1. Strategies for Cost-Effective Development Jeffrey Kittle President & CEO Herman & Kittle Properties

2. QAP Priorities  Green Building  Utilities  Cost/Benefit of financing source (Davis Bacon?)

3. Local Design Requirements  Due diligence up-front on all fees to city – generally not negotiable  Due diligence on all design requirements – if too much, can you build in the next county and still get deal funded? Sometimes the next county on the path of growth can be very good over the long run.

4. Construction Material Pricing  Centralized purchasing with competitive bidding  Separate labor and material where possible  Roofing, siding, concrete, brick, plumbing fixtures, lumber, lighting.  Proactively watch material and labor pricing markets.  Retainage release at 50% completion – otherwise trades factor in a cost to carry.  Real estate with utilities (avoid lift stations) on-site and minimal topo relief  Low acquisition costs of buildings for a rehab  Cost benefit analysis of long-term utility savings vs. up-front costs  Acquisition rehab deals – analysis of up-front rehab vs. ongoing replacement reserve requirement  Work with local unit of government on properties they have access to – likely low or no cost  Brownfield Site – funds often available for phase 1, 2, or clean-up

5. Investor Demands  Hard Cost Contingency – reduce or post LC/Bond  Operating Reserve – reduce and/or trade longer ODG  Reduction of non-basis eligible costs  LP pay their own way – LP pays for their own 3 rd party costs  Mutually acceptable construction inspector for both lender and syndicator

6. Continuous conversation that balances QAP, Costs, and long- term viability of project. Questions?