An ounce of prevention is worth a pound of cure.

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1 Introduction to Recap Affordable housing consulting firm, founded in 1989 Portfolio Strategy & Recapitalization Transactions Public housing Section 8 LIHTC Redevelopment Planning Business Planning Policy Analysis Valuations Closed over 1,000 multifamily housing transactions Subsidiary On-Site Insight does capital needs planning National Church Residences SIB Study in An ounce of prevention is worth a pound of cure. Pay for Success (P4S) and Social Impact Bond (SIB) Financing Accountability for results Prevention reduces costs while providing better outcomes Eliminate time and money disconnects Caring for elderly good test case for value of prevention Large population Population will need high-cost health services Placed-based service delivery works - many households already clustered 2 1

2 Who Does What, With Whom? 3 Sponsor & Service Provider 4 Program Intervention Provider (PIP) service model identifies and prescribes a target population and service delivery model NCR as Program Provider Service-enriched elderly housing Designed to meet health goals, manage chronic health conditions, reduce Medicare/Medicaid costs Health status monitoring (24 hour staffing, medication, emergency response. Assistance with daily living activities (housekeeping, laundry, therapy) Social supports (meal service, computer learning center, activities, transportation) Saves more than $73/day, $2,223/month per person compared to nursing home care 2

3 Government Agency Pay for Success (P4S) Contract Pay for RESULTS (outcomes) rather than ACTIVITIES (outputs), results are paid for with realized savings NCR Case Study: Ohio spends over $2.7B in annual nursing facility care Over 312,000 Dual Eligible population in Ohio (Medicare & Medicaid) Ohio pays 100% of nursing home costs Modeled 75% of cost savings paid to NCR (PIP) as success fee with a 10- year PS4 contract 5 Every 200 service-enriched elderly housing units could save Ohio over $1M per year Impact Investor Social Impact Bond (SIB) Financing NCR Case Study: $15.5M ($77,500/unit) up-front investment (could be structured as debt or equity) Allowed NCR to spend $11M on rehab costs to support service program (commercial kitchen, dining, laundry, unit upgrades) and set-aside $1.1M for reserves to cover non-medical services Projected 8% Priority Return, 95% of residuals to the SIB Investor over 10-year period Initially philanthropy, over time commercial/market-based 6 3

4 Observer/Auditor Multi-lateral arrangement between PIP, government agency, lender/investor, and auditor Provides third party determination of payments under P4S contract NCR Case Study Key issues: Ensure apples-to-apples comparison of population to study group to accurately estimate savings Govt Agency needs to focus on actual results as opposed to how results are achieved (means and methods) 7 Who Does What, With Whom? 8 4

5 Social Impact Bond Transaction Structure Social Impact Bond Financial instrument Step 1: SIB raises money Expenditure Interval of time Payback PIP sponsor implements Capital retrofits & an intervention program or engaging A 3 rd party service provider delivering services directly to to provide services to Step 3: PIP sponsor uses the proceeds of the SIB to deliver services Place Based Locus for services The Customer Step 2: PIP sponsor signs P4S agreement which creates to provide SIB repayments Pay for Success contract making payments under a Government agency that result in a Observable results with quantifiable metrics 9 Program Impact Paradigm P4S Contract Thank you Please feel free to contact me with questions Zoe Weinrobe zweinrobe@recapadvisors.com x