Welcome CDFA BNY Mellon Development Finance Webcast Series: $3 - - PowerPoint PPT Presentation

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Welcome

CDFA – BNY Mellon Development Finance Webcast Series: $3 Trillion Strong: Big Ideas, Big Deals, Big Returns The Broadcast will begin at 1:00pm (EST).

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Erin Tehan

Legislative & Federal Affairs Coordinator Council of Development Finance Agencies Columbus, OH

$3T Strong: Big Ideas, Big Deals, Big Returns

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

CDFA – BNY Mellon Development Finance Webcast Series:

Innovations in Energy Finance

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.

$3T Strong: Big Ideas, Big Deals, Big Returns

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Speakers

Christine Johnson, Moderator BNY Mellon Karl Marschel Steve Eikenberry Toby Rittner Bryan Cave LLP First American Bank CDFA

$3T Strong: Big Ideas, Big Deals, Big Returns

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Christine Johnson

Product Manager BNY Mellon San Francisco, CA

$3T Strong: Big Ideas, Big Deals, Big Returns

Information Security Identification: Confidential

Overview - $3 Trillion Strong: Big Ideas, Big Deals, Big Returns

CDFA-BNY Mellon Webcast Presented by Christine Johnson

Global Corporate Trust November 15, 2011

Information Security Identification: Confidential

Overview – Bond Volumes

• Against a backdrop of a challenged environment for the municipal bond market:
• European debt trouble
• Potential reduction in market through regulation (tax reform, supercommittee)
• Local challenges (municipal bankruptcy issues, challenges to redevelopment)
• ….volumes are at record levels for 2011 and expected to increase toward Q4
• Total volume at $34 bln for 2011 a 23.7% decrease from 2010 levels as of month

end October.

• Overall YTD volume down 33.5% to $229 bln

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Information Security Identification: Confidential

What is being supported

• Top 5 categories
• General Purpose
• Education
• Utilities
• Transportation
• Health Care
• What about private financing?

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Information Security Identification: Confidential

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Toby Rittner

President & CEO Council of Development Finance Agencies Columbus, OH

$3T Strong: Big Ideas, Big Deals, Big Returns

www.cdfa.net

CDFA - BNY Mellon Webcast Series:

$3 Trillion Strong - Big Ideas, Big Deals, Big Returns

Toby Rittner President & CEO November 15, 2011

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$3 Trillion Strong

www.cdfa.net

Big Ideas

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Big Deals

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Big Returns

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Preserving Tax-Exempt Bonds

535 copies of Built by Bonds sent to Congress 30+ meetings with Congress on Nov 2 – Supercommittee, Senate Finance, House W&M, others Next 30 Days – Survive Supercommittee Next Year– Looming tax reform challenges in 2012 Your Help – Send BBB to Congress, submit more case studies, contact your leadership to support tax-exempt bonds March 14, 2012 – CDFA Capitol Hill Day

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Karl Marschel

Associate Bryan Cave LLP Chicago, IL

$3T Strong: Big Ideas, Big Deals, Big Returns

CDFA – BNY Mellon Webcast Series: $3 Trillion Strong: Big Ideas, Big Deals, Big Returns

November 15, 2011 Karl L. Marschel Bryan Cave LLP 161 North Clark Street, Suite 4300 Chicago, Illinois 60601 312-602-5015 karl.marschel@bryancave.com

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Willis Tower

Willis Tower Unveils Sustainable Plan to Transform Tallest Building in Western Hemisphere

• Efficiency improvements to the building’s exterior envelope and windows. The tower has 16,000

single-pane windows. Sustainability plans for the building call for a window replacement and glazing

• program. Strategies to achieve a thermal break of the curtain wall are also being investigated. These

upgrades would achieve savings of up to 60 percent of heating energy.

• Mechanical systems upgrades in the form of new gas boilers that utilize fuel cell technologies, which

generate electricity, heating and cooling at as much as 90 percent efficiency. Mechanical upgrades also will include new high-efficiency chillers and upgrades to the distribution system.

• The tower’s 104 high speed elevators and 15 escalators that will be modernized with the latest

technology to achieve 40 percent reduction in their energy consumption.

• Water savings that will be realized with conservation initiatives through upgrades to restroom fixtures,

condensation recovery systems and water efficient landscaping, which will reduce water usage by 40 percent and save 24 million gallons of water each year.

• Lighting that will be upgraded through advanced lighting control systems and daylight harvesting, an

advanced lighting control system that automatically dims lights in tenant spaces based on the amount of sunlight entering through the windows. Combined, these upgrades will save up to 40 percent of lighting energy consumption.

• Renewable energy like wind and solar, and technologies like green roofs that will be tested. Wind

turbines will be tested to take advantage of the tower’s height and unique set-back roof areas. Solar hot-water panels will help heat water for the building. Green roofs that can sustain high- altitude conditions, and that will be among the tallest in the world, will be tested to reduce storm water runoff, improve insulation, help mitigate the urban heat island effect, and provide pleasant vistas for tenants

• verlooking the areas.

Chicago Loop Decarbonization Study- Monroe Corridor

Adrian Smith + Gordon Gill Architecture

Adrian Smith + Gordon Gill Architecture

Adrian Smith + Gordon Gill Architecture

Adrian Smith + Gordon Gill Architecture

Diagram Combined-

Adrian Smith + Gordon Gill Architecture

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Proposed Program for an Energy Efficient Retrofit Financing District

• Include subsidized energy audits and direct subsidies and government provided

conduit financing related to energy efficiency retrofits of commercial and public buildings.

• The overall goal of this program would be to incent building owners to evaluate

their properties and to make those energy efficiency improvements which make the most sense for their specific site.

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From our preliminary review, the types of energy efficiency retrofits that would likely be included in such a program would be: – Re-commissioning of Building Systems; – Operator Training; – Lighting Fixture Upgrades (upgrades to T8s, etc); – Installation of Occupancy Sensors; – Mechanical Equipment Upgrades (installation of VFDs, etc); – Plumbing Fixture Retrofits; and – Any other improvements for which an applicant could demonstrate meaningful efficiency improvement.

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Financing the energy retrofit Improvements

• Incur front-end debt
• Pay-As-You-Go notes and project-specific

agreements

• Combination of front-end debt and pay-as-you-go

agreements

• Combination of TIF and Community Facilities

District/Special Improvement District overlay

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Public Funding

• Public funding for the program would essentially be

composed of two parts, (1) out right subsidy of improvements and (2) utilizing public financing mechanisms to provide conduit financing in order for building owners to pay for improvements (which

• bligations would be repaid by each building owner
• ver time).

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Public Funding-Part One

• Fund some portion of a given improvement (likely 5-

15%) from truly public sources.

– Such sources could include tax increment finance revenues, state energy program grants, EECBG funding or other grant funding. – These funds would be utilized to incent private building

• wners to make energy efficiency retrofits to their buildings

as well as to subsidize energy audits (to the extent subsidy is required to incent building owners to have energy audits performed).

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Public Funding-Part Two

• Making public funding mechanisms available to help

provide financing for energy efficiency improvements.

– leverage access to public finance markets – provide a program which would allow building owners to borrow funds and repay these over a period of time.

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Public Funding-Part Two (cont’d)

• One such available mechanism is special service area (or special

district) financing.

– Bond could be issued secured by a special tax on one or more commercial properties. – Annual special tax pays down bonded debt. – Alternatively, working with a utility, so-called “on bill” financing could be utilized .

• In addition, the amount of the annual special tax could be tailored to the

anticipated energy cost savings resulting from each such retrofit, thus allowing such tax payers to pay no more in combined energy and special tax payments than they would have for energy alone.

• Obvious issues needing further analysis in any given transaction are

the rights of first mortgage lenders.

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Public Funding-Recommended Process Requirements

• Establish an application procedure pursuant to which, utilizing the

results of an energy audit as well as cost estimates, the building

• wner demonstrates:

– what energy efficiency retrofits make the most sense for that building – estimates of the costs of such improvements – the shortfall, if any, between the cost of the improvement and a reasonable payback through cost savings.

• Such application allows the public body to determine, for a given

applicant

– the level of direct subsidy for any given project (which should adhere to a set of standards developed with an eye towards treating similar buildings similarly) – a level of conduit financing to make available for a given applicant or – a combination of both.

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In summary, the steps to such a proposed program include:

• Encouraging building owners to perform energy audits of their buildings where

such audits have not already been performed (with potential audit subsidies, if necessary).

• Creating an application process by which a building owner, using the results of

an energy audit and cost estimates, would apply to the city for funding. Such an application would require the building owner to, in the event they are requesting direct subsidies, demonstrate that the cost savings realized by such an improvement do not repay the cost of such improvements over a commercially reasonable period.

• Working with the applicant pursuant to standards (which would need to be

developed by the city) identifying an appropriate level of public subsidy.

• The program would also have a component which would allow a building owner

to elect to utilize conduit public financing through an SSA mechanism in order to fund some portion of the proposed energy efficiency improvements.

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Case Study: Sterling, Illinois

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Local Economic Background

• Limited community growth
• Industrial and business sectors warning signs were

appearing

• Rash of bankruptcy filings by local firms
• Layoffs at many local industries
• Closure of area’s largest employer – NWS&W

resulting in loss of 1,500 jobs and insurance and retirement benefits for 9,000 retirees.

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NWSW’s Plant 1 & 2

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NWSW’s Largest Customer Leggett & Platt

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Wal-Mart Under Construction

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Ingredients of the Wal-Mart Distribution Center Deal

• In-place infrastructure
• I-88 Trumpet Exchange
• Union Pacific main line
• Cheap and readily available land (15 cents/square foot)
• CDAP, BDPIP and IDOT Economic Development Grants
• Labor Training Grants
• EDGE Tax Credits
• Real estate tax abatement
• Special Service Area financing for 4.5 miles new sewer and

water infrastructure

• Available labor pool

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Accomplishments To Date

• 1. 100% of the former NWS&W site has been purchased by the public or

the private sector

• 2. Capital investment of over $100,000,000
• 3. In excess of 1200 permanent jobs
• 4. Over $3M in Brownfield funds secured to date
• 5. Actively involved IEPA Site Assessment Group in site characterization

through utilization of USEPA funds for all 700 acres

• 6. Retained “core” of steel mill
• 7. Completed environmental assessment (Phase I and/or II) of 700 acres

(100%) of property

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Accomplishments To Date

8. Enrolled 250 acres of property in Site Remediation Program and dealt with three landfills, hazardous waste (K0-61 dust = heavy metals), pre RCRA landfill and non-RCRA landfill ( the so-called slag heap) 9. A New Home For 12 New Businesses:

– Sterling Steel Company, LLC – Azcon Corporation – Sterling Rail Company, LLC – Casey Equipment/Sterling Industrial Park, LLC – Rock River Lumber and Grain Company – Wilbert Vault Company – MATX, Inc. – Pallet Manufacturing Inc. – Patriot Group – Wal-Mart Distribution Center – Panther Logistics – Greater Sterling Development Corporation

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Future Projects in Progress

3,000-acre economic development area

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Electrical Grid

Electrical Grid Serving Commonwealth Edison’s Largest Customer

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Aerial photo of the Ronald Reagan Freeway’s Trumpet Exchange (I-88)

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Aerial of main line of Union Pacific Railroad

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Future Projects in Progress

Riverfront development area

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Contact Information

Karl L. Marschel

karl.marschel@BryanCave.com 312-602-5015

Bryan Cave LLP

161 North Clark Street Suite 4300 Chicago, Illinois 60601 Thank You.

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Steve Eikenberry

Senior Vice President First American Bank Elk Grove Village, IL

$3T Strong: Big Ideas, Big Deals, Big Returns

$ 3 Trillion Strong: Big I deas, Big Deals, Big Returns

Steve Eikenberry Senior Vice President w w w .firstam bank.com

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TEMPCO ELECTRI C HEATER

• Founded in 1972 by a recent immigrant to United States
• Located in Chicago suburb of Wood Dale, IL
• Initial facility was 1,500 sq. ft. with 3 employees
• Manufactures thermal components for industrial applications
• Currently working on 3rd Illinois Finance Authority bond issue
• $6.6 million issue will refinance remaining balances on Series 1988 bonds

(orig. $5mm), Series 1997 bonds (orig. $3.6mm), and finance 37,000 sq.

• ft. addition
• Two facilities with over 175,000 sq. ft. and over 360 employees
• Use of tax exempt financing saved the company NPV of approximately

$1,400,000

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ELGI N ACADEMY

• Chartered in 1839, classes began in 1856
• Oldest co-ed, college preparatory school in the Chicago Area
• 460 students in preschool -12th grade
• 7: 1 student-faculty ratio, average class size of 15 students
• Student body comes from over 35 communities in western suburbs of

Chicago

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ELGI N ACADEMY

• Harold D. Rider Family Media, Science and Fine Arts Center
• Constructed in 2008, 41,000 sq. ft. building is Gold-level LEED certified
• Financed through $11,505,000 Illinois Finance Authority bond issue
• Houses library, 14 classrooms and 300 seat black box theatre
• City of Elgin provided $500,000 for development as part of downtown

revitalization efforts

• Venue houses performances from the Elgin Opera, the Elgin Theatre

Company, the Elgin Symphony Orchestra, Children’s Theatre and the Elgin Choral Union

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MULFORD SQUARE PRESERVATI ON CORP. CUPOLA FOUNDATI ON

• 501(c)(3)s founded 1996 in affiliation with Elgin Academy
• Purpose is to preserve multi-family affordable housing under the Low-

Income Housing Preservation and Resident Homeownership Act of 1990

• Former HUD properties with Section 8 contracts expiring
• From 1995-2003, over 300,000 units lost from affordable housing stock
• O’Keeffe Apartments – 67 units in Chicago’s south shore
• Mulford Park Apartments – 268 units in Rockford, IL
• Funded by bonds issued through IHDA and low income housing tax credits
• Academy students provide technology training for residents
• Excess cash flow can be donated to Academy

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Audience Questions

$3T Strong: Big Ideas, Big Deals, Big Returns

CDFA: Advancing Development Finance Knowledge, Networks & Innovation www.cdfa.net

Intro Revolving Loan Fund WebCourse Daily: 1-5 pm (EST) December 13-15, 2011 Fundamentals of Economic Development Finance WebCourse Daily: 1-5 pm (EST) January 24-26, 2012 Intro Bond Finance Course Washington, DC March 15-16, 2012 Register online at www.cdfa.net

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Tuesday, December 20, 2011 @ 1:00pm Eastern CDFA – BNY Mellon Development Finance Webcast Series: Direct Bank Purchases: A Question of Transparency? Volume is up in the municipal bond market at the end of 2011, and given the rise in direct bank purchases, the amount of actual transactions is even higher. Direct purchases are not subject to public disclosure requirements, so tracking their impact has become an increasingly popular debate. During this installment of the CDFA-BNY Mellon Development Finance Webcast Series, hear from experts in the field as they weigh in on direct purchases and whether these deals should be subject to greater reporting, scrutiny, and transparency consideration.

Next Webcast

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For More Information

Christine Johnson Program Manager 415-263-2026 christine.johnson@bnymellon.com Erin Tehan Legislative & Federal Affairs Coordinator 614-224-1323 etehan@cdfa.net

The material contained herein is for informational purposes only. The content of this is not intended to provide authoritative financial, legal, regulatory or other professional advice. The Bank of New York Mellon Corporation and any of its subsidiaries makes no express or implied warranty regarding such material, and hereby expressly disclaims all legal liability and responsibility to persons or entities that use this report based on their reliance of the information in such report. The presentation of this material neither constitutes an offer to sell nor a solicitation of an offer to buy any securities described herein.