Double Bottom Line Funds: Successful Private Equity Funds Double Bottom Line Funds: Successful Private Equity Funds to Revitalize Low Income Neighborhoods 2005 MetroBusinessNet Annual Convening Miami, Florida February 17-18,2005 Belden Hull Daniels, President & CEO Economic Innovation International, Inc www.economic-innovation.com

What are Double Bottom Line Initiatives and Funds? Regional Initiatives oversee Private Equity Funds $3 billion managed by proven fund managers Upper quartile private equity returns attract investors Double Bottom Line Funds Pull growth back into the urban core Fully redeploy inner city infrastructure Fund mixed-use, mixed-income and job generating projects Generate large scale job, wealth & community impacts Two Bottom Lines The First Bottom Line: upper quartile market returns for investors The Second Bottom Line—The Three Es: Sustainable E1conomic Development; Social E2quity, and Sound E3nvironmental impact.

Double Bottom Line Initiatives & Funds have unique qualities: Regional Initiatives link low income areas to the larger region Low income areas only prosper by exporting to the larger region Regions can only prosper if low income areas prosper Large Scale makes a substantial impact—Billions! Private Market Discipline drives the Initiatives and Funds Double Bottom Line DNA is deeply embedded in the Funds Successful Fund Managers profit by recognizing and addressing market failure Initiatives measure and report success with both bottom lines

Double Bottom Line Funds Focus Investments in: Mixed-use commercial, industrial & housing projects Affordable and mixed-income housing Urban infill and brownfield cleanup Transit-oriented development Job and wealth creating business ventures Profitable investment for developers and investors Measurable job and wealth for community residents

Double Bottom line Funds Are Capitalized to Succeed Private equity produces higher returns by capitalizing on market imperfections Proven, incented private management High investor returns are appropriate to risk $3 billion invested by banks, pension funds, insurance companies, foundations, endowments and others Community sponsors oversee most funds Close working relationship with the public sector

Double Bottom Line Funds Use Private Market Discipline Fund managers chosen in competitive process Investors & community involved in selection Fund managers protected by firewall & at risk Accountability to community stakeholders Sponsors participate in economic returns

Successful Fund Managers Find & Fix Market Failure: Low Income Neighborhoods are Not Disadvantaged— They are Domestic Emerging Markets! They have: The nation’s only untapped labor force Vast untapped disposable income to buy Large tracts of underappreciated land close to the Central City In place, and often underutilized, infrastructure. Successful Fund Managers address these market failures for the benefit of both investors and community stakeholders Private Equity Funds only make money when they find and fix a market failure Community Stakeholders reap the jobs, wealth and community revitalization from success as a domestic emerging market.

Double Bottom Line Funds: Investors Appreciate Returns Banks like CRA credit plus high returns Insurance industry likes avoiding CRA plus high returns Public Pension Funds like DBL plus high returns Foundations like high corpus returns, not low PRI returns Faith based investors slow to come on board Corporations & high net worth individuals are joining

Double Bottom Line Funds Capitalize Strong Demand

Not a just a Fund; a System! Funds I II & III Genesis LA Real Estate Funds

Double Bottom Line Funds have exploded across the US Puget Sound Portland Coastal Maine Boston New York Sacramento Philadelphia Bay Area Baltimore/Washington St. Louis Los Angeles Albuquerque San Diego Shreveport Miami

Not Just a Fund; A Family of Funds! Genesis LA Not-for-Profit Real Estate Fund I $85M Real Estate Fund II $150M Workforce Housing Fund I $60M Business Equity Fund I $30M Shamrock Shamrock Fulcrum Phoenix

Many Models: Genesis LA Family of Funds Genesis LA Not-for-Profit oversees the Funds $300 Million currently under management $1.5 Billion in deals generated $85 Million Genesis LA Real Estate Fund I Managed by Shamrock, the Disney Family Fund Manager Returns far above promised high teens Success in first fund leads to $150M Genesis LA Fund II $150Million Genesis LA Real Estate Fund II Now being built because of success of Fund I $60Million Genesis Workforce Housing Fund I Managed by Phoenix Realty Supports “workforce housing” in LA’s urban core $30Million Business Equity Fund I Invests in minority entrepreneurs in LMI neighborhoods

Many Models: $217Million Coastal Enterprises $53M Coastal Enterprises, Inc.—the NFP parent owner 25-year-old broad based CDC Over 1,000 loans and investments in coastal Maine Deal flow: micro loans, subordinated term loans & venture capital $25M CEI Ventures, Inc.—wholly owned for-profit mgt firm $5.5M Coastal Ventures Fund I $20M Coastal Ventures Fund II Similar Subsidiary Structures for: CDFI: $10M CEI Community Ventures Fund NMTC: $129M CEI Capital Management

Many Models: Massachusetts Life Initiative 1997 Massachusetts “CRA” Insurance legislation Community Advocates/Legis Oversee Funds $100 Million Massachusetts Life Initiative Totally funded by Mass Life Insurance Industry Invests with CDCs and Housing Associations $100M already invested; starting 2nd cycle Based on 25 yr, $500M MCRC: 18,000 jobs, 60%LMI Real value not $, but capacity building $80M Massachusetts P&C Initiative

Many Models: American Ventures South Florida Urban Initiative Fund $30M first closing; $75M final closing Focuses on Miami-Dade, Broward & Palm Beach dense development mixed-use, mixed-income transit-related developments Knight Foundation initiated process Investors include: Citicorp, Wachovia, Knight Albuquerque Urban Initiative Fund Other regions in negotiation