1. Using Historic Tax Credits in New York Joel Cohn, CPA Reznick Group www.reznickgroup.com 410-783-4900 joel.cohn@reznickgroup.com

2. Keeping the Credits or Selling Them? If the Developer Can Use Them, The Credits Are Most Valuable When Kept If They Are to be Sold, Remember That Selling Credits is a Misnomer The Drop Dead Date to Close on The Sale of the Credits is The Date of Completion of All or a Portion of the Building Reznick Group Building Business Value

3. Pricing Metrics for Credits Credits Are Priced Based on Each $1.00 of Credit e.g. Buyer Pays $0.95 for Each $1.00 of Credit Generated The Pricing Depends on The Magnitude of Credits Big Deals vs. Small Deals Big Deals Can Be Priced Over $1.00/$1.00 of Credit Small Deals Usually Less Than $1.00/$1.00 of Credit Pricing Also Depends on How Quickly Developer Needs/Wants Money from Credit Buyer Pricing Also Depends on Typical Underwriting Criteria: of the project, developer, etc. Reznick Group Building Business Value

4. Where Credits Fit in The Capital Stack Its Not Just a Question of How They Fit But Also When Need to Consider the Bridge Financing Need and the Cost to Bridge In the Final Capital Stack, the Tax Credit Equity Is No More Than +/- 20% of Total Development Costs, and Probably Less The Gross Price is The Proceeds Available to Get the Building Built Reznick Group Building Business Value

5. Its The Net Price That Matters in the End Economic Returns Are Required by Credit Buyers Cash on Cash Return – Typically 2-3%/year for 5 years, based on Contributed Capital Exit Fee – 10-15% of Contributed Capital Plus a Portion of Depreciation – At Least 10% Potential Tax Liability Payments Transaction/Closing Costs Ongoing Administrative Costs Loss of Any Building Efficiencies to Meet Standards Reznick Group Building Business Value

6. CapitalCash NET YearContributedDistributedPutFLOW 2009839,280(25,178) 814,102 20103,357,120(125,892) 3,231,228 2011 (125,892) 2012 (125,892) 2013 (125,892) 2014 (125,892) 2015 (629,460) Total4,196,400(654,638)(629,460)2,912,302 Gross Credit Price 1.05 Cost of Preferred Return Per Credit(0.16) Cost of Put Option (Exit Fee) Per Credit(0.16) Cost fo Share of Depreciation? Net Equity as a Percentage of Tax Credits73%

7. Who Are The Buyers of the Credit? Public Companies Not Subject to Some of the Same Limitations in Using This Credit As Are Individuals and Closely-Held Companies Small Universe of Buyers– Today There Are Less Than 10 Active Buyers Choosing a Buyer: Consider All Deal Terms, Not Just Gross Credit Price Reznick Group Building Business Value

8. Plain Vanilla

9. Reznick Group Building Business Value Not So Plain Vanilla Historic Deal Structure Project Sponsor Tax Credit Investor 99% LP Real Estate Partnership/ Property Owner/ Master Lessor Operating Partnership/ Master Lessee Entity MortgageTenant Group 90% Credits, Profits, Losses Equity Investment Equity $$ 99% Credits, Profits, Losses Master Lease Rent Equity $$ Rent 10% Losses, Profit, 10% Residual, Tax Credit Pass Through