Maryland Regional Workforce Housing Fund

Leadership ForumJune 7, 2006

MARYLAND REGIONAL WORKFORCE HOUSING FUND (“MRWH”)

1. Enterprise: Background and Expertise

2. MRWH Fund: Opportunity and Need

3. MRWH Fund: Investment

4. MRWH Fund: Investment Process

5. MRWH Fund: Investment Benefits

6. MRWH Fund: Management Team

7. Next Steps

8. Example of an “Award Winning Community”

9. Contact Information

PRESENTATION AGENDA

Chosen by the 9 funders of the Phase I Market Assessment to oversee the creation and implementation of the Fund

Headquartered in Maryland, with extensive investment, development, and lending expertise in the local region

Products and services that address all needs related to affordable housing and community development capital and funding

• tax-credit equity• senior debt• mezzanine debt• grants

programmatic models and expertise

Works closely with local, state and federal elected officials and policymakers

ENTERPRISE: BACKGROUND AND EXPERIENCE

One of the leading advocates for policy in support of affordable and workforce housing and community development

Will ensure: continued community input deal outreach/sourcing in Fund’s footprint necessary “tools” for challenging deals

Investing in communities at the rate of approximately $1 billion a year

$6 billion invested in communities over the past 23 years, yielding more than 175,000 affordable homes

Catalyst for LIHTC legislation - the public-private model for affordable housing financing that is responsible for virtually all affordable multifamily housing being created today

Created/presently developing more than 4,500 homeownership and rental residences

for individuals and families of diverse income, age and culture

ENTERPRISE: BACKGROUND AND EXPERIENCE

2003, Governor Ehrlich created the Governor’s Commission on Housing Policy to address housing issues shortage of workforce housing need for initiatives to create sustainable communities

2004, Final report supported the creation of an equity Family of Funds workforce housing for people who cannot afford to live in the cities and

counties in which they work community revitalization initiatives to address the overwhelming need in

Maryland, Washington, D.C. and Northern Virginia

Low levels of supply and high levels of demand for new housing affordable to “working families” households earning 80% to 120% of the AMI high project costs faced by developers growing population upward pressure on housing prices and rents lack of innovative financing sources for developers

FUND OPPORTUNITY AND NEED

Maryland ranks second nationally in commuting times

More than one million new Marylanders are expected in the next 25 years

From 2000 to 2005: median home price in Maryland increased 102% to $363,125 median household income for four person families increased 17% to $77,938

From 1998 to 2005: MD average weekly earnings increased 4.1% annually (U.S. average - 3.9%) MD average house price increased 23.8% annually (U.S. average - 14.1%)

Maryland needs to increase net supply of housing by at least 27,500 units by 2010 to cover shortage in housing units projected

Statistics cited from: “Why Housing May Replace Healthcare as Our Region’s Leading Affordability Issue,” Anirban Basu, Sage Policy Group, Inc., March 15, 2006 and the U.S. Census Bureau website, http://www.census.gov/hhes/income/4person.html

FUND OPPORTUNITY AND NEED

Developments that achieve double bottom line objectives: risk-adjusted market rates-of-return for investors (the first bottom line) measurable job and wealth creation, and community revitalization for

community stakeholders (the second bottom line)

Fund Size: $100 million

Individual Investment: $2 million to $20 million

Total Development Cost: $10 million to $50 million

Development Type: For-sale and rental housing targeted at working residents Household incomes in the 80%-120% range of AMI

• single family homes• condominiums• town homes• live/work lofts• apartments

New construction, rehabilitation, and adaptive reuse

THE INVESTMENT

Location: Low-moderate and mixed-income communities Urban, suburban, and rural areas Maryland, Washington D.C. and Northern Virginia

Structure: Equity, preferred equity, and mezzanine debt Targeted internal rate of return in the mid-teens Preferred distributions to Investors Significant percentage of the “at risk” capital required in qualifying

developments Projected term of 3 to 5 years

THE INVESTMENT

Investment Sourcing: Enterprise offices in Baltimore, Columbia and Washington, D.C. Substantial Developer Relationships Vast Lender Network Industry Association Memberships Investor Referrals

Rigorous Investment Underwriting: Executive Summary Economic/Social Impact Analysis Development Feasibility/Risk Analysis Market and Demographic Analysis Key Party Analysis – Credit and Experience Consistency with Fund Underwriting Guidelines Conclusions/Recommendations

INVESTMENT PROCESS

Investment Approval and Performance MonitoringCommittee comprised of 6 Enterprise senior executives: Development Feasibility Consistency with Fund Mission Minimum Yield Thresholds Community Impact LMI Investment Area Community Support

Exception Approval and Performance ReviewCommittee comprised of investors holding $10 million or greater: Compliance with Overall Fund Parameters Compliance with Investment Parameter Targets Periodic Reporting and Review

INVESTMENT PROCESS

Economic Benefits Deliver market rates of return in the mid-teens Priority return to investors Diversified portfolio within a well-capitalized fund Partnerships with experienced real estate underwriters and developers

Social Benefits Foster vibrant and healthy communities by increasing the jobs/workforce

housing balance Effectuate economically viable developments to address the

overwhelming need for workforce housing and bolster community revitalization and stabilization

Encourage the integration of mixed-income and mixed-use neighborhoods

Positive Public Relations Public recognition of participation in prominent regional investment

vehicle Maximize the use of existing resources and reduce development pressure

on less urbanized areas Significant public-private partnerships Positive Community Reinvestment Act consideration

INVESTMENT BENEFITS

Charlie Werhane, Vice Chairman and Chief Operations OfficerEnterprise Community InvestmentCapital Raising, Fund Oversight

Chickie Grayson, PresidentEnterprise Homes, Inc.Capital Raising, Development Expertise

Joe Wesolowski, Senior Vice PresidentEnterprise Community InvestmentCapital Raising, Asset Management, Operations

Christine Madigan, Vice PresidentEnterprise Homes, Inc.Capital Raising, Fund Strategy, Deal Structuring, Oversight

Edie Loughlin, DirectorEnterprise Community InvestmentDeal Sourcing, Deal Structuring, Deal Closing

ENTERPRISE FUND MANAGEMENT TEAM

Finalize MRWH Fund legal documents

Finalize MRWH Fund marketing materials

Develop investment pipeline

Obtain investor commitments

First close of MRWH Fund

Close of initial workforce housing development investments

NEXT STEPS

WATERVIEW Developed by a partnership between Enterprise Homes, Inc. and a private, local builder

Located in Middle River, Baltimore County, MD, on a 63 acre site that was a former failed FHA apartment project razed by the County

New urbanist street plan; 175 detached, homeownership units; 100,000 sf. community shopping center, community green space

$48 million Total Development Cost

Equity/Mezzanine: $1 million

Greater than 15% ROE realized to date

The Results: Recognized by Baltimore Magazine as one

of the “Best Places To Live” in 2005 Homebuilders Association of Maryland,

Award of Excellence, Project of the Year (2003)

Strong catalyst for redevelopment in the area

Homeownership for the County’s Workforce offering units affordable to those in the 80% - 150% AMI range, with the majority in the 80% - 115% range.

AWARD WINNING COMMUNITY EXAMPLE

THANK YOU

Christine MadiganVice PresidentEnterprise410-332-7400cmadigan@enterprisehomes.com

Joe WesolowskiSenior Vice PresidentEnterprise410-772-2512jwesolowski@enterprisecommunity.com