MSP Real Estate, Inc. City Center Apartments New Berlin, WI Comprehensive Plan Housing Analysis:

MSP Real Estate, Inc. City Center Apartments New Berlin, WI 2010 Comprehensive Plan Housing Analysis: MSP Real Estate, Inc. as part of our Plan of Operation has researched how our proposed development will help meet the current housing needs of the people of City of New Berlin as well as address the City s policies and objectives set forth in Chapter 7 of the New Berlin Comprehensive Plan. In doing so we have extensively reviewed Chapter 7 of the 2010 Comprehensive Plan to see how our development helps meets those policies and objectives as set forth by the City. To determine that a sufficient market demand exists to construct the development we have commissioned a market study by Baker Tilly to determine the market potential for both Section 42 workforce and senior affordable apartments as proposed. It is our conclusion that both the 2010 Comprehensive Plan and the market study support the need for our affordable housing development in New Berlin and the financial feasibility of the project. This report will detail how our relates to the main goal of the 2010 comprehensive plan, which is to within the City provide current and future residents a range of housing choices that meets the needs of persons of all income groups, age groups and persons with special needs Housing Choices that meets the needs of persons of all income groups: Our proposed development consists of 80 units of workforce housing for individuals earning between $17,000 and $45,000 per year. Three figures in the comprehensive plan are pertinent when analyzing the housing stock available in New Berlin to our target markets. 1) Figure 7.18 Condition of Housing details that of the 4,533 multifamily units in New Berlin 70% are considered in only good condition. 2) Figure 7.21 outlines that 44% of the households in New Berlin are considered extremely low income or very low income and that their month housing cost range is equal to our maximum rents. 3) Figure 7.22 outlines the number of total housing units and households for the extremely low and very low income category. It is important to realize that the income ranges of the extremely low and very low income are compared to New Berlin s median household income of approximately $74,000. In other communities around Milwaukee and Waukesha counties incomes between $17,000 and $45,000 are generally considered to be more low moderate income. Regardless of how we define the household income, the figures listed above suggest that individuals in our target market either live in housing stock 15 20 years old in New Berlin or if they work in New Berlin they commute from other parts of the metro area. Our Market Study identified 7 market comparable projects totaling 1,303. Analysis of these properties showed that the market rents for one, two and 3 bedroom apartments range from 15 40% higher than what we are proposing. This makes sense since market rate apartments typically met the needs of individuals earning 60 80% of the area median income. Included with analysis is a graph labeled Exhibit 1, which I believe is extremely helpful in defining the different subsections of housing found in metropolitan communities.

Tier 1 Homeownership Residents, mainly families in a community make up the majority of the tenancy of homeowners. According to the US Census Department the median home value in New Berlin is 245,700. On page 7:24 of the comprehensive plan it states The minimum household income needed for a $200,000 mortgage in New Berlin would be $73,200 or $6,100 per month based on a 30 year mortgage including taxes and insurance. This would place the average New Berlin homeowner in the 80 100%+ area median income band. Tier 2 Market Rate Apartments Residents, consisting of some families and mainly non family households are the majority of renters in a community. Based on the findings of our market study we can conclude that to afford a basic one bedroom apartment an individual would need to earn over $31,000 annually. This would place the average renter in the 65 80% area median income band. Tier 3 Section 42 Affordable Apartments Like with market rate rentals, residents, consisting of some families and mainly non family households are the residents of Section 42 apartments in a community. This housing is designed for people and families just entering the workforce or situations where one roommate or spouse works while the other is still in school. s for these apartments range between 15 40% less than market rate rentals, yet are indistinguishable in terms of management and appearance. Section 42 apartments like the ones we have proposed are targeted to serve the workforce and elderly population and provide housing for people in the 40 60% area median income bracket. Tier 4 Section 8 Public Housing Section 8 Public Housing was built to provide people who are only able to pay 30% of their income for rent and the US government makes up the difference through rental subsidies. Unlike Section 42 apartments which require resident to have a source of income, residents of Public Housing are not required to have jobs and the housing is meant to serve the lowest income individuals in society who earn in the 0 40% area median income bracket. Now that I have defined the 4 different subsections of housing in a typical community I will present the case for why I feel that Section 42 affordable apartments are a vital piece of the housing market missing in New Berlin. Over the past 10 years there has been a real estate boom that has seen immense amounts development of both, single family residences, condominium and multifamily apartments in New Berlin as well as the country as a whole. Over the past 2 years the single family home, condominium and market rate apartment construction has come to a grinding halt. Financing that was once easily obtained has dried up and lenders and regulators are demanding increased underwriting standards that make most projects infeasible. I think that if you ask around you will find that the only real multifamily lender in the market right now is HUD. Attached to this report is a financial comparison labeled Exhibit 2 which details sources, uses, income and expenses for a HUD Financed 221(d)(4) 80 unit market rate apartment development versus the 80 unit Section 42 Workforce Housing development that we are proposing. If you concentrate on the bottom line, it shows the cash on cash return for each development. As an economic indicator, 10 Year US Treasuries are currently yielding a 3.68% return. It is safe to say that an investor would be extremely reluctant to commit capital to a project that yields less than the 10 Year Treasury. When you look at the financial model for an 80 unit market rate apartment project with today s underwriting criteria and basic assumptions the cash on cash return is extremely low at only 2%. In today s volatile economic climate it is highly unlikely that investors would be willing to commit $4,254,000 in capital to a development project that only yields a return of 2%.

On the other hand, using the same land and construction costs and adjusting other costs to be specific to Section 42 apartments, our 80 unit workforce housing development is actually feasible in today s economic climate. By leveraging the equity from the sale of the tax credits we can construct a high quality apartment project that is affordable to workforce employees. On page 7:15 of the comprehensive plan it states, The U.S. Department of Housing and Urban Development (HUD) states that an area needs a minimum overall vacancy rate of 3 percent to ensure adequate housing choices, which should include a minimum 1.5 percent vacancy rate for owneroccupied housing units and a minimum 5% vacancy rate for rental housing units to ensure adequate housing choices. Our market study has determined that in New Berlin the vacancy rate is about 3.3% which would suggest that adequate housing choices are not available for rent in New Berlin. Since there are currently no Section 42 apartments in the City of New Berlin, it can be concluded that people in our income demographic are either living in substandard housing, paying a disproportionate amount of income for rent or traveling from outside the community to commute to and from work. Exhibit 3 to our proposal lists all the businesses in City Center as well as the adjacent shopping center at Moorland and National. Those businesses along with the caregivers from our Heritage Assisted Living, Regency Senior Apartments represent a workforce of over 500 people that would income qualify to live at our proposed development. Locating apartment buildings next to the employment centers is extremely important. By constructing this project in City Center it gives people that work in the nearby Walmart, grocery stores, restaurants and Assisted Living facilities the ability to cut down on travel to and from work. On page 7:23 of the Comprehensive Plan the final paragraph of the page really extenuates this idea. A community might track the percentage of its housing that is affordable to households earning 60% of the area median income. In addition to the distress it causes families who cannot easily find a place to live, lack of affordable or workforce housing is considered by many to have negative effects on a community s overall health. For example, lack of affordable housing can make low cost labor difficult to find, and increase demands on transportation systems (as workers travel longer distances between jobs and affordable housing) In order to meet its goal to provide housing needed to sustained continued economic growth and development the City of New Berlin needs to fill the gap in its housing market for workforce housing. Attached to this report is a market demand analysis performed by Baker Tilly. In that demand analysis they determined that the City of New Berlin could support 98 units of workforce housing at the unit size and rent levels we have proposed. Our 80 unit project will help to meet those needs today as well as help the City meet its goals set forth in the comprehensive plan. Housing Choices that meets the needs of persons of all age groups:

In addition to the 80 unit workforce housing development we are also proposing a 100 unit apartment building for seniors 55 years and older. Phase I of this development will create 76 units of affordable senior apartments. These apartments will help meet the need for housing of the aging baby boomer generation. MSP Real Estate, Inc. currently owns the Deer Creek Village Senior Housing Campus across the creek from our proposed development in City Center. That project consists of 100 units of Section 42 senior apartments, 45 units of market rate senior apartments, 43 units of assisted living and 33 units of memory care. We are very much committed to serving New Berlin s senior population now and in the future. Since opening our Deer Creek Village development we have experienced occupancy rates in the 98% range. Our affordable units have been nearly 100% and we feel that this indicates a strong demand remains for this type of housing in New Berlin. Baker Tilly completed a market study that confirms our assumption and we believe that it is critical to the health of a community to keep its seniors near their family, places of worship and most of all their lifelong friends. By located across the creek from our existing development we can encourage interaction between the two properties and offer amenities a standalone property could not. Our proposed location is ideal for both housing types in that it is so close to the new library, grocery stores, churches and medical centers. To meet market demands we have targeted residents that are just entering the workforce all the way up to residents in their 90 s and everything in between. I believe that we have proposed a development that helps meet the unmet housing needs of all age groups in the community and accomplishes the goals set forth in the comprehensive plan. Housing Choices the meets the needs of persons with special needs: In February we held a neighborhood meeting to allow residents of New Berlin to come hear about our project and give us feedback on what they would like to see in our project. The biggest thing we took away from that meeting was that there was a significant demand for special needs housing in the City. Parents of some developmentally disabled children were extremely vocal in support of our proposal and encouraged us to look into ways that we could incorporate some lower income units into the development to meet those needs. The fundamental problem is that special needs individuals receive social security which would income qualify them for a 40% AMI tax credit unit, but since no housing of this type exists their alternative is to live in a Section 8 or Public Housing development. This is not an acceptable alternative to those children s parents. With the financing programs available this year from WHEDA we were able to incorporate 9 units in the development to accommodate residents at that 40% rent level and target the special needs population. This will allow local residents to live within walking distance to jobs and maintain their individual dignity as well as their sense of community. In addition to the main housing goal the City of New Berlin Comprehensive Plan has set four other objectives and policies to promote achievement of the City s overall housing goal. Encourage appropriate transitions between different land uses to ensure sustained value for residential neighborhoods:

Our proposed development is located in New Berlin s City Center. The location of our proposed development within City Center was specified as multifamily from the conception of the City Center Development Plan and subsequent PUD. Pursuant to objective 2 on page 7:4 of the Comprehensive Plan the City prepared and adopted a detailed neighborhood development plan prior to the zoning and development of the residential area within City Center. In addition the City Center PUD and Development Plan included the proposed land use pattern of the area, including commercial, institutional and retail development. Pursuant to the Comprehensive Plan, the City Center Plan specifically identified open space, a street system and pedestrian connections. To date, both condominiums and market rate apartments have been constructed in City Center. We believe that our development would satisfy both the main housing goals identified by the Comprehensive Plan as well as the City Center Plan. The workforce housing component meets the goal of City Center to create sustainable development and a bike or walk to work environment. Several major employers employing over 500 low and moderate income individuals are located with.5 miles of City Center. In order to maintain continued economic growth it is important for New Berlin to meet the housing needs of all the people who work in the City. This development would help accomplish that goal as set forth in page 7:2 of the Comprehensive Plan. In addition to meeting the Neighborhood Plan objective and policy set forth as item 2 in the Comprehensive Plan our development meets the infill and compatible with surrounding land use test. To the east is a Section 42 senior apartment development that we currently own and operate. We obviously have put a lot of thought on the impact of building additional apartments next to our existing property. We are extremely comfortable with it as an adjacent land use and intend to create a pedestrian bridge connecting the two developments. To the South of the development is an existing condominium project. The entity selling us the land has worked out an arrangement with the condominium owners related to separating the parcel we are buying from the existing condominium association. Those owners have all had legal representation throughout that process and have no problems with our proposed development. The property has a land use plan in place for high medium density residential and that is exactly what we are proposing to construct. Preserve and enhance natural resources and environmental systems that define, connect and add character to neighborhood: One of the most marketable amenities of our development site is the large retention ponds to the west. The City of New Berlin has a 10 foot easement along the west side of our property that will allow our residents as well as the general public to walk along a nature trail within City Center. This oasis of nature within the city enhances our property as well as the properties around it. The views from our apartments overlooking the ponds will be a valued amenity for our property. The City did great job in the planning process and creating the City Center Plan to enhance this water feature. On page 7:4 of the Comprehensive Plan it states in the third objective that the City should use creative techniques to preserve and protect the City s natural resource assets and ways of managing stormwater that can add aesthetic elements into a development. I could not think of how the City could not have done a better job meeting that objective with the layout of the ponds at City Center which our development can utilize. In addition to the detention ponds, Deer Creek runs parallel to our eastern property boundary. By adding a pedestrian bridge to connect the two developments we can encourage interaction between our residents and enhance people s enjoyment of the creek.

Encourage high quality construction and maintenance standards: MSP Real Estate, Inc. is also the general contractor for all our developments. The owner of MSP, Milo Pinkerton has a master s degree in architecture and as a company we pride ourselves in developing the highest quality affordable housing in the state. Our proposed development is designed with prairie style buildings that utilize split face block, brick and cement board siding as an accent material. Our interiors feature stainless steel appliances that are energy star rated as well as high quality wood trim, cabinets and doors. Even though our rents are affordable and the apartments are rented to low and moderate income individuals our philosophy is that MSP development should not be of inferior quality to market rate apartments. In fact the financing programs available from WHEDA this year allow us to leverage private investment with the tax credits to create an extremely high quality affordable housing product. Since we are required to own the project for a minimum of 15 years we are incentivized to be forward thinking in our developments. Subsequently we use the highest quality materials and most energy efficient design available to ensure we are competitive throughout that 15 year holding period. Over the past 16 years we have teamed up with the professional property management company, Oakbrook Corporation to maintain and manage our apartment developments in Wisconsin. Oakbrook currently manages 7000+ apartments in Wisconsin and Illinois and is rated by WHEDA as the highest quality management company in the state. They have a preventive maintenance program to keep our property looking good now as well as looking and operating as well 10 years from now. We are long term owners and members of the community so it is our priority to make sure that we have a building that is looking good and well maintained. Prepare and implement a residential property maintenance plan: This objective is a little bit of a crossover from the previous one which stresses how important it is to the City of New Berlin to make sure that future development is maintained to preserve its appearance. We understand the City may have concerns that an affordable housing development will not be kept up over time. We would like to assure the city that this is not something they have to worry about with this development. Our track record as well that or our management agent is impeccable and you are welcome to contact any of the 20+ municipalities that we have built developments in for confirmation. MSP stands by our product and we put the necessary capital improvement dollars into our properties to keep them in great shape and marketable. Our management company already has both property maintenance plans and preventative maintenance plans that it utilizes with all its developments. We welcome the City s input on working together to structure these plans specific to this development in New Berlin to ensure that the maintenance standards meet the City s expectations. I know that whatever plan we agree upon will be strictly enforced by Oakbrook for the enjoyment of all. After reviewing all the policies and objectives set forth in Chapter 7 of the New Berlin Comprehensive Plan we believe that our proposed development satisfies the City s goal. We are developing in one phase a 156 unit apartment community that spans all ages and addresses the City s need for a range of

housing choices. The main goal of the comprehensive plan is to within the City provide current and future residents a range of housing choices that meets the needs of persons of all income groups, age groups and persons with special needs We are going to provide housing for all the people identified in that goal above that need housing options in New Berlin and satisfy the objectives of the Comprehensive Plan in one development. There are is currently one Section 42 senior housing development in the City, and none for general tenancy. The low vacancy rates, adjacent employment centers with over 500 lowmoderate income workforce employees, aging baby boomer generation and the large unmet demand identified in the market studies all point to the fact that our development is needed in the City and this is the ideal location for it. While many options for market rate apartment rentals and owner occupied residents exist already in New Berlin we believe that the housing needs of those earning between 40 60% ami or approximately $17,000 to $45,000 annually are not being met. These residents currently live substandard apartments or our paying too much in housing costs. In summary, we agree with the idea set forth in the comprehensive plan and believe that our development helps make New Berlin and healthy community. A community might track the percentage of its housing that is affordable to households earning 60% of the area median income. In addition to the distress it causes families who cannot easily find a place to live, lack of affordable or workforce housing is considered by many to have negative effects on a community s overall health. For example, lack of affordable housing can make low cost labor difficult to find, and increase demands on transportation systems (as workers travel longer distances between jobs and affordable housing)

New Berlin Unmet Workforce Housing Needs Analysis New Berlin, Wisconsin March 2010 Prepared By: Baker Tilly Virchow Krause, LLP Ten Terrace Court P.O. Box 7398 Madison, WI 53707 608-249-6622

Page 2 This unmet needs analysis serves to assess the unmet needs for workforce multifamily housing market in the City of New Berlin, Wisconsin. Based on the market information obtained during the research, no alternative affordable workforce housing developments were noted in the primary market area. The current residents are likely residing in substandard housing or maintain a rent overburden, whereby the residents are paying greater than 35% of their household income towards rent. Based on the analysis conducted, a need for 98 workforce housing units was noted in New Berlin, WI.

Page 3 Location and Market Area Definition Primary Market Area (PMA) The Primary Market Area (PMA) is defined as the area in which similar properties compete with the subject property for renters. The PMA for the proposed Deer Creek Apartments must first be established before the influences of supply and demand can be assessed. The subject property is centrally located in the City of New Berlin, Wisconsin, within the City Center development, just south of the intersection of National Avenue and Coffee Road. The City Center is a planned pedestrian friendly mixed-use development that combines the New Berlin Library, various retail, office, and residential uses. The site s immediate neighborhood consists of the Deer Creek Village Senior Housing campus directly to the east, Deer Creek Parkway Condominiums to the south, a medical building and City of New Berlin Public Library to the northwest followed by various retailers and service providers. Interviews were conducted with area property managers and other knowledgeable real estate professionals within the community. A consensus among those interviewed indicated that a predominant primary market for the residential component of the development exists. Primary Market Area (PMA) The PMA is the area from which the strongest potential demand for housing associated with the proposed development is anticipated to originate. A consensus among those persons interviewed, a review of the transportation linkages for New Berlin, a review of the employment base within the community and a driving tour of the surrounding area establish a factual basis for determining the boundaries for the PMA. These factors indicate that the predominant PMA for the proposed Deer Creek Apartments includes the area encompassing the following area: North: Interstate 94 South: Interstate 43 East: Interstate 895/U.S. Highway 45 West: South Calhoun Road Based on discussions with area property managers, it is likely that 75-80% of the residents that ultimately reside at the development will originate from within the PMA with the rest originating from outside the PMA (most likely remaining portions of Waukesha County). However, as a conservative approach, only the population from within the PMA will be analyzed. A map of the Primary Market Area is included on the following page.

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Page 5 Population and Households Overall Demographic Analysis The following table provides a summary of the demographic makeup of the people residing within the PMA. According to the US Census Bureau and the ESRI BIS actual 2000, estimated 2009, and projected 2014 demographic data sets, the overall population is projected to increase by approximately 79 people per year for the 5 years ending in 2014, resulting in an overall gain of 0.8 percent. The number of households is projected to increase at a rate of about 77 per year for a gain of 1.8 percent. A greater increase is projected in renter occupied units than in owner occupied units, with the overall average household size decreasing from 2.36 persons per household to 2.33 persons per household. Demographic Summary Description 2000 2009 2014 % Change 2009-2014 Annual Change 2009-2014 Population 51,100 51,719 52,113 0.8% 78.8 Households 20,891 21,773 22,159 1.8% 77.2 Average Household Size 2.43 2.36 2.33-1.3% Owner-occupied HHs 14,550 15,137 15,326 1.2% 37.8 er Occupied HHs 6,341 6,636 6,833 3.0% 39.4 Median Age 39.5 42.1 42.2 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014 PMA Population/Age Distribution PMA Population/Age Distribution 2000 2014 2000 2009 2014 Population by Age Number Percent Number Percent Number Percent 0-4 2,930 5.7% 2,854 5.5% 2,854 5.5% 5 9 3,163 6.2% 2,932 5.7% 2,933 5.6% 10-14 3,524 6.9% 3,095 6.0% 3,095 5.9% 15-19 3,297 6.5% 3,100 6.0% 2,919 5.6% 20-24 2,662 5.2% 2,931 5.7% 2,826 5.4% 25-34 6,339 12.4% 6,139 11.9% 6,694 12.8% 35-44 8,673 17.0% 6,968 13.5% 6,653 12.8% 45-54 8,138 15.9% 8,625 16.7% 7,676 14.7% 55-64 4,790 9.4% 6,969 13.5% 7,642 14.7% 65-74 4,061 7.9% 3,940 7.6% 4,777 9.2% 75-84 2,707 5.3% 2,928 5.7% 2,746 5.3% 85+ 819 1.6% 1,237 2.4% 1,297 2.5% Total 51,103 100% 51,718 100% 52,112 100% Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014

Income Target New Berlin, WI Page 6 The following table shows the distribution of household income by age of householder in the PMA. ESRI BIS estimates that in 2009 there are approximately 6,904 households with incomes between $0 and $49,999 and of these 3,919 households were under the age of 65. Although this information does not match the proposed development s targeted incomes exactly, it provides insight when examining the depth of the affordable housing market. A more detailed penetration analysis will be presented later in this report to more closely determine the number of age and income qualified households. PMA Household Income by Age 2009 Estimated HH Income Base < 25 25-34 35-44 45-54 55-64 65-74 75+ Totals Total 821 3,065 3,738 4,920 4,098 2,435 2,692 21,769 <$15,000 61 103 57 77 124 141 420 983 $15,000 to $24,999 107 138 117 141 113 302 612 1,530 $25,000 to $34,999 85 217 179 163 244 248 382 1,518 $35,000 to $49,999 176 515 435 367 500 445 435 2,873 $50,000 to $74,999 179 846 756 778 786 465 360 4,170 $75,000 to $99,999 108 643 943 1,098 941 328 247 4,308 $100,000 to $149,999 58 411 735 1,427 882 285 96 3,894 $150,000 to $199,999 33 136 213 471 359 146 75 1,433 $200,000 to $249,999 12 34 149 233 80 47 42 597 $250,000 to $499,999 2 15 131 145 62 24 17 396 $500,000 + 0 7 23 20 7 4 6 67 Median HH Income $47,831 $63,787 $81,417 $95,049 $80,579 $53,054 $32,742 Average HH Income $60,084 $76,081 $102,120 $111,232 $92,945 $71,423 $49,798 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014 PMA Household Income by Age 2009 Estimated Under the age of 65 HH Income Base < 25 25-34 35-44 45-54 55-64 Totals Total 821 3,065 3,738 4,920 4,098 16,642 <$15,000 61 103 57 77 124 422 $15,000 to $24,999 107 138 117 141 113 616 $25,000 to $34,999 85 217 179 163 244 888 $35,000 to $49,999 176 515 435 367 500 1,993 $50,000 to $74,999 179 846 756 778 786 3,345 $75,000 to $99,999 108 643 943 1,098 941 3,733 $100,000 to $149,999 58 411 735 1,427 882 3,513 $150,000 to $199,999 33 136 213 471 359 1,212 $200,000 to $249,999 12 34 149 233 80 508 $250,000 to $499,999 2 15 131 145 62 355 $500,000 + 0 7 23 20 7 57 Median HH Income $47,831 $63,787 $81,417 $95,049 $80,579 Average HH Income $60,084 $76,081 $102,120 $111,232 $92,945 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014

Page 7 PMA Household Income by Age 2000 Actual HH Income Base < 25 25-34 35-44 45-54 55-64 65-74 75+ Totals Total 774 3,198 4,547 4,724 2,832 2,401 2,419 20,895 <$15,000 95 218 142 143 180 271 623 1,672 $15,000 to $24,999 159 178 202 233 126 420 601 1,919 $25,000 to $34,999 148 316 364 345 301 396 399 2,269 $35,000 to $49,999 171 647 659 515 468 485 359 3,304 $50,000 to $74,999 150 1,094 1,268 1,071 726 438 312 5,059 $75,000 to $99,999 37 389 901 866 489 177 85 2,944 $100,000 to $149,999 9 262 677 1,106 400 153 14 2,621 $150,000 to $199,999 5 63 155 256 99 35 12 625 >$200,000 0 31 179 189 43 26 14 482 Median HH Income $34,020 $54,511 $67,370 $76,128 $60,000 $38,893 $24,621 Average HH Income $38,197 $59,919 $79,220 $86,475 $69,685 $52,401 $31,872 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014 PMA Household Income by Age 2014 Estimated HH Income Base < 25 25-34 35-44 45-54 55-64 65-74 75+ Totals Total 746 3,400 3,567 4,375 4,500 2,945 2,628 22,161 <$15,000 63 124 52 68 127 157 422 1,013 $15,000 to $24,999 101 142 110 108 110 322 567 1,460 $25,000 to $34,999 71 197 157 128 218 268 334 1,373 $35,000 to $49,999 149 499 346 256 462 453 383 2,548 $50,000 to $74,999 176 990 711 689 882 573 394 4,415 $75,000 to $99,999 97 676 854 923 1,007 429 260 4,246 $100,000 to $149,999 54 560 808 1,386 1,094 406 125 4,433 $150,000 to $199,999 27 143 224 454 417 215 76 1,556 $200,000 to $249,999 6 37 142 200 92 74 41 592 $250,000 to $499,999 2 21 139 140 77 40 18 437 $500,000 + 0 11 24 23 14 8 8 88 Median HH Income $48,475 $66,196 $84,550 $100,289 $83,943 $59,441 $34,647 Average HH Income $58,404 $79,264 $106,496 $115,436 $97,304 $78,722 $52,771 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014

Household by Size New Berlin, WI Page 8 In 2000, 20,468 of the 20,890 (98.0 percent) occupied units in the PMA were occupied by one to five people. This is a likely indicator that that approximately 98 percent of the rental demand in the PMA is for efficiencies, one, two, and three-bedroom units for a typical rental development. This ratio suggests that existing and future multifamily rental units should target a mix of about 98 percent efficiencies, one, two, and three-bedroom units. The proposed development provides housing options for families of up to five persons and matches the typical renter profile in the PMA. Household by Tenure Household by Size 2000 Census Households by Size Number Percent Total 20,890 100% 1 Person Household 5,529 26.5% 2 Person Household 7,611 36.4% 3 Person Household 3,251 15.6% 4 Person Household 2,981 14.3% 5 Person Household 1,096 5.2% 6 Person Household 314 1.5% 7+ Person Household 108 0.5% Source: US Census Bureau ESRI BIS estimated that in 2009, 69.5 percent of the occupied households in the PMA owned their homes, while 30.5 percent were renters. Description Census 2000 2009 2014 Number Percent Number Percent Number Percent Total 20,891 100.0% 21,773 100.0% 22,159 100.0% Owner-occupied HHs/Householder 14,550 69.6% 15,137 69.5% 15,326 69.2% er Occupied HHs/Householder 6,341 30.4% 6,636 30.5% 6,833 30.8% Source: US Census Bureau Automobile Ownership The 2000 U.S. Census Data indicated that 1,110 (5.3 percent) of the households in the PMA do not own an automobile. The average number of vehicles available is 1.8 per household. Number of Cars per HH Total Percent Total 20,832 100% None 1,110 5.3% 1 6,794 32.6% 2 9,281 44.6% 3 2,776 13.3% 4 694 3.3% 5+ 177 0.8% Average Number of Vehicles Available 1.8

Page 9 Comparable: Deer Creek Village Senior Year Built: 2000 Map #: Address: 3601 S. 147 th Street, New Berlin, WI Telephone: 262-641-9410 Contact Person: Mary Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 2 57 17 42 14 13 145 2 BR/1 BA 2 BR/1 BA 40% 60% 60% $487 $760 $1,040 $915 $1,200 $1,370 $43 $43 $43 $51 $51 $51 $530 $803 $1,083 $966 $1,251 $1,421 715 715 732 962 980 1,010 0 2 4 1 1 0 8* Amenities: Appliances: Unit Features: Included in : x Laundry Room x Refrigerator x W/W Carpet x Water/Sewer Playground x Range/Oven x Patio/Balcony x Trash Removal Swimming Pool x Dishwasher Fireplace x Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center Washer/Dryer x Drapes/Blinds x Heat (gas) Business Center x W/D Hook-up Controlled Entry x Elevator Microwave x Garage/U.G. Parking Extra Storage (Included) (Included) Security Deposit: $250 Concessions: ½ month free for one bedroom units Remarks: LIHTC Section 42 senior development. *Six recent vacancies due to typical senior related issues in the last month. five. Normal vacancies around

Page 10 Comparable: Stone Gate Apartments Year Built: 1995 Map #: Address: 13301 W. National Avenue, New Berlin, WI Telephone: 262-786-8181 Contact Person: Sara Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 12 28 28 12 28 12 12 8 28 8 6 6 188 +Den 1 BR/2 BA+Den+loft +Den +Den 3 BR/2 BA 3 BR/2 BA $935 $950 $955 $1,145 $1,225 $1,155 $1,210 $1,275 $1,325-1,355 $1,485 $1,560 $1,565 $1,023 $1,038 $1,043 $1,233 $1,313 $1,264 $1,319 $1,384 $1,434-1,464 $1,594 $1,686 $1,691 825 850 875 1,135 1,405 1,255 1,220 1,125 1,405 1,500 1,660 1,670 0 Amenities: Appliances: Unit Features: Included in : Laundry Room x Refrigerator x W/W Carpet x Water/Sewer x Tennis Court x Range/Oven x Patio/Balcony x Trash Removal x Swimming Pool x Dishwasher x Fireplace Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer x Drapes/Blinds Heat (gas) Business Center W/D Hook-up Controlled Entry Elevator x Microwave x Garage/U.G. Parking Extra Storage (Included) Security Deposit: $600 Concessions: None Remarks: Market Rate family development, private entrances.

Page 11 Comparable: Highland at New Berlin Year Built: 1998-2002 Map #: Address: 12445 MacAlistar Way, New Berlin, WI Telephone: 414-526-5804 Contact Person: Debbie Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 9 32 32 9 32 6 16 16 6 158 1 BR/2 BA+Den +Den +Den +Den $895 $915 $915-930 $1,100-1,115 $1,195 $1,255 $1,305-1,320 $1,315-1,330 $1,455 $983 $1,003 $1,003-1,018 $1,188-1,203 $1,304 $1,364 $1,414-1,429 $1,424-1,439 $1,564 825 875 850 1,135 1,405 1,125 1,375 1,405 1,500 3 Amenities: Appliances: Unit Features: Included in : Laundry Room x Refrigerator x W/W Carpet x Water/Sewer Playground x Range/Oven x Patio/Balcony x Trash Removal x Swimming Pool x Dishwasher x Fireplace Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer x Drapes/Blinds Heat (gas) Business Center W/D Hook-up Controlled Entry Elevator x Microwave x Garage/U.G. Parking Extra Storage (Included) Security Deposit: $600 Concessions: None Remarks: Market Rate family development, private entrances.

Page 12 Comparable: Fountain Square Year Built: 1989-1997 Map #: Address: 3115 South Fountain Square Blvd., New Berlin, WI Telephone: 262-784-5433 Contact Person: Kay Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 48 16 8 32 16 4 4 16 32 32 4 4 20 20 256 +Den +Den (condo) +Den (condo) (condo) (condo) +Den $745-795 $795-845 $845 $845-895 5 5 $915 $995 $875-935 $915-975 $965 $985 $1,055 $1,135 $833-883 3-933 $933 $983-1,033 $973 $973 $1,003 $1,083 $984-1,044 $1,024-1,084 $1,074 $1,094 $1,164 $1,244 830 865 825 912 842 885 945 1,020 1,020 1,055 1,055 1,055 1,040 1,200 1 Amenities: Appliances: Unit Features: Included in : x Laundry Room x Refrigerator x W/W Carpet x Water/Sewer x Tennis Court x Range/Oven x Patio/Balcony x Trash Removal x Swimming Pool x Dishwasher Fireplace Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer (condo) x Drapes/Blinds Heat (gas) Business Center W/D Hook-up x Controlled Entry Elevator c Microwave x Garage/U.G. Parking Extra Storage (apt-$70/month) Security Deposit $600 Concessions: None Remarks: Market Rate family development, two different style units (typical apartment style and condo style unitsprivate entrances and attached garages)

Page 13 Comparable: The Sanctuary Year Built: 1999 Map #: Address: 2200 S. Clubhouse Drive, New Berlin, WI Telephone: 262-796-2900 Contact Person: Caroline Date of Survey: 3/16/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 15 15 76 76 182 +Den +Den $1,060-1,080 $1,185-1,240 $1,280-1,325 $1,390-1,425 $1,148-1,168 $1,273-1,328 $1,389-1,434 $1,499-1,534 910 1,130 1,165 1,442 1 1 0 0 2 Amenities: Appliances: Unit Features: Included in : Laundry Room x Refrigerator x W/W Carpet x Water/Sewer Playground x Range/Oven x Patio/Balcony x Trash Removal x Swimming Pool x Dishwasher Fireplace Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer x Drapes/Blinds Heat (gas) Business Center W/D Hook-up Controlled Entry Elevator x Microwave x Garage/U.G. Parking Extra Storage (Included) Security Deposit: $300 Concessions: None Remarks: Market Rate family development, private entrances, no applications pending for current vacancies.

Page 14 Comparable: Deer Creek Run Year Built: 1994 Map #: Address: 1575 South Moorland Road, New Berlin, WI Telephone: 262-821-5750 Contact Person: Mary Ann Date of Survey: 3/16/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 112 +Den +Den $895 $950 $995 $983 $1,059 $1,104 1,200 1,200 1,400 0 Amenities: Appliances: Unit Features: Included in : Laundry Room x Refrigerator x W/W Carpet x Water/Sewer Playground x Range/Oven x Patio/Balcony x Trash Removal x Swimming Pool x Dishwasher x Fireplace (2 BR) Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer x Drapes/Blinds Heat (gas) Business Center W/D Hook-up Controlled Entry Elevator Microwave x Garage/U.G. Parking x Extra Storage (Included) (Included) Security Deposit: One month s rent Concessions: None Remarks: Market Rate family development.

Page 15 Comparable: Pinewood Creek Year Built: 1989 Map #: Address: 3150 South Moorland Road, New Berlin, WI Telephone: 262-784-8882 Contact Person: Penny Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 16 101 17 16 32 17 199 1 BR/1.5 BA +Den $765 $840 $835 0 5 $855 $134 $134 $134 $134 $134 $874 $974 $969 $1,014 $1,019 $989 950 1,073 1,048 1,120 1,113 1,103 12* Amenities: Appliances: Unit Features: Included in : x Laundry Room x Refrigerator x W/W Carpet x Water/Sewer Playground x Range/Oven x Patio/Balcony x Trash Removal Swimming Pool x Dishwasher Fireplace Hot Water Community Room x Disposal x Air Conditioning (central) Electricity Fitness Center Washer/Dryer x Drapes/Blinds Heat (electric) Business Center W/D Hook-up x Controlled Entry x Elevator Microwave x Garage/U.G. Parking x Extra Storage ($30/month) (Included) Security Deposit: $300 Concessions: None Remarks: Market Rate family development. *Five applications pending for vacant units.

Page 16 Comparable: Wyndridge Apartments Year Built: 2000-11/2009 Map #: Address: 12701 Wyndridge Court, New Berlin, WI Telephone: 262-547-6697 Contact Person: Ruth Date of Survey: 3/15/2010 Unit Type % of CMI Net Utility Allow. Gross Square Footage Vacant 208 5 $940 $945 $1,000 $960 $1,025 $1,120 $1,250 $973 $1,028 $1,033 $1,088 $1,069 $1,134 $1,229 $1,359 1,000 900 1,000 1,000 1,200 1,300 1,200 1,300 25* Amenities: Appliances: Unit Features: Included in : Laundry Room x Refrigerator x W/W Carpet x Water/Sewer x Tennis Court x Range/Oven x Patio/Balcony x Trash Removal Swimming Pool x Dishwasher x Fireplace Hot Water x Community Room x Disposal x Air Conditioning (central) Electricity x Fitness Center x Washer/Dryer x Drapes/Blinds Heat (gas) Business Center W/D Hook-up Controlled Entry Elevator x Microwave x Garage/U.G. Parking x Extra Storage (Included) (Included) Security Deposit: $300 Concessions: One month free and $400 second month with a twelve month lease Remarks: Market Rate family development, private entrances. Phase II included internet and cable in rent. *Twenty of the total vacancies are within phase II under initial lease up (128 units)

Page 17 New Berlin, WI Project Comparison Map # Project Name/Address/ Phone Number/ Contact Market Rate Stone Gate Apartments 13301 West National Avenue New Berlin, WI 262-786-8181 Sara 12 28 28 12 28 12 12 8 28 8 6 6 188 Unit Types +Den 1 BR/2 BA+Den+loft +Den +Den 3 BR/2 BA 3 BR/2 BA Gross (Adj.) Range $1,023 $1,038 $1,043 $1,233 $1,313 $1,264 $1,319 $1,384 $1,434-1,464 $1,594 $1,686 $1,691 Square Footage Range 825 850 875 1,135 1,405 1,255 1,220 1,125 1,405 1,500 1,660 1,670 Per Square Foot $1.24 $1.22 $1.19 $1.09 $.93 $1.01 $1.08 $1.23 $1.02-1.04 $1.06 $1.02 $1.01 Vacancy Rate Subsidies Waiting List 0 units (0.0%) Utilities Included/ Concessions None None W, S, TR/ None Highland at New Berlin 12445 MacAlistar Way New Berlin, WI 414-529-5804 Debbie Fountain Square 3115 S. Fountain Square Blvd. New Berlin, WI 262-784-5433 Kay 9 32 32 9 32 6 16 16 6 158 48 16 8 32 16 4 4 16 32 32 4 4 20 20 256 1 BR/2 BA+Den +Den +Den +Den +Den +Den +Den (condo) (condo) +Den $983 $1,003 $1,003-1,018 $1,188-1,203 $1,304 $1,364 $1,414-1,429 $1,424-1,439 $1,564 $833-883 3-933 $933 $983-1,033 $973 $973 $1,003 $1,083 $984-1,044 $1,024-1,084 $1,074 $1,094 $1,164 $1,244 Utilities Included: W-Water, S-Sewer, TR-Trash Removal, HW-Hot Water, E-Electric, H-Heat 825 875 850 1,135 1,405 1,125 1,375 1,405 1,500 830 865 825 912 842 885 945 1,020 1,020 1,055 1,055 1,055 1,040 1,200 $1.19 $1.15 $1.18-1.20 $1.05-1.06 $.93 $1.21 $1.03-1.04 $1.01-1.02 $1.04 $1.00-1.06 $1.02-1.08 $1.13 $1.08-1.13 $1.16 $1.10 $1.06 $1.06 $.96-1.02 $.97-1.03 $1.02 $1.04 $1.12 $1.04 3 units (1.9%) 1 unit (0.4%) None None W, S, TR/ $500 to one month free None None W, S, TR/ None

Page 18 New Berlin, WI Project Comparison Map # Project Name/Address/ Phone Number/ Contact Market Rate The Sanctuary 2200 South Clubhouse Drive New Berlin, WI 262-796-2900 Caroline Deer Creek Run 1575 South Moorland Road New Berlin, WI 262-821-5750 Mary Ann Pinewood Creek 3150 South Moorland Road New Berlin, WI 262-784-8882 Penny Wyndridge Apartments 12701 Wyndridge Court New Berlin, WI 262-547-6697 Ruth 15 15 76 76 182 Unit Types +Den +Den 112 +Den +Den 16 101 17 16 32 17 199 1 BR/1.5 BA +Den 208 Gross (Adj.) Range $1,148-1,168 $1,273-1,328 $1,389-1,434 $1,499-1,534 $983 $1,059 $1,104 $874 $974 $969 $1,014 $1,019 $989 $973 $1,028 $1,033 $1,088 $1,069 $1,134 $1,229 $1,359 Utilities Included: W-Water, S-Sewer, TR-Trash Removal, HW-Hot Water, E-Electric, H-Heat Square Footage Range 910 1,130 1,165 1,442 1,200 1,200 1,400 950 1,073 1,048 1,120 1,113 1,103 1,000 900 1,000 1,000 1,200 1,300 1,200 1,300 Per Square Foot $1.26-1.28 $1.13-1.18 $1.19-1.23 $1.04-1.06 $.82 $.88 $.79 $.92 $.91 $.92 $.91 $.92 $.90 $.97 $1.14 $1.03 $1.09 $.89 $.87 $1.02 $1.05 Vacancy Rate Subsidies Waiting List 2 units (1.1%) 0 units (0.0%) 12 units (6.0%) 25 units (12.0%) Utilities Included/ Concessions None None W, S, TR/ One month free None None W, S, TR/ None None None W, S, TR/ None None W, S, TR/ One month free and $400 for second month with a twelve month lease

Page 19 PMA Household Income by Age 2009 Estimated Under the age of 65 HH Income Base < 25 25-34 35-44 45-54 55-64 Totals Total 821 3,065 3,738 4,920 4,098 16,642 <$15,000 61 103 57 77 124 422 $15,000 to $24,999 107 138 117 141 113 616 $25,000 to $34,999 85 217 179 163 244 888 $35,000 to $49,999 176 515 435 367 500 1,993 $50,000 to $74,999 179 846 756 778 786 3,345 $75,000 to $99,999 108 643 943 1,098 941 3,733 $100,000 to $149,999 58 411 735 1,427 882 3,513 $150,000 to $199,999 33 136 213 471 359 1,212 $200,000 to $249,999 12 34 149 233 80 508 $250,000 to $499,999 2 15 131 145 62 355 $500,000 + 0 7 23 20 7 57 Median HH Income $47,831 $63,787 $81,417 $95,049 $80,579 Average HH Income $60,084 $76,081 $102,120 $111,232 $92,945 Sources: US Census Bureau, ESRI BIS estimates for 2009 and projections for 2014 PMA Household Income Distribution Under the Age of 65 (2009) ers Only Number of Households Under $15,000 $15,000 to $24,999 $25,000 to $34,999 $35,000 to $49,999 Total Households Under the Age Of 65 422 616 888 1993 er Occupied Factor* 30.5% 30.5% 30.5% 30.5% Total Income Qualified in the PMA Under the Age of 65 129 188 271 608 Source: ESRI BIS *Estimated % renters for all ages in the PMA (ESRI BIS)

Page 20 Unmet Needs Analysis ers Only Under the Age of 65 Unit Type 1 BR 1 BR 2 BR 3 BR 1 BR 2 BR Persons per HH 2 2 3 5 2 3 Combined Income Restrictions 40% 50% 50% 50% 60% 60% Combined AMI AMI AMI AMI AMI AMI Gross s* $530 $616 $751 $919 $716 $851 $530-$993 Income Cap $22,640 $28,300 $31,800 $38,200 $33,960 $38,160 $38,160 Income Base (Annual 35% of HH Income) $18,171 $21,120 $25,749 $31,509 $24,549 $29,177 $18,171 Number of er HH in Income Band** 84 162 164 225 251 286 655 Maximum Capture Rate 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% Potential Unmet Need in PMA 13 24 26 34 38 43 98 *s proposed by project developer (Utilities included) **Interpolated 2009 estimate based upon best corresponding income cohort from the 2009 ESRI BIS estimates. Includes renters only.

City Center Apartments New Berlin 80 Workforce Housing Sources Interest An. P&I LTV Amo. Interest An. P&I LTV Mortgage 6,700,000.00 40 6.50% 470712 61% Mortgage $ 2,079,000.00 30 7.75% 178728 17% Equity 4,254,000.00 Tax Credit Equity $ 8,483,715.00 Total 10,954,000.00 Exchange Funds 1261264 Dev. Equity/ Deferred Fee 393748 Total $ 12,217,727.00 Uses Land $ 800,000.00 Site Work $ 400,000.00 Construction $ 8,095,000.00 Contingency $ 200,000.00 Architect $ 156,000.00 Interim Costs $ 325,000.00 Permanent Financing $ 429,500.00 Soft Costs $ 353,500.00 Organizational $ 15,000.00 Development Fees $ Reserves $ 180,000.00 Total $ 10,954,000.00 Uses Difference Land $ 800,000.00 Site Work $ 400,000.00 Construction $ 8,095,000.00 Contingency $ 200,000.00 Architect $ 196,000.00 Tax Credit developments require more attorney time Interim Costs $ 205,000.00 More equity so less construction interest Permanent Financing $ 58,685.00 HUD has a 6% origination fee Soft Costs $ 459,000.00 Tax Credit Fees Organizational $ 15,000.00 Development Fees $ 1,309,042.00 12% Fee included in eligible basis investor requires 70% earned Reserves $ 480,000.00 Investor requires 6 months reserves Total $ 12,217,727.00 Income Gross Potential $ 1,107,900.00 less vacancy (7%) $ 77,553.00 Net Income $ 1,030,347.00 Income Gross Potential $ 649,608.00 less vacancy (7%) $ 45,472.56 Net Income $ 604,135.44 Expenses Operating $ 440,000.00 Mortgage Insurance $ 30,150.00 Expenses Operating $ 376,000.00 Lessincome results in lower taxes Mortgage Insurance $ Related to HUD financing NOI $ 560,197.00 NOI $ 228,135.44 Debt $ 470,712.00 Debt $ 178,728.00 Cash Flow $ 89,485.00 Debt Coverage 1.19 Cash Flow $ 49,407.44 Debt Coverage 1.28 Cash on Cash 0.0210 Cash on Cash 0.1255