920 Cherry Street Ribbon Cut in Grand Rapids 10-25-07

The CDFI Fund announced the winners of this year's allocation of New Market Tax Credits. Regrettably MMF was not one of the winners. Port Huron was allocated $15 million out of their request for $60 million. They hope to use it to attract a new downtown hotel.

We were pleased to see that two of our Board members Fifth Third New Markets Development Corp. and National City New Markets Fund received allocations of $100 million and $75 million respectively. The Local Initiatives Support Corporation received $133 million. The two banks have an 8 state footprint they need to cater to and LISC has a national footprint although it has made significant investment in Michigan projects. Based on past history, Michigan projects can expect to receive approximately $30 to $50 million in QEI investment. This represents about 0.75% to 1.3% of the 2007 allocation.

We have congratulated all of the winners and encouraged them to consider Michigan projects.

However, it is time to consider some sort of national fair share plan. Tony Iliardi suggested a Congressional mandated distribution similar to the LIHTC program. It should also add a distress level to the formula. To have the state that is undergoing a major restructuring of it economy as it transitions to a smaller industrial base, with the largest unemployment rate in the nation to receive such a small investment footprint. It appears to contradict the purpose of the program.

In addition, we need to encourage more regional and statewide organizations, that have the capacity, to apply. To only have three applicants from the Michigan reduces our capacity to be competitive. Lastly, we need to do a better job in our application. We thought we did a good job. We will need to review the CDFI Fund notes on our application and see why we lost points. MMF track record is good. Just based on track record MMF should have received an allocation.

The Michigan Magnet Fund has closed 10 New Market Tax Credit Projects by allocating $60.0 million of its Qualified Equity Investment.

The projects are in 6 cities and include:
1. Clear Water - Grand Rapids a $6.7 Million investment in this historic rehab of the former Water Works building into an office complex. This is Fifth third Bank investment into the MMF and includes brownfield tax credits in addition to the national and state historic tax credits.

2. 920 Cherry Street - See above

3. 500 Block - Flint is a $5.4 million investment into the rehabilitation of these former downtown buildings into a mixed use development. This was a complex project using HUD 108 financing from the city, old building (10%) tax credits, brownfield and state historic SBT tax credits, and a BEDI grant.

4. Book Cadillac - Detroit is a $10 million qualified equity investment into this $185 million historic rehabilitation of this grand hotel. The MMF investment made it possible for National City Bank to invest $28.0 million in purchasing the losses from the donation of the facade easement to a Conservancy group.

5. East Forest Arts Project - Detroit is a $3.6 Million into this arts orientated historic rehabilitation development in the city's cultural center. The African-American Art Gallery owner is the qualified low income business receiving the MMF investment. It uses a HUD 108 loan as part of the leveraged investment to National City Bank's NMTC driven equity investment and obtained a brownfield SBT tax credit in addition to the state and federal historic tax credits.

6. Pere Marquette - Bay City is a $5 million investment by the MMF into this historic rehabilitation of the former railroad station into the City Convention Offices. This project in addition to national and state historic tax credits, obtained state brownfield SBT tax credits. MMF obtained a leveraged loan from a local foundation to leverage the new market tax credit equity investment by Fifth Third Bank.

7. Harbor Shores - Benton Harbor is a $8.6 million investment into a land development company that is redeveloping over 250 acres of land in Benton harbor and as part of total 500 acre, $86 million land development. National City Bank provided the equity investment leveraged by a loan from the Whirlpool Corporation. The investment is being used to acquire the land and put in the infrastructure.

8. Bicycle Factory - Grand Rapids is a $4 million investment into a historic rehabilitation and transformation of this former factory into a mixed use facility. Fifth Third Bank is the QEI investor in MMF. However, within one week of the closing the building was completely destroyed by the largest fire ever seen in the City. It is presently being restructured from a historic rehabilitation to a larger new construction. We expect to know the feasibility of the close by October 15, 2007.

9. Studio One - Detroit is a $5 million investment by Fifth Third Bank in the MMF toward this $18 million project toward a mixed use development in the City's Cultural Center and will provide 128 market rate apartments on land leased from Wayne State University. This project closed in May, 2007. It also has a state brownfield tax credit.

10. Woodard Station Lofts - Owosso is a $5 million investment using debt leveraged by a loan from Huntington Bank and new market tax credit equity from Fifth Third Bank into the MMF. This project is located in a low income rural community and will receive state and national historic tax credits, state brownfield tax credits in addition to the new market tax credits.

Michigan Congressional Delegation Supports MMF Application