1. Rental Assistance Demonstration

2. This is RAD 2 ACCSection 8 At closing, funding is converted to a Section 8 contract rent

3. What RAD Can Do Terms  15-20 year, renewable contracts with Use Agreement  Predictable initial contract rent setting; annual operating cost adjustments for inflation (OCAF)  Established Replacement and Operating Reserves;  RAD HAP funding begins at construction closing !!  No limitations on use of project cash flow  PHA Ownership/control similar to LIHTC practices  Long term affordability ensured Process  Partial or Full AMP  No SAC approval  Subsidy layering review via RAD  Simplified procurement  Freed from PH Annual Plans, PHAS, Community Service, PIC, etc. Financing  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 Flexibility  Transfer assistance from unworkable units prior to conversion  Market accommodations in meeting 1-for-1 preservation (e.g., convert efficiencies to 1 bdrms; long-term vacant units)  Combine RAD & agency PBVs or SAC TPVs>PBVs  Flexibility to reduce densities, replace housing off-site, produce mixed income communities  Allows PHA to undertake renovations immediately or after conversion, as warranted  Demolition/New Construction allowed  Ability to “bundle” project applications for flexibility with initial contract rents

4. New RAD Notice FY 2012 rent (from HUD Tool) if apply by 12-31-2013 Exempting those with CHAPs from occupancy criteria of Performance Housing Assessment System (PHAS) Bundling of multiple project rents Commitments for multiple-phase projects Allows Portfolio Awards Option for distressed HOPE VI projects regardless of DOFA Allowing MTW Agencies to use block grant in rent setting for 2 or more projects, subject to service level requirements & subsidy layering review 4

5. Comparison of PHA fees ACC vs RAD Assume a 100 unit project, new const, at a cost of $120K per unit Per unit per monthCurrent ACCRAD Property Mgmt Fee $ 45.00 $ 35.00 Bookkeeping $ 7.50 $ - IT $ 2.00 $ - Asset Mgmt Fee $ 10.00 $ - Capital Fund Fee $ 15.00 $ - Cash Flow (50% share) $ 37.00 Per Unit Per Month Total $ 79.50 $ 72.00 Annual Total $ 95,400.00 $ 86,400.00 Annual difference $ (9,000.00) Developer Fee (35% of $1.8M Fee) $ 630,000.00 Net unrestricted funds to the PHA $ 621,000.00

6. Development objectives Partnership with PHAs – Modernize/ Substantially rehab aging rental properties – Demolish/replace severely distressed/obsolete properties – Thin densities/mix incomes via RAD HAPs and transfer authority Place RAD HAP contracts in off-site, high-amenity locations 6

7. Case Study: Hopewell, Virginia Key Features PHA in Partnership with Experienced Nonprofit Developer, Community Housing Partners 9% Low Income Housing Tax Credits Resident Council Input 7

8. Case Study: Hopewell, Virginia Pre- Conversion Public Housing 30 units In need of major repair Post-Conversion Mixed Income Development 56 units Demolition/ New Construction 8

9. Case Study: Hopewell, Virginia Pre- Conversion Post-Conversion 9

10. 10 Sources & Uses Sources of FundsAmountPer Unit New First Mortgage Loan$2,871,830$44,872 Public Housing Operating Reserves$0 Public Housing Capital Funds$0 Replacement Housing Factor$0 Low Income Housing Tax Credit Equity - 9%$5,455,975$85,249 Soft Sources$500,000$7,813 Developer Equity$105$2 Other$0 Total Sources of Funds $8,827,910$137,936 Uses of FundsAmountPer Unit Acquisition Costs$96,365$1,506 Construction Costs$6,388,848$99,826 Relocation Costs$65,000$1,016 Professional Fees$683,197$10,675 Loan Fees and Costs$400,000$6,250 Reserves$362,000$5,656 Developer Fees$832,500$13,008 Total Uses of Funds $8,827,910$137,936 Case Study: Hopewell, Virginia

11. Income & Expenses: 11 Stabilized Cash Flow Pro Forma TotalPUPA Gross Potential Rents for RAD Units$243,624$8,121 Gross Potential Rents for Other Apartment Units$327,015$9,618 Gross Potential Rents for Commercial$0N/A Vacancy Loss and Bad Debt Loss($43,215)-$675 Other Income$8,400$131 Effective Gross Income$535,824$8,372 Total Operating Expenses($286,550)($9,552) Annual Deposit to Replacement Reserve($19,200)($640) Net Operating Income$230,074$6,767 First Mortgage Debt Service($190,300)($6,343) Operating Cash Flow$39,774$1,170 Case Study: Hopewell, Virginia

12. What advice would you give to PHAs? “The writing is on the wall – we can’t sustain the public housing or the quality of life the way things have been going. It became apparent that this old housing stock with diminishing capital funds was not going to be sustainable. ” - Steven Benham, Executive Director, Hopewell Redevelopment and Housing Authority

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