1. GOVERNOR’S HOUSING CONFERENCE 2013 Creative Financing Sources/Structures to Produce Affordable Housing

2. Limited Financing Tools for “Traditional” Affordable Housing  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 PHAs & Affordable Housing Providers Have Limited Universe of Tools

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 HistoricallyToday 6500+ VouchersBudget Cuts Have Lowered Payment Standards Capital Fund ProgramBreak-Even Subsidy HistoricallyToday Reliable Funding PoolRequired Subsidy Has Skyrocketed to 2x/3x. Greater Need, Less Resources!

4. Paradigm Shift: Blend/Shake/Mix  Our Challenge is to Creatively Leverage Traditional Tools with Market Driven Debt and Equity 1. 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? 2. 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! 3. 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  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 Chevy Chase LakesChevy Chase Lakes 2.0 # UnitsAMI Level 47120% 2150%

6. Case Study: RAD at Elizabeth House  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 Elizabeth House Assemble the Entire Block (375K Sqft of FAR)

7. Case Study: Acquisition Platform  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 Traditional Public Financing Tools Access Capital Markets & Private Investors