MMF Finances
Pontiac Mixed-Use Project

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 The Michigan Magnet Fund today (1/20/2012) announced that it has lent Lafayette Place Development $9,262,500 toward the financing of this $19.8 million mixed-use, mixed income project. The project is located at 154 N. Saginaw Street in Pontiac Michigan (Census Tract 26125141600). It will be available for residency in early 2013.

The development will utilize approximately 79,145 square feet of the former Sears Department Store. The upper floors of the building will be dedicated to residential loft apartments called Lafayette Place Lofts, while the street level will serve the retail and commercial aspect of the area. A geothermal system will reduce heating and cooling costs while a “green” rooftop will provide a meeting place for tenants.

The $19.8 million project will have 46 loft style residential units with interior and exterior parking to meet the local market demand for urban style residential living. 12 of the rental units will be affordable by households at 50% of Area Median Income while an additional 18 will be affordable to households at 120% of median income.  The balance will have no income restrictions.  Also included in this plan will be will be a mix of retail, commercial and project amenities to meet the needs of the residents and the visitors of Pontiac.

The exterior of the existing building will remain historically intact with updates to areas that have decomposed or degraded over the years. Windows on the Saginaw Street side will visually remain the same so the historic downtown district remains unchanged. New floor to ceiling windows will be installed, and existing historic win-dows will be repaired or replaced as necessary to accommodate the new loft style apartments.

Up to 21,300 square feet of this building will be utilized by “Destination Retailers”. A new fresh food market and café  will provide all fresh food products, starting with the finest locally grown produce. It will present to the customers fresh meats, cheeses, pastas and baked goods. Culinary classes on site will teach the neighborhood residents how to prepare fine meals with all the different cultural flavors. Catering and delivery will be available along with an onsite café.  The project will also include a full service Fitness Center.

igan State Housing Development Authority.  A net $932,400 bridge (state historic tax credit value) loan is provided equally by a partnership of Great Lakes Capital Fund and MMF.  U.S. Bancorp CDC invested almost $2.7 million as equity into an Investment Fund that in turn invested in a MMF subsidiary.  Additional funds came from the sale of Federal and State Historic Tax Credits and state Brownfield Tax credits, all of which totaled over $7.4 million, Since the tax credits are earned upon completion of the project, KeyBank bridged almost $5.8 million of it for construction. The project could not be built without the Michigan Magnet Fund financing commitment.  

Flexible Terms
Five of MMF’s financial terms are more flexible than the marketplace.  MMF’s is blended interest is lower than market by more than 50% and interest only for seven years, has longer than market amortization period, with no loan origination fee, and higher, above market loan to value ratio.

Verso Paper Corp. Completes $45 Million Renewable Energy Project at Mill in Quinnesec, Michigan

The Michigan Magnet Fund received a call from the Chief Engineer thanking MMF for the work it did in pulling together the financing for this project that will result in keeping 475 Upper Peninsula rural workers employed in high paying jobs. Verso Paper Corp. announced on 1/9/2012 that the company has completed a $45 million renewable energy project at its pulp and paper mill in Quinnesec, Michigan. The project includes design upgrades to the mill's existing combination boiler (which burns biomass from waste wood sources), a new biomass handling system, and a new turbine generator. The project is delivering 28 megawatts of additional green energy for consumption within the mill, which is equivalent to the amount of electricity consumed by 18,000 homes in a year. MMF pulled to gether a three CDE consortium to provide a combined $32.0 million of the financing using their combined New Markets Tax Credit allocation. The original MMF announcement can be found on page 2.

“The completion of the Quinnesec renewable energy project is a milestone in the implementation of Verso’s long-term energy strategy,” said Verso President and CEO Mike Jackson. “Besides delivering annual energy savings, the project helps Verso deliver on our commitment to increase our use of renewable biofuel and thereby reduce our carbon footprint.”

The boiler upgrades enable the mill to use renewable, carbon-neutral, wood-based biofuel for more than 95 percent of its on-site electricity generation. The new biomass handling system expands the mill's capabilities for processing residual wood such as tree tops, limbs and bark. Verso ensures that the expanded harvesting of this logging residue meets forest sustainability standards. The mill's boilers also will continue to burn black liquor, a byproduct of the wood pulping process.

MMF recruited Norther Initiatives to work with Verso to recruit and find financing for UP small businesses to act as biomass suppler to Verso. This activity is expected to expand local jobs by 50.

“In addition to reducing our carbon footprint, these improvements will improve boiler combustion and efficiency and will markedly reduce the mill’s reliance on electricity produced from fossil fuels,” said Verso Vice President of Energy and Technology Mark Daniel.

Verso began ordering major components for the project in May 2010, construction was begun in October 2010, and the project was completed with the commissioning of the new turbine earlier this month.

350 Attend
Lofts on Ludington Opening

MMF and MSHDA staff joined Matt and Beth Sviland, Bank of Holland & 1st Bank - Upper Michigan investors (seen below) and approximately 350 of Matt and Beth's friends to celebrate the receipt of their Occupancy Permit for Lofts on Ludington in Escanaba in January, 2012. The Michigan Magnet Fund allocated $4.0 million of its New Market Tax Credit allocation to help finance this important $5 million historic mixed-use project. The local newspaper called it one of the most important projects to hit the rural distressed City of Escanaba located at the western end of the Upper Peninsula in the State of Michigan. The developer is Matt & Beth Sviland, a local store owner.

This four story landmark known as the historic Richter Brewery Building, located at 1615 Ludington Street, Escanaba, Michigan, is listed on the national Register of Historic Places. A mixed use rehabilitation will be undertaken on this 29,000 square foot structure, enhancing the entrance to Escanaba's traditional downtown. This building is located in Escanaba's DDA district, and Escanaba is the county seat of Delta County. This building is located in an SBA designated HUB Zone, a local TIF district, and it has been designated for redevelopment by the City of Escanaba. The building will be renovated in accordance with the Secretary of the Interior's Standards for Rehabilitation. The renovated mix of this project will offer commercial leasehold space at street level on Ludington Street, and fifteen loft style rental apartments behind and above with 8 of them meeting affordability rents and incomes.

The structure takes up half of the 1600 block of Escanaba's main retail thoroughfare, Ludington Street, and is located at the West entrance to this twenty-two block lineal downtown district. As visitors and residents alike enter the downtown from the West and approach the first traffic light at Stephenson Avenue and Ludington Streets, they view this massive brick building on the right. Rising four stories, with twin towers and several arch topped windows, this functionally obsolete structure is current an e eyesore, and has been mostly vacant since the 1940's.. Many of the units are 2 stories with patios and one has 3 stories.

This is "It takes a Village Project." MSHDA is providing $725,000 in CDBG fund, the City is providing a $525,000 Loan from a former UDAG established Revolving Loan Fund, the state is providing Brownfield tax credits and state historic tax credits to add to the federal historic tax credits, the DDA is providing s small grant. The small local bank is providing $1.5 million in bridge and permanent financing while The Bank of Holland is providing the NMTC and Federal Historic Tax Credit Equity. The state tax credits are being bridged by Enhanced Capital, a NY based syndicator.

MMF Invests in
35 Oakes Street Project

The Michigan Magnet Fund (MMF) announced in the last week of 2011 that it has closed on loans totaling $6.34 million to the 35 Oakes Street Project.  The Project is a renovation of the Heartside Manor, a dilapidated vacant former hotel  located in Grand Rapids, Michigan.  It is adjacent to Grid 70, a nationally acclaimed creative ideation hub for design and innovation.  To learn more about Grid 70, visit www.Grid70.com

Grid 70 has attracted Amway, Steelcase, Pennant Health Alliance, The Williams Group, Meijer, and Wolverine World Wide as corporate tenants to house their prod-uct development professionals. 35 Oakes’ proxim-ity to Grid 70 has allowed the Project to be marketed to seve-al prospective tenants who are similar to the Grid 70 participants.  This Project will be the tenth building to be redeveloped in the area by the Rockford Development Group, and it is projected to bring approximately 142 permanent jobs to the neighborhood and create 112 jobs during construction.

Rockford Development Group has begun the $11.0 million redevelopment of the property with a targeted completion date of spring 2013.  When complete, the Project will contain approximately 58,000 square feet of commercial space.  The New Markets Tax Credit (NMTC) financing will allow Rockford Development Group to offer the space at rent levels that are more competitive with other projects in the Heartside neighborhood.  Without the MNTC financing, the Project would not be financially feasible and would not be commercial viable at this time.

Severely Distressed Area
The Project is located in an area that meets the definition of an additional distressed neighborhood with 51.7 percent of its residents living below the   poverty rate and with a median family income of only 49.3 percent of the metropolitan area’s median family income.Michigan Magnet Fund
The Michigan Magnet Fund (MMF) is a CDFI Fund certified community development entity that has received NMTC allocations in several different allocation cycles.  MMF will use these allocations to make qualified low income community investments throughout Michigan totaling $145 million.  The NMTC is a 39 percent tax credit used to attract private capital that will be used to make qualified investments in low income communities.  With the investment in the 35 Oakes Project, MMF has utilized NMTC to raise over $125 million in Qualified Equity Investments in eighteen projects.  These investments resulted in

over $600 million of capital investments in low incomeneighborhoods throughout Michigan.

Flexible Terms
MMF’s loan to the 35 Oakes Project qualifies for NMTC because it was made under terms more flexible than could be realized in the conventional financing markets.  These flexible terms include a lower than market interest rate, extended (seven years) interest-only period, loans subordinated to other project financing, higher loan to value ratio, and longer amortization periods.

Financing Structure
The NMTC financing accomplished by The Huntington Community Development Corporation is making a $1,825,000 equity investment and The Huntington National Bank is providing a loan of $4,674,800 into the Huntington 35 Oakes Investment Fund.  The Investment Fund will utilize the proceeds of the equity contribution and loan to make an investment in an MMF affiliate.  The MMF affiliate will use the $6.5 million to make the Flexible Terms loan to the Project.  The balance of the Project cost will be financed through developer equity, a conventional mortgage loan from The Huntington National Bank, Michigan Brownfield Tax Credits, and the Grand Rapids Downtown Development Authority.  #

MMF Invests
$5.6 Million in
Hamtramck
Recycling Center
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The Michigan Magnet Fund, a CDFI Fund certified Community Development Entity announced that it has invested $5,606,250 in the Hamtramck Recycling (HR) located at 3300 Denton in Hamtramck, MI. Hamtramck Recycling L.L.C. a 'Qualified Low Income Community Business (QALICB) will provide an integrated, cost effective, and environmentally sound waste disposal system for the community and the customers they serve while increasing landfill diversion options through responsible outlets. HR intends to build a new transfer station and tailor it to accommodate Industrial Dry Waste, recovering recyclable materials from the waste stream. The facility will be located in an industrially zoned area of the City of Hamtramck adjacent to Wayne County Jail and the GM Assembly Plant manufacturing the Volt automobile.

Targeted Population
The census tract has a zero population. Therefore, the project will be targeted to provide 60% of the jobs to a low income population whose family income is less than 80% of the area median family income. Although the CDFI Fund requirements are 40% of the employees must meet the median income test, MMF requires that any configuration below 50% will result in a default on the loan. The project is targeted at meeting the core goal of the NMTC program – providing jobs to the low income residents in the community. A minimum of 26 of the 43 projected employees must be certified low income. Over 60% of the employees must be low income at the time of closing. This project not only provides a living wage but equally important – health care benefits.

Uses of Funds
Hamtramck Recycling is purchasing an obsolete facility previously

used as a recycling facility. By modernizing the building design, preparing a detailed business plan that includes efficient manufacturing procedures, competitive pricing based on third party projections, and analyzing cash flow needs to assure adequate cash during the start-up phase, HR has established the framework for success. The business plan shows how NMTC is creating the opportunity for this start up business to be successful while providing job opportunities to the low income people badly needing them. The other key to the firm's projected success is being able to develop a modern assembly line that permits the use of such technology as overhead cameras to examine truck contents upon entry to price its recyclable mix, and the appropriate use of automated equipment to permit easier sorting and separation of materials.

Financial Structure
The Michigan Magnet Fund received its NMTC equity financing from PNC's Tax Credit Investment Group that invested $1,737,938 in exchange for a 39% tax credit on the $5.75 million Qualified Equity Investment for a seven year period The leveraged loan to the Investment Fund came from a private party which is also a 25% owner of the QALICB. The balance is owned by St. Clair Partners, LLC. TheNMTC investor has agreed to 'Put' the amount of the equity investment to the QALICB for $1,000. However, if HR is successful, HR has agreed to make a payment to MMF's Economic development Fund based on Loan B principal of an amount equal to the percent increase in the business's value at the end of the NMTC holding period. MMF will use the funds to reinvest in smaller QALICB's.

MMF Invests in
Seidman
Center

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The project is located in an urban Brownfield redevelopment area as designated by the City of Grand Rapids. It involves the construction a new, multi­story 124,000 square foot LEED Silver building for the expansion of the Seidman College of Business and various community and business outreach services. It is anticipated that this project will provide the needed stimulus for further development south of Fulton Street along the west bank of the Grand River. The building will include space for various outreach services to local and state businesses, including incubator services for small businesses, conferencing, executive level training, community outreach, food service and other related services and the University’s college of business. Demolition began this summer, and the building completion targeted for spring, 2013.

rate criterion for additional distress.  The site is a State /local programs targeted towards economically distressed communities with a local and state approved Michigan Brownfield Plan providing state tax credits.

Rehab programs, the Alliance includes Community Treatment Centers, Life Guidance Services, EAC Employee Assistance Center, and Corporate Services. The Corporate Services division provides all day-to-day operational tasks such as accounting, human resources, fund raising, and marketing for each of the divisions. This allows service providers to better focus on advancing their mission to improve lives.

The Heart of the City Health Center will provide these three organizations with up-to-date and efficient facilities for existing programs, replacing crowded and inefficient medical and office space. The project provides for the opportunity to seamlessly blend primary health care, dental, pharmacy, mental and behavioral health services. This will provide for coordinated care of multiple health issues. One of the treatment teams will specialize in the treatment and management of multiple chronic health conditions. Chronic conditions create disproportionate health care costs. Ineffective management of these conditions costs money and lives. This team will use the Chronic Care Model to bring leading edge care to the community. In addition to the efficiencies created the new and enlarged facility will allow these organizations to add over 7,000 new patients.

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MMF Closes
$138.75 million in 19 Projects