1. Economic Development Downstate Summit Creating a Common Downstate Voice September 29, 2011 Vital Tools and Resources for Downstate (Rural) Economic Development Part II – TIF Districts Thomas R. Henderson Illinois Tax Increment Association Thenderson@illinois-tif.com (217) 523-4905 James M. Snyder Ice Miller LLP James.snyder@icemiller.com (312) 726-7127

2. Existing Vital Tools Used in Combination with Tax Increment Finance What existing vital tools can Leaders of Downstate Communities combine with Tax Increment Finance to fill gaps?  While staggering budget challenges are confronting most communities in 2011, the most determined leaders are discovering innovative approaches for creating public/private partnerships and deploying creative strategies to raise capital and prosper during these difficult times.  Tax Increment Finance  Midwest Disaster Bonds - New financing for most projects in 18 counties in Illinois (mostly downstate)  Qualified Energy Conservation Bonds  New Markets Tax Credit and other Tax Credits  USDA Loans / SBA Loans  Other Tools

3. Case Study – Kone Center, Moline, Illinois  $40 Million Kone Center – Eight Story Mixed Use office building.  Kone Corp., a Finland based Company that makes elevators and escalators will consolidate its current Moline, Illinois administrative and call center operations. Kone is anchor tenant, occupying second to sixth floors.  Key component of continued successful revitalization of Moline Mississippi riverfront. Project will retain 375 Kone jobs, add estimated 53 construction jobs and create 50 new permanent positions.  Vital Tools Utilized: -A 20.2 Million Illinois Finance Authority Midwestern Disaster Area Bonds. First Midwestern Disaster Area Bonds issued in Illinois. -City of Moline borrows $7.5 Million and re-loans to Developer to purchase property at favorable interest rates. -$7 Million Illinois – EDGE) Economic Development for a Growing Economy) program. Kone had to meet one of five criteria related to the creation of retention of jobs in Illinois – for example, that it had "multi-state location options and could reasonably and efficiently locate outside of the state."

4. Case Study – Kone Center, Moline, Illinois (cont'd)  Vital Tools Utilized (cont'd) -The City agreed to create a new 23 year Tax Increment Financing (TIF) district (to replace a portion of an existing district) that will use up to $10.1 million of increased property-tax revenue to cover project costs outside of construction, including land acquisition, interest, and architectural and engineering work. Through the TIF, Developer will get back substantial portion of the property taxes Developer pays from the new development. -$8 Million New Market Tax Credits. -$471,000 grant from Illinois Department of Commerce and Economic Opportunity for installation of 316 kilo watt solar photo voltaic system to help earn Leed Certification. -State of Illinois New Market Tax.

5. Existing Vital Tools Used in Combination with Tax Increment Finance – New Markets Tax Credit Overview  Federal Program designed to encourage economic and social growth in low income areas.  Used to create Equity in Projects; Investors receive federal tax credits over 7 years for investing in qualifying projects.  Qualifying projects include manufacturing and commercial projects to bring new jobs to the low income community as well as essential services like health clinics, day care, elderly care and education.  The tax credits provide 18-20% of the project cost as "equity" and reduces the cost of financing by 30%.  Project must create economic development or provide essential services to a community with 80% or less of State/Metro median ("LIC"). Many projects downstate will qualify.  Set to expire unless extended.

6. New Markets Tax Credits Overview (cont'd)

7. Existing Vital Tools Used in Combination with Tax Increment Finance – Midwestern Disaster Area Bonds  Special Provision for up to $1.5 Billion of Tax-Exempt Bonds in 18 Illinois Counties affected by 2008 Floods:  Most Projects Located in a MDAB Eligible County Qualify.  Each Prospective MDAB Project must either constitute: (i)Non residential real property used in a trade or business, including most industrial and commercial uses, or (ii)Public utility property to qualify for MDAB financing.  Timeframe for Issuing MDAB's: Under the Act, MDAB's may be issued from 2008 through January 1, 2013.

8. Midwestern Disaster Area Bonds (cont’d)  The 18 MDAB Eligible Counties designated by the Federal Act: Qualified Projects located in the following counties may qualify for MDAB financing: Adams Douglas Lake Calhoun Edgar Lawrence Coles Hancock Mercer Clark Henderson Rock Island Crawford Jasper Whiteside Cumberland Jersey Winnebago

9. Midwestern Disaster Area Bonds (cont’d)  Examples of Qualifying MDAB Projects: Assuming the other qualification requirements described herein are satisfied, the following are examples of projects that qualify.  Example Non-Residential Projects in Private Business Use (i.e., Industrial Warehousing/ Distribution, Commercial/Office projects, and Agricultural projects. Manufacturing Facilities (particularly helpful for projects over $20MM) Warehouses/Distribution Facilities Retail Businesses/Commercial Property/Hotels Office Buildings (including Medical Office Buildings and other Medical Facilities) Agricultural Facilities and Improvements

10. Vital Tools and Resources... Are our vital tools going to be taken away? -Federal proposals exist to take away Federal tax-exempt status of government bonds. This would cost downstate communities 100- 250 basis points (1 – 2.5%) on future borrowing costs. -While other states and countries are looking to responsibly expand vital tools, certain members of legislative body looking to restrict Tax Increment Finance (SB 540). -Ice Miller LLP has acted as bond counsel on many TIF transactions downstate. Ice Miller provided legal support to the City of Chicago TIF Reform Panel on better and more transparent use of TIF. City is aligned with downstate on many issues. Some issues City would be supportive but downstate communities must respond if issue does not affect City directly.

12. Thomas R. Henderson thenderson@illinois-tif.com (217) 523-4905 thenderson@illinois-tif.com James M. Snyder James.Snyder@icemiller.com (312) 726-7127 James.Snyder@icemiller.com James.Snyder@icemiller.com