1. NCSHA – Preservation Strategies

2. Homes for America (HFA)  Is a regional nonprofit working in 4 mid-Atlantic States  Create and preserve housing enhanced with services for low- income households and special needs populations  Portfolio of 5,500 homes in 71 communities

3. Preservation Activities  Portfolio Additions: Buy properties and rehabilitate using Tax Exempt Bonds and LIHTC Buy and operate workforce housing with no major rehabilitation  Portfolio Maintenance: Over the next 10 years HFA will have 3-5 properties reach year 15 annually

4. Preservation Ahead of the Curve  Negotiated partner buy out in year 12 of initial LIHTC compliance period  120 apartments in strong suburban market  Investor capital account balance over $1 million positive  Market presented good refinance opportunity - 9% to 5.5% interest  Cooperative and helpful local government lenders

5. Why use the buy-out approach?  Did not have a Right of First Refusal  Had negotiated buying out a Co-GP on a six property portfolio and this was one of the properties  Investor willing to exit before year 15  No major rehabilitation needed  Local government partners motivated to preserve affordability

6. Why it worked  Public lenders did not require any pay down of their debt  Existing mortgage interest at 9%, current interest at 5.5%, the refinance created $2.4 million of excess proceeds to buy out partners and pay transaction costs and future debt service payments did not increase.  Investor and syndicator willing to negotiate a reasonable sharing of the property’s value

7. One More Deal-At the opposite end of the spectrum  20 apartments with no economic value; 2 soft loans with balances in year 15 higher than year 1  ILP capital account $80K, balance fast approaching $0  Negotiated a buy-out of ILP for $100 plus payment of legal fees  Syndicator wanted 15 years of accrued asset management fees at about $38,000.

8. Limited Options  No refinance potential  No resyndication potential under current QAP  No large cash reserves - $20K operating reserve and $66K RFR  Only viable option – negotiate walk away of ILP and operate as a high public purpose, no return property

9. Typical Issues in Year 15 Transactions  Investors often want cash and the only cash in tied up in reserves  Many properties have limited refinance or resyndication potential  Exercising ROFR in nonprofit / for-profit joint ventures  Trying to buy year 15 properties on the market  Structuring to avoid related party issues