John Leith-Tetrault November 8, 2007 Washington, DC Five Years of Twinning NMTC and HTC

CDE Survey Results NTCIC Portfolio Recommendations NTCIC For-profit subsidiary of NTHP established in projects over six years 32 HTC / NMTC projects (97% additionally distressed) Over $210 million in gross equity Almost $ 900 million in total development costs

CDE Survey Results NTCIC Portfolio Recommendations History of Twinning Strong geographic and programmatic nexus between HTC and NMTC IRS rules on twinning December 2002 Concept was first introduced in NTCICs Round 1 NMTC application As one of several products to be offered by NTCIC in Round 1, it was anticipated that twinned equity might exceed 15% of the allocation In fact, due to demand, NTCIC used nearly 100% of its allocation for this product The first QEIs of the NMTC program in October 2003 were NTCICs for twinned equity to several small HTC projects

CDE Survey Results NTCIC Portfolio Recommendations Brief survey of 154 allocatees 39 CDEs were targeted with a more in-depth survey Questions focused on number of projects invested in by CDE that also received the HTC and the impacts of those projects Includes both debt and equity QLICIs Covers Rounds 1-4 Survey Overview

CDE Survey Results NTCIC Portfolio Recommendations 34% response rate 14% of all CDEs surveyed have invested in projects receiving the HTC – with about 10% regularly doing so More than 1 in 10 NMTC projects to-date has received HTCs (130 out of 1176) QLICIs to HTC projects make up almost 20% of all QLICIs to date, by dollar amount, or $1,083,215,307 Of respondents, average QLICI size to a HTC project was $8,462,620 – almost 2.5x the average size for the program overall Results

CDE Survey Results NTCIC Portfolio Recommendations Of respondents: Over 90% of projects located in additionally distressed census tracts 32,553 jobs created* -- or about 1 job for every $29,000 invested $2.92 leveraged for every QLICI dollar – close to the program average Community Impact *does not include all survey respondents

CDE Survey Results NTCIC Portfolio Recommendations NTCIC Portfolio

CDE Survey Results NTCIC Portfolio Recommendations All projects must demonstrate financial need for the subsidy Project sources must include at least 5% developer equity NMTC subsidy must be used to: a) Cover a funding gap; b) Provide reserves to meet investor requirements or stabilize project; c) Help project meet conventional DCR standards (not less than 1.20); d) Reduce the private fundraising burden or need for grants; e) Reduce commercial or residential rents for locally-owned businesses, low- income residents, and social service agencies, or to attract a key tenant to a low- income community; f) Take out developer equity contributed early to a project when return on equity is below what would be normally expected for the risks of the deal; or g) Be used as a fund to provide additional community benefits But for Analysis

CDE Survey Results NTCIC Portfolio Recommendations Community Benefits Projects must demonstrate a high standard of community impact Proposed programs and commitments that have community impact are outlined in a Community Benefits Agreement signed by NTCIC and the project at closing Quantified performance on each element of the CBA is monitored through required reports during the compliance period CBAs may include the following impacts: (1)create or retain jobs for Low-Income Persons (LIPs) or residents of LICs; (2)increase wages or incomes for LIPs; (3)finance or assist businesses owned by residents of LICs; (4)finance or assist minority- or women-owned businesses or businesses owned by LIPs; (5)finance or assist nonprofit organizations that provide childcare, health care, educational or other benefits to LIPs; (6)facilitate wealth-creation or asset accumulation (such as home ownership) by LIPs; and (7)provide essential goods and services to LIPs or residents of LICs.

CDE Survey Results NTCIC Portfolio Recommendations AVANCE San Antonio, TX Non-profit office space Net equity: $824,974

CDE Survey Results NTCIC Portfolio Recommendations Dia: Beacon Beacon, NY Museum and education center Net equity: $5,963,226

CDE Survey Results NTCIC Portfolio Recommendations Emmaus Washington, DC Headquarters for non-profit providing services to the local senior citizen community Net equity: $577,565

CDE Survey Results NTCIC Portfolio Recommendations Fox Oakland Oakland, CA Charter school, community theatre Net equity: $11,856,300

CDE Survey Results NTCIC Portfolio Recommendations Equity investments in QALICBs are critically needed to keep debt to feasible levels. Equity investments in QALICBs are what the NMTC program was designed to do. HTC/NMTC equity investments are the most frequently used equity product in the NMTC program. Twinned deals are self-targeted to the poorest communities because that is where historic buildings are located. Inadvertent biases against the use of equity products have crept into the NMTC program over the years. Survey respondents identified the related party rule as the biggest obstacle. Conclusions and Recommendations Conclusions

CDE Survey Results NTCIC Portfolio Recommendations Conclusions and Recommendations Recommendations The CDFI Fund should undertake a review of its regulations related to the general use of equity products and the specific use of twinned HTC/NMTC transactions to identify and eliminate obstacles that discourage these deals and drive up transaction costs. CDFI fund should add a data field to its CIIS reporting to keep better track of and to better regulate the use of twinned equity transactions.

John Leith-Tetrault President (202) Corinne Ingrassia Director of Marketing (202) Contact Information