WALL STREET WITHOUT WALLS

Transcription

1 Accessing Capital Markets for Community Development Priorities 2006 Budget Policy Implications, WALL STREET WITHOUT WALLS New Cities US Mayors Conference Brookings Institute January 27, 2006

2 Prioirities for US Mayors in Monetizing Underutilized Assets Tom Mennino, Boston, MA Ellen Moyer, Annapolis, MD Dana Williams, Park City, UT Martin O'Malley, Baltimore, MD Heidi Davison, Augusta,GA Rosemarie Ives, Redmond, WA Peg Hanrahan, Gainesville, FL Dave Cieslewicz, Madison, WI Scott King, Gary, IN Marshall Kamena, Livermore, CA Jim Brainard, Carmel, IN Alternative Financing Mechanisms: Certainty of Cash Flows Physical revitalization: Leveraging Dead Assets David Bieter, Boise, ID Beth Krom, Irvine, CA Funding Pre-development costs - collaboratively Marty Blum, Santa Barbara, CA Michael Guido, Dearborn, MI Rocky Anderson, Salt Lake City, UT Corporate Involvement in Community Development Assets with New Regional First Loss Reserve Fund / Mezzanine Funding Franklin Cownie, Des Moines, IA Tom Bates, Berkleley, CA Cole Finnegan, Denver, CO Irma Anderson, Richmond, CA Euline Brock, Denton, TX Pete Clavelle, Burlington, VT Randy Primas, Camden, NJ Bernard Kincaid, Birmingham, AL RT Rybak, Minneapolis, MN Graham Richard, Fort Wayne, IN Kevin Foy, Chapel Hill, NC

3 Economic Development - Practical Innovation & Applications of Collateral & Credit Enhancement Practices using existing resources in New Cities 1. Use Dead Assets 2. Bequeathed Assets 3. Vacant Lots for Collateral Pool / 4. Using Corporate Inventory to Monetize NMTC Presented to Mayors: Economic Development Discussion Forum

4 CAPITAL MARKETS High Credit Quality Loans Can be sold A TOOL for only High & Good Quality Portfolios Good Credit Quality: Needs Credit Enhancement & Support: can be sold or financed High Touch Lending: Various Risk Levels: Needs Monitoring High Touch / High Risk: Active TA and Involvement

5 To Achieve Scale in Cities We must first achieve sustainability & maximize our use of subsidy thinking must shift from product Innovation to product Delivery

6 The breadth and attitude of our vision for today s potential or tomorrow s dream will profoundly influence what we see at this moment we have the option to walk backwards,..stuck in yesterday s lost hopes.

7 Innovative Mayors to ASSEMBLE Collateral Pool for Minority Business Loans supported by Vacant Lots Vacant Lots CE/CP Collateral Fund Collateral Value = $50 Million Managed by the City s Fund Designated Fund Managers Dead Inventory Foreclosures Financial Assets Bequeathed Assets COLLATERAL for Minority Businesses Working Capital

8 New Cities 2006 Collateral Loan Fund Fund to provide working capital and loans to invest in local minorit y businesses Schematic for discussion p urp oses only Loan Capital provided by consortium of Banks & SBA Lenders Bank A: ( e.g. PNC Bank) Bank B: ( e.g. Chevy Chase) Bank C: ( e.g. Wells Fargo Bank) Bank D: ( e.g. Maryland National) Bank E: ( e.g. M&I Bank) Bank F: ( e.g. JP Morgan Chase) Bank G: ( e.g. HSBC) Bank H: ( e.g. Deutsche Bank) Bank I: ( e.g. TcF Bank) Bank J: ( e.g. Bank of America) $ 50 MM Total Bank Total Bank Lending from Consortium $ 50.0 MM Loans Supported by 10-25% First Loss Collateral Guarantee by Collataleral Fund Collateral invested by: Collateral Wrapped by Financial Guarantee of Letter of Credit City Vacant Lots ( collateral leader ) Consortium of Banks: Unclaimed Financial Assets Corporations: Commercial real estate & excess or underutilized inventory Local Universities: Bequeathed Real Estate Assets Total contributed collateral to New Baltimore Minority Business Loan Fund $ 4.0 MM $ 2.5 MM $ 2.5 MM $ 1.0 MM $ 10.0 MM $ 10 MM Total Collateral * collateral is substituteable by appointed trustee * bank loans are based on market demand, but on average 5-7year term loans

9 Pilot Programs Use Dead Assets & Bequeathed Assets & Vacant Lots for Collateral Pool Use Corporate Inventory to Monetize New Market Tax Credits (NMTC) Brownfield options: indemnity bonds for environmental problems, Manchester Guild: Job Training: Demand Driven

10 Setting the Priorities Prioiritize facilities Child Care Long Terms/ Assisted Living Schools Business Incubators Job Training Affordable Housing / Mixed use

11 CITY CORPORATE PARTNERSHIP Corporate Dead Inventory Liquidation & CDE Investment Milwaukee Corps. Warehoused Dead Inventory $10 million in non-saleable Inventory, or Equipment Harley Davidson A.O. Smith Corporation Brady Corp. Milwaukee Electronics Corp Eaton Corporation $10 million NMTC Inventory transfer Monetize Inventory through Asset Liquidator (i.e. Bid4Assets.com) Asset Liquidator receives $3 auction in exchange for inventory $3 million Inventory transfer Highest Bidder $10 million Low-Income Child Care Facility or Minority Business Loan Fund Corps Realizes full value of transaction CDE Exchange Equity Investment for NMTC at full value

12 What Lessons Can We learn from Noah s Ark??

13 The woodpecker might have to go!

14 Prime Mover to Scale Use / Seek Federal & State Assets Leverage current & future CF streams Enlist Corp & University participation Fund w/local ownership shares:residents Facilitate aggregation & 2nd look deals Bankroll expense side of incubators FOR MORE INFO...