General introductory information regarding Midwest Housing and the Low Income Housing Tax Credit. Information regarding using the Low Income Housing Tax Credit to assist in meeting CRA requirements.

1. Andrea Frymire
Executive Vice President
South Region
John Wiechmann
President / Chief Executive Officer

2. Midwest Housing Equity Group, Inc. (MHEG) was created in 1993 under the
direction of then Governor Ben Nelson. The objective was to raise equity capital
to invest into affordable rental housing throughout Nebraska. MHEG later
expanded, starting in 2000, into Kansas, Iowa and Oklahoma. Today MHEG’s
service area includes: Arkansas, Colorado, Iowa, Kansas, Minnesota, Missouri,
Nebraska, Oklahoma, South Dakota and Texas. Our mission is:
Changing lives for a better tomorrowChanging lives for a better tomorrow
by promoting the development and sustainabilityby promoting the development and sustainability
of quality affordable housingof quality affordable housing ..
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We look for quality affordable properties that meet our mission and standards.
OUR MISSION & OBJECTIVE

3. TO DATE, MHEG HAS:
- raised over $900 million in equity
- developed 350 projects in rural, suburban and urban communities
- created and renovated almost 10,000 units of affordable rental housing
2012 HIGHLIGHTS:
- Closed over $142 million in equity (28 deals)
- Raised over $92 million in equity capital
- $15 million in corporate organizational reserves
Our developments range from 6 to over 200 units and include:
- single family homes
- multi-unit and multi-building complexes
- duplexes
- historical renovations
-specialty needs developments: elderly, assisted living, transitional
homeless facilities, and developmentally disabled residents
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OUR DEDICATION & SUCCESS

4. MHEG TOTALS
- 40 Funds
- $905 million raised
- 350 projects closed
- 9,768 units created
IOWA
- 7 Funds
- $173 million raised
- 61 projects closed
- 2,058 units created
KANSAS
- 10 Funds
- $208 million raised
- 89 projects closed
- 2,342 units created
NEBRASKA
- 18 Funds
- $391 million raised
- 162 projects closed
- 3,962 units created
OKLAHOMA
- 4 Funds
- $133 million raised
- 38 projects closed
- 1,406 total units created
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* Information current as of 5/2013
MHEG PORTFOLIO

5. * Information current as of 5/2013
Total Units Created
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Total Equity Raised in Millions
$905M 9,768 units
EQUITY & PORTFOLIO GROWTH

6. - Underwriting-financial feasibility
- Identifying sources of potential financing
- Assist with/Reviewing applications for funding
- Compliance with Section 42 and other financing sources
- Accounting for construction/rehab period and then for ongoing operations
- Preparation of carryover forms and cost certification
- Annual audit and tax return preparation
-Partnership with MDHF, a CDFI set up to offer a variety of predevelopment loans and
permanent loans
- Training for development and management
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BENEFITS MHEG PROVIDES

7. - Investment Test:
- Affordable housing is a fundamental element under CRA.
- An investment in a LIHTC Fund:
- Receives positive CRA consideration provided it benefits the bank’s
assessment area or the broader statewide or regional area that
includes the bank’s assessment area.
- Lending Test:
- Opportunity to make construction and permanent loans on the LITHC
developments can assist in meeting the Lending Test.
- Must be fixed rate and have a minimum term of 16 years
- Generally the LTV will be less than 25%
- Nonrecourse
- Service Opportunities:
- Providing technical assistance on financial matters for a non-profit organization
serving low or moderate income individuals’ housing needs or economic
revitalization and development needs
- Voting on developments within the Fund
- Serving on a Board or Committee for a non-profit syndicator, housing authority,
developer, etc.
- Developing and teaching financial education curricula for low or moderate income
individuals
*Regulators do vary on the scope of inclusion. Please check with your Regulator for their interpretation. 7
CRA CONSIDERATION FOR BANK INVESTORS

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- Capacity Building: In addition to working with established developers and
sponsors, MHEG also works with rural housing authorities, Community Housing
Development Organization’s, Community Action Program’s and other small developers
that are developing tax credit properties in their own communities.
- Housing Where it’s Needed the Most: We fund projects that are really
needed but are sometimes more expensive and difficult to put together, such as small
rural properties, inner city, infill and special needs projects
- No Extra Risk: By investing in smaller properties with local developers, we do not
accept any more risk than national syndicators. In fact we are able to spend much more
time on an investment and mitigate our risk.
BENEFITS TO EACH STATE

9. - Geographical location
- Size of investment (% of total of Fund)
- Guarantees
- Reserve accounts
- Structure of debt to property
- Experience and strength of development team, general partner and property manager
- Project site-zoning, stability, accessibility
- Market Study/Analysis
- Title and Survey
- Insurance: property, contractor (insurance and bonds)
- Quarterly risk rating for life of investment
- Environmental studies: Phase I mandatory, Phase II if needed
-Reasonable and substantiated operating assumptions: rent levels, vacancy factors,
expense estimates, level of must pay debt, and lease-up period
-Construction parameters and oversight
-Rent Level Analysis
-Operating Expense Comparison and Analysis to MHEG’s extensive database
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UNDERWRITING GUIDELINES

10. $1,000,000 Total Project Cost
$ 200,000 Project Cost Not Eligible for Credits
$ 800,000 Eligible Basis for Credits*
x 9% Tax Credit Percentage
$ 72,000 Credits Received/year
x 10 Years credits are received
$ 720,000 Credits received
x .85 Price paid for credits
$ 612,000 Equity into project from MHEG
Allows for low debt on project enabling developers
to keep rents affordable
* States may allow 130% basis boost (not shown here).
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TAX CREDIT CALCULATION

11. Soft Debt / GPSoft Debt / GP
EquityEquity
25%*25%*
Hard DebtHard Debt
< 20%< 20%
Tax Credit EquityTax Credit Equity
55% (70% with basis55% (70% with basis
boostboost))
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* Funded By:
− AHP
− HOME
− TCAP
− Exchange
− Developer Fee
− Various Contributions
− Certain Grants
TYPICAL DEAL STRUCTURE

12. What is the REAL risk?
- Ownership risks of multifamily low-income
Rental housing pools
Mitigated by MHEG’s investment policies,
ongoing
management and financial oversight, as well
as
MHEG’s financial strength
- Compliance risk
Mitigated by MHEG’s continuing compliance
practices and oversight
- Changes in current law
Highly improbable any law change would affect
Any current investments
- Reputation Risk
We take “the high road”, we know that we
represent our fund investors who are financial
pillars of their communities
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RISK vs. RETURN
What do you get in Return?
-Optimal Tax Planning Strategy
- 10 full years of federal tax credits
- 15 full years of depreciation and other
passive deductions
- Periodic Write-down of Paid in Capital
- CRA Investment Credit, if applicable
- Marketing and PR opportunities
- Stabilizing and Investing in your local
communities
- Stable proven track record of a
performing asset class
- Accurately forecasted tax benefits
- Quarterly Reporting and Asset
Management update

13. WHAT ARE THE ADVANTAGES:
-Pool of projects diversifies risk
-Structured for strong reserves at the project and fund level, with additional
reserves at MHEG
- Disciplined and conservative underwriting guidelines
- Investment decisions lie with investors
- MHEG professional staff manage all aspects of investment
- Comprehensive quarterly reporting to fund participants – available in
electronic format
- Independent financial audits performed at the project and fund level
- Legal documents uniform and comprehensive
- Delayed investment pay-in schedule increases yield
- MHEG Fund investors could take minimal construction risk
- MHEG Fund investors do not need an expert tax credit specialist on staff,
MHEG’s staff provides tax credit expertise
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FUND INVESTORS vs. DIRECT INVESTORS

14. After a developer presents a potential deal to MHEG, the project goes through
several steps to ensure the deal meets our standards and approval.
- Development/Underwriting & Due Diligence Departments review project
- SCRUB Meeting: internal loan and project committee examine potential project
- Technical Review: technical advisors, tax lawyers & accountants assess potential project
- Fund Investor Approval
- MHEG Board / Investment Committee approval
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PROJECT SELECTION PROCESS

15. - MHEG does not want the capital you need for normal operations.
- The dollars you are considering placing with MHEG are actually dollars you owe to the IRS
as a result of your successful operations.
- You receive no monetary return with your payment to the IRS.
- You will receive an above market return and a CRA Investment Credit, if applicable, when
you purchase tax credits with MHEG.
- Your participation benefits the community and you receive a monetary return without
jeopardizing your normal business capital.
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POINTS TO CONSIDER

16. - At the end of the 15-year tax credit compliance period, our goal is to exit the partnership
in a manner that allows the property to continue to comply with the states extended
compliance period.
- The general partner or managing member in most cases has a right of first
refusal to purchase our interest for an amount stipulated in the IRS code.
- Since the project still has restricted rents, it will not be able to refinance much additional
debt. Our exit usually does not generate significant cash or create a tax event.
Therefore, we do not include any residual value in our analysis of return to investors.
(note: this narrative is greatly oversimplified, but does represent the results of a typical exit)
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WHAT TO EXPECT IN THE FUTURE