1. The Future of Tax Credit Rental Housing in Indiana Robert Vogt September 14, 2005

2. Where Are We Headed in Indiana? Interest rates are rising discouraging the flood of first time homebuyers Job opportunities are increasing Rentals are becoming an acceptable permanent housing alternative Occupancies are on the way up

3. Where Are the Opportunities? Where do we stand now? Where is the growth? Where is the supply? Where is the future opportunity?

4. Penetration Rate Calculation Comparison of existing Tax Credit units with the number of income-qualified renter households Provides macro view of Tax Credit market Higher the penetration rate, less likely area can support additional Tax Credit product (saturation)

5. Penetration Rate Calculation Analysis ignores Tax Credit government subsidized projects (preservation deals) Analysis ignores family versus senior units Project to 2010 to identify opportunities

6. Estimating Future Demand Estimate change in income-qualified renter households Source of data: HISTA (Household Income Size Tenure Age) –Cross tabulation of multiple variables –Current year estimates and 5-year projections 2005 - 2010 –Finer income bands designed for use in low-income projects $10,000 ranges up to $60,000 –More reliable demand estimates than traditional techniques Evident in analysis of elderly where most households are less than 3-person

7. Estimating Current Supply State lists (IHCDA web site) –Units in existing LIHTC properties –Government subsidized Tax Credit properties are lumped in with conventional Tax Credit Thorough field analysis needed to obtain exact supply numbers and verify LIHTC program participation

8. Qualified Income Range for Renter Households Methodology Qualified Income Range –2005 Income Limits –Max Income (60% 4-person max allowable income) –Min Income (50% 1-bedroom maximum rent) –35% Rent-to-Income Ratio For 2010, income range projections were adjusted to reflect increase in household income

9. Approximate Current Penetration Rates Higher estimated rates clustered in eastern/central Indiana Lower estimated rates in northwestern and southwestern Indiana Currently an estimated 10 Counties (10.9%) below 8.0% penetration

10. Approximate Current Penetration Rates

11. Highest/Lowest Penetration Rates Highest Franklin (49.1%) Blackford (47.2%) Ohio (47.2%) Rush (44.2%) Dekalb (42.3%) Lowest White (0.0%) Brown (0.0%) Spencer (0.0%) Daviess (2.3%) LaPorte (2.8%)

12. Renter Occupied Households Estimated Change (2005-2010)

13. Top 5 Counties Hamilton (20.1%) Hendricks (17.6%) Johnson (10.4%) Boone (10.3%) Hancock (10.2%) Bottom 5 Counties Fayette (-5.5%) Martin (-3.7%) Wabash (-3.6%) Perry (-3.4%) Rush (-3.1%)

14. Renter Income Qualified Households Estimated Change (2005-2010)

15. Top 5 Hamilton (20.8%) Hendricks (14.8%) Boone (10.9%) Whitley (8.8%) Johnson (8.0%) Bottom 5 Vermillion (-13.5%) Warren (-11.2%) Fountain (-10.6%) Perry (-10.0%) Fayette (-8.1%)

16. 3+ Person Renter Households Estimated Change (2005-2010)

17. Top 5 Counties Hendricks (21.1%) Hamilton (17.8%) Boone (12.0%) Johnson (10.1%) Hancock (10.1%) Bottom 5 Counties Martin (-8.7%) Union (-6.5%) Floyd (-6.4%) Fayette (-6.3%) Newton (-6.2%)

18. Renter Households Age 55+ Estimated Change (2005- 2010)

19. Top 5 Counties Hamilton (39.5%) Hendricks (32.4%) Brown (24.8%) Porter (24.0%) Crawford (23.9%) Bottom 5 Counties Perry (-2.8%) Fayette (0.8%) Benton (3.0%) Jay (4.0%) Martin (4.5%)

20. Approximate Future Penetration Rates (2010) Assumes no additional supply Assesses effect of income qualified household growth on current product supply levels Indicates potential for additional product

21. Approximate Future Penetration Rates (2010)

22. Highest Penetration Franklin (51.6%) Blackford (50.1%) Ohio (49.1%) Rush (47.4%) Dekalb (42.9%) Lowest Penetration Brown (0.0%) White (0.0%) Spencer (0.0%) Daviess (2.3%) LaPorte (2.8%)

23. Issues Does not differentiate between senior and family projects Does not evaluate quality of existing rental housing Does not consider affordability of other housing choices (including rental)

24. Issues Does not analyze site specific market areas Does not consider current occupancy rates Does not account for government subsidized Tax Credit units Does not evaluate impact of HCVs

25. For Additional Information Robert Vogt Vogt Williams & Bowen, LLC 869 W. Goodale Blvd. Columbus, OH 43212 www.vwbresearch.com 614.225.9500