1. SUPPORTIVE HOUSING CONFERENCE: June 9, 2011 DEMYSTIFYING BOND FINANCING TO BUILD SUPPORTIVE HOUSING 1

2. Three models of Bond Financing: Schermerhorn- 100% supportive housing units Urban Pathways -100% supportive housing units with NYS OMH funds Lindeguild Hall - Integrated - 'mixed income' market rate with middle, low income, and supportive 2

3. Schermerhorn House: 160 Schermerhorn St., Brooklyn 3

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9. Schermerhorn House: Studio Apartment 9

10. Schermerhorn House: Green Roof 10

11. Schermerhorn House: Common Space 11

12. Schermerhorn House: Accessory Community Space – Brooklyn Ballet 12

13. Project Financing Capital Structure - Schemerhorn 13

14. Urban Pathways – Hughes House 14

15. New York State Housing Finance Agency Urban Pathways Sources & Uses Hughes House (Urban Pathways) Gross sqft. Bronx, New York 35,421 Sources of Funds - Construction AmountAmount Per Unit Percent of Total Development Cost OMH Construction Loan $10,156,885$184,67159.1% -$893,115 Letter of Credit $847,167$15,4034.9% Federal Low Income Tax Credits $4,041,457$73,48123.5% $11,050,000 Federal Home Loan Bank $710,587$12,9204.1% OMH Grant $192,500$3,5001.1% 100.00% Developer's Equity/Deferred Fee$1,235,034$22,4557.2% Total Sources of Funds - Construction $17,183,629$312,430100.0% First Mortgage & DSRF as a % of Aggregate Basis65.11% Sources of Funds - Permanent HFA Bonds $11,050,000$200,90964.3% Federal Low Income Tax Credits $4,662,057$84,76527.1% Federal Home Loan Bank $710,587$12,9204.1% OMH Grant $192,500$3,5001.1% Developer's Equity/Deferred Fee $568,485$10,3363.3% Total Sources $17,183,629$312,430100.0% Uses of Funds Land and Other Acquisition Costs $1,238,027$22,5107.2% Hard Construction Costs $10,912,804$198,41563.5% Soft Costs $2,900,043$52,72816.9% Reserves and Escrows $0 0.0% Developer Fee $2,132,755$38,77712.4% Total Uses $17,183,629$312,430100.0% Developer Fee Paid During Construction $897,721 Deferred Developer Fee $568,485 Total Developer Fee Paid During Conversion $1,564,270 Total Developer Fee $2,132,755 $1,564,270 17,183,629 Paid Developer Fee$1,564,270 17,201,054 Unrestricted Fee ($7,500/unit x 55 units)$412,500 17,425 Restricted Fee to be put into reserve acccounts$1,151,770 4,679,482 4,662,057 17,425 15

16. LINDENGUILD HALL 104 unit new construction project developed by the Lantern Group Closing anticipated in June 2011 Mixed Population 52 studio units with DOHMH rental subsidies thru NY/NY III paying 60% ami rents and servicestargeted to homeless veterans 51 two-bedroom units to be rented to low income households via HDC- supervised lottery On-site supportive services LEED Silver with NYSERDA Energy Award 16

17. LINDENGUILD HALL FINANCING SOURCES AND USES Construction Sources per DU% of total HDC First Mortgage$17,700,000$170,19251.47% HDC Second Mortgage$04,694,060$045,13513.65% HPD Third Mortgage - SHLP$05,800,000$055,76916.87% FHLB AHP$01,398,790$013,4504.07% NYSERDA Energy Award$00,229,000$002,2020.67% Tax Credit Equity$00,662,225$006,3681.93% Deferred Developer's Fee$03,903,977$037,53811.35% GAP(SURPLUS)$000000000$00000,00.00% TOTAL SOURCES$34,388,052$330,654100.00% Permanent Sources HDC First Mortgage $04,220,000$040,57712.27% HDC Second Mortgage $06,760,000$065,00019.66% HPD Third Mortgage - SHLP $05,800,000$055,76916.87% FHLB AHP $01,398,790$013,4504.07% NYSERDA Energy Award $00,229,000$002,2020.67% Tax Credit Equity $13,500,523$129,81339.26% Deferred Developer Fee/Sponsor Loan $02,479,739$023,8447.21% GAP(SURPLUS)$000000000$00000,00.00% TOTAL SOURCES$34,388,052$330,654100.00% Uses Acquisition Cost $01,786,743$017,1805.20% Construction Cost$23,100,000$222,11567.17% Soft Cost $05,933,165$057,05017.25% Developer's Fee $03,568,143$034,30910.38% TOTAL USES$34,388,052$330,654100.00% 17

18. CURRENT SITE 18

19. ARCHITECTURAL RENDERING 19

20. What Are Tax Exempt Bonds What are the benefits of financing? What types of housing can be built with tax exempt bonds, qualified rental housing? In terms of financing tools, how should the development community think about the differences between 9% and 4% credits? Who can issue bonds? Who are the parties in a bond transaction? 20

21. What Are Tax Exempt Bonds Cont What are the obligations of the sponsor/developer with respect to the bonds? What special rules apply to a 501(c)(3) sponsor? 21

22. TAX-EXEMPT BOND REQUIREMENTS 50% Testvolume cap required for private activity bonds 95/5 Cost Certification TEFRA Notice and Hearing Low Income election – typically 100% of units are tax credit eligible low income units; minimum is 20% of units at 50% ami or 25% of units at 60% AMI Regulatory Agreement to obligate compliance with affordability and rent restrictions Tax credit application to allocating agency (HPD); DOCE letter required prior to closing 22

23. HDC BOND FINANCED SUPPORTIVE HOUSING Generally follows Low Income Affordable Marketplace Program(LAMP) Tax exempt private activity bonds to meet 50% test As of right 4% Federal Low Income Housing Tax Credits Construction Loansfully enhanced by bank to insulate bondholders from real estate risk Permanent Loans – sized to project NOI, insured or credit enhanced for term Rental assistance and supportive services contract required for all supportive units 23

24. BUDGET CONSIDERATIONS FOR BOND DEALS Bond Costs of Issuance (1.5% of Construction bond) Negative Arbitrage (interest paid on fully funded construction bond amount) NYS Bond Issuance Charge Credit Enhancement Fees Type and amount of rental assistance for supportive units Supportive services on budget or off budget. 24

25. How To Apply for Funds How does a project apply? Why would you apply to HFA vs. HDC ? 25

26. Credit Enhancementand role of private lender What is the role of bank in bond financing? How does bank analyzing a supportive housing transaction? Underwriting concerns? What impact does the equity investor have on how a bank underwrites the deal? What are the typical costs of Letter of Credit? 26

27. OMH Transactions- Alternative to Letter of Credit – OMH Letter of Credit What are the challenges to financing OMH deals? What is a quick draw letter of Credit? 27

28. FUTURE What steps are state and city taking to increase access to bond financing for supportive housing and integrated housing? 28

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30. SUPPORTIVE HOUSING DEVELOPMENT LIST Development Name UnitsBoroughClose Date Washington Avenue100Bronx07/17/03 600 Concord Avenue83Bronx12/22/03 Claremont Park Apartments98Bronx07/22/04 Casa del Sol Apartments114Bronx06/23/05 15 East Clarke Place102Bronx06/29/05 Urban Horizons II128Bronx11/30/05 30% of Units Prospect Avenue124Bronx12/28/05 for 45 Malta St.48Brooklyn12/28/05 Formerly 1068 Gerard Avenue82Bronx12/28/05 Homeless Morrisania Terrace42Bronx12/28/05 830 Fox Street58Bronx06/29/06 St. Peter's Avenue Apartments58Bronx06/29/06 1211 Southern Blvd127Bronx06/29/06 East Tremont Ave Apts73Bronx06/29/06 West 153rd Street85Manhattan06/30/06 St. Ann's Terrace CDE314Bronx06/25/09 Supportive Schermerhorn, L.P.217Brooklyn12/14/05 Housing Pitt Street Development263Manhattan12/28/06 Silverleaf118Bronx06/29/04 Cedars Project95Bronx11/01/06 Integrated Pitt Street Development263Manhattan12/28/06 Housing 1825 Atlantic Avenue150Brooklyn06/28/07 Serviam Towers160Bronx12/23/08 Lindenguild Hall104BronxACTIVE Kings County Senior Residence173Brooklyn06/30/05 Serviam Towers160Bronx12/23/08 Riverway Apartments115BrooklynACTIVE Senior Housing Astoria Senior Residence184Queens12/22/06 with Rental Crown Heights Senior Residence144Brooklyn12/20/07 Assistance and/or Services Council Towers VI78Queens06/29/10 Self Help KVII92Queens12/22/10

31. Questions and Answers 31