Presentation for the Borough of Middletown

Woodland Hills | Electric Substation Relocation & Smart Grid

United Realty & Infrastructure Group, LLC

August 2015
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hereby 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 intended
recipient. 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 them
in 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 the relocation of the Substation and Meter Replacement;
The Woodland Hills area was discussed as the desired location which is composed of
approximately 170 acres and has been zoned and approved for 440 dwelling units. The
Borough expressed a strong interest in having Woodland Hills developed, which is the
largest remaining developable parcel in Middletown. On May 13, 2014, Urigroup
secured site control of Woodland Hills 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 move forward on a preliminary design and proposal for the relocation in
combination of the substation to the Woodland Hills area;
On February 17, 2015, the Borough and Urigroup executed a Development Agreement
to develop the Substation at Woodland Hills (see Proposed Borough Facility Plan
enclosed). Under the Development Agreement, the parties agreed that Urigroup would
develop Substation and Electric Meter replacement then lease them to the Borough
under terms to be negotiated further;

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. In addition, the Borough and Urigroup have submitted
applications for two Community Development Block Grants and have begun the
process of submitting an application for Redevelopment Assistance 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 for over 13 years, the site work improvements at Vine Street and Woodland
Avenue will open the site up for future development, and more importantly the
Substation will be relocated to a site 30 feet above 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 the existing metered system to a smart grid system will provide much
greater efficiencies for the Borough and its customers. In addition once the construction
has been completed, if the Borough were to later lease or sell their elect distribution
system then the newly installed system would have much greater value when looking
for possible investors/operators.

Woodland Hills
Vision Plan

Woodland Hills
Fiscal and Economic Impact

Woodland Hills
Financing Options

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 to
one another;

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

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.

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.

Questions and Comments