1. SERC 2014 Judy Vandyke, CEO/Managing Partner, BGC judy@thebennettgrp.net Holly Knight, Vice President of Development, BGC holly@thebennettgrp.net

2. Operating Subsidy Funding 84??% 82%94.968% 100% 103% 88.42% Flat rent impact?

3. Capital Fund Capital Funding Trends

4. Typical PHA Revenue versus Expenses

5. Average Administrative Trends

6. Typical Expense Trends

7. What is best plan for residents? Diversify Borrow funds for improvements New cutting edge programs Partner Reposition RAD Mixed finance Compliance is not going away even if there is temporary relief Need to over come funding and sequestration

8. TOWERS SENIOR PLACE LTD PHA property General Partner Special Limited Partner (PHA) Limited Partner 99.98%.01% $$$ Tax Credits Tax Losses Equity State Allocating Agency TAX CREDITS Right of First Refusal Option to Purchase Land Lease

9. Development Considerations  New Construction, Rehabilitation, or Acquisition Rehab  Degree of Difficulty in Obtaining 9% or 4% Tax Credits  If Rehab, Can’t Rely on old PNAs. RAD PCA is Critical First Step  If FHA Rehab Financing, Must Obtain 55 Year Maximum Useful Life  Relocation Options – Off-Site if New, On-Site if Rehab  Entire Portfolio or a Portion – Impact on COCC  The Development Partner Has a Fiduciary Responsibility to The Housing Authority  Best and Highest Use  Seller take back finance –protection for the PHA

10. Structuring the Development Partnership Understand the Balance Between Risks/Capabilities and Benefits  The Lender & Investor will Want Guarantees – Construction Completion, Operating Deficit, Ongoing Credit Delivery, With Assets at Risk  Who Takes on the Various Risks Determines Ownership Split, Fee Split, and Distributions  The Development Partner Will Want to Protect its Guarantees  Responsibility for Pre-Development Costs  Property Management by Experienced Tax Credit Manager is Essential If Credits Involved – Use Third Party Compliance (BGC Advantage)  Insurance/Property Taxes  If Authority is to Manage at Some Point, Must Strengthen Management Capabilities  Structure of Right of First Refusal at end of Tax Credit Compliance Period

11. Financing Availability of FHA 223(f) & 221(d)(3) insurance, with priority processing Access to FHA LIHTC Pilot processing Ability to tap 9% & 4% LIHTCs, including “short bond” structures Ability to support transaction with public housing reserves and capital funds, including Replacement Housing Factor funds Access to HOME and CDBG for development budgets Available sales proceeds can support other affordable housing purposes

12. Compare Projects Sunny Dell COST BENEFIT ANALYSIS 158/debt158/4%206/debt206/4% Per Unit Hard Cost 13,000 25,000 12,000 25,000 Gross Potential Income $ 887,220 $ 1,240,020 $1,187,700 First Mortgage Amount 3,120,200 2,131,600 2,931,400 4,071,900 Developer Fee to PHA 150,000 530,400 150,000 665,600.0 Administrative Fee 154,000 113,000 201,000 140,000 Management Fee - 51,523 72,095 69,053 CASH FLOW $ 40,955 $ 55,895 $ 76,948 $ 53,446

13. Change Take the first step in faith. You don’t have to see the whole staircase, just take the first step. -Martin Luther King, Jr.