Tools for Redevelopment Courtney Knight Managing Director, Redevelopment Revitalizing Atlanta 1

Redevelopment Programs Tax Allocation Districts Established to publicly finance certain redevelopment activities in under-developed areas Costs are financed through the pledge of future incremental increases in property taxes generated by the resulting new development Private Investment Programs New Markets Tax Credits EB-5 Foreign Investment Business Financing Initiatives Green Building Fund 2

TAX ALLOCATION DISTRICTS Revitalizing Atlanta 3

What is a Tax Allocation District? Creates incentive for development that would otherwise not occur Tax increment financing (TIF) is a tool used to publicly finance certain redevelopment activities in underdeveloped or blighted areas Locally, TAD creation results from legislation passed by the City, County, and Atlanta Public Schools TADs attract private investment which results in increased development, new jobs, reduced crime and greater economic vitality New development within the TAD increases property values and thereby increases tax revenue

How do TADs work?

City of Atlanta TADs 10 Tax Allocation Districts To date, approximately $560 million in TAD bonds have provided gap financing for over $3.4 billion in private development Assessed property values in TADs have grown 20% since 1998 while City of Atlanta has grown at 5% Incentivize development in blighted and underdeveloped areas of City Beltline Exception: Other TADs’ tax increment or bond proceeds are used primarily as developer incentive, while the Beltline TADs increment or proceeds are used to fund the construction of Beltline infrastructure.

Livable Centers Initiative (LCIs) Atlanta Regional Commission City of Atlanta and Invest Atlanta will jointly submit an application to Atlanta Regional Commission for Livable Centers Initiatives (LCIs). LCI designation will provide funding for major  transportation improvements  that will improve access to the University site by improving access to the main roads north of the site. Planning grants to enhance connectivity, accessibility by multiple transportation modes, walkability, and mixed-use development in activity centers, town centers and corridors.

PRIVATE INVESTMENT PROGRAMS Revitalizing Atlanta 8

New Markets Tax Credits Federal program enacted by Congress in 2000 to attract private sector investment to communities with high rates of poverty and unemployment NMTC investment finances commercial and mixed-use projects Invest Atlanta’s NMTC entity has $148MM in NMTC Allocation Federal priorities for NMTC investments: Job Creation Jobs Accessible to Low-Income Persons Goods and Services to Low-Income Communities Flexible Lease Rates for Locally-Owned Businesses

New Markets Tax Credits – Deal Structure 80% Developer Funds: Bank Loan, Grants or Charitable Contributions 20% Equity: Tax Credit Investor Contribution NMTC Investment Fund Black arrow is debt. Red arrow is tax credit purchase. Yellow arrow is tax credit. Purple arrow is investment. Green arrow is NMTC allocation. Blue arrow is limited Principal and Interest. Orange arrow is cash equity of Borrower. Project receives a 7-year below-market rate loan. 20% of loan does not have to be repaid at end of term.

New Markets Tax Credits Program Invest Atlanta has been awarded $148 million in NMTC allocation since 2007. $48 million of NMTC allocation is currently available (as of October 2014) NMTC Investment Priorities: Job Creation Services for Low-Income Communities Create holistic, healthy neighborhoods Improve access to: Education Health care Healthy foods

EB-5 Foreign Investment Program United States federal program created in 1990 to attract foreign investment Program allows families to expedite US citizenship process with investment of $500,000 Program targets investments to projects in low-income areas Invest Atlanta is creating a new EB-5 regional center to match investors with eligible projects Target Areas for Investment

EB-5 Foreign Investment Program Invest Atlanta EB-5 Regional Center Matches foreign investors to local projects Collects $500,000 from each investor Funds are combined then released when project is ready Investors get a visa for residency when project is complete EB-5 Program requirements for developers: Target Area – Projects must be located in low-income areas Job Creation – Each $500K investment must create 10 jobs Developer Loan – Typically funds are provided as a 5 year loan Ideal Deal Size – $5 - 20 million range is best for EB-5 tool

EB-5 Foreign Investment Program EB-5 Program Financing for Development Projects Amount Investor #1 $500,000 Investor #2 Investor #3 Investor #4 Investor #5 Investor #6 Investor #7 Investor #8 Investor #9 Investor #10 Total EB-5 Investment $5,000,000 Development projects typically get a 5-year loan with 4-6% interest rate EB-5 Job Creation Requirements For each $500,000 invested, 10 jobs must be created. In this example, the project must create 50 jobs. Once funds are received and construction starts, visas can be issued.

Business Financing Initiatives Atlanta Catalyst Fund $500K revolving fund for small business loans. Loan amounts range from $50,000 to $100,000. Eligible for real estate improvements or operating capital. Atlanta Seed Equity Initiative $400K fund for equity investments Program will address the need for venture capital to support startups with high growth potential in Atlanta Partnership with Startup Atlanta and private investors. NMTC Business Loan Fund $8 million revolving loan fund. Loan amounts range from $1-$3.5 million Loans serve a niche range that is currently underserved by existing financing programs in Atlanta.

Property Assessed Clean Energy Financing (PACE) Private financing for building owners to make energy efficiency upgrades. Funds provided 100% upfront. Repayment over 20 years along with annual property tax bill.