1. 5.06.06 Confidential #5261633v1 Issues in Real Estate Transactions Involving Affordable Rental Housing For Urban Re-Development Stephanie M. M. Smith 500 Woodward Avenue Suite 3500 Detroit, MI 48226 313.965.8815 ssmith@clarkhill.com

2. 5.06.06 Confidential #5261633v1 FIRST, THE NOTION HERE IS NOT JUST TO GET THE JOB DONE, BUT TO REBUILD COMMUNITIES, LIVES AND RECONSTRUCT CULTURAL MORES AND NORMS. SECOND, THE LEGALITY OF STRUCTURING A DEAL CAN BE QUITE HARROWING TO SAY THE LEAST WITH VARIOUS ENTITY FORMATIONS AND LASAGNA FINANCING. THIRD, THE CLIENT MOST LIKELY WILL BE UNSOPHISTICATED IN UNDERSTANDING THE DEVELOPMENT PROCESS AND IS DRIVEN TO DEVELOP FROM AN EMOTIONAL STANDPOINT AND NOT MERELY AN ECONOMICAL STANDPOINT. THE ROLE OF A DEVELOPMENT ATTORNEY DIFFERS FROM A TRADITIONAL COMMERICAL REAL ESTATE ATTORNEY

3. 5.06.06 Confidential #5261633v1 1. Non-profit Organization 2. Joint Venture Partnership 3. Limited Dividend Housing Association Limited Partnership ESTABLISHING AND STRUCTURING THE VARIOUS LEGAL EXISTENCES OF THE ENTITY TO TAKE TITLE TO THE PROPERTY

4. 5.06.06 Confidential #5261633v1 Non-Profit Organization will form a Community Development Corporation (“CDC”), which allows the 501 (c) (3) organization to provide services to community for housing, jobs, and commercial space. The CDC may form a more discrete entity such as the Community Housing Development Organization (“CHDO”) for the sole process of developing affordable housing. Board members of the CDC consist of local residents who are generally not in the business of real estate development or finance. 1. Non-Profit Organization 1. NON-PROFIT ORGANIZATION

5. 5.06.06 Confidential #5261633v1 Generally, the CDC will form a joint venture partnership with a for-profit developer to increase the likelihood of success for financing and completing the project. Generally, a for-profit developer (“for-profit”) will be encouraged to joint venture with a CDC to achieve access/connection to the community. The CDC will maintain a 51% interest in the partnership and the for-profit will maintain a 49% interest in the partnership. 2. JOINT VENTURE PARTNERSHIP

6. 5.06.06 Confidential #5261633v1 The Joint Venture will agree to structure a limited dividend housing association limited partnership (“LDHA-LP”) to allow the partners to seek tax credit financing. The Non-Profit will form a for-profit wholly-owned subsidiary and the For-Profit will form a single-purpose entity, such as a limited liability company. These formed entities will act as the Co-General Partners in the LDHA-LP maintaining a.01% interest in the LDHA- LP. The Non-Profit will act as the Initial Limited Partner in the LDHA- LP. This entity will maintain a 99.99% interest in the LDHA-LP. 3. LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP

7. 5.06.06 Confidential #5261633v1 Maplewood LDHA-LP ( Non-Profit For-Profit Subsidiary- 51%) Maplewood Inc..005% Co-General Partner (For-Profit Single-Purpose Entity- 49%) Jam Maplewood, LLC.005% Co-General Partner (Non-Profit) Maplewood CDC 99.99% Initial Limited Partner THE LDHA-LP SCHEMATIC STRUCTURE

8. 5.06.06 Confidential #5261633v1 KEY ISSUES IN NEGOTIATING AND STRUCTURING THE PARTNERSHIP AGREEMENTS 1.Pre-Development Agreement 2. Limited Partnership Agreement

9. 5.06.06 Confidential #5261633v1 KEY CONCERNS: –Roles and Responsibilities for the Non-Profit and the For-Profit Partners –The Specifics of the Development Project –Terms and Conditions of the Financing Structure –Developer’s Fee Provision –Remedies/Liabilities Provision 1. PRE-DEVELOPMENT AGREEMENT

10. 5.06.06 Confidential #5261633v1 KEY CONCERNS: –The roles and responsibilities of the co-general partners as it relates to the Partnership –The Capital Contributions and Percentage of Interests –Powers, Restrictions, and Responsibilities –Distribution on Termination –Tax Matters The Co-General Partners are designated as tax matters partner of the partnership and shall engage in such undertakings as are required of the tax matters partner of the partnership as provided in regulations pursuant to Section 6231 of the Code 2. LIMITED PARTNERSHIP AGREEMENT

11. 5.06.06 Confidential #5261633v1 CONSTRUCTION AGREEMENT –Details the construction schedule, pay-ins, and eligible basis for getting tax credits MANAGEMENT/MARKETING AGREEMENT –Details the manner in which the premises are to be maintained in a manner suitable to the equity lenders and the governing state and local regulations MOST-NEGOTIATED THIRD PARTY AGREEMENTS

12. 5.06.06 Confidential #5261633v1 KNOW THE CONSUMER MARKET –Census data (population and income) existing services, market studies, financial proformas, target/market rent KNOW THE SUPPORT MARKET –Investor Support (traditional, government, foundations), government support, non-profit-support, residential association support What are the important sources and attached regulations (New Market Tax Credits, Historic Tax Credits, Community Development Block Grants) How to leverage one funding source with another How to effectively use debt Combination with familiar sources (i.e., Low Income Housing Tax Credits, HOME Funds, etc.) Using the Government: public improvements, architectural services, etc. THE PARTNERSHIP MISSION AND FINANCING

13. 5.06.06 Confidential #5261633v1 REVIEW AND NEGOTIATE THE LOAN DOCUMENTS FROM ALL POSSIBLE SOURCES OF FUNDING Tax Syndication Loans via:  Low-Income Housing Tax Credits  Historic Tax Preservation Credits  New Market Tax Credits Community Development Block Grants (“CDBG”) HOME Loans Private Bank Loans

14. 5.06.06 Confidential #5261633v1 REVIEW AND ENSURE REGULATORY DOCUMENTS ARE IN PLACE AND THAT ENTITY COMPLIES FULLY WITH ALL LOCAL LAWS AND REGULATIONS Title Work Environmental Reports Site Control Letters Site Plan Approvals Market Study Zoning Letter Non-Profit Status Letter

15. 5.06.06 Confidential #5261633v1 RE-EXAMINING THE PROJECT WITH THE OWNERSHIP ENTITY TO ENSURE ITS CAPABILITY OF MAINTAINING AN OWNERSHIP OR RENTAL COMMUNITY THROUGHOUT THE LIFE OF THE PROJECT UNDERSTAND THE EXIT STRATEGIES FOR THE VARIOUS FINANCING NEEDED TO FUND THE PROJECT.

16. 5.06.06 Confidential #5261633v1 Any Questions? Thank You Stephanie M. M. Smith 500 Woodward Avenue Suite 3500 Detroit, MI 48226 313.965.8815 ssmith@clarkhill.com