1. New York City Affordable Housing Overview Massey Knakal Multifamily Housing Summit November 16, 2011 1

2. Affordable Housing: Who needs it?New York is a city of renters- 2 out of 3 households rent compared to 1 out of 3 nationwide. The need foraffordable housing remains strong, especially since the economic downturn. Photos St. Anns Avenue and Eagle Avenue between 156th and 159th Streets, Bronx Affordable housing supply doesnt meet demand Low vacancy rate (2.91%); Continuous housing emergency since 1974 More than half of renter households pay more than 30% of income towards rent; About pay more than half of their income toward rent Aging housing stock Close to three-fifths of the housing units in the City were built before 1947 Threatens neighborhood decline potentially impacting property values and investmentOngoing investment in affordable multi-family housing is needed to keep pace with growingdemand for new construction and to maintain existing stock through preservation financing andenforcement of the housing maintenance code. 2Data Sources: U.S. Census Bureau, 2006-2008 American Community Survey and the 2008 New York City Housing and Vacancy Survey, HUD

3. Affordable Housing: The New Housing Marketplace PlanThe New Housing Marketplace Plan is the most ambitious and extensive affordable housing planin the nation, creating and preserving 165,000 units of affordable housing by the end of 2014. 124,510 Units To Date 67% Preservation; 33% New Construction 80% of the units are targeted to households earning under 80% of AMI 75% of units developed under the Plan will be rental housing, 25% homeownership $18 B Total Development Cost to Date 133,700 Jobs to Date 3

4. Impact of the Market Crash on the NHMPThe crash in the market in late 2008 changed the landscape of affordable housing. Where HPDand the NHMP were previously pressured by and reliant on the strength of the market, thecrash required a paradigm shift in the policies, programs, and operations of the agency. 2004-2008 2009-Today Challenges Rising rents and sales prices Financial distress in multi- Displacement of tenants family stock Increasing levels of market Diminishing availability and rate development increased cost of credit Diminishing availability of Falling private investment land Rising foreclosures Increasing signs of physical deterioration Opportunities/Tools Cross-subsidizing mixed Reclaiming formerly assisted income housing stock Inclusionary zoning Preserving existing stock Rezoning under-utilized land Investing in new communities 4

5. New York City At-Risk Multifamily HousingNew York City has witnessed an increase in physical and financial distress among multifamilyrental buildings. The decline in the economy and housing market over the past few years has led to disinvestment and rising distress in both neighborhoods and the multi-family housing stock across the city. In addition to the softening housing market, this is a result of: A pattern of speculative investment during the boom years in NYC rent-stabilized multifamily properties. Investors bought properties premised on unrealistic assumptions related to tenant turnover and income growth. Flawed appraisals were used to support these transactions. Lenders accepted borrowers unrealistic underwriting. HPD analysis has found that a wide range of banks from local community lenders to national institutions hold non-performing loans often backed by collateral that is suffering from deferred maintenance and, in some cases, severe physical deterioration. 5Photos from Ocelot portfolio.

6. New York City At-Risk Multifamily HousingIn cooperation with community advocates, elected officials and other government agencies, theCity has developed a variety of tools to address the issue of at-risk multifamily housing. Proactive Preservation Initiative City-wide data-driven effort to identify and stabilize over 500 at-risk multi-family buildings per year New Proactive Enforcement Bureau to conduct roof-to-cellar inspections Updated AEP and ERP legislation to strengthen enforcement tools for uncooperative owners $750 million to assist responsible owners purchase notes and/or properties in addition to making needed repairs. Multifamily Preservation Program Qualified Developer List- A rolling RFQ has been issued to identify a list of qualified developers (Qualified Developers) who have the experience, financial resources, and capacity required to rehabilitate, maintain, and manage multifamily housing. Fannie Mae Multifamily First Look- Fannie Mae will offer at-risk multifamily properties to Multifamily Preservation Program Qualified Developers in a controlled bidding process At-Risk Multifamily Building Data Sharing Coordinated at-risk building data-sharing and disposition strategies with HDC, HCR, and HUD Coordination with UNHP and Building Indicator Project (BIP) data to identify at-risk buildings Quarterly report on housing quality data for at-risk multifamily buildings with the FDIC New York 6 Region Office and the NY State Banking Department

7. Weathering the Budget Storm: HPD Vulnerabilities NHMP Vulnerabilities: HPD has been able to stay on target despite City capital cuts, primarily because of a greater contribution of HDC reserves to the Plan. The HPD Capital Budget totals $1.5B through the end of the NHMP. HPD Capital Budget FY12 - FY14 City Capital Federal funding supports: Reso A HOME 10% 421a HOME funding supports approximately 5,000 of the remaining Plan units. 421a Reso A HOME funds are targeted for developments with the most vulnerable 11% residents including Supportive Housing and Low Income Rental Program City Capital units. 48% Potential cuts to Section 8 funding will also impact underwriting for projects. HOME 31% HPD Operations Vulnerabilities: Federal funding makes up 85% of HPDs $659 million budget; federal cuts threaten Plan completion and core services. HPD Budget by Source Other City 12% City State Federal funding supports: 3% In FY11, over 678,000 code inspections for conditions such as lack of heat and State CDBG 0% Other Federal Other hot water, lead paint, bed bugs, etc. CDBG Correction of almost 16,000 emergency violations, addressing immediate health 23% and safety conditions affecting tens of thousands of New Yorkers. About 14,000 annual court cases to prosecute landlords who fail to maintain their Other Federal buildings in acceptable condition. 7 62%

8. Beyond The New Housing Marketplace PlanWhile HPDs 10-year plan is bold and highly impactful, we will pursue additional opportunities over thecoming year to reach beyond the NHMP. These include: Expand the supply of affordable housing beyond the 165,000 New, creative financing for distressed portfolios Find new resources additional city land; FAR/air rights Explore new housing models Define and pilot new models for small households (e.g. micro or shared housing) Expand housing and affordability through collaboration Pursue new development models with NYCHA Find new state/local preservation opportunities Better serve at-risk populations Expand production of supportive housing Find opportunities to better leverage subsidies Update shelter policies 8