1. Marc Jahr, NYCHDC: A Program for Preservation NALHFA 2011 Educational Conference, San Francisco, CA May 20, 2011 Source: Norman García, HDC Staff

2.  The most ambitious municipal housing plan ever undertaken  11 years (2004 – 2014)  $8.5 Billion (not including bonds)  HDC’s ability to issue bonds is harnessed to the plan, and its balance sheet leveraged  Create and Preserve 165,000 units of affordable housing  Serving 500,000 low-income and middle- class New Yorkers The New Housing Marketplace Plan (2003 – 2014) 2

3. Issue tax-exempt or taxable bonds to finance multi-family senior mortgages. Use unrestricted corporate reserves, created from net income and other issuance related activities, as low-interest subordinate mortgages. Innovate and adapt development programs. NYCHA Federalization Program (20,139 Units) Low-Income Affordable Marketplace Program (22,531 Units) New Housing Opportunities Program (5,223 Units) Mixed Income Program (50/30/20) (1,980 Units) Mitchell-Lama Preservation Program (20,270 Units)  AMI Served: <60% (Family of 4 - $47,500) Average public housing family income of $23,187.  City and State-built multi-family rental public housing.  Mixed-finance rehabilitation using Taxable and Tax-exempt bonds.  As of right 4% Federal Low Income Housing Tax Credits.  Leverage American Recovery and Reinvestment Act Funds to “federalize” public housing, providing access to annual federal operating subsidies and significantly decreasing NYCHA’s operating deficit.  AMI Served: <60% (Family of 4 - $47,500)  Multi-family rental housing affordable to low income households.  Tax-exempt bonds (variable or fixed rate).  As of right 4% Federal Low Income Housing Tax Credits.  HDC Subordinate loans of $55,000/unit.  AMI Served: 80-130%, as well as unrestricted market units. (Family of 4 - $63,350-$102,950)  Multi-family rental housing affordable to moderate and middle income households.  Taxable bonds (variable or fixed rate).  HDC Subordinate loans of $65,000- $85,000/unit.  AMI Served: 40-130%, as well as unrestricted market units. (Family of 4 - $31,700-$102,950)  Multi-family rental housing- 50% of units at market rents; 30% affordable to middle income and 20% low income households.  Tax-exempt bonds (typically variable rate).  As of right 4% Federal Low Income Housing Tax Credits on low income units.  HDC Subordinate loans of $65,000- $85,000 per low and middle income unit.  AMI Served: ~100% (Family of 4 - $79,200)  Multi-family rental or cooperative housing affordable to middle income households  Taxable or tax-exempt bonds (variable or fixed rate)  Senior debt restructured at lower rate. Subordinate debt restructured at 0%.  Low interest repair loans available to address capital needs.  Extended affordability and commitment to stay in the Mitchell- Lama program for a minimum of 10- 15 years HDC Affordable Housing Programs 3

4. Reasons for Preservation  More economical to preserve than to build new  Less vacant land available for new construction  New capital needed to modernize  Funding for system upgrades  Capital resources needed for modernization  Services needed for tenancy  Address cases of poor management and neglect  Preserve asset value of affordable financing 4

5. Challenges Facing Preservation  Capital Needs  Restricted Income  Tight Budgets/Cash-Flows  Inadequate Reserves  Statutory & Regulatory Requirements  Loss/Expiration of Subsidies  Cancellation of Debt Issues  Expiring Tax Benefits  Syndicators/Investors (Limited Partners) want to Exit  Market Incentives to Leave Affordable Housing Programs 5

6. HDC Preservation Initiatives  LAMP Preservation Program (including HUD-distressed and/or Section 8 properties)  202 Refinancing Program  Mitchell-Lama Preservation Program and Section 236 Decoupling  NYCHA Federalization  HUD foreclosed properties Units by Program LAMP 9,765 NEWHOP 201 M-L 20,270 SECTION 8 791 31,027 *as of 05-09-2011 6

7. LAMP Preservation Program  LAMP Developments:168  Units:22,531  Tax-exempt Volume Bond Cap:$2,526,505,000  Taxable Bond/Other Financing:$0,056,295,000  Senior Loan Debt:$2,582,800,000  Subordinate Loan Debt:$0,496,840,000  Key Program Principles:  Funds acquisition and moderate rehabilitation of existing occupied projects, many with Project Based Section 8 HAP contracts.  Uses tax-exempt bonds to leverage 4% LIHTC equity.  Project financing must support adequate rehabilitation budget in addition to proposed acquisition price  Rehab scope reviewed by HDC to ensure adequacy  Permanent mortgage insurance provided by Sonyma, REMIC or enhancement from a financial institution or GSEs The Plaza Residences, Brooklyn NY 7

8. Section 202 Refinancing Program  LAMP Developments:19  Units:3,184  Tax-exempt Volume Bond Cap:$247,150,000  Taxable Bond/Other Financing:$001,410,000  Senior Loan Debt:$248,560,000  Subordinate Loan Debt:$000,000,000  Partners – HUD, HPD, Financial Institutions, Syndicators/Investors, Developers  Key Program Principles  Existing Section 8 HAP Contracts extended. Rent increases sought if necessary  Underwrite to full Section 8 Contract rents.  Acquisition by new LP to leverage 4% LIHTC equity to fund capital repairs and upgrades  Seller Note used to boost Acquisition basis  Offers lower tax exempt interest rate on 1 st Mortgage to reduce monthly debt service and fund additional ongoing services for residents  Permanent mortgage insurance from SONYMA, REMIC, or long-term credit enhancement from financial institutions or GSEs. Linden Blvd Apts., Queens NY 8

9.  Mitchell-Lama Developments:41  Units:20,270  Tax-exempt Volume Bond Cap:$154,400,000  Taxable Bond/Other Financing:$568,949,468  Senior Loan Debt:$592,807,241  Subordinate Loan Debt:$281,188,502  Partners – HUD, HPD, Financial Institutions, Syndicators/Investors, Developers  Key Program Principles  Aimed at preserving the aging Mitchell Lama portfolio as an important affordable middle-income housing resource  Restructure existing HDC 1 st and 2 nd Mortgages to extend term, reduce rate and leverage additional loan proceeds  Owner must stay in the Mitchell Lama program for a minimum of 15 additional years to maintain affordability  Additional loan proceeds used to fund capital repairs and reserves  2 nd mortgages restructured from surplus cash notes to interest-only balloon payments after 1 st mortgage is fully amortized Mitchell-Lama Preservation Program Big Six Towers, Queens NY 9

10. Year-15 Preservation Program  Year-15 Developments:12  Units:267  Tax-exempt Volume Bond Cap:$N/A  Taxable Bond/Other Financing:$N/A  Senior Loan Debt:$02,095,511  Subordinate Loan Debt:$  Partners – HUD, HPD, Financial Institutions, Syndicators/Investors, Developers  Key Program Principles  The City has used LIHTC to develop approximately 30,000 units since the late 1980's. the Year-15 Program has repositioned 55 projects totaling over 2,800 units since fiscal year 2008. Approximately 10,000 units have reached or will reach year 16 by 2015.  Program purpose is to preserve the long-term affordability and viability of Year-15 projects.  Owners must agree to extend the original affordability restrictions by a minimum of 15 additional years.  HPD’s preservation strategies include full residential tax exemptions, up to $15,000 per unit in funding for capital work and project reserves, modifications of existing debt, rent restructuring, and management changes.  As a subcomponent of the existing Year-15 Program, HPD proposes to resyndicate Low Income Housing Tax Credits partnering city capital subsidy with 4% Tax Credit Equity to provide additional funding in situations where there is a substantial scope of work that might otherwise exceed the standard Year 15 subsidy maximum of $15,000 per unit 10

11.  NYCHA Developments:21  Units:20,139  Tax-exempt Loan:$0,477,000,000  Taxable Loan:$000,3,000,000  Tax Credit Equity:$0,209,242,146  NYCHA Loan (Non-ARRA Funds):$0,463,887,526  NYCHA ARRA Loan:$0,100,000,000  Total Sources:$1,253,129,672  Partners – HUD, HPD, Financial Institutions, Syndicators/Investors, Developers  Key Program Principles  A Mixed Finance Transaction that enabled the NYC Housing Authority to qualify for $65M in annual federal public housing subsidies  Utilized a unique circular financing structure that maximized LIHTC without overleveraging the public housing developments with permanent debt  Used HDC’s strong AA-rated Open Indenture to issue bonds  Leveraged $200M in 4% LIHTC via Citi Community Capital  Funded physical repairs, upgrades and significant reserve escrows for more than 20,000 units of public housing NYCHA Federalization Castle Hill, Bronx NY 11

12.  Preserve 1,800 units of HUD-financed housing and extend the affordability period.  Program will ensure that the physical and financial needs of each property are addressed while maintaining the City’s housing preservation goals  HDC acquired a portfolio of discounted HUD notes on 10 properties in Manhattan, the Bronx and Brooklyn  Transaction enabled the funding of a Revolving Repair Fund (RRF) from a portion of the mortgage revenue  Immediate repair needs funded from the RRF  Longer-term repair needs funded via refinancing  4 of 10 properties, with 683 units, have been refinanced to-date HPD, HUD and HDC Collaboration Note Sale 12

13. Neighborhood Restore (NR) Privatizing Acquisition and Disposition  Neighborhood Restore HDFC A.Structure o Incorporated in 1999 o A collaboration of HPD, LISC and Enterprise o LISC and Enterprise select the Board of Directors:  Harold Shultz (President), Citizen’s Housing and Planning Council  Ms. Bernell Grier (Vice President), Neighborhood Housing Services  Ms. Denise Scott (Secretary), Local Initiatives Support Corporation  Ms. Lydia Tom (Treasurer), Enterprise Community Partners  Ms. Diane Borradaile, The Low Income Investment Fund  Mr. Jack Greene, The Community Preservation Corporation  Ms. Holly Leicht, NYC Dept. of Housing Preservation and Development  Mr. Joseph F. Reilly, Community Development Trust  Mr. James Buckley, University Neighborhood Housing Program  Ms. Akiko Mitsui, The Vanguard Group o HPD Capitalizes Neighborhood Restore o Annual administrative budget - $700,000 o Annual program budget - $2,000,000 o Neighborhood Restore sells properties at $2,000/unit partially supporting its operating budget 13

14.  Neighborhood Restore HDFC B.Roles and Responsibilities ( Bridging the Gap)  City takes title to distressed properties through o in rem proceedings and then instantly transfers o property to NR  Selects qualified developers through RFQ process o 2010 – 80 applications submitted; 50 qualified  Assigns qualified developers to properties o Work with tenants o Address all hazardous and emergency conditions with NR funding o Assemble take-out construction and permanent financing  Since 1999, over 440 properties, containing 5,141 units of housing have been transferred to Neighborhood Restore; in turn 367 properties, containing 4,600 units have been transferred to nonprofit and for-profit owners  Sources of financing have been divided among HPD PLP Program, Revised Tenant Interim Lease Program and NYS Affordable Housing Corporate Program o (Homeownership) Neighborhood Restore (NR) 14

15. The New Housing Marketplace The Opportunities Within the Crisis – Proactive Preservation Then (2004-2008)Now Challenges Rising rents and sales prices Displacement of tenants Increasing levels of market rate development Diminishing availability of land Financial distress in multi-family stock Diminishing availability and increased cost of credit Falling private investment Rising foreclosures Increasing signs of physical deterioration Opportunities/Tools Cross-subsidizing mixed income housing Inclusionary zoning Rezoning under-utilized land Reclaiming formerly assisted stock Preserving existing stock Investing in new communities 15

16. HPD Proactive Preservation Initiative  Stabilize and create new affordable housing out of buildings in financial and physical distress  Goal is to restructure privately owned rent stabilized buildings in distress and gain affordable housing  This initiative marries HPD’s roles as code enforcer and affordable housing finance agency  3 broad strategies: o aggressive outreach to lenders and owners o work with HDC and private sector partners to restructure debt o work with federal partners to find new resources 16

17. HPD Proactive Preservation Initiative  The Ocelot Portfolio  Overleveraged, Multi-family Rental Buildings  Collaborative effort between Fannie Mae, HPD and HDC  Transfer title of 19 distressed developments with 521 units to a responsible owner  HDC restructures debt of three Ocelot buildings in the Morris Heights section of the Bronx, preserving a total of 116 low-income units  Finance Note Sale – 1520 Sedgwick Avenue (“The Home of Hip Hop”)  Acquire Mezzanine Debt – Milbank Portfolio: 10 buildings, 548 Units, buy $3 million in mezzanine debt for $1 from Deutsche Bank  Borinquen Court: HPD exercises right of first refusal to acquire HUD foreclosed, 145- unit, Section 202; HDC acquires for $1 and instantly transfers title to qualified nonprofit 17

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