Advancing Communities | Reliable quality service for over 25 years

1. Advancing Communities | Reliable quality service for over 25 years • A COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION • Cinnaire is a full-service community development financial partner that supports community stabilization and economic development by developing and nurturing partnerships with investors and mission-focused organizations. We provide creative loans, investments, and best-in-class services to partners. • cinnaire.com| 844-4CINNAIRE

2. Overview of Opportunity Zones • Taxpayers get capital gains tax deferral & forgiveness of certain capital gains for making timely investments in Qualified Opportunity Funds (QOFs) which subsequently invest in Qualified Opportunity Zone Property (QOZP) • Basic Process • A fund is formed as a partnership, corporation or limited liability company and certified to the IRS on the date of its first tax return • An investor uses capital gains realized to invest in the fund within 180 days • The fund acquires partnership interests, stock or tangible business property in businesses located in opportunity zones • The Investor must retain its original investment in the fund at all times to continue to benefit from the gain deferral and other tax benefits • Recognition of Original Capital Gains on the earlier of December 31, 2026 or the disposition of the investment • 10% of the deferred gain is permanently forgiven if held for 5 years prior to 12/31/2026 • Additional 5% of the deferred gain is permanently forgiven if held for 7 years prior to 12/31/2026 • If the Investor holds the investment for at least 10 years – they are entitled to FMV basis step-up, whereby all appreciation to value is excluded

3. Overview of Opportunity Zones – Cont'd • Qualified Opportunity Zones • The Tax Cuts and Jobs Act of 2017 (“the Act”) has established an economic development tool to allow for preferential tax treatment of investments in designated economically-distressed communities. • These economically-distressed communities are called Qualified Opportunity Zones (“QOZ”). A list of QOZs may be found on the Community Development Financial Institutions Fund (CDFI) Web site.  • Qualified Opportunity Fund • A Qualified Opportunity Fund (“QOF”) is an investment vehicle to make an investment into a QOZ property and can be either a partnership or a corporation. The fund must directly acquire and hold not less than 90% of its assets in either partnership interests or stock in qualified businesses or tangible property located in opportunity zones. • The QOF must be “certified” as a “Qualified Opportunity Fund”. This is a self-certification via a tax form that is filed with the taxpayer’s federal income tax return for the taxable year. • Qualified Opportunity Zone Property • Qualified Opportunity Zone Property (“QOZP”) consists of qualified OZ business property, qualified OZ stock and qualified OZ partnership interest.

4. Qualified Opportunity Fund (QOF) • Statutory Requirements for QOF • Purpose – an investment vehicle organized as a corporation or partnership for the purpose of investing cash proceeds in QOZP • Certification • Certification Process is “Self-Certification” by filing Form 8996 • QOF must certify its “purpose” on Form 8996 • QOF chooses the first month in which it will be treated as a QOF. If not, first month will be first month of taxable year. • Asset Test – QOF must hold 90% of its assets in QOZP1 • Noncompliance Penalty • The QOF can be penalized on a per month basis if it fails to meet the 90% test • The penalty can be waived if the QOF can show the IRS that the reduction in investment was due to a reasonably unexpected cause2 • The amount of the penalty is determined by the percentage shortfall below 90% multiplied by the federal short term under payment rate plus 3% 1This is determined by the average of the QOZP held on (1) the last day of the first six-month period of the QOF’s taxable year, and (ii) the last day of the QOF’s taxable year 2Similar to the “reasonable expectations” test in NMTC

5. Types of OZ Funds • Proprietary Funds – Single Investor with one or more investments into QOZ Properties • Pros • Timing and coordination of gains • Investment Strategy • Cons • May have limited investment equity • Single Asset Funds – Single QOZ Property with one or more Investors • Pros • Underwriting • “Club Fund” • Cons • Timing and coordination of gains • Variable investment strategies • Multi-Investor Funds – Multiple investors & multiple QOZ Properties • Pros • Diversification • Cons • Securities rules • Investment tracing • Timing and coordination of gains

6. Types of Investment in Qualified Opportunity Zone Property (QOZP) QOF Investments Qualified Opportunity Zone Partnership Interest Qualified Opportunity Zone Business Property Qualified Opportunity Zone Stock

7. Qualified Opportunity Zone Stock and Partnership Interests • The investment must be acquired after December 31, 2017 in exchange for cash; • Must be a qualified opportunity zone business, or is being organized for the purpose of being a qualified opportunity zone business; • Must remain a qualified opportunity zone business for substantially all of the qualified opportunity fund’s holding period Qualified Opportunity Zone Property (QOZP) Qualified Opportunity Zone Stock (Qualified Opportunity Zone Business) Qualified Opportunity Zone Partnership Interest (Qualified Opportunity Zone Business) Qualified Opportunity Zone Business Property

8. Qualified Opportunity Zone Business • A trade or business in which substantially all of the tangible property owned or leased by the taxpayer is qualified opportunity zone business property (QOZBP) and: • At least 50% of income of the QOZB must be derived from active conduct of a trade or business (Business Operations) • Substantial portion (70% pursuant to OZ Guidance) of the QOZB’s tangible property used in Business Operations • QOZB must maintain less than 5% of its unadjusted basis in property which is nonqualified financial property3 • Reasonable Working Capital does not count against the 5% limitation. • Construction and/or acquisition funds retained by a QOZB will be deemed to be “reasonable amounts of working capital” for up to 31 months if: • such funds are actually used and designated for construction/acquisition • pursuant to a written schedule consistent with normal business practices • working capital use consistent with designated uses and schedule • Certain “sin businesses” do not qualify4 3 Same test as NMTC test. 4 Same test as NMTC test (private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises).

9. Qualified Opportunity Zone Business Property (QOZBP) Must be tangible property used in Business Operations • Acquired by purchase from an unrelated party (the seller must not hold more than 20% of the interest in purchaser) after December 31, 2017 • During substantially all of the holding period, substantially all of the use of the tangible property is within a QOZ  • Original use of the property • must be in a QOZ and must start with the taxpayer, or • Taxpayer substantially improves the property5 • Land not subject to original use requirement per OZ Guidance • 5 During any 30-month period after acquisition, additions to basis (other than basis in land) exceed an amount equal to the adjusted basis of such property at the beginning of such period.

10. Potential Investment Types in Opportunity Zones • Construction & Development of Commercial Real Estate • Development & Renovation of Existing Property in Opportunity Zone • The creation of a new business in an Opportunity Zone • Expansion of Existing Business in an Opportunity Zone

11. Market Trends: Deals Being Sought • Substantial Improvement Requirement • QOZ Property is treated as substantially improved by the QOF if during any 30-month period beginning after the date of acquisition of the property, additions to basis exceed an amount equal to the adjusted basis at the beginning of the 30-month period. • Preferred Equity Investments • Affordable Housing Development • Market-Rate Housing Development • Community Facilities • Commercial Real Estate Development • Federal Investment Credits • Federal Historic Tax Credits • Solar and Energy Tax Credits • State Investment Credits • State Historic Credits • Other Potential Investments • Low Income Housing Tax Credit • New Market Tax Credit

12. Intentions of Investors | The Benefits of OZ • Investing to Improve Our Communities • These investments, which are similar to standard real estate investment transactions, are designed to have a positive impact in our communities. Improving not only the economics of the area, but also having a positive impact on the lives of the people who live and work in the area • Temporary Deferral of Capital Gains • Investors can defer tax on existing capital gains until the earlier of December 31, 2026 or the date on which the investment is sold or exchanged, if the amount of the capital gain is invested into a QOF within 180 days • Potential for Reduced Tax Liability on Deferred Capital Gains • A portion of Original Deferred Capital Gains may be forgiven based on the length of the investment. Taxes may be due on 100%, 90% or 85% of the Original Deferred Capital Gain. • Held 5 years: 10% of the Original Deferred Gain is permanently forgiven • Held 7 years: An additional 5% of the Original Deferred Gain is permanently forgiven • Permanent Exclusion of Additional Capital Gain Recognition of Appreciated Investment • If the QOF investment is held for 10 years and is eventually sold with an appreciated investment price, and assuming a FMV Basis Election is made, then there is no additional capital gain tax recognized on the investment

13. Intentions of Investors | Examples • Potential for Reduced Tax Liability on Deferred Capital Gains • If on December 31, 2026 at least 7 years have passed, then the tax will be due on 85% of the Original Deferred Gain (the amount invested in QOF) • $1 Million deferred gain invested in QOF – less $150,000 (10% for 5-year hold and 5% for 7-year hold) • $850,000 is subject to capital gain tax • If December 31, 2026 occurs prior to the 7-year hold period, but after the 5-year period, then the decrease would only be 10% • $900,000 is subject to capital gain tax • If December 31, 2026 occurs prior to the 5-year hold period then there is no reduction • $1,000,000 is subject to capital gain tax • Permanent Exclusion of Additional Capital Gain Recognition of Appreciated Investment • If the original $1 Million deferred gain QOF investment appreciates in 10 years to $5 Million, then there is no additional capital gain tax • The original $850,000 capital gain would be recognized on December 31, 2026

14. Key Points Investors Funds Eligible Investments • Tax incentive is most valuable for 10-year investments in appreciating assets • Six months to invest after realizing a capital gain • Capital is required to be an equity investment – loans from investors are not eligible for the tax incentive • All capital must flow through an Opportunity Fund to be eligible for the tax incentive • Funds are self-certified via an IRS tax form • Fund must be established for the purpose of investing in Opportunity Zones • 90% of fund assets must be invested in Zones to maximize the tax incentive • Must be equity investments • Real estate investments must include substantial rehabilitation - doubling basis within 30 months • “Sin businesses” are not eligible • Other requirements include property use in “active conduct of business” and limits on assets held in cash

15. Key Dates

16. Additional Information • Opportuntiy Investment Consortium of Indiana https://www.opportunityinvestmentconsortium.com/ • IRS – OZ Frequently Asked Questionshttps://www.irs.gov/newsroom/opportunity-zones-frequently-asked-questions • CDFI – List of QOZs https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx • Code of Federal Regulations – 26 U.S. Code Subchapter Z – Opportunity Zones https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-Z • Map of Opportunity Zones https://eig.org/news/opportunity-zones-map-comes-focus • Novogradac OZ Resource Center https://www.novoco.com/resource-centers/opportunity-zones-resource-center

17. Contact Information