Stimulus Funding and Creative Finance

1. Stimulus Funding and Creative Finance How to Construct Parking Structures During Tight Financial Markets Steven Hayward, AICP, PCP Director of Development + Planning Charter Township of Lansing Peter Flotz, AICP Principal Lansing Melbourne Group, LLC

2. Why Act Now?

3. Market Update • Credit Markets are loosening • Investors are still paying attention to the credit quality of issuers • Rated Issues v. Non-rated • Municipal Bonds continue to price at near-record lows

4. Market Update • The 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.’

5. Build America Bonds • Permitted Issuers • State and local governments • No private activity • Eligibility • Extension contemplated thru 04/01/2013 • No limits on issuance • Key Elements • Taxable Bond that provides either interest subsidy to issuer or federal tax credit to bondholders • Otherwise could be tax-exempt • No more than de minimis original issue premium • Build America Bonds - Subsidy Option • Eligible Projects • New money capital projects • No refundings of non-BABs • Not available for 501(c)(3) • Key Elements • Issuer receives 35% cash subsidy in 2010 on each payment date from federal government • Subsidy not subject to future appropriation risk • May be possible to monetize subsidy payment stream • Build America Bonds - Credit Option • Eligible Projects • New money capital projects • Refundings permissible • Not available for 501(c)(3) • Key Elements • Bondholder receives 35% non-refundable tax credit on each payment date • Credit may be carried forward • Issuer can “strip” credit from bonds to appeal to broader group of investors

6. BABs: Direct-Pay / Subsidy Option • Eligible Projects • New money capital projects only • No refundings • Key Elements • 2% limit on costs of issuance • Expenses above 2% limit must be paid directly by the Issuer • The Issuer receives a direct-pay/subsidy from the US Treasury equal to 35% of the interest payment due to the bondholder • This subsidy is not subject to future appropriation risk • Treasury payment is to be made “contemporaneously” with interest payment • It may be possible to monetize the subsidy payment stream to support the issuance of additional bonds • Leveraging the subsidy will depend on bond covenants and documents

7. BABs: Tax Credit Option • Eligible Projects • New money capital projects • Refunding of existing bonds • Providing working capital • Key Elements • Bondholder/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 mechanism • The 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 year • The credit may be “stripped” and sold to a different investor other than the bondholder/purchaser • This option is seldom used

8. BABs Benefit Comparison of AA-Rated Yield Curves (as of March 23, 2010)

9. Build America Bonds (“BABs”) and Recovery Zone Economic Development Bonds (“RZEDBs”) • More than $85 billion of BABs have already been issued since late March, 2009 • Additional Considerations • Direct subsidy presents most economically advantageous structure in the current market • Greater interest cost savings on the long end of the BABs or RZEDBs yield curve • Potential to structure short tax-exempt bonds and long BABs or RZEDBs • Benefit from taxable investor interest because they offer an alternative to corporate debt issuers

10. Provision Volume Allocation Permitted Issuers Eligible Projects Summary All projects that qualify for tax Provides governmental and Governmental and Tax Exempt Bonds na na exemption (including 501(c)(3) borrowers with lower 501(c)(3)s 501(c)(3) issues) cost financing structure Provides governmental All projects that would otherwise State and local borrowers with an additional Build America Bonds (BABs) na na qualify for tax exemption (with government issuers structure through a the exception of 501(c)(3) issues) subsidy/tax credit Proportionate to All projects that would otherwise Provides governmental Recovery Zone Counties and cities $10 state qualify for tax exemption (with borrowers with an additional Economic Development Bonds with populations in Billion employment the exception of 501(c)(3) issues) structure through a (RZEDBs) excess of 100,000 decline that benefit a "Recovery Zone" subsidy/tax credit Build America Bonds (“BABs”) and Recovery Zone Economic Development Bonds (“RZEDBs”) • BABs may be issued for • Refunding of tax exempt bonds and • Working capital purposes • RZEDBs may be issued to promote development in a designated Recovery Zone • A 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

11. Build America Bonds (“BABs”) and Recovery Zone Economic Development Bonds (“RZEDBs”) • Direct Subsidy • Only for new money financings • Not subject to future appropriation risk

12. Recovery Zone Economic Development Bonds (“RZEDBs”)Comparison of AA-Rated Yield Curves(as of March 23, 2010)

13. Provision Volume Allocation Permitted Borrowers Eligible Projects Summary Proportionate Provides tax Recovery Zone $15 to state exempt structure Private entities Private depreciable property Facility Bonds (RZFBs) Billion employment for the private decline sector Recovery Zone Facility Bonds • RZFBs are allocated to each state based upon proportion of each state’s 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

14. New Market Tax CreditInvestment • Bill Signed 12/21/2000 • Purpose - 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, 2008

15. New Market Tax CreditInvestment • 39% Investment Tax Credits to Investor for Over 7 Years • First Three Years = 5%/Year • Next Four Years = 6%/Year • Total = 39% • Funds Used to Invest Almost Any Businesses Located in a Low Income Census Tract • Tax Credits Allocated to a Community Development Entity (CDE) by US Treasury • Cash Flows to CDE as Qualified Equity Investment • Must Stay in Deal For 7 Years • Flows In as Equity, Flows Out as Equity, Loan or Loan Purchase • Deals May Be Pooled or Pass-Through Investments • Tax Credit Goes to Investor Regardless of Investment Success or Failure

16. New Market Tax CreditInvestment • Census Tract with • Poverty Rate > 20% or • Greater of the Following Two: • Median Family Income < 80% of MSA Median Income or • Median Family Income < 80% of Statewide Median Family Income • 95% 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 Tract

17. New Market Tax CreditInvestment

18. Case Studies • Eastwood Parking Deck – Lansing Township, MI • Hyatt Place - Melbourne, Florida

19. Why Act Now?

20. Eastwood – Lansing Township, MI

21. Eastwood – Lansing Township, MI

22. Hyatt Place – Melbourne, FL

23. Stimulus Funding and Creative Finance How to Construct Parking Structures During Tight Financial Markets Question & Answer Steven Hayward, AICP, PCP Director of Development + Planning Charter Township of Lansing Peter Flotz, AICP Principal Lansing Melbourne Group, LLC

24. THANK YOU FOR ATTENDING! Stimulus Funding and Creative Finance How to Construct Parking Structures During Tight Financial Markets 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.