1. ALABAMA MISSISSIPPI CONNECTICUT VIRGINIA 500 Office Park Drive, Suite 300 / Birmingham, AL 35203 www.navigatehousing.com RESTRUCTURING PUBLIC HOUSING PORTFOLIOS Finance Alternatives Eric Q. Strong, CEO Navigate Affordable Housing Partners, Inc. estrong@navigatehousing.com Doug Turner, Managing Partner Censeo Housing & Community Development doug.turner@censeohcd.com Lisa M. McCarroll, Director of Contract Administration Navigate Affordable Housing Partners, Inc. lmccarroll@navigatehousing.com

2. is this just another way to get me to sit through a presentation on RAD?

3. OVERVIEW 1)Aging PHA Stock 2)Deferred Maintenance 3)Fewer Affordable Housing Units 4)Very Limited New Development Opportunities 5)Unstable / Declining Funding HUD is determined to consolidate programs – and public housing is the largest program that no longer fits in the model The Reality Of The Last 10+ Years

4. OVERVIEW THREE-STEP PROCESS 1 2 3 Internal Planning Change Tools Implementation

5. OVERVIEW PROCESS 3 Years Ago

6. INTERNAL PLANNING REAL Numbers – Not General Ideas The Physical Condition of Properties The Other Properties In your Market Operating Cost Structure – Property Level and PHA Level Industry Operating Performance Metrics Does the Scale (location, number of units, etc.) allow you to operate efficiently? BEFORE CHOOSING THE TOOLS, KNOW…

7. THE TOOLBOX No Change RAD Streamlined Conversion Voluntary Conversion Section 18 Disposition Homeownership Development or Project-Based Vouchers (PBV) Transfer of Assistance Capital/Operating Fund Borrowing LIHTC (especially acquisition/rehab “4%” credit) CHOICES AND TOOLS

8. INTERNAL PLANNING Mission Statement – which briefly expresses the purpose of your PHA, specifically, “why do we exist?” and “what business are we in?” Operationalize It – “What am I trying to accomplish” BEFORE CHOOSING THE TOOLS…

9. TOOL SELECTION Have you done the planning and research? Is your plan resident/potential resident based? Will regulations make it better or worse for those continuing to operate as a traditional PHA? Are You Betting on the best Carrots at the end? Can you expand and serve more people? What would be different for your organization if you are required to change NO CHANGE

10. TOOL SELECTION Unit cap sill at 185,000 units (current wait list) Administration – 2 nd attempt to add “extra” funds for deals that don’t “pencil” out Many properties with CHAPs where physical need > funds that can be raised. Many changes of estimated physical need in application and actual PCA. Latest Developments Strong Influence of Fair Housing in RAD – Site & Neighborhood Standards, Unit Change forms. RENTAL ASSISTANCE PROGRAM (RAD)

11. TOOL SELECTION UNITS CLOSED THRU JAN 16, 2016 27,434 Mississippi – Closed 3,268 Percent of All RAD Closings12% MS PHA UNITS - PRE-RAD 13,324 MS Closed or Entered in RAD 5,277 Percent of MS Portfolio40% MISSISSIPPI RAD

12. TOOL SELECTION Coupled with 4% LIHTC True physical needs < $45,000 unit +/- OR Property has few physical needs Ability to lower current U/A with Energy Saving features RAD Payment Standard near FMR OR Lower RAD Payment Standard can be absorbed in TOA development RAD is the best tool when:

13. TOOL SELECTION Is Your Entire PHA < 250 Units? Notice PIH 2014-14PIH 2014-14 Approved when – cost analysis of conversion assessment demonstrates – the total costs of ongoing maintenance and operations for a property exceed the total costs of providing tenant-based assistance. [Costs more as PHA than other assistance.] STREAMLINED CONVERSION

14. TOOL SELECTION Introduced in QHWRA (Section 533)QHWRA (Section 533) Complex Cost Comparison –total costs of ongoing maintenance and operations for a property(as public housing) exceed the total costs of providing tenant- based assistance. May be best option for poorest performing /highest cost PHA assets VOLUNTARY CONVERSION

15. TOOL SELECTION When Does Voluntary Conversion Work? GOOD CANDIDATE Big property > 250 units Early DOFA Date (Old) High Average BR size Continuing High Vacancy Not Energy Efficient FMR < PHA Allocation

16. TOOL SELECTION Low Density FMR > PHA Allocation Low Vacancy (property & market) Good physical condition DOFA date within last 20-30 years (or less) When Does Voluntary Conversion Work? NOT SO GOOD CANDIDATE

17. TOOL SELECTION SECTION 18 DISPOSITION Historically, the most common disposition option - Flexible Use of the proceeds High likelihood of tenant protection vouchers (TPV) Change in neighborhood Value of underlying land allows replacement Public purpose Allows for partial vouchers and ability to convert less than 1-for-1 units.

18. TOOL SELECTION HOMEOWNERSHIP Most likely where a PHA has a property or AMP composed of “Scatter Site” units of single family homes / duplexes Scatter site units +/- 10% of all PHA units RAD doesn’t make scatter-site management any better Possible to Use Capital Funds to Make Ownership Feasible “SCATTERED SITE” IS MOST POPULAR NAME FOR A PHA DEVELOPMENT IN THE COUNTRY. 405 PROPERTIES!

19. TOOL SELECTION DEVELOPMENT & PBV Re-think Role of a PHA as Developer for wider range of Incomes (Homeless to Workforce Housing) – Not just local agent of HUD programs. PBV newly popular (in RAD and general development) BUT read Notice PIH-2015-05(HA)! PIH-2015-05(HA) Compliance in VMS Use of Independent Entity in PHA-owned units Selection (if not in RAD)/ RFP Payment Standard HQS Inspections Tenant Complaints Contract Renewal

20. TOOL SELECTION CONSOLIDATION / CONSORTIA 2 Notices - PIH 2014-24 & PIH 2012-11PIH 2014-24 PIH 2012-11 One governs PIH Low Rent Units – the other HCV Vouchers Transfer = a “divesting” PHA turns over ownership and operation to one or more “receiving” PHAs. Consolidation = organizational change in which two or more divesting PHAs turn over ownership and operation to create a new “consolidated” PHA. Consortia also an Option

21. POSTSCRIPT “Change is the law of life. And those who look only to the past or present are certain to miss the future.” John Fitzgerald Kennedy – June 1963 Address in the Assembly Hall at the Paulskirche in Frankfurt www.hud.gov www.hudexchange.info RAD Resources:

22. ALABAMA MISSISSIPPI CONNECTICUT VIRGINIA 500 Office Park Drive, Suite 300 / Birmingham, AL 35203 www.navigatehousing.com THANK YOU www.navigatehousing.com estrong@navigatehousing.com | doug.turner@censeohcd.com | lmccarroll@navigatehousing.com