The project was visited on February 12, 2016 by ABC International. A copy of the Borrower’s Application No. 1, dated February 11, 2016, was received on February 12, 2016. At the time of our site visit, it was partly cloudy with the temperature about 55°F. Construction progress was as follows:

Based upon our site visit of February 12, 2016, the Borrower’s Application No. 9, dated February 11, 2016, (Exhibit “B”) and supporting documentation, ABC has determined the current value of work-in-place to be as follows.

At this point in time, the project is presently 66% bought out and is within the direct cost budget of $2,565,360; however, the Borrower has not submitted a cost report formatted similar to the loan budget. Of note, the Borrower has adjusted the line items located within the unit construction costs to reflect the actual contract amounts and changes in the scope of work documented within submitted invoices. In general, ABC finds the changes to be appropriate and acceptable to complete the scope of work outlined in the plans.

The Borrower’s current application identifies that 10% retainage being withheld on the value of work-in-place.

Overall, the quality of construction to date is satisfactory and is in general conformance with the construction documents reviewed by ABC. During our site visit, we did not observe any significant areas of unsatisfactory workmanship regarding the construction. In addition, construction has been performed in accordance with generally accepted construction industry standards.

ABC has received a single combined waiver of lien executed by each of the trade contractors receiving payment during the previous period (Exhibit “C”).

During the PC, no change orders were provided for our review.

ABC has received a building permit for Building No. 1 issued May 24, 2015 and a building permit for Building No. 2 issued September 12, 2015. According to the Borrower, a foundation permit has been issued by the City of North Salem but not received for Building No. 3. This permit will be forwarded to ABC upon receipt by the Borrower.

During the PC, ABC has received two (2) COs (Exhibit “D”) issued by the South Salem, New York Department of Buildings dated October 25, 2015, both for Unit No. 2 located within Building No. 1. CO No. 25862 approves for occupancy a single family condominium with a finished basement family room, and CO No. G-25468 approves for occupancy a one (1) car garage and an unfinished basement with laundry area. To date, ABC has received COs for Unit Nos. 2, 4, and 5 located within Building No. 1.

IVI has received an as-built survey from Surveying Associates, P.C., dated November 15, 2015 identifying the location of Building No. 1, 2, and 3. ABC has reviewed the site plan and has confirmed that the constructed location corresponds to that planned.

ABC has received and reviewed the trade-by-trade construction schedules submitted by the contractor for Building Nos. 2 and 3. According to the schedules and based upon site observations, it appears that construction of Building No. 2 is approximately 1 week behind schedule. In addition, construction of Building No. 3 has not yet begun and is approximately 7 weeks behind schedule. ABC recommends that we receive a schedule update to reflect the current construction status.