Governor’s Housing Conference 2013

1. Governor’s Housing Conference 2013 Creative Financing Sources/Structures to Produce Affordable Housing

2. Limited Financing Tools for “Traditional” Affordable Housing PHAs & Affordable Housing Providers Have Limited Universe of Tools • Low Income Housing Tax Credits (LIHTC) • Community Development Block Grant (CDBG) • HOME Investment Partnerships (HOME) • HOPE VI Redevelopment Program • Public Housing and Annual Contribution Contract (ACC) • Local Subsidy • Tax Exempt Bond Financing • Federal Housing Administration (FHA) Loans

3. Past Successes • At the Inception of the LIHTC Program HOC Financed 8 Partnerships Utilizing 9% Credits. • 316 Units Preserved • Robust Funding Allocation for Housing Choice Voucher Program and Capital Fund Program. • Local Subsidy

4. Paradigm Shift: Blend/Shake/Mix • Our Challenge is to Creatively Leverage Traditional Tools with Market Driven Debt and Equity • Who do we serve? Paradigm: Everyone, with a heavy focus on at risk and underserved populations. Shift: How Can Blending in Market Rate Units Advance the Mission? • What’s our product? Paradigm: Mixed Income, Mixed Use, Amenity Rich Communities in Transit Oriented Locations Shift: Build a product that communities ask for regardless of end-users! • How do we identify creative solutions and bring other products and/or uses to the site? Partnerships =Risk Mitigation / Leverage Leverage Private Capital = Mixed Income TOD Monetize Land Basis in Portfolio = RAD / Legacy Assets Increase Density and Sell off Portion to Complementary Use; Create a Sense of Place and Push Demand = Create Equity for Hard to Build, Deeply Affordable Projects

5. Case Study: Partnership at Chevy Chase Lakes Chevy Chase Lakes Chevy Chase Lakes 2.0 • 68 Units on 11 Acres • Montgomery County • 500 Square Miles • High Land Costs • Median Household Income = $95,660 • Shrinking Green Space • Opportunity • Rehabilitate Existing (Low Leverage/Low Impact) • Redevelop Existing (High Impact/High Risk) • Balance Risk + Return = Partner + Redevelop • 70 Luxury Townhomes (For Sale) • +/-200 Apartments (Rental) • Serving 0 – 120% AMI Across Site • Deep Long Term Affordability on Rentals • Affordable / Workforce Options on For Sale • Expect Significant Equity from Land Sale = Internal Subsidy for New Building + Other Opportunities

6. Case Study: RAD at Elizabeth House Elizabeth House Assemble the Entire Block (375K Sqft of FAR) • 165 Units of Age Restricted Public Housing • 1960s Infrastructure • ¼ mile from • Next Door to Alexander House (312 Units of Mixed Income) • Adjacent to 1 Acre of Mid-Century Low Rise Commercial (Private Owner) • Partner with Commercial Property Owner • Build Replacement Housing On Site • Redevelop Commercial Site and former Public Housing Site • Re-Calibrate Income Diversity • Revitalize Commercial Uses w/New Tenants • Develop Robust Offer of New Amenities for both Residents & Community

7. Case Study: Acquisition Platform Traditional Public Financing Tools Access Capital Markets & Private Investors • Tax Exempt Bonds • Advantages: Historically Lower Rates, Long Term Hold • Challenges: Timing, Restrictions • Local Financing • Advantages: Cash Flow Contingent, Low Rates, Deferred Until Sale or Refinance • Challenges: Limited Resources, Increased Needs • Low Income Housing Tax Credits • Advantages: Long Term Equity Source, Mission – Centric, Long Term Hold • Challenges: Timing, Uncertainty of Award (9%), Market Rate Perception • Institutional Equity • Advantages: Speed, Perception of Sellers, Shared Risk, Certainty of Execution, Mitigate Deal/Opportunity Loss • Challenges: Market Driven Returns, Forced Return of Capital (Sale or Refinance) • Partner w/Long-Term Holders • Advantages: Alignment of Interests, Long Term Investment Horizon • Challenges: Different Objectives, Risk of Needs Changing During Hold Period • Conventional Debt • Advantages: Speed, Availability, Perception • Challenges: Incongruent with Long Term Hold, Interest Rate Risk