1. U.S. Dept. of Agriculture Rural Development 538 Program Offering Financial Advice and Solutions to Health Care, Senior Living, and Housing Providers. Brian W. Coate Vice President Lancaster Pollard & Co. Lancaster Pollard Mortgage Company Rural Rental Housing Association o f Illinois

2. Table of Contents Program Purpose Program Outreach Program Features LIHTC Qualifying Borrowers & Properties Roles & Responsibilities Application Process Updates Case Study Reference Information GRRHP Flow Chart

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7. Non-profit corps. or partnerships Public entities Indian Tribes For-profit comps. Individuals Trusts New construction Substantial rehab. of at least $6,500 per unit for acquisition or to create new units. Can be used with acquisition and rehab. or a rehab. with no change of ownership. Qualified Borrowers and Properties Qualified Borrowers Qualified Properties

8. Roles and Responsibilities Government’s Approval and issuance of loan guarantee and interest assistance Oversight of lender and program Process and reimburse losses Lender’s Originate, service, close and monitor loans Oversight of borrower for compliance with program regulations Liquidation of property for collection

9. Program Purposes To encourage economic development in rural areas To increase and preserve the supply of affordable multifamily housing in rural areas To ensure the availability of housing for rural residents whose incomes are 115% of area median income or less

10. Program Purposes, cont. Foster risk-sharing partnerships with public and private lenders Increase moderately-priced housing in rural America Facilitate affordability for low and moderate income rural residents

11. Program Features Covers 90% of outstanding principal and interest Offered for construction and permanent loans or permanent only loans Use with 9% tax credits, 4% tax credits & other gap financing 11

12. Program Fees Initial guarantee fee equal to 1% of the total loan guarantee due when guarantee is issued Annual guarantee fee equal to 0.5% of the total outstanding principal and interest of the loan. Lender Fees Third Party Reports Other Funding Source Fees

13. LIHTC What you get Sophisticated partner ~6% Return Equity Devoted partner for 15 yrs Ongoing cash flows Substantial repairs Replacement reserves Developer’s fee Like new asset 13 What you give up Ownership, not control The property… in default

14. The Players, Process, and Money Flow Developer LenderUSDA Tax Credits Application EquityDebt Loan Guarantee State Allocating Agency Tax Credits TC Syndicator

15. Updates Loan to cost limit increased to 70% from 50% New 515 transfer template 2010 census, what? Refocus on preserving the portfolio 15

16. Case Study 515 Transfer Rental Assistance Rehab Loan on existing property HUD Section 8 HAP contract 16

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19. Keys to the Financing Mark up to post rehab market rent levels Rents below market rate Savings from existing high interest rates 19

20. Updates: kitchen cabinets and countertops sinks & faucets range hoods bathroom fixtures and accessories remove the bath tub and install shower pan shower surround with bench valves and trim install exhaust fans lighting throughout apartment (LED) HVAC systems 20

21. Updates continued New flooring paint the units Accessibility modifications to current standards Common area improvements include corridor and stair lighting (LED) redesign of the public toilets laundry facility for ADA access, paint walls, paint doors and frames, remove and replace the mailbox Site improvements include redesign of the dumpster pad and enclosure to provide ADA access. 21

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23. www.lancasterpollard.com QUESTIONS? Brian W. Coate, Vice President Lancaster Pollard 65 East State Street, 16th Floor Columbus, OH 43215 Phone (614) 224-8800 Fax (614) 224-8805