FLORIDA AFFORDABLE HOUSING GUARANTEE PROGRAM...

FLORIDA AFFORDABLE HOUSING GUARANTEE PROGRAM

PROJECT SUITABILITY ASSESSMENT AND RISK EVALUATION REPORT TO: Junious D. Brown III

Guarantee Program Administrator

FROM: TIBOR PARTNERS, Inc. ("TPI")

DATE: January 8, 2003

SUBJECT: Application for Mortgage Guarantee for: Eagle Pointe Apartments

Pompano Beach Broward County Guarantee Application No. 153

I. PROJECT SUMMARY Project Address: North side of West Atlantic Blvd., east of NW 21st Avenue,

Pompano Beach, Broward County Property Type: Multi-family rental. New construction of 192 units in 7 three

story walk-up garden style residential buildings, a clubhouse, swimming pool, exercise room, playground, carded gated entry on 8.21 acres. On completion, the Project will consist of 60 one-bedroom/one bath units, 72 two-bedroom/two bath units and 60 three-bedroom/two bath units, and 321 outdoor parking spaces including 7 handicapped spaces. 100% of the units will be leased to persons/families earning 60% or less of the area median income. The Fort Lauderdale PMSA (Broward) median income is $60,200 for 2002.

Property The Project’s market value, utilizing the income approach to Appraisal: value methodology, and based on favorable financing and

restricted rents, at completion of construction and stabilized occupancy is $13,900,000. This value, as of November 1, 2002 is contained in an appraisal dated November 1, 2002 and revised on December 18, 2002 prepared by Hume Real Estate Consultants, Inc.

Mortgagor/Borrower: Eagle Pointe Associates, Ltd.

PROJECT SUITABILITY ASSESSMENT AND RISK EVALUATION REPORT: EAGLE POINTE APARTMENTS

[a Florida For Profit Limited Partnership] Mara S. Mades 2121 Ponce de Leon Blvd., PH2 Coral Gables, Fl. 33134 General Partner (0.01%interest):Cornerstone Eagle Pointe, LLC

Investor Limited Partner (99.99% interest): Stuart I. Meyers Family Partnership Ltd.(29.997%), JL Holding Corp. (49.995%), M3, Inc. (9.999%), MSM, Inc. (9.999%) [Will be replaced at or prior to closing by Lend Lease Real Estate Investments, or an affiliate thereof.]

Guarantor(s): Eagle Pointe Associates, Ltd., Stuart I. Meyers Family [for Construction Completion Partnership, Ltd., Cornerstone Eagle Pointe, LLC, Cornerstone

and Operating Deficits] Group Development Corp., and its related Principals, Jorge

Lopez, Stuart I. Meyers, Leon J. Wolfe and Mara Mades. Mortgagee/Guarantee Beneficiary: Florida Housing Finance Corporation

Mark E. Kaplan, Executive Director Tallahassee, Fl. 32301-1329

Developer: Cornerstone Group Development, LLC.

Jorge Lopez 2121 Ponce de Leon Blvd., PH 2 Coral Gables, Fl. 33134

General Contractor: Alliance Construction, LLC.

(an affiliate of The Cornerstone Group) Frank W. White III, General Contractor 2121 Ponce de Leon Blvd., Suite 510 Coral Gables, Fl. 33134

Property Manager: Cornerstone Residential Management, LLC.

(an affiliate of The Cornerstone Group) Nola Castillo, Senior Vice president 2121 Ponce de Leon Blvd., PH 2 Coral Gables, Fl. 33134

Guarantee Program

Participation: Construction Loan: 100% mortgage guarantee, to be effective at the closing of the Project, on a loan (as recommended by AmeriNational Community Services, Inc. (ACS)) in an approximate amount of $12,270,000, and Permanent

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Loan: 50% ($6,135,000) pari passu first loss) mortgage guarantee, to be effective at completion of construction of the Project and endorsement by HUD/FHA, on a permanent first mortgage loan in an approximate amount of $12,270,000.

Total Project Costs: $18,869,064 (excludes the Debt Service Reserve Fund which is

to be secured by a surety bond as per the AmeriNational Community Services, Inc. (ACS) Final Report, dated January 8, 2003.

II. BACKGROUND

The Florida Housing Finance Corporation’s Guarantee Program (the "Guarantee Program") has been requested to guarantee a $12,270,000 construction and permanent first mortgage loan to be made by the Florida Housing Finance Corporation (the "Mortgagee", “Florida Housing” or "Guarantee Beneficiary") pursuant to the HUD Risk-Sharing Program created under Section 542 of the Housing and Community Development Act of 1992 and made permanent in December of 2000 pursuant to the VA/HUD Appropriations Bill H.R. 5482. Bonds to finance the project will be issued by Florida Housing Finance Corporation (the "Mortgagee", “Florida Housing", or "Guarantee Beneficiary"). A copy of the ACS Final Report, dated January 8, 2003, is attached. III. PROJECT DESCRIPTION AND AFFORDABILITY

The proposed Project will be situated on approximately 8.21 gross acre site located at north side of West Atlantic Blvd., east of NW 21st Avenue in Pompano Beach, Broward County. The subject site is vacant land approximately two feet below street grade, is zoned BU-3, General Business with an allowable exception for Multi-family, which permits as a special exception 23.4 units per acre; the Project is approved for the planned 192 units.

The Project is designed primarily for families as is evidenced by the following unit mix:

PRO FORMA UNITS* UNIT TYPE SQUARE FEET Net RENT/MO**

Year 2002

60 1br/1ba 700 $ 640 72 2br/2ba 950 $ 765 60 3br/2ba 1150 $ 879

Total: 192 $ 146,220 NOTES: * Units are set aside for families earning 60% of the area median income ** Net of utility allowance. Fort Lauderdale PMSA (Broward) median income is $60,200 for 2002.

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IV. PROJECT FINANCING

The Sources and Uses of Funds, bond amount and mortgage amount employed in this analysis are as provided to Florida Housing, Guarantee Program staff and TPI by ACS in its January 8, 2003 Final Report. Information as to bond and mortgage rates was obtained from the same source.

Mortgagee will provide both construction and permanent financing through the sale of FHFC tax exempt bonds in the approximate amount of $12,270,000, together with developer note ($1,093,064 deferred developer fee) and the Housing Credit proceeds ($5,506,000) will fund the total project costs of $18,869,064 (including capitalized interest). Principal and interest payments on the bonds will not be guaranteed by the Guarantee Program. The bonds will be secured by the Project’s mortgage and the Debt Service Reserve Fund Surety Bond which, in turn, will, if approved, benefit from the Guarantee Program’s enhancement.

Principal and interest payments on the bonds will be additionally enhanced by a “AAA” credit enhancement. The bonds will be secured by the Project’s mortgage and the Debt Service Reserve Fund. During the construction period the mortgage will be 100% guaranteed by the Guarantee Program while during the permanent phase the mortgage will be insured by FHA pursuant to a HUD Risk-Sharing Agreement. Florida Housing’s risk portion will be borne (assumed) by the Guarantee Program. Thus, the Guarantee Program will effectively bear the entire risk during the construction phase of this transaction, and retain a 50% pari passu risk on the mortgage for the term of the permanent loan.

The Credit Underwriter’s calculation of debt service is predicated upon a weighted average “all-in”mortgage loan interest rate of 6.525% based upon the Project’s proposed net operating income. The maximum interest rate that could be incurred for this loan while maintaining 1.15:1.0 debt service coverage would be 6.525%. The mortgage will have a term of forty years and fifteen months (41.25) years (40 year amortization); the Mortgagor will pay interest only during the first fifteen (15) months, and principal and interest for forty (40) years. ACS projects a stabilized net operating income of $ 994,745. The resulting loan to value of the first mortgage (based upon favorable financing and restricted rents) is 88.27%; (90% is the maximum permitted by the Guarantee Fund). The projected debt service coverage ratio on the first mortgage (NOI/DS) is 1.15:1.0 (1.15:1.0 is the minimum permitted for this loan by the Guarantee Program). V. MARKET ANALYSIS

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The firm of Hume Real Estate Consultants, Inc. was retained by ACS to prepare an appraisal dated November 1, 2002 and revised December 18, 2002 of the Project. A separate Market Feasibility Study also dated November 1, 2002 was prepared by the same firm. ACS’s Final Report indicates that it has reviewed the appraisal and the Market Feasibility Study. ACS has determined that the Market Feasibility Study is satisfactory and that there are significant households within the income band necessary to support rent restricted housing. The sub market area which includes parts of the following: Pompano Beach, Deerfield Beach, North Lauderdale/Tamarac, Ft. Lauderdale/Lauderhill/Lauderdale

PROJECT SUITABILITY ASSESSMENT AND RISK EVALUATION REPORT: EAGLE POINTE APARTMENTS Lakes, reflect strong occupancy rates with the sub market reflecting a 98% occupancy rate. TPI, based upon the evidence in the ACS Final Report, the information in the Appraisal and the Market Feasibility Study accepts ACS ’s conclusion. VI. RISK ANALYSIS

The Guarantee Program has been requested to provide a 100% guarantee of the construction phase and participate in a shared (50-50, first dollar, pari passu) risk arrangement on the permanent phase. The latter will commence when HUD/FHA proffers its endorsement on the mortgage loan (expected to occur at construction completion and issuance of a final certificate of occupancy). In summary, TPI believes that the risks of this transaction are acceptable.

Based upon the Mortgagee's (Florida Housing's) Application and related information submitted by it or on it's behalf, TPI's analysis has identified the following risk characteristics of this transaction.

Construction Loan Period The risks to the Guarantee Program during the construction phase are that the

Project will not be completed on time, within budget and according to plans and specifications, or that capitalized interest will be insufficient to carry the interest payments due on the Project’s mortgage through a protracted rent-up period. A 100% Payment and Performance Bond (which assures completion and specific performance) is required by the Guarantee Program in addition to the industry standard retainage. The General Contractor will be expected to conform to Florida Housing's loan underwriting standards consistent with those employed by Florida Housing and ACS.

The proposed Low Income Housing Tax Credit (the “Housing Credits”) pay-in schedule (which provides that payments may be made at one or more intervals from loan closing through construction completion and stabilization) could contribute, directly or indirectly, to a default in the guaranteed mortgage loan during the construction period. TPI recommends that all amounts necessary to complete construction be deposited with the Bond Trustee at closing or evidence be obtained at closing that 100% of such amounts are on deposit, or immediately available, with the entity providing Housing Credit payments.

A successful initial rent-up, as is the norm, represents a substantial risk in any rental project. In order to mitigate this risk, the Guarantee Program is requiring the Developer (Mortgagor) to provide a Net Operating Income Deficit Guarantee until stabilized occupancy has been achieved. The most likely scenario is that the Project would generate some cash flow and the developer would provide cash pursuant to the aforementioned deficit guarantee. As a last resort, the Guarantee Program would be able to make payments sufficient to cover the shortfall. The latter would also be a prudent course of action, since it is in the best interest of the Guarantee Program to nurture the project to the point it qualifies as eligible for HUD’s endorsement. If the guarantees, acceptable to the Guarantee Program, referred to above, are present, TPI is of the opinion that the likelihood of the occurrence of a default of this nature is minimal. The

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financially significant principals in this transaction, Stuart I. Meyers, Jorge Lopez, Leon J. Wolfe and Mara S. Mades, as well as the other entities providing Guarantees, demonstrate the liquidity necessary to support the required Construction Completion and Net Operating Deficit Guarantees according to ACS. However, the Cornerstone entities in this transaction and Messrs. Lopez, Meyers and Wolfe and Ms. Mades are being required to execute a liquidity maintenance agreement requiring minimum liquid balances of $ 4.5 million in support of the required Construction Completion and Net Operating Deficit Guarantees, of which Messrs. Lopez, Meyers and Wolfe and Ms. Mades are to be required to maintain a minimum liquidity of $3.0 million. ACS is requiring quarterly evidence of this minimum liquidity until project stabilization.

Permanent Loan Period

The permanent loan phase will be characterized by, among other things, the

presence of a first dollar loss risk-sharing partner, HUD/FHA. Thus, in the event of a mortgage default during the permanent loan phase, the net loss will be shared equally between HUD and Florida Housing (supported by payment from the Guarantee Program). This structure diminishes the financial risk to the Guarantee Program.

The Mortgagor's controlled entities (of Cornerstone) Alliance Construction, Inc. (the Project’s general contractor) and Cornerstone Residential Management, Inc.’s (the Project’s property manager) ability to maintain the projected rent/income levels and contain costs, over time, will be a significant predictor of the potential for a claim pursuant to the Guarantee Program's policy. The proposed management company has adequate experience as managers of affordable multifamily rental projects. Cornerstone Residential Management, Inc. is a Florida Housing Finance Corporation approved property management company.

The premium proposed to be charged for both the construction (.65% per annum) and permanent (.50% per annum) phases of this transaction fairly compensates the Guarantee Program for undertaking each risk. VII. SCOPE OF ANALYSIS

TPI has solely relied on the following documents and information, as supplied to it by the Mortgagee or its agent(s), or by the Mortgagor at the direction of the Mortgagee, in the preparation of this Report:

ACS’s Final Report, and Recommendations dated January 8, 2003 the Appraisal dated November 1, 2002 and revised December 18, 2002

prepared by Hume Real Estate Consultants, Inc. Consultech’s Plan and Cost Review (#22571), dated December 19, 2002,

and The Market Feasibility Study, dated November 1, 2002, prepared by Hume

Real Estate Consultants, Inc.

TPI has not received, and, thus, not had the benefit of information contained in the following documents or provided from the following sources:

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Mortgagee Loan Commitment Loan Documents: Loan Agreement between Mortgagee and Mortgagor; the

Mortgage; the Construction Loan Agreement; the Assignment of Leases; the Note; the Intercreditor Agreement; and the Land Use Restriction Agreement.

HUD/FHA Firm Approval Letter Information regarding the terms (interest rate) of the bonds to be issued;

this impacts debt service and financial performance calculations. the construction contract

VIII. ADDITIONAL CONDITIONS TO THE GUARANTEE PROGRAM'S STANDARD

COMMITMENT TO GUARANTEE AND CERTIFICATE OF GUARANTEE

TIBOR PARTNERS, Inc. recommends that the Commitment and Certificate issued to the Mortgagee contain the following additional terms and conditions which shall be satisfied prior to the time the guarantee is to become effective: 1. Certification by the Mortgagee that the Borrower has complied with the terms and

conditions of the Mortgagee’s Loan Commitment. Any amendments or modifications thereto require the prior approval of the Guarantee Program.

2. Furnishing in a form acceptable to the Guarantee Program and TPI the information

which TPI has not been furnished, as is detailed in Section VII of this Report. 3. Certification by the Mortgagee that each of the Conditions and other requirements

contained in the ACS Final Report, dated January 8, 2003, and the Consultech Plan and Cost Review (#22571), December 19, 2002, have been complied with and/or completed.

4. Approval by the Guarantee Program of the mortgage, note and all other loan

documents related to this transaction. 5. Approval of the agreement between Florida Housing and the Servicer. The

selection of the Servicer shall be subject to approval by the Guarantee Program.

6. The maximum guarantee of the (i) construction loan shall be 100% of an amount

not to exceed $12,270,000, and (ii) permanent loan shall be 50% of the original principal balance of the mortgage loan currently estimated to be $6,135,000, as of the date the guarantee becomes effective.

7. Submission of a management plan for the Project, and a management contract,

each of which shall be acceptable to the Guarantee Program. The management company’s acceptability is contingent upon its continuing designation as a Florida Housing Finance Corporation approved management company.

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8. In the event that the guarantee does not become effective prior to September 30,

2003, this guarantee commitment shall automatically expire.

9. Payment of all fees and premiums due to the Guarantee Program. 10. Receipt of a copy of each fully executed Loan Document (as that term is defined in

the LOAN AGREEMENT; Article I, Definition of Terms), as approved by the Guarantee Program.

11. Certification by the Mortgagee that the Borrower has complied with the terms and

conditions contained in each Loan Document. 12. Provision by the Borrower of a Net Operating Income Deficit Guarantee with an

expiration date not earlier than six (6) months after the date the Mortgagee certifies to the Guarantee Program that the Project has achieved (a) stabilized occupancy for six [6] continuous months, (b) a revenue achievement level of $1,593,541 (annualized), (c) an occupancy level of at least 90%, (d) a ratio of net operating income to debt service of at least 1.15:1.0 and (e) has made all monthly mortgage and escrow payments as required by the Loan documents on a timely basis.

13. Executed copies of the Mortgagee’s Mortgage and Note in form and substance

satisfactory to the Guarantee Program, securing the Guaranteed Mortgage Loan currently estimated to be $12,270,000, and (ii) permanent loan shall be 50% of the original principal balance of the mortgage loan currently estimated to be $6,135,000. Such Mortgage shall provide for payments of interest only for the initial fifteen (15) months of the term of the mortgage loan.

14. Opinion(s) of counsel(s) to the Borrower addressed to the Guarantee Program to

the effect that (a) the Mortgage and each Loan Document executed by the Borrower have been duly executed and delivered by the Borrower and constitute legal, valid and binding obligations of the Borrower enforceable in accordance with their terms, and (b) such other matters as the Guarantee Program may reasonably request.

15. An executed copy of any document or agreement, as approved by the Guarantee

Program, which modifies the Loan Commitment or any Loan Document. 16. Final plans and specifications for all improvements to be constructed and acquired

in connection with the Project, together with necessary approvals from city, state and federal governmental jurisdictions as may be required to construct the Project. All recommendations contained in the Consultech Plan and Cost Review (#22571) Report, dated December 19, 2002 and or any revisions thereof, shall be satisfied.

17. Construction related insurance coverage including, but not limited to, builder’s risk

insurance. 18. A certificate from the Borrower to the Mortgagee to the effect that at the Closing of

the Construction Mortgage Loan the Borrower is not then in default under any Loan

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Document or Agreement. This certification shall also specifically include any and all Florida Housing Guarantee Program Guaranteed Loans.

19. A certificate from the Borrower that all regulatory approvals necessary to commence

construction of the Project have been obtained. 20. Executed copies of the Payment and the Completion Costs Guarantee, including a

100% Payment and Performance Bond, each as approved as to form and substance by the Guarantee Program, and based upon those costs found acceptable to ACS (supported by Consultech Plan and Cost Review (#22571), December 19, 2002) and or any revisions thereof. ACS shall certify that the costs are within the costs to be financed by the first mortgage.

21. Project construction shall be monitored by a consulting professional engineer or architect (the construction monitor) retained by the Mortgagee and approved by the Guarantee Program, the cost of which shall be borne by the Developer.

22. The Developer’s Note as well as any other project related debt (if any) as listed in

the Sources and Uses of Funds Schedule provided by the Mortgagee, shall be fully subordinated to the Guaranteed Mortgage. Guarantee Program approval of the terms of any project related debt is required prior to closing as listed in the Sources and Uses of Funds Schedule.

23. The Mortgagee shall be required to approve and sign off on all construction draw-downs and any change order in excess of $25,000 or on each subsequent change order when the aggregate of change orders exceed an amount equal to $50,000. Mortgagee shall exercise the same degree of care to protect the interests of the Guarantee Program as Mortgagee uses for the protection of its Construction Mortgage Loan to the Borrower.

24. During the construction period, the Developer shall be required to provide statements of requests for construction draw-downs to the Mortgagee which shall be paid subsequent to approval by the construction monitor.

25. The required operating and construction completion guarantees shall be (a)

effective at closing, (b) subject to the approval of ACS as to form, substance and acceptability, and (c) subject to the Guarantee Program finding said guarantees to be acceptable. This Condition is understood to require the credit underwriter’s approval of an acceptable detailed schedule of all contingent liabilities of the guarantors. Said schedule and approval to be filed with the Guarantee Program prior to closing.

26. All Housing Credits amounts necessary to complete construction be deposited


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27. with the Bond Trustee at closing or evidence be obtained at


closing that 100% of such amounts are on deposit, or immediately available, with the entity providing Housing Credit payments.

27. The public purpose options selected by the Developer, and effective at the closing

of the mortgage loan to be guaranteed, for this Project shall remain in effect for as long as this Mortgage Loan continues to be guaranteed by the Guarantee Program.

IX. RECOMMENDATION

Based upon TPI's review of the proposed transaction, we believe that this housing is eligible under the Mortgagee’s Guarantee Program enabling legislation. TIBOR PARTNERS, Inc. recommends that, subject to these Additional Conditions, the Guarantee Program accept the described mortgage loan as suitable for mortgage guarantee. Attachment: The following Exhibit is attached hereto and made a part hereof: ACS’s Final Report dated January 8, 2003

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Florida Housing Finance Corporation

Credit Underwriting Report

Eagle Pointe Apartments 2002-037B

Section A Board Summary

Section B Loan Commitment Conditions/HC Allocation Recommendation

Section C Supporting Information and Schedules

Prepared by

AmeriNational Community Services, Inc.

Final Report

January 8, 2003

MULTIFAMILY MORTGAGE REVENUE BOND REPORT ACS

Completeness and Issues Checklist DEVELOPMENT NAME: Eagle Pointe Apartments

DATE: January 8, 2003

In accordance with the applicable Program Rule(s), the Applicant is required to submit the information required to evaluate, complete, and determine its sufficiency in satisfying the requirements for Credit Underwriting to the Credit Underwriter in accordance with the schedule established by the Florida Housing Finance Corporation (“FHFC”). The following items must be satisfactorily addressed. “Satisfactorily” means that the Credit Underwriter has received assurances from third parties unrelated to the Applicant that the transaction can close within the allowed time frame. Unsatisfactory items, if any, are noted below and in the “Issues and Concerns” section of the Executive Summary.

STATUS NOTE FINAL REVIEW

REQUIRED ITEMS: Satis. / Unsatis.

1. The development’s final “as submitted for permitting” plans and specifications.

Note: Final “signed, sealed, and approved for construction” plans and specifications will be required thirty days before closing.

Satis.

2. Final site plan and/or status of site plan approval. Satis.

3. Permit Status. Satis. 1

4. Pre-construction analysis (“PCA”). Satis.

5. Survey. Satis.

6. Complete, thorough soil test reports. Satis.

7. Full or self-contained appraisal as defined by the Uniform Standards of Professional Appraisal Practice.

Satis.

8. Market Study separate from the Appraisal. Satis.

9. Environmental Site Assessment – Phase I and/or the Phase II if applicable (If Phase I and/or II disclosed environmental problems requiring remediation, a plan, including time frame and cost, for the remediation is required). If the report is not dated within one year of the application date, an update from the assessor must be provided indicating the current environmental status.

Satis.

10. Audited financial statements for the most recent fiscal year ended or acceptable alternative as stated in Rule for credit enhancers, applicant, general partner, principals, guarantors and general contractor.

Satis.

11. Resumes and experience of applicant, general contractor and management agent.

Satis.

12. Credit authorizations; verifications of deposits and mortgage loans. Satis.

13. Management Agreement and Management Plan. Satis.

14. Firm commitment from the credit enhancer or private placement purchaser, if any.

Satis.

15. Firm commitment letter from the syndicator, if any. Satis.

16. Firm commitment letter(s) for any other financing sources. Satis.

17. Updated sources and uses of funds. Satis.

EAGLE POINTE i January 8, 2003


STATUS NOTE FINAL REVIEW

REQUIRED ITEMS: Satis. / Unsatis.

18. Draft construction draw schedule showing sources of funds during each month of the construction and lease-up period.

Satis

19. Fifteen-year income, expense, and occupancy projection. Satis.

20. Executed general construction contract with “not to exceed” costs. Satis.

21. Any additional items required by the credit underwriter. Satis. Revised 11/4/02

Notes and Applicant’s Responses: 1. Building Permit Status: The Applicant states that their construction project manager is processing the plans currently and expects to be able to have a letter from the city by early February stating that permits will be issued upon payment of fees. Applicant has provided ACS with copies of permits for the Florida Department of Health Water Main construction Permit, Broward County Department of Planning and Environmental Protection License for installation of Wastewater Collection/Transmission System, South Florida Water Management District and the Florida Department of Environmental Protection permits also granted.

EAGLE POINTE ii January 8, 2003


Changes From The Application

COMPARISON CRITERIA YES NO

Does the level of experience of the current team equal or exceed that of the team described in the application?

x

Are all funding sources the same as shown in the Application? 1

Are all local government recommendations/contributions still in place at the level described in the Application?

n/a

Is the Development feasible with all amenities/features listed in the Application? 2

Do the site plans/architectural drawings account for all amenities/features listed in the Application? x

Does the Applicant have site control at or above the level indicated in the Application? x

Does the Applicant have adequate zoning as indicated in the Application? x

Has the Development been evaluated for feasibility using the total length of set-aside committed to in the Application?

x

Have the Development costs remained equal to or less than those listed in the Application? x

Is the Development feasible using the set-asides committed to in the Application? x

If the Development has committed to serve a special target group (e.g. elderly, large family, etc.), do the development and operating plans contain specific provisions for implementation?

x

HOME ONLY: If points were given for match funds, is the match percentage the same as or greater than that indicated in the Application?

n/a

HC ONLY: Is the rate of syndication the same as or greater than that shown in the Application? x

Is the Development in all other material respects the same as presented in the Application? x

1. The tax exempt bond amount requested in the application was $12,490,000. However, the

underwriter reduced the maximum amount allowable to $12,270,000 in order to meet the 1.15:1 Debt Service Coverage requirement. However, upon bond pricing, the maximum tax exempt bond amount may increase up to the applicant’s request of $12,490,000 if the DSC can be met. This change is neither harmful of beneficial to the development.

2. According to the Applicant, the unit mix has changed from 48 one bedrooms to 60 and from

84 two bedrooms to 72 based upon market study information the developer received. The net change in square footage is approximately 2% therefore the budget has been similarly reduced. The Applicant also stated that they decided to offer more one bedrooms also based upon recent information showing that affordable communities in the area typically do not offer enough one bedrooms and that there is an unmet need in the area since the one bedroom units typically rent out first. ACS finds that this change is beneficial to the development.

EAGLE POINTE iii January 8, 2003

ACS

Section A

Board Summary

January 8, 2003


Executive Summary

This is an AmeriNational Community Services, Inc. (“AmeriNational” or “ACS”), Multifamily Mortgage Revenue Bond (“MMRB”) Credit Underwriting Report for Eagle Pointe Apartments, to be located on the north side of West Atlantic Blvd., East of NW 21st Avenue, Pompano Beach, Broward County, Florida. This development will consist of a 192-unit facility with seven three story walk-up “garden” style apartment buildings, a clubhouse and maintenance area, situated on an 8.21-acre site. Additional improvements are to include a swimming pool, clubhouse, exercise room, laundry facilities, gated with a carded entry and a playground. Interior unit features will include a frost-free refrigerator/freezer, range/oven, dishwasher, garbage disposal, window treatments and washer/dryer hook-ups. Current plans indicate there will be 321 parking spaces provided, of which seven will be handicapped. Based upon demographic and market analysis, including existing and proposed developments, the Appraiser projected a 20 unit per month absorption rate. ACS expects construction to commence April 2003 and completion to occur in March 2004. The Construction Contract specifies construction for 12 months and delivery of the first building during the seventh month of construction. For purposes of Credit Underwriting, ACS utilizes an absorption rate of 20 units per month, resulting in a 15-month construction/stabilization period with stabilization at 90% occupancy. Ownership Structure: Eagle Pointe Associates, Ltd. (“Applicant”) is a Florida limited partnership formed December 4, 2001 to construct and operate Eagle Pointe Apartments. The General Partner of the Applicant (with a .01% ownership interest) is Cornerstone Eagle Pointe, L.L.C, a Florida Limited Liability Company. The members of the general partner are Stuart I. Meyers Family Partnership, Ltd. (30%), Jorge Lopez (50%), Mara S. Mades (10%) and Leon J. Wolfe (10%), who in addition to Eagle Pointe Associates, Ltd., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., and Cornerstone Eagle Pointe, L.L.C. will provide guarantees of completion, operating deficit and recourse obligations. The guarantors, in addition to the applicant entity, will also provide an environmental indemnity. The limited partners currently are the Stuart I. Meyers Family Partnership, Ltd. (29.997%), JL Holding Corp. (49.995%), M3, Inc. (9.999%) and MSM, Inc. (9.999%); however, they will be replaced by Lend Lease Real Estate, or an affiliate thereof, as a limited partner upon admission into the partnership prior to or concurrent with MMRB closing. The Developer is Cornerstone Group Development, L.L.C. (“Cornerstone Group”), Coral Gables, FL., Alliance Construction, L.L.C. will be the General Contractor, and Cornerstone Residential Management, L.L.C., will be the Management Agent. All three entities are owned 50% by Mr. Lopez, 30% by Mr. Meyers, 10% by Mr. Wolfe and 10% by Ms. Mades. The Applicant and its Principals have sufficient experience and financial resources to develop, construct and operate the proposed development. MMRB Loan: The Applicant has requested a Multifamily Mortgage Revenue Bond (“MMRB” or “Bonds”) loan to be issued by the Florida Housing Finance Corporation (“FHFC” or “Florida Housing”), for the construction and permanent financing of this development. The application submitted for the MMRB Program 2002 Allocation indicated $12,490,000 in tax-exempt bonds. The applicant has

EAGLE POINTE PAGE A-1 January 8, 2003


revised their request to include taxable bonds in the amount of $180,000 for a total requested MMRB loan of $12,670,000 . However, at the time of this analysis the underwriter has reduced the request due to $12,270,000 in tax exempt bonds due to the 1.15 DSC constraints for a total MMRB loan amount of same. An estimated Debt Service Reserve of $432,325 will not be cash funded; it is to be secured by a Surety Bond in the same amount. Inasmuch as the interest rate of the MMRB Loan cannot be accurately determined until the bonds are priced, ACS has underwritten the subject development by determining its anticipated Net Operating Income (“NOI”). Based upon a projected NOI of $994,745 , ACS has calculated the supportable loan amount for various amortization periods and “all-in” interest rates (can increase the tax-exempt bond amount up to $12,490,000 if interest rates upon bond pricing allow). This information is presented in the format of a table attached to this Credit Underwriting Report as Exhibit 1. The current weighted average “all-in” rate of 6.525% is also the maximum interest rate at which the subject development can support the recommended MMRB Loan of $12,270,000 . Based upon current interest rates and loan-to-value, the proposed development can support a MMRB Loan in the amount of $12,270,000 . Terms and conditions of the MMRB Loan include a term of 41.25-years, which will include a 15-month construction/stabilization phase followed by a 40.00-year amortization period. The Debt Service Coverage (“DSC”) ratio will be no less than 1.15 to 1.00 (including scheduled MMRB Loan principal and interest payments, U.S. Department of Housing and Urban Development (“HUD”), Guarantee Program, Insurance Wrap and Bond Trustee Fees, plus FHFC Issuer fee including the required Permanent Servicing, Compliance Monitoring and Financial Monitoring fees.) Base rates for the tax-exempt bonds are currently estimated at 5.35%. Guaranteed Investment contract (“GIC”) earnings on un-disbursed MMRB funds will accrue at an estimated rate of 1.26%. It is important to note, however, that interest rates will not be fixed until bonds are priced, at or near the MMRB Loan closing date. The “all-in” weighted average rate utilized by ACS for this report is 6.525%. The MMRB Loan will be secured by a First Mortgage on Eagle Pointe and a First Security Interest in all personalty of the subject development. Based upon applicant’s prepayment of $38,400 (one-half the required Replacement Reserves for Year 1 and 2), Replacement reserves of $100 per unit per year will be paid from Operations Year 1 and 2, followed by $200 per unit per year thereafter. An inflation factor based upon the Consumer Price Index will be applied to the Replacement Reserve deposit beginning in Year 7, unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to Florida Housing’s Guarantee Program (“Guarantee Program”) that evidences an increase in the deposit is excessive or unnecessary. Monthly deposits to an Escrow for property Taxes and Insurance are also required. Based upon an anticipated NOI of $994,745 , the subject development can support the recommended MMRB Loan at the required 1.15 to 1.00 DSC so long as the Annual Debt Service does not exceed $864,996. If the weighted average interest rate on the bonds is greater than 6.528%, the MMRB Loan will have to be reduced so that annual Debt Service does not exceed $864,996. If the MMRB Loan is reduced, the Applicant will have to fund any shortfall with an increase to Deferred Developer Fees, a deferral of General Contractor Fees and/or an injection of Developer Cash (Equity). EAGLE POINTE PAGE A-2 January 8, 2003


Credit Enhancement and MMRB Structure: Applicant has applied for Credit Enhancement from the Guarantee Program in combination with the HUD Risk Sharing Program. The MMRB Loan is anticipated to have a 41.25-year term (a 40.00-year permanent/amortization period following a 15-month interest only construction/stabilization period). Credit Enhancement Fees include an FHFC Guarantee Program fee of 0.500%, a HUD Risk Sharing Fee of 0.250% and an Insurance Wrap fee of 0.055%. Other fees include the FHFC Issuer fee of 0.37%, which includes a Bond Trustee fee, Compliance Fee, Permanent Servicing and Financial Monitoring. This Credit Enhancement structure is expected to impart an “AAA” bond rating. HC Equity Based upon a Commitment Letter dated December 16, 2002, Lend Lease Real Estate Investments Limited Partnership (“LLREI”), Boston, MA, or an affiliate, will replace the Stuart I. Meyers Family Partnership, Ltd. , JL Holding Corp., M3, Inc. and MSM, Inc. as the 99.99% Limited Partner, concurrent with or prior to the closing of the MMRB Loan. With $6,714,770 of syndicated HC and a syndication rate of $0.8200 per dollar of syndicated HC, the Limited Partnership anticipates a Net Equity Contribution of $5,506,000. Of this amount, $2,753,000 will be advanced upon admission to the Limited Partnership (MMRB Loan closing).Two additional construction installments of $837,750 at 50% completion and $837,750 at 75% will allow for a total amount available during construction to be $4,428,500. The remaining payments will consist of $325,000 funded at completion, $350,000 funded at HC Determination and the final payment of $402,500 funded at permanent loan conversion, 1.12 DSC for three consecutive months or issuance of Form(s) 8609. AmeriNationals’ recommendations are contingent upon closing of the HC purchase consistent with the terms of this Credit Underwriting Report. Other Financing Sources: Additional sources of funds for this development include deferred developer fees. During the construction period, the developer must defer $2,170,564 of the available developer fee. During the permanent phase, the developer must defer $1,093,064 of the available developer fee. Additional Information: 1. Guarantees and Liquidity: AmeriNational recommends that FHFC obtain Construction

Completion and Operating Deficit Guarantees (collectively the “Guarantees”) from Eagle Pointe Associates, Ltd., Cornerstone Eagle Pointe, L.L.C., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., Stuart I. Meyers Family Partnership, Ltd., along with Stuart I. Meyers, Jorge Lopez, Leon J. Wolfe and Mara S. Mades, personally.

Based upon its review of the Personal Financial Statements and the Schedule of Contingent Liabilities, AmeriNational concludes that Mr. Meyers, Mr. Lopez, Mr. Wolfe, Ms. Mades along with SIM Holdings II, L.L.C., JL Holding Corp., Cornerstone Group Development Corp., and Cornerstone Group Development, L.L.C., have sufficient Net Worth for the purpose of collateralizing the FHFC Guarantees by executing a Liquidity Maintenance Agreement. AmeriNational’s recommendation is contingent upon: (i) confirmation two weeks prior to FHFC Mortgage Loan closing of at least $4.5 million in combined liquidity for Cornerstone Group Development Corp., Cornerstone Group Development, L.L.C., SIM



Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades; however, Mr. Meyers, Mr. Lopez, Mr. Wolfe and Ms. Mades shall maintain no less than $3 million of the minimum $4.5 million liquidity requirement at all times and (ii) Cornerstone Group Development, L.L.C,. Cornerstone Group Development Corp., SIM Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades to enter into a Liquidity Maintenance Agreement with FHFC. Terms of the Liquidity Maintenance Agreement must include, but are not limited to requirements for Cornerstone Group Development Corp., Cornerstone Group Development, L.L.C., SIM Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades: (i) continuously maintain liquid balances of not less than $4.5 million until the FHFC Guarantees have been released, (ii) certify the minimum $4.5 million liquid balances have been continuously maintained and (iii) provide evidence of such liquid balances to the Loan Servicer on a quarterly basis. The Liquidity Maintenance Agreement must also contain a clause such that if not cured within a timely manner, failure to maintain the required balances is an event of MMRB Loan default.

2. Net Operating Income Assumptions: Based on operating data from comparable properties, third party reports (primarily a subject self-contained appraisal and market study), and the credit underwriter’s independent due diligence from three comparables in the market (Exhibit 7); ACS represents that, in our professional opinion, estimates for rental income, vacancy and loss allowances, other income, and operating expenses fall within a band of reasonableness. For purposes of this analysis, estimates utilized for other income and operating expenses in this report have not been adjusted and the amounts utilized by the appraiser for purposes of determining the “restricted rent/favorable financing” investment value of the subject are the same as utilized in this report.

Issues & Concerns: None



Recommendation: AmeriNational recommends a MMRB loan for the construction and permanent financing of this development in the amount of $12,270,000 and an annual HC allocation of $740,968 . The actual MMRB financed loan amount is subject to confirmation (based on actual interest rates) that the minimum debt service coverage and maximum loan to value underwriting guidelines have been met. AmeriNational’s recommendations are based upon the assumptions detailed in the Board Summary (Section A) and subject to the Loan Conditions outlined in the Loan Commitment Conditions/Housing Credit Allocation Recommendation (Section B), with Supporting Information and Schedules (Section C). The reader is cautioned to refer to these sections for complete information. Prepared by: Reviewed by:

_____________________________ Nancy Griffin Michael Williams Senior Credit Underwriter Credit Underwriter AmeriNational Community Services, Inc. AmeriNational Community Services, Inc.



Eagle Pointe Apartments

Multifamily Mortgage Revenue Bond Program Recommendation: Net Loan Amount: $12,270,000Estimated Debt Service Reserve: $432,325

Total Bond Amount: $12,270,000

Tax Exempt Bonds: $12,270,000Taxable Bonds: $0

Note: The Debt service Reserve will be secured by a Surety Bond rather than cash funded.

Maximum Housing Credit Recommendation: $740,968 Note: This recommendation is based upon the Qualified Basis Caculation as found in Exhibit 3.

Development Type Set Aside Affordability PeriodNew Construction 85% at 60% AMI (MFMRB) 50 years

100% at 60% AMI (HC)

Mortgagor Principals DeveloperEagle Pointe Associates, Ltd. Jorge Lopez, Stuart I. Meyers Cornerstone Group

Leon J. Wolfe and Mara S. Mades Development L.L.C

Credit Enhancement Syndicator HC PriceFHFC Guarantee Program Lend Lease Real Estate $ .82 per dollar of HC

in concert with Investments Limited PartnershipHUD Risk Sharing Boston, MA or affiliate

Site Area Density Zoning8.21 acres 23.4 units per acre BU-3 & Rm-12, General Business

w/exception for MF (max 192 Units)

Net Operating Income Appraised Value Total Development Cost$994,745 $13,900,000 Restricted Rents/ $18,869,612

Favorable Financing @ Stabilized $13,400,000 Market Rents/

Market Financing @ Stabilized



Rent Roll MSA: Ft. Lauderdale

Bed-rooms Baths

No. of

Units

Unit Size (SF)

Median Income

%

Max Gross

HC Rents

Utility Allow-ance

Max Net

HC RentsApplicant

RentsUnderwriter

Rents Annual Rents1 1 60 700 60% $677 $37 $640 $640 $640 $460,8002 2 72 950 60% $813 $48 $765 $765 $765 $660,9603 2 60 1150 60% $939 $60 $879 $879 $879 $632,880

Total 192 179,400 $1,754,640

Bed-rooms Baths

No. of

Units

Unit Size (SF)

Median Income

%

Max Gross

HC Rents

Utility Allow-ance

Max Net

HC RentsApplicant

RentsUnderwriter

Rents Annual Rents1 1 60 700 60% $677 $37 $640 $640 $640 $460,8002 2 72 950 60% $813 $48 $765 $765 $765 $660,9603 2 60 1150 60% $939 $60 $879 $879 $879 $632,880

Total 192 179,400 $1,754,640

Sources of Funds

Source Lender ApplicantApplicant's

Revised UnderwriterInterest Rate*

Amort. Years

Term Years

Annual Debt Service

Tax-Exempt Bonds FHFC $12,490,000 $12,490,000 $12,270,000 6.525% 40.00 41.25 $864,650Taxable Bonds FHFC $0 $180,000 $0Housing Credit Equity Lend Lease $5,789,000 $5,898,000 $5,506,000Deferred Developer Fee Cornerstone $306,263 $118,736 $1,093,064Total $18,585,263 $18,686,736 $18,869,064 $864,650

Ratios Loan to Value1 Debt Service Coverage Total Cost Per Unit

88.27% Restricted Rents/ 1.15 based upon a current "all- $98,279Favorable Financing in" interest rate of 6.525%2

91.57% Market Rents/ 1.15 based upon a maximum Market Financing "all-in" interest rate of 6.525%3

MFMRB Loan to Cost1 MFMRB Loan per Unit1 FHFC Assistance Per Unit4

65% $63,906 $63,906

HC Allocation Per Unit$3,859.21

1. Based on the MMRB loan amount recommended. 2. Based on the MMRB loan amount recommended at the current “all-in” interest rate. 3. Based on MMRB loan amount recommended at the maximum MMRB “all-in” interest rate. 4. Tax-Exempt Bonds excluding HC syndication proceeds since HC are direct from the

Treasury.



Construction Financing Sources


Revised UnderwriterInterest

RateConstruction Debt Service

Tax-Exempt Bonds FHFC $12,490,000 $12,490,000 $12,270,000 5.350% $769,249Taxable Bonds FHFC $0 $180,000 $0Housing Credit Equity Lend Lease $4,920,650 $4,920,650 $4,428,500Deferred Developer Fee Developer $1,174,613 $1,096,086 $2,170,564Deferred G/C Fee Alliance $0 $0 $0

$18,585,263 $18,686,736 $18,869,064 $769,249 Notes to the Construction Period Sources of Funds: 1. MMRB financing will have Credit Enhancement through Florida Housing’s Guarantee

Program in concert with HUD Risk sharing. The MMRB Loan will require payments of interest only during the 15-month construction/stabilization period. The construction contract is for a period of 12 months. Construction Debt Service, which limits Eligible basis, is based upon current base average interest rate of 5.35% for the tax-exempt bonds. Capitalized Interest included in the Development Budget is inclusive of this interest amount, but it also takes into account three months of Debt Service during the stabilization period and Guaranteed Investment contract (“GIC”) earnings of 1.26% generated on un-disbursed bond funds. (Exhibit 2)

2. Based upon a Commitment Letter dated December 16, 2002, Lend Lease Real Estate

Investments Limited Partnership (“LLREI”), Boston, MA, or an affiliate, will replace the Stuart I. Meyers Family Partnership and Jorge Lopez as the 99.99% Limited Partner, concurrent with or prior to the closing of the MMRB Loan. With $6,714,770 of syndicated HC and a syndication rate of $0.8200 per dollar of syndicated HC, the Limited Partnership anticipates a Net Equity Contribution of $5,506,000. Of this amount, $2,753,000 will be advanced upon admission to the Limited Partnership (MMRB Loan closing).Two additional construction installments of $837,750 at 50% completion and $837,750 at 75% will allow for a total amount available during construction to be $4,428,500. The remaining payments will consist of $325,000 funded at completion, $350,000 funded at HC Determination and the final payment of $402,500 funded at permanent loan conversion, 1.12 DSC for three consecutive months or issuance of Form(s) 8609. AmeriNationals’ recommendations are contingent upon closing of the HC purchase consistent with the terms of this Credit Underwriting Report.

3. Assuming during the construction phase, the developer will defer $2,170,564 of the

developer fee or the amount necessary to cover actual construction period shortfall, if the MMRB loan amount is reduced.

4. The Applicant states that it has a standing agreement with a local bank to provide Letters of

Credit (“LOC’s”) to cover the 3% hard cost contingency. ACS is aware of several transactions this Developer has utilized such LOC for Hard Cost Contingency. This is a standard provision for this applicant.



Permanent Financing Sources


Revised Underw riterInterest

Rate*Am ort. Years

Term Years

Annual Debt Service

Tax-Exempt Bonds FHFC $12,490,000 $12,490,000 $12,270,000 6.525% 40.00 41.25 $864,650Taxable Bonds FHFC $0 $180,000 $0Housing Credit Equity Lend Lease $5,789,000 $5,898,000 $5,506,000Deferred Developer Fee Cornerstone $306,263 $118,736 $1,093,064Total $18,585,263 $18,686,736 $18,869,064 $864,650

Notes to the Permanent Period Sources of Funds:

1. MMRB financing will have Credit Enhancement from the Guarantee Program in combination with the HUD Risk Sharing Program. The MMRB Loan is anticipated to have a 41.25-year term (a 40-year permanent/amortization period following a 15-month construction/stabilization period). Credit Enhancement Fees include an FHFC Guarantee Program fee of 0.500%, a HUD Risk Sharing Fee of 0.250% and an Insurance Wrap fee of 0.055%. Other fees include the FHFC Issuer fee of 0.37%, which includes a Bond Trustee fee, Compliance Fee, Permanent Servicing and Financial Monitoring. This Credit Enhancement structure is expected to impart an “AAA” bond rating.

The MMRB Loan will be secured by a First Mortgage on Eagle Pointe and a First Security Interest in all personalty of the subject development. Based upon applicant’s prepayment of $38,400 (one-half the required Replacement Reserves for Year 1 and 2), Replacement reserves of $100 per unit per year will be paid from Operations Year 1 and 2, followed by $200 per unit per year thereafter. An inflation factor based upon the Consumer Price Index will be applied to the Replacement Reserve deposit beginning in Year 7, unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to Florida Housing’s Guarantee Program (“Guarantee Program”) that evidences an increase in the deposit is excessive or unnecessary.

2. Per a December 16, 2002, Syndication Letter, LLREI will purchase a 99.99% Limited

Partner interest concurrent with or prior to the closing of the MMRB Loan. With $6,714,770 of syndicated HC and a syndication rate of $0.8200 per dollar of syndicated HC, the Limited Partnership anticipates a Net Equity Contribution of $5,506,000. AmeriNational’s recommendations are contingent upon closing of the HC purchase consistent with the terms of this Credit Underwriting report.

3. Deferred Developer Fees of $1,093,064 represent the amount that must be deferred

after all available loan proceeds and housing credit equity has been received.



Uses of Funds

Applicant Total Costs

Applicant's Revised Total

CostsUnderwriter Total Costs

HC Ineligible Costs

Actual Construction CostDemolition $0 $0 $0Site Work $0 $0 $0Off-site $0 $0 $0New Rental Units $9,081,152 $8,801,659 $8,801,659Accessory Buildings $263,498 $250,000 $250,000Recreational Amenities $260,000 $225,533 $225,533Special Inspection Fees $0 $30,000 $30,000P&P Bonds $0 $70,000 $70,000General Contractor Fees (max 14%) $1,331,351 $1,298,808 $1,298,808Subtotal $10,936,001 $10,676,000 $10,676,000Other - Hard Cost Contingency by LOC $0 $0 $0Total Actual Construction Cost $10,936,001 $10,676,000 $10,676,000 $0 Notes to the Actual Construction Costs:

1. Applicant states it has a relationship with a local bank to provide a LOC to cover the Hard Cost Contingency. ACS is aware of several transactions in which the developer has provided such LOC.

2. The General Contractor Fees consist of General Conditions of 6%, Overhead at 2% and

Contractor Profit at 6% (14% total). At $1,298,808 , General Contractor Fees are 14.0% of Net Construction Costs (i.e., the Construction Contract figure of $10,676,000 less the General Contractor’s Fee, Special Inspection Fees (3rd party inspector fees for building of non-frame construction) of $30,000 and Payment & Performance Bonds of $70,000). General Contractor Fees are in conformance with the rule.

3. An executed lump sum contract in the amount of $10,676,000, dated August 10, 2002,

between the Applicant, Eagle Pointe Associates, Ltd., and Alliance Construction, Inc. was received and reviewed. Retainage will be 10% until 50% complete, and 0% thereafter. The contract indicates construction will take 12 months to complete.






HC Ineligible Costs

General Development CostsAccounting Fees $20,000 $15,000 $15,000Appraisal $7,500 $7,500 $10,100Architect's Fee - Design $134,400 $124,800 $124,800Architect's Fee - Supervision $28,800 $28,800 $28,800Builder's Risk Insurance $96,000 $96,000 $96,000Building Permits $96,000 $96,000 $96,000Brokerage Fees $0 $0 $0Closing Costs - Construction $0 $0 $0Closing Costs - Permanent $0 $0 $0Engineering Fee $48,000 $48,000 $48,000Environmental Report $9,000 $5,000 $5,000FHFC Application Fee $2,000 $4,000 $4,000FHFC Administrative Fee $57,899 $57,899 $59,277FHFC Compliance Fee $0 $0 $0FHFC Credit Underwriting Fee $9,000 $12,101 $13,950Impact Fees $725,064 $650,436 $650,436Inspection Fees/Construction Admin. $15,600 $24,000 $24,000Insurance $0 $76,800 $76,800Legal Fees $95,000 $90,000 $90,000 $45,000Market Study $5,000 $5,000 $5,000Marketing and Advertising $150,000 $150,000 $150,000 $150,000Pre-Construction Analysis $0 $0 $1,800Property Taxes $50,000 $75,000 $75,000 $30,000Soil Test $6,000 $5,000 $5,000Survey $15,000 $10,000 $10,000Title Insurance $75,000 $100,000 $100,000Utility Connection Fees $480,000 $480,000 $480,000Other - Clubhouse Furniture $75,000 $135,000 $135,000Other - Seed Capital Interest $0 $0 $0Other - Replacement Reserves $0 $0 $0Other - Consulting Fees $0 $0 $0Other - $0 $0 $0Other-Misc. Soft Costs $50,000 $50,000 $50,000Total General Development Costs $2,250,263 $2,346,336 $2,353,963 $225,000 Notes to the General Development Costs: 1. Closing Costs Construction is included in other line items. 2. FHFC Administrative Fees reflect 8% of the estimated amount of annual HC recommended.

FHFC Compliance Fees are part of the Issuer’s annual servicing fee and will be paid from operations. Underwriting fees reflect $10,750 for MMRB and $3,200 for HC underwriting.

3. Appraisal and Market Study fees are actual costs. 4. ACS has included $1,800 for a Plan and Cost Review 5. Legal Fees at 73 basis points (“BP”) of the loan amount are within the “greater of $40,000 or

75bp” maximum per FHFC program rule.



6. Other-Misc. Administrative Contingency of $50,000 was requested by the applicant and appears reasonable to ACS as some costs are currently estimates. Since ACS cannot determine at this time which costs may increase, a determination as to whether or not they are ineligible HC costs cannot be made.

7. The remaining General Development Costs, which represent the Applicant’s estimates

updated during underwriting, appear reasonable.




HC Ineligible Costs

Financial CostsCredit Enhancement Fees $148,475 $319,680 $319,680 $309,993Bond Loan Construction Loan Interest $565,000 $594,000 $769,249 $230,775Bond Loan Issuance Costs $498,525 $396,925 $381,794 $370,224Borrower Cost Of Issuance $0 $66,395 $66,395 $64,383Surety Bond Premium $0 $0 $15,131 $15,131Reserves Required by Lender $38,400 $38,400 $38,400 $38,400Total Financial Costs $1,250,400 $1,415,400 $1,590,649 $1,028,906

Notes to the Financial Costs: 1. The construction interest rate indicated for the MMRB loan reflects the current anticipated

base construction interest rate of 5.350%. The calculation is also based on a construction period of 12-months and a stabilization period of 3-months for a total construction and stabilization period debt service of 15-months, and an average outstanding loan balance based upon the applicant’s construction draw schedule. Capitalized Interest included in the Development Budget is inclusive of this amount, but it also takes into account Guaranteed Investment Contract (“GIC”) earnings generated on un-disbursed bond funds. (Exhibit 2)

2. The Credit Enhancement Fees and Bond Loan Issuance Costs are the Applicant’s revised

estimates, which appear reasonable. ACS will confirm these costs with the Bond Underwriter prior to MMRB closing. ACS has shown as a separate line item a 3.5% premium on the $432,325 Surety Bond, in substitution for the Debt Service Reserve.

3. Replacement reserves of $200 per unit per year are normally required, however the

Applicant elected to prepay Replacement Reserves in the amount of $38,400 (one-half the required replacement Reserves for Years 1 and 2). Replacement Reserves to be funded from Operations will be $100 per unit per year for Years 1 and 2, followed by $200 per unit per year thereafter. An inflation factor based upon Consumer Price Index will be applied to the replacement Reserve deposit beginning in Year 7 (please refer to Exhibit 1), unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to the Guarantee Program that evidences an increase in the deposit is excessive or unnecessary.






HC Ineligible Costs

Development Cost Before Land and Developer Fee $14,436,664 $14,437,736 $14,620,612 $1,253,906

Other Development CostsDeveloper Fee on Acquisition of Building $0 $0 $0Developer Fee $2,598,599 $2,599,000 $2,599,000Excess Land Cost $0 $0 $0Other - Consultant Fee/Fin'l Advisor/Excess Lega $0 $0 $0Total Other Development Costs $2,598,599 $2,599,000 $2,599,000 $0 Notes to the Other Development Costs: 1. Total Other Development Costs are 17.78% of Development Cost before Land and

Developer fees. They are within the maximum for MMRB developments per FHFC Program Rule.




HC Ineligible Costs

Development Cost Before Land $17,035,263 $17,036,736 $17,219,612 $1,253,9

Land Acquisition CostsLand $1,550,000 $1,650,000 $1,650,000 $1,650,000Other - Loan interest carry costs $0 $0 $0 $0Total Acquisition Costs $1,550,000 $1,650,000 $1,650,000 $1,650,000

06

Notes to the Acquisition Costs:

1. The Applicant provided an Assignment of Purchase and Sale Agreement dated April 1, 2002 between Cornerstone Group Associates, Inc., seller, and Eagle Pointe Associates, Ltd., buyer, based upon an original Purchase and Sale Agreement between Louis Bachrodt Trust Dated August 19, 1985, as seller, and Cornerstone Group Associates, Inc. as buyer, dated November 11, 2001 for a purchase price of $1,650,000 which is supported by the as-is value of $1,650,000 as stated in the Appraisal.




HC Ineligible Costs

Total Development Cost $18,585,263 $18,686,736 $18,869,612 $2,903,906



Operating Proforma DESCRIPTION Annual Per UnitIncome Gross Potential Rental Revenue $1,754,640 $9,139 Other Income Washer/Dryer Rentals $55,296 $288 Cable TV Income $21,600 $113 Miscellaneous Income $23,040 $120 Intrusion alarms $9,216 $48 Gross Potential Income $1,863,792 $9,707 Less: Vacancy Loss @ 4.0 $74,552 $388 Collection Loss @ 1.0 $18,638 $97Total Effective Gross Income (EGI) $1,770,602 $9,222

Expenses Fixed: Real Estate Taxes $183,637 $956 Insurance $81,600 $425 Variable: Management @ 5% $88,530 $461 General and Administrative $50,800 $265 Payroll Expenses $156,250 $814 Utilities $112,320 $585 Marketing and Advertising $6,528 $34 Maintenance and Repairs $50,880 $265 Grounds Maintenance and Landscaping $24,000 $125 Security $2,112 $11 Reserve for Replacements $19,200 $100 Other $0 $0 Other $0 $0Total Expenses $775,857 $4,041

Net Operating Income $994,745 $5,181

Debt Service Payments First Mortgage $864,650 $4,503 Second Mortgage $0 $0 Other - Net Interest Expense on DSR $0 $0 Other Fees - Letter of Credit/Guarantee $0 $0 Other Fees - Agency/Trustee/Servicer $0 $0Total Debt Service Payments $864,650 $4,503

Operating Income After Debt Service - Before Tax Cash Flow $130,095 $678



Debt Service Coverage (DSC) Ratios DSC - First Only 1.150 DSC - First and Second 1.150 DSC - All Mortgages 1.150 DSC- All Mortgages and Fees 1.150

Financial Ratios Operating Expense Ratio 44% Break-even Ratio 88% Notes to the Operating Proforma and Ratios:

1. Based on operating data from comparable properties, third party reports (primarily a subject self-contained appraisal and market study), and the credit underwriter’s independent due diligence from comparable properties (Exhibit 7); ACS represents that, in our professional opinion, estimates for rental income, vacancy and loss allowances, other income, and operating expenses fall within a band of reasonableness. For purposes of this analysis, estimates utilized for other income and operating expenses in this report have not been adjusted and the amounts utilized by the appraiser for purposes of determining the “restricted rent/favorable financing” investment value of the subject are the same as utilized in this report.

2. The Rent Roll is based upon Year 2002 Maximum HC Rents published by FHFC, less Utility allowances per an April 1, 2002, utility allowance from the Broward County Public Housing Authority.

3. ACS has conservatively underwritten Vacancy Loss at 4% and Collection loss at 1%, which is in accordance with the Appraisal and the average vacancy and collection percentages provided in comparable properties in Exhibit 7.

4. Other Income is comprised of Washer/Dryer rentals, Cable TV and Miscellaneous income, which are estimates by the appraiser and are within the average based upon similar comparable properties in the subject’s market. The Washer/Dryer rentals are at the rate of $30 /unit per month for 80% of the units, the cost of providing such is included in the Construction Budget per the Developer. Cable TV at the rate of $12.50/unit for 75% of the units; the cost of providing such is included in the Utility Expense line item. Intrusion Alarm Income is at $10/unit per month for 40% of the units. Miscellaneous Income (i.e. vending income, late charges, pet deposits, forfeited security deposits, etc.) is calculated at the rate of $10/unit per month.

5. Insurance including flood was based upon the Appraiser’s estimate of $425/unit per year and supported by an October 23, 2002 insurance quote from Riemer Insurance Group, Inc. for $400/ unit per year. ACS has utilized the more conservative number which allows for a 6.25% increase.

6. ACS projects Management Fees at 5% of Total Effective Gross Revenue, which conforms to the July 9, 2001, Property Management Agreement with Cornerstone Residential Management, L.L.C., a related company.

7. Replacement reserves of $200 per unit per year are normally required, however the Applicant elected to prepay Replacement Reserves in the amount of $38,400 (one-half



the required replacement Reserves for Years 1 and 2). Replacement Reserves to be funded form Operations will be $100 per unit per year for Years 1 and 2, followed by $200 per unit per year thereafter. An inflation factor based upon consumer Price Index will be applied to the replacement Reserve deposit beginning in Year 7, unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to the Guarantee Program that evidences and increase in the deposit is excessive or unnecessary.

8. The development’s Net Operating Income (“NOI”) of $994,745 , can support the adjusted total loan amount of $12,270,000 , at a 1.150 debt service coverage, based on the current “all-in” interest rate of 6.525% on the tax-exempt bonds and a 40-year amortization period. This debt service coverage of 1.150 is the minimum required DSC (1.15:1) by the Guarantee Program.

9. The 15-year Income and Expense Projection that reflects increasing DSC is attached to this report as Exhibit 4.


ACS

Section B

Loan Commitment Conditions

January 8, 2003


Multifamily Mortgage Revenue Bond Loan Recommendation AmeriNational Community Services Group (“AmeriNational” or “ACS”) recommends a loan funded through the Florida Housing Finance Corporation’s (“FHFC” or “Florida Housing”) Multifamily Mortgage Revenue Bond (“MMRB”) Program of $12,270,000 under the conditions detailed in this section. Loan Amount The MMRB total loan amount recommended by ACS is $12,270,000 which includes $12,270,000 of tax-exempt funds. A Debt Service Reserve, estimated by ACS to be $432,325 , will not be cash funded. Rather, it is to be secured by a Surety Bond in the same amount. The loan amount recommended by ACS is determined as follows: I. The maximum loan amount is limited to the lesser of:

a. 90% of the Appraised Value or the percentage allowed by the Credit Enhancer ($12,510,000).

b. The tax-exempt bond amount in the Acknowledgement Resolution plus any taxable

amount. c. If applicable, the bond amount must not be less than 90% of the amount stated in the

Notice of Intent to Issue FHFC to the Florida Division of Bond Finance. d. The amount necessary to make the development feasible which is $12,270,000 of which

$12,270,000 is tax-exempt bonds based on the information provided to date. e. The maximum total loan amount is $12,510,000, which is 90% loan-to-value and of which

$12,490,000 is the maximum amount for tax exempt bonds which was the Applicant’s request. However, the total MMRB loan amount may not exceed $12,270,000 unless interest rates support a higher amount up to 90% loan-to-value upon bond pricing.

II. Inasmuch as the interest rate of the loan cannot be accurately determined until the bond

purchase closes, AmeriNational recommends:

a. The combined Debt Service Coverage (“DSC”) ratio for the loan must not be less than 1.15 to 1.00. Debt Service includes all interest, principal and fees (including, but not limited to, U.S. Department of Housing and Urban Development (“HUD”), Insurance Wrap, FHFC Issuer Fees which include the Bond Trustee and FHFC-required Permanent Servicing and Financial Monitoring fees.

b. Based on a Net Operating Income ("NOI") of $994,745 , the total Debt Service of the

MMRB Loan cannot exceed $864,996 and achieve a 1.15 to 1.00 combined DSC. c. If based on the actual interest rates at loan closing, the projected annual Debt Service

exceeds this amount, AmeriNational recommends the loan be reduced to achieve an annual Debt Service not to exceed $864,996.

EAGLE POINTE PAGE B-1 January 8, 2003


AmeriNational recommends that any shortfall created by a reduction in the loan be funded with the deferral of Developer Fees, the deferral of General Contractor Fees and/or the injection of Developer Cash (Equity) during the permanent period.



Multifamily Mortgage Revenue Bond Loan General Conditions Purpose: To provide construction and permanent mortgage financing for Eagle Pointe Apartments, a proposed 192-unit multifamily rental development to be located on the north side of West Atlantic Blvd., East of NW 21st Avenue, Pompano Beach, Broward County, Florida. Security/Collateral: 1. A first mortgage lien on the land and improvements 2. A security interest in all personalty of the project 3. Additional collateral as required by Florida Housing. Typical Documents: 1. Note, Mortgage, and Land Use Restriction Agreement (“LURA”) 2. Assignment of leases, rents, profits 3. Assignment of management contract, service contracts, etc. 4. Loan Agreement and Trust Indenture 5. Construction Completion and Operation Deficit Guarantees 6. Guarantee of Recourse Obligations 7. Environmental Indemnity 8. Other documents as may be required by Florida Housing and by applicable program rule Term: Varies. The maturity date of the loan is determined by the maturity of the bonds sold to finance the loan. Interest Rate: Varies. The interest rate may be either fixed or variable during the term of the loan, depending on the terms of the bonds sold to finance the loan. The loan interest rate is determined by the interest rate of the bonds, plus credit enhancement, mortgage insurance, or private placement fees (as applicable), trustee fees, loan servicing fees, compliance monitoring fees, and financial monitoring fees. Repayment Schedule: Monthly payments of interest, principal and fees. Interest and FHFC-required servicing fees are calculated based on the outstanding principal balance of the loan.



Escrows: The Trustee shall maintain escrows for hazard insurance, property taxes, and replacement reserves throughout the term of the loan. Replacement Reserves: The sum of $100 per unit per year paid monthly for Years 1 and 2, with $200 per unit per year thereafter, paid monthly, will be required to be deposited on a monthly basis into a designated Escrow account to be maintained by the Bond Trustee. An inflation factor based upon consumer Price Index will be applied to the replacement Reserve deposit beginning in Year 7, unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to the Guarantee Program that evidences and increase in the deposit is excessive or unnecessary. An initial deposit of $38,400 (representing one-half the required Replacement Reserves for Years 1 and 2) must be prepaid and deposited to the Replacement Reserve at MMRB Loan closing. FHFC shall have the right to attach the escrow accounts in the event of default under the loan documents. The application of funds by FHFC shall not be restricted and may include debt service payments and/or repairs. The Replacement Reserve account funds are to be used by the Borrower for capital expenditures only, and not for normal maintenance and repairs. Capital expenditures shall include building structural repairs, roof replacement, kitchen appliance replacement, carpet replacements, major building systems replacement, and such other permissible uses of Replacement Reserve funds as provided in the Trust Indenture. The release of funds shall be at the Florida Housing’s sole discretion. Prepayment Penalty: Varies. Prepayment terms (if prepayments are allowed) are established by the terms of the bonds sold to finance the loan. Assumption Assumable in some cases, subject to conditions in chapter 67-21, F.A.C., and subject to Florida Housing’s written approval.



Conditions This recommendation is contingent upon the review and approval of the following items by ACS and Florida Housing at least 30 days before a requested date for funding. Failure to receive approval of these items within this time frame may result in postponement of the bond pricing date. For competitive bond sales, these items must be reviewed and approved prior to the issuance of the notice of bond sale. 1. A 100% Payment and Performance Bond (“P&P”) to secure the construction contract with

Alliance Construction, L.L.C., a related company and the Borrower. The P&P bonds must be from a company rated at least “A-“ by A.M. Best & Co., with a financial size category of at least VI. They must list either FHFC or the Bond Trustee (at Florida Housing’s option) as Co-Obligee. FHFC and/or their legal counsel must approve the source, amount(s) and all terms of the P&P bonds.

2. Building Permits and any other necessary permits and approvals (e.g., Final Site Plan approval, Water Management District, Florida Department of Transportation, etc.) or a letter from the local permitting and approval authority that the above-referenced approvals and permits will be issued upon receipt of applicable fees.

3. AmeriNational has received a Plan and Cost Analysis (“PCA”) and a Features/Amenities audit by Consultech and Associates, Inc. (“Consultech”). ACS’ recommendation is contingent upon a revised report stating all recommendations and all features and amenities are included. These items must be addressed to Florida Housing’s and ACS’ satisfaction prior to loan closing.

4. Final (signed and sealed) site plans, building plans, and specifications. The Geotechnical Report will be bound within the final plans and specifications.

5. AmeriNational must receive satisfactory evidence of the LOC to be provided to cover a

minimum of a 3% Hard Cost Contingency. 6. Final sources and uses of funds, itemized by source and line item, in a format approved by

AmeriNational. A detailed calculation of the construction loan interest based upon the final draw schedule, documentation of the loan issuance costs, and draft loan closing statement must also be provided. The sources and uses of funds schedule will be attached to the Loan Agreement and the Construction Loan and Mortgage Servicing Agreement as the approved development budget.

7. Final draw schedule to be approved by all lenders prior to closing, itemized by line item, and showing the sources of funds for monthly draws.

8. Confirmation two weeks prior to loan closing of (i) at least $4.5 million in combined liquidity for Cornerstone Group Development Corp., Cornerstone Group Development, L.L.C., SIM Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades ; however, Mr. Meyers, Mr. Lopez, Mr. Wolfe and Ms. Mades shall maintain no less than $3 million of the minimum $4.5 million liquidity requirement at all times and (ii) Cornerstone Group Development Corp., Cornerstone Group Development, L.L.C., SIM Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades to enter into a Liquidity Maintenance Agreement with FHFC. Terms of the Liquidity Maintenance Agreement must include, but are not limited to requirements for Cornerstone Group Development Corp., Cornerstone Group Development, L.L.C., SIM Holdings II, L.L.C., JL Holding Corp., Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades: (i) continuously maintain



liquid balances of not less than $4.5 million until the FHFC Guarantees have been released, (ii) certify the minimum $4.5 million liquid balances have been continuously maintained and (iii) provide evidence of such liquid balances to the Loan Servicer on a quarterly basis. The Liquidity Maintenance Agreement must also contain a clause such that if not cured within a timely manner, failure to maintain the required balances is an event of MMRB Loan default.

9. General liability, flood (subject to funding availability), builder’s risk, and hazard (as certificates of occupancy are received) insurance reflecting Florida Housing as Loss Payee/Mortgagee.

10. Architect, Construction Consultant, and Borrower certifications on forms provides by Florida Housing will be required for both design and as-built with respect to Section 504, ADA and Fair Housing requirements.

11. Surety Bond in place of a Debt Service Reserve satisfactory to FHFC in the amount required to cover at least six months of debt service.

AmeriNational’s recommendation is contingent upon the receipt and satisfactory review of the following items by FHFC and its legal counsel at least 30 days before a requested date for funding. Failure to receive approval of these items within this time frame may result in postponement of the bond pricing date. For competitive bond sales, these items must be reviewed and approved prior to the issuance of the notice of bond sale. Title insurance binder or commitment for title insurance. Documentation of the legal formation and current authority to transact business in Florida for the Applicant, the General Partner, the Limited Partners and the Guarantors. 1. A final, signed and sealed survey dated within 90 days and certified to FHFC, meeting all

FHFC specifications. 2. Title insurance binder or commitment for title insurance. 3. Documentation of the legal formation and current authority to transact business in Florida

for the Borrower, the General Partner of the Borrower, the Guarantors and any Limited Partners of the Borrower.

4. General Liability, Flood, Builder’s Risk, and Hazard (as Certificates of Occupancy are received) Insurance reflecting FHFC as Loss Payee/Mortgagee.

5. Florida Housing and its legal counsel shall review and approve all closing documents and Florida Housing shall be satisfied in its sole discretion that all legal and program requirements for the MMRB loan have been satisfied.

AmeriNational’s recommendation is also contingent upon satisfaction of the following additional conditions ON THE PRE-CLOSING DATE. 1. Consultech and Associates, Inc. (“Consultech”), Tampa, FL, to act as Florida Housing’s

inspector during the construction. 2. Award of Housing Credit (“HC”) and purchase of the HC by Lend Lease under the terms

consistent with the assumptions of this report. 3. All amounts necessary to complete construction must be deposited with the Bond Trustee

prior to Mortgage and MMRB Loan closing, or any phased pay-in of amounts necessary to complete construction shall be contingent upon an unconditional obligation of the entity



providing Housing Credit (“HC”) Equity (and evidence that 100% of such amount is on deposit with such entity at Mortgage and MMRB Loan closing) to pay, regardless of any default under any documents relating to the HC as long as the First Mortgage continues to be funded. Notwithstanding the foregoing, at least 50% of all HC Equity (but not less than provided for in the Syndication Agreement or such higher amount as recommended by the Credit Underwriter) required to complete construction shall be deposited with the Bond Trustee at Mortgage and MMRB Loan Closing.

4. A Mortgagee Title Insurance policy in the amount of the MMRB Loan to be issued at closing. This Title Policy shall contain no exceptions unacceptable to Florida Housing and its legal counsel.

5. An initial Replacement Reserves deposit of $38,400 (representing one-half of the required Replacement Reserves for Years 1 and 2) for deposit at MMRB Loan closing. Replacement Reserves in the amount of $100 per unit per year paid monthly for Years 1 and 2, with $200 per unit per year thereafter. An inflation factor based upon consumer Price Index will be applied to the replacement Reserve deposit beginning in Year 7, unless waived or reduced in the event Obligor provides a Physical Needs Study prepared by an independent third party acceptable to the Guarantee Program that evidences and increase in the deposit is excessive or unnecessary.

6. All replacement reserves are to be held by the Bond Trustee. 7. Property Tax and Hazard Insurance Escrow to be held by the Bond Trustee. 8. Standard FHFC Construction Completion Guarantee from Eagle Pointe Associates, Ltd.,

Cornerstone Eagle Pointe, L.L.C., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., Stuart I. Meyers Family Partnership, Ltd., along with Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades, individually, to be released upon lien free completion.

9. Standard FHFC Operating Deficit Guarantee from Eagle Pointe Associates, Ltd., Cornerstone Eagle Pointe, L.L.C., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., Stuart I. Meyers Family Partnership, Ltd., along with Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades, individually, to be released when the development achieves; (i) a 1.15 debt service coverage on the MMRB loan and (ii) 90% occupancy and (iii) 90% of Effective Gross Income, all for six consecutive months, as certified by an independent Certified Public Accountant.

10. Standard FHFC Environmental Indemnity Guarantees from Eagle Pointe Associates, Ltd., Cornerstone Eagle Pointe, L.L.C., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., Stuart I. Meyers Family Partnership, Ltd., along with Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades, individually.

11. Standard FHFC Recourse Obligations Guarantees from Eagle Pointe Associates, Ltd., Cornerstone Eagle Pointe, L.L.C., Cornerstone Group Development, L.L.C., Cornerstone Group Development Corp., Stuart I. Meyers Family Partnership, Ltd., along with Mr. Lopez, Mr. Meyers, Mr. Wolfe and Ms. Mades, individually.

12. Compliance with HUD Environmental Criteria and Standard contained in 24CFR, Part 51, and Handbook 4590.01, Rev-1, Housing Finance Risk Sharing Regulations and receipt of HUD firm approval letter.

13. Any other reasonable requirements of Florida Housing or its legal counsel.



Housing Credit Allocation Recommendation ACS recommends a preliminary annual HC allocation of $740,968 . Please see the HC Allocation Calculation in Exhibit 3 of this report for further details. Contingencies The HC allocation recommendation is contingent upon the receipt and satisfactory review of the following items by ACS and Florida Housing by the deadline established in the Preliminary Determination. Failure to submit these items within this time frame may result in forfeiture of the HC allocation. 1. Closing of the FHFC MMRB loan consistent with the assumptions of this report. 2. Purchase of the HC by Lend Lease under the terms consistent with assumptions of this

report. 3. Final, signed, sealed and approved building plans and specifications. 4. Building permits and any other necessary approvals (e.g. final site plan approval,

Department of Environmental Protection, Department of Transportation, etc.) 5. Any other reasonable requirements of Florida Housing or ACS.


Exhibit 4

Eagle Pointe Apartments Final Review Report 15 Year Income and Expense Projection

DESCRIPTION YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15Income Gross Potential Rental Revenue $1,754,640 $1,807,279 $1,861,498 $1,917,343 $1,974,863 $2,034,109 $2,095,132 $2,157,986 $2,222,725 $2,289,407 $2,358,089 $2,428,832 $2,501,697 $2,576,748 $2,654,050 Other Income Washer/Dryer Rentals $55,296 $56,955 $58,664 $60,423 $62,236 $64,103 $66,026 $68,007 $70,047 $72,149 $74,313 $76,543 $78,839 $81,204 $83,640 Cable TV $21,600 $22,248 $22,915 $23,603 $24,311 $25,040 $25,792 $26,565 $27,362 $28,183 $29,029 $29,899 $30,796 $31,720 $32,672 Miscellaneous $23,040 $23,731 $24,443 $25,176 $25,932 $26,710 $27,511 $28,336 $29,186 $30,062 $30,964 $31,893 $32,850 $33,835 $34,850 Interest Income $9,216 $9,492 $9,777 $10,071 $10,373 $10,684 $11,004 $11,335 $11,675 $12,025 $12,386 $12,757 $13,140 $13,534 $13,940 Gross Potential Income $1,863,792 $1,919,706 $1,977,297 $2,036,616 $2,097,714 $2,160,646 $2,225,465 $2,292,229 $2,360,996 $2,431,826 $2,504,781 $2,579,924 $2,657,322 $2,737,041 $2,819,153 Less: $0 Vacancy Loss @ 4% $74,552 $76,788 $79,092 $81,465 $83,909 $86,426 $89,019 $91,689 $94,440 $97,273 $100,191 $103,197 $106,293 $109,482 $112,766 Collection Loss @ 2.25% $18,638 $43,193 $44,489 $45,824 $47,199 $48,615 $50,073 $51,575 $53,122 $54,716 $56,358 $58,048 $59,790 $61,583 $63,431Total Effective Gross Income $1,770,602 $1,799,724 $1,853,716 $1,909,327 $1,966,607 $2,025,605 $2,086,374 $2,148,965 $2,213,434 $2,279,837 $2,348,232 $2,418,679 $2,491,239 $2,565,976 $2,642,956

Expenses Fixed: Real Estate Taxes $183,637 $190,982 $198,622 $206,567 $214,829 $223,422 $232,359 $241,654 $251,320 $261,373 $271,828 $282,701 $294,009 $305,769 $318,000 Insurance $81,600 $84,864 $88,259 $91,789 $95,460 $99,279 $103,250 $107,380 $111,675 $116,142 $120,788 $125,619 $130,644 $135,870 $141,305 Variable: Management @ 5% $88,530 $89,986 $92,686 $95,466 $98,330 $101,280 $104,319 $107,448 $110,672 $113,992 $117,412 $120,934 $124,562 $128,299 $132,148 General and Administrative $50,800 $52,832 $54,945 $57,143 $59,429 $61,806 $64,278 $66,849 $69,523 $72,304 $75,196 $78,204 $81,332 $84,586 $87,969 Payroll Expenses $156,250 $162,500 $169,000 $175,760 $182,790 $190,102 $197,706 $205,614 $213,839 $222,392 $231,288 $240,540 $250,161 $260,168 $270,574 Utilities $112,320 $116,813 $121,485 $126,345 $131,399 $136,654 $142,121 $147,805 $153,718 $159,866 $166,261 $172,911 $179,828 $187,021 $194,502 Marketing and Advertising $6,528 $6,789 $7,061 $7,343 $7,637 $7,942 $8,260 $8,590 $8,934 $9,291 $9,663 $10,050 $10,452 $10,870 $11,304 Maintenance and Repairs $50,880 $52,915 $55,032 $57,233 $59,522 $61,903 $64,379 $66,955 $69,633 $72,418 $75,315 $78,327 $81,461 $84,719 $88,108 Grounds Maintenance and Landscaping $24,000 $24,960 $25,958 $26,997 $28,077 $29,200 $30,368 $31,582 $32,846 $34,159 $35,526 $36,947 $38,425 $39,962 $41,560 Security $2,112 $2,196 $2,284 $2,376 $2,471 $2,570 $2,672 $2,779 $2,890 $3,006 $3,126 $3,251 $3,381 $3,517 $3,657 Reserve for Replacements $19,200 $19,200 $38,400 $38,400 $38,400 $38,400 $39,936 $41,533 $43,195 $44,923 $46,719 $48,588 $50,532 $52,553 $54,655 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Expenses $775,857 $804,038 $853,732 $885,418 $918,344 $952,559 $989,648 $1,028,191 $1,068,244 $1,109,867 $1,153,122 $1,198,073 $1,244,787 $1,293,332 $1,343,783

Net Operating Income $994,745 $995,686 $999,984 $1,023,909 $1,048,263 $1,073,046 $1,096,725 $1,120,774 $1,145,189 $1,169,969 $1,195,110 $1,220,606 $1,246,453 $1,272,644 $1,299,173

Debt Service Payments First Mortgage $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 Second Mortgage $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other - Net Interest Expense on DSR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Debt Service Payments $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650 $864,650

Operating Income After Debt Service - Before Tax Cash Flow $130,095 $131,036 $135,334 $159,259 $183,612 $208,396 $232,075 $256,123 $280,539 $305,319 $330,459 $355,955 $381,802 $407,994 $434,523

Debt Service Coverage Ratios Debt Service Coverage - First Only 1.150 1.152 1.157 1.184 1.212 1.241 1.268 1.296 1.324 1.353 1.382 1.412 1.442 1.472 1.503 Debt Service Coverage - First & Second 1.150 1.152 1.157 1.184 1.212 1.241 1.268 1.296 1.324 1.353 1.382 1.412 1.442 1.472 1.503 Debt Service Coverage - All Mortgages 1.150 1.152 1.157 1.184 1.212 1.241 1.268 1.296 1.324 1.353 1.382 1.412 1.442 1.472 1.503 Debt Service Coverage - All Mortgages and Fees 1.150 1.152 1.157 1.184 1.212 1.241 1.268 1.296 1.324 1.353 1.382 1.412 1.442 1.472 1.503

Financial Ratios Operating Expense Ratio 44% 45% 46% 46% 47% 47% 47% 48% 48% 49% 49% 50% 50% 50% 51% Break-even Ratio 88% 87% 87% 86% 85% 84% 83% 83% 82% 81% 81% 80% 79% 79% 78%

AmeriNational Community Services, Inc. Page 1 of 1 1/8/03

Exhibit 1

Eagle Pointe Apartments Net Loan Amounts for Varying Interest Rates and Amortization Periods

Amort. Period (Years) 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 7.00% 7.25%

15 $8,821,986 $8,680,409 $8,542,088 $8,406,936 $8,274,869 $8,145,804 $8,019,662 $7,896,36620 $10,478,895 $10,267,011 $10,061,400 $9,861,843 $9,668,132 $9,480,064 $9,297,445 $9,120,08925 $11,738,228 $11,457,997 $11,187,775 $10,927,139 $10,675,685 $10,433,028 $10,198,799 $9,972,64930 $12,695,384 $12,352,012 $12,022,838 $11,707,159 $11,404,309 $11,113,661 $10,834,619 $10,566,62235 $13,422,869 $13,023,107 $12,641,931 $12,278,297 $11,931,222 $11,599,787 $11,283,130 $10,980,44038 $13,772,635 $13,342,506 $12,933,607 $12,544,661 $12,174,477 $11,821,944 $11,486,022 $11,165,74340 $13,975,794 $13,526,865 $13,100,910 $12,696,489 $12,312,265 $11,946,992 $11,599,511 $11,268,744

All loan amounts shown in the table above are based on a 1.15 debt service coverage ratio.


Exhibit 2

Eagle Pointe Apartments Construction and Stabilization Period Interest (“CAP I”)

1 2 3 4 5 6 7 8 9 10 11 12 TOTAL

Net MFMRB Loan $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000 $12,270,000Average Balance Construction Loan $2,560,386 $3,470,516 $4,518,566 $5,736,616 $7,239,666 $7,725,566 $9,165,416 $10,378,466 $11,441,516 $11,854,566 $12,014,566 $12,270,000Invested Funds $9,709,614 $8,799,484 $7,751,434 $6,533,384 $5,030,334 $4,544,434 $3,104,584 $1,891,534 $828,484 $415,434 $255,434 $0

Total MFMRB Interest (including DSR) $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $54,704 $656,445Other Bond Fees $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0GIC Earning - DSR $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0GIC Earnings - Project Fund ($10,195) ($9,239) ($8,139) ($6,860) ($5,282) ($4,772) ($3,260) ($1,986) ($870) ($436) ($268) $0 ($51,307) Net Interest Expense $44,509 $45,464 $46,565 $47,844 $49,422 $49,932 $51,444 $52,718 $53,834 $54,268 $54,436 $54,704 $605,138

Total MFMRB Interest - Completion thru 90% occupancy (3 months) $164,111Other Bond Fees - Completion thru 90% occupancy $0GIC Earnings - DSR, Completion thru 90% occupancy $0

NOI (50%) thru 90% occupancy n/a Capitalized Interest Deposit $769,249


Exhibit 7

Eagle Pointe Apartments Income and Expense Comparables

1 2 3 4 Subject

Property NameOaks of

PompanoPembroke

ParkBanyan Pointe Stirling Total

Eagle Pointe

County Broward Broward Broward Broward Units Broward# of Units 224 244 300 251 1019 192

Completed 1998 1999 2000 2000Management Cornerstone Swezy Cornerstone Landmark

Average/ Unit Appraiser Developer ACS

Vacancy 2.40% 2.50% 5.41% 3.42% 3.43% 4.00% 4.00% 4.00%Collection 0.10% 0.00% 0.21% 0.00% 0.08% 1.00% 1.00% 1.00%Other Income per unit $335 $597 $1,169 $837 $734 $503 $569 $569Expenses per unit $4,004 $4,438 $3,828 $4,286 $4,135 $4,093 $3,786 $4,141

Property Taxes $191,284 $240,145 $297,000 $255,911 $966 $956 $956 Per appraisal, methodology validatedProperty Insurance $98,894 $119,524 $80,756 $121,566 $413 $425 $425 Per quote with 6.25% increaseManagement Fees $93,886 $115,477 $138,222 $114,620 $454 $458 $461 5% of income, underwriting guidelineGeneral & Administrative $40,157 $167,352 $93,964 $121,314 $415 $265 $265 Per appraisalPayroll $158,901 $105,284 $196,802 $125,383 $575 $814 $814 Per appraisalUtilities $142,114 $35,654 $165,606 $105,074 $440 $585 $585 Per appraisalMarketing & Advertising $6,960 $1,828 $14,234 $0 $23 $0 $34 Per averageMaintenance & Repairs $95,159 $205,289 $52,450 $98,360 $443 $265 $265 Per appraisalGrounds Maintenance & Landscaping $22,000 $43,616 $37,962 $83,359 $183 $125 $125 Per appraisalSecurity $2,778 $0 $11,508 $0 $14 $0 $11 Per averageReplacement Reserves $44,800 $48,800 $60,000 $50,200 $200 $200 $200 $200 ($100 yrs. 1-2), program ruleTotal $4,004 $4,438 $3,828 $4,286 $4,126 $4,093 $4,141



HC Allocation Calculation Section I: Qualified Basis Calculation Total Development Cost $18,869,612 Less Land Costs $1,650,000 Less Federal Grants $0 Less Other Ineligible Costs $1,253,906 Less Disproportionate Standard $0Total Eligible Basis $15,965,706Applicable Fraction 100%DDA/QCT Basis Credit, if applicable 130%Qualified Basis $20,755,418Housing Credit Percentage (Federal allocation) 3.57%Annual Housing Credit Allocation $740,968

Notes to the Qualified Basis Calculation:

1. “Other Ineligible Costs” include are reflected in the HC Ineligible Costs column of the Uses of Funds schedules with Section A of this Credit Underwriting Report.

2. The development has a 100% set-aside, therefore, the Applicable Fraction is 100%.

3. The development is located in a Qualified Census Tract (“QCT”); therefore, the 130%

basis credit was applied.

4. The Eligible Basis Calculation, above, does not take into consideration recent Internal Revenue Services “TAMS” regarding the calculation of Eligible Basis. Inclusion of such IRS guidance could affect the HC Allocation.

Section II: GAP Calculation Total Development Cost (including land and ineligible costs) $18,869,612 Less Mortgages $12,270,000 Less Grants $0Equity Gap $6,599,612HC Syndication Percentage to Investment Partnership 99.990%HC Syndication Pricing $0.820HC Required to meet Equity Gap $8,049,113Annual HC Required $804,911

Notes to the Gap Calculation: 1. Mortgages include the MMRB loan. 2. The HC Syndication Pricing and Percentage to Investment Partnership are based on the

executed syndication commitment described in the Syndicator Information section. EAGLE POINTE EXHIBIT 3 PAGE 1

January 8, 2003

MULTIFAMILY MORTGAGE REVENUE BOND REPORT ACS Section III: Tax Exempt Bond 50% Test Total DEPRECIABLE Cost $15,965,706 Plus Land Cost $1,650,000 Equals Aggregate Basis $17,615,706

Tax Exempt Bond Amount $12,270,000 Plus GIC Income $0 LESS Debt Service Reserve $0 LESS Tax Exempt Proceeds Used for Cost of Issuance $0 Equals Tax Exempt Proceeds Used for Building and Land $12,270,000

Tax Exempt Proceeds as a Percentage of Aggregate Basis 69.65% Notes to the Tax Exempt Bond 50% test:

1. This development is not anticipated to have a Debt Service Reserve; therefore the “Less Debt Service Reserve” item is $0.

2. Guaranteed Investment Contract (“GIC”) Earnings on un-disbursed tax-exempt bonds is

calculated on an average outstanding balance and a GIC rate of 1.26%.

3. The cost of Issuance will be funded with HC Equity.

4. If the tax-exempt bond amount is less than 50% at the time of Final Cost Certification, Developer Fees would have to be reduced by an amount to ensure compliance with the 50% test. That may, in turn result in a reduction to HC equity.

HC Per Syndication Agreement $671,477HC Per Qualified Basis $740,968HC Per GAP Calculation $804,911

Annual HC Recommended $740,968

Syndication Proceeds based upon Annual HC Recommended $7,408,939

Notes to Summary:

1. The Annual HC Recommended is based on the lower of the Qualified Basis or Gap Calculation. ACS utilized the AmSouth Equity Commitment terms for this report. The difference is due to the HC rate utilized by AmSouth based in December 2002 versus the required underwriting rate as stated in the program rule. HC rates have been falling for the past twelve months.

EAGLE POINTE EXHIBIT 3 PAGE 2

January 8, 2003

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