Prudent Investment in Urban Revitalization

Belden Hull Daniels, CEOEconomic Innovation International, Inc

Deborah La Franchi, CEOStrategic Development Solutions

Pension Funds & Urban RevitalizationBaltimore, MD

June 7, 2006

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Double Bottom Line (DBL)Private Equity Funds

1st Bottom line: Superior Risk-Adjusted Market Returns 2nd Bottom Line: Measurable Urban Revitalization

Rapidly growing $6.5 billion industry: “doing well & doing good”

Targets investment in low-income communities

Managed by proven private equity fund managers

Creates superior risk-adjusted market returns for investors

Creates jobs and economic opportunity

Provides flexible, responsive, value-added capital

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Market Discipline; Accountability

Private-sector discipline is central

Risk-adjusted market rate returns (mid- to high-teens)

Fund Sponsor sets the second bottom line goals

Fund Managers chosen in national competitive process

Fund Sponsor makes Fund Manager selection

Investors must approve Fund Manager

Fund Managers protected by firewall & at risk

Accountability to Fund Sponsor & community stakeholders

Fund Sponsor participates in financial returns

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Repeat Institutional Investors

Commercial Banks: B of A, Chase, Citibank, Union, USBank, Wachovia, WaMu, Wells and others

Insurance Companies: AAA, Axa, Hancock, Liberty, Mass Mutual, Mercury, Met Life, NY Life, Northwestern,

Pacific Life, PMI, Prudential and others

Foundations: California Community; Annie E Casey, Danforth, Ford, Jacobs, Heron, Knight, MacArthur, McCune, McDonnell, Sand Hill and others

Public Pension Funds: CalPERS, CalSTRS, Contra Costa County, Connecticut, Illinois, LACERA, LACERS, MassPRIM, NYCERS, NY Common and others

Union Pension Funds: AFL-CIO Housing & Building Trusts, SEIU and others

University Endowments: Washington University and others

High-Net-Worth Persons: Bay Area, Northwest Louisiana and others

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Proven Fund Managers

Access Capital

Boston Capital

Canyon/Johnson

Cityscape Capital

Community Preservation Corp.

Equibase Capital Group

Enterprise Community Investment

Fidelity Partners

Hanover Financial

Hunter Chase

Ironwood Equity Fund

Kennedy Wilson

Landmark Equity

MacFarlane Partners

Massachusetts Capital

Pacific Coast Capital Partners

Phoenix Realty

The Reinvestment Fund

Shamrock Holdings

Urban America

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III. Case Study: Genesis Family of Funds

Genesis LA

Not-for-Profit8 staff &

Board of Directors

Genesis Real Estate Fund I

$85 Million

Mgr: Shamrock

2000

Genesis Real Estate Fund II

$102 Million

Mgr: Shamrock

2005

Genesis Workforce

Housing Fund I

$103 Million

Mgr: Phoenix Realty Group

2004

GenesisGrowth Fund I

$30 Million

Mgr: Fulcrum Capital

2003

Genesis Community

Investment Fund

$1 Million

Mgr: Genesis LA

2000

Genesis NMTC Fund

$120 Million

Mgr: Genesis LA

2005

$450 million capital

$1.5 billion deals in LMI areas

100% Self-sufficient not-for-profit

Continues to create Funds

Works with small – medium sized developers

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Case Study: Genesis Workforce Housing Fund I

Managed by: Phoenix Realty Group

For-Sale Housing: Single Family Detached, Townhouses and Condo

S. California’s Underserved Communities (LMI)

$102 million: Financing for Real Estate Development

Investment of $2 to $20 million

Fund to Provide Institutional Capital to Local Developers

Income of Buyers: 80% - 150% AMI, flexible to 200% AMI

Nurses, Teachers, Firefighters, Police, Office Workers

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Case Study: Genesis Workforce Housing Fund I

Avenue 26 Condominiums

City of Los Angeles, Lincoln Heights

New construction of old factory site

Adjacent to Gold Line Metro station

Not-for-profit Developer

165 for-sale residential units

Child care center

Community arts center

Retail/office component

Senior affordable and tax-credit units to be built on adjacent site

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Case Study: Bay Area 2nd Bottom Line

Soon: Four funds, $300 million capital, $1 billion in deals

First Fund: $66 million Bay Area Smart Growth Fund I

First 3 Years: $51 million invested in 10 projects:

100% of projects are smart growth & “Three E”

1121 permanent & construction jobs created & retained

633 units of affordable for-sale homes developed

1.2 million sq. ft. of commercial space developed

1.6 million sq. ft. of affordable housing developed

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IV. Creating a Maryland Regional Workforce Housing Fund I

$60 - $90 Million Maryland Fund generates $$180-270 Million in deals

100% Smart and Sustainable Growth projects

Preservation and conservation of open and recreational space

Revitalization of downtowns with mixed-income and mixed-use projects

Family housing for firemen, school teachers, policemen, nurses etc.

Transit-oriented development for livable & walkable communities.

Maryland Enterprise Fund Sponsor oversees Fund.

Enterprise Community Investment, Inc. Fund Manager brings track record.

National pool of repeat institutional investors have high interest

Now More Across Country: New England Workforce Housing Fund I

Project sizes range from $15 – 30 Million

• Commercial Banks• Pension Funds• Insurance Companies• Corporate Investors• High-Net Worth Individuals

• Raises $100M from Investors• Private -Sector Fund Manager• Makes investment decisions

3. I nve s t o rs

Project B

Converting dilapidated buildings to new attractive workforce

Condominiums

Enterprise Community Investing , Inc. is creating a Maryland Workforce Housing risk -adjusted market-rate-of-return private equity fund . This $100 million Fund will target housing for families that are at 80% - 150% of average median income .

4. Real Estate Projects

Project C

Re-position abandoned buildings for new workforce housing

developments

$3M – 20 M each

• Shares in Fund Manager’s fee annually • Financially self -sustaining from Fund Manager’s fee• Helps develop early stage projects

• Provides capacity to developers• Receives 2% annual management fee • Invests the $100M ($1M – 20M in each project )• $100M investment plus profit is returned to investors

(target net returns to investors of 12% to 16%)

2. Maryland Regional Workforce Housing Fund I

Project D

Other Similar Housing Investments

Project A

Single Family Detached Homes affordable to the workforce

$ 100 Million Inves tments

• Manages creation of the Fund• Receives seed funding back once Fund is closed • Hires staff - regional economic development

assistance

1. Not- for -Profit Sponsor : Enterprise Maryland

Maryland Regional Workforce Housing Fund I

P rojects return invested capital plus profi t

$100 M Investment

$100 M Investment + Profit

$100 Million + Profit