NYS HOME Local Program Small Rental Development Initiative Pro forma Budget Workbook Instructions

NYS HOME Local Program Small Rental Development Initiative Pro forma Budget Workbook Instructions I. Overview This Excel Workbook consists of 6 worksheets: 1) Project Summary 2) HOME Limits 3) Units & Revenue 4) Operating Budget 5) 20 Year Operating Projection 6) Development Budget The budget information contained in these worksheets are necessary to meet HOME Final Rule underwriting requirements at 24 CFR 9250(b). The completed Workbook will be a required uploaded Attachment to the Application. The spreadsheets have been constructed to require minimal data input by the Applicant, and most cells are auto-calculated based on those inputs. Below are the instructions for Data Input and Feasibility Testing that an Applicant should undertake as part of packaging the application for HOME funding. Questions regarding this Workbook and its contents should be directed to: Alex Smith, Manager of Finance and Compliance at alex.smith@nyshcr.org or by calling (518) 474-2057. II. Data Input Instructions APPLICANTS ONLY NEED TO COMPLETE THE LIGHT YELLOW SHADED CELLS OF THE WORKBOOK. The spreadsheet has been designed to calculate all other cells. Applicants are cautioned not to change any of the unshaded cells. Data input instructions are provided below in the order of the Worksheets, however the data may be input in any order. Small Rental Development Initiative April, 27 2017 Page 1 of 12

A. Worksheet 1: Project Summary Project Information Enter the following information: a) Project Name: Enter the name of the project b) Street Address: Enter the street address of the project c) City: Enter the city the project is located within d) County: Enter the county the project is located within e) Zip Code: Enter the zip code associated with the address Developer-owner Information a) Developer-owner: Enter the name of the Developer-owner b) CHDO: If a CHDO select Yes, if not select No c) Unit Type: Select one of the following options from the dropdown: (1) Single Family (2) Duplex(es) (3) Townhomes (4) Garden Apts. (5) Flats (6) Mid-rise (7) High-rise (8) Other d) Project Identifies Targeting Special Populations in CDOL: If your CDOL application indicates the targeting of any of the identified special populations, select Yes. If the project is not targeting any of the special populations, select No e) Project Type: Select one of the following options from the dropdown menu: (1) Rehabilitation only (2) Acquisition/rehabilitation (3) New construction (4) Acquisition/new construction f) HOME Units: Enter # of HOME assisted units proposed; total units will be autopopulated from Worksheet 3 g) Fixed or Floating HOME units: Select which method will be used from the dropdown menu. 3. Sources List all of the permanent funding sources and the total amount of funding for each source in the light yellow shaded cells. a) Mortgage: This is to identify newly committed financing for this project. Enter the committed funding amount under the column titled Total. A commitment letter will be a required upload in the application. Small Rental Development Initiative April, 27 2017 Page 2 of 12

b) HOME: Enter the amount of HOME funding requested c) Remaining Blank Cells: Enter the name(s) of any additional permanent funding sources under Sources. Enter the respective funding amount under the column titled Total 4. Existing Debt List all sources of existing debt on the property that was incurred prior to the current proposed project. a) Existing Debt: Identify the existing debt b) Loan Balance: Identify the remaining balance of the existing debt c) Monthly Payment: Identify the monthly payment amount of the existing debt In the instance where there is no pre-existing debt, the HTCF reserves the right to require amortization, principal only payments, or increased payments to reserves if cash flow from the operating budget is excessive. B. Worksheet 2: HOME Limits All fillable fields must be completed. Household Income Limits Using the HOME Income Limits issued by HUD for the project region, enter the following information: a) 50% AMI (Very Low Income) Enter the identified Income Limit amounts for 1 person to 6 person households in the corresponding 50% AMI row. b) 60% AMI Enter the identified Income Limit amounts for 1 person to 6 person households in the corresponding 60% AMI row. c) 80% AMI (Low Income) Enter the identified Income Limit amounts for 1 person to 6 person households in the corresponding 80% AMI row. Please make sure that every yellow cell in this section is filled in. The HOME Income limits can be found at the following location: https://www.hudexchange.info/programs/home/home-income-limits/. Utility Allowances Utility allowances must be determined by using the HUD Utility Schedule Model (HUSM). Identify in the yellow cells the proposed utility allowances for 0 bedroom to 4 bedrooms sized units. Please make sure to indicate the source in the application. The HUSM model and instructions are located at the links below: www.huduser.gov/portal/datasets/husm/uam.html https://www.huduser.gov/portal/sites/default/files/pdf/husm-instructions.pdf Small Rental Development Initiative April, 27 2017 Page 3 of 12

3. HOME Gross Rent Limits Using the HOME Rent Limits issued by HUD for the project region, enter the following information: a) 0 Bedrooms: Enter the Low-HOME, High-HOME, and Fair Market Rents in the appropriate yellow cells b) 1 Bedroom: Enter the Low-HOME, High-HOME, and Fair Market Rents in the appropriate yellow cells c) 2 Bedrooms: Enter the Low-HOME, High-HOME, and Fair Market Rents in the appropriate yellow cells d) 3 Bedrooms: Enter the Low-HOME, High-HOME, and Fair Market Rents in the appropriate yellow cell e) 4 Bedrooms: Enter the Low-HOME, High-HOME, and Fair Market Rents in the appropriate yellow cell The worksheet will calculate the Contract Rent Limits by deducting the utility allowance. The HOME Rent Limits can be found at the following location: https://www.hudexchange.info/programs/home/home-rent-limits/ C. Worksheet 3: Units & Revenue Under each bedroom type on the worksheet (Manager Unit, Efficiency, 1 Bedroom, 2 Bedrooms, 3 Bedrooms, and 4 Bedrooms), enter the following information. Please note the following: 1) Manager Units cannot be counted as a HOME unit; 2) Rents cannot exceed the identified rent limits on Worksheet 2; however rents should be competitive in the market and sufficient enough cover operating costs; 3) If there are more than 5 HOME units in the total project, scattered site included, than 20% of the HOME units must be for 50% AMI or under. 50% AMI Targeted line: a) # of units: Enter the number of units in the project of this bedroom type that is allocated for 50% AMI b) Baths: Enter the number of bathrooms in a unit of this bedroom type that is allocated for 50% AMI c) Sp. Ft.: Enter the square footage for a unit of this bedroom type that is allocated for 50% AMI d) Rent: Enter the amount of rent that will be charged for a unit of this bedroom type up to the Low-HOME Rent Limit. Rent cannot exceed the Low-HOME Rent Limit identified on Worksheet If any utilities are included in the rent, use the HOME GROSS Rent Limits. If utilities are not included in the rent, use the CONTRACT Rent Limits. If your units are SROs then the rent cannot exceed the amount calculated under SRO Rent Small Rental Development Initiative April, 27 2017 Page 4 of 12

60% AMI Targeted line: a) # of units: Enter the number of units in the project of this bedroom type that is allocated for 60% AMI b) Baths: Enter the number of bathrooms in a unit of this bedroom type that is allocated for 60% AMI c) Sp. Ft.: Enter the square footage for a unit of this bedroom type that is allocated for 60% AMI d) Rent: Enter the amount of rent that will be charged for a unit of this bedroom type up to the High-HOME Rent Limit. Rent cannot exceed the High-HOME Rent Limit identified on Worksheet If any utilities are included in the rent, use the HOME GROSS Rent Limits. If utilities are not included in the rent, use the CONTRACT Rent Limits. If your units are SROs then the rent cannot exceed the amount calculated under SRO Rent 3. 80% AMI Targeted line: a) # of units: Enter the number of units in the project of this bedroom type that is allocated for 80% AMI b) Baths: Enter the number of bathrooms in a unit of this bedroom type that is allocated for 80% AMI c) Sp. Ft.: Enter the square footage for a unit of this bedroom type that is allocated for 80% AMI d) Rent: Enter the amount of rent that will be charged for a unit of this bedroom type up to the High-HOME Rent Limit. Rent cannot exceed the High-HOME Rent Limit identified on Worksheet If any utilities are included in the rent, use the HOME GROSS Rent Limits. If utilities are not included in the rent, use the CONTRACT Rent Limits. If your units are SROs then the rent cannot exceed the amount calculated under SRO Rent 4. Market Rate Targeted line: a) # of units: Enter the number of units in the project of this bedroom type that will be rented at a market rate b) Baths: Enter the number of bathrooms in a unit of this bedroom type that is allocated for market rate c) Sq. Ft.: Enter the square footage for a unit of this bedroom type that is allocated for market rate d) Rent: Enter the proposed rent that will be charged for a unit of this bedroom type up to the Fair Market rate. If any utilities are included in the rent, use the HOME GROSS Rent Limits. If utilities are not included in the rent, use the CONTRACT Rent Limits 5. Common Space/Other Sq. Footage: If there is non-residential square footage in the building, identify the total number of non-residential square feet. Small Rental Development Initiative April, 27 2017 Page 5 of 12

6. Other Income: Estimate any other average monthly income beyond rents expected by entering the following: a) Interest: Enter the estimated income from interest b) Laundry: Enter the estimated income generated from laundry facilities c) Carports: Enter the estimated income generated by carport rentals d) Tenant Charges: Enter the estimated income generated by late fees, nonsufficient funds, etc. e) Other: Enter anything else that does not fall into one of the other categories. Description of the income is required. Enter the description in the yellow cell D. Worksheet 4: Operating Budget Please note that all expenses on this worksheet must be entered as annual amounts, not monthly. The only expenses requiring a Per Unit amount is Management under Administrative Costs and Replacement Reserve under Escrows & Reserves. Revenue: a) Vacancy/Collection Loss: Enter the estimated percent of vacancy and collection loss in the yellow cell. The cell is already formatted as a percent so use the actual number that reflects the percent. Operating Expenses Administrative Costs Enter the estimated annual operating expenses, the Worksheet will auto-populate Per Unit and % cells. a) Advertising: Enter the estimated operational cost of advertising the project b) Management: Enter the PER UNIT operational cost of managing the project c) Legal Fees: Enter the estimated operational cost of legal fees associated with the project d) Accounting/Audit: Enter the estimated operational cost for Accounting and auditing fees associated with the project e) Compliance Monitoring: Enter the estimated operational cost associated with compliance monitoring for the project. f) Fringe 0.5 FTE Mgr.: Enter the estimated operational costs of a half-time manager to the project. Changing the yellow Other-Fringe 0.5 FTE Mgr. cell to a description of the fringe is required. g) Other: Enter any other estimated operational administrative costs. Changing of the yellow Other cell to a description of the cost is required. Small Rental Development Initiative April, 27 2017 Page 6 of 12

3. Operating Expenses Maintenance a) Decorating: Enter estimated operational cost for decorating b) Repairs: Enter estimated operational cost of repairs c) Exterminating: Enter the estimated operational cost of extermination d) Grounds: Enter estimated operational cost of grounds upkeep e) Other: Enter any other estimated maintenance operational costs. Changing of the yellow Other cell to a description of the cost is required. 4. Operating Expenses Operating a) Elevator: Enter the estimated operational costs associated with any elevators b) Project Paid Fuel: Enter the estimated operational costs associated with project paid fuel c) Common Electricity: Enter the estimated operational costs associated with common electricity use d) Water/Sewer: Enter the estimated operational costs associated with water and sewer e) Gas: Enter the estimated operational costs associated with gas f) Trash Removal: Enter the estimated operational costs associated with trash removal g) Payroll: Enter the estimated operational costs associated with employee payroll h) Payroll Taxes & Fringe: Enter the estimated operational costs associated with payroll taxes and fringe i) Other: Enter any other estimated operational operating costs. Changing of the yellow Other cell to a description of the cost is required. Small Rental Development Initiative April, 27 2017 Page 7 of 12

5. Operating Expenses Escrows & Reserves a) Property Insurance: Enter the estimated operational cost associated with property insurance b) Real Estate Taxes: Enter the estimated operational cost associated with real estate taxes c) Other Taxes: Enter the estimated operational cost associated with any other taxes d) Replacement Reserve: Enter the estimated operational cost associated with the replacement reserve e) Other: Enter any other estimated operational costs associated with escrows and reserves. Changing of the yellow Other cell to a description of the cost is required. 6. Mortgage If there are or will be any amortizing mortgage paid on the project after rehabilitation/construction, enter the mortgage terms by entering the following: a) Debt Coverage Ratio: Enter the ratio of cash available for debt servicing to interest, principal and lease payments. b) Amortization (years): Enter in the amount of time in years that you will be paying off debt with a fixed repayment schedule in regular installments c) Interest Rate: Enter the mortgage interest rate. The cell is already formatted for percentages so just enter the whole percentage number E. Worksheet 5: 20 Year Projection Revenue Most of this sheet is populated from Worksheet 4 and auto-calculated for 20 years based on inflation adjusters. Revenue is assumed to be 5%, but may be adjusted if the Applicant has different information regarding year-over-year changes. To adjust, enter the Gross Income Potential percentage in the appropriate yellow cell. The cell is formatted for percentages so just enter the whole percentage number. Operating Expenses Most of this sheet is populated from Worksheet 4 and auto-calculated for 20 years based on inflation adjusters. Inflators are assumed to be 3%, but may be adjusted if the Applicant has different information regarding year-over-year changes. To adjust, enter the Inflator percentage in the appropriate yellow cell. The cell is formatted for percentages so just enter the whole percentage number. Small Rental Development Initiative April, 27 2017 Page 8 of 12

3. Operating Deficit Reserve Analysis a) Interest Earned: Enter the interest rate percentage that interest will be earned on the reserve account. The cell is formatted for percentages so just enter the whole percentage number. F. Worksheet 6: Development Budget On this worksheet, enter the estimated development costs by line item in the light yellow shaded cells. Predevelopment & Feasibility a) Appraisals: Enter the estimated cost of appraisals b) Architectural/Engineering fees: Enter the estimated cost of architectural and engineering fees. Please note that the fees need to include specifications and job progress inspections c) Environmental Reviews & Reports: Enter the estimated cost of the environmental reviews and reports (Phase 1, Phase 2, etc.) d) Market Need Assessment: Enter the estimated cost of the market need assessment e) Survey: Enter the estimated cost for surveys f) Other: Enter any other estimated predevelopment and/or feasibility costs associated with the project. Changing of the yellow Other cell to a description of the cost is required. Building & Property Acquisition a) Land: Enter the estimated cost of land acquisition b) Existing Buildings: Enter the estimated cost of building acquisition c) Securing Buildings: Enter the estimated cost of securing any buildings in the project d) Relocation: Enter the estimated cost of relocating families living in an existing building Small Rental Development Initiative April, 27 2017 Page 9 of 12

3. Construction Costs a) Local Fees & Building Permits: Enter the estimated cost of local fees and building permits b) On-Site Infrastructure Improvements: Enter the estimated costs of any on-site infrastructure improvements that will be required c) Demolition: Enter the estimated demolition costs d) Site Preparation & Improvements: Enter the estimated costs of any site preparation and improvements that will be required e) Building Construction: New and/or Rehab: Enter the estimated cost of rehabbing an existing building or the construction of a new building f) Construction Contingency: Enter the estimated percentage of the construction hard costs set aside for changes in the scope of work. The cell is formatted for percentages so just enter the whole percentage number. 4. Professional Services a) Borrower's Legal Fees: Enter the estimated cost of the Borrower s legal fees b) Title & Recording Fees: Enter the estimated cost of the title and recording fees c) Accounting & Auditing Fees: Enter the estimated cost of the accounting and auditing fees associated with development of the project. d) Affirmative Marketing/Advertising: Enter the estimated cost of affirmatively marketing and advertising the project. 5. Carrying & Construction Financing Costs a) Inspection & Draw Fees: Enter the estimated costs of the inspection fees for construction draws b) Lender Financing Fees: Enter the estimated costs of fees charged by banks and other financial institutions for processing and funding a loan c) Builder's Risk Insurance: Enter the estimated cost of coverage that protects insurable interest in materials, fixtures and/or equipment that is being used in the construction and/or renovation of a building or structure in the case those items sustain physical loss or damage d) Property Insurance: Enter the estimated cost of coverage that provides financial reimbursement to the owner of a structure and its contents, in the event of damage or theft e) Real Estate Taxes: Enter the estimated cost of real estate taxes f) Interim/Capitalized Operating Costs: Enter the estimated cost associated with interim/capitalized operating costs Small Rental Development Initiative April, 27 2017 Page 10 of 12

6. Permanent Financing a) Lender Financing Fees: Enter the estimated cost associated with Lender Financing fees b) Title & Recording Fees: Enter the estimated cost associated with Title and Recording fees c) Legal Fees: Enter the estimated cost associated with Legal Fees d) Other: Enter any other estimated Permanent Financing costs associated with the project. Changing of the yellow Other cell to a description of the cost is required. 7. Reserves Please note reserves are not HOME eligible except for the HOME Rent Up Deficit Reserve which is restricted to a maximum period of 18 months. While reserves are not eligible for HOME reimbursement, they are recommended and should be reflected in the budget to the extent they pre-exist or are funded from other sources a) HOME Rent Up Deficit Reserve: Enter the amount of months (18 months maximum) and proposed amount HOME Rent-up Reserve that will be used on the project b) Capitalized Operating Deficit Account: c) Operating Reserve: Enter the number of months there will be an operating reserve. The Operating Reserve amount will be auto-calculated. d) Replacement Reserves: Enter the amount of funds in the Replacement Reserves e) Equipment and Furnishing: Enter the amount of funds in the Equipment and Furnishing reserves 8. 9. Construction Period Interest Enter the cost of funds used to finance the construction of the project Developer Fee a) Developer Fee Percentage: Enter the percentage amount of the requested HOME funds that you will be taking for the developer fee. The developer fee is capped at 23% of the awarded HOME funds. III. Feasibility Testing HTFC/HCR will use these spreadsheets to underwrite the project to determine that the project is compliant with HOME requirements, is feasible, and is viable for at least the period of affordability. Listed below are some checks that an Applicant will want to conduct before submitting the Workbook as part of the Application. If the project as designed and entered does not stand up to these tests, it may not be able to be funded with HOME. Small Rental Development Initiative April, 27 2017 Page 11 of 12

A. Worksheet 1: Project Summary & Gap Is the project fully funded, or does a gap remain? Are all Sources other than HOME firmly committed and do you have evidence of that commitment to provide with your Application? (HOME rules require all Sources to be committed.) B. Worksheet 2: HOME Limits These numbers are inputs, but check to make sure they are correct. C. Worksheet 3: Units & Revenue 3. Are the proposed rents within the High or Low HOME rent limits as applicable after their deduction for tenant paid utilities and are they comparable to the street rents indicated by market need? Are the proposed rents realistic in that they will be competitive within the market as well as being sufficient to cover the operating costs of the project? If 5 or more HOME-assisted units (total), are at least 20% of the units set aside in 50% AMI units and below Low HOME rents? D. Worksheet 4: Operating Budget Are Operating Expenses adequate to ensure proper management and maintenance of the property over the period of affordability (POA)? Is revenue sufficient to produce positive net cash flow that is reasonable but not excessive? E. Worksheet 5: 20 Year Projection Does the property produce positive cash flow for the POA? Is the Operating Deficit Reserve sufficient to cover any negative cash flow during the POA? F. Worksheet 6: Development Budget 3. Are development costs complete and adequate to cover all costs to be incurred during the development period? Are development costs reasonable given typical development costs? Are the reserves funded as needed (from other Sources, except for the Rent up Reserve which may be funded with HOME) to ensure viability for the POA as reflected in Worksheet 5? Small Rental Development Initiative April, 27 2017 Page 12 of 12