1. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Saving The Tax Credits in a Failed Transaction Historic Tax Credit Developers Conference February 6, 2009

2. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Leverage Lender #1 Investment Co. NMTC Investor #1 Leverage Lender #1 Investment Co. NMTC Investor #2 Investment Co. HTC/NMTC Investor #2 CDE #1 CDE #2 CDE #3 Master Tenant Landlord Leverage Lender #2 State Credit Investor Mortgage Loans to Landlord Capital

3. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Sources: Existing Adjustments Revised Federal & State HTC Equity (a) 200,000 Additional NMTC Equity (b) 1,500,000 Subordinated Loan 4,304,000 Total Sources: 200,000 5,804,000 6,004,000 Uses: Accounts Payable 2,841,000 Costs to Complete 3,140,000 Cash Deficits to End of NMTC Period 1,838,000 (1,815,000) 23,000 7,819,000 (1,815,000) 6,004,000 Shortfall (7,619,000) 7,619,000 -

4. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Debt Structure: 1st Lender - A Loan - Must Pay 16,000,000 (5,000,000) 11,000,000 1st Lender - A Loan - Accruing 5,000,000 NMTC - B Loan - Must Pay 1,930,000 (1,930,000) - NMTC - B Loan - Accruing 1,930,000 Subordinated Debt 4,304,000 Total 17,930,000 4,304,000 22,234,000 Interest Rate - A Loan - Must Pay8.07%-3.07%5.00% Interest Rate - A Loan - Accruing -7.00% Interest Rate - B Loan - Must Pay1.57%-1.57% - Interest Rate - B - Accruing -1.57% Subordinated Loan - Accruing -6.00% Interest Rate - A Loan - Must Pay 1,291,200 (741,200) 550,000 Interest Rate - A Loan - Accruing - - - Interest Rate - B Loan - Must Pay 30,301 (30,301) - Interest Rate - B - Accruing - - - Subordinated Loan - Accruing - - - Total Debt Service 1,321,501 (771,501) 550,000

5. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Stakeholders Developer 1 st Lender 2nd Lender NMTC Investor (3) HTC Investor CDE (3) Sub Contractors

6. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Developer Reduce cost to complete funding Receive sufficient fee to carry overhead and maybe some profit Reduce operating carry Retain management Reduces guarantees Maintain any possible residual

7. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Tax Credit Investor Protect against recapture of HTC - Federal & State Protect against recapture of NMTC Generally requires an infusion of capital Changes in economic interest in real estate

8. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Lender If also a credit user – protect the credit Analysis of ways to record the least amount of loss recapture of principal –Foreclose now –Will economic correction will significantly reduce loss –Infusion of capital from other stakeholders may allow benefit of completion and stabilization Loan interest rate & term restatements

9. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. CDEs How do fees get paid? Affect on future NMTC allocations Recapture events

10. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Sub Contractors Accounts Payable How do we get them back on the job?

11. 2009 Historic Tax Credits For Developers Conference All Information Contained in the Document is intended for the purpose of education and may not be reproduced without prior consent. ©Copyright 2008 Reznick Group, P.C. Negotiated Issues Non-disturbance Agreement (Is there one?) Length of forbearance by lender New investor capital generally needs credit protection for life of credit New investor capital may increase credit period Legal/tax opinions – updated? Priority of new equity - priority in respect to restructured 1 st mortgage Yield on new equity Fee structure - CDE Fees; Asset Management Fees Preferred returns Put/Call Deferred development fee