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Welcome CDFA BNY Mellon Development Finance Webcast Series: Insiders Look at Private Activity Bond Volume Cap The Broadcast will begin at 1:00pm (EDT). CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  1. Welcome CDFA – BNY Mellon Development Finance Webcast Series: Insider’s Look at Private Activity Bond Volume Cap The Broadcast will begin at 1:00pm (EDT). CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  2. Insider’s Look: Private Activity Bond Volume Cap Erin Tehan Legislative & Federal Affairs Coordinator Council of Development Finance Agencies Columbus, OH CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  3. Insider’s Look: Private Activity Bond Volume Cap CDFA – BNY Mellon Development Finance Webcast Series: Insider’s Look at Private Activity Bond Volume Cap This Webcast is a listen-only event. Please make sure your computer speakers are turned on to hear the presentation. You can also listen by selecting “Use Telephone” in the audio tab of the GoToWebinar control panel. To ask a question, type your question into the Question box in the GoToWebinar control panel. CDFA is recording this Webcast, and it will be available to view online at www.cdfa.net. CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  4. Insider’s Look: Private Activity Bond Volume Cap Speakers Christine Johnson , Moderator BNY Mellon Jason Rittenberg Roxanne Graham Bill Mandeville Council of Development State of Utah State of Washington Finance Agencies Misti Armstrong California Debt Limit Allocation Committee CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  5. Insider’s Look: Private Activity Bond Volume Cap Christine Johnson Product Manager BNY Mellon San Francisco, CA CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  6. Global Corporate Trust August 16, 2011 Overview - Private Activity Bonds CDFA-BNY Mellon Webcast Presented by Christine Johnson Information Security Identification: Confidential

  7. Overview of Private Activity Bonds • A Private Activity Bond (PABs) is any bond whose proceeds are used for the benefit of a private entity. • Use Test : >10% of proceeds for beneficial use of private business entity • Security Test : >10% of debt service is supported by private payment stream • PABs are taxable unless used for a qualified purposed that would allow them to be issued as tax-exempt bonds • 95% of the proceeds of qualified tax-exempt PABs must be used for the qualified purpose • PABs are typically subject to AMT (except where specially exempted) • Most PABs are also subject to volume caps that limit the total bonding capacity for the specific qualified purpose. These caps vary by state. • Private Activity Bonds can serve as a key financing tool for Public-Private Partnerships 2 Information Security Identification: Confidential

  8. Variations on Private Activity Bonds • Major variations on the PABs: • Industrial Development Bonds (IDBs) • Exempt Facility Bonds • Qualified Redevelopment Bonds • Qualified Student Loan Bonds • Qualified 501(c)(3) Bonds • Mortgage Revenue Bonds • Recovery Zone Economic Development Bonds • Further exemptions from AMT for Private Activity Bonds (PABs) and expanded definition of Industrial Development Bonds (IDBs) written into the American Recovery and Reinvestment Act (ARRA). 3 Information Security Identification: Confidential

  9. Selected Qualified Uses and Volume Caps Selected Private Activity (Exempt Subject to Volume Facilities) Cap? Airport No Docks and Wharves No Mass Commuting Facilities Yes Water Furnishing Facilities Yes Sewage Facilities Yes Solid Waste Disposal Yes (if privately owned) Qualified Residential Rental Projects Yes Local Electric Energy or Gas Facility Yes Local District Heating and Cooling Yes Qualified Hazardous Waste Yes High Speed Intercity Rail Facilities Yes Industrial Development Bond Yes Qualified Public Educational Facilities No 4 Information Security Identification: Confidential

  10. National PAB Issuance Information Security Identification: Confidential 5

  11. Industrial Development Bonds Information Security Identification: Confidential 6

  12. Information Security Identification: Confidential

  13. Insider’s Look: Private Activity Bond Volume Cap Jason Rittenberg Research & Resources Coordinator Council of Development Finance Agencies Columbus, OH CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  14. CDFA National Volume Cap Report Contact all states’ allocating authorities • 50 states + DC • Different structures in different states • Volunteering to report Request information on: • Cap allocation • Cap carryforward from last year • PAB issuance • Cap-related programs (e.g., HERA) • Expiring cap • Carryforward to next year CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  15. Context for PABs & Cap in 2010 Housing & Economic Recovery Act of 2008 Recovery Zone Bonds Tax credit bond programs High carryforward into 2010 CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  16. The Big Numbers in 2010 Volume Cap Capacity: $65.0B Total PAB Issuance: $14.6B Carryforward to 2011: $43.5B CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  17. 2010 PAB Issuance Issuance Trend: $14.6B • $11.9B in 2009 • $13.7B in 2008 Industrial Development Bonds: $665.9M • $946.5M in 2009 • Indiana & West Virginia down $305.5M • 5 states issue no IDBs in 2010 after issuing in 2009 Housing Bonds (MRB, Multifamily): $7.8B • $5.7B in 2009 • 37% growth in these categories CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  18. Carryforward to 2011 Expired/Abandoned Cap: $4.3B Extra Housing Cap Abandoned: $2.2B • $11B in extra cap expired end of 2010 • Majority of states report using entire allotment Total Carryforward to 2011: $43.5B • States carried $41.6B into 2010 CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  19. Questions for 2011 and Beyond Will states be able to take advantage of additional capacity? How can we replicate success of additional housing cap? What can be done to improve the use of IDBs? CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  22. Insider’s Look: Private Activity Bond Volume Cap Roxanne Graham Program Manager, Private Activity Bond Program State of Utah, Governor’s Office of Economic Development Salt Lake City, UT CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  23. CDFA Webinar – August 16, 2011 Insider’s Look at Utah’s Private Activity Bond Volume Cap by Roxanne C. Graham

  24. Volume Cap Accounts State Legislature Establishes Volume Cap Accounts 1. Single Family Account – 42% 2. Student Loan Account – 33% 3. Small Issue Account – 24% Multi-family Housing – 12% Manufacturing – 12% Redevelopment Projects - ?% NEW 4. Exempt Facility Account – 1%

  25. Allocation Process Meeting Schedule and Allocation Process • Private Activity Bond Review Board – 5 meetings per year; 1 st month of each quarter starting in January; closeout meeting in December. • Volume cap allocations are valid for 90 days. • Extensions may be granted upon written request. Usually no more than 4 extensions to any project. • Extension period is for 90 days.

  26. Volume Cap Movement Movement of Volume Cap throughout Calendar Year January 1 July 1 August 15 October 1 MFG 50% Balance Small MFG Pool Issue 100% of Pool Account MF Account Pool Account 50% Available to All Other QRP Programs Exempt Facilities Account Single Family Student Loans

  27. 2010 Volume Cap 2010 Volume Cap Allocation Distribution Account Percent Amount Single Family Mortgages 42% $107,618,700 Student Loans 33% $ 84,557,550 Small Issue 24% $ 61,496,400 Multi-family Housing 12% $30,748,200 Manufacturing 12% $30,748,200 Exempt Facilities 1% $ 2,562,350 Total Volume Cap 100% $256,235,000

  28. 2010 Projects Projects Approved for 2010 Volume Cap Allocation • Single Family & Student Loan – Combined Total Volume Cap - $205,331,250 • Manufacturing – 4 projects - $26,800,000; only 2 projects closed using $9,800,000 • Multi-Family Housing – 3 projects - $54,922,771 • CarryForward Amount - $2,876,750 ◦ Split between Single Family & Student Loan Accounts • HERA – Single Family & 1 Multi-Family Project – Used Total Cap of $96,550,479

  29. Recovery Zone Bonds

  30. Questions? Please contact: Roxanne C. Graham, Program Director, PAB Program roxanneg@utah.gov; (801) 538-8699

  31. Insider’s Look: Private Activity Bond Volume Cap Bill Mandeville Bond Allocation & Community Revitalization Manager State of Washington, Department of Commerce Olympia, WA CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

  32. Washington State Department of Commerce Bond Cap and Community Revitalization Program Bill Mandeville CDFA Webinar August 16, 2011

  33. PROGRAM ORGANIZATION Bond Cap and Community Revitalization Bond Cap and Community Revitalization Business Finances @ Commerce Bond Cap Brownfields NSP Bond Users NSP 1 Clearinghouse NSP 3

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