1. Presentation: Inter-American Development Bank December 8, 2009

2. Presentation Participants Mathew Wambua Executive Vice President for Real Estate and External Affairs 2

3. I.Overview of HDC II.The Need for Affordable Multi-family Rental Housing in New York City III.Responding to NYC’s Affordable Housing Needs IV.HDC’s Financing Programs V.Case Study VI.Current Issues VII.Questions & Answers Outline of Presentation 3

4. I.HDC Overview 4

5.  Established in 1971 as a not-for-profit, public benefit corporation for the purpose of financing affordable multi-family rental housing in the City of New York, for low, moderate and middle income residents  Governed by 7-member Board of Directors appointed by the Mayor of NYC and Governor of the State of New York  A staff of 159 manages $9.77 billion of assets, including $6.88 billion in mortgage loans and loan interests, and a multi-family portfolio of 125,000+ units  HDC consistently ranks as the nation’s top issuer of affordable housing bonds for the purpose of financing multifamily housing (#1 2004-2006, 2008; and #2 in 2007) NYC Housing Development Corporation 5  2004 - $1.12 Billion  2007 - $659 Million  2005 - $1.53 Billion  2008 - $1.37 Billion  2006 - $1.65 Billion  2009 - $1.50 Billion* * Final Issuances to be completed during the month of December

6. 6 II.The Need for Affordable Housing in NYC

7. NYC’s Rental Housing Market 7  8.3 million population: 3.33 million units of housing in 2008  2.2 million rental units (1.1 million regulated)  1.1 million owner occupied units  Net Vacancy Rate: 3%  Nearly 50% of all renter households pay more than 30% of gross income for rent  Median Market Rent vs. Tax Credit Rent:  Median Two-Bedroom Rent is $2,700 in Manhattan  Tax Credit Rent for NYC is $976 a month for a Two-Bedroom unit (rent set at 58% AMI)

8. 8 III.Responding to NYC’s Affordable Housing Needs

9. Responding to NYC’s Affordable Housing Needs 9  Currently, Mayor Bloomberg’s affordable housing plan, the “New Housing Marketplace Plan”, comprises the most ambitious municipal housing plan in US History.  It calls for the creation and preservation of 165,000 units, from 2003 – 2014  HDC, in partnership with the City’s Department of Housing Preservation and Development (HPD), plays a critical role in implementing the New Housing Marketplace Plan  HDC initially committed to financing a total of 42,000 units between 2003 – 2014, or approximately 25% of the plan’s total units  HDC has already financed 43,203 units towards this commitment  Since 2003 HDC has issued over $8.39 billion and over $935 Million of its corporate reserves to finance the creation and preservation of affordable housing in the New Housing Marketplace Plan  In spite of numerous obstacles within the real estate and capital markets over the last 2 years, HDC continues to meet production goals; issuing $1.37 BB in bonds and investing over $250 MM in corporate reserves to finance 7,421 units during 2008.

10. 10 IV.The HDC’s Financing Programs

11. 11 HDC Financing Programs HDC offers a number of financing programs targeted at producing and preserving affordable housing for a variety of income ranges: Low (< 60% AMI), Moderate (60% AMI – 130% AMI) and Mixed Income General Program Features:  Issuance of tax-exempt and taxable bonds, the proceeds of which are used to make development and permanent loans to Developers  Provision of additional low-interest (1%) subordinate debt of up to $85,000 per unit, the proceeds of which come from HDC’s corporate reserve  Developments are qualified for property tax abatements and exemptions  Program terms and structures allow for the layering of additional private and public financing sources (i.e.: LIHTC Equity, HOME, Reso A and HPD Programs)  In exchange for favorable financing terms, projects are required to preserve affordable rents for 15 – 50 years

12. 12 HDC Programs Total Units Created/Preserved from 2003 to Present – 43,203 Low-Income Affordable Marketplace Program (18,782 LAMP Units) New Housing Opportunities Program (4,513 NEWHOP Units) Mixed Income Program (50/30/20) (1,574 Units) Mitchell-Lama Preservation Program (18,334 M-L Units)  AMI Served: >60% (Family of 4 - $46,080)  Multi-family rental housing  affordable to low income households  Tax-exempt bonds (variable or fixed rate)  As of right 4% Federal Low Income Housing Tax Credits  HDC Subordinate loans  Corporate reserves of $55,000/unit  AMI Served: >130% (Family of 4 - $102,960)  Multi-family rental housing  affordable to moderate and middle income households  Taxable bonds (variable or fixed rate)  HDC Subordinate loans of 65,000- $85,000/unit  AMI Served: >130%, as well as non-restricted market units  Multi-family rental housing- 50% of units at market rents; 30% affordable to middle income and 20% low income households  Tax-exempt bonds (typically variable rate)  As of right 4% Federal Low  Income Housing Tax Credits on low income units  HDC Subordinate loans of $65,000- $85,000 per low and middle income unit  AMI Served: approximately 100% (Family of 4 - $76,800)  Multi-family rental or cooperative housing affordable to middle income households  Taxable or tax-exempt bonds (variable or fixed rate)  Senior debt restructured at lower rate. Subordinate debt restructured at 0%.  Low interest repair loans available to address capital needs.  Extended affordability and commitment to stay in the Mitchell-Lama program for a minimum of 10-15 years

13. 13 V.Case Study

14. 14 St. Ann’s LAMP/NEW HOP LAMP/NEW HOP South Bronx, NYC

15. Aerial View of St. Ann’s Site as of July 2009

16. St. Ann’s Terrace: Project Site Plan Approximately 640 affordable units will be developed in eight buildings on a 3.1 Acre 3-block site bounded by E.156 th Street, St. Ann’s Avenue, E.159 th Street and Eagle Avenue. Jackson acquired the site in June 2007 for $24MM with $3MM of equity and a $21MM Citibank loan. Buildings A, B, H & C, D, E closed on construction financing on June 25 th, 2009. Community Recreation Area Buildings F&G—160 low-income units at or below 60% AMI and approximately 160 additional parking spaces proposed for development at a later date. Building H Building A Building BBuilding C Building D Building E Community Garden EAGLE AVENUE ST. ANN’S AVENUE EAST 156 TH STREET EAST 159 TH STREET Low-Income Buildings CDE: 314 Units, Including: 311 Units at or below 60% AMI* & 3 super units; 51 Parking Spaces and 11,300 SF of Retail *Includes 95 Units reserved for formerly homeless tenants Mixed-Income Buildings ABH: 166 Units, Including: 42 Units at 60% AMI, 122 Units at 80% AMI & 2 super units; 135 Parking Spaces and nearly 35,000 SF of Retail

17. Development Partners Developer/BorrowerJV between Jackson Development Group and Joy Construction Construction Letters of Credit Providers CDE Low-Income: JP Morgan Chase with Capital One ABH Mixed-Income: JP Morgan Chase with HDC (Potential HDC take-out participants are Goldman Sachs and Bank Leumi) Lenders NYC Housing Development Corporation and NYC Department of Housing Preservation and Development Low-Income Housing Tax Credit Provider (CDE Low-Income Only) Syndicator: Hudson Housing Capital Investor: Capital One at $.85 raise Permanent Credit Enhancement Expected to be provided by SONYMA or REMIC for the top 20% of the 1 st Permanent Mortgage on each deal.

18. CDE Low-Income Financing SOURCES- ConstructionTotalPer Unit% of TotalNotes HDC Tax-Exempt Bonds$49,100,000$156,36950.08%4.29% Blended HDC LAMP 2nd Sub. Loan$20,770,000$66,14621.18%1.25% I/O; *Over Standard 55k/DU 421a Fund Loan$0 0.00%Comes in at Permanent HPD City Capital + HOME$15,488,712$49,32715.80%.50% I/0; Max HOME for 11 Units Developer Loan to Project$1,382,618$4,4031.41%Not typical for LIHTC Deal Tax Credit Equity$1,809,798$5,7641.85%6% of total Tax Credit equity Deferred Developer Fee$9,500,000$30,2559.69%Represents 100% of fee TOTAL SOURCES$98,051,128$312,265100.00% SOURCES- PermanentTotalPer Unit% of TotalNotes HDC Tax-Exempt Bonds$21,435,000$68,26421.86%6% All-in Long Term Rate HDC LAMP 2nd Sub. Loan$20,770,000$66,14621.18%0% yrs. 1-15; 2.75% yrs. 16-35 421a Fund Loan$3,140,000$10,0003.20%HDC subsidy if 421a not available HPD City Capital + HOME$15,488,712$49,32715.80%.25% I/O Deferred into balloon Developer Loan to Project$1,887,613$6,0121.93%Not typical for LIHTC Deal Tax Credit Equity$30,163,300$96,06130.76%Pays ST Bonds and Dev. Fee Deferred Developer Fee$5,166,503$16,4545.27% $4.33MM - $1.89MM Developer Loan = $2.44MM Net Paid Fee TOTAL SOURCES$98,051,128$312,265100.00%

19. CDE Low-Income Financing USES- Const. & Perm.TotalPer Unit% of TotalNotes Acquisition Cost$6,000,000$19,1086.12%$17 PSF (Part of $24MM Total) Construction Cost$64,829,832$206,46466.12% $177 Per Residential SF; Average $77 PSF on Retail/Parking Soft Cost$17,721,296$56,43718.07%$49 PSF, w/o Developer Fee Developer's Fee$9,500,000$30,2559.69%$26 PSF TOTAL USES$98,051,128$312,265100.00% FINANCING NOTES  Financed with Fixed-Rate Tax-Exempt Bonds and Subsidy through HDC’s Low Income Affordable Marketplace Program (LAMP)  Acquisition Cost distributed by what each project could support (not proportionate)  420c will abate 100% of taxes on residential for the loan term w/ a “Special Area” ICAP abatement on retail/parking improvements for 25 years.

20. ABH Mixed-Income Financing Financed with HDC Fixed-Rate Tax-Exempt Recycled Bond Proceeds and Subsidy through HDC’s New Housing Opportunities Program (New HOP). Extended 421a benefits for residential and “Special Area” ICAP for retail/parking will abate taxes on improvements for 25 years. SOURCES-Const. & Perm.TotalPer Unit% of TotalNotes HDC TE Recycled$25,830,000$155,60237.32%5.5 % Base, 6.2% at Perm HDC Second Mortgage$14,110,000$85,00020.39%1% Interest Only (I/O) HPD 3rd City Capital$13,898,350$83,72520.08%1% I/O 100% Deferred @ Perm. Reso A Funds$1,500,000$9,0362.17%0% Interest Developer Equity$13,867,443$83,53920.04%New HOP Program requires 10% TOTAL SOURCES$69,205,793$416,902100.00% USES-Const. & Perm.TotalPer Unit% of TotalNotes Acquisition Cost$11,200,000$67,47016.18%$40 PSF (Part of $24MM Total) Construction Cost$46,882,039$282,42267.74% $185 Per Residential SF; Average $80 PSF on Retail/Parking Soft Cost$11,123,754$67,01116.07%$40 PSF- No Developer Fee TOTAL USES$69,205,793$416,902100.00%  Acquisition Costs not distributed proportionately, but rather by what each project could support.  1 st Perm Loan term restricted to 28 years by Recycled Bond Legislation Constraints. Amortization based on 35 yrs.

21. St. Ann’s Architectural Rendering

22. St. Ann’s Prior to Construction

23. St. Ann’s Construction Progress

28. VI. Challenges & Lessons Learned 28

29. Challenges 29 Over the course of the last 2 years, significant dislocation within the capital markets, diminishing sources of public capital, and general weakening of the overall real estate market have created major challenges to the execution of affordable housing construction projects.

30. Challenges 30  Finance and Capital Markets  Increased volatility of interest rates within the bond market  Diminished access to liquidity within the lending market  Diminished prices paid by investors for low-income housing tax credits  Real Estate Market  Slacking demand for multifamily housing within certain markets, due to oversupply of higher-end products  Public Sector Funding  Decreases in direct public sources for project financing and subsidy, due to the fiscally austere environment

31. 31 Lessons Learned  Large scale, aspirational, mixed-income and mixed use development projects continue to be executable. However, such transactions require:  Greater effort  Broader base of partners  Flexible enough financing structures to allow for the layering of multiple funding sources  Ideally, an ability to phase the project

32. 32 Lessons Learned  Alternatively, given difficulties in the current public and private financing environment, focusing on simplified, template-oriented financing structures that target low-income development is often the most efficient use of resources.  Many hurdles and concerns are mitigated with such projects:  Real Estate Market  Finance & Capital  Public Sector Funding

33. VII. Questions & Answers Please visit our website: www.nychdc.com 33

34. 34 Addendum

35. Low-Income Affordable Market-Place Program HDC’s LAMP Program combines a first mortgage, funded through proceeds from the sale of variable or fixed rate tax-exempt private activity bonds, with a second mortgage, provided through HDC corporate reserves, as of right “4%” Federal Low Income Housing Tax Credits, and other subsides, to produce housing affordable to those earning less than 60% of New York City’s median income. Program Features:  Bond funded senior loan available in multiple interest rate modes, sized at an overall DSCR of 1.15 and maximum LTV of 75%  Low interest subordinate loan up to $55,000/unit at a fixed rate of 1%  Qualify for §421-a, or J-51 tax benefits  Typically 30+ years of affordability Income and Rent Limits: Maximum income level of no more than 60% of AMI (currently $46,080 for a family of four) Maximum rents: Studio $642; 1 BR $810; 2 BR $976, 3 BR $1,128

36. New Housing Opportunities Program HDC’s New Housing Opportunities Program (New HOP) combines a first mortgage, funded through proceeds from the sale of variable or fixed rate taxable bonds, with a second mortgage, provided through HDC corporate reserves, to finance multi-family rental housing affordable to moderate and middle income families earning 80% to 130% of New York’s median income. Program Features:  Bond funded senior loan avaiable in multiple interest rate modes, sized at an overall DSCR of 1.15 and maximum LTV of 80%  Low interest subordinate loan up to $85,000/unit fixed rate of 1%  Qualify for §421-a, or J-51 tax benefits  Typically 30+ years of affordability Income and Rent Limits: Maximum income level of no more than 175% of AMI (currently $134,400 for a family of four) Maximum rents up to 130% of AMI: Studio $1,448; 1BR $1,818; 2BR $2,186; 3BR $2,525

37. Mixed Income Program HDC’s Mixed-Income Program combines a first mortgage, funded through proceeds from the sale of variable or fixed rate tax-exempt private activity bonds, with a second mortgage, provided through HDC corporate reserves to create an economically diverse development. Under this initiative, at least 20% of the units must be reserved for low-income households, a minimum of 30% of the units set aside for middle-income households, and a maximum of 50% of the units at market rates. Program Features:  Bond funded senior loan available in multiple interest rate modes, sized at an overall DSCR of 1.15 and a maximum LTV of 85%  Low interest subordinate loan up to $85,000/unit at a fixed rate of 1%  Qualify for §421-a, or J-51 tax benefits and LIHTC’s on low-income units  Typically 30+ years of affordability Income and Rent Limits: Maximum income level of no more than 175% of AMI (currently $134,400 for a family of four) Maximum rents up to 130% of AMI: Studio $1,448; 1BR $1,818; 2BR $2,186; 3BR $2,525

38. Mitchell-Lama Preservation Background HDC’s Mitchell-Lama Preservation Program provides mortgage restructuring and repair loan funding financed through tax-exempt or taxable bonds, or HDC corporate reserves. Subject to the Mitchell-Lama rules, units are generally affordable to families earning approximately 100% of New York City’s median income. Program Features:  Lower Interest Rate Financing – Existing debt is restructured at a lower interest rate and the loan term is extended  Subordinate Financing – Existing second mortgage no longer accrues interest  Repair Loans – New loans to finance needed capital improvements and upgrades  Grant Funds – Subsidized transaction costs and capital grants  Extended Affordability – 15 year commitment to stay in the Program Income and Rent Limits: Maximum income level of no more than 100% of AMI (currently $76,800 for a family of four) Maximum rents up to 100% of AMI: Studio $1,103; 1BR $1,386; 2BR $1,668; 3BR $1,926