1. What’s Old is New: Preservation Projects Amy Rowland, VP of Real Estate Development – Mercy Housing Mountain Plains Region Housing Innovation Marketplace January 25, 2011

2. 2 Founded in 1981 by the Sisters of Mercy of Omaha as a response to the need for affordable housing Currently active nonprofit developer/owner in 16 states Works from 5 Geographic Business Centers across US More than 38,000 homes developed nationwide, serving over 130,000 people Emphasis on provision of resident services Denver-based national corporate office Mercy Housing Mountain Plains covers CO, AZ, UT, SD and NE

3. Mercy Housing - LIHTC Properties 3 Crestview VillageCrestview Village Western ManorWestern Manor Northglen

4. Crestview Village LaVista, NE 4 154 units (2 sites) 23 units are Section 8 HUD 236 Family rental Acquired in 1996/Built in 1971 Minor rehab in 1996 One story 1 bedrooms units Two story 2,3 & 4 bedroom townhomes Upgrades: $35k/unit  New Community Building (3,900 SF)

5. 5 82 units 78 units w/ Section 8 HUD 236 Family rental Acquired in 1995/Built in 1973 Has never undergone a major rehab Upgrades: $37k/unit  New Community Building (2,500 SF)  New Entry Porches Western Manor Lincoln, NE

6. 6 60 units 12 units are Section 8 HUD 236 Family rental Acquired in 1995/Built in 1970 Has never undergone a major rehab Upgrades: $40k/unit  New Community Building (2,500 SF)  4 fully-accessible units  new siding & decks Northglen Lincoln, NE

7. 7 Resident Services currently take place in a 1,000 SF end unit at Crestview The Community Buildings will house management and leasing activities, restrooms, a business center and a community room for activities such as crafts, after school programs, and life building classes. At Western Manor, 50 out of 115 residents participated in an onsite activity or class in July 2009. New Community Buildings Western Manor

8. Crestview Community Building 8

9. Western Manor - Built 1972 7% HUD 236 Mortgage maturing August 1, 2013 Mercy Housing acquired in 1995 w/ $1.4M LIHPHRA Grant Crestview – Built 1970 &’71 8.5% HUD 236 Mortgage maturing February 1, 2012 Mercy Housing acquired in 1996 w/ $4.7M LIHPHRA Grant Northglen – Built 1970 7.5% HUD 236 Mortgage maturing August 1, 2011 Mercy Housing acquired in 1995 w/ $1.07M LIHPHRA Grant 9 Existing Financing

10. Critical Rehabilitation Needs Depleted Reserves Negative Cash Flow Tax Credit Availability – 2008 – 2010 Disaster Credits – Tax Credit Assistance Program (TCAP) Prepaying HUD loan prior to loan maturity qualified non-subsidized residents to access enhanced vouchers. 10 Refinancing Urgency

11. Sources: ANB First $2,147,000 LP Equity $6,736,000 Seller’s Note $4,910,000 MHMP Loan $585,000 Existing Reserves $246,000 Deferred Fee $121,000 Total Sources$14,745,000 Uses: Acquisition$5,200,000 Rehab Costs$5,936,000 Design/Eng $293,000 Financing Fees $521,000 Other Costs $615,000 Developer Fee $972,000 Relocation $393,000 Reserves $815,000 Total Uses $14,745,000 11 Sources & Uses Crestview Village

12. Collective Financing Sources 12

13. HUD Regulations LIHTC Requirements Major Issues – Owner Distribution limitation of LIHPHRA makes repayment of Seller Notes, Investor Fees and Deferred Developer Fees impossible – HUD decision-making process vs. critical LIHTC and TCAP deadlines 13 Conflicts between HUD Programs and Tax Credit Structure Enhanced Voucher Saga TCAP Deadlines

14. Enhanced Vouchers Covers tenants without PB Vouchers Complicated, not like Section 8 Vouchers No local experience at HA’s Timing problems with local receipt of vouchers vs. our HUD approvals Result – minority of tenants will be able to use vouchers to stay in our projects, which was a major intent of our restructuring 14

15. Lessons Learned Perseverance & tenacity are required - patience will not be rewarded Hire a lawyer with HUD- experience early (DC-based) 1+1+1 = 3! Beware assumptions re: qualified tenants Asset Mgmt. tip - Keep on top of allowable rent increases for HUD deals 15