Analysis of Potential Sale of Maplewood Manor

1. Analysis of Potential Sale of Maplewood Manor Albert A. Bogdan

2. Goals AAB Development Strategies, LLC • Determine Status of Residuals and Replacement Reserve • Maximize Funds Available for Neighborhood & Housing Improvement Program • Modernize Maplewood Manor

3. First – Do Nothing AAB Development Strategies, LLC • Residuals Available for New Projects • Legal Opinion & HUD Concurrence • $1 million+ • Appraisal = $3.7 million • Maplewood Manor (MM) Borrowing Capacity • 3.6% Interest over 40 Years – Fannie Mae or FHA • 0.87 Loan to Value Ratio • $3.2 million Available for New Project & MM Rehabilitation • Use Work Plan to Determine Mix • Total of $4.2 million Available for Rehab & New Projects • + $550,000 Replacement Reserve Available for Rehab • Recommend Placing Property in Separate LLC • Segregate Residuals, Liability & Profits (Residuals)

4. Analyzing Value AAB Development Strategies, LLC • Basis for Appraised Value • (Net Operating Income – Residual Value) / Cap Rate • Cash Available to Investor • Cap Rate = Average Return on Investment Expected from Real Estate Investment • Bay City Cap Rate = 9.5% • Every $1 Increase in NOI = $10.35 in Value • Appraiser Has Significant Professional Discretion • Not Totally Dependent on Actual Expenditure • Cap Rate is not a Precise Number • Appraisal = $3.7 million • Final Appraiser Will Be Selected by Lender

5. How to Increase Value AAB Development Strategies, LLC • Increase Revenue • BCHC Pays Rent • Decrease Expenditures • Compared BCHC Expenditures Versus LIHTC Average • Administrative Cost Low (No Services to Seniors) • Repair and Maintenance Cost Very High • Utilities Same • Lack of PILOT (Also Needed for LIHTC Application) • Obtain PILOT + Service Agreement with City = No $ Change to City • Expenditures May be Reduced Substantially • If Changes Can be Made, Value is Increased • Possible Increase in Value Up to $5.1 million • Possible Debt Available $4.4 million

6. Second – Sell Maplewood Manor AAB Development Strategies, LLC • Two Proposals • American Community Developers • Housing Partners, Inc. • American Community Developers (ACD) • Offered Appraised Value - Contingent on LIHTC Award • Award Highly Likely • For-Profit • Excellent Reputation – Primarily Michigan Projects • Maplewood Manor will be Updated to 2014 Standards • Lease space to BCHC @ $1.00/year for 10 years • Services to Seniors Expanded

7. Second – Sell Maplewood Manor AAB Development Strategies, LLC • Housing Preservation, Inc. (HPI) • Offered Appraised Value - $50,000 Down Payment • National Nonprofit • Relatively New Organization – No Michigan Presence • Growing by Substantial National Acquisitions • Maplewood Manor May Not be Updated for Some Time • Will Have Trouble Scoring MSHDA LIHTC Points • BCHC to Relocate – May Be Negotiable • Services to Seniors Expanded • Funds Available for Other Projects • Sales Price of $3,700,000+ +Residuals of $1,000,000 = $4,700,000+

8. Third – LIHTC Partnership AAB Development Strategies, LLC • Four Partnership Proposals • Volunteers of America – Non-profit • Presbyterian Village – Non - profit • Lutheran Homes of Michigan - Non-profit • Shelborne Development – For-profit • Proposals All Similar • Form Development Partnership = Roles to be Defined • Partner Must Have LIHTC Management Lead • 50-50 w For-profit granting 50.1 to BCHC • Form Limited Dividend Housing Association LLC • LDHA LLC Purchase Property for Appraised Value • Apply for LIHTC Award • BCHC Continues Stay in Property – Pays Rent - Negotiable • BCHC Participates in Development & Management • Maplewood Manor will be Significantly Updated to 2014 Standards • Services to Seniors Expanded

9. Understanding LIHTC AAB Development Strategies, LLC • Prepared Work Plan • Fusco, Schaffer, Pappas • Criteria • Bring Property Up to 2014 Building Codes – Essentially Like New • Make All Apartment Visitable • Improve Barrier Free Apartments • Meet Updated Certificate of Needs Assessment • Meet New Green Standards • Work Plan Priced by Damone Group • Major Contractor • Key Subs Price Concepts • Minimum Hard Costs Required = $20,000/Unit • LIHTC Points Granted if > $30,000/Unit • Tentatively Added 4 Apartments

10. Alternative Design Changes AAB Development Strategies, LLC

11. Use of Funds AAB Development Strategies, LLC

12. Calculation of Tax Credit Equity AAB Development Strategies, LLC

13. Sources of Funds AAB Development Strategies, LLC

14. Projected Cash Flow AAB Development Strategies, LLC

15. Key LIHTC Partnership Points AAB Development Strategies, LLC

16. Some Key LIHTC Points AAB Development Strategies, LLC

17. Total Funds for New Projects AAB Development Strategies, LLC

18. Recommendation AAB Development Strategies, LLC • Transfer Property to a LLC • Take Actions to Increase Net Cash Flow • Negotiate PILOT + Service Agreement • Reduce Repair & Maintenance Expense - Use Replacement Reserve • Interview Potential Developer Partners • Agreement for LDHA to Acquire MM for Appraised Value • Agreement to 50-50 Development Fee • Ask Partner to Define BCHC Staff Roles • Agreement to Share in Predevelopment Costs • Developer to Describe How They will Maximize LIHTC Points • Select Partner • Form Limited Dividend Housing Association LLC • Apply for LIHTC Award in 2/2014 or 8/2013