1. Sean L. Spear, Executive Director CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE April 27, 2011

2. CDLAC PROGRAMS CDLAC is a fee based program and receives no federal or state funding. Agencies and organizations authorized to issue tax-exempt private activity bonds or mortgage credit certificates must receive an allocation from CDLAC. The bonds issued utilizing the private activity bond allocation are purchased by municipal bond investors and the repayment is the obligation of the Borrower, not the state. CDLAC has adopted Regulations for allocating the annual state ceiling; $3,539,125,820 for 2011. The Regulations give priority to projects or programs that provide the greatest public benefits. Applications for award of allocation are reviewed and recommended through a competitive process. The Committee has six (6) program pools for the issuance of tax-exempt private activity bonds:  Qualified Residential Rental Program (QRRP)  Single-Family Housing Program  Teacher Extra-Credit Home Purchase Assistance Program  Student Loan Program  Small-Issue Industrial Development Bond Program  Exempt Facilities Program 2

3. 2010 AT-A-GLANCE Multifamily Housing (QRRP: General, Rural & Mixed-Income) $785 million (past year carryforward and 2010 current year cap) for rental projects. 6,399 multifamily rental units, of which 5,262 units are reserved for very low income households. Single Family Housing (MRB & MCCs) $432 million for Single Family Housing assistance programs. 2,392 low to moderate income first-time homebuyers. 3

4. 2011 ACTIVITY 4

5. PERMANENT REGULATIONS  Establish Review and Approval Standards for BBB-rated, Non- Investment Grade rated, and Unrated Public Sale Transactions  Placement Agent Statement  Marketing Plan  Bond Default History  Minimum Denominations OR ‘Big Boy’ Letter  Addressing IRS Notice 2010-81  Carryforward for Draw-Down Bond Transactions  New Annual Issuer Reporting  Clean-Up of Application Requirements & Timing  Uniform TEFRA Deadline  Issuance Deadline Reset for Supplemental Allocations 5

6. MAKING BOND / 4% DEALS WORK  Private Placements and Invitation-Only QIB Sales have proven to be viable alternatives to public sales. Private Placements are being driven by the CRA-credit needs of the commercial banks, and special governmental initiatives such as the New Issue Bond Program (NIBP).  4% - Level Tax Credit Pricing has remained strong; somewhat driven by the lesser supply of 9% - Level investment opportunities here in California. Recent ‘Tricks of the Trade’  Maximizing Eligible Basis  Less Deep Targeting of Rents, But Still Targeted Below Market Maximums  Working with Locality to Support Conversion from 9% to 4% Project  Marketing Multiple Tax Credit Opportunities to Investors (linking a 4% to a 9%)  Using FHA for Recapitalizations and Year-15 Investor Takeouts 6

7. FEDERAL ACTIVITY & LOOK FORWARD  Tax Reform Discussions  Conversion to Tax Credit Bonds?  Conversion to Interest Subsidy Bonds?  IRS Compliance Review  Confirmation of Delivery of Public Benefits  Confirmation of Ongoing Compliance  NIBP Round II? 7

8. CONTACT INFORMATION Sean L. Spear Executive Director sspear@treasurer.ca.gov Misti Armstrong Program Manager marmstrong@treasurer.ca.gov California Debt Limit Allocation Committee (CDLAC) 915 Capitol Mall, Room 311 Sacramento, CA 95814 (916) 653-3255 8