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CDFA2008 Practitioner’s Showcase
May 6, 2009
National New Markets Fund LLC
Second Line Stages
National New Markets Fund LLC
Economic Innovation InternationalBelden Hull Daniels, President and CEO
Strategic Development SolutionsDeborah J. La Franchi, President and CEO
Partners in New Market Tax CreditsEconomic Innovation: Founded by Belden Hull Daniels in 1970$150B Privately Capitalized Funds Built Since 1970
CDFA Pioneers: Economic Innovation helped build more than a dozen in: AK, AR, CO, CT, FL, KS, MA, ME, NE, VA, WA, and WYHarvard and MIT: Taught Development Finance at both for many years
Strategic Development Solutions Founded by Deborah La Franchi in 2001
15-Person Economic Development and Fund Building Firm Genesis LA: First CEO: 6 Funds capitalized at $.5B doing $1.5B deals Former Assistant Deputy Mayor for Economic Development
(Los Angeles/Mayor Riordan)
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New Orleans, LAAugust 29, 2005
Hurricane Katrina
1800+ Deaths
$90 Billion in Property Damage
30 Oil Refineries Damaged; 9 Never Reopened
More than 1 Million Housing Units Flooded
Unemployment Doubled in One Month from 6% to 12%
25% Poverty Rate Before “The Great Recession”
The Costliest Hurricane Ever
One Of The Five Deadliest Ever
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Diversifying New Orleans’
Major Industries
Big Issue:
More Industries With More Jobs
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New OrleansTourism Was
Job Generating
Tourism was 35% of the City’s Annual Operating Budget
Since Katrina, New Orleans Lost $1B+ per year in Tourism $
Post Katrina Tourists Cut By 2/3rds
Was More than 10 million per year
Cut to About 3 million per year
Thus, Economic Diversification is Critical
And, High Value-Added Jobs are Even More Critical
Big Issue:
Tourism Collapse
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New OrleansMotion Picture
Industry Helps Fill the Gap
From ‘01 and ‘07 New Orleans Motion Picture Industry:
Grew 22%
Each Year Wages Increased More than 8%
Louisiana Became One of Top Production States
And Production Facilities Create High Value-Added Jobs
Big Growth:
The Film Industry Creates:New Jobs
New Income
New Taxes
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Louisiana Film Production
Since 2002:
$2 Billion in Productions Have Been Filmed in Louisiana
$1.5 Billion Total Direct Impact to Louisiana’s Economy
Each Year Film Jobs Increased by 33%
Film Production Budgets Spent in Louisiana Have Risen from 33% in 2005 to 87% for 2007
Big Deal:
Big Diversification
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Supports the Rapid Growth of Louisiana’s Indigenous Motion Picture Industry
Serves the Specific Demand for More Streamlined Production
Assumes a National Leadership Position in a Cleaner, More Environmentally Friendly Film Industry
Stimulates Long-Term Economic Growth in New Orleans and Louisiana
Creates Training, Jobs, Income, Wealth, and Taxes
Why aProduction
Studio in New Orleans?
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Big Construction Impacts
200 Direct Jobs, 22 Indirect Jobs
$2 Million Federal Tax Revenues
$.75 Million State Tax Revenues
Big Impacts:Construction
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Second Line Stages:A Sow’s Ear Into a Silk
Purse
35 Filmed Productions
2,635 Direct Jobs
2,597 Indirect Jobs
$20 Million Federal Taxes*
$12 Million State and Local Taxes*
Big Operation Impacts Over 7-Year NMTC Life
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Big Impacts:Operations
* Figures do not take into account the 40% State Film Infrastructure Tax Credit or the 25% State Tax Credit for Productions over $300,000.
Second Line Stages:A Sow’s Ear Into a Silk
Purse
Big Opportunity:Lots of Training
Lots of Jobs
Second Line Stages Partners with Kingsley House to Create:
Apprenticeship Training for At-Risk-Youth
Green Collar Training for At-Risk-Youth
Neighborhood Security Training
Outcome: Skilled Employment Opportunity for Residents
Creative Arts Workshops with Visiting Artists and Professionals Studio
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Second Line Stages:A Sow’s Ear Into a Silk
Purse
Concrete Slabs Have Very High Fly Ash
Recycled Steel
Locally Purchased Materials
Waste Recycled from Landfills to Green Projects
Reflective Roofs Save Energy
Going for LEED Silver Certification
Big Deal:Sustainable Construction
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Second Line Stages:A Sow’s Ear Into a Silk
Purse
Computer Automated Systems to Optimize Operations
High-Efficiency Air-Cooled Chillers
Variable Air Volume HVAC Systems
Premium Efficiency Motors
Variable Speed Drives on All Motors
Compact Fluorescent and High Output T5 Lighting with Electronic Ballasts
Going for LEED Silver Certification
Big Deal:Sustainable Operation
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Second Line Stages:A Sow’s Ear Into a Silk
Purse
$41 Million Total Funding to the Project $ 4.7 M Senior Loan to Project
$ 5.1 MMaster Tenant Loan A - Blend of NMTC Equity, Federal Historic Tax Credit Equity and Debt
$ 1.7 M CDE Loan B - NMTC Equity
$ 4.1 M Fund Loan A - NMTC Equity, Loan, and Developer Equity
$ 0.7 M Fund Loan B - NMTC Equity, Loan, and Developer Equity
$ 5.8 MNNMF CDE Loan - Blend of NMTC Equity, Federal Historic Equity, Developer Equity, and Debt
$ 3.0 M CDE Equity - Blend of Sources
$ 3.0 M Master Tenant Equity - NMTC Equity and HTC Equity
$ 8.8 M SLS Developer Equity
$ 3.0 M State Historic Tax Credit Equity – Direct to Project
$ 1.0 M Book up/Contributed Property
$ 0.1 M Interest Income on Loan
$ 41.0 M
Second Line Stages – Closing Financing
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$57.2 Million Total Gross Financing Over Project Life
$ 10.2 M Leveraged Loan - to SLS Lender
$ 8.5 M SLS Equity contributed to SLS Lender
$ 6.9 M $24MM in NMTC Allocation between 3 CDES
$ 4.7 M Federal Historic Tax Credit Purchase
$ 4.7 M Senior Loan - direct to project
$ 9.8 MDeveloper Equity contributed over the life of project
$ 2.9 M State Historic Tax Credit Equity Paid over time
$ 9.5 M Infrastructure Tax Credit Equity
$ 57.2 M
Second Line Stages – Total Gross Financing
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Second Line Stages:A Very Complicated Transaction
Non-Member Manager
Investment Fund
SLS Lender
LLC
National Bank 1
National Bank CDC
NNMFCDE 2
CDE 3
CDE 1Master Tenant
LLC
Developer
SLS LLC
Second Line Stages
National Bank 1
State Historic Tax Credit LLC
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Second Line Stages:A Winner at Every
Level A Devastating Tragedy Creates Enormous Needs
Building a Sound Stage Helps Anchor a New Industry
Training LMI Residents Creates New Job Opportunities:
2,835 Direct, Often High Value Jobs
2,619 Indirect Jobs
More Income, Wealth and Tax Base in the Community:
$22 Million in Federal Taxes Over 7 Years
$13 Million in State and Local Over 7 Years
Constructing and Operating Green:
Creates a National Model for Film Production
Creates a Local Model for Green Development
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