 10,453 Food Beverages 8,096 Health Care 4,455

Utilities Estimate 2,160

All spending increases at 2% per year after buildout of community.

PA Dep't of Community & Economic Development, Dauphin County Profile, Spending per household per year

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Proposed Woodland Hills Development Site Plan& Borough Facility Plan

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urigrouptorti gallas and part ners, Inc. Woodland Hills

Site Plan 2015 Torti Gallas Urban, Inc. | 1326 H Street NE 2nd Floor Washington, DC 20002

urigrouptorti gallas and part ners, Inc. Woodland Hills

2015 Torti Gallas Urban, Inc. | 1326 H Street NE 2nd Floor Washington, DC 20002

Proposed Borough Facility

Woodland Hills Impacts 10 year.pdfPopulation and Fiscal Impact