New Brookhill Q&A v 11-3-2020

New Brookhill Overview and Q&A

Quick overview of Brookhill Village?

1. How many units are currently occupied?

2. Approx. how many residents live there now in total?

3. Approx. how many residents are children?

4. How big is Brookhill Village?

5. How big is New Brookhill?

6. How long is the new Ground Lease?

7. Can the current buildings remain on the site?

8. What is needed to move forward:

135 www.NewBrookhill.com 261 76 37 acres 16 acres October 31, 2049 No $10MM in GAP funds and finalize capital stack.

What is the plan for New Brookhill? New Brookhill maintains affordability and keeps the legacy of the historic Brookhill Village community intact in a new mixed-income community. It will contain 324 apartment units in 3-story flats and 2-story townhomes with market-rate amenities on 16 acres of the current Brookhill Village site. Of these, half (162) will be affordable, including 65 units at 30% AMI, 39 at 60% AMI and 58 at 80% AMI. How long will these units be “affordable�? These units will be affordable for approximately 27 years, until the ground lease expires Oct 31, 2049. The HTF RFP calls for a minimum of 20 years of affordability.

What about the current tenants at Brookhill? The plan demonstrates that we can redevelop New Brookhill without any off-site displacement due to construction. Current residents will have first priority to apply. There will be units available for all existing tenants who qualify and who wish to live in New Brookhill.

What is the current financing structure (capital stack) and the request for public investment for New Brookhill?

Source Type of Financing Amount Construction/Senior Private Financing* Debt 47,000,000 Public/Private GAP Financing** Mezzanine Debt 10,000,000 City of Charlotte Housing Trust Fund (HTF)** Loan 3,000,000 Developer Equity - Deferred Developer Fee Loan 1,960,000 Developer Contribution - Uncompensated Land Value*** Contribution 22,120,000 Total 84,080,000 * The current executed Senior Debt Term Sheet is a construction loan that converts to a permanent loan with a 10 yr term/30 yr amort at 10-Yr T Swap rate plus 300 bps (Minimum of 3.875%). Currently modeled with a 17 yr amortization and a 4.25% rate.

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** The public/private funding needed to fill the GAP in the current capital stack. *** This value is based on a MAI appraisal by Stout Advisory for others.

Why doesn’t New Brookhill use HUD financing or LIHTC Tax Credit equity? We tried! The details of the Federal Tax law have requirements for the issuance of tax credits that the underlying ground lease cannot meet. The primary advantage of HUD financing is the extended (40 year) loan term, which cannot be utilized given the term of the ground lease. Almost all affordable housing lenders are geared to LITHC-centric financing and their lending products are rigid so as to provide LIHTC compliance. Consequently, New Brookhill needs to be underwritten and financed as a market rate deal that supports 50% affordable units rather than an affordable deal that includes market rate units.

Does the developer have any “skin in the game”? Yes. The developer has spent over $350,000 out-of-pocket to date directly to make New Brookhill happen as planned and is deferring $1.96MM in development fees. This is in addition to the $22.1+MM discounted valuation of the leasehold interest and the foregone profits that could be derived from developing New Brookhill as a market rate project.

What happens if Public/Private GAP financing IS secured? With public support, the path forward for New Brookhill as a true testament to Charlotte’s commitment to affordable housing is clear and doable. The project timeline calls for immediate start of permitting and construction. A phased construction plan will ensure that current residents are not displaced from the Brookhill Village site during construction. With public support, New Brookhill offers a path forward for working families instead of a push out.

What happens if Public/Private GAP financing IS NOT secured? Without public support, multiple financial and legal forces and deadlines will drive market-rate development at New Brookhill. In this undesirable scenario, the current Brookhill Village residents will need to find alternative housing quickly. The question isn’t whether Brookhill Village will get re-developed and New Brookhill will get built, but rather… who will live there? The Developer is doing all it can to help. The final decision is up to Charlotte leaders.

What is the status of the ground lease? Tom Hendrickson, through Brookhill Land Lease Ventures LLC (BLLV), negotiated a new lease with Brookhill Land, LLC (fee simple property owner) until October 31, 2049, and removed the legal obstacles by getting agreements with ALL prior parties, including the US Attorney & CMPD, resulting in dismissal of ALL State and Federal actions. With clear title to the Ground Lease, BLLV has signed an agreement with New Brookhill, LLC for the ground lease for New Brookhill until October 31, 2049.

What does the US Attorney Settlement Agreement require? Hendrickson facilitated and signed the Settlement Agreement with the US Attorney’s Office that requires BLLV to “take commercially reasonable actions”, “subject to procurement of public GAP funding and other New Brookhill Q&A www.NewBrookhill.com 2

necessary development financing and approvals for the Project”. Regardless of the approval of New Brookhill, the Settlement Agreement further requires BLLV to “Demolish the substandard housing units currently located on the Property as soon as practicable.”

Does the development team have the experience to build this project? Led by Tom Hendrickson and Pat Garrett, New Brookhill is backed by a stellar team that is fully capable of executing on this opportunity and making New Brookhill a renewed, vibrant community on the Brookhill Village site. Team overview is below and resumes can be found at www.NewBrookhill.com. New Brookhill is not, and cannot be, a LIHTC deal, but we have tax credit experience on our team. The reason that Brookhill Village has not been successfully tackled by any other development team, affordable or market, in the past is not because of its lack of attention, notoriety or exposure to the development community. It is because of the Federal and State legal complications and corresponding financial complexity compounded by the lack of conformity to standard LIHTC rules, all exacerbated by the difficulty to envision a solution as presented now by the New Brookhill team. The New Brookhill team has legal, financial, community relations, affordable, planning, design, development, construction and property/asset management experience on the team that are combining their talents and expertise to present this unique opportunity to Charlotte leaders to prove that #BrookhillMatters.

• Tom Hendrickson is a non-practicing attorney and entrepreneur who has a successful track record of assembling teams to create, implement and solve large-scale complex problems and projects, including: founding a bank (North State Bank with +/- $900MM in assets); launching the re-development of Raleigh’s Glenwood South district; starting, running for 10 years and selling to a public company a civil and environmental engineering company; assembly, visioning, pre-development and entitlement work for a 1,000+ acre, $6,000MM+ mixed-use sustainable design development project; acquisition, renovation/re-development, financing, management and sole ownership of multiple buildings, including a historic 12-story office building in downtown Raleigh and a 163-unit apartment project in New Bern.

• Pat Garrett is a nationally recognized affordable housing expert and leader who has decades of affordable housing experience as President of CharlotteMecklenburg Housing Partnership, Inc (CMHP). Under her leadership CMHP revitalized numerous neighborhoods and produced over 2,000 affordable housing units and was responsible for the redevelopment of the Double Oak Community, now known as Bright Walk.

• Natasha Fowler, formerly of CMHP and Laurel Street Residential, has managed over $160MM in assets and over 13 years of asset and project management experience involving over 3,000 units.

• Shook Kelley is leading the planning, architecture, and design efforts. At the forefront the South End redevelopment efforts, they have produced over 3,000 multifamily units across the country and numerous projects locally for CMHP. • WeaverCooke is a trusted construction partner who has built over 12,750 units of affordable housing in North Carolina.

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• • • • • •

S.L. Nussbaum will add New Brookhill to their existing 26,262 units under management across the Southeast.

Stanley Watkins, Tracy Russ, Alvin Jacobs, Ricky Fisher and Bobbie Fisher are key advisors for New Brookhill.

Cole Jenest & Stone is leading the civil engineering efforts for the redevelopment of Brookhill Village.

Jeff Brown/Moore & VanAllen is lead development and entitlement counsel, with years of local experience.

Mary Nash Rusher & Benton Blaine/McGuire Woods are lead public finance counsel.

William B. (Buddy) Kirk/Kirk Palmer & Thigpen is lead real estate and general counsel.

What has been accomplished to date?

Predevelopment Accomplishments: MAI Appraisal: We received a final Lender-Ordered As-Completed and As-Stabilized MAI Appraisal. The appraisal indicates an As-Stabilized Value of $69MM and supports our requested loan.

Survey: We have completed an ALTA site survey as well as a 1’ topo survey for all of Brookhill Village.

Phase 1 Environmental Site Assessment: We have received a final Phase 1 ESA. Environmental Assessment: We commissioned and received a completed HUD-level Environmental Assessment which is a pre-requisite for receiving the PBV support from Inlivian.

HUD Noise Study: We have commissioned and received a HUD Noise Study.

Positive market analysis: We commissioned an independent market study that concluded that New Brookhill “will serve to fill a portion of the pent-up demand for affordable housing.

Overall, sufficient market demand and demographic support exist for the proposed subject site to be successfully developed as currently proposed.”

Website information updated: The website at www.newbrookhill.com strives for full transparency and includes community highlights, Q&A, project history and details, recent press and community outreach.

Architectural Plans: Building designs are in hand and we have continued making progress on the Construction Drawings in order to reduce time between loan closings and obtaining building permits.

Financial Stakeholders: City of Charlotte - HTF: The City Council has voted to approve a request for $3MM for New Brookhill.

Mecklenburg County: We are in discussions with County leaders regarding a request for annual support for rent subsidies, which is under review.

Inlivian: Inlivian (formerly the Charlotte Housing Authority) has proposed to assist low income New Brookhill resident families who are at or below 30% AMI with up to 65 Project Based Vouchers (PBV’s).

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Financing Activities: Construction/Mini-Perm Loan: We have an executed Term Sheet for $47 Million in Construction/Mini-Perm financing and have completed a lender-ordered MAI As-Stabilized Appraisal of New Brookhill.

Current Property Loan: We have negotiated an extension of the current note on the property to facilitate finding the GAP funding for New Brookhill.

What is needed to move forward?

(1) Secure the GAP funding.

(2.a) Verify the sufficiency of the Construction/Mini-Perm term sheet (executed on May 20, 2020), or (2.b) secure a construction/forward commitment with a 20-year permanent loan.

(3) Update the financing costs.

(4) Update the material cost estimates due to the time since the HTF application.

(5) Verify the City’s plan for the public infrastructure in the Brookhill Village area.

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