1. Urban Land Institute New Markets Tax Credits and Hibernian Hall – A Case Study May 26, 2009 Jeanne Pinado, Madison Park Development Corporation Peter Roth, New Atlantic Development Andrea Daskalakis, Massachusetts Housing Investment Corporation Stephen Nolan, Nolan Sheehan Patten LLP

2. CONTEXT: MHIC + New Markets Financing n MHIC is a private non-profit created 18+ years ago to provide sources of sustainable capital for housing and community development in low-income, primarily minority neighborhoods statewide n Mission focused initially on affordable housing, primarily both debt and equity capital for projects financed through the Low-Income Housing Tax Credit (LIHTC) n MHIC viewed the NMTC as a vehicle for complementing our >$900 million in affordable housing to further our goal of creating self-sustaining neighborhoods n Hibernian Hall represents one of our first 4 NMTC transactions and helped us to qualify for a 2 nd allocation of NMTC authority

3. A Case Study: Roxbury Center for the Arts at Hibernian Hall n Project had a history with MHIC  MHIC provided acquisition financing in 2000.  MHIC staff included the project in our first NMTC application submitted in 9/2002  Project was deemed a high priority by the City and received a commitment of CDBG funds.  The Sponsor, Madison Park Development Corporation, had raised substantial equity capital through a capital campaign.

4. Roxbury Center for the Arts at Hibernian Hall (cont.) n Project had major underwriting risks  It was a spec building.  A major portion of the building was a performance venue that was a start-up business.  The project needed a conventional loan, but no hard debt lender had been lined up.  Madison Park had not completed its capital campaign.  The financing gap was substantial.

5. The Roxbury Center for the Arts at Hibernian Hall (cont.) n Project also had strengths  Sponsor had organizational depth, experience in CRE, financial capacity and operating strength.  Sponsor had assembled a strong development team.  Sponsor was contributing $1.415 million in capital funds.  Sponsor had demonstrated that the project met a critical unmet need in Roxbury.  The City of Boston had committed $300,000 of CDBG funds as subordinate debt.

6. MHIC’s Approach to Underwriting n Required Sponsor to master lease the property, in addition to sub-leasing 3 spaces for its own use – the 5,500 SF performance venue, the ACT Roxbury space, and 3,500 SF of the basement space for its Computer Technology Center. n Underwrote rents at below market rent levels. n Minimized hard debt to ensure a back-end take out by maximizing the NMTC investment  Maximized the utility of the “leveraged” NMTC financing model.  Converted a shallow tax subsidy to a deep one.  Leveraged the value of the HTC.  Result: generated NMTC equity = ~40% of TDC.

7. Investors New Markets Leverage Structure Lender Loan Investments & Loans Business Equity Low-Income Community NMTC Fund I Equity CDE with NMTC allocation

8. Investors New Markets Leverage Structure Lender Business Credits Cash $ Return Low-Income Community NMTC Fund I Credits Cash Cash CDE with NMTC allocation

10. Leveraged Structure with HTCs: Challenges n Convincing our public partners and hard debt lenders to accept atypical collateral for CRE loan n Convincing our sponsors that the back-end unwind worked for them. n Structuring the terms of the hard debt to meet the requirements of the NMTC program n Creating a legal structure that worked – needed to satisfy related party test n Overlaying additional business terms (e.g. capitalizing the Master Tenant, developing lease terms) n Combining the regulatory requirements not difficult – HTC driven by project costs and NMTC driven by investment capital

11. Center for the Arts at Hibernian Hall – The NMTC Financing n NMTC qualified equity investment (QEI) in CDE of $6.8 million n CDE First Mortgage Loan of $1.9 million n CDE Subordinate debt of $1.7 million n CDE Equity investment of $2.6 million n Sponsor: Madison Park Development Corp., CDC based in Roxbury, existing MHIC customer n Acquisition and rehabilitation of 4-story, 35,000 sq. ft. (24,000SF rentable) commercial building with ground floor retail space, office space, and performance venue/ballroom space. n MHIC New Markets grant-like equity and HTC equity: 38% of total development costs (40% net of deferred development fee)

12. Center for the Arts at Hibernian Hall Sources and Uses Center for the Arts at Hibernian Hall Sources and Uses n Sources  Hard debt$1,900,000  3 rd party soft debt (CDBG) 300,000  Sponsor Loans (NRC and foundations) 1,415,000  General Partner capital (non-cash) 320,000  Limited Partner capital 320,000  CDE Deferred Payment Loan 2,253,000  Master Tenant Security Deposit 40,000  Deferred Development Fee 225,000 Total $6,773,000 n Uses  Acquisition 539,000  Hard Costs 4,259,000 $122/GSF  Soft Costs 1,173,000  Reserves 137,000  Development Fee & Overhead 665,000 Total $6,773,000 $194/GSF

13. Types of Projects Financed BusinessFinance Pipeline to Utilize Allocation from Rounds 1-4, and 6

14. Coffin Lofts New Bedford Mixed-use w/affordable housing Community: New Bedford Units: 18 Sponsor: Hall Keen, LLC New Markets Financing: $5,358,240 Closed Financing: March 2004 Construction Complete: December 2005

15. Lawton’s Corner New Bedford Mixed use w/affordable housing Community: New Bedford Units: 17 Sponsor: Hall Keen, LLC New Markets Financing: $4,815,502 Closed Financing: March 2004 Construction Complete: December 2005

16. Lawton’s Corner, New Bedford

17. Warren Palmer Roxbury Commercial – spec retail and office space Community: Roxbury Sponsor: Jubilee Christian Church New Markets Financing: $8,376,661 Closed Financing: December 2004 Construction Complete: March 2006

18. Holyoke Health Center Community health center Community: Holyoke Sponsor: Holyoke Health Center New Markets Financing: $18,920,896 Closed Financing: March 2005 Construction Complete: December 2005

19. Colonial Theatre Pittsfield Theatre and performing arts center Sponsor: Colonial Theatre New Markets Financing: $16,669,313 Closed Financing: January 2005 Construction Complete: July 2006

20. Project Hope Boston Non-profit community service center Sponsor: Project Hope New Markets Financing: $4,800,422 Closed Financing: January 2005 Construction Complete: August 2006

21. Project Place Gateway South End, Boston SRO housing, non-profit offices, restaurant Sponsor: Project Place New Markets Financing: $11,103,039 Closed Financing: November 2005 Construction Complete: March 2007

22. Egleston Power Station Boston Community access cable facilities Sponsor: Urban Edge & Boston Neighborhood Network New Markets Financing: $6,990,232 Closed Financing: December 2006 Construction Complete: October 2007

23. Atlantic Works East Boston Day care center, artists’ work spaces Sponsor: East Boston CDC New Markets Financing: $3,432,500 Closed Financing: December 2005 Construction Complete: December 2006

24. Rare Queen Anne facadeRare Queen Anne facade City priority for 8 yearsCity priority for 8 years The building will include:The building will include: 6 state-of-the art auditoriums (2 with stadium seating), 1000 seats 6 state-of-the art auditoriums (2 with stadium seating), 1000 seats RestaurantRestaurant Parking provided behind complexParking provided behind complex Locating lobby in adjacent building affords more concession and seating areaLocating lobby in adjacent building affords more concession and seating area Cinema Center, Pittsfield

25. Natural Kitchens Brockton Organic salad dressing company Sponsor: Natural Kitchens, Inc. New Markets Financing: $2,100,023 Closed Financing: June 2006 Construction Complete: June 2007

26. Chinatown Community Education Center Community education, training center, and school Sponsor: Asian American Civic Association and Kwong Kow Chinese School New Markets Financing: $11,995,240 Closed Financing: June 2006 Construction Complete: September 2007

27. Marbury Terrace Jamaica Plain Food service center, classrooms, non-profit offices Sponsor: Community Servings, Inc. New Markets Financing: $4,809,965 Closed Financing: August 2006 Construction Complete: June 2007

28. Nuestra Casa Lawrence Community education center Sponsor: Lawrence CommunityWorks New Markets Financing: $5,520,746 Closed Financing: September 2006 Construction Complete: September 2007

29. Dudley Village North Roxbury Affordable rental housing and commercial space Sponsor: Dorchester Bay EDC Acquisition Financing: April 2003 LIHTC Financing: $4,038,767 New Markets Financing: $1,653,067 Closed Financing: December 2006 Construction Complete: August 2008

30. Boston Health Care for the Homeless Health care center and respite facility Sponsor: Boston Health Care for the Homeless New Markets Financing: $20,948,716 Closed Financing: December 2006 Construction Complete: March 2008

31. Jean Yawkey Place Boston Health Care for the Homeless

32. Fenway Community Health Center Community health center (in mixed-use development) Sponsor: Fenway Community Health Center New Markets Financing: $9,500,000 Closed Financing: December 2006 Construction Complete: March 2009

33. Hanover Theatre Worcester Performing arts theatre Sponsor: Chelsea Neighborhood Developers Loan: $4,009,900 New Markets Financing: $13,585,000 Closed Financing: August 2007 Construction Complete: March 2008

34. Hibernian Hall Roxbury Community: Roxbury Sponsor: Madison Park CDC New Markets Financing: $6,303,208 Closed Financing: March 2004 Construction Complete: March 2005