2010 ULI Fall Meeting Presentation October 13, 2010 10:45 am to 12:00 pm

1. Innovative Financing ToolsInnovative Financing Tools
to Support Mixed‐Income
Transit‐Oriented
Development
Wednesday,
October 13
10:45 a.m. ‐ 12:00 p.m.

3. Innovative Financing Tools to Support MixedInnovative Financing Tools to Support Mixed--
I T itI T it O i t d D l tO i t d D l tIncome TransitIncome Transit--Oriented DevelopmentOriented Development
ULI Fall Meeting Washington DCULI Fall Meeting Washington DC
O t b 13 2010O t b 13 2010October 13, 2010October 13, 2010
AaronAaron MiripolMiripol
Urban Land Conservancy (ULC)Urban Land Conservancy (ULC)Urban Land Conservancy (ULC)Urban Land Conservancy (ULC)
Denver, ColoradoDenver, Colorado
www.urbanlandc.orgwww.urbanlandc.org

4. About Urban Land Conservancy (ULC)
• 501(c)(3) nonprofit, supporting organization to the Denver Community Foundation.
Established 2003, staffed 2007
• Mission: To acquire, develop, and preserve community assets in urban areas in the
Denver Metro area
• Invested over $21 million in real estate, serving over 10,000 low and moderate income
peoplepeople
• 400 full and part-time jobs are supported by ULC real estate investments
• Promote community development; strengthen neighborhoods through preservation of key
areas of influenceareas of influence
• Preserve community assets in existing or emerging neighborhoods to ensure their
continued public benefit
• Acquire strategic sites in anticipation of market changes through land banking along
2
q g p g g g g
transit corridors
• When possible use 99 year land lease with partners to ensure permanent public benefit

5. Make-Up of Denverp
598,707 residents
240,000 households
15,000 businesses
13 000 nonprofits (metro-wide)13,000 nonprofits (metro-wide)
Land locked
Both a City and a County
“St M ” liti l t“Strong Mayor” political system

6. Opportunities during difficult economic times;
TOD FundTOD Fund
Build out of FasTracks over the next decade
Over 120 miles of additional track and 59 new stations- Over 120 miles of additional track and 59 new stations
Increased demand for housing within ½ mile of light rail
stations
40% of growth projected from households at or below 80%
AMI
4
Opportunity to purchase land now

7. How the TOD Fund works
Finance land and property acquisition
1 200 ff d bl h th t 101,200 affordable homes over the next 10 years
- 60% AMI rental, 95% AMI ownership
- Goal of 15% of homes for 30% AMI- Goal of 15% of homes for 30% AMI
Quickly provides patient, high-risk capital at low cost
Purchase and hold sites for up to 5 years

8. How the TOD Fund works (cont…)
ULC: 10% investor and sole borrower
Enterprise Community Partners: Assemble loan capital; fundEnterprise Community Partners: Assemble loan capital; fund
manager; largest investor
City of Denver: Top loss funding of $2 5 millionCity of Denver: Top loss funding of $2.5 million
MacArthur Foundation Housing Preservation Award: $2
illi PRI d $250 000 t f l i tmillion PRI and $250,000 grant for early warning system

9. TOD Fund Waterfall
Position Organization Amount/ Rate
Equity Urban Land Conservancy $1.5 million /0%
First Loss City of Denver $2.5 million/0%
Second Loss Enterprise Community Partners $1 million/ 2%
Third Loss Mac Arthur Foundation $2 million/ PRI 2%
Third Loss CHFA $2 million/ 2%
Third Loss Rose Community
Foundation
$500,000/ 2%
Senior Debt Enterprise Community Loan Fund
(with Wells Fargo and US Bank)
$6 million / 5%
Senior Debt Mile High Community Loan Fund $500,000/ 4%g y ,
TOTAL $ 15 Million/ 3.5%

10. Economics of Affordable Housing on the
West CorridorWest Corridor
h 1 424 ff d bl h i hi ½ il di f h C idThere are 1,424 affordable homes within a ½ mile radius of the West Corridor
light rail line today.
The West Corridor will add roughly 15,000 total homes by 2030
f l f h h ff d bl i ld d bl hIf only 10% or 1,500 of these homes are affordable, it would double the
number of affordable homes currently within ½ mile of the West Corridor
According to an National Association of Home Builders (NAHB) model, the
i i t f b ildi th ff d bl h ld beconomic impact of building these affordable homes would be:
First year of construction: $140,488,000 in local income, $12,195,000 in
taxes and other revenue for local government, and 1,785 local jobs.
A l i l l i t $40 732 000 i l l i $5 609 760 i
8
Annual, ongoing local impacts: $40,732,000 in local income, $5,609,760 in
taxes and other revenue for local government, and 468 local jobs.[1]
[1] Source: “The Economic Impact of Low Income Housing Tax Credit Development Along Transit Corridors,”
NAHB Housing Policy Department, June 2010.

11. Context
9

12. The West Line Corridor
10

13. Jody Apartments
Located less than 300 feet from a future RTD light rail
Model for the TOD Fund
Located less than 300 feet from a future RTD light rail
stop on the West Corridor.
ULC has extended a 99-year land lease to a
nonprofit, NEWSED, that bought the improvements on
the site: four rental buildings serving over 100 residents.
52 of the 62 apartments are permanently
affordable, with 12 of the 52 committed to households at
30% AMI and below.30% AMI and below.
Total acquisition and rehab: $3.25 million

14. First TOD Fund Acquisitions
Yale CircleYale Circle
1.2 acre of vacant land located next to the
Yale light rail station (below)
Land Price= $1.45 million/$25sq. Ft.
Preliminary plans include a 70+ multi-family
apartment complex utilizing 9% Low Income
Housing Tax Credits; application of taxHousing Tax Credits; application of tax
credits would occur in 2011.
Total Development Costs = $11.5 million
Dahlia ApartmentsDahlia Apartments
Dahlia went into foreclose in 2008 and consists of
six buildings with thirty-six 2-bedroom apartment
homes in northeast Denver.
Dahlia was the first TOD Fund acquisition and
includes the use of Neighborhood Stabilization
Funds (NSP) of $450,000. Enterprise Community
Loan Fund, provided a $1,000,000 loan from theLoan Fund, provided a $1,000,000 loan from the
Fund and ULC is partnering with Hope
Communities with the permanent take out.
Total acquisition and rehab: $1.75 million

15. Future of TOD Fund
TOD Fund addresses less than 5% of the Metro Denver work force housing needsTOD Fund addresses less than 5% of the Metro Denver work force housing needs.
Expand to at least $25 million by 2012 (regional fund)
Need investments from other local municipalities beyond Denver to succeed as “regional”Need investments from other local municipalities beyond Denver to succeed as “regional”
Fund
New enabling legislation allows RTD to partner with for profit and non-profit developers
at transit stations
Get beyond silo thinking: State Divisions of Housing, Transportation, Energy, Labor need
to invest in Fundto invest in Fund
Over $150 million of investments leveraged by Fund and more than 2,200 jobs created

16. Deciding to Partner on TOD Fund
Advantages:Advantages:
Expertise
RiskRisk
Innovation
Enhance community relationshipsEnhance community relationships
Disadvantages:
L f t lLoss of control
Layers of complexity

17. National Perspective
Approximately 15 acquisition funds exist around the country
Most target affordable housing
Some target transit corridors
Denver, Portland – few examples specific to both
TOD and affordable housing funds in development in Bay Area and
15
Washington DC

18. Why TOD matters
Low and moderate income families spend a disproportionate
percentage of their income on housing and transportation
Low income households are most likely to utilize public
transit regularly and pay cash fares
Green TOD yields important environmental rewards
including reduced sprawl, traffic and green house gasses
16
Transit access improves education, job and amenity access

19. Trends
Phil th i i t t i i iti f dPhilanthropic interest in acquisition funds
Funds are always challenging to establish and operate
Each story is unique and dependent on existing local collaborations
and culture
Collaboration is key, regional collaboration is increasingly required!
17 Nonprofits need to know regional entities to succeed

20. Benefits of Transit-Oriented Development
Gives developers a financing tool to help mitigate risk at transit
sites & encourages partnerships with CDCssites & encourages partnerships with CDCs.
Fund preserves land and buildings around transit corridors to
ensure long term community benefite su e o g e co u y be e
Increases ridership on public transit
Balances redevelopment efforts along transit
Provides employers with access to an expanded workforce
Infill development (high density) helps reduce negative
18
environmental impact with infrastructure already in place.

21. Creating Great Communities for the Bay Area
Creating Great Urban Land Institute
Washington, DC
October 2010
Heather Hood, Initiative Officer
www.sff.org

22. Mission of the Foundation
The San Francisco Foundation mobilizese Sa a c sco ou dat o ob es
resources and acts as a catalyst for
change to build strong communities, foster
civic leadership and promotecivic leadership, and promote
philanthropy.
www.sff.org 2

23. www.sff.org 3

24. A Growing Region
Berkeley
Oakland
San Jose
Marin
San Francisco
Silicon Valley
www.sff.org 4

25. New Transit Investments Lead the Way
• $60 million MTC• $60 million- MTC
planning funds
• 100 station area
plansplans
• $12 billion- local bonds
• $1.5 billion- state
i f t t f dinfrastructure funds
• Potential of what could
come from the
R th i ti f thReauthorization of the
Federal Transportation Bill
in 2011
www.sff.org 5

26. Our Goal
By 2030 all people in the
Bay Area will live in
complete communities,
affordable across all
incomes, with access to
quality transit.
www.sff.org 6

27. Strategy
• Engage deeply in 25 local
planning efforts to influence
100 plans
• Target low and moderate
income neighborhoodsg
• Get mixed-income TOD built
• Build a regional policy• Build a regional policy
framework
www.sff.org 7

28. www.sff.org 8

29. www.sff.org 9

30. 1. CAPACITY BUILDING
2. POLICY AND ADVOCACY
3. DEVELOPMENT
Need a picture of affordable hsg here
• Secure sites for mixed-
income development
• Develop property
acquisition fund
W k ith iti t id tif• Work with cities to identify
land and new partnerships
Cr t rk t i ti• Create market incentives
for developers
• Craft messages and media
www.sff.org 10
Craft messages and media
with regional agencies

31. Bay Area Development Opportunities
Scarcity of Development Sites Near Transit
Near
Existing or
30.0
35.0
ndsofAcres
g
Planned
Transit20.0
25.0
Thousan
10.0
15.0
0.0
5.0
www.sff.org 11
Vacant or Underutilized Land

32. The “capital stack” for the
Bay Area TOD Fund for Affordable HousingBay Area TOD Fund for Affordable Housing
1 Senior loans
• Banks, insurance companies
• Other direct commercial lenders
B d fi i
2 L i l
1. Senior loans • Bond financing
• Foundations and Intermediaries
2. Low-interest loans
(Program-Related
Investments)
(Such as the Ford Foundation, the
Fund Manager and other
CDFI’s, and community
foundations’ PRIs)
3. Equity or Grant $3. Equity or Grant $
• State & local funds
(Such as the Metropolitan
Transportation Commission)
• Federal funds
www.sff.org 12
• Foundation grants

34. Innovative Financing Tools to
Support Mixed-Income TOD
Brian Prater
Managing Director, Western Region
Low Income Investment Fund
October 13th, 2010

35. Low Income Investment Fund
(LIIF)
• National Community DevelopmentNational Community Development
Financial Institution (CDFI)
• 501(c)3 nonprofit organization• 501(c)3 nonprofit organization
• Headquartered in San Francisco, with
ffi i LA N Y k d D Coffices in LA, New York, and D.C.
• Primarily work on Eastern seaboard
and in the Western U.S.
• Founded in 1984 (26 years old)( y )

36. LIIF’s VisionLIIF s Vision
The Low Income Investment FundThe Low Income Investment Fund
creates pathways of opportunity for
low income people and communities.
LIIF serves the most vulnerable peopleLIIF serves the most vulnerable people
and places.

37. LIIF’s ActivitiesLIIF s Activities
• Mission-driven organizationMission-driven organization
• Poverty alleviation
i i l h• Financing – loans, grants, other
• Fund structuring and management
• New Markets Tax Credits
• Technical AssistanceTechnical Assistance
• Policy work

38. LIIF ProgramsLIIF Programs
• Affordable housing• Affordable housing
• Education
• Childcare and child development
• Green and sustainable developmentGreen and sustainable development
• Transit-oriented development (TOD)
H l h f d• Healthy foods

39. What We’ve DoneWhat We ve Done
• Invested $900 million in communitiesInvested $900 million in communities
nationwide
• Leveraged $5 4 billion of additional• Leveraged $5.4 billion of additional
investments
P d h l 55 000 i f• Partnered to help create 55,000 units of
housing, 159,000 childcare
d 50 000 f dspaces, and 50,000 seats for students

40. The CDFI ApproachThe CDFI Approach
• Support holistic strategySupport holistic strategy
• Community engagement
li / d• Policy/advocacy
• Public/private partnerships
• Complementary programs
• Technical assistanceTechnical assistance

41. CDFIs and TODCDFIs and TOD
• Partner to deliver neededPartner to deliver needed
program, policy and technical
assistance supportpp
• Consult with partners and design tools
to deliver needed financial productsp
• Aggregate public, CDFI and/or private
capital into structures that share riskp
• Assist in identification of new sources
for community projectsy p j
• New paper: CDFIs and TOD

42. Possible Needs for TOD
• Low cost, patient capital for
predevelopment and acquisition
• Creative solutions to “carry” problem
• Flexible capital to fill construction
period gaps
• Mini-perm or permanent capital to
complement other sources
• Methods to share risk across partners
• Regional solutionsg

43. CDFI Financing Toolsg
• Fund and fund like structures• Fund and fund-like structures
• Direct loans, including bridges
S di ti / ti i ti• Syndications/participations
• New Markets Tax Credits
• Other facilities with top loss
• Limitations: Term and total $$ size

44. E l f F d St tExample of a Fund Structure

45. LA County Housing
Innovation Fund
• $60MM, 5 year fund$60MM, 5 year fund
• LIIF, Century Housing, CSH, LA
County Citi and OneCalifornia BankCounty, Citi, and OneCalifornia Bank
• $20MM County, $8MM CDFI, and
$32MM f i t it l$32MM of private capital
• Layered structure to provide risk
protection to private capital
• Delivers acquisition/predevelopment
loans of up to 100% LTV at 6-6.5%

46. Los Angeles County Housing Innovation Fund
Structure
Class A Senior
Lender
Class A Senior
Lender
OriginatingLIIF
(Administrative Agent
Structure
Class A Senior
Lender Lender
LIIF
Lender
Lenders
Mezzanine
Position
(Administrative Agent
And Master Servicer)
Lender
LACHIF LLC
LA County Fund, LLC
• Up to $60MM fund
• Class A Senior Lenders will lend up to $32.1MM; Class B
Lenders up to $8.1MM; and LACHIF investment up to
$19.8MM. Class B Lenders will share ownership of LA
LIIF
(Class B Lender)
Century Housing
Holds $19.8MM
loan from County
County Fund, LLC.
• Project loans will be funded by Class A lenders
(53.5%), Class B Lenders (13.5%), and the County (33%).
• Pooled Risk for Class A Senior Lenders. County funds will
support Class A Senior Lender funds until all County funds
are exhausted
Century Housing
(Class B Lender)
CSH
Loan
are exhausted.
(Class B Lender)
A PieceA PieceA Piece
Project
B Piece
(CSH)
County
Funds
B Piece
(Century)
County
Funds
B Piece
(LIIF)
County
Funds
Project
Loans
(Up to $5MM each)

47. S f B A TODSummary of Bay Area TOD
Fund and Proposed Program

48. Equitable TOD
• TOD projects have historically benefited
affluent populationsaffluent populations
– Market rate/high end housing and shops
• Yet TOD can greatly benefit low income• Yet TOD can greatly benefit low income
communities
– Families making $20,000 to $50,000 pay asFamilies making $20,000 to $50,000 pay as
much as 57% in housing + transportation
– Public transportation can save families as much
$as $9,000 annually
– Connect LMI people to the regional economy

49. Program/Fund Overview
• Competitive RFP for $10MM in MTC
bl f drecoverable grant funds
• CDFI Consortium – comprised of six
CDFIs with complementary skills
• Partnership amongp g
foundations, CDFIs, banks, and public
sector
• Regional scale – 9-county Bay Area
• Demand Analysis• Demand Analysis

50. ComponentsComponents
• Loan Fund: $50MM or moreLoan Fund: $50MM or more
• Proposed Grant Pool
h i l A i• Technical Assistance
• Program Assessment
• Learning through case studies, best
practices and conveningsp g

51. Loan Fund StructureLoan Fund Structure
• Uses $10MM in MTC funds as top lossUses $10MM in MTC funds as top loss
protection for other lenders
• Maximizes ability to attract investors• Maximizes ability to attract investors
through risk structure
R d b• Reduces costs to borrowers
• Allows more flexibility of loan
products
• Ensures fund sustainabilityy

52. Bay Area TOD Fund Structure
($50MM Fund)
CDFIs and Banks
(Class A Lenders)
Up to $25MM
LIIF
(Administrative Agent
($50MM Fund)
Bay Area TOD Fund, LLC
Up to $25MM(Administrative Agent
And Master Servicer)
Originating
CDFIs (mezzanine)
MTC
Grants $10MM
to LLC
• Class A Senior Lenders will lend up to $25MM; Class B
Lenders (originating CDFI/mezzanine) up to $7.75MM;
PRI up to $6.5MM; Class C Lenders (originating CDFI) up
to $750M and MTC investment (grant) at $10MM. CDFIs
will share ownership of Bay Area TOD Fund, LLC.
• Project loans will be funded by Class A lenders (50%)
(Class B Lenders)
Up to $7.75MM
Originating• Project loans will be funded by Class A lenders (50%),
Class B Lenders (15.5%), PRI (13%), Class C Lenders
(1.5%) and the MTC (20%).
• Pooled Risk for Class A Senior Lenders. MTC funds will
support Class A Senior Lender funds until all MTC funds
are exhausted.
PRI Source(s)
Loans up to
Originating
CDFIs
(Class C Lenders)
Up to $750M
Class A
Project
p
$6.5MM to LLC
Class A Class A
MTC
Project
Loans
(Up to $7.5MM each) PRI
Class B
Class C
MTC
PRI
Class B
Class C
MTC
PRI
Class B
Class C

53. Fund PrioritiesFund Priorities
• Creation and preservation of affordableCreation and preservation of affordable
housing
• Mixed income housing• Mixed-income housing
• Complementary services, such as
hild h l h li ichildcare, health clinics, etc
• Healthy foods
• Neighborhood retail

54. Loan Fund ProductsLoan Fund Products
• Maximum loan size up to $7 5MMMaximum loan size up to $7.5MM
• Acquisition (7 yr terms)
d l• Predevelopment
• Construction bridge loans
• Leverage loan (NMTCs)
• Mini-permanent loansMini permanent loans

55. Favorable Product TermsFavorable Product Terms
• Better than regular CDFI productsBetter than regular CDFI products
• Up to 110% Loan-to-value
f l h 6%• Interest rate of less than 6%
• Terms of up to 7 years
• Larger loan sizes ($7.5M)
• Potential for larger financing packagesPotential for larger financing packages
• Multiple takeout scenarios

56. TimelineTimeline
• Currently finalizing capital raisingCurrently finalizing capital raising
• $45MM in preliminary pipeline
G hi ll di j• Geographically diverse projects
• Nonprofit and for profit developers
• Projected fund closing 1st quarter 2011
• Drinks for allDrinks for all