1. 2012 IHCDA QAP Forum RealPropertyResearchGroup Washington / Baltimore  Atlanta 1 Bob Lefenfeld Managing Principal Real Property Research Group, Inc. September 1, 2011

2. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Real Property Research Group, Inc. Multi-disciplinary real estate and economic development consulting firm with offices in MD and GA Practice focused on rental housing, for sale housing, senior housing, retail development, opportunity assessments and economic impact analysis Work in 49 states and DC Contract byIHCDA for last 6 years to review all tax credit market studies submitted to agency 2

3. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Examine market study for consistency with QAP.  Determine if study was prepared according to generally accepted industry practices.  Evaluate each market study based on project analysis, appropriateness of market area, economic and demographic analysis, competitive analysis, demand analysis and conclusions.  Confirm penetration, absorption and capture rates.

4. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Schedule C –Market Study Requirements.  National Council of Affordable Housing Market Analysts (NCAHMA) WWW.Housingonline.com  Market analysis content standards  Definition of terms  White papers  Preferred Market Study Provider List  Many are members of National Council of Affordable Housing Market Analysts (NCAHMA)

5. RealPropertyResearchGroup Washington / Baltimore  Atlanta 5 Market Study Review Checklist  review all 9% market studies (45 to 50) within a 45 day period  Reviews conducted by principals or directors  Objective today is to inform you, the users of market studies, what we are looking for

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7. RealPropertyResearchGroup Washington / Baltimore  Atlanta  According to guidelines, study can be six months old.  Computation of maximum incomes using 1.5 persons per bedroom If one or two person HH can qualify for one bedroom unit, use average of one and two person household income, not two person income.

8. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Failure to describe proposed development in detail Targeted Incomes Utility Policy Amenities and Features  For Renovation Projects:  Inadequate information on the nature of the existing development including history, condition, and prevailing rent and occupancy levels.  Insufficient data on the nature and extent of renovation work planned.

9. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Inadequate discussion of context in which development is going to take place.  Neighborhood amenities and services.  Data dump is not an analysis  Identify specific location of important amenities (supermarket, shopping center, hospital, schools, parks).  Clarify project-based rental assistance vs. vouchers

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11. RealPropertyResearchGroup Washington / Baltimore  Atlanta  The geographic area from which future residents of the community would primarily be drawn and in which competitive rental housing alternatives are located  Market Study White Paper available at NCHAMA website: www.housingonline.com

12. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Location of Competitive Properties  Socio-Economic Characteristics  Accessibility  Natural Boundaries  Market Perceptions  Commuting Patterns  Target Market (Senior larger than Family)

13. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Radii Market Area  County-Wide Market Areas  Gerrymandered Market Areas  Secondary Market Areas

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15. RealPropertyResearchGroup Washington / Baltimore  Atlanta What is the economic environment in which project will be operating?  Labor Force  Unemployment  At-Place Employment  Major Employers  Employment Nodes

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17. RealPropertyResearchGroup Washington / Baltimore  Atlanta  QCEW stands for Quarterly Census of Employment and Wages, formerly known as ES-202 and formerly known as CEW Covered Employment and Wages.  The QCEW program derives its data from quarterly tax reports submitted to State Employment Security Agencies by over eight million employers subject to State unemployment insurance (UI) laws and from Federal agencies subject to the Unemployment Compensation for Federal Employees (UCFE) program. This includes 99.7% of all wage and salary civilian employment. These reports provide information on the number of people employed and the wages paid to the employees each quarter. The program obtains information on the location and industrial activity of each reported establishment, and assigns location and standard industrial classification codes accordingly. This establishment level information is aggregated, by industry code, to the county level, and to higher aggregate levels.  At-Place Employment Data: http://data.bls.gov/pdq/querytool.jsp?survey=en http://data.bls.gov/pdq/querytool.jsp?survey=en

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22. RealPropertyResearchGroup Washington / Baltimore  Atlanta Analyst confuses at-place and resident employment No attempt to discuss recent expansions or contractions Analyst fails to present a cogent discussion of economic trends. “no matter how bad the data, conclusion is positive” “If economy is good, more demand; if economy is bad, more need”  Economic data should provide context for demographic trends.

23. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Use 2010 Census data.  Reconcile estimates and projections from different sources  Evaluate the reasonableness of projections given economic trends, construction activity and other factors  Use updated income distributions  Evaluate occupancy trends

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26. RealPropertyResearchGroup Washington / Baltimore  Atlanta 26  Date of survey  Income targets of units  Project-based rental assistance  Reasonable utility allowance

27. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Vacancy rates should be computed and presented.  Stabilized market vacancy rate  Tax Credit Vacancy Rate  Present subsidized vacancy separately

28. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Compile information to provide picture of market.  Show tax credit rates by income target.  Adjust for differences in utility policies and rent incentives.

29. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Required to demonstrate competitive advantage  Use HUD 92273 or other form

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32. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Conduct for the overall project and by income target  Affordability with and without Subsidy 32

33. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Factors of growth, need balanced with supply.  Methodology should be clear to reader  Sources of data must be specified  No turnover factor  Justification for abosrption Source: US Bureau of Labor Statistics

34. RealPropertyResearchGroup Washington / Baltimore  Atlanta  Evaluate capture rate  Demand calculated with and w/o subsidy

35. RealPropertyResearchGroup Washington / Baltimore  Atlanta 35 Rather than just presented, Information should be analyzed Conclusion should follow and be consistent with information presented in report. For projects with project-based rental assistance (PBRA), analyst must assess market feasibility of proposed tax credit rents without PBRA. Demand for special needs uses must be addressed. Candid conclusion of development’s market feasibility.

36. RealPropertyResearchGroup Washington / Baltimore  Atlanta 36 I have made a physical inspection of the site and market area and that information has been used in the full study of the need and demand for new rental units. To the best of my knowledge, the market can support the demand shown in the study. I understand that any misrepresentation in this statement may result in the denial of participation in the rental housing tax credit program in Indiana as administered by the Indiana Housing and Community Development Authority. Neither I nor anyone at my firm has any interest in the proposed development or relationship with the ownership entity. Compensation for my services is not contingent upon this development receiving a reservation or allocation of tax credits. I affirm under the penalties of perjury that the foregoing representations are true. __________________________________ ___________________________ Market Analyst Date  Checklist  Signed Statement

37. RealPropertyResearchGroup Washington / Baltimore  Atlanta RealPropertyResearchGroup Market and Economic Analysts for the Real Estate Industry Bob Lefenfeld 410 772-1004 x 6101 Bob @RPRG.net www.RPRG.net