1. Spingarn Development, LLC. Presents The Watermark Detroit National Brownfields Conference Detroit, Michigan May 7, 2008

2. Case Study Points  High level overview of development project  Challenges of developing a Brownfield site  Innovative financing alternatives

3. Spingarn Development, LLC.  Principle Dave Bing - Industrialist, business owner, developer Industrial development Single family in-fill Commitment to city Catalyst for broader development efforts  Target market is Detroit  Undervalued residential market on the uptrend  New Urbanism – Downtown resurgence, suburban inflow  Success proven in other like kind markets - Cleveland, Pittsburgh  Waterfront opportunities – allure, chance to design to customer preferences

4. Project Facts  Real estate acquisition, development and sale  2006  Product type  Condominium – Mid-rise and town houses  Development cost  $62 million  Capital raising  $6 Million  Individual - Institutional  Anticipated build time  19-24 months

5. Development Description  2122 Atwater – on Detroit River -.8 miles east of GM headquarter building, 1.4 miles west of Belle Isle park  2.24 acre parcel - formerly Medusa Cement  New build  Multi- life style community offering distinct building types  112 residential units – 200k sq. ft. of saleable space

6. The challenge……the start

7. Watermark Detroit Future Site

8. Site History  Fort Detroit…….. site was a swamp  Landfill in land for ½ mile  Strip farming by the French …Atwater, St Aubin  Industrial usage for over 100 years  Scrap iron, lumberyard, coal yard  Last 40 years contained Medusa cement  Bulk cement material storage  Off loaded semi’s or repackaged

10. Construction & Environmental Issues Storage silos demolished 2005 Foundations remained…over 6 feet of cement and rebar Brownfield grant from MDEQ State of MI made it possible Various levels types of fill found, some over 150 years old Removal concerns Load bearing considerations Water table challenges Deep caissons Risk of pour damage warranted high contingency dollars Sole removal and remediation required Contaminates from previous industrial usage Lead, arsenic, benzoprene, chromium Possible gasoline storage tanks

11. How deep must we go…………………Superstructure foundations

12. High water table…………….caisson integrity?

13. Funding challenges First “out of the box” risk  Is the market ready  Developer experience Construction uncertainties  What is under the ground  Cost to remediate  Infrastructure sufficiency Buyer acceptance  Product and price point  Waiting period Value assessment  What are the true comp’s  Chicago analysis

14. What Our Funders Required……a lot Banks  LTV 75%  GMP construction  Personal guaranties  10% ROS  68% pre-sales …cover loan amount…first out Investors  20%+% IRR  Quick payback  High certainty of incentives materializing  Cooperative and innovative development authority

15. Financial components……mosaic  Bank Funding - $43 million Construction loan - $43 million construction loan  Mezzanine - $11.5 million  Detroit General Retirement Fund $8 million  Detroit Investment Fund $2.5 million  Equity - $7.3 million National City - CDC $.8mm Detroit Police and Fire Retirement Fund $3 million Investors – $3.5 million

16. Bottom line challenged …… Revenue $ 59 million Cost $62 million Net ($3 million)

17. Impact Factors Revenue pressures New development…will it happen No comps……not Chicago Non-traditional life style for market…..luxury condo Competing lower end products Cost additions Remediation Foundation conditions …deep caissons… prox $2 million Higher funding cost….trail blazer premium

18. Closing the Gap  Incentive funding oAll incentives on the back end of project  Brownfield Tax Credits - $4 million  10% of eligible cost  Sold @ 80+% of par  TIF - $4 million  Bonding mechanism…..first time  NEZ impact…conflict with investor timing

19. Meeting the Return Hurdle Net ($3 million) Brownfield Tax Credit $4 million TIF Bond Proceeds $4 million Investor Net $5 million 21% IRR (prox)

20. Why Use Brownfield Programs ? Provides encouragement to developers in weak or high risk markets Helps augment the unknowns Utilization of governmental agency experience Can serve as “genesis” for mega projects East River District plan Mitigates trepidation of funding sources Subordinated positions Equity support Facilities job and tax base growth Construction jobs Property tax…NEZ and beyond Secondary stage Leads to future non-supported private development

21. Success attributes ! Private - public sector collaboration Willingness to innovate and take mutual “measured risk” Sell the communities attributes Community committed funders Changing to a “National” Banking environment Long term horizon One off’s may not justify the support Sound economic propositions that benefit all parties Right developers…commitment, reasonable return objectives Not for “feel good” …. for economic success

22. The Future…………what it can be

23. The Watermark Detroit on the River Walk

24. Dequindre Cut…………….mobility

25. Lifestyle …………………