1. Pooling, Aggregation and Integration: Strategies for Small Issuers to Increase Their Volume Charter School Capital Access Program (CCAP) Presented by: Donald R. Hinkle-Brown The Reinvestment Fund May 22, 2006 New York

2. Problem Statement and Catalyst for Innovation Scarcity of Long Term Capital: Both JV organizations lacked sufficient LT capital to address demand in a fast growing niche. Federal DOE Resources: Credit Enhancement grants were available to Public sector, non-profits and JV’s

3. Benefits of the Program/Model/Strategy NCBDC and TRF designed a DOE application strategy which met our shared capital needs and would qualify in the less competitive JV category. - our broader shared geography would appeal to the DOE as well as bankers - we anticipated multiple state government applications, as well as multiple solo non-profit applications Our proposal received $6.4 million in DOE grant funds, which was then leveraged with $35mil in bank capital, and $10mil in subordinate capital.

4. Benefits of the Program/Model/Strategy JV Arrangement: NCBDC – lead operational partner, loan accounting, grants management, custodial, originations TRF – lead capitalization partner, originations Geography split: NY, NJ, PA, DE, DC

5. Description of the Program/Model/Strategy * Up to 20 year loan terms - full term/amorts up to 15 years - 15/20 * Highly flexible underwriting - start up schools - leasehold improvement loans - 1.1x DSCR * Low cost of funds – low rates to borrowers - Tbill + 300bp to borrowers * School Assessments by TA partner

6. Implementation Lessons Success: “capital on our terms” - long term capital unprecedented for most CDFIs - our underwriting model was incorporated with few compromises Limitations: “market acceptance” = competition “portfolio permanence” = no recycle Bumps: - geographic split - first come first served - sunk costs

7. Looking Ahead… CCAP project remains TRF’s sole JV Both NCBDC and TRF applied for DOE grant solo in 2004 and 2005 – each received awards. TRF Charter School Growth Fund (solo) will combine $10mil in DOE grant with $50mil in bank capital.