New York State Housing Finance Agency Multifamily Volume Cap (“MVP”) Preservation Facility September 27, 2016 Marian Zucker President Finance & Development

New York State’s Volume Cap Constraints New York State receives approximately $1.97 billion of volume cap per year Demand typically exceeds supply HFA and SONYMA’s combined volume cap needs ranges from $1.3 billion to $1.5 billion, representing 65%-76% of the State’s total cap

HERA Amendment to the IRC Internal Revenue Code, Section 146 (i) (6): Allows repayments of loans financed by housing bonds to be recycled into new loans additional volume cap. As long as: Refunding bonds are issued within 4 years of the original bonds New loan is made within 6 months of the prior loan’s repayment Refunding bonds are TEFRA’d prior to issuance for 2x par The last maturity date of the refunding bonds ≤ 34 years Impact: Allowed the Agency to recycle Volume Cap

Initial Recycling Process Unpredictable prepayments and project/bond issue Timeline Uncertainty + Nowhere to hold prepayments (despite HERA’s 6 month allowance) Cost associated with keeping bonds outstanding until prepayments could be used = Cumbersome & Expensive to Recycle

“Necessity is the Mother of Innovation” – How the Facility Helped Solved the Dilemma Prepayments can stay in facility for up to 6 months Prepayments available to refund into a project within one day’s notice The Facility is fully cash collateralized by the project payment – the Agency only owes interest on outstanding amounts

$ $ $ $ $$ $$ $$ $$ $$ Process Overview MVP Construction HFA Credit Enhancement HFA Redeem “A”’s Bonds Draw on Credit Enhancement Project A Bondholders $$ Bonds $$ Bond Proceeds Project B Bondholders $$ Refunding Facility $$ Loan partially funding Project B $$ Draw on Facility Project A Prepays Project B MVP Project A June 16, 2016 Prepayment Prepayment *Preliminary; subject to change in price and availability; when, as, and if issued

Activity Under the Recycling Facility Since 2011, NYSHFA has issued over $1 billion* in recycled bonds to fund its multifamily pipeline Approximately $165 million* was recycled using the Facility In 2016, MVP was used to issue approximately 45% of the Agency’s total recycling bonds *Includes projects expected to close through September 30, 2016

Basic Features Facility Structure Executed as private placement with Citibank $300 million drawdown facility Structured with a stated term of 36 months Repayment held for a six month term maximum Interest reserve account for additional protection to facility provider Benefits Capture and recycle tax exempt bond authority more efficiently Avoid logistical challenges : Aligning repaying project with new bond issue Provide more predictability of our recycling resources Accept project prepayments at any time Capture recycling bonding authority until a new project is ready to be funded