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It was determined that Section 6.14 of the Loan Agreement delegates administrative approval and consent authority to the City Manager to approve the withdrawal request Pursuant to this section, and the City Manager provided this approval in a letter dated May 2022. Current Withdrawal Request Vacancy rates at The Parkview continued and increased as the pandemic progressed. In 2022, the property continued to experience significant vacancy, due to the death of several of its residents, which the facility struggled to fill as many seniors and their families were reluctant to move during the pandemic. The Parkview experienced a significant challenge in filling vacant units as quickly as would typically occur. The property's average occupancy in 2022 was 89 percent, which equates to an average of 12 vacant units every month. With an average rent of $7,200 per unit, the total rent loss due to vacancy in 2022 was $1 ,055,000. While The Parkview was able to offset this vacancy loss by $375,000 through raising market rents upon unit turnover, and implementing a 5 percent rent increase in 2022, the property still had a $680,000 net shortfall in rental revenue. At the same time, The Parkview incurred an overall net increase in staffing costs of approximately $900,000 in 2022 due to increased reliance on temporary staff whose wages and other labor costs were higher than if permanent staff were in place. The pandemic created a very challenging job market in the healthcare and assisted living sector, with labor shortages and high demand for both permanent and temporary staff. This resulted in The Parkview having to pay more temporary employees at a range of $30-$50 per hour. On average, the property had up to 15 full time staff and seven part time temporary staff every week during 2022. Finally, The Parkview also had other increased operating costs, including electricity costs of approximately $42,000 due to the facility's solar PV system being offline for repairs for much of the 2022 calendar year (repairs were delayed by shortages of parts and labor again caused by the pandemic), and $150,000 in increased expenses for maintenance/repair labor and materials due to the increase in unit turnover throughout the year. Operating Reserve Withdrawal Request The Parkview is requesting approval from the City to withdraw an additional $701 ,935 from its operating reserve to cover operating deficits at The Parkview. As of May 31, 2023, the balance in the operating reserve is $3,581,6051. After the $701,935 withdrawal, the operating budget reserve balance will be $2,894,6652. The 2023 annual operating budget has a projected revenues of $9 million with projected expenses, 'The Parkview uses any existing surplus cash to make annual waterfall payments, in accordance to the order of priority stipulated prioritized in Section 2.3(b)(i) of the Loan Agreement, to its Operating/Management Reserve Deposit. 2 The Parkview adheres to the best practice of having an operating reserve balance of 1 month of operating expense, which is approximately $700.000 for operating expenses. debt service, and reserve funding. plus 3 years of the annual subsidy withdrawals, which is approximately S180.000, for a total of $1,118,000. Page 3 of 5