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Stimulus Funding and Creative FinanceHow to Construct Parking Structures During Tight Financial MarketsPeter Flotz, AICPPrincipalLansing Melbourne Group, LLC

Steven Hayward, AICP, PCPDirector of Development + PlanningCharter Township of Lansing

1Why Act Now?

2Market UpdateCredit Markets are looseningInvestors are still paying attention to the credit quality of issuersRated Issues v. Non-ratedMunicipal Bonds continue to price at near-record lows3

Market UpdateThe Federal Open Market Committee maintained its position to keep their benchmark interest rate near zero for an extended period due to economic conditions, low rates of resource utilization, subdued inflation trends and stable inflation expectations. The implied consensus is that until employment and housing see consistent strength, the Fed may side with staying with low rates for an extended period of time. 4Build America BondsBuild America Bonds - Subsidy Option Eligible ProjectsNew money capital projectsNo refundings of non-BABsNot available for 501(c)(3) Key ElementsIssuer receives 35% cash subsidy in 2010 on each payment date from federal government Subsidy not subject to future appropriation riskMay be possible to monetize subsidy payment streamBuild America Bonds - Credit Option Eligible ProjectsNew money capital projectsRefundings permissibleNot available for 501(c)(3) Key ElementsBondholder receives 35% non-refundable tax credit on each payment date Credit may be carried forwardIssuer can strip credit from bonds to appeal to broader group of investorsPermitted IssuersState and local governmentsNo private activityEligibilityExtension contemplated thru 04/01/2013No limits on issuanceKey ElementsTaxable Bond that provides either interest subsidy to issuer or federal tax credit to bondholdersOtherwise could be tax-exemptNo more than de minimis original issue premium56BABs: Direct-Pay / Subsidy OptionEligible ProjectsNew money capital projects onlyNo refundings

Key Elements2% limit on costs of issuanceExpenses above 2% limit must be paid directly by the IssuerThe Issuer receives a direct-pay/subsidy from the US Treasury equal to 35% of the interest payment due to the bondholderThis subsidy is not subject to future appropriation riskTreasury payment is to be made contemporaneously with interest paymentIt may be possible to monetize the subsidy payment stream to support the issuance of additional bondsLeveraging the subsidy will depend on bond covenants and documents7BABs: Tax Credit OptionEligible ProjectsNew money capital projectsRefunding of existing bondsProviding working capital

Key ElementsBondholder/purchaser receives a non-refundable tax credit equal to 35% of the interest payment due from the Issuer BABs are not structured to be a 0% interest financing mechanismThe credit may be carried forward for one (1) year in the event that the credit holder does not have a tax liability in a given yearThe credit may be stripped and sold to a different investor other than the bondholder/purchaserThis option is seldom used BABs BenefitComparison of AA-Rated Yield Curves(as of March 23, 2010)8

Build America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDBs) More than $85 billion of BABs have already been issued since late March, 2009Additional ConsiderationsDirect subsidy presents most economically advantageous structure in the current marketGreater interest cost savings on the long end of the BABs or RZEDBs yield curvePotential to structure short tax-exempt bonds and long BABs or RZEDBsBenefit from taxable investor interest because they offer an alternative to corporate debt issuers9BABs may be issued for Refunding of tax exempt bonds and Working capital purposes

RZEDBs may be issued to promote development in a designated Recovery ZoneA Recovery Zone is an area designated because of significant poverty, unemployment, rate of home foreclosures or general distress or economically distressed because of military base closure or realignment or any area which a designation as an empowerment zone or renewal community is already in effect

Build America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDBs) 10

ProvisionVolume AllocationPermitted IssuersEligible ProjectsSummaryTax Exempt BondsnanaGovernmental and 501(c)(3)sAll projects that qualify for tax exemption (including501(c)(3) issues)Provides governmental and 501(c)(3) borrowers with lower cost financing structureBuild America Bonds (BABs)nanaState and local government issuersAll projects that would otherwise qualify for tax exemption (withthe exception of 501(c)(3) issues)Provides governmental borrowers with an additional structure through asubsidy/tax creditRecovery Zone Economic Development Bonds (RZEDBs)$10 BillionProportionate to state employment declineCounties and cities with populations in excess of 100,000All projects that would otherwise qualify for tax exemption (with the exception of 501(c)(3) issues)that benefit a "Recovery Zone"Provides governmental borrowers with an additional structure through a subsidy/tax creditBuild America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDBs) 11Direct SubsidyOnly for new money financingsNot subject to future appropriation risk

Recovery Zone Economic Development Bonds (RZEDBs)

Comparison of AA-Rated Yield Curves(as of March 23, 2010)

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Recovery Zone Facility BondsRZFBs are allocated to each state based upon proportion of each states employment decline as compared to the national employment decline (Michigan highest)95% of the bonds must be spent on Recovery Zone Property (with the exception of bad projects such as liquor stores, country clubs, gambling)Cannot be spent on land.RZFBs are similar to private activity bonds in that an allocation is made by the state to the issuer

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ProvisionVolume AllocationPermitted BorrowersEligible ProjectsSummaryRecovery ZoneFacility Bonds (RZFBs)$15 BillionProportionateto state employment declinePrivate entitiesPrivate depreciable propertyProvides tax exempt structure for the private sectorNew Market Tax Credit InvestmentBill Signed 12/21/2000Purpose - Attract $15 Billion in Investment to Low-Income Communities$2.5 Billion Allocated for 2001 and 2002$3.5 Billion Allocated for 2003 and 2004$2.0 Billion Targeted for 2005$3.5 Billion/Year in 2006, 2007, 200839% Investment Tax Credits to Investor for Over 7 YearsFirst Three Years = 5%/YearNext Four Years = 6%/YearTotal = 39%Funds Used to Invest Almost Any Businesses Located in a Low Income Census TractTax Credits Allocated to a Community Development Entity (CDE) by US TreasuryCash Flows to CDE as Qualified Equity InvestmentMust Stay in Deal For 7 YearsFlows In as Equity, Flows Out as Equity, Loan or Loan PurchaseDeals May Be Pooled or Pass-Through InvestmentsTax Credit Goes to Investor Regardless of Investment Success or FailureNew Market Tax Credit InvestmentCensus Tract withPoverty Rate > 20% orGreater of the Following Two:Median Family Income < 80% of MSA Median Income orMedian Family Income < 80% of Statewide Median Family Income95% of Financing Must Have Additional Levels of Distress, Poverty Rate > 30%, Median Family Income < 60%, Brownfield, Urban Renewal Area, Enterprise Zone, etc.Go to MMF1.org to Verify Census TractNew Market Tax Credit Investment

New Market Tax Credit InvestmentCase StudiesEastwood Parking Deck Lansing Township, MIHyatt Place - Melbourne, Florida18Why Act Now?

19Eastwood Lansing Township, MI

20Eastwood Lansing Township, MI

21Hyatt Place Melbourne, FL

22Question & AnswerStimulus Funding and Creative FinanceHow to Construct Parking Structures During Tight Financial Markets

Peter Flotz, AICPPrincipalLansing Melbourne Group, LLC

Steven Hayward, AICP, PCPDirector of Development + PlanningCharter Township of Lansing

23THANK YOU FOR ATTENDING!PLEASE COMPLETE THE SESSION EVALUATION FORM

Be sure to stop by SHOPIPI.com just outside meeting rooms to pick up your copy of this session on CD to take back and share with colleagues.Stimulus Funding and Creative FinanceHow to Construct Parking Structures During Tight Financial Markets

24Owners Entity0.01%

Investment LLC(99.99%)

Investment Entity

Bank, Pension, HUD 108 or Other Loan

MMF A, LLCA Certified Subordinated CDE (99.99%)

Owner

Michigan Magnet Fund(Sponsor)(.01%)

$7,000,000

Equity $3,000,000

NMTC$3,899,810

NMTC$1,190

QEI$10,000,000

NMTC$3,900,000

Origination Costs, Legal, Consulting Fees$400,000

Origination, Legal, & Consulting Services

Debt$9,600,000

Debt Service

Interest Only7 Years

Debt Service

In Some Cases the Origination Costs, Legal & Consulting costs may be Paid by the Developer After Receiving $10,000,000 in Debt